Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Khan v Commissioner for Fair Trading [2023] NSWCATOD 130 Hearing dates: 9 May 2023 Date of orders: 28 August 2023 Decision date: 28 August 2023 Jurisdiction: Occupational Division Before: C Mulvey, Senior Member Decision: The decision of the respondent made on 25 November 2022, is affirmed. Catchwords: OCCUPATIONAL – owner builder permit - s32(1A) Home Building Act - no special circumstances established – no financial hardship established - dual occupancy Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Home Building Act 1989 Standard Instrument (Local Environmental Plans) Order 2006 Cases Cited: Beadle v Director General of Social Security [1984] AATA 176 Hammoudi v Commissioner for Fair Trading [2016] NSWCATOD 57 McGufficke v Commissioner for Fair Trading [2022] NSWCATOD 176 Topp and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 99 Texts Cited: Davie, T: The Annotated Home Building Act 1989 NSW; 2001 Category: Principal judgment Parties: Usman Khan – Applicant Commissioner for Fair Trading - Respondent Representation: Mr U Khan - Applicant Mr M Nicoletti - Respondent File Number(s): 2022/00387857 Publication restriction: None REASONS FOR DECISION Background 1. On 4 November 2022, Mr Usman Khan (the "Applicant"), lodged with the Commissioner for Fair Trading (the "Respondent") an application for an owner-builder permit ("OBP") for construction of a dual occupancy and at a property in Dural. On 21 December 2021, the Hills Shire Council granted to the Applicant a Development Consent for that construction. 2. On 7 November 2022, the Respondent issued a Notice of Determination stating that an OBP must not be issued unless the Applicant meets the 'special circumstances' requirement to demonstrate a compelling reason that justifies the issue of the OBP. The Applicant failed to do so and the Respondent refused to issue the Applicant an OBP in accordance with s32(1A) of the HBA. On 8 November 2022, the Applicant requested the Respondent to internally review its decision. The result of the internal review, which was made on 25 November 2022, affirmed the Respondent's initial decision to refuse the issue of an OBP. 3. On 22 December 2022, the Applicant filed an application in this Tribunal, seeking administrative review of the Respondent's internal review decision made on 25 November 2022 ("the Reviewable Decision"). The Applicant cites the grounds for his application as being: 1. We are living on a five acre block where the Council allows to construct two dwellings. At the time of our purchase eight years ago there was a 40 years [sic] old house where we have been living. Now the Council have approved plans for a second single dwelling. 2. I want to build my home as an owner Builder, but my application has been declined because it is titled as dual occupancy due to an old house already standing there. You are requested to approve owner builder permit in view of this particular situation to build my new home. Basis of Refusal of the OBP Permit 1. In January 2015, the HBA was amended to introduce s32(1A). The section mandates that the Respondent must not issue an OBP unless there are 'special circumstances'. The section also provides that the Respondent may issue guidelines to define special circumstances. To date, no guidelines have been issued. The Reviewable Decision found no special circumstances existed enlivening a discretion for the Respondent to issue an OBP. The reviewer concluded the following on that issue: "The applicant states their five-acre block has an existing forty-year old cottage and that Council allow two dwellings as an attached dual occupancy, although they are building only once house Council advised three options and the applicant has opted to build a new dwelling overlapping the corner of the existing house, which can be any size. Council have declared such development as a dual occupancy, although it is a secondary single new dwelling being built after forty years since the existing dwelling was built. Having regard to the information provided in support of the application and internal review, the applicant is of the view that building a secondary single new dwelling justified special circumstances. I conclude this element does not substantiate that special circumstances exist for a permit to be issued in accordance with section 32(1A) of the HBA." Relevant Legislation 1. Section 32 of the HBA sets out the authorities conferred on the holder of a permit by the issue of an owner-builder permit. The default position is that owner-builder permits may not be issued in relation to a dual occupancy. 2. An owner-builder permit for the purposes of a dual occupancy may only be issued in "special circumstances". Section 32 HBA Authority conferred by owner-builder permits (1) An owner-builder permit authorises its holder to do such residential building work as is described in the permit on the land specified in the permit. (1A) An owner-builder permit must not be issued to authorise its holder to do residential building work that relates to a dual occupancy unless the Secretary is satisfied that special circumstances exist that justify the owner-builder permit authorising its holder to do that work. The Secretary may issue guidelines as to the circumstances that will be considered to be special circumstances for the purposes of this subsection. (2) The authority conferred by an owner-builder permit: (a) is subject to the conditions applicable to the permit for the time being, and (b) may, on the application of the holder of the permit, be varied by an order of the Secretary set out in a notice served on the holder of the permit. Section 29 HBA Definitions (1) In this Act: "dual occupancy" and "secondary dwelling" have the same meanings as in the principal local environmental planning instrument prescribed by the Standard Instrument (Local Environmental Plans) Order 2006. "owner-builder work" means residential building work: (a) the reasonable market cost of the labour and materials involved in which exceeds the prescribed amount, and (b) that relates to a single dwelling-house, dual occupancy or secondary dwelling: (i) that may not be carried out on the land concerned except with development consent under Part 4 of the Environmental Planning and Assessment Act 1979 , or (ii) that is complying development within the meaning of that Act. (2) If land is owned by a company that is wholly owned by individuals, the land is to be taken (for the purposes of this Division) to be owned by those individuals. (3) In this Division, a reference to an owner of land includes a reference to a person who has a prescribed interest in the land. 1. The Standard Instrument (Local Environmental Plans) Order 2006 defines dual occupancy and dwelling as follows: "dual occupancy means 2 dwellings (whether attached or detached) on one lot of land; and "dwelling means a room or suite of rooms occupied or used or so constructed or adapted as to be capable of being occupied or used as a separate domicile." 1. The holder of an OBP must not engage unlicensed contractors to do any residential building work – (see s 32AA of the HBA). 2. It is not in dispute that the Reviewable Decision is a 'reviewable decision' pursuant to s 63 of the Administrative Decisions Review Act 1997 (NSW) which provides: (1) In determining an application for an administrative review under this Act of an administratively reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following: (a) any relevant factual material, (b) any applicable written or unwritten law. (2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision. (3) In determining an application for the administrative review of an administratively reviewable decision, the Tribunal may decide: (a) to affirm the administratively reviewable decision, or (b) to vary the administratively reviewable decision, or (c) to set aside the administratively reviewable decision and make a decision in substitution for the administratively reviewable decision it set aside, or (d) to set aside the administratively reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal. Special Circumstances 1. There are no guidelines issued as to the definition of special circumstances in the HBA context. However, a number of factors can be considered in interpreting the meaning of special circumstances: * An understanding of the term "special circumstances" generally; * the purposes of the Home Building Act 1989; * the purposes of an owner-builder permit in the context of the HBA; * the legislative purpose behind the amendment to the HBA in section 32(1A) against the issue of owner-builder permits for dual occupancies; the scope of special circumstances as set out in the Minister's Second Reading Speech in May 2014; and * the Applicant's claim for special circumstances in the context of the permit sought. Meaning of special circumstances 1. A review of case law reveals that the concept of 'special circumstances" is commonly found in the areas of criminal law, professional disciplinary matters in relation to costs, applications for security of costs and in the social security arena concerning beneficial exercise of a discretion. In Topp and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 99, the AAT considered the meaning of the term "special circumstances" in relation to its use in section 1184K of the Social Security Act. Section 1184 allowed for the Secretary of the Department of Social Security to exercise a beneficial discretion "if it is appropriate to do so in the special circumstances of the case." 2. Relying on a Full Federal Court decision in Beadle v Director General of Social Security [1984] AATA 176, the AAT considered that if something unfair, unintended or unjust had occurred which was out of the ordinary, (my emphasis) this might constitute special circumstances justifying the exercise of the discretion – see Topp's case – see paragraphs 21 and 38-40. 3. The AAT's analysis in Topp's case also indicates that the determination of the existence of "special circumstances" vested a broad discretion in the decision maker. 4. In Hammoudi v Commissioner for Fair Trading [2016] NSWCATOD 57 and McGufficke v Commissioner for Fair Trading [2022] NSWCATOD 176, the Tribunal considered factors which could amount to special circumstances, which is not exhaustive, as being: age, retirement, health, use of the development, familiar relationships and financial hardship. Purposes of the HBA 1. The overall purpose of the HBA is to protect consumers in the contracting for and the construction of residential buildings. Davie describes an owner-builder in the context of the HBA as "someone who intends to build a dwelling on his or her own land and live in it." (See Davie, T: The Annotated Home Building Act 1989 NSW; 2000 at p17). 2. Prior to the s32(1A) amendment, generally speaking, it appears an owner-builder permit was not granted unless the dwelling built was to be occupied by the Applicant. The Second Reading Speech introducing the amendment against dual occupancy states that: "The owner-builder provisions are being reformed to help ensure that the permit system is not being used inappropriately for commercial reasons as a means of circumventing the licensing requirements." AND "There are concerns that some commercially orientated, unlicensed people may be using the permit system in order to undertake dual occupancy work on land with a view to subdividing the land and on selling it at a profit. The owner-builder permit system is not intended for such commercial development work." 3. I understand this to mean that the amendment is aimed at avoiding the use of owner-builder permits to create a dual occupancy for commercial purposes such as immediate on selling or subdivision for financial advantage. It could also include renting part or whole of the developed property for financial gain. In this context the Second Reading Speech then refers to special circumstances as follows: "special circumstances exist, such as where a family could demonstrate legitimate non-commercial reasons for the work or where refusing the permit could cause family hardship." The Hearing and the Evidence 1. The proceeding was initially listed on 9 May 2023 for hearing. The Applicant sought an adjournment, which was granted, after a pre-liminary view was formed that the Applicant had not filed any evidence to ground a finding of special circumstances. The proceedings were re-listed for hearing the substantive application on 16 June 2023. 2. The Applicant relied upon the following evidence: * Application filed 22 December 2022 (A1) * Bundle filed 5 May 2023 (A2) * Bundle filed 29 May 2023 (A3) 1. The Respondent relied upon its bundle of s58 of the ADA documents filed 3 February 2023 (R1) and written submissions. 2. The Applicant and the Respondent made oral submissions at the hearing. The Applicant's Position 1. The Applicant is married and has two adult children. His son is married. He and his wife have a daughter. The Applicant's daughter is partnered with no children. 2. The Dural property consists of a small existing dwelling. The plan is to build a second larger attached dwelling. 3. The Applicant said that about three years ago, he hired an architect to draft plans for building a second dwelling to his home. This was because his family all live in the small old dwelling. The accommodation "is not enough" and the family require more room. He said he had plans to build another single story house. The plan was for his son, his wife and daughter to remain living in the existing dwelling. The Applicant, his wife, their daughter and her spouse will move into the new larger dwelling. After obtaining council permission to build a second dwelling he was told about two years later he required to establish there were special circumstances to obtain an OBP. 4. The Applicant said he obtained two independent quotes for the proposed development to build the second dwelling. The estimated cost being approximately $1.5 million. If he was the owner builder, he estimated his cost to build the second dwelling at approximately $938,000. 5. He said the cost of the independent builder's quotes is "out of our reach" from a financial point of view. He has only approximately $1 million surplus funds available in a mortgage facility to pay for building of the new dwelling. This is different to his evidence below where he said the balance was approximately $1.3 million. He said the mortgage facility, if spent, will cost about $5,000 per month. His son and daughter will each contribute $2,000 per month and he and his wife will pay $1,000. 6. In cross examination, the Applicant said he runs a business called Aust Alliance. The business is registered in his and his wife's name. In the past, the business involved building duplexes in Epping, Carlingford and Rydalmere for dual occupancies. Once developed the properties were sold. He said that he was project managing the developments and a builder was engaged to build each dwelling. The Applicant's role in this business included hiring the necessary trades to complete the developments. The developments were constructed between 2009 – 2020. 7. The Applicant agreed that the developments were sold at a profit, all except one. He said he would make a profit of about ten percent. He said some of the profit from the developments was used to purchase the land in Dural which was approximately $2 million. He also contributed to the purchase of the land from earnings he received as an IT consultant and with the sale of a previous property where his family lived. The Applicant purchased the land without any lending facility being extended. The applicant said there is "a couple of $100,000" left from the profits earned in the development business which he has access to. Presumably to contribute to the development of the second dwelling. 8. The Applicant was asked about whether the remaining loan amount of $1 million would be used to contribute towards the development of the second dwelling. He said this was a loan for the Dural house was which was approximately $1.7 million. He said at the date of hearing he could draw on about $1.3 million, but does not want to do so because of the amount of interest that would be payable. He then said that about $300,000 - $400,000 was used to purchase the Dural property. But, on further cross examination, he said this amount was not applied to purchase the property. I was set aside as a cushion to build the second dwelling. The Applicant did not provide any financial documentation concerning his current financial capacity to build the second dwelling, his financial standing generally, nor, that of his children. Without that evidence, it is difficult to make any finding about whether he is subject to financial hardship which might be a special circumstance. 9. The applicant said that his son is a civil engineer and his daughter is a full time teacher. His daughter earns approximately $80,000 - $85,000 and his son earns in excess of $120,000. The Applicant said he received an aged pension as does his wife. 10. The applicant relies upon a schedule setting out his estimate of costs for building the second dwelling if he is the owner builder. His estimate, is based upon his own experience and information he obtained from his last development project (between the years 2017-2020), speaking to friends and a 'few tradies'. I find the quotation is speculative and it has been devised without any degree of precision. Such other information that would have been of assistance is a break-up of the particulars of each amount, for example with the driveway estimate, formwork, concreters estimates, and information of the cost of preparing the ground work and supply of materials. I also find that according to the Applicant's evidence, his estimate is at least partially based upon the last development he completed between 2017 – 2020. 11. Overall, I accept the Applicant as an honest and reliable witness. The Respondent's Position 1. The Respondent submits that the Applicant has not demonstrated that there are special circumstances to warrant the grant of an OBP. The Respondent contends that the decision to refuse the application is not unfair, unjust or unintended and the correct and preferrable decision is to affirm the decision. 2. Despite the Applicant's contention that being granted a development consent for the construction of a second dwelling on the property in 2021, that in itself does not amount to a special circumstance. The Respondent also contends that the Applicant's proposal to build an attached second dwelling, does not of itself constitute special circumstances. Tribunal's Consideration 1. The Applicant purchased the Dural property, eight years ago. Since that time, he has had plans to build a second dwelling. It is not in dispute that the Applicant obtained a development consent for the construction of a second dwelling in furtherance of that plan. I agree that this in itself does not amount to a special circumstance. 2. On 4 November 2022, the Applicant lodged an application for an OBP with the Respondent to develop the Dural property. That application was refused on the grounds that there were no special circumstances demonstrated which would enable the Respondent to exercise a discretion to grant the OBP. The Applicant requested the Respondent to internally review that decision. The Respondent affirmed its previous decision to refuse the grant of an OBP. 3. The main contention of the Applicant is that the purchase and redevelopment of the Dural property was to provide further accommodation for his extended family. He said he has no other plans in respect of that property. 4. The Applicant has not adduced any cogent objective evidence, apart from a broad assertion that the dual occupancy proposal was for one of three options given by the Hills Shire Council to approve the development consent. I find this in itself does not amount to special circumstances within the meaning of s32(1A) of the HBA. 5. He was granted an adjournment to address the absence of adducing evidence to ground a finding of special circumstances. He has failed to do so. 6. The applicant has made general and mere assertions about his plans for the second dwelling. He has not adequately explained the financial arrangement of how he would be able to fund the construction of the second dwelling. He relies on scant financial projections about the cost of the development, but, he has not satisfactorily explained whether he will be the subject of any financial detriment if he is not granted an OBP. He has failed to put on evidence from his children and his wife about the families plans, their own financial circumstances and how they might financially contribute to the development. The projected costings for the development where the Applicant is the owner builder are not sound in the absence of more accurate primary costs and specifications. This is because, the Applicant has relied upon the costs associated with the last development he built in 2017 – 2020 in combination with conversations he has had with trades people and friends. The development between three to six years ago. I have no confidence in the accuracy and reliability of the estimates provided by the Applicant. 7. Unlike the factors which were considered in the decision of Hammoudi and McGufficke, there are few identifiable or relevant factors which support the Applicant's contention of special circumstances existing. Those factors which weigh in favour of the Applicant are his age and an assertion about the plan to accommodate his family. What is missing is more cogent evidence about these things. It would have been helpful to have statements from his children and wife about their age, personal circumstances and financial means to fund or contribute to the development and the use of it. 8. In Hammoudi, the Tribunal found special circumstances where financial hardship was established if the staged construction plan with an OBP was not granted. The Applicant has not provided any objective and cogent evidence to support of his application for an OBP. He has made mere assertions. 9. I find the Applicant has failed in this application to establish "special circumstances". 10. In the result, the decision of the Respondent made on 25 November 2021 is affirmed. Orders 1. The decision of the Respondent made on 25 November 2022, is affirmed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 August 2023