CITATION: Ng & anor v Commissioner for Fair Trading, NSW Office of Fair Trading & anor [2007] NSWADT 259 DIVISION: General Division APPLICANTS Alfred Ng PARTIES: Accent Constructions Pty Ltd RESPONDENT Commissioner for Fair Trading, NSW Office of Fair Trading FILE NUMBER: 063414; 063408 HEARING DATES: 8 August 2007 SUBMISSIONS CLOSED: 8 August 2007 DATE OF DECISION: 5 November 2007 BEFORE: Molony P - Judicial Member CATCHWORDS: Home Builder - improper conduct MATTER FOR DECISION: Principal Matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Building Services Corporation Act 1989 Home Building Act 1989 La Plata Constructions Ply Ltd & Gallo v Building Services Corp (Commercial Tribunal, unreported, 12 April 1990) Director-General, Department of Fair Trading v. Cohen [2000] NSWFTT 3 CASES CITED: Younan v Commissioner of Fair Trading [2007] NSWADT 170 at [26] Harb v Commissioner of Fair Trading [2007] NSWADT 175 Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158. In Person REPRESENTATION: V Griswold, solicitor ORDERS: The Tribunal makes the following orders in respect to Mr. Ng's application on file number 063414:; 1. The decisions made by the Commissioner on 12 April 2006 imposing monetary penalties on Mr. Ng is set aside; 2. The Tribunal substitutes that decision with a determination that Accent Construction Pty Ltd be reprimanded in respect of improper conduct between January and July 2001, when as the holder a contractor licence, it breached the statutory warranty implied by section 18B(a) of the Home Building Act 1989 with respect to thirteen items of work on one residential building; The Tribunal makes the following orders in respect to Accents Construction Pty Ltd's application on file number 063408:; 1. The decisions made by the Commissioner on 12 April 2006 imposing monetary penalties on Accent Construction Pty Ltd is set aside; 2. The Tribunal substitutes that decision with a determination that Mr. Ng be reprimanded in respect of his improper conduct between January and July 2001 when, as the holder of a supervisor certificate for and a director of a licenced corporation, the statutory warranty implied by section 18B(a) of the Home Building Act 1989 was breached by the licenced corporation with respect to thirteen items of work on one residential building. REASONS FOR DECISION Introduction 1 Alfred Ng is a civil and structural engineer. He has held a supervisor certificate under the Home Building Act 1989 since 14 November 1984, which authorises him to do, and to supervise, residential building work. Mr. Ng is also a director and the nominated supervisor of Accent Constructions Pty Ltd ("Accent") which has been the holder of a licence authorising it to do general building work under the Act since August 1991. 2 The Commissioner of Fair Trading is the administrator responsible for the Home Building Act 1989. 3 On 9 December 2005 the Commissioner issued show cause notices calling on both Mr. Ng and Accent to show cause why disciplinary action should not be taken against them on the ground that they were each guilty of improper conduct, under s 56(c) of the Act in the case of Accent, and s 57(c) in Mr. Ng's case. The Commissioner alleged that in the course of the uncompleted construction of a dual occupancy dwelling, undertaken by Accent between 2000 and 2001, there had been "numerous defects in the building work carried out by Accent," which breached the statutory warranty implied by s 18B(a) of the Act. This is: "a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract" 4 S 51(1)(c) provides that a licensee, and the holder of a supervisor certificate, is "guilty of improper conduct" if they breach a statutory warranty. S 53(1)(c) provides that the nominated supervisor of residential building work is "guilty of improper conduct" if "a breach of a statutory warranty occurs in the course of doing that work." S 54(1) provides that an officer of a corporation which is the holder of contractor licence "is guilty of improper conduct if the holder does any of the things referred to in section 51 or 52." 5 On 12 April 2006 a delegate of the Commissioner found both Accent and Mr. Ng were guilty of improper conduct in that thirteen items of work had not been performed in a proper or workmanlike manner in breach of the statutory warranty under s 18B(a). In so finding, the delegate relied on two reports: one from Alfred Frasca, a building consultant retained by the owner of the property ("the Frasca report"): the second a report prepared by Mr. John Christie a building inspector with the Office of Fair Trading ("the Christie report"). The delegate determined to take disciplinary action against both Accent and Mr. Ng under s 62. Accent was required to pay a penalty of $10,000 and Mr. Ng $7,500, both within 28 days. 6 On 17 May 2006 Accent and Mr. Ng requested that the delegate's determination be reviewed. Detailed written submissions were made by NG on 15 June 2007. Mr. Mg also made oral submissions to the Commissioner in the form of an interview with Office of Fair Trading officers. 7 On 11 August 2006 the Commissioner suspended both Access' licence and Mr. Ng's supervisor certificate for non-payment of the penalty. Mr. Ng immediately wrote to the Commissioner seeking that the suspension be lifted pending the outcome of the internal review. 8 On 16 November 2006 Accent and Mr. Ng filed an application to review the delegate's decision in this Tribunal and sought a stay of the Commissioner's decision. On 21 November 2006 the Tribunal granted a stay of the determination and found that, given the delay in completing it, the internal review was not required: s 53(9)(b) Administrative Decision Tribunal Act 1997. 9 On 23 November 2006 Mr. Ng lodged a separate application for review in his own name. On 12 December 2006 the Tribunal directed that Mr. Ng be removed as an applicant to Accents application. 10 Thereafter both applications have been heard together with the substantive hearing occurring on 8 August 2007. 11 That hearing proceeded on the basis that the appeal was one against penalty only, with Mr. Ng arguing that, in the circumstances, the breaches found by the delegate did not justify the disciplinary action taken. Mr. Ng represented both himself and Access. During the course of his evidence and submissions he came very close to questioning the fact of the breaches found by the delegate, rather than their extent and seriousness. I am satisfied, however, that he understood the limits imposed by his agreement with the Commissioner that the appeal was against penalty only, and wished for his evidence and submissions to be taken as going to the issue of appropriate disciplinary action only. 12 There were two other themes which affected Mr. Ng's evidence and submissions, and which contributed to the injustice he feels he has suffered at the hands of the Commissioner. The first relates to the fact that the owner of the property, who made the complaint upon which the Commissioner took the disciplinary action, was a member of the Consumer Trader and Tenancy Tribunal, a statutory tribunal administratively associated with the Office of Fair Trading. Mr. Ng believes that the decision to take disciplinary action against Accent and himself may have resulted from that connection. The second relates to what he perceives to be a denial of natural justice in the process adopted by the Commissioner in taking disciplinary action. 13 I pointed out to Mr. Ng that my task in conducting the review under s 63 of the Administrative Decision Tribunal Act 1997 is to stand in the shoes of the Commissioner, to consider the issues on the basis of the evidence before me and the applicable law, and make the decision again on the merits. That decision is to be "the correct and preferable decision." As a consequence, I indicated that I would do my best to ensure he was given the advantage of all the aspects of procedural fairness in the course of the hearing before me, but I was not conducting an error of law review of the decision making processes adopted by the Commissioner. 14 With respect to the owner of the property, there was no evidence before me which lends weight to Mr. Ng's suspicions. There is however, ample evidence that the owner had a good knowledge of the regulatory system and has vigorously deployed that knowledge in seeking to achieve a desired outcome. The History of the Building Works and Subsequent dispute 15 Mr. Ng gave sworn evidence as to the circumstances surrounding the building works. That evidence was not contested. It provides relevant context to the circumstances in which the admitted breaches of the statutory warranties occurred. 16 In October 2000 the owner approached Mr. Ng with respect to the building of a second house on the property. A DA consent for a detached dual occupancy dwelling and subdivision had been issued by the Council on 2 January 1996. Mr. Ng said that when he saw the DA he realised that it would expire at the end of the year, and it was not the sort of development for which a new DA could be obtained. It was therefore vital that work be done before the DA expired. Substantial commencement was required before the expiry date. 17 He was commissioned to prepare amended plans and structural certificate in order to get the work underway. He described these as being the "bare minimum to get past Council." They were based on the initial plans lodged with the DA. A construction certificate was issued, dated 27 December 2007. The concrete peers were dug and poured by Accent before 1 January 2007 in order to satisfy substantial commencement requirement of the DA. At this point there was no contract in place. 18 On 15 January 2001 a contract was executed for the sum of $267,913.00. The owner sought a number of substantial variations to the proposed structure. These included raising the floor level of the sunken lounge (with resultant variations in ceiling height), changing the location of the toilet, the front entrance arrangements, the staircase, and moving a number of windows. Mr. Ng said that in order to implement these variations a series of changes to the DA had to be sought. They had to be sought in stages, so as to not compromise the earlier DA approval. 19 Some work proceeded while this occurred. The slab was poured, with a plan to pour a further slab on top, when the variation to the level of the lounge was approved. The brick work was commenced and nearly completed, when the owner made complaints as to the quality of some of the work. Mr. Ng said that he suggested that a building consultant be engaged in an effort to resolve these problems. A consultant recommended that minor defects be rectified. 20 The owner was dissatisfied with that report and sought further reports from Andrew Daniels which, according to Mr. Ng, cast the "defects in such a way as to require rectification." The owner also obtained an engineering report from Peter Alsop. Mr. Ng did not accept that the defects identified were as serious as claimed and engaged his own expert, John Fransen, to respond. An entrenched dispute developed. 21 Accent did some further work on the roof but, by June 2001, a stand off had developed, with the owner declining to pay a progress claim until the defects, about which the parties could not agree, were fixed. Work stopped entirely in July 2001. Despite negotiation the stand-off continued. 22 In the first quarter of 2002 the owner made a claim on Home Warranty Insurance (HWI) with respect to the alleged defects. Mr. Ng was contacted by an expert on behalf of Strategic Claims Solutions, the insurer. Mr. Ng told him that there were unresolved contractual issues in dispute between the parties. 23 It is unclear precisely when that Mr. Ng sought to bring the matter to a head by issuing proceedings in the Consumer Trader and Tenancy Tribunal, on behalf of Accent, seeking to recover the progress payment due to the builder. The owner successfully applied to have the proceeding transferred to the District Court and made a cross-claim. 24 Expert reports and Scott Schedules were filed in the District Court proceedings. A joint experts report on "agreed justified defective and incomplete building complaint items" was prepared and signed by three building consultants: Mr. Daniels for the owner, Mr. Fransen for Accent, and Mr. Dickinson (who Mr. Ng said was appointed by the insurer). Of the 38 items listed the experts agreed on 32, of which seven were agreed to be defective builders work. One complaint was attributed to consequential damage, with the balance being incomplete work. 25 The hearing commenced in the District Court but was then settled on 6 August 2004. By consent both claim and cross-claim were dismissed, with no order as to costs. The parties released each other from all claims matters or things arising from or related to the proceedings. Accent was required to provide the owner with certain certificates, and the owner was to pay Accent $2000 on provision of the certificates within 28 days. The contract was terminated. 26 In the course of the District Court proceeding Accent relied on a costing prepared by Stanhome homes. In cross-examination Mr. Ng agreed that he had a business relationship with them. He had embarked on joint ventures with them. He allowed his phone number to be used in local advertising in his area, and answered phone calls for them. 27 The matter did not end there. Mr. Ng said that he provided the owner with the required certificates, but he was not paid. He commenced proceedings in the Local Court seeking to recover the $2,000. He said this was met by a strong challenge to the validity of his certificates, founded on a 180 page appraisal (including attachments) of the works prepared Alfred Frasca, consulting engineer. That report alleged a number of serious defects and problems relating to certification. It recommended extensive remediation. The author had access to the earlier report prepared by Mr. Daniels, a Pest report by Aventis and a detailed survey undertaken in 2004, but to none of the other numerous reports and Scott Schedules. Indeed, from reading the report, it is not clear that Mr. Frasca was aware of much of the history already narrated. 28 Discretion being the better part of valour Mr. Ng discontinued his Local Court claim. 29 On 4 November 2004 the owner wrote to the General Manager of the Home Building Service making a formal complaint against Mr. Ng and Accent, and making a claim for "indemnification for losses and damages to rectify breaches of Statutory Warranty" which it was said had been wrongly dealt with by the insurer. That letter did not refer to the District Court proceeding or its outcome. Mr. Ng alerted the Office of Fair Trading to this in a fax dated 18 January 2005, addressed to Mr. Garry Christie of the Home Building Service. 30 On 2 February 2005 Mr. Christie conducted an inspection of the works in company with Mr. Ng and the owner, as part of an investigation. He prepared a report based on that inspection which underlies, together with a number of matters reported in the Frasca report, the findings on which the Commissioner's decision to take disciplinary action was taken. Mr. Ng has always indicated his acceptance of the Christie report. 31 On 10 February 2007 Mr. Christie wrote a file note in respect to the investigation. He noted that because there had been orders made between the parties it was not possible to issue a rectification order. He outlined the concerns expressed by the owner. He made the following recommendation: "Based on the evidence available and what I was shown on the site, it is my opinion that although there are defects in the job the defects are not of a serious nature and could have been rectified if the contractor had proceed (sic) with the project. The contractor should be sent a warning letter by the Department in regard to this matter. I recommend that no disciplinary action be taken against the contractor based on the items listed above." 32 I note that the owner wrote to the General Manager of the Home Building Service on 9 February 2005 questioning Mr. Christie's qualifications, observations and interactions with Mr. Ng during that inspection, and seeking to have another inspector appointed. On 1 March 2005, Mr. Steve Masters, a Senior Building Inspector inspected the works. On 10 April 2005 he prepared a file note in which he reported that Mr. Christie's inspection was "appropriate" and detailed the complaints identified to him at the time. Mr. Masters, however, recommended that Mr. Christie's recommendation be reviewed for disciplinary action to be taken against the trader, who he said had a record of previous defective work and had failed to comply with rectification orders. The Defects Found 33 The following items are the agreed defects as found by the delegate and not disputed by Mr. Ng. It should be noted that there were many other defects alleged and reported on, but they are not in issue before me. 34 Item 1 – Concrete Steps at rear of House In his report Mr. Christie wrote: "The consumer advised that the risers and treads on the new steps were of varying heights; I measured each of the risers and found that they varied from 155mm to 165mm however the majority of the risers were of the same height. The treads were between 245mm to 270mm, again most of the treads were of the same width. I walked up and down the stairs on approximately a dozen occasions and found no difficulty with the stairs as a safety hazard. The consumer advised that it is at night when she has problems. The contractor advised that the stairs have been approved by the local council inspector, and that the stairs are to have a tile applied to them which would have allow him to adjust the heights and width of the risers and treads. Additionally the consumer advised that the stairs have been installed in the wrong location, the contractor advised that due to variation by the consumer the stairs had to be moved and these variations were agreed on site. These variations were verbal only. Although the stairs are out of tolerance, they can be rectified and it is not considered a serious matter." 35 Mr. Frasca reported and the Commissioner found that this was not in accordance with Building Code of Australia ("BCA") part 3.9.1.4. 36 Item 2 - Patching of Damaged Internal brickwork and walls out of Plumb Mr. Christie reported that mortar had been used to fill openings in the brick wall and around the chasing of pipes. He commented that the chasing was done in a "satisfactory manner." He expressed a concern that, in some cases, the mortar might lead to cracking, but noted that the walls were to be rendered and that Mr. Ng said he would have installed wire meshing before rendering to "alleviate possible cracking." Mr. Christie concluded this complaint was not of "any great concern." 37 Mr. Frasca reported and the Commissioner found that this was not in accordance with Australian Standards ("AS") 3 5 00.5:2000 clause 2.13.2 and AS 3700-2000 clause 4.3. The conclave of experts reported to the District Court that this was an agreed defect. 38 Item 3 - Pipe Work in En Suite The owner alleged that chasing of the pipe work was so significant that it was compromising the structural stability of the structure. Mr. Christie wrote: "During the site inspection I was shown the ensuite where the consumer indicated that the amount of chasing that has been undertaken for the pipe work could affect the structural stability of the house. The contractor who is a structural engineer replied that the brick wall could take ten times the weight of the roof structure, and that the wall has been up approximately 3yrs now with no sign of any structural cracking. In my opinion I consider this complaint to be not of any major concern." 39 Mr. Frasca reported and the Commissioner found not in accordance with AS 3500.5:2000 clause 2.13.2 and AS 3700-2000 clause 4.3. He agreed that it did not compromise the structure. 40 Item 4 - Slab Edge In a couple of location Mr. Christie found that the slab edge had been installed incorrectly and required rectification. Mr. Ng agreed but said it would have been rectified if the work proceeded. Mr. Christie did not think it was a major defect and considered that it could be rectified in the course of the works. 41 Mr. Frasca reported that this did not comply with AS2780 Rule 5.3.4(e). The Commissioner found that this was not in accordance with BCA part 3.2.2.7. It is not clear to me from the Commissioner's reasons how that conclusion was reached. There is certainly evidence of a defect. 42 Item 5 – Brick ties and cavities Mr. Christie wrote: "The consumer brought to my attention that the brick ties may not have been installed correctly I measure the distance between the ties and found that they are at 800mm centers. I also observer that looking up the cavity I found that it was completely blocked with mortar droppings and will require cleaning as it will cause moisture penetration to the internal skin of the brickwork. In this instance the contractor is guilty of poor workmanship, and should have cleaned the cavities during construction. The cavities will now have to be cleaned which will be a difficult task." 43 Mr. Frasca reported and the Commissioner found this was not in accordance with BCA part 3.3.3.2 and AS 3700 clause 11.4.13. The conclave of experts reported to the District Court that the rubble in the cavities was an agreed defect. 44 Item 6 - Damp proof course Mr. Christie wrote: "I observed on site that the stepped flashing that has been installed incorrectly in that it is approximately 20mm short in width and needs extending. The contractor would need to remove the mortar and extend the flashing and reinstall mortar. The contractor accepted that the flashing was defective and indicated that he would have taken out the mortar and reinstalled with new waterproof mortar. This defect I consider is a major problem which would if untreated would have cause serious moisture damage to the house." 45 Mr. Frasca reported many damp course defects and agreed with Mr. Daniels that this was not in accordance with BCA part 3.3.3.2 and AS 3700 clause 11.4.13. The conclave of experts reported to the District Court that this was an agreed defect. 46 Item 7 - Weep holes Mr. Christie found that the contractor had failed to install weep holes to the sills of the sliding and that weep holes had not been installed at the base of the cavity, but one brick course above base level. He considered this a defect (not serious) which could be rectified. 47 Mr. Frasca commented that to comply with the BCA weep holes must "be installed at least one brick course below floor level." The conclave of experts reported to the District Court that this was an agreed defect. 48 Item 8 – Termite barrier (Living Room) Mr. Christie found that the termite barrier had been removed from the external doorway in the living room. Mr. Ng agreed, but said it would have been reinstalled as the project proceeded. Mr. Christie thought that this "had the potential to cause problems if not rectified." 49 The conclave of experts reported to the District Court that this was an agreed defect. 50 Item 9 - No flashing under sliding doors Mr. Christie wrote: "There was no evidence of flashing provide to the sliding doors, the contractor confirmed that flashing had not been installed but would have rectified if the project had proceeded. It will be necessary for the doors to be taken out and flashing installed and the doors reinstalled." 51 Item 10 - Window flashing not installed correctly Mr. Christie wrote: "I observed that the window flashings have not been installed correctly in that they do not extend across the entire opening or go into the reveals. The contractor failed to comment on this detect. It will be necessary for the windows to be removed and the flashing reinstalled. This is a justified complaint." 52 In his report (prepared for Mr. Ng) Mr. Rodney Johnson commented that he considered it "unlikely" that "rain water will enter the cavities of the outside walls." 53 Item 11 - No brick control joints Mr. Frasca reported (para 5.9): "No brick control joints have been specified on the contract council approved plans. Also, no brick control joints have been built. AS3700 Clause 4.8.1 states in part: Control joints shall be incorporated in masonry as necessary to control and limit the movements referred to in Clause 2.5.2.2. AS3700 Clause 2.5.2.2 states in part: 2.5.2.2 Differential movements A masonry member or structure shall be designed to allow movements to be controlled or isolated so that damage to the masonry, the building and its components is avoided and the structural and other requirements are satisfied. The AS3700 Code requirements have not been satisfied." 54 Mr. Ng made the point that AS3700 does not specify when control joints are to be made, and added that it was not normal practice to specify them in plans. He said that they would have been cut or grooved in during rendering. 55 Item 12 - Concrete flat roof larger than specified At paragraph 4.4(f) Mr. Frasca reported: "Our site measurements revealed that the concrete flat roof was constructed larger than the specified concrete flat roof noted on the non council approved drawing A3B, and the non-council approved drawing N° S11... The constructed concrete roof encroached substantially into the pitched tile roof area over the kitchen. This construction error has caused the pitched tiled roof over the kitchen to be built not in accordance with the council approved plans." 56 The Commissioner found accordingly. 57 Mr. Ng said this was a consequence of raising the level of the lounge, and was an issue he was seeking to address when work stopped. 58 Item 13 - Porch on northern wing too low At paragraph 5.4 viii Mr. Frasca reported: "The front porch for the northern wing was specified on the council approved architectural and structural plans to be constructed 100mm lower than ground floor level. However, the porch level was constructed 222mm lower than ground floor level. Refer photo N° 12. As a result, the ground level adjacent to the porch slab is at the same level as the porch slab. This is unacceptable since flooding of the porch area occurs on a regular basis, and is detrimental to the performance of the entry area." 59 The Commissioner found accordingly. 60 Mr. Ng said that the porch was incomplete and that with the addition of a mortar bed and tiles it would have been at correct level. Because the height deficit was 222mm I have difficulty substantial in accepting that the completed slab would have been at design level, although it would seem probable that the pooling difficulties noted in the Frasca report would be alleviated. Mr. Ng's submissions 61 Mr. Ng conceded that the work described above was defective, but said that it was not beyond rectification. He argued that because the work was incomplete it was unfair and wrong in principle to consider disciplinary action based on a breach of the statutory warranty under s 18B(a), because the work is incomplete. Rather he submitted the work should be evaluated under the statutory warranty implied by s 18(b)(e). This provides: "(e) a warranty that, if the work consists of the construction of a dwelling , the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling , the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling ," 62 Mr. Ng said he had been in the building industry for 35 years. He had assisted to owner to get the building works in progress as a matter of urgency in order to preserve the DA. After work commenced, the owner had requested substantial variations which had not passed Council. They required a series of amendments in order not to compromise the DA. This was a task that was in process, but incomplete, when the owner called in consultants who made unrealistic and excessive demands. He acknowledged his responsibility to deliver the structure in a proper and workmanlike manner, but said that he had been deprived of the opportunity to do so by the owners conduct. He had not been allowed to rectify the defects. 63 He submitted that that no disciplinary action should be taken against either Accent or himself. The Commissioner's submissions 64 The Commissioner submitted that there was ample evidence of breaches of the statutory warranty implied by s 18B(a). As consequence both Accent and Mr. Ng were guilty of improper conduct. 65 The Commissioner acknowledged that in the circumstances Accent had not had the opportunity to rectify the defects. The Commissioner alleged no relevant antecedents. The Commissioner submitted that given the nature of the defective works a monetary penalty was imposed, which was described as low to mid level, and was appropriate. Consideration 66 Turning first to Mr. Ng submission that the statutory warranty under s 18B(a) should not be used as a basis of a finding of improper conduct, a similar issue was considered in relation the requirement imposed by the Building Services Corporation Act 1989. This required that licensees do work in a good and workmanlike manner. The Commercial Tribunal in La Plata Constructions Ply Ltd & Gallo v Building Services Corp (unreported, 12 April 1990) discussed the time at which the work was to be assessed, at p.8. Because "defects of a serious nature can occur early in the construction of a project" and "rectification which in itself may originally have been simple, could later require substantial demolition work simply because the judgment had to wait until the whole of the contract was completed," the Tribunal found that the time at which the work is to be assessed is at any time after the particular work has been done, not after the completion of the contract. The Tribunal cautioned that, "this is not to say that a builder should be prejudged or criticised prematurely for, for example, failing to complete work which he quite reasonably fully intended to complete at a later stage in the contract." 67 While the obligation imposed by s 18B(a) is somewhat different, requiring that work be "performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract," I consider that the reasoning expressed by the Commercial Tribunal is equally compelling in the present context. I do not accept that s 18B(a) should be restricted in its application to the assessment of work on completion. The caution voiced by the Commercial Tribunal is, however, equally relevant. 68 In accordance with the agreement between the parties I am satisfied that each of the thirteen defects identified and discussed above constitute a breach of the statutory warranty implied by s 18(b)(a). I consider items 6, 9, 10, 11, 12 and 13 are serious matters for concern. The other defects are less serious. All the defects show a lack of attention to detail on Accent's and Mr. Ng's behalf, although I accept that the variations requested by the owner play a part in explaining item 11. 69 As a consequence of these braches of statutory warranty the Act provides that both Mr. Ng and Accent are guilty of improper conduct: s 51(1)(c), s 53(1)(c) and S 54(1). Where a licence holder is guilty of improper conduct, the Commissioner may take disciplinary action: s 56(c). The disciplinary action which may be taken is set out in s 62: If, after compliance with this Division, the Director-General is satisfied that any ground on which disciplinary action may be taken against the holder of an authority has been established in relation to the holder, the Director-General may do any one or more of the following: (a) determine to take no further action against the holder, (b) caution or reprimand the holder, (c) make a determination requiring the holder to pay to the Director-General, as a penalty, an amount not exceeding $11,000 (in the case of an individual) or $50,000 (in the case of a corporation) within a specified time, (d) vary the authority held by the holder, by imposing a condition on the authority, including a condition requiring the holder to undertake a course of training relating to a particular type of work or business practice within a specified time, (e) suspend the authority for a period not exceeding its unexpired term, (f) cancel the authority, (g) disqualify the holder, either temporarily or permanently, from being any one or more of the following: (i) the holder of any authority, or any specified kind of authority, (ii) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, (iii) an officer of a corporation that is the holder of an authority. 70 The Commissioner chose to impose monetary penalties on both Accent and Mr. Ng, requiring Accent to pay $10,000 and Mr. Ng $7,500. Mr. Ng says this is excessive in the circumstances. 71 In Director-General, Department of Fair Trading v. Cohen [2000] NSWFTT 3 (cited in Younan [2007] NSWADT 170 at [26]; and Harb [2007] NSWADT 175 at [60]) the Fair Trading Tribunal outlined a series of factors which might be relevant to the assessment of an appropriate penalty. They were: - the nature, width and extent of the contraventions - the loss or damage and prejudice in consequence of the contraventions - the circumstances in which the contraventions took place - whether the licensee has been found to have engaged in any similar conduct - the presence of fraudulent or dishonest intent and deliberation on the part of the licensee - the extent of carelessness or wilfulness of the conduct - the efforts made to correct the situation and what measures have been taken by the licensee - what consciousness the licensee (a) had (b) displayed, of its obligations under the relevant statute and to the owners - the effect upon the licensee - antecedents - attitude, building history and future compliance - the penalty range. 72 To that list I would add two factors which were outlined in a list of relevant factors, which a court might take into account in determining the amount of a civil penalty, that were proposed by the Australian Law Reform Commission in Principled Regulation: Federal Civil and Administrative Penalties in Australia (2002) ALRC 95 in recommendation 29-1: see Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158. These are: - any gain made as a result of the contraventions - the degree of cooperation with the authorities. 73 In this case the nature, width and extent of the breaches of warranty have already been discussed. Neither party put to me a cost of rectifying the defects. While I have various reports and Scott Schedules which attempt to evaluate the cost of rectification, they are so diverse and intermingled with the costs of rectifying other alleged defects, that I am unable to conclude what the cost of rectification will be. 74 The circumstances in which the statutory warranty was breached were those of a rushed commencement of the works in order to preserve the DA, with subsequent contract preparation, and staged implementation of variations in order to comply with development requirements. The works as they progressed were therefore evolving. I accept that Mr. Ng and Accent were always willing to remedy the defects, but because of disagreement as to their extent and the necessary rectification, did not do so before they left the site. They were aware of their obligations. 75 This case is a yet another unfortunate example of a building dispute that has been allowed to escalate out of control, to the significant detriment of all involved. Because they could not agree on the rectification, the progress payment was withheld. As a result, Accent did not proceed and left the site. There is agreement that thereafter Accent was not welcome back on the site by the owner, and could not have rectified. I accept that if Mr. Ng has been able to proceed with the works, he would have rectified the thirteen defects under consideration. Unfortunately, as the background shows, the dispute continued to escalate. The subsequent proceedings have taken a toll on all involved. Neither Accent nor Mr. Ng have made any gain. 76 Mr. Ng has always acknowledged the defects as found by Mr. Christie, but has disputed many others which have not been alleged before me. He has cooperated with the Office of Fair Trading in the course of the investigation, albeit consistently maintaining his view. Both Accent and Mr. Ng have been involved in the building industry for many years. There are no relevant antecedents alleged against them. 77 The purpose of disciplinary action is not to punish but to protect the public: Clyne v NSW Bar Association (1960) 104 CLR 186 at 201. Given Mr. Ng's and Accents long involvement and history in the building industry, the unusual contractual circumstance in which the breaches arose, and the fact that Accent did not have the opportunity to remedy the defects, I am not persuaded that that the public interest requires that a monetary penalty be imposed. In my view the public interest can be adequately served by publicly censuring both Mr. Ng and Accent. This can be achieved by reprimanding them under s 62(b). Such a reprimand will appear on the licence records of both Mr. Ng and Accent. Those records are accessible by members of the public, via the Office of Fair Trading web site. Orders 78 The Tribunal makes the following orders in respect to Mr. Ng's application on file number 063414: 1. The decisions made by the Commissioner on 12 April 2006 imposing monetary penalties on Mr. Ng is set aside. 2. The Tribunal substitutes that decision with a determination that Accent Construction Pty Ltd be reprimanded in respect of improper conduct between January and July 2001, when as the holder a contractor licence, it breached the statutory warranty implied by section 18B(a) of the Home Building Act 1989 with respect to thirteen items of work on one residential building. 79 The Tribunal makes the following orders in respect to Accents Construction Pty Ltd's application on file number 063408: 1. The decisions made by the Commissioner on 12 April 2006 imposing monetary penalties on Accent Construction Pty Ltd is set aside. 2. The Tribunal substitutes that decision with a determination that Mr. Ng be reprimanded in respect of his improper conduct between January and July 2001 when, as the holder of a supervisor certificate for and a director of a licenced corporation, the statutory warranty implied by section 18B(a) of the Home Building Act 1989 was breached by the licenced corporation with respect to thirteen items of work on one residential building. 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.