CITATION: Barakat v Commissioner for Fair Trading, New South Wales Office of Fair Trading [2008] NSWADT 127 DIVISION: General Division APPLICANT Barry Barakat PARTIES: RESPONDENT Commissioner for Fair Trading, New South Wales Office of Fair Trading FILE NUMBER: 083051 HEARING DATES: 10 April 2008 SUBMISSIONS CLOSED: 10 April 2008 DATE OF DECISION: 30 April 2008 BEFORE: Handley R - Judicial Member CATCHWORDS: Home Builder - cancellation of supervisor certificate - disqualification from holding authority MATTER FOR DECISION: Principal matter LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Home Building Act 1989 Australian Broadcasting Commission v Bond (1990) 170 CLR 321 Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127 McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994) CASES CITED: Ng & anor v Commissioner for Fair Trading, NSW Office of Fair Trading & anor [2007] NSWADT 259 Raso v Commissioner for Fair Trading, Office of Fair Trading [2008] NSWADT 51 Siganto v R (1998) 194 CLR 656 YJ v Chief Executive Officer, WorkCover Authority [2006] NSWADT 264 APPLICANT J Conomos and F Coyne, barrister REPRESENTATION: RESPONDENT W Maynard, solicitor ORDERS: The Commissioner's decision to cancel Mr Barakat's supervisor certificate and to disqualify him from holding such a certificate or various related certificates is set aside, and in substitution for that decision Mr Barakat is required to pay a penalty of $5,000 to the Commissioner within two months of the date of this decision. REASONS FOR DECISION 1 This matter involves an application by Barry Barakat for a review of a decision of the Commissioner for Fair Trading ('the Commissioner') to cancel Mr Barakat's supervisor certificate authorising him to do specialist work within the categories of electrical wiring, air conditioning and refrigeration on the ground that he is not a fit and proper person to hold a supervisor certificate by reason of his improper conduct, and to disqualify him for a period of five years from holding such a certificate or various related certificates whether in person, as a member of a partnership or as an officer of a corporation. Background/Facts 2 Mr Barakat was born in Lebanon on 14 February 1955 and is aged 53. He is married with three adult children. He is an engineer with the following professional qualifications/certifications: Bachelor of Engineering awarded by the NSW Institute of Technology (now the University of Technology, Sydney ('UTS')) on 16 May 1983; and Graduate Diploma of Management (Technology Management) and Master of Business Administration (Technology Management) awarded by Deakin University and the Association of Professional Engineers, Scientists and Managers, Australia on 16 May 1996 and 6 May 1997, respectively. He is also registered on the National Professional Engineers Register as a 'Registered Professional Engineer' in the following areas of practice: electrical (from 31 July 1994) and building services (from 14 June 1999). 3 On 16 September 1983, the Office of Fair Trading ('OFT') granted Mr Barakat a supervisor certificate authorising him to undertake and supervise specialist work in the categories of electrical wiring, air conditioning and refrigeration. 4 Mr Barakat worked for the New South Wales Department of Public Works for 14 years, from 1983 to 1997. In 1997, he established his own business, BHB Australia Pty Ltd, conducting electrical and air conditioning contracting work, including the inspection and investigation of existing systems and consultancy work. Mr Barakat gave evidence that he is general manager of the business, which has 10 full-time employees as well as casual staff, contractors and subcontractors. However, he also undertakes 'hands on' work himself. Mr Barakat said he relies on his supervisor certificate in his business and it would be very difficult to find someone else with similar qualifications and experience in all aspects of building to undertake his role should he lose his licence. 5 On 21 May 2001, Mr Barakat applied to the OFT for a contractor licence to undertake residential building work in the category of 'general building work'. In support of his application, he submitted a testamur for an Associate Diploma in Applied Science (Building), with a completion date of March 1993, purportedly issued by NSW TAFE. On 9 July 2001, relying on Mr Barakat's application and supporting documents, including the testamur, the OFT issued him with a contractor licence authorising him to undertake residential building work in the category of general building work. 6 Investigations carried out by the OFT and, subsequently, by the Independent Commission Against Corruption ('ICAC'), established that Mr Barakat's testamur was issued fraudulently by a TAFE employee. Mr Barakat gave evidence before the ICAC in which he acknowledged that he had obtained the testamur fraudulently. He handed in his contractor licence at the ICAC hearing and has not since sought to renew it. 7 On 9 January 2007, the OFT gave notice to Mr Barakat inviting him to show cause why disciplinary action should not be taken against him on the ground that he is not a fit and proper person to hold a supervisor certificate. Counsel for Mr Barakat, Mr Conomos, responded by letter dated 21 February 2007. On 15 March 2007, Mr Barakat was interviewed by officers of the OFT. By letter dated 6 February 2008, a delegate of the Commissioner notified Mr Barakat that he had decided to cancel Mr Barakat's supervisor certificate from the date of service of the decision, and also to disqualify Mr Barakat for a period of five years from holding such a certificate or various related certificates whether in person, as a member of a partnership or as an officer of a corporation. 8 On 14 February 2008, Mr Barakat applied to the Tribunal for a review of this decision. At a Directions Hearing on 20 February 2008, the Tribunal, acting pursuant to section 55(2) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act'), granted leave for the application to proceed notwithstanding that no application for internal review had been made by Mr Barakat and, further, ordered that the decision be stayed pending the determination of the review. 9 At the hearing, Mr Barakat acknowledged that he had acted incorrectly in relation to his 2001 application and said he realises how wrong this was. This is the only such mistake he has ever made, he very much regrets it, and he will never make such a mistake again. The Relevant Legislation 10 Pursuant to section 57 of the Home Building Act 1989 (the 'HB Act'), the Commissioner may take disciplinary action against the holder of a supervisor certificate under section 62 on any one of a number of grounds, including "(b) that the holder is not a fit and proper person to hold the certificate" and "(c) that the holder is guilty of improper conduct". 11 Section 62 sets out the disciplinary action that may be taken by Commissioner, which may include 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." The Applicant's Submissions 12 Mr Conomos provided written submissions and made oral submissions at the hearing. He noted that Mr Barakat has admitted his wrongdoing, has shown contrition and expressed remorse, has co-operated with the OFT, and gave evidence at the ICAC hearing. The improper conduct, which was a single incident in 2001, did not occur in relation to Mr Barakat's supervisor certificate which he has held continuously for 25 years without a single complaint being made, but, rather, in relation to his application for a building licence. Given the seven years that have passed and what has happened since the incident, it is not likely that such improper conduct would occur again and in relation to Mr Barakat's supervisor certificate. Despite the single incident in 2001, Mr Barakat is a person of good character and a fit and proper person to hold such a licence. 13 Mr Conomos submitted that the penalty imposed by the Commissioner was a very high one in terms of the spectrum of penalties available to the Commissioner. Mr Conomos contended that the Tribunal should take into account the principle of parity or consistency in sentencing in determining the appropriate penalty for Mr Barakat because these are disciplinary proceedings of a quasi-criminal nature: Siganto v R (1998) 194 CLR 656, at paragraph 49 (per Gaudron J). Mr Conomos referred to the Tribunal decision in Raso v Commissioner for Fair Trading, Office of Fair Trading [2008] NSWADT 51 ('Raso'), where allegations of a similarly serious nature were made against the applicant and the Tribunal determined to take no further disciplinary action against him. In Mr Barakat's case, a nominal penalty would be appropriate. 14 Mr Conomos submitted that the Commissioner's decision was unreasonable and warranted interference by the Tribunal. In terms of deterrence, Mr Barakat has learned his lesson and the loss of his building licence will act as a deterrent to others contemplating such misconduct. The imposition of disciplinary action is discretionary. While Mr Barakat should be penalised for his misconduct, he should be allowed to continue operating his business. The Respondent's Submissions 15 Mr Maynard, for the Commissioner, submitted that, by reason of Mr Barakat's misconduct, he is not a fit and proper person. While Mr Maynard acknowledged that the penalty imposed by the Commissioner was at the higher end of the spectrum, he submitted that the facts are distinguishable from those in Raso, where the Tribunal found that the applicant had been reckless in signing a blank application form, rather than dishonest, and was a fit and proper person to hold his licences. It was for this reason that the Tribunal found there was no basis for taking disciplinary action against the applicant. In Mr Barakat's case, he has admitted improper conduct, albeit in respect of one incident. Thus, there are grounds for taking disciplinary action under section 57. 16 Mr Maynard submitted that a penalty should be imposed under section 62. Penalties were imposed by the Commissioner under section 62(f) and (g) because of the seriousness of the misconduct. The purpose of disciplinary action is to protect the public: the integrity of the home building scheme, and public confidence in the system of regulation, are of great importance, as is public safety. While no member of the public was affected by the misconduct, the Commissioner submits that the penalty imposed should be severe. However, Mr Maynard submitted that if the Tribunal were to form the view that the penalty imposed was too severe, then he submitted that a fine in the mid-range open to the Commissioner, for example of $5,000, would be appropriate. 17 Mr Maynard referred the Tribunal to the decision in Ng & anor v Commissioner for Fair Trading, NSW Office of Fair Trading & anor [2007] NSWADT 259 ('Ng'), at paragraph 71 to paragraph 72, where the Tribunal identified factors relevant to the assessment of an appropriate penalty. Consideration of some of these factors is favourable to Mr Barakat, while others point to the seriousness of his misconduct. Discussion 18 Essentially there is no dispute that Mr Barakat was guilty of improper conduct in claiming to have an Associate Diploma in Applied Science (Building) and submitting a fraudulent testamur in support of his application for a building licence in 2001. 19 The first issue for the Tribunal is whether Mr Barakat is a fit and proper person to hold a supervisor certificate. Whether or not he is not a fit and proper person, the second issue, given that he acknowledges improper conduct, is whether disciplinary action should be taken against him and, if so, what form that should take. 20 In relation to whether Mr Barakat is a fit and proper person to hold a supervisor certificate, I note the guidance provided pursuant to section 25(1A) of the HB Act, where the Commissioner, in determining whether an applicant is a fit and proper person to hold a supervisor or tradesperson certificate, "is to consider whether the applicant is of good repute, having regard to character, honesty and integrity". 21 The meaning of the phrase 'fit and proper person' was discussed by the High Court in Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127, at paragraph 9, where Dixon CJ, McTiernan and Webb JJ said: "The expression 'fit and proper person' is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. 'Fit' (or 'idoneus') with respect to an office is said to involve three things, honesty knowledge and ability: 'honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it' - Coke." 22 The meaning of the phrase was also discussed in Australian Broadcasting Commission v Bond (1990) 170 CLR 321, where Toohey and Gaudron JJ said at paragraph 36 of their judgment: "The expression 'fit and proper person', standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of 'fit and proper' cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur." 23 As their Honours recognised, at paragraph 66, whether a person is a fit and proper person involves a value judgement to be made in the context of the particular activity to be licensed. In McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994 : see, in particular, the judgments of Kirby P, at paragraph 21 to paragraph 26, and Powell JA, at paragraph 59 to paragraph 73), the Court said where there is evidence of misconduct, there should be consideration of any explanation for that misconduct, its seriousness to the particular activity, the motivation of the person, whether the misconduct is an isolated incident, the person's underlying qualities of character, and the person's conduct since the incident and whether this demonstrates recognition of the misconduct and subsequent reform. See also the review of the relevant law in YJ v Chief Executive Officer, WorkCover Authority [2006] NSWADT 264, at paragraph 34 to paragraph 47. 24 Thus, whether Mr Barakat is a fit and proper person must be determined in the light of the nature and purpose of the activities he would undertake as the holder of a supervisor certificate. Fitness and propriety concerns honesty, knowledge and ability. Character concerns a person's inherent moral qualities – their standards, attitudes and the quality of the person in these terms. A person's character may be capable of rehabilitation. Character should be distinguished from reputation, which is how the person appears in the estimation of other reasonably minded people in the community. The context of the activities the person would undertake requires that account should be taken of the nature of the relevant industry and public policy objectives behind the regulation of the relevant activities. Ultimately, issues of fitness and propriety and good character are matters of judgement for the decision-maker. 25 I am satisfied from Mr Barakat's evidence that the incident in 2001, while a serious act of misconduct involving dishonesty, was an isolated incident. I note that seven years have passed since the incident, and that Mr Barakat has expressed remorse and shown contrition, has co-operated with the OFT and given evidence before the ICAC. I also note that he has held his supervisor certificate for a period of 25 years without complaint being made to the OFT. I was impressed by Mr Barakat's demeanour in giving evidence and, in my view, he has "learned his lesson" and the risk of his repeating such misconduct is extremely low. Mr Barakat has also provided references attesting to his good character. I am satisfied from the evidence that he is a fit and proper person to hold a supervisor certificate. 26 My having so determined is not, however, the end of the matter. Section 57 of the HB Act empowers the Commissioner to take disciplinary action against the holder of such a certificate on a number of grounds, including not only "(b) that the holder is not a fit and proper person to hold the certificate", but also "(c) that the holder is guilty of improper conduct". Mr Barakat has acknowledged that he was guilty of improper conduct in relation to the 2001 incident. Thus, I must also consider whether disciplinary action should be taken against him and, if so, what form that should take. 27 I note the factors relevant to the assessment of an appropriate penalty identified by the Tribunal in Ng at paragraph 71 to paragraph 72. In Mr Barakat's case, he committed a serious act of dishonesty in purporting to hold an Associate Diploma in Applied Science (Building) and submitting a fraudulent testamur in support of his application for a building licence. However, this was an isolated incident, seven years ago and, as I have stated, Mr Barakat has shown remorse and expressed contrition, has co-operated with the OFT and given evidence at an ICAC hearing. At the ICAC hearing, he handed in the building licence and has not reapplied for such a licence since. 28 Mr Barakat has held his supervisor certificate for 25 years without a complaint being lodged against him, and he has conducted his business as an electrical and air conditioning contractor since 1997. He employs 10 full-time employees as well as casual staff in his business, and has provided evidence of an extensive range of work undertaken in that business. 29 In my view, given the seriousness of the improper conduct, an appropriate penalty should be imposed. The misconduct, involving dishonesty, is more serious than that in Raso, which involved the applicant recklessly "signing a blank application, rather than allegations of dishonesty or fraud" (paragraph 60). In the present proceedings, Mr Maynard acknowledged that the penalty imposed by the Commissioner is at the high end of the spectrum. In my view, the penalty imposed was, in all the circumstances referred to above, too severe. Mr Maynard submitted that if the Tribunal were to form the view that the penalty imposed was too severe, a fine in the mid-range open to the Commissioner, for example of $5,000, would be appropriate. Under section 62(c), the Commissioner may make a determination requiring the holder of a certificate to pay a penalty, in the case of an individual, of an amount not exceeding $11,000. I agree that a determination requiring Mr Barakat to pay a penalty of $5,000 is appropriate. Decision 30 The Tribunal's powers in deciding an appeal are stated in section 88 of the HB Act. The Tribunal may: "(a) confirm the decision, determination or order of the Director-General appealed against, or (b) substitute for that decision, determination or order any other that the Director-General might have made." 31 The Commissioner's decision to cancel Mr Barakat's supervisor certificate and to disqualify him from holding such a certificate or various related certificates is set aside, and in substitution for that decision Mr Barakat is required to pay a penalty of $5,000 to the Commissioner within two months of the date of this decision. 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.