CITATION: Pinnacle Homes (Sydney) Pty Ltd -v- Director General, Department of Fair Trading [2001] NSWADT 222 DIVISION: General Division APPLICANT PARTIES: Pinnacle Homes (Sydney) Pty Ltd RESPONDENT Director General, Department of Fair Trading FILE NUMBER: 013253 HEARING DATES: 30/10/2001 SUBMISSIONS CLOSED: 10/30/2001 DATE OF DECISION: 10/30/2001 BEFORE: O'Connor K - DCJ (President) APPLICATION: Stay of proceedings MATTER FOR DECISION: Preliminary matter LEGISLATION CITED : Home Building Act 1989 CASES CITED: Dekanic (1982) 6 ALD 240 APPLICANT REPRESENTATION: S Churches, barrister RESPONDENT G Johnston, barrister ORDERS: Application refused. 1 The Tribunal has before it an application for an urgent stay arising out of an application for review filed by Pinnacle Homes (Sydney) Pty Limited on 25 October 2001. The application for review relates to a decision of the Director General of Fair Trading to impose a condition on an authority. That condition is set out in a document dated 12 September 2001 headed Order Section 36(1)(c) . The condition required that Pinnacle Homes (Sydney), being the holder of licence number 123133C cannot enter into any new contracts or take any deposits from the public in relation to residential building work. 2 The material before the Tribunal which is contained in exhibits numbered 1 to 8 discloses that at the time the condition was issued by the Director General, being 12 September 2001, the company had building insurance in place until 30 September 2001. It is also evident from the material that there was concern on the part of the Director General over the possibility that the builder may not have insurance after 30 September 2001, thereby exposing the public to the risk that contracts might be entered into without insurance being in place. Now, in that regard I accept that there is no evidence before me today or no basis for inferring that the company would have acted otherwise than responsibly had it not had insurance in place on 1 October 2001. 3 It is not appropriate in the context of a stay application to seek to determine finally the merits or otherwise of the original decision, that is in a sense to dispose of the application for review. But as I think we all know, applications for stays enter the territory of the merits almost inescapably. So one cannot ignore in the context of a stay some of the circumstances that have given rise to the original decision. But I should make it clear that today we are not engaged in the process of making a decision as to the merit or otherwise of the original decision. Our task is a more confined one. The criteria relevant to the determination of an application for a stay are those, as counsel has indicated, set out in s 60 of the Act, in particular s-s (2) and s-s (3). 4 The cases that were cited, including Dekanic (1982) 6 ALD 240 that was cited, do indicate that the process to be gone through is first to address the criteria in s-s (2) and then to go on and address the criteria set out in s-s (3). The Tribunal to date has tended to take the view that where a licence holder is operating under a licence, it may be appropriate for the Tribunal to make orders staying any decision that might prevent the licence holder from continuing in business so as to secure the effectiveness of the determination of the application for review but that is not really the end of the matter. It is still necessary then to go on and consider the other criteria. This situation is more complicated than the usual situation. 5 Usually we are dealing with a definitive exclusion from business rather than the situation here where the company has not been prevented from continuing to complete contracts made prior to 12 September 2001; but has effectively been prevented from taking new business since that date. So that this is not as clear cut a situation as some of those with which we have dealt. But for the sake of today's consideration, I will accept that it is appropriate to consider whether a stay should be given so as to secure the effectiveness of the determination of the application for review and go on and consider the criteria under s-s (3) of the legislation. Much attention was paid in the submissions to the position as it applied to the company on or about 12 September 2001. 6 It is plain and I think this was recognised by the Department that the condition that was imposed would and has had an impact on the ability of the company to continue trading effectively. Clearly it is vital, given the way in which the building industry operates, that there be new business steadily coming in the door as existing business is completed; for a range of reasons to do with maintaining one's workforce and maintaining cash flow and so on. So the gravity of the decision that the Department took is inescapable. 7 Nonetheless, I must look at the matter as it stands today, on 30 October. The position is that the company does not have insurance in place. 8 There are really two major goals of the consumer protection regime that apply in respect of home building in New South Wales. The first is that the building work be carried out in a competent and timely way and the second is that where things go wrong there be effective insurance in place to protect consumers. As I see it, the Tribunal must give primacy to those considerations to do with consumers and the public interest even though I acknowledge that by not having the ability to take new business the company faces very real issues about the impact of that situation on their workforce and their subcontractors; and their ability to maintain intact teams of workers who give preference to their sites. 9 The overwhelming fact of significance for me today is that there is no insurance in place today and there was a suggestion through the submissions in the proceedings that if the Tribunal allows the company to have the condition lifted, then it will be able to get insurance. But there is no evidence to that effect before me. There is a good deal of speculation on the matter, but no evidence. There is also some doubt raised in my mind on the basis of the material (when you compare the solicitor's letter of 25 September with the statements made in evidence by the General Manager, Mr Turner) as to whether there is the financial capacity to carry the guarantee of $600,000 versus the guarantee that was previously demanded of $250,000. 10 Though the Tribunal is not an expert in matters of insurance, it would seem that the variation between those two numbers has something to do with the number of building projects that the company sees itself as capable of carrying at any one time. There are serious issues that have come to light today in the course of the proceedings to do with the capability of the company to manage the cost of insurance and also the scale of that insurance. I have noted what Mr Peirce (director) has had to say about his ability to continue to meet the demands in respect of insurance; but he himself acknowledged that there is a complication in that regard in respect of whether or not he has to put the family home on the line; and that that matter is to be addressed in a meeting in Melbourne in the next few days. 11 They are the main considerations that have moved me in respect of the proceedings for today. 12 I acknowledge in terms of criterion (a) in s-s (3) that there is a potential for workers to lose their jobs if this matter is not resolved very quickly. Equally there are interests connected with the protection of consumers and the orderly regulation of home building in New South Wales that need also to be addressed. I might say in that regard that I would expect that subcontractors in the industry, and I presume most employees, are well aware that they operate in a regime where consumer insurance is fundamental. Public interest factors such as those seem at this stage to me to lie in favour of not intervening by way of grant of the application. 13 I simply would encourage the company to move as quickly as possible to seek to deal with the issue of the insurance and, to the extent that these reasons may be of any value in that regard, you may wish to use the text of them; and note that the Department has indicated throughout that it will lift the condition once it is satisfied that appropriate insurance is in place. ORDER Application refused. 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.