Taheri v Commissioner for Fair Trading, NSW Office of Fair Trading [2006] NSWADT 200

CITATION: Taheri v Commissioner for Fair Trading, NSW Office of Fair Trading [2006] NSWADT 200

DIVISION: General Division

APPLICANT PARTIES: Simiak Taheri RESPONDENT Commissioner for Fair Trading, NSW Office of Fair Trading

FILE NUMBER: 053261

HEARING DATES: 31/03/2006

SUBMISSIONS CLOSED: 03/31/2006

DATE OF DECISION: 07/05/2006

BEFORE: Montgomery S - Judicial Member

CATCHWORDS: Home Builder - issue of contractor licence - Home Building Act - home builder - issue of contractor licence

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Home Building Act 1989 Home Building Regulation 2004

Ex parte Meagher (1919) 19 SR (NSW) 433 Flanagan v Commissioner of Fair Trading [2004] NSWADT 166 Hughes and Vale Pty Ltd v State of NSW (1955) 93 CLR 127 CASES CITED: Law Society of NSW v Foreman (1994) 34 NSWLR 408 Leader v Yell (1864) 33 LJMC 233 New Broadcasting Ltd v Australian Broadcasting Tribunal (1987) 73 ALR 420 Petracaro v Commissioner of Consumer Affairs (1994) 62 SASR 387

APPLICANT R Freeman, barrister REPRESENTATION: RESPONDENT F Campora, solicitor

ORDERS: The Commissioner's decision to refuse Mr Taheri's application for a contractor licence under the Home Building Act 1989 is affirmed

REASONS FOR DECISION 1 Mr Taheri has applied for an individual contractor licence under the Home Building Act 1989 ("the Act"). A delegate of the Commissioner determined that his application should be refused on a number of grounds, including that he was not a fit and proper person. Mr Taheri sought an internal review of the decision to refuse his application. On review, the original decision to refuse his application for a licence was affirmed. 2 Mr Taheri has applied to the Tribunal for an external review of the Commissioner's determination. Applicable Legislation 3 Section 20(1)(a) of the Act provides that the Commissioner must reject an application for a contractor licence if the Commissioner is not satisfied that the applicant is a fit and proper person to hold the licence. Further, section 20(1A) provides that the Commissioner is to consider whether the applicant is of good repute, having regard to character, honesty and integrity when determining whether an applicant is a fit and proper person to hold an authority. 4 Pursuant to section 20(2) of the Act the Home Building Regulation 2004 ("the Regulations") may fix or provide for the Commissioner to determine standards or other requirements that must be met before any licence is issued or before a licence of a particular kind is issued. Section 20(3) of the Act states that the Commissioner must reject an application for a contractor licence if not satisfied that any requirement fixed or provided for under the Regulations would be met were the contractor licence to be issued. 5 Under clause 25(1)(a)(x) of the Regulations before a contractor licence is issued, the Commissioner must be satisfied that each relevant person in relation to the application for the licence has not carried out work in respect of which the Commissioner considers an unreasonable number of insurance claims have been paid. The Commissioner's Case 6 Ms Campora referred to the specific requirement in section 20(1A) of the Act that the Commissioner consider issues of character, honesty and integrity when determining whether an applicant is a fit and proper to hold an authority. She referred to a number of authorities in which the expression 'fit and proper' has been considered and submits that Hughes and Vale Pty Ltd v State of NSW (1955) 93 CLR 127 is authority for the principle that the three characteristics of fitness and propriety are honesty, knowledge and ability. She says that the licensing of a person as a building contractor under the Act means that the person can be held out to the public as being not only possessed of acceptable expertise, but as a person of integrity and honesty: Flanagan v Commissioner of Fair Trading [2004] NSWADT 166 at paragraph 32. 7 Ms Campora alleges that there are numerous instances of non-disclosure of material information when completing forms for the licensing authority; that Mr Taheri made false or misleading statements in documents in order to embellish his employment history and experience; that Mr Taheri made contradictory and therefore false statements or omissions; that Mr Taheri that denied responsibility for his actions, or attempted to shift blame to third parties; and that Mr Taheri admitted that he advised his wife to make a false application for an owner-builder permit. She asserts that these are evidence that Mr Taheri is not fit to be the holder of a contractor licence. 8 Mr Taheri was appointed as a director of Bowrain No. 43 Pty Limited ("Bowrain") in December 1996 when he took over the control of the company from his brother. In August 1998, Bowrain's Contractor Licence was cancelled as Bowrain had been without a nominated supervisor for more than 30 days. Shortly thereafter Bowrain was placed in the hands of company administrators. In late August 1998, an Owner-Builder Permit was issued to Mr Taheri's wife, Veeda Taheri, to do residential building work on a duplex at 14 Boldrewood Place, Cherrybrook. That Owner-Builder Permit was cancelled in October 1998 by the former Department of Fair Trading as it was not satisfied that the premises would be occupied as the applicant's residence. 9 In November 1998, Bowrain lodged an application for a Contractor Licence. The directors answered 'NO' to the question concerning whether any director or company of which they were a director, ever been refused, disqualified from holding a licence, authority, certificate or registration or had any such instrument cancelled or suspended. Similarly, the answer 'NO' was given to the question regarding whether any director had in the last seven years been a director or manager of a company which was wound up, placed into receivership or under official management or entered into other arrangements with creditors due to insolvency. 10 Also in November 1998, Estate Homes Pty Ltd lodged an application for a Contractor Licence. The application was refused, as the director, Veeda Taheri, was not considered to be a fit and proper person to hold the licence. In Ju1y 1999, Veeda Taheri ceased to be a director of Estate Homes and Mr Taheri became a director. 11 In 1999 Bowrain's creditors voted in favour of a deed of company arrangement. The main creditor was the Fair Trading Administration Corporation, which was managed by the Department of Fair Trading ("FTAC"). FTAC approved seven insurance claims from homeowners for building work that was performed by Bowrain. Each claim related to contracts signed before Mr Taheri became a director of Bowrain. 12 Ms Campora alleges that Mr Taheri repeatedly failed to disclose his directorship of a company whose authority had been cancelled, and which had been placed in administration. She asserts that this is further evidence that Mr Taheri is not honest in his dealings with the licensing authority. She further asserts that Mr Taheri's explanation that he did not disclose this information in various applications for authorities because he was desperate to support his wife and family and had no other means of making an income indicates his willingness to misstate the truth when he can derive a benefit he is not otherwise entitled to obtain. 13 In Law Society of NSW v Foreman (1994) 34 NSWLR 408 Mahoney JA noted at 449: "Character involves, inter alia, two things: the acceptance of high standards of conduct; and acting in accordance with those standards under pressure. Character is tested not by what one does in good times but in bad." 14 Ms Campora submits that Mr Taheri's explanation for some of the instances of non-disclosure have shown that in times of stress or difficulties, he cannot be relied upon to act with candour and integrity. She says that Mr Taheri was a director of Bowrain but that there has been no explanation provided for the non-disclosure of the cancellation of Bowrain's licence when Mr Taheri lodged his licence application in March 2003. 15 With respect to the issue of whether Mr Taheri has the requisite knowledge and ability, the Commissioner relies on breaches of the Act in relation to carrying out of unlicensed work; the failure to return a cancelled authority; and that Mr Taheri failed the Building Industry Skills Centre Oral Assessment Test in May 2003. Ms Campora submits that the large number of unresolved complaints and claims against the company of which Mr Taheri was a director suggest that he failed to supervise or have the work supervised adequately. She says that this is further evidence that Mr Taheri does not have the requisite knowledge of the duties and responsibilities of a holder of a licence nor the ability to permit him to hold an authority under the Act. 16 Ms Campora referred to New Broadcasting Ltd v Australian Broadcasting Tribunal (1987) 73 ALR 420 where Davies J, President of the Administrative Appeals Tribunal considered a number of authorities and noted that question of fitness is not at large but directed towards the purpose of the regulatory regime. She submits that therefore contraventions of the Act are very relevant and show that Mr Taheri is not a fit and proper to hold a contractor licence. 17 She says that Mr Taheri must show not only that he is possessed of a requisite knowledge of the duties and responsibilities devolving upon him as the holder of the particular licence under the Act, but also that he is accredited to the public, without further inquiry, as a person to be entrusted with the sort of work the licence entails: Ex parte Meagher (1919) 19 SR (NSW) 433 at 442. 18 Accordingly, she submits, the Tribunal cannot be satisfied that Mr Taheri is a fit and proper person to hold a contractor licence. 19 The Commissioner also considers that an unreasonable number of insurance claims have been paid. Mr Taheri was a director of Bowrain when it was placed into external administration. The Commissioner says that he failed to ensure that the building work contracted for by the company was adequately supervised, if at all, thereby leaving a number of consumers with incomplete and/or defective work. 20 Mr Anthony Brown attended the hearing, gave evidence in support of the Commissioner's case and was cross-examined. Mr Brown's evidence largely concerned the role he played in regard to work carried out by Bowrain. A deed prepared on Mr Brown's behalf supports Mr Taheri's assertion that Mr Brown was the nominated supervisor for the company and therefore responsible for the defective work. However, Mr Brown's evidence was that he was only contracted to inspect and report on the quality of the work carried out by the company. Ms Campora submits that Mr Brown's version of events should be preferred to that of Mr Taheri. She says that Mr Taheri was responsible for carrying out the work that was the subject of an unreasonable number of insurance claims. 21 Ms Campora submits that the correct and preferable decision is that the Commissioner's decision be affirmed. Mr Taheri's Case 22 Mr Taheri asserts that when regard is had to whether he is of good repute, his character, honesty and integrity, the Tribunal should conclude that he is a fit and proper person to hold a contractor licence. 23 Mr Freeman submits that in relation to the issue of character the case Law Society of NSW v Foreman is not relevant to this matter. He submits that it can be distinguished on its facts because Foreman's case involved the question of a solicitor's character where the solicitor had overcharged, over serviced her clients and the right of Ms. Foreman to practice rather than the character of a builder to obtain a licence. This matter is dealing with the issue of a builder obtaining a licence where there is no allegation of misappropriation of client's money. 24 Mr Freeman submits that comments by Olsson J. in Petracaro -v- Commissioner of Consumer Affairs (1994) 62 SASR 387 at 392 are relevant in considering character and the issuing of a builder's licence. His Honour stated: "As was pointed out by Hale J. in Maxwell v Dixon [1965] WAR 167 at 169, weight must be given only to matters which can fairly be seen to be relevant to the vocation in issue. That inquiry must primarily be directed to the situation as it stands at the time of the application, given that past events may assist as being relevant indicative background. Although the expression "fit and proper" is capable of extending to the three characteristics of honesty, knowledge and ability, what is pertinent for consideration depends on the statutory context and the qualifications directly relevant to the particular vocation." 25 He contends that Mr Taheri is a fit and proper person and refer to the views expressed in In the matter of the Appeal of Trevor James Pye DC (NSW) 19 August 1976 (unreported) where Head J held that even in circumstances that past conduct might put a person under a cloud that there is a doubt that he or she is fit and proper that: "the Court is concerned more with an assessment of whether the disrespect of the law (by the person before it) in the past is likely to influence their actions in the future. The critical question is whether the person's past is going to put their future under such suspicion that the law should take no chances. If that situation is not applicable the previous convictions are not an absolute bar to the issue of the licence to such persons ". 26 Section 20A of the Act requires the Commissioner to consider the "character" of Mr Taheri. Mr Freeman submits that "Character" has been held to mean, the estimation in which a man is held by those acquainted him: Leader v Yell (1864) 33 LJMC 233. In this regard, Mr Taheri has provided a number of testimonials. 27 At the time Bowrain went into administration it owned real estate located at 14 and 14 A Bolderwood Place Cherrybrook. Mr Taheri and his family lived at No. 17 Bolderwood Place Cherrybrook. Mr Taheri admitted that he advised his wife to make an application for an owner builder permit for each duplex. He advised this as a way of returning a higher dividend to creditors. 28 Mr Freeman further submits that the Commissioner's assertion that in numerous instances Mr Taheri failed to disclose material information when completing forms for the licensing authority is not supported by the evidence. 29 In regard to the Commissioner's assertion that Mr Taheri had an unreasonable number of insurance claims made against him, Mr Freeman says that the claims were made in relation to residential building work perform by Bowrain. He submits that for the purposes of clause 25(1)(x) of the Regulations the "relevant person" was Bowrain and not Mr Taheri. He further submits that the legislature did not intend for one legal entity to be prohibited from obtaining a licence because of another legal entity's insurance claim history. 30 In any event, of the seven claims that were approved, the first six were approved because the builder failed to rectify. Mr Taheri's evidence is that he was refused access to the properties, which were the subject of the insurance claims, by each of the home-owners. Mr Freeman says that as five of the home-owners were invited to lodge insurance claims a departmental officer, each of those claimants had an incentive to deny Bowrain the right to rectify the defective work. Further, all of the insurance claims were approved after Bowrain went into administration. Consequently, Bowrain could not rectify defective work or complete incomplete work without the approval of the administrator. It was therefore inevitable that the claims were approved. 31 Mr Taheri denies that he breached the Act by carrying out unlicensed work. He says that in the examples referred to by the Commissioner he had not contracted with the parties to perform residential building work. 32 In relation to the Commissioner's assertion that Mr Taheri has committed "other breaches of the Act", Mr Freeman says that the Commissioner has failed to provide particulars of which section Mr Taheri is said to have breached and how Mr Taheri breached that section. In relation to the Commissioner's assertion that Mr Taheri failed to return a cancelled authority, Mr Freeman submitted that the issue of return of the authority was a matter for the administrator because the administrator was provided with all records concerning the business of Bowrain when it was placed into administration. 33 Mr Freeman submitted that there is no merit to the Commissioner's assertion the fact that Mr Taheri failed an oral assessment on 15 March 2003 is evidence of his lack of knowledge and ability. He says that this submission holds no weight given that on 1 November 2004 Mr Taheri was awarded Certificate IV in Contractors Management Program and had previously been awarded certificates of attainment for Quantities and Tendering and Construction Building Services. 34 Mr Freeman submitted that Mr Taheri's evidence should be favoured over that of Mr. Brown and that the correct and preferable decision is that the Commissioner's decision should be set aside and the licence should be granted. Findings 35 This case essentially involves an assessment of whether Mr Taheri can be held out to the public as a person who is not only possessed of acceptable expertise, but also as a person of integrity and honesty. The unquestioned principle in determining whether a person is a "fit and proper person" to be issued a licence for a particular activity, is that past improper conduct of the applicant must be considered in light of the activity which is to be licensed and not considered at large. 36 There are several bases on which the Commissioner says that Mr Taheri should not have a licence. In my view the principle argument is that he has not been honest in his dealings with the licensing authority. I agree with the Commissioner in this regard. 37 I am satisfied on the evidence before me that Mr Taheri deliberately failed to disclose his directorship of Bowrain in circumstances where he knew that Bowrain's authority had been cancelled and that it had been placed in administration. He did so in an effort to obtain the licence because he was desperate. In the circumstances it is quite likely that he expected that his failure to disclose these facts would be known. However, in my view that does not alter the fact that he attempted to mislead the licensing authority. Ms Campora has submitted, and I agree, that Mr Taheri was willing to misstate the truth in order to derive a benefit to which he was not otherwise entitled. I also agree that contraventions of the Act are very relevant. 38 In this regard, Mr Taheri fails the test of fitness and propriety outlined in Hughes and Vale Pty Ltd v State of NSW. In my view Mr Taheri's conduct has demonstrated little regard for the law and demonstrates a lack of responsibility and honesty. It is also my view that Mr Taheri has not totally accepted responsibility for his actions and that it is too soon to yet be confident that he is unlikely to repeat this kind of behaviour if he again found himself in difficult circumstances. 39 While it is unnecessary that I consider the other issues raised by the Commissioner, I note that I found Mr Brown's version of events implausible. I accept Mr Taheri's evidence of his dealings with Mr Brown and his intentions with respect to ensuring that all Bowrain's creditors were paid. I also note that I do not consider Mr Taheri's experience to be in issue. 40 Nevertheless, in light of Mr Taheri's dishonesty and having weighed the totality of the evidence I am not satisfied that sufficient time has passed to enable Mr Taheri to be held out to the public as a person the public can be comfortable with as the holder of a licence. 41 This is not to say that Mr Taheri will never be able to obtain the licence he seeks. With the passage of time without further incident Mr Taheri may well be able to satisfy the Commissioner in the future that he will comply with all applicable legislative requirements. For the moment however, I can not attest that Mr Taheri is a fit and proper person to hold this licence and therefore the appropriate order is that the Commissioner's decision be affirmed. Orders 1. The Commissioner's decision to refuse Mr Taheri's application for a contractor licence under the Home Building Act 1989 is affirmed.