Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Bannister v Department of Finance and Services [2011] NSWADT 290 Hearing dates: 31 October 2011 Decision date: 07 December 2011 Jurisdiction: General Division Before: C Huntsman, Judicial member Decision: Set aside the reviewable decision and remit the matter for reconsideration by the Respondent in accordance with a direction that the Respondent accept that the Applicant is a fit and proper person to hold a contractor licence, category builder. Catchwords: Fit and proper person Legislation Cited: Section 20 Home Building Act 1989 Cases Cited: Pobjie v Commissioner for Fair Trading, NSW Office of Fair Trading (No 2) [2008] NSWADT 39 Category: Principal judgment Parties: Neal Bannister (Applicant) Department of Finance and Services (Respondent) Representation: Neal Bannister (Applicant In person) Legal Services, Department of Finance and Services (Respondent) File Number(s): 113212 Reasons for decision Background 1On 24 February 2011 the applicant, Mr Bannister, completed an application for an individual contractor licence, builder, which was registered as received by the respondent, the Department of Services, Technology and Administration, on 28 February 2011. By letter dated 4 May 2011 the respondent decided to refuse the application for a contractor licence. The applicant sought an internal review of the decision and on 12 July 2011 the original decision to refuse the application was confirmed.The applicant seeks review of this decision by the tribunal. 2The applicant had previously held a contractor licence, category builder, for some 31 years and in 2010, due to oversight, did not apply to renew the licence. In February 2011 he applied for a licence, this application being the subject of the current review proceedings. In recent years the applicant had been director of a group of building companies (the Bannister group of companies) which had encountered financial difficulties. On 14 July 2008 Alan Hayes and Christopher Hill of PPB Advisory (PPB) were appointed as administrators of the Bannister group. On 18 August 2008 PPB were appointed liquidators of the Bannister group. On 26 September 2008 the applicant entered into a personal insolvency agreement (PIA) with the receiver. From this date the applicant was disqualified, under the Corporations Act 2001, from being a director. On 2 December 2010 the applicant was discharged by the trustee from his debts and had satisfied his obligations under the PIA. Due to the failure of the companies, there were insurance claims against the companies for incomplete work, and various contracts with consumers were unable to be completed. 3The applicant previously held an individual contractor licence, issued 28 August 1998, expired 25 August 2010, category builder. The Bannister group of companies held licences (there was more than one licence for the group, licences were held by the companies with in the Bannister group of companies), issued in May 2001, expiring 21 May 2011 and cancelled 11 September 2008. For each of the corporate licenses the applicant was the sole director and nominated supervisor with the exception of Northtek Developments Pty Ltd (one of the companies in the group) where the applicant was one of two nominated supervisors. 4The applicant submitted the application for a contractor licence in February 2011 and in March 2011 the Delegate of the Commission of the Fair Trading requested additional information from the applicant regarding the Bannister group of companies. 5The delegate noted that a records search with the Australian Securities and Investments Commission (ASIC) had provided advice that the applicant was a director of Bannister Corp (New South Wales) Pty Ltd, Bannister Corp Pty Ltd, Bannister Constructions Pty Ltd and Northtek Developments Pty Ltd ("the Bannister Group of companies") which were all placed under administration/controller appointed on 18 August 2008. The respondent requested information about the situation leading up to the administrator/controller being appointed, including provision of reasons for the said appointment, details as to whether all reasonable steps were taken to avoid the administration/controller being appointed, and the provision of information including independent reports relating to the appointment of the administration/controller, (for example, liquidators reports and the initial creditors report at the time of administration). The correspondence noted that the applicant was required to demonstrate that he is able to complete residential building contracts in the future and to satisfy this needed to provide a statement of affairs, particularly a statement of assets and liabilities prepared by his accountant. It was indicated that the statement must include a favourable opinion about his ability to run a financially successful business. The applicant was also requested to provide information about why this information (about the Bannister group companies) was not declared by the applicant in his answers to the questions in section 7 of the application form. The applicant was requested to provide reasons for the Personal Insolvency Agreement and to provide the trustee report, including a list of creditors, regarding the personal insolvency agreement. The correspondence from the respondent also refers to a number of home warranty insurance claims recorded against the licence held by the Bannister group of companies. The applicant was asked to provide information in respect of the claims, and to provide a written explanation why the insurance claims were not declared in the application. The applicant was also asked to supply a written explanation why the cancelled licences previously held by the Bannister group of companies, were not declared to the respondent. The applicant entered into a Personal Insolvency Agreement and was recently discharged from his obligations under the agreement by the trustee. 6By letter dated 7 April 2011 the applicant provided a written response to the questions raised by the respondent. 7On 12 July 2011, on internal review, the respondent affirmed and varied the original decision to refuse the application for a contractor licence. The statement of reasons for the internal review decision details that the respondent concluded that when the applicant failed to correctly answer the questions in section 7 of the licence application form, this was a deliberate attempt by the applicant to conceal events that may have had an adverse impact upon his application; and the respondent considered that the application should be refused in accordance with section 20(1)(a) and 20(1A) of the Act as it was considered that the applicant is not a fit and proper person. On internal review one of the original grounds for refusal of the application - that of there having been an un-reasonable number of insurance claims - was set aside as it was considered on internal review that the applicant could not be considered as a "relevant person" in relation to clause 25 (1) (A) (8) of the Home Building Regulation 2004 (the Regulation). In relation to the answers by the applicant on the application form, at section 7, the internal review statement of reasons details that the applicant ticked "no" to a number of questions, including questions relating to whether he had "entered into arrangements with creditors or assigned property to pay debts within the last three years"; whether he had been a "director or a manager of a company which was subject to a winding up order, placed into receivership or administration, or under official management, controller appointed, or entered into other arrangements with creditors due to insolvency"; whether "any partnership or company of which you were/are a member or director, had any insurance claims paid against contracts entered into force residential work"; and whether "you or any partnership or company of which you were/are a member or director, had any complaints launched or compliance action commenced arising from your activities in relation to the conduct of residential work". The internal review statement of reasons notes the reason provided by the applicant for incorrectly answering questions in section 7 of the licence application form: "My reason for answering section 7 the way I did was because the notes and information at the back of the document that was referred to if the answer was yes, did not seem to be relevant to my situation I do not have a copy of the information it was not sent back to me, but from memory it was referring to an individual who had become bankrupt. I had never been bankrupt, I entered into a personal individual arrangement only (PIA) in September 2008. You will notice I wrote yes on the form and then changed it after reading the back page, as my understanding was that it was not relevant to my case" Evidence at the hearing 8The applicant gave sworn oral evidence at the hearing and provided a number of references as to his character and experience. He also provided a statement by his accountant, Mr J Bennett, dated 11 October 2011. 9The respondent provided documents filed pursuant to section 58 of the Administrative Decisions Tribunal Act 1997; and further material filed on 27 October 2011. The respondent also provided an affidavit by Ms Jenny Minor, Liability and Litigation Claims Manager for Calliden Insurance Ltd which attached a claims history for the Bannister group of companies. Detailed written submissions were also provided as discussed below. 10The respondent relied on the statement made by the applicant, as recorded in the minutes of a meeting of creditors of the Bannister group of companies (folio 079 of respondent's documents) and the report of the liquidators, Alan Hayes and Christopher Hill, to ASIC, dated 18 November 2009 with respect to that part of the report referring to voidable transactions (folio 86 of respondent's documents) and in particular to the statement that the liquidators have reported breaches to ASIC and will be seeking funding to commence public examination of Mr and Mrs Bannister, and at this stage, were continuing their investigations in respect to voidable transactions. It is recorded at folio 107 of the respondent's documents that creditors were invited on 28 May 2009 to consider funding the liquidators to commence recovery action against the possible voidable transactions identified. No funding proposal from creditors was received, and in light of insufficient funds available to the liquidators, they did not envisage any recoveries from voidable transactions. (Folio 107 is from a liquidator's report of February 2011). The respondent submitted that it relied on the publicly available database records of ASIC. The respondent submitted that the records indicated the books and records were not kept appropriately "the books and records of the companies are insufficient to substantiate the company's claims. We do not envisage further recoveries from the trade debtors". The respondent also submitted that at folio 107, the liquidators state that they have twice reported each of the four companies to ASIC pursuant to section 533 of the Corporations Act 2001. They state they anticipate the winding up of the company will be completed by June 2011 and deregistered by ASIC in September 2011 subject to obtaining clearance from ASIC. The respondent submits that due to the report under section 533, pursuant to section 200 of the Corporations Act there may be a "of banning order" in relation to the directors for up to 7 years. The respondent submitted that because this potential was "out there" then it was not appropriate for the applicant to be granted a contractor licence. The resp ondent's evidence is further detailed at paragraphs 29 to 31below. 11Mr Bannister gave oral evidence to the tribunal. He stated that the liquidators had commenced the process some three years previously and his understanding from his lawyer was any alleged breaches, relating to voidable transactions, were allegations not proven and the advice given to him was that a "Banning order" was not an issue in his case. He stated liquidators were not pursuing examination in relation to any alleged voidable transactions. 12The applicant stated that his wife died on 3 February 2011 and he submitted his application for a contractor license some three weeks after she passed away. He states that there were lots of errors in the application form for reason of the distress that he was under at that time. He said he started completing the application form just one week after she passed away, and submitted the application three weeks after her death. The applicant states that his wife was his best friend, and in the last years of her life he was her carer while she was ill with terminal cancer. The applicant told the tribunal that he understands the importance of conducting a business with integrity and therefore understands the importance of the answering questions on the form correctly. He states at that time, soon after his wife's death, errors were easy to make. He notes the letter which he supplied from his accountant and observed that his accountant noted at this time that there were lots of errors that he was making, and documents he was not completing correctly. In relation to his response, provided to the respondent on 7 April 2011, where he had to respond to questions put to him by the respondent, he states he was feeling extremely low at that time after the death of his wife. He states that he thought it was bad at the time his wife first died, but the period between six and 10 weeks after her death was the worst period of his life. 13The applicant provided a letter from his accountant, Mr Bennett, which states as follows: As Mr Bannister's accountant/tax agent I wish to confirm some information and explanation in relation to his application for a Builders Licence prepared lodged in early February 2011. At his request, I had cause to visit Mr Bannister on 17th of February to assist in various items of paperwork which had not been attended to since his wife passed away on February 2. Mrs Bannister provided clerical services to the business which included preparing and handling most of the paperwork allowing him to concentrate on the building work. Due to the passing away of his wife and the subsequent distraught state of Mr Bannister a significant volume of work had to be prepared, finished and/or corrected. In the years I've known Mr Bannister I know that he is very fastidious in his work and has a very high moral standard. This was evidenced by the fact that to my knowledge there were no complaints about the work he carried out. I would be prepared to provide further information if required. 14The applicant told the tribunal that it was relevant that he has a clean record on his individual licence which he has held for some 31years, there has never been a claim of any kind on that individual licence. To the best of his knowledge, there had never been any claims against him, as individual licence holder, for defective work. He noted conversations with an officer of the respondent, around the time of the internal review decision, and the reasons that part of the decision was overturned, relating to insurance claims. He states that Mr Wallace, officer of the respondent, noted that he had never had any insurance claims against his individual licence. He agrees that he should have known that the licences relating to the Bannister group of companies were cancelled, and should have known of the insurance claims on the Bannister group of companies, however he noted that when the liquidators came on board, all business mail was redirected to the liquidators, and some of his personal correspondence also went to the liquidators in error. He never received his renewal correspondence for his individual licence, or correspondence about the corporate licences being suspended. Whilst he understood that there would be insurance claims against the Bannister group of companies, because of incomplete work, he never saw any written notification of these claims. 15In relation to his individual licence, he did concede that he should have known that it had been not renewed; he noted it came up for renewal in August 2010 but stated at that time his individual licence renewal was the last thing on his mind. He said his wife had an operation in June 2010 and after that he took lots of time off work and all that his focus was on trying to get his wife well. He became aware that his individual licence had not been renewed when a friend, who had been interested in him undertaking some building work, had discovered, perhaps by looking at the register, that the licence had lapsed. Further, from 2008 he had not used his individual contractor license. The only work which he has undertaken over recent years has been in the employee of Mr Snow, and not with use of an individual contractor licence. In relation to the corporate licences, once the companies went into liquidation, whether they still held licences was not on his mind. The companies were gone, he did not think about whether they held a licence. 16The applicant stated that when he completed the application form, in July 2011, he did not intentionally answer questions dishonestly. He stated that he knew the matters relating to liquidation of the Bannister group of companies were a matter of public record and he was not seeking to hide these facts. He states he was just trying to survive emotionally at that point, and there was no reason for him to put something wrong on the form. He answered the questions wrongly due to distress. He recalls that he originally ticked "yes" to one of the questions on the form, but after reading the notes at the back of the form, decided that the correct answer was "no". However, it now transpires that the correct answer would have been "yes". He states that he thought the information on the form related to him as an individual contractor, and not to his corporations, and due to distress which he was suffering at that time did not answer the form correctly. 17In relation to his experience the applicant states that he successfully ran a small building business for over 20 years. The letter which he provided to the respondent, from his accountant, shows he is financially viable at the current time. He has no intention of going back into a large business - the large company which he ran had up to 75 employees at one point. He states that he was successful for over 20 years prior to the trouble with the Bannister group of companies. He stated that all insurance claims for the Bannister group of companies were for incomplete work, because of the closing of the business, and he knows of no claim for defective work. He said he is capable of running a small-scale business on an individual contractor licence. He wants to work with his son, who is a qualified carpenter, and do small jobs. He notes that he has supplied references from people who he has worked for or with. They testify to his business acumen and integrity. 18Under cross-examination by the representative of the respondent the applicant stated that if he was not working for Mr Snow in the period after 2008 he did not do any work and was working. He agreed that as a licence holder under the Home Building Act for a period of 31 years he was aware of his responsibilities. It was put to him that when the company went into administration, he should advise the respondent. The applicant stated that the liquidator did everything, and advised the applicant to do nothing and take no action in respect of the companies. He stated that on the liquidator's directions he was not allowed to speak to anyone. 19The tribunal asked the applicant a number of questions about what he had done to try to prevent the companies going into liquidation, and to protect consumers. The applicant was also questioned by the representative for the respondent about his statements made at the creditors meeting. The applicant stated that there were a combination of pressures which led to the collapse of the business, and that he did try hard to prevent this. Some of the issues were that there were long periods of bad weather where materials were delivered and paid for before the materials were able to be fixed into position and so there were long periods where no progress payments could be received as work was not completed, and materials sat on the site, which placed pressure on cash flow. Significant problems were caused by use of software, an accounting package. The applicant was advised that this accounting package was sufficient for the size of the business but it did not work and made it very difficult to pinpoint the business cash flow. The applicant stated that he also had concerns about the role of the general manager, he had some concerns about the way tenders/contracts for government jobs had been quoted including ambiguous omissions in costs of one job which led to the carrying of a huge overdraft which contributed to the business failing. At the creditors meeting he referred to poor recruitment decisions, he was alluding to the role of the general manager when he so stated, he did not feel able to accuse the general manager because he did not believe he had sufficient evidence at that time. The applicant stated that he tried to keep the business going. When he first experienced the problems with this software program he had information technology experts come into the business, including from the software provider, to try to rectify the software but the software still did not work properly to provide information about cash flow in the business. He then decided to hire an accountant, specifically to work on this issue, which was an additional accountant to his regular business accountant, and despite this accountant being on site for some months, the position was not sufficiently rectified. 20He states that after the business failed he tried to assist the homeowners affected by the business failure, such assistance included making available his private phone number to the home owners. He would try to assist but there was little that he could do in practical terms because everything was "frozen" by the liquidators. However he tried to provide advice and support and remained available, by phone, to homeowners. 21The applicant was questioned by the representative of the respondent about the companies' books and records. It was put that projects went over time (in relation to the Bannister group of companies). The applicant agreed that he was aware of time requirements and relevant legislation. He stated that at no time did he go over any time period specified in any contract. Where there were delays he sought and negotiated an extension of time in the contract and taking into account the extension of time provided for in contracts, there was no going over allocated time. He noted that the standard HIA contracts did not contain clauses in relation to Council projects. 22The applicant maintained that he took a number of steps to avoid the companies going into liquidation. He was questioned about newspaper reports, copies of which were part of the respondent's material before the tribunal. He noted that there were some errors in those reports. 23In relation to his history in the industry the applicant stated that he has worked in the industry since 1985, and always kept his individual contractor licence. He was in a partnership in 1993 and believes that the partnership also held a licence, this was a partnership known as Mason and Bannister and there were no claims against the partnership. In 1998 he parted company with Mr Mason and used his individual licence. He noted that he had been involved in the Bannister group of companies and that Mr Snow was a former general manager to late 2002. He later engaged the general manager whom he states caused problems and he terminated that general manager about 8 to 12 months prior to when he called the liquidators in. The problems with the software package became apparent before he terminated the general manager - one day the package would give him one cash figure, the next day another. The applicant had to manually record cash flow instead, and spent many hours per day working on this - there were 30 to 50 building sites and he was working 18 hour days to try and record the cash flow position because of the problems with the software system. 24The applicant told the tribunal that building is his profession and he considers that honesty and integrity is an important part of the building business. In his current position as a supervisor, working for Mr Snow, his skill and integrity has been important. In his current position he is required to manage the costs of the job, oversight the contract, oversight progress payments and timeliness of work. Apart from the time when the companies failed he has an impeccable record, in his submission. The applicant noted that he has completed all the obligations in relation to the companies imposed by his Personal Insolvency Agreement. He has made payments as required under that agreement. 25The applicant provided written references. A reference from Frank Takos states that he has known the applicant on a professional basis since March 2003 in the construction and successful delivery of several projects, all of which were construction in regional New South Wales, and of which he was project manager . The reference details his view of the applicant's honesty in dealings, prompt action by providing replies in relation to various construction and project/budget queries, project timetable delivery; record-keeping in relation to progress claims and payments, variations, extension of time requests, and financial reconciliations. "In short, I found him to be an honest person and integrity and a sense of pride in his construction ability and finished product." The applicant states that Mr Takos, having experienced two incomplete projects because of the insolvency of the companies, knows of the history of the Bannister group of companies. A reference by Chris Johnson, senior Project manager, (New South Wales Department of Education and Communities) states that he has known the applicant for more than two years on a professional level, his role for the DET being to supervise and manage contractors engaged by the DEC (both schools and TAFE) to carry out upgrades, maintenance and minor capital works. "(the applicant) has represented Robin Snow constructions in a role that includes advice to Asset Services Officers, the complete tendering processes, all liaising with myself and other DEC Asset Management staff, all supervision and project management of the projects through the handover and defects liability periods relevant to each project. (The applicant) has displayed the highest level of integrity and honesty at all times. Because of his business and personal qualities we will continue to acquire his services on an ongoing basis. I consider him to be one of the very best contractors that DEC and I have engaged. Neil has built up a very high level of trust with me and the other DEC Asset Management Unit staff, which unfortunately is rare in this industry." 26A reference from Robin Snow, General Manager, Robin Snow Constructions, addressed to the Department of Fair Trading, states that he has known and worked beside the applicant since 1994 and in all of his dealings have found the applicant's skills and workmanship as a builder exemplary and his honesty and integrity above reproach. He refers to observing the loss of the applicant's wife and the impact of this and states "I believe Neil has much to offer our industry; his knowledge and experience will benefit clients and sub contractors alike..." 27In relation to his referees the applicant noted that Frank Takosis aware of the liquidation of the Bannister companies as he had two incomplete projects on building sites where he was project manager, due to the failure of the companies. In relation to the referees from the Department of Education the applicant states that he disclosed his history before contracts were settled and those referees are aware of the history of the Bannister group of companies. 28The respondent submits that the non-declaration by the applicant in section 7 of the application form was a deliberate attempt to conceal events that may have had an adverse impact on his application for an individual contractor licence - building. The respondent submits on this basis that the applicant is not a fit and proper person to hold an authority. However, the respondent further submits that additional material obtained regarding the liquidation of the Bannister group of companies raises broader questions about the applicant's fitness and proprietary to be granted a licence. On this basis the respondent submits that the applicant is not a fit and proper person to hold a licence. 29The respondent submits that the applicant does not have the requisite honesty, knowledge and ability to be granted a licence under the Home Building Act. The respondent submits the applicant did not disclose the following information in his application for a licence: that the three companies of which he was sole director had their authorities cancelled; that he had entered into arrangements with creditors to pay debts within the last three years by entering into a Personal Insolvency Agreement; that he had been the sole director of four companies placed in receivership or administration of 14 July 2008; that the four companies had 32 insurance claims paid against contracts entered into for residential work for incomplete works; that the four companies of which he was sole director had complaints lodged arising from its activities in conducting residential work (the respondent noted it presses two complaints received in relation to incomplete work) . The respondent notes that by letter dated 15 March 2011 from the respondent the applicant was provided with an opportunity to make full and frank disclosures about these matters and his response of 7 April 2011 is less than frank in the respondent's submission. The Respondent submits that the applicant concedes that as director he was responsible for the cash flow and general operations of the Bannister group of companies, and as director he ought to a make a proper judgement of whether the companies should either continue to trade or drastically change their business practices. As the sole director and nominated supervisor he was responsible for ensuring contracts included all the relevant terms, and that contracts were completed in compliance with statutory warranties under the Home Building Act. The respondent submits that instead of accepting responsibility the applicant seeks to blame the financial difficulties on his ex-general manager, inclement weather, and the software systems. He downplays his non-declarations on the application form as errors or mistakes resulted from his distress. The respondent submits this does not explain why he did not make full disclosure two months later. The respondent submits the character references do not assist in determining the case. The respondent submits, as detailed in the written submission, that in reviewing all the matters in relation to what occurred with the Bannister group of companies, and non-declaration of matters on the application form, then the applicant is not a fit and proper person and the application for a licence should be refused. 30The respondent also relies on a number of documents filed including minutes of the meeting of creditors in July 2008; annual report to creditors by the liquidator; correspondence to ASIC of November 2009 by the liquidator; annual report to creditors by the liquidator of 25 February 2011. The respondent also provided copies of reports in a newspaper, the Examiner, which suggested that the company may have been trading whilst insolvent. 31Amongst the documents submitted by the respondent is also a letter of 23 March 2011 from the trustee (appointed under the Bankruptcy Act 1966) indicating that the applicant's Personal Insolvency Agreement was fully effectuated on 2 December 2010 and all his debts, were satisfied by the operation of the agreement, and he is now discharged from all those debts. Attached to the correspondence was a copy of the certificate of discharge. Legal considerations 32Section 20 of the Home Building Act provides for the application, and issuing, of contract licences, building: Issue of contractor licences (1) The Director-General must reject an application for a contractor licence if: (a) the Director-General is not satisfied that the applicant is a fit and proper person to hold a contractor licence, or (b) the applicant is a mentally incapacitated person, or (c) the applicant is disqualified by this Act or the regulations from holding a contractor licence. Note. Under section 6 of the applied Act (within the meaning of section 19) an application for the grant of a contractor licence may be made by any individual aged 18 years or more, by any partnership or other association whose members are all individuals aged 18 years or more or by any corporation. (1A) Without limiting subsection (1) (a), in determining whether an applicant is a fit and proper person to hold a licence the Director-General is to consider whether the applicant is of good repute, having regard to character, honesty and integrity. (2) The regulations may fix or provide for the Director-General to determine additional standards or other requirements that must be met before any contractor licence is issued or before a contractor licence of a particular kind is issued. (3) The Director-General must reject an application for a contractor licence if: (a) the Director-General is not satisfied that any such requirement would be met were the contractor licence to be issued, or (b) the Director-General is not satisfied with the applicant's proposed arrangements for supervision of the work which the contractor licence will authorise the applicant to contract to do, or (c) the Director-General is not satisfied that the applicant has complied or is able to comply with any requirements of Part 6 or any requirements of the regulations relating to insurance applicable to the doing of work of a kind proposed to be authorised by the contractor licence. (4) (Repealed) (5) A decision of the Director-General relating to determining standards or other requirements under subsection (2) cannot be reviewed by the Administrative Decisions Tribunal in an application for review made under this or any other Act. (6) Without limiting this section, the Director-General may reject an application for a contractor licence if the Director-General is of the opinion that it is in the public interest to do so on any of the following grounds: (a) an employee or proposed employee of the applicant is disqualified from holding a contractor licence, has had an application for an authority rejected on a ground relating to his or her character, honesty or integrity or has had an authority cancelled or suspended on any disciplinary ground, (b) there are reasonable grounds to believe that the application has been made with the intention of avoiding disclosure of any relevant past misconduct of the applicant or a close associate of the applicant, (c) the Director-General considers that a close associate of the applicant who would not be a fit and proper person to hold a contractor licence exercises a significant influence over the applicant or the operation and management of the applicant's business. 33The Home Building Act also provides for review of decisions by the tribunal. Section 83 A of the Act provides that an "authority" means a contractor licence and section 83 B provides for review by the tribunal of decisions of the respondent relating to applications for an authority,. Section 63 of the Administrative Decisions Tribunal Act provides 63 Determination of review by Tribunal (1) In determining an application for a review of a 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 enactment on the administrator who made the decision. (3) In determining an application for the review of a reviewable decision, the Tribunal may decide: (a) to affirm the reviewable decision, or (b) to vary the reviewable decision, or (c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision it set aside, or (d) to set aside the reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal. 34The tribunal is to consider whether the applicant is a fit and proper person to be the holder of a licence. The tribunal, in the case of Pobjie v Commissioner for Fair Trading, NSW Office of Fair Trading (No 2) [2008] NSWADT 39 (1 February 2008), reviewed the authorities and it is useful to set out the guidance provided by that review: Fitness and Propriety 113 The Law - Assessment of whether a person is fit and proper to be the holder of a licence is different from, but related to, an assessment of whether a person is of good repute. 114 In Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, Chief Justice Mason explained that, at 380: "The question whether a person is fit and proper is one of value judgment. In that process the seriousness or otherwise of particular conduct is a matter for evaluation by the decision maker. So too is the weight, if any, to be given to matters favouring the person whose fitness and propriety are under consideration." Toohey and Gaudron JJ said at 380: "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. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question." 115 A person's fitness is to be gauged in the light the nature and purpose of the activities that the person will undertake. In Hughes and Vale Pty Ltd v New South Wales (No.2) [1955] HCA 28; (1955) 93 CLR 127 the High Court said (at 156-7): "The expression 'fit and proper' is of course familiar enough as traditional words when used with reference to offices and perhaps vocation. 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 ... When the question was whether a man was a fit and proper person to hold a licence for the sale of liquor it was considered that it ought not to be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into; each case must depend upon its own circumstances." 116 In Sobey v Commercial and Private Agents Board 20 SASR 70 Walters J said: "In my opinion what is meant by that expression is that the applicant must show not only that he is possessed of a requisite knowledge of the duties and responsibilities evolving upon him as the holder of a particular licence ... but also that he is possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public ... as a person to be entrusted with the sort of work which the licence entails." 117 Fitness and propriety are flexible concepts. A consideration of whether a person is fit and proper involves an assessment of their knowledge, honesty and ability in the context of the role they are seeking to undertake. What fit and proper means must be viewed in the light of, "... the activities in which the person is or will be engaged": Re Percival and Australian Securities Commission [1993] AATA 196; (1993) 30 ALD 280, at 290. What is fit and proper will depend on the legislative context and the nature of the particular profession, trade or occupation in question: Re Brennan & Australian Casino Surveillance Authority (1995) 38 ALD 794, at 796 paragraph [41]. Thus in Obradovic -v- Commissioner for Fair Trading, Office of Fair Trading (GD) [2006] NSWADTAP 18 the Appeal Panel agreed that a formerly licensed building contractor should have his application for a new licence refused because, despite there being no evidence that he was dishonest or of bad repute, evidence that he had been extremely tardy and intransigent in dealing with customer complaints, and the regulator, when he held a licence, was sufficient to conclude that he was not fit and proper for the role. In that case, as here, the licensing scheme was among other things, designed to protect consumers and to provide them with adequate means of redress against licensed contractors. In Bond the assessment occurred in the context of whether the applicant was a fit and proper person to hold a licence under the Broadcasting Act 1942 (Cth). 118 The discretion vested in a decision maker in determining whether a person is fit and proper, in any given context, was said by the Full Court of the Federal Court in Commissioner for ACT Revenue v Alphaone Pty Ltd (1994) 49 FCR 589 at 389, per Northrop, Miles and French JJ, to "give wide scope for judgement and allow broad bases for rejection." 119 As was made clear by Toohey and Gaudron JJ in Bond, issues of character and reputation may play a determinative role in deciding whether a person is fit and proper. Their Honours also clearly highlighted that there is a difference between the two. They explained that an assessment of character is relevant because it is an indicator of a person's likely future conduct when considering how a person might act in the context of the role they are seeking to undertake. Reputation on the other hand, provides an indication of the public perception of future conduct in that role. In Re T and the Director of Youth and Community Services [1980] 1 NSWLR 392, Waddell J explained, at 393: "A distinction must be drawn between "repute" or "reputation" and "character" or "disposition". The word "character" is sometimes used as meaning a person's reputation, but "reputation" is not ordinarily used to mean character. The distinction has been referred to in many decisions of the courts." 120 In Melbourne v The Queen [1999] HCA 32; [1999] 198 CLR 1 at 15 McHugh J explained: "... character refers to the inherent moral qualities of a person or what the New Zealand Law Commission has called "disposition -- which is something more intrinsic to the individual in question". It is to be contrasted with reputation, which refers to the public estimation or repute of a person, irrespective of the inherent moral qualities of that person." 121 In Ex Parte Tziniolis; Re Medical Practitioners Act (1966) 67 SR (NSW) 448 Walsh JA, at 450, said that in determining questions of character: "... the court is required to consider matters affecting the moral standards, attitudes and qualities of the Applicant and not merely to consider what is his general reputation." That case was concerned with an application for registration of a medical practitioner. His Honour went onto explain that the Court was entitled to inquire into personal misconduct, as well as professional misconduct, in considering whether the applicant was a man of good character: "... whilst recognizing that there may be some kinds of conduct deserving of disapproval which have little or no bearing on whether or not it shows the applicant for registration as a medical practitioner is a person of good character. In this respect, I think, that some assistance can properly be obtained as to the mode of approach to be made from the observations made in cases where the was whether or not that a person was fit and proper to be a barrister, such as those in Ziems v Prothonotary of the Supreme Court of NSW [1957] HCA 46; (1957) 97 CLR 279." 122 Thus, as with fitness and propriety, assessment of character is to be made in the context of the nature and purpose of the activities that the person is seeking to undertake. 123 Section 20(1A) of the Home Building Act 1989 reflects the interaction between the concepts of "fitness and propriety" and "reputation and character" discussed in these cases when it provides that, "in determining whether an applicant is a fit and proper person to hold a licence the Director-General is to consider whether the applicant is of good repute, having regard to character, honesty and integrity ." Discussion of law, evidence and findings 35The respondent submits that the applicant is not a fit and proper person to hold an authority, in the present case the authority is a contractor licence in the category of building, under the Home Building Act. Section 20(1)(a) of the Act provides that the respondent must reject the application for the authority if the respondent is not satisfied that the applicant is a fit and proper person. Section 20(1A) of the Act provides thatin determining whether an applicant is a fit and proper person to hold an authority the Director-General is to consider whether the applicant is of good repute, having regard to character, honesty and integrity. 36The applicant submits that he is a person of good repute, good character, honesty and integrity. The respondent submits that the applicant's non-disclosure on the application form and the evidence about the Bannister group of companies, indicate that he is not a fit and proper person. 37An issue for the tribunal to decide is whether, on the evidence presented, according to law, the applicant is a fit and proper person to hold an authority. 38In relation to the applicant's honesty, character and integrity, the evidence from the applicant's referees is that the applicant is a man of honesty and integrity and good character; and has project management, budgeting and constructions skills as a builder. The applicant also refers to the 20 year period, before he was director of the Bannister group of companies, where as an individual contractor there were no complaints made against him for any reason - there were no complaints against his honesty and integrity, there were no insurance claims for detective work, and no other complaints or claims against his individual contractor licence. He submits this lengthy period of competent work as a builder, and the integrity and honesty indicated by the lack of complaints and lack of insurance claims against him, indicates that he is a person of integrity, honesty and good character. 39In relation to the financial difficulty of the Bannister group of companies the applicant notes that he entered into a personal insolvency agreement and that the trustee has provided evidence that he complied with that agreement and he is now discharged from his obligations under that agreement. He provides an explanation for the financial difficulties which the Bannister group of companies encountered, and his efforts to address the financial difficulties. He states that at all times he was concerned about the position of consumers and made himself available to assist them by providing his personal mobile telephone number. The tribunal accepts that this evidence indicates that the applicant made efforts to take responsibility for the financial difficulties of the Bannister group of companies. 40The respondent indicated that the applicant had not notified the Department that the contractor licenses for the Bannister group of companies had been suspended when this occurred. The applicant responded that by that time all affairs of the Bannister group were in the hands of the liquidator/administrator including all correspondence and business dealings. The tribunal has no reason to reject this part of the applicant's evidence, and accepts that from the time the administrator was present and had taken the administrator/liquidator role for the Bannister group of companies the applicant's decision-making role and awareness of all that was occurring in relation to those companies, including the insurance claims, was limited. In relation to the insurance claims arising from non-completion of work by the Bannister group of companies the tribunal accepts the evidence indicates that the insurance claims arose because the companies failed, and for that reason could not complete the work, rather than arising from any defective work. 41In relation to whether the applicant had done all that he reasonably could in relation to taking responsibility and taking action for the financial difficulties of the Bannister group of companies, the tribunal finds that he did so - the applicant's evidence is that due to the difficulties caused by the accounting software he had software consultants attend the business on more than one occasion, and he also hired an accountant whose job was specifically to address the cash flow of the business in the context of the difficulties presented by the software package. The tribunal considers the evidence indicates that the applicant was trying to address the issues and prevent damage to the consumers that the Bannister group of company had contracted with, but he was not successful in so doing and the companies failed. The evidence supports a conclusion that the process of administration of the companies is now complete, given that the applicant has been discharged on his Personal Insolvency Agreement. 42The respondent relied on a statement made in an early report to the creditors that voidable transactions may be pursued if the creditors chose to fund such cause of action. The tribunal notes that the subsequent trustees report to creditors, of February 2011, states this is not going to occur and that the creditors did not provide funds. The tribunal finds on this evidence that this possibility is no longer a likelihood. The respondent also relies upon the possibility of actions being taken under the Corporations Code. There is no evidence presented by the respondent or otherwise before the tribunal to indicate that such action is warranted ; nor evidence indicating that such action is likely, especially given the lack of action to date, and the fact that the trustee has now discharged the applicant from the obligations under the PIA. On the evidence there is no indication that ASIC is intending to take any action. On the evidence overall in this matter, and given the context that the personal insolvency agreement has been complied with, and from which the applicant has been discharged by the trustee, the tribunal is not satisfied that the evidence presented suggests that any further legal proceedings against the applicant, arising from his actions as director of the Bannister group of companies, is likely. The tribunal is not satisfied that there are any outstanding legal proceedings on the evidence. There is no evidence before the tribunal that the applicant acted improperly, incompetently or without integrity as director of the Bannister group of companies. There is no evidence of any outstanding legal proceedings for reason of any such conduct. The tribunal is not satisfied on the evidence that the applicant is not a fit and proper person for such a reason. 43The respondent also relied upon the nondisclosure by the applicant of matters on the application form. The applicant has given a response that he did not answer the questions correctly because of his personal distress at the time, and also because, due to his distress he formed a mistaken understanding after reading the notes attached to the form, of the information required. He mistakenly understood that the answers were a declaration by him in relation to his individual contractor licence history,as to the history of that license, and did not require information as to the licences held by the Bannister group of companies. A close reading of the questions clearly indicates that the applicant should have understood that disclosure was required from him, as he clearly would have known that he had been a director of a company that had entered into an agreement with creditors. He answered no to this question. The applicant gave evidence that at the time he answered the questions on the form his wife, for whom he had been carer during a terminal illness, had recently died, and his ability to think clearly was affected by his grief. The tribunal has no basis to reject that explanation, and on the applicant's evidence overall found the explanation to be plausible and reliable. Other evidence, particularly by the applicant's accountant, supports the reliability of the applicant's evidence on this point. 44The respondent indicated that the applicant's response in April 2011 to requests for further information was not as complete as it could have been and that this reflects adversely on his candour and honesty. The applicant stated that at this time, within a couple of months of his wife's death, he was even less able to cope, as the loss of his wife had "hit home". He had tried to answer the questions of the respondent, and the tribunal notes that the applicant did provide some information, as requested, including a statement of his financial position. The tribunal has no basis on the evidence overall to reject the applicant's account that at this time he was in emotional difficulty, which affected his organisational skills, because of the death of his wife. There is no evidence indicating that the applicant was dishonest in his response. The tribunal is not satisfied, on the evidence overall, that the applicant is attempting to avoid responsibility for his incorrect answers on the form and for the resultant non-disclosure, but rather finds the applicant's account that he was affected by grief and this led to errors on the form, to be plausible and acceptable, having regard to the applicant's evidence overall and his presentation during the hearing. In the tribunal's view this finding is consistent with other evidence before the tribunal, in particular the letter from the accountant which indicates that around this time the applicant was not coping well with paperwork requirements, and the evidence of the accountant also indicates the close relationship between the applicant and his wife. The tribunal thereby finds the applicant's evidence about the impact of his wife's death on his functioning to be reliable, consistent and plausible evidence and accepts that account. The tribunal therefore accepts that there were personal reasons for the applicant's inability to correctly answer the form, or to provide better disclosure in April 2011, noting that he did make efforts to provide some disclosure. The tribunal finds for these reasons that the applicant's failure to disclose matters correctly on the application form, and to provide more detailed information in April 2011, was due to the emotional impact of his wife's death. The tribunal is not satisfied that there was any dishonesty, or lack of candour, involved. As such, the tribunal is not satisfied, considering the evidence overall, that the applicant lacks honesty and integrity, by his answers on the application form, or his response in April 2011. Nor, as discussed above is the tribunal satisfied that the evidence indicates that the applicant lacks honesty and integrity in relation to any of the evidence relating to the Bannister group of companies which is before the tribunal. 45The tribunal was not satisfied on the evidence that the applicant lacks integrity, honesty, or is otherwise not of good character. In making this finding the tribunal notes that the references provided by the applicant are consistent with this finding, and that those references are from people who know of the applicant's recent work performance as well as his longitudinal history, including the failure of the Bannister group of companies, yet the referees testify to his competence, integrity and honesty, and his skill as a builder, and in contract and project management. 46Having made the findings of fact detailed above, and having regard to the provisions of the Act, the tribunal is satisfied that the evidence indicates that the applicant is a fit and proper person to hold an authority (being a contractor licence, category of builder). The evidence indicates that the applicant has performed building tasks with skill - this is stated in the references before the tribunal. The evidence also indicates a lengthy period where the applicant held a contractor licence, before being director of the Bannister group of companies, and that during that lengthy period there were no complaints, or insurance claims, against the applicant's individual contractor licence. The lack of complaints over such a lengthy period is a relevant matter in the tribunal's view and suggests a period of time where the applicant performed the role of licenced builder appropriately. The references before the tribunal testify to the applicant's repute, and to his skill in performing the role of builder, including skills in project and budget management. This evidence, in the context of the evidence overall in this matter, indicates that the applicant is a fit and proper to hold a licence and the tribunal considers the evidence supports a conclusion that the applicant is of good repute, having regard to character, honesty and integrity , for reasons discussed above. 47The tribunal finds, having regard to the evidence, and the findings of fact made by the tribunal, that the applicant is a fit and proper person to hold a contractor licence as a builder. That being so, then the tribunal finds that the correct and preferable decision on the evidence is to set aside the decision and remit the matter for reconsideration by the Respondent in accordance with a direction that the Respondent accept that the Applicant is a fit and proper person to hold a contractor licence, category 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. Decision last updated: 07 December 2011