Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Calandra v Director General Department of Finances and Services [2012] NSWADT 144 Hearing dates: 18 June 2012 Decision date: 24 July 2012 Jurisdiction: General Division Before: C Huntsman, Judicial member Decision: The decision is set aside Catchwords: Alleged breach of statutory warranties by Corporation and holder of contractor licence of which Applicant was Director and Nominated Supervisor; whether improper conduct established and whether basis for disciplinary action Legislation Cited: Sections 18B, 51, 53, 54, 56, 62, 83B Home Building Act 1989; Home Building Regulation Category: Principal judgment Parties: Emilio Calandra, (Applicant) Director General Department of Finance and Services (Respondent) Representation: Counsel Mr Carey (Applicant) Mr Massey, (Applicant) Mr Maynard,Legal Services, Department of Finance and Services, (Respondent) File Number(s): 123062 Reasons for Decision 1This was an application for review by Emilio Calandra, the Applicant, for review of a decision by the Department of Fair Trading (Director-General Department of Finance and Services), the Respondent, to take disciplinary action against the Applicant on the grounds of improper conduct under sections 53 and 54 of the Home Building Act 1989 (the Act). The Applicant was the director of Calandra Constructions Pty Ltd at the relevant time, and the nominated supervisor. The Respondent alleges that Calandra Constructions Pty Ltd had breached statutory warranties under section 18B of the Act in respect of residential building work at a premises in Vaucluse, Sydney. The Respondent maintained that Calandra Constructions Pty Ltd had conducted itself improperly within the meaning of s51(1)(c) of the Act and, as such the grounds were established for taking disciplinary action under the Act. The Respondent maintained that such disciplinary action should also be taken against Mr Calandra, the Applicant, as officer of the corporation, and as nominated supervisor. The penalty imposed on the Applicant was a reprimand under s62(b) of the Act. Calandra Constructions Pty Ltd was required to pay as a penalty the amount of $1000. 2The homeowners who contracted with Calandra Constructions Pty Ltd for residential building work, subject of these proceedings, had made a complaint to the Home Building Service, by filing a Home Building Complaint Form dated 26 June 2010. The Complaint was against Calandra Constructions Pty Ltd. In relation to the complaint, considerable documentary material was provided, including a copy of the contract and the home building insurance, and reports as to alleged building defects, and quotes for the cost of remedial works by consulting engineers and the architect retained by the owners. Following the complaint, a site inspection was conducted by the building inspector, Mr Christy, on 21 July 2010 in the presence of the owner and the architect, and an additional site inspection/visit was conducted on 17August 2010. Mr Christy prepared a Building Inspection report dated 7 September 2010. On 21 September 2010 a decision was made by the Respondent to issue a Notice To Show Cause to the Applicant. The Notice to Show Cause was issued to the Applicant by the Respondent and dated 14 June 2011, served on the Applicant on 20 June 2011. Responses were made to the Notice To Show Cause by the Applicant. By letter dated 14th February 2012, the Respondent issued the Notice of Decision of disciplinary proceedings against the Applicant. On the same date Calandra Constructions Pty Ltd was also issued with the Notice of Decision imposing disciplinary proceedings. 3The Respondent decided that Calandra Constructions Pty Ltd had breached statutory warranties and was guilty of improper conduct. The Respondent further decided that the Applicant, as Director of Calandra Constructions Pty Ltd at the relevant time, was guilty (pursuant to s54 of the Act) for the improper conduct Calandra Constructions Pty Ltd. The Respondent also decided that the Applicant was guilty of improper conduct under s53 of the Act as he was the nominated supervisor of Calandra Constructions Pty Ltd, and as such had control over the building work, and a breach of a statutory warranty occurred in the doing of that work. 4At a Directions Hearing at the Tribunal on 15 March 2012 the Tribunal directed that the application for review proceed in the absence of an internal review decision. An order was made granting a stay of the Respondent's decision until further order of the Tribunal. 5The Respondent's findings were based on a building inspection report prepared by a building inspector of the Home Building Service, Mr Christy. Mr Christy provided a report dated 7 September 2010. Mr Christy identified a number of issues with Calandra Constructions Pty Ltd's building work, however, in the Notice of Decision issued by the Respondent on 14 February 2012 only two items were found by the Respondent to have constituted breaches of statutory warranties and grounds for disciplinary action. At the time of the hearing it was common ground that only those items were in issue. The two items are detailed below. 6Both the Applicant and Calandra Constructions Pty Ltd maintained in correspondence to the Respondent, and in evidence to the Tribunal, that Mr Christy's findings were based on incomplete information and were in error. Evidence was submitted by the Applicant and Calandra Constructions Pty Ltd to support the Applicant's contention. 7The application for review was listed concurrently with an application for review of the related decision of the Respondent imposing disciplinary action on Calandra Constructions Pty Ltd, (refer Reasons For Decision relating to file 123059). The Law 8Section 18 B of the Act provides for statutory warranties for residential building work: The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work: (a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment. 9What constitutes improper conduct is set out in section 51of the Act: (1) A holder of a contractor licence who is authorised by the contractor licence to contract to do residential building work or specialist work, or a holder of a supervisor or tradesperson certificate, is guilty of improper conduct if the holder: (a) commits an offence against this Act or the regulations or section 307A or 307B of the Crimes Act 1900 , whether or not an information has been laid for the offence, or (b) in the course of doing any work that the licence or certificate authorises the holder to do, fails to comply with the requirements applicable to the work made by or under this or any other Act in respect of the work, or (c) breaches a statutory warranty, or (d) in the case of specialist work, does the work otherwise than in a good and workmanlike manner or knowingly uses faulty or unsuitable materials in the course of doing the work, or (e) becomes a person who is disqualified by this Act or the regulations from holding the licence or certificate, or (f) commits an offence under the Plumbing and Drainage Act 2011 or the regulations under that Act, whether or not the holder has been convicted of the offence. (2) The holder of a contractor licence is guilty of improper conduct if the holder: (a) without reasonable cause, breaches a contract to do any work that the contractor licence authorises the holder to contract to do, or (c) does not comply with an order of the Tribunal or with an order of a court in respect of a building claim as referred to in Part 3A, or (d) employs a person or engages a person under a contract for services knowing the person is disqualified from holding a contractor licence, has had an application for an authority refused on a ground relating to the person's character, honesty or integrity or has had an authority cancelled or suspended on a disciplinary ground, or (e) commits fraud or makes any misrepresentation in connection with any contract authorised by the contractor licence or any contract for the sale of any dwelling, structure or work that has resulted from, or been affected by, any work done under the authority of the contractor licence, or (f) is convicted of any offence under the Workers Compensation Act 1987 or the Workplace Injury Management and Workers Compensation Act 1998 or any regulations made under either of those Acts. (3) It is a sufficient defence to a complaint that the holder of a contractor licence has been guilty of improper conduct as referred to in subsection (1) (b), (c) or (d) in connection with work undertaken by the holder, if the holder proves to the satisfaction of the Director-General that the holder did all that could reasonably be required to ensure that a nominated supervisor for that work would exercise such degree of control over the doing of the work as would be necessary to prevent the occurrence of the improper conduct. (4) It is a sufficient defence to a complaint that the holder of a contractor licence has been guilty of improper conduct as referred to in subsection (2) (d) if, before employing or engaging the person concerned, the holder obtained the approval of the Director-General to the employment or engagement of the person. 10Further liability of nominated supervisors for improper conduct is provided in s53 of the Act: 53 Improper conduct: nominated supervisors (1) The holder of an endorsed contractor licence or a supervisor certificate who has control over the carrying out of residential building work or specialist work of any kind is guilty of improper conduct if: (a) the requirements applicable to the work made by or under this Act or any other Act are not complied with, or (b) a breach of a statutory warranty occurs in the course of doing that work, or (c) in the case of specialist work, the work is done otherwise than in a good and workmanlike manner or faulty or unsuitable materials are used in the course of doing the work. (2) The holder of an endorsed contractor licence or a supervisor certificate is to be presumed, in the absence of evidence to the contrary, to have control over the doing of all work for which the holder is a nominated supervisor. (3) It is a sufficient defence to a complaint that a holder has been guilty of improper conduct under this section if the holder proves to the satisfaction of the Director-General that the holder used all due diligence to prevent the occurrence of the improper conduct.. 11The Act provides for liability of officers of Corporations in section 54: 54 Improper conduct: members of partnerships or officers of corporations (1) An individual who is a member of a partnership or an officer of a corporation that is the holder of a contractor licence is guilty of improper conduct if the holder does any of the things referred to in section 51 or 52. (2) The reference in subsection (1) to an individual who is a member of a partnership includes a reference to an individual who is an officer of a corporation that is a member of a partnership. (3) It is a sufficient defence to a complaint that an individual who is a member of a partnership, an officer of a corporation that is a member of a partnership or a director of a corporation (being a partnership or corporation that is the holder of a contractor licence) has been guilty of improper conduct if the individual proves to the satisfaction of the Director-General that: (a) the improper conduct occurred without the individual's knowledge, or (b) the individual was not in a position to influence the conduct of the other members of the partnership or other officers of the corporation, of which the individual was a member or an officer, so as to prevent the occurrence of the improper conduct, or (c) the individual, being in such a position, used all due diligence to prevent the occurrence of the improper conduct. (4) Disciplinary action for improper conduct may be taken against an individual who is a member of a partnership, an officer of a corporation that is a member of a partnership or an officer of a corporation (being a partnership or corporation that is the holder of a contractor licence) whether or not any such disciplinary action has been taken against the partnership or corporation. (5) Division 2 applies to disciplinary action taken against an individual referred to in subsection (4) in the same way as it applies to disciplinary action taken against the holder of an authority, and references in that Division to the holder of an authority extend to an individual so referred to. . 12The grounds for taking disciplinary action against a holder of a contractor licence are set out in section 56 of the Act: The Director-General may take disciplinary action under section 62 against the holder of a contractor licence on any of the following grounds: (a) that the holder is not entitled to hold the contractor licence, (b) that the holder is not a fit and proper person to hold the contractor licence, (c) that the holder is guilty of improper conduct, (d) that there is not a sufficient number of nominated supervisors to ensure: (i) that the statutory warranties for residential building work are complied with, or (ii) that specialist work is done in a good and skilful manner and that good and suitable materials are used in doing the work, or (iii) that the requirements applicable to the work made by or under this or any other Act in respect of residential building work or specialist work are complied with, (e) in the case of a holder of a contractor licence that is a partnership-that any of the members of the partnership, or any of the officers of a corporation that is a member of the partnership, is not a fit and proper person to be a member of the partnership or an officer of the corporation or has been guilty of improper conduct, (f) in the case of the holder of a contractor licence that is a corporation-that any of the officers of the corporation is not a fit and proper person to be an officer of the corporation or has been guilty of improper conduct, (g) that the holder has failed to comply with a condition of the contractor licence imposed by a determination under this Part, (h) that the holder does not meet the standards of financial solvency determined by the Director-General to be appropriate to the class of licence held, (i) that, in the opinion of the Director-General, there is a risk to the public that the holder will be unable (whether or not for a reason relating to the financial solvency of the holder) to carry out work that the holder has contracted to do (whether before or after the commencement of this paragraph), (j) that the licence was improperly obtained, (k) that the Director-General has become aware of information about the licencee that, if known at the time the application for the licence was determined, would have been grounds for refusing the application, (l) that the holder has knowingly done any residential building work or specialist work before the relevant principal certifying authority has carried out any critical stage inspection required to be carried out under section 109E (3) (d) of the Environmental Planning and Assessment Act 1979 in relation to the work or has failed to give any notification required under that Act in relation to such an inspection 13Disciplinary action may be taken as set out in section 62 is the Act: If, after compliance with this Division, the Director-General is satisfied that any ground on which disciplinary action may be taken against the holder of an authority has been established in relation to the holder, the Director-General may do any one or more of the following: (a) determine to take no further action against the holder, (b) caution or reprimand the holder, (c) make a determination requiring the holder to pay to the Director-General, as a penalty, an amount not exceeding $11,000 (in the case of an individual) or $50,000 (in the case of a corporation) within a specified time, (d) vary the authority held by the holder, by imposing a condition on the authority, including a condition requiring the holder to undertake a course of training relating to a particular type of work or business practice within a specified time, (e) suspend the authority for a period not exceeding its unexpired term, (f) cancel the authority, (g) disqualify the holder, either temporarily or permanently, from being any one or more of the following: (i) the holder of any authority, or any specified kind of authority, (ii) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, (iii) an officer of a corporation that is the holder of an authority. 14Section 83B of the Act provides for review of such decisions by the Tribunal. It is well established that on review of a decision the Tribunal is to make the correct and preferable decision, according to the law and evidence, on the material before the Tribunal. 15In the current matter it was not in dispute that Calandra Constructions Pty Ltd was the holder of an authority under the Act, being a contractor licence, nor was it in dispute that the Applicant was nominated supervisor. It was not disputed as Director of Calandra Constructions Pty Ltd he was an officer of the Corporation for the purposes of s54 of the Act. It was also not in dispute that Calandra Constructions Pty Ltd was engaged in residential building work at the relevant time. The Applicant's case is that there was no breach by Calandra Constructions Pty Ltd of a statutory warranty and no basis for a finding of improper conduct, and therefore no basis for disciplinary action under the Act. The Respondent's case is that the report of Mr Christy supports a finding that there was such a breach of a statutory warranty and accordingly improper conduct and a proper basis for the taking of disciplinary action. The Respondent relies, in relation to Calandra Constructions Pty Ltd, on s51(1)(c) of the Act - improper conduct due to breach of statutory warranty, and in particular a breach of the statutory warranty in s18B(a) - a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract. In relation to the Applicant, the Respondent relies on ss53 and 54 of the Act, that he was nominated supervisor and an officer of the Corporation, and thereby liable for improper conduct due to the alleged breaches of statutory warranties, and alleged improper conduct, by Calandra Constructions Pty Ltd. The evidence 16Both parties made detailed written and oral submissions and also presented evidence to the Tribunal at the hearing. The Applicant provided documents under cover letter of Mr Massey, solicitor, of 23 May 2012, which consisted of various correspondence and e-mails between Calandra Constructions Pty Ltd, Calandra Constructions Pty Ltd's engineer and project manager, and the architect involved in the residential building work on behalf of the owner. Those documents are contained in Exhibit A1 of the hearing exhibits. The Applicant also provided an affidavit from Steve Reynolds, contracts administrator for Calandra Constructions Pty Ltd, dated 18 June 2012 with Annexures A through to J: those annexures contained plans/drawings relating to the residential building work and copies of correspondence and e-mails. The affidavit with annexures is exhibit A2 in the proceedings. Mr Steve Reynolds also gave evidence to the Tribunal at the hearing. 17The Respondent provided s58 documents to the Tribunal, received on 19 April 2012. These documents included the complaint by the home owner to the Home Building Service; consultants reports in relation to the complaint including correspondence/ reports by the architect, and a detailed report by an independent quantity surveyor (with additional assessment imput by structural engineers and hydraulic engineers) as to costs of rectification works/completion works; and other documentation as to termination of the contract between the home owner and Calandra Constructions Pty Ltd; Mr Christy's building inspection report of 7 September 2010; and correspondence between the Respondent and Calandra Constructions Pty Ltd (including the Notice to Show Cause and Applicant's response). Mr Christy, building inspector, also gave oral evidence to the Tribunal at the hearing. 18It was common ground at the hearing that only two items as detailed in Mr Christy's report remained in issue, these were items four and five of Mr Christy's report. Accordingly the parties focused their evidence on these two matters. Item 4 related to the concrete slab to the garage having incorrect dimensions - as the garage wall which is connected to the existing laundry wall should have been a certain length but measurements of the wall showed it was a lesser length. Drawing No 0208 - A142 issue 12 confirms the required size, according to Mr Christy. Mr Christy states that the wall is only 1800 mm long and not 2035 mm as required by the working drawings. Mr Christy accordingly found that the concrete slab and brick wall to the garage had not been constructed in a proper and workmanlike manner. 19Item 5 of Mr Christy's report involved the steel beams to the first floor. It was stated they were cut incorrectly which allowed the beams to be approximately 20 to 25 mm short at both ends where they are fixed the concrete wall. Additionally, with the connection of the steel beams to the concrete wall, the bolt holes have been drilled in incorrect locations with the top holes drilled too close to the top of the concrete. Mr Christy accordingly found that the steel beams to the first floor had not been installed in a proper and workmanlike manner. 20It was also common ground at the hearing that the inspection by Mr Christy was conducted at the building site in the presence of the owner of the building and the architect. It was conceded that the builder/Applicant was not present during Mr Christy's inspection, nor was Calandra Constructions Pty Ltd notified or requested to be present. Mr Christy agreed in his oral evidence that the working drawings and plans on which he relied to make his findings about defective work by Calandra Constructions Pty Ltd were drawings supplied to him by the architect and owner during the site inspection. The owner and architect detailed their concerns to Mr Christy during the inspection. 21It was also common ground at the hearing that the contract for residential building work between Calandra Constructions Pty Ltd and the homeowner had been terminated in April 2010 before the inspection by Mr Christy. It was conceded that one of the difficulties in the case was that building work was necessarily incomplete because the owner had terminated the building contract. As such, Calandra Constructions Pty Ltd was in the position of being unable to complete work and Mr Christy was in the position of inspecting a building site where work was incomplete. 22Mr Christy told the Tribunal that he measured, on-site, the dimensions of the brick wall. He stated the brick wall was constructed 250 mm short, based on the drawings given to him by the architect and the owner. Based on his measurement at the site and the drawings given to him by the architect and the owner, Mr Christy formed the view that the brick wall was constructed too short and that this was a defect, and he formed this view on the day of his site inspection. He states the wall was not in the correct location. Mr Christy noted that the garage wall was not in the right place, and that this might mean that two large vehicles could not sit in the garage, and as such the garage dimensions were critical to the owner. The owner told Mr Christy that he would be pulling down the brick wall and extending the garage. 23In relation to item 5, beams were in position, fastened to bolts at the time of his inspection and supported by props. There were gaps between the end of the beams and the walls, the beams were in position but supported by props. He stated that there was a view of an engineer given to him that the holes were drilled in the wrong location. Mr Christy stated he was not a structural engineer and his decision was based on that information. 24Under cross-examination Mr Christy indicated that he had been 10 years working for the Respondent and before that he was the principal building technical officer with Telstra and looked after their network and non-network buildings, including project management. His work was mostly commercial/industrial. He did his apprenticeship as a carpenter and joiner and completed a building certificate. He has several years experience in dealing with architects, consultants and local government. 25Mr Christy did return to the building site after his initial inspection but this was ae short visit to confirm some items in his report. The architect took him round on both occasions and gave him access to the site. 26Mr Christy was shown drawings annexed to the affidavit of Mr Reynolds, in particular annexures A,C,D,E,F,G, H and I. Mr Christy indicated he had not previously seen these drawings. He stated he had seen Annexure G before. Mr Christy was clear in his evidence that his attention was not drawn to the drawings, and correspondence, annexed to Mr Reynolds' affidavit and these had not been considered by him in reaching the conclusions set out in his report. 27Mr Christy was shown the various plans and drawings attached to Mr Reynolds' affidavit and in particular noted the dotted line marked A on the plans. He agreed that this same line was drawn on various of the plans attached to Mr Reynolds' affidavit, but was not contained on the drawing given to him during the site inspection by the architect and owner. Mr Christy agreed with the proposition that the garage wall ended on the line marked as A on the plans, and that this was also the location of the garage wall constructed by Calandra Constructions Pty Ltd. Mr Christy agreed under cross-examination that the drawings were not consistent. Mr Christy was asked to assume for the purposes of comment that the garage wall was intended by the contract to be built on grid line A and that the drawing accurately reflects where the existing laundry wall was placed. It was then put to Mr Christy that the new garage wall was in fact constructed on grid line A as required. He agreed that the length of the garage wall had to be dictated by the location of the laundry wall and the location of the eastern wall. Mr Christy agreed that if the wall was to be extended to the dimensions as shown on the drawing given to him by the architect then the dotted line, grid line A, would need to be moved. Mr Christy was unaware that the builder had criticisms of the architect during the building work. Mr Christy accepted the possibility that the architect had not provided complete information to him. Mr Christy stated that his opinion was based on the observations he made on the day and the information given to him. He stated that it was an authorised drawing that he was shown so it was relevant information but agreed that he was not given all information. 28In relation to item 5 of his report Mr Christy conceded that there were two issues of concern to him initially. The first issue, being a 20 mm gap, Mr Christy accepted that the specifications in the plans said that a 20 mm gap needed to be allowed for. Mr Christy agreed that the only defect of any concern remaining in item 5 was the issue of the bolts. Mr Christy maintained that he formed his own opinion during a site inspection and did not rely on what the owner or the architect told him. However he also conceded under cross-examination that his conclusions in relation to item 5 were dictated by what the architect had told him was required, and further agreed he was not a structural engineer. 29Mr Christy was shown Annexure E to Mr Reynolds' affidavit which shows a series of cross-section drawings. In particular detail 10 A shows the beam and steel beams. It was put that they were not at the same height and Mr Christy could not be sure, could not say either way, but agreed he had not ever seen this drawing. In relation to Annexure C Mr Christy agreed that on this diagram the height of the beam is different to the previous diagram. In relation to detail 10A and the measurement of 135 m Mr Christy understood it to be a reference to spacing where the holes are to be placed and said he hadn't seen this document before. In relation to pages 23 to 29 of the affidavit of Mr Reynolds, Mr Christy stated that he had not seen these documents or drawings before. 30Mr Reynolds provided a written affidavit and oral evidence to the Tribunal. He states that at all material times, until the contract was terminated in April 2010, he was Calandra's project manager at the site and responsible for day-to-day management of work. Building work commenced at the site or about 3 August 2009 in accordance with plans and specifications provided by the architect retained by the owners. From time to time it was also necessary to request information and/or direction from other consultants retained by or on behalf the owners including the structural engineer, and the surveyor. The scheduled date for completion of the works under the contract was December 2010. On 17 March 2010 Calandra Constructions Pty Ltd ("Calandra") sent a letter to the owners (annexure A). On 9 April 2010 Calandra received notice from the solicitor for the owners that the contract had been terminated. Proceedings were subsequently commenced against Calandra by the owners and a cross claim was filed by Calandra Constructions Pty Ltd. The proceedings were transferred to the Supreme Court and resolved by consent orders on or about April 2012. Mr Reynolds understands that a complaint, from which the decision and proceedings in the present matter arise, was made to the Department of Fair Trading on 28 June 2010. He understands from documents shown to him subsequently that Mr Christy conducted site inspections on 21 July 2010 and 17 August 2010. Calandra was not invited to attend either site inspection nor was it aware of the investigation until it received a copy of a Notice To Show Cause on 14 June 2011. Mr Reynolds states that he has been made aware by Mr Emilio Calandra (Director of Calandra Constructions Pty Ltd) that he also was not aware of the investigation nor invited to attend a site inspection. In relation to each of the alleged defects Mr Reynolds states as follows. 31Item 4 - Mr Reynolds notes that Mr Christy relied on drawing number 0208 - A142 issue 12 (page 234 of section 58 documents). He notes Mr Christy's view that the wall should have been constructed 2035 mm long and measured instead at 1800 mm length. Mr Reynolds does not dispute the length of the wall, but disputes that the contract required differently. Mr Reynolds notes that the contract required the owners to provide Calandra Constructions Pty Ltd with sufficient information to enable it to properly set out the works prior to construction and to have the set out of the works certified by licensed surveyor. Calandra Constructions Pty Ltd arranged for the surveyor to set out and certify the setting out of the relevant part of the works on or about the boundaries, grid lines and radial points. This was done by the surveyor according to grid lines included in various drawings issued by the architect. A survey plan was completed by the surveyor in October 2009 (annexure C to affidavit) . Mr Reynolds describes grid line A on each of the drawings. Grid line A was set out by the surveyor on the ground at the site with offset marks from survey pins located. Drawing 0208 - 142 issue 2, which also forms part of the contract, specifies that the Eastern garage wall was to be constructed on grid line A which is precisely where Calandra Constructions Pty Ltd constructed it. Drawing number 0208 - A 143 issue 12 also specifies that the Eastern garage wall should be constructed on grid line A, though the grid line itself is not so easily identified on that drawing. Further, drawing number 0208 - A 143 issue 12 (the first floor) specifies that the exterior wall of the terrace above the garage was also to be built on grid line A. (Annexure D). Mr Reynolds states that it was not possible to construct the new section of the southern garage wall to the dimension nominated in drawing number 0208 - A142 issue 12, and also to comply with the requirement that the Eastern garage wall and the first-floor exterior terrace wall (above the garage) be constructed on grid line A. 32In about mid- March 2010 Mr Reynolds contacted an officer of the architect by telephone and informed him of the discrepancy in relation to the specification of the length of the new section of the southern garage wall. He never heard anything more from the architect about this and a few weeks later Calandra Constructions Pty Ltd was dismissed from the site. He would have followed the matter up further however Calandra Constructions Pty Ltd was terminated shortly thereafter. Mr Reynolds notes Mr Christy's expressed view that there was still sufficient area behind the abutting wall to allow the southern section of the garage wall to be constructed to what he says was it specified length of 2035 mm. By abutting wall Mr Reynolds assumes Mr Christy means the Eastern garage wall. He states Mr Christy's suggestion would have involved the construction of the Eastern garage wall off grid line A and much closer to the boundary wall as can be seen from the drawings. This in turn would have reduced the width of the pathway behind the garage. He cannot comment on whether such an alteration to the design would have been consistent with the relevant development consent. 33Item 5 - Mr Reynolds notes that Mr Christy concludes that two prefabricated steel beams to support the first-floor were incorrectly cut and not installed properly. He notes that photographs of the beams and joins concerned can be seen in Mr Christy's report. It was noted in the hearing that the issue of the beams being 20 to 25 mm short did not need to be addressed as Mr Christy had conceded that this was not a fault by the builder. The other issue was that the design called for prefabricated steel beams to be bolted to the pre-existing circular concrete beam. Mr Reynolds notes Mr Christy's finding that the boltholes in the adjoining concrete beam were drilled in the incorrect position such that the top bolthole for each beam was too high and too close to the top of the concrete beam. Mr Reynolds states that it is not correct to say that the holes were drilled in the wrong place, and he states that Mr Christy does not appear to have been made aware of the full facts. On close inspection of TTW Drawing S 410 - 1, section 10, in detail 10 A (Annexure E to his affidavit) it can be seen that the drawing assumes the highest of the pre-existing circular concrete beam is the same as that of the prefabricated steel beam, two vertical rows of bolts were to be inserted through holes drilled in place at the end of each steel beam and corresponding holes drilled in the pre-existing circular concrete beam to join the two together; and the minimum distance between the bolt and boltholes was required to be 135 mm. Mr Reynolds states that boltholes were initially drilled in the steel plates and lined up with corresponding holes and steel plates. 34However, upon lifting the beams it became apparent that the height of the pre-existing circular beam was not the same as had been assumed in drawing S410-1, section 10, detail 10 A. Mr Reynolds contacted the architect to seek direction, the architect attended the site on 16 November 2009 and issued direction S K - 002 (Annexure G to affidavit). This direction required Calandra Constructions Pty Ltd to remove the top row of bolts and drill further lower holes in the concrete beam so as to lower the top row of bolts to achieve the minimum distance of 95 mm. However, the measurements taken by the architect on 16 November appeared to be incorrect and had Calandra Constructions Pty Ltd followed that direction, it would not have been possible to achieve the minimum distance of 135 mm. He sent an e-mail to the architect on about 27 November 2009 seeking further direction, and a copy of that e-mail is annexed to the affidavit and marked H. Mr Reynolds states he followed up about this issue again on 1 December 2009 and 4 December 2009 with formal requests for information, (copies of which are annexed to the affidavit, marked I). Mr Reynolds subsequently carried out the measurements and drew the diagram attached to the request dated 4 December 2009. In response, the architect issued a further direction on 11 December 2009 requiring the removal of the top horizontal row of bolts altogether and the addition of further plate, to be welded to the side of the existing steel plates at the end of each steel beam, and a further vertical row of two bolts to be inserted into the extended plate beside the existing bolts. A copy of the direction is Annexure J to Mr Reynolds' affidavit. However Calandra Constructions Pty Ltd's role at the site was terminated before this procedure could be completed in accordance with SK - 007. 35Mr Reynolds notes the Respondent's observation that the steel beams were secured by propping, and states that this was required until such time as a permanent masonry wall could be constructed under them as the permanent support, as originally and always called for by the design. However, Calandra Constructions Pty Ltd's role at the site was terminated before this procedure could be completed. Under cross- examination Mr Reynolds was asked about the content of Annexure A to his affidavit, being the letter from Calandra Constructions Pty Ltd of 17 March 2010. It was put to Mr Reynolds that the correspondence indicated that there were issues in relation to the adequacy of the directions given to the builder. He was asked whether he had raised these concerns earlier with the owner and/or architect and Mr Reynolds stated that he had done so through requests for direction and information, and also during weekly site meetings where he also requested clarification and information. While awaiting direction and clarification Calandra Constructions Pty Ltd would refocus their work on the site to a different location so as to be able to keep progressing the building work. The parties' submissions 36The Respondent submitted that there may be exculpatory reasons for some non-compliance by Calandra Constructions Pty Ltd in this case, on the evidence, but submitted that the Act requires full compliance and the Tribunal would not be satisfied that the work was fully compliant. The Respondent submitted that the Tribunal should find that there was defective work, and the exculpatory factors would go to the penalty, so that it might be sufficient to find defective work and to say no penalty was appropriate. The Respondent further submitted that the low penalty which the Respondent indeed gave in this case indicated their view of the gravity of the breaches as being at the low end. 37The Applicant submitted that the Tribunal has to be satisfied that the Respondent has made out the grounds for disciplinary action, that is, the Tribunal needs to be satisfied that there was improper conduct given breach by Calandra Constructions Pty Ltd of statutory warranties. The Applicant noted that the Respondent relies on Mr Christy's opinion and that the evidence discloses that that opinion was not based on all relevant documents and information. The primary source of the information was from the architect and this was in the context of a dispute between the owner and the builder in which the architect had a role. This was also in the context of the builder having made criticisms of the architect. The Applicant submits that the uncontested evidence of Mr Reynolds, in relation to item 4 of Mr Christy's report, is that the wall of the garage was required to be built on grid line A and was in fact built on grid line A. The existing wall and the existing laundry wall require this is also. There was no scope for the garage wall to reach the length specified in the drawing given by the architect to Mr Christy and relied on by Mr Christy. Mr Christy noted that the drawings were inconsistent and in particular the drawing given to Mr Christy was inconsistent with other drawings. The Applicant submitted that no breach of statutory warranty was established. Mr Reynolds raised the discrepancy with the architect but given the termination of Calandra Constructions Pty Ltd's contract with the owner this could not be pursued. In relation to item 5 it was submitted that the Tribunal would be satisfied that there was a discrepancy in the drawings in relation to the height of the concrete beam. As such it cannot be said that there was a breach of statutory warranties. 38The Applicant submitted that the Tribunal should find on the facts and evidence, and according to law, that no breach of statutory warranty by the holder of the contractor licence, Calandra Constructions Pty Ltd, was established on the evidence. On this basis the Tribunal should also find that there was no improper conduct by the Applicant as Director and Nominated Supervisor of Calandra Constructions Pty Ltd. In the alternative the Tribunal, if not so satisfied, should vary the decision to an order that no further action be taken, having regard to all the evidence submitted. Discussion of law and evidence and Tribunal's findings 39The Tribunal has considered all of the documentary evidence submitted by the parties, and the evidence presented at the hearing including the evidence of the witnesses. 40The Tribunal notes the s58 documents provided by the Respondent do not contain a copy of the Applicant's licence to indicate that he is nominated supervisor - at the hearing when this was raised the representative of the Respondent noted it was not in dispute. The Tribunal notes that the copy of the licence of Calandra Constructions Pty Ltd , a contractor licence, category building, which is in the s58 documents (at pages 141 - 143) does record the Applicant as an Associated Party and as both Director and Nominated Supervisor of Calandra Constructions Pty Ltd. The Tribunal therefore accepts that the Applicant holds these positions, and notes this was not disputed by the Applicant in the proceedings. Accordingly, if the Tribunal is satisfied that there were breaches of statutory warranties by Calandra Constructions Pty Ltd , then the Applicant may be guilty of improper conduct under the provisions of s53 and 54 of the Act. It is necessary therefore to make findings as to whether Calandra Constructions Pty Ltd breached statutory warranties as alleged by the Respondent. 41The Tribunal finds that Mr Christy's inspection and subsequent report was based on a site visit in the presence of the architect and owner. Calandra Constructions Pty Ltd was not present nor was the Applicant. The builder's views were not considered by Mr Christy in forming his conclusions and writing his report. It appears from the evidence that the first input by Calandra Constructions Pty Ltd and the Applicant was at the time of the response to the Notice to Show Cause. 42The Tribunal finds, consistently with the evidence of Mr Christy and Mr Reynolds, that the plan/drawing given to Mr Christy, during the site inspection, by the architect, was not consistent with other drawings as attached to the affidavit of Mr Reynolds. The Tribunal found the evidence of Mr Reynolds to be very clear and detailed and to be supported by contemporaneous records such as copies of correspondence, emails and plans/drawings. The Tribunal has no basis to reject the evidence of Mr Reynolds given its clarity and its consistency with other documents. The Tribunal accepts the un-contradicted evidence of Mr Reynolds that the plans envisaged the garage wall (re -item 4) to be built on grid line A. The Tribunal accepts the evidence of Mr Reynolds that the wall was in fact built on grid line A having regard to all of the evidence presented on this issue. The Tribunal accordingly finds that the wall/slab was built in accordance with the plans and contract, and there is no evidence indicating that it was otherwise not built in a proper and workmanlike manner. The Tribunal finds that the finding of Mr Christy that the wall was built short and not in accordance with the plans, is incorrect. The Tribunal finds that the evidence supports a conclusion that the wall was built on grid line A in accordance with the plans. The Tribunal found Mr Reynolds to be clear and concise in his evidence and he supported his evidence with the records of communications with the architect and copies of plans. He clearly explained the role of the surveyor, the survey points on the site, and the location of grid line A and the Tribunal accepts his evidence in relation to this. The Tribunal makes no criticism of Mr Christy, and accepts Mr Christy's evidence that he made his recommendations and report based on his own opinion and not the opinion of the owner and the architect. However, the Tribunal considers that Mr Christy was given a plan/drawing which was inconsistent with a number of other plans/drawings and that his conclusion was incorrect because it was based on incomplete information. 43In relation to the boltholes, item 5, the Tribunal accepts the evidence of Mr Reynolds, which was supported by drawings and records attached to his affidavit, that he had numerous conversations with the architect seeking clarification in relation to the placement of the bolts and the holes and the beams. The Tribunal accepts his evidence that he was given different directions and followed those directions. The Tribunal accepts the evidence also that the work was incomplete, and the beams left supported by propping, because Calandra Constructions Pty Ltd's contract with the owner of the residential premises, was terminated. 44On the evidence overall in this matter the Tribunal is not satisfied that the Respondent has established that Calandra Constructions Pty Ltd performed work that was not in a proper and workmanlike manner, or work that was not in accordance with the contract and plans, in relation to items four and five of Mr Christy's report. The Tribunal is not satisfied considering the evidence overall in this matter that Calandra Constructions Pty Ltd built the garage wall too short and not in accordance with plans and survey diagrams. The Tribunal is also not satisfied, considering the evidence and in particular the drawings annexed to Mr Reynolds affidavit, that Calandra Constructions Pty Ltd performed work that was not in a proper and workmanlike manner or not in accordance with the contract/plans, in relation to the steel beams and bolts specified by Mr Christy in item 5 of his report. Calandra Constructions Pty Ltd's explanations are supported by evidence, and are plausible, and the Tribunal accepts that on seeking clarification in relation to the measurements of the bolts and the beams Calandra Constructions Pty Ltd received further directions from the architect and remained dissatisfied with the workability of those directions. This could not be further pursued because the contract for work was terminated. The Tribunal is not satisfied on the evidence that Calandra Constructions Pty Ltd performed work that was not performed in a proper and workmanlike manner, or work that was not in accordance with the contract and plans, in relation to items 4 and 5 of Mr Christy's report. Accordingly the Tribunal is not satisfied on the evidence that Calandra Constructions Pty Ltd, breached statutory warranties in relation to this work. 45Given that the Tribunal is not satisfied that Calandra Constructions Pty Ltd breached statutory warranties, and as such is not satisfied that Calandra Constructions Pty Ltd was guilty of improper conduct (as further detailed also in the Reasons for Decision in that matter, file 123059), then the Tribunal is not satisfied that the Applicant is guilty under s 53 of the Act of improper conduct: the Tribunal cannot be satisfied that there were breaches of statutory warranties in the doing of the work where he had control as nominated supervisor as is required by s53 of the Act. Further, the Applicant is not guilty of improper conduct under s54 of the Act, as Director of Calandra Constructions Pty Ltd, because Calandra Constructions Pty Ltd was not guilty of improper conduct. 46As the Tribunal is not satisfied that the Applicant was guilty of improper conduct, then the Tribunal is not satisfied that there is a basis for disciplinary action under the Act. Accordingly, the Tribunal has decided that there is no basis in law for imposition of the penalty. Therefore, the correct and preferable decision, according to the law and the evidence, is that the decision under review be set aside. 47The Tribunal further recommends that if there has been any entry in the Register, pursuant to s120 of the Act, in relation to the penalty imposed in this matter, that given the Order to set aside the decision, the Director General amend the Register pursuant to s120(4) of the Act. ********** 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: 24 July 2012