Champion Homes Sales Pty Ltd v Commissioner for Fair Trading [2017] NSWCATOD 110

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Champion Homes Sales Pty Ltd v Commissioner for Fair Trading [2017] NSWCATOD 110 Hearing dates: 23 May 2017 Date of orders: 13 July 2017 Decision date: 13 July 2017 Jurisdiction: Occupational Division Before: S Montgomery, Senior Member Decision: (1) The decision to impose a penalty of $3,500 on the Applicant for a breach of statutory warranty under section 18B(1)(a) of the Home Building Act 1989 is set aside.

(2) In its place the decision made to caution the Applicant. Catchwords: Home Building Act 1989 – disciplinary action for breach of statutory warranty penalty of $3,500 set aside – caution Legislation Cited: Home Building Act 1989 Cases Cited: Champion Homes Sales Pty Ltd v Commissioner for Fair Trading, Office of Finance, Services and Innovation [2017] NSWCATAP 15 Lowe v The Queen (1984) 154 CLR 606 Category: Principal judgment Parties: Champion Homes Sales Pty Ltd (Applicant) Commissioner for Fair Trading (Respondent) Representation: Solicitors: Kedron Legal (Appellant) Fair Trading Legal Services (Respondent) File Number(s): 2016/00378584

REASONS FOR DECISION 1. Champion Homes Sales Pty Ltd has sought review of the determination by a delegate of the Commissioner for Fair Trading By decision to impose a penalty of $3,500 on the Applicant for a breach of statutory warranty under section 18B(1)(a) of the Home Building Act 1989 ("the Act"). 2. I heard the matter in April 2016 ("the earlier proceedings"). I set aside the Respondent's original decision, and instead made the decision to caution the Applicant. The Applicant appealed that decision. The appeal was successful on the basis that I had failed to provide adequate reasons for my decision to caution the Applicant and the matter was remitted to me for redetermination: see Champion Homes Sales Pty Ltd v Commissioner for Fair Trading, Office of Finance, Services and Innovation [2017] NSWCATAP 15. 3. The defects that were the subject of the disciplinary action taken against the Applicant included a shower screen that was 30 centimetres shorter than was provided for by the contract and a vanity basin that was above the vanity rather than embedded in the vanity. 4. Section 18B(1)(a) of the Act provides: 18B Warranties as to residential building work (1) 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 done with due care and skill and in accordance with the plans and specifications set out in the contract, … 1. As the Appeal Panel noted, it was not in dispute in the earlier proceedings that there had been a failure to construct in accordance with the relevant contract and that this had resulted in the Applicant failing to comply with the statutory warranty in section 18B(1)(a) of the Act. 2. Section 51(1)(c) of the Act provides. 51 Improper conduct: generally (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: … (c) breaches a statutory warranty, or 1. As the Applicant failed to comply with the statutory warranty in section 18B(1)(a) of the Act, it is guilty of improper conduct under section 51(1)(c) of the Act. 2. Section 62 of the Act provides for a range of disciplinary action that may be taken. It provides: 62 Disciplinary action that may be taken by Secretary If, after compliance with this Division, the Secretary 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 Secretary 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 Secretary, 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. 1. The issue in dispute is what, if any, disciplinary action should be taken in relation to this conduct. 2. In my findings in the earlier proceedings I expressed the view that I could not see any benefit to the public in the imposition of a fine of $3,500 against the Applicant and I set aside that decision. However, I was of the view that some disciplinary action was warranted and I took the decision to impose a caution on the Applicant. As can be seen from the provisions of section 62, a caution is the minimum action that can be taken. 3. The Applicant argues that it is clear from the findings in the earlier proceedings and those of the Appeal Panel that the Applicant did not abrogate its responsibilities. Further, the Applicant notes that I made no finding of culpability in relation to the directors and supervisors. It contends that the company cannot do otherwise than that which is directed by its directors and/or supervisors. 4. It is submitted that as the parties responsible for the actual work and decision-making conducted themselves in a manner which did not rise to a level of opprobrium, the Applicant should not have to wear the opprobrium. If it does, it is carrying a greater burden than that of the controlling mind. 5. However, as the Respondent correctly notes, the Appeal Panel rejected the Applicant's "controlling mind" submission. The Appeal Panel stated at paragraph [19]: The Appeal Panel is of the view that the Appellant's "controlling mind" submissions should be rejected. Simply because no penalty has been imposed on the directors and supervisor of the Appellant does not mean that those persons were not culpable and does not mean that no penalty should be imposed on the Appellant. What is the appropriate penalty for the Appellant can only be decided by applying the relevant law to the relevant conduct of the Appellant. The party to the proceedings who held the relevant licence under the Act to contract was the Appellant, and that was the party liable in the first instance to consumers under that contract. 1. The Respondent contends that there is no requirement for the Tribunal to impose the same penalty on the Applicant as that imposed on the directors and supervisors. It submits that the consideration of the parity principle in case law is largely focused on sentencing natural persons involved in the same criminal conduct or a common criminal enterprise. There does not appear to be any basis in law for parity to be established in sentencing or imposing a penalty on corporations and directors when they are charged with the same offence, or in situations involving the same conduct. 2. The Respondent submits that the parity principle only applies in cases where the offenders' circumstances are comparable. In support of its submission it relies on comments in Lowe v The Queen (1984) 154 CLR 606 where Gibbs CJ stated: "It is obviously desirable that persons who have been parties to the commission of the same offence should, if other things are equal, receive the same sentence, but other things are not always equal, and such matters as the age, background, previous criminal history and general character of the offender, and the part which he or she played in the commission of the offence, have to be taken into account." 1. The Respondent submits that it is not possible to compare the Applicant, which is a company, with the directors and supervisor who are natural persons. Furthermore the circumstances of the Applicant, as the licence holder and party responsible at law for the work not built in accordance with the contract, is different to that of the directors and supervisor. 2. The Appeal Panel did not express a view in regard to the argument based on the principle of parity. 3. I agree with the Respondent in this regard. In my view there is no requirement for the Tribunal to take the same action in relation to the Applicant as that taken in regard to directors and supervisors. 4. I do not agree that the same considerations apply to the Applicant as to directors and/or supervisors in determining what action is to be taken for a minor breach of the s18B warranties. Under the Act the Applicant held the relevant licence to contract and under that contract the Applicant was the party liable to the consumers in the first instance. The Applicant, not directors or supervisors, is the party responsible at law for the work that was not built in accordance with the contract. In my view, there is no need to establish that parity. 5. In my view, some disciplinary action is warranted in relation to the Applicant because of its failure to meet its statutory obligations. However, in the circumstances I am satisfied that the minimum disciplinary action is sufficient. 6. In my view the appropriate disciplinary action is to caution the Applicant in regard to the breach of the statutory warranty in section 18B(1)(a) of the Act by its failure to construct in accordance with the relevant contract.