Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Streamax Australia Pty Ltd v Commissioner of Police, NSW Police Force [2018] NSWCATOD 25 Hearing dates: 8 December 2017 Date of orders: 27 February 2018 Decision date: 27 February 2018 Jurisdiction: Occupational Division Before: C Ludlow, Senior Member Decision: The decision under review is set aside. Catchwords: OCCUPATIONS – Licensing - revocation of master security licence – close associate – whether condition of licence breached – whether sale of security equipment in breach of Act Legislation Cited: Administrative Decisions Review Act 1997 Security Industry Act 1997 Security Industry Regulation 2016 Cases Cited: AVS Group Australia Pty Limited v Commissioner of Police, NSW Police Force [2012] NSWADT 1 O'Neill v Commissioner of Police, NSW Police Force [2005] NSWADT 130 Category: Principal judgment Parties: Streamax Australia Pty Ltd Commissioner of Police, NSW Police Force Representation: Mr B Warr (Director)(Applicant) Lindsay Taylor Lawyers (Respondent) File Number(s): 17/246893 REASONS FOR DECISION 1. This is an application for review of a decision by the respondent on 30 May 2017 to revoke the Master Security licence held by the applicant, Streamax Pty Ltd (Streamax) under the Security Industry Act 1997. The decision was based on the reasons that the applicant had contravened a condition of the licence by failing to notify changes in particulars of the licence, namely the change of directors; and that it had knowingly supplied false or misleading information in connection with an application for a security licence. 2. The applicant submits that the respondent's decision was made on an incorrect factual basis. The Legislation 1. The Security Industry Act regulates the carrying on of security activities, as defined in s 4. The relevant portions of that section are set out below. 4 Carrying on a "security activity" (1) For the purposes of this Act, a person carries on a security activity if the person carries on any one or more of the following activities in the course of conducting a business or in the course of the person's employment: … (d) installing, maintaining, repairing or servicing, by physical or electronic means: (i) any security equipment, or (ii) any mechanical, electronic, acoustic or other equipment that the person installing, maintaining, repairing or servicing the equipment purports to be equipment that is designed or adapted to provide or enhance security or for the protection of any property, (e) selling: (i) any security equipment (other than basic household or automotive security items at approved classes of retail outlets), or (ii) any mechanical, electronic, acoustic or other equipment that the person selling the equipment purports to be equipment that is designed or adapted to provide or enhance security or for the protection of any property, (f) selling security methods or principles, (g) selling the services of persons to carry on any security activity referred to in this section, (h) providing advice in relation to security equipment (other than basic household or automotive security items at approved classes of retail outlets), including providing product advice in relation to security equipment, (h1) providing advice in relation to the identification and analysis of security risks and providing solutions or management strategies to minimise security risks, (i) providing advice in relation to any other mechanical, electronic, acoustic or other equipment (other than basic household or automotive security items at approved classes of retail outlets) that the person providing the advice purports to be equipment that is designed or adapted to provide or enhance security or for the protection of any property, (j) providing training or instruction in relation to any security activity referred to in this section, (k) assessing another person's training, instruction or competencies in relation to any security activity referred to in this section, (l) (Repealed) (m) providing persons to carry on any security activity referred to in this section, (n) acting as an agent for, or otherwise obtaining contracts for: (i) the supply of persons to carry on any security activity referred to in this section, or (ii) the supply of any security equipment (other than basic household or automotive security items at approved classes of retail outlets), or (iii) the supply of any security activity referred to in this section, (o) brokering any security activity referred to in this section, by acting or purporting to act as an intermediary to negotiate and obtain any such activity for a person (other than the person's employer or a principal who is not a client of the person) in return for a commission or financial benefit, (p) any other activity, or class of activities, that is connected with security or the protection of persons or property, whether by physical or electronic means, and that is prescribed by the regulations for the purposes of this section. 1. Section 6(3) of the Act provides: (3) The regulations may exempt any person or class of persons from the operation of this Act in such circumstances, and subject to such conditions, as may be specified in the regulations. Any such regulation may create offences in relation to a failure to comply with a condition prescribed in relation to an exemption. 1. Schedule 1 of the Security Industry Regulation 2016 provides that the following persons are exempt: Persons who sell, by wholesale (other than directly to the public) only, equipment referred to in section 4 (1) (e) of the Act, but only to the extent to which the persons sell such equipment. 1. Section 26 provides: 26 Revocation of licence (1) A licence may be revoked: (a) (Repealed) (b) if the licensee: (i) supplied information that was (to the licensee's knowledge) false or misleading in a material particular in, or in connection with, the application for the licence or the renewal of the licence, or (ii) contravenes any provision of this Act or the regulations, whether or not the licensee has been convicted of an offence for the contravention, or (iii) contravenes any condition of the licence, or (c) (Repealed) (d) for any other reason prescribed by the regulations. (1A) The Commissioner must revoke a licence where the Commissioner is satisfied that, if the licensee were applying for a new licence, the application would be required by this Act to be refused. (2) The Commissioner may revoke a licence by serving on the licensee, personally or by post, a notice stating that the licence is revoked and the reasons for revoking it. (3) The revocation of a licence by such a notice takes effect when the notice is served or on a later date specified in the notice. Note. Section 31 requires the licensee to immediately surrender the licence if the licence is revoked. (4) The Commissioner may, by serving a further notice on the holder of a licence, cancel a notice revoking a licence before the notice takes effect. (5) For the purposes of subsection (1A), the Commissioner may have regard to any criminal intelligence report or other criminal information held in relation to the licensee that: (a) is relevant to the activities carried on under the class of licence held by the licensee, or (b) causes the Commissioner to conclude that improper conduct is likely to occur if the licensee continues to hold the licence, or (c) causes the Commissioner not to have confidence that improper conduct will not occur if the licensee continues to hold the licence. (6) The Commissioner is not, under this or any other Act or law, required to give any reasons for revoking a licence if the giving of those reasons would disclose the existence or content of any criminal intelligence report or other criminal information as referred to in subsection (5). 1. Clause 30 of the Security Industry Regulation 2016 provides: 30 Requirement to notify changes relating to close associates (1) It is a condition of a master licence that the licensee must notify the Commissioner electronically, by post or in any other approved manner of: (a) any change in the particulars relating to close associates included in an application under clause 12 (3) (a) (ii) or (4) (d), and (b) the name, date and place of birth and residential address of any person who subsequently becomes a close associate of the licensee. (2) The notification must be made within 14 days after the change occurs or the person becomes a close associate." 1. Section 15(2C) provides that the Commissioner must refuse to grant an application for a licence if the applicant has supplied information that is (to the applicant's knowledge) false or misleading in a material particular in, or in connection with, the application. Section 15(3) provides that the Commissioner may refuse to grant an application for a licence if the Commissioner considers that the grant of the licence would be contrary to the public interest. 2. Section 26(1A) provides that the Commissioner must revoke a licence where the Commissioner is satisfied that, if the licensee were applying for a new licence, the application would be required by the Act to be refused. 3. Section 5 defines the meaning of close associate: 5 Meaning of "close associate" (1) For the purposes of this Act, a person is a close associate of an applicant for, or the holder of, a licence if the person: (a) holds or will hold any relevant financial interest, or is or will be entitled to exercise any relevant power (whether in his or her own right or on behalf of any other person), in the business of the licence applicant or holder, and by virtue of that interest or power is or will be able (in the opinion of the Commissioner) to exercise a significant influence over or with respect to the conduct of that business, or (b) holds or will hold any relevant position, whether in his or her own right or on behalf of any other person, in the business of the licence applicant or holder. (2) In this section: relevant financial interest in relation to a business means: (a) any share in the capital of the business, or (b) any entitlement to receive any income derived from the business, whether the entitlement arises at law or in equity or otherwise. relevant position means the position of director, manager, and other executive positions and secretary, however those positions are designated, and such other positions as may be prescribed by the regulations for the purposes of this definition. relevant power means any power, whether exercisable by voting or otherwise and whether exercisable alone or in association with others: (a) to participate in any directorial, managerial or executive decision, or (b) to elect or appoint any person to any relevant position. 1. Section 16(3) of the Act provides: (3) The Commissioner must refuse to grant an application for a licence if the Commissioner is of the opinion that the applicant is not suitable to hold a licence because the applicant has been involved in corrupt conduct. 1. Section 16(5) provides: (5) A reference in subsection (1), (2), (3), (4) or (4A) to an applicant includes, in the case of an application for a master licence, a reference to each close associate of the applicant. Background 1. According to ASIC records Streamax was established on 26 February 2013. ASIC records show that on 29 June 2017 its principal place of business was at Castle Hill. 2. Streamax was a company limited by shares. Mr Wheeler was a director of Streamax from 31 July 2014 to 24 November 2015. 3. On 12 February 2016 Mrs Jaratlak Wheeler, the wife of Craig Wheeler, became director and secretary of Streamax. At this time the sole shareholder in Streamax was Verdant Australia Pty Ltd (Verdant). Mrs Jaratlak Wheeler was the sole director, secretary and shareholder of Verdant. On 1 April 2016 Ms Jordan Wheeler, the daughter of Craig and Jaratlak Wheeler, became director and secretary of Streamax. 4. Streamax applied to the respondent for a Master Security Licence under the Security Industry Act on 29 September 2016 and was issued with a Master Security Licence by the respondent on 14 December 2016. Ms Jordan Wheeler was the nominated person for the licence. 5. The licence was revoked by the respondent on 1 June 2017. 6. Mr Bradley Warr, who had become a director of Streamax replacing Ms Jordan Wheeler, on 15 May 2017, requested an internal review of the decision on behalf of the applicant. The internal review confirmed the original decision. The evidence 1. Mr Warr's evidence was that he used to be in the NSW Police Force and met Mr Craig Wheeler through their membership of the Freemasons. He said he decided to become a director of Streamax after Mr Craig Wheeler told him that his daughter Jordan Wheeler wished to cease being a director of Streamax. Mr Warr met with Mrs Jaratlak Wheeler in March 2017 and it was agreed between them that he would replace Ms Jordan Wheeler as director. 2. There were 100 shares in Streamax. Mr Warr bought 30 shares in Streamax from Mrs Wheeler and Verdant retained 70 shares. 3. Mr Craig Wheeler is director of another company, Streaming Video Technology Australia Pty Ltd (SVTA) which imports certain mobile digital video recorder (MDVR) products into Australia. It was not in dispute that Streamax buys MDVR products from SVTA; however what Streamax does with those products is one of the issues in these proceedings. 4. Mr Warr said the business of Streamax is the wholesale supply of MDVR systems to businesses which then sell them to customers. However he also planned for the company to move into the areas of installing and retailing the products in the future, for which it would require a Master Security Licence under the Act. 5. Ms Jordan Wheeler provided a statement to the Tribunal in which she said that she wanted to cease being a director and Mr Warr had agreed to become a director. According to the evidence of Mr Warr and Ms Jordan Wheeler, it was agreed that Ms Wheeler would lodge the documentation with ASIC advising the change of directors. However, what she did was nominate her father, Mr Craig Wheeler, as the director to replace herself instead of Mr Warr. She said she logged onto the ASIC website to make the necessary changes to the company record. However she did not have Mr Warr's date of birth and could not complete the form. Instead she used her father's details. She thought that her father could then change it to Mr Warr later. She said that she did not consult her father before doing this. The result was that she ceased to be recorded as a director on 27 April 2017 and Craig Wheeler commenced again as a director from that date until 15 May 2017 when Mr Warr replaced him. 6. Mr Warr lodged his application to make himself the nominated person for the company's master security licence. The application was received by the respondent on 16 May 2017. 7. On 30 May 2017 the Respondent revoked the licence. 8. In 2009 in its report on corruption in the provision and certification of Security Industry Training, the Independent Commission against Corruption (ICAC) found that Mr Wheeler engaged in corrupt conduct and that his conduct adversely affected the exercise of official functions connected with the determination of an application for a security licence. According to the report, ICAC was of the opinion that consideration should be given to obtaining the advice of the Director of Public Prosecutions with respect to the prosecution of Mr Wheeler for the offences of being an accessory before the fact to the offence of making a false or misleading statement contrary to s178BB of the Crimes Act 1900; being an accessory before the fact to an offence of making a false or misleading statement or representation contrary to s33(2) of the Security Industry Act; being an accessory before the fact to an offence of making a false or misleading qualification certificate contrary to clause 15(2) of the Security Industry Regulation; and giving false and misleading evidence before ICAC. No evidence was before this Tribunal to show that Mr Wheeler has been charged with or convicted of those offences. 9. The respondent tendered a statement by Mr Wheeler dated 7 June 2016 which was provided to NSW Police investigators in an earlier investigation. In that statement Mr Wheeler stated that he had been involved with Streamax. He said the company was intended to operate as a wholesale distributor of safety camera systems. He said the company name was the same as the name of the Chinese company which markets the mobile digital video recorder technology. He said Streamax had never traded and the company was registered to preserve any good will which might be associated with the name of the technology. 10. He stated that SVTA bought a product from Streamax Technology Company Limited, a company based in China, and modified the product and then installed software on the product. It then sold the MVDR equipment to wholesale customers for installation by contractors. 11. Mr Wheeler said SVTA traded out of an address in Castle Hill. There were numerous other companies operating at that address, not associated with him, and sharing the same phone number. 12. A COPS entry dated 5 November 2015 records a police investigation concerning the operation of Streamax. According to this entry a website audit revealed that Streamax was advertising that it carried on, and was willing to carry on, a security activity; specifically selling MVDRs with technical support. Neither Streamax nor Craig Wheeler (who was a director of Streamax at the time) had the necessary security licence to carry on such an activity at the time as it is a security activity within the meaning of the Security Industry Act (4(1)(d), (e) and (g)). 13. The COPS entry records that Michael Jurisic, who was interviewed by police in November 2015, told police he was employed by Streamax in selling, installing and maintaining MVDRs in vehicles despite not having a Class 1 or 2 licence. 14. SVTA was investigated by the respondent and on 13 October 2017 it identified that the company had unlawfully provided persons to carry on security activities, contrary to s 7(1) of the Security Industry Act. SVTA was issued with a penalty notice for the offence. 15. The respondent tendered evidence of a domain name search which showed that as at 8 November 2017 Mr Wheeler was the contact for Streamax's domain name registration. The issues in these proceedings Whether Craig Wheeler is a close associate of the applicant 1. It has been held that the objects and purposes of the Security Industry Act are the regulation of the security industry to maintain public safety and to ensure that those who are licensed to operate in the industry are appropriately qualified and persons of integrity (O'Neill v Commissioner of Police, NSW Police Force [2005] NSWADT 130). Mr Wheeler has been found to have committed corrupt conduct by ICAC. The respondent submitted that Mr Wheeler is a close associate of the applicant, and it would not be in the public interest for the applicant to hold a licence. 2. Under s 63(1) of the Administrative Decisions Tribunal Act 1997, the Tribunal is to determine an application for an administrative review by deciding what the correct and preferable decision is having regard to the material then before it. The hearing of these proceedings took place on 8 December 2017. At the conclusion of the hearing, the applicant was granted leave to file supplementary evidence and submissions concerning its business operations. On 1 February 2018 submissions were received from the applicant with evidence to show that Mr Warr was the only director and officeholder of the applicant as at 1 January 2018. 3. The respondent was given an opportunity to respond to this material, but has elected not to do so. As this material is before the Tribunal, I will consider it in reaching my determination as to whether Mr Wheeler is a close associate of the applicant. 4. As held in AVS Group Australia Pty Limited v Commissioner of Police, NSW Police Force [2012] NSWADT 1 at [31], in order to establish that Mr Wheeler is a close associate, the Commissioner must satisfy the Tribunal that: 1. Mr Wheeler is, or will be, able to exercise a significant influence over the conduct of the security business of Streamax, and 2. that significant influence is, or will be exercised as a result of: 1. Mr Wheeler holds or will hold a relevant financial interest in the business of Streamax; or 2. Mr Wheeler is entitled, or will be entitled, to exercise any relevant power in the business of Streamax; or 1. Mr Wheeler holds, or will hold a relevant position in the Streamax business (in which case the ability to exercise a significant influence need not be established). 1. Mr Wheeler was a director of the applicant from 31 July 2014 to 24 November 2015 and between 27 April and 15 May 2017. 2. It is not in dispute that currently he does not hold any relevant position in the company. As at 1 January 2018, the only person with any position in the company is Mr Warr. There is no evidence that Mr Wheeler holds a position either on his own right or on behalf of anyone else, in the business of the company. Neither his wife nor daughter is now a shareholder or office holder in the company. 3. There is no evidence before the Tribunal that Mr Wheeler currently holds or will hold any relevant financial interest in the company within the meaning of s 5. That is, any share in the capital of the business, or any entitlement to receive any income derived from the business. 4. I accept that, based on the evidence tendered by both parties, it is clear that Streamax and SVTA have had, and still have, a close business relationship. They deal in the same technology. Streamax buys its MDVR equipment from SVTA. The two companies share an address but the applicant does not pay any rent or outgoings and Mr Wheeler has not asked for any contribution, according to Mr Warr. The companies have similar business names. Their websites have similar material. 5. It is not in dispute that Mr Wheeler was involved in the operation of Streamax as a director over two periods. The second period only lasted just over two weeks. Recently also, his wife and daughter held directorships. During those periods he would have had a "relevant power" in the business of the company, and could have exercised a significant influence over or with respect to the conduct of that business, making him a close associate. 6. However as at 1 January 2018, Mr Warr is the sole director and shareholder. In my view there is insufficient evidence to show that Mr Wheeler currently has a power to participate in any directorial, managerial or executive decision, or to elect or appoint any person to any relevant position within Streamax. Mr Warr appeared to have a reasonable grasp of the applicant's business operations and to be capable of making independent business decisions. I am not satisfied that Mr Wheeler currently has the power to exercise a significant influence over, or with respect to, the conduct of the business. 7. Accordingly I am not satisfied that Mr Wheeler is currently a close associate of the applicant. Whether the applicant contravened a condition of the licence 1. A second issue is whether the applicant contravened a condition of the licence in that it failed to notify the respondent of changes in particulars of the licence, namely the removal of Jordan Wheeler and the appointment of Craig Wheeler as director. As noted above, while he was a director or Mrs Wheeler's company held shares in the applicant, Mr Wheeler met the criteria for being a close associate. 2. It is clear that the applicant did fail to notify the respondent of these factors and identify Mr Wheeler as a close associate. The question is, however, whether this breach is sufficient to justify a revocation of the licence. In my view, it is not. I am satisfied that the breach was due to the actions of Ms Wheeler, who is no longer a director of the applicant. Mr Wheeler is no longer a close associate. I am not satisfied that Mr Warr, the current sole director, was aware of the breach, as if he were, there was no reason for him to submit the form identifying himself as the nominated person, as he did, to the respondent. Whether the applicant carried on a security activity without a licence 1. The third issue is one which arose during the hearing. It is whether the company breached the legislation by carrying on a security activity without a licence. This would depend on whether the company was retailing the MVDR equipment, and whether it installed or serviced the equipment, as these constitute carrying on a security activity. The Applicant maintained that it was engaged in wholesale activities. 2. The only direct evidence of sales of equipment before the Tribunal was that given by Mr Warr. Under cross-examination Mr Warr said Streamax had sold more than 20 equipment sets to his knowledge, but that these had been sold on a wholesale basis and no service or installation was provided. 3. Mr Warr provided a list of companies which he said were Streamax's clients. These included taxi services, a security company and others. It was Mr Warr's evidence that these companies purchased the MDVR equipment wholesale to sell to and/or install for taxi operators, for their own vehicles, or to sell on to other businesses. The applicant did not seek to adduce direct evidence from any of these customers about the nature of the business relationship or any business records of those sales. 4. There was no evidence of the dates of these sales and the specific items sold. I cannot be satisfied on the available evidence that the applicant breached the legislation. 5. In light of the above, there is no basis on which the Tribunal can be satisfied that the revocation of the licence is the correct and preferable decision. The internal review decision should be set aside pursuant to s63(3)(c) of the Administrative Decisions Review Act. Order 1. The decision revoking the master security licence issued to Streamax Pty Ltd is set aside. ******** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 27 February 2018