Unlicensed building and its consequences
The Supreme Court of New South Wales has issued a stern warning to builders who repeatedly operate unlicensed in breach of the Home Building Act 1989 (NSW) (the Act). In NSW Commissioner for Fair Trading v Rixon (No. 4)  NSWSC 1, the defendant was convicted of contempt of court and sentenced to 18 months imprisonment (with a non-parole period of 12 months) for breaching orders prohibiting him from operating without a valid contractor licence.
Licensing requirements under the Act
Section 4 of the Act provides that a person must not contract to do any residential building work or specialist work except if they, or the partnership or corporation they’re contracting on behalf of, holds a valid contractor licence authorising its holder to contract to do such work. Section 12 of the Act prohibits the actual performance of residential building work or specialist work without a valid licence.
Section 5 of the Act prohibits an unlicensed person from representing that they’re prepared to do residential building work or specialist work. Furthermore, section 17 prohibits an unlicensed person from representing that they hold a valid contractor licence, supervisor certificate or tradesperson certificate when they do not.
The maximum penalty for breaching these sections is $22,000 for an individual and $110,000 for a corporation. Furthermore, individuals convicted of second or subsequent offences under sections 4 or 5 face a maximum penalty of $55,000 or 12 months imprisonment, or both.
Case study: NSW Commissioner for Fair Trading v Rixon
The defendant, Mr Rixon, had carried out residential building work on various occasions prior to April 2013 without holding a valid contractor licence. On 17 April 2013, consent orders were made (the Consent Orders) prohibiting Mr Rixon from:
- contracting to perform residential building work without a valid licence;
- representing that he or any person or entity involved with him holds a valid contractor licence, supervisor certificate or tradesperson certificate when they do not;
- completing or supervising the completion of building work without a valid licence; and
- requesting or accepting payment for the performance or proposed performance of residential building work without a valid licence.
On 9 May 2014, the Supreme Court of New South Wales convicted Mr Rixon of contempt of court for breaching the Consent Orders. Garling J sentenced Mr Rixon to 18 months imprisonment, suspended upon the condition of good behaviour, compliance with the Consent Orders and completing 300 hours of community service.
Throughout January and February 2015, Mr Rixon once again breached the Consent Orders by:
- placing an advertisement for “labour and material under $1,000.00” under the name Affordable Home Services (an unregistered business name) in the local paper and in connection with this, using the ABN and ACN of another business, unbeknownst to its director;
- attending the premises of a Mr Gibara to discuss demolishing a brick wall and undertaking further works including the installation of a new Colorbond fence and concrete driveway to the value of $21,000;
- supervising two labourers he had hired through an online advertisement on Gumtree to perform part of the work; and
- accepting four payments totalling $10,000 for works undertaken on Mr Gibara’s premises.
The ‘supervision only’ exclusion
Mr Rixon submitted the work he undertook was merely supervisory since he only coordinated and facilitated the exchange of money from Mr Gibara to the operator of an earthworks moving machine responsible for the earthworks necessary to erect the Colorbond fence.
The Court rejected this submission for three reasons: the owner’s evidence had not been challenged, Mr Rixon had not sworn an affidavit or given evidence and Mr Rixon had a number of convictions for offences regarding dishonesty.
Whilst the Court did not examine the supervision only exclusion from the definition of residential building work (Schedule 1 clause 2(3)(i) to the Act), it should be remembered that it excludes from the definition of residential building work the supervision only of residential building work:
(i) by a person registered as an architect under the Architects Act 2003, or
(ii) by a person supervising owner-builder work for no reward or other consideration, or
(iii) by any other person, if all the residential building work is being done or supervised by the holder of a contractor licence authorising its holder to contract to do that work.
Assuming that Mr Rixon sought to rely on (iii), this was not addressed in evidence.
Mr Rixon pleaded guilty to contempt of Court for breaching the Consent Orders. In sentencing, the Court held that:
Mr Rixon deliberately did the acts set out in the charges and did them knowing that they were in contravention of the [Consent Orders]. He could not have been in any doubt that he was not permitted to do the things the subject of the charges because only five months earlier he had been convicted of contempt for performing similar acts in breach of the same [Consent Orders] … put in place for the purpose of protecting members of the public in accordance with the underlying intention of [the Act], from unlicensed builders. The contempt, therefore, by breaching the [Consent Orders] not only undermines the authority and integrity of the Court but had the effect of injuring members of the public sought to be protected …
As a result, the Court sentenced Mr Rixon to a term of imprisonment of 18 months with a 12 month non-parole period.
Ultimately, the Court’s first decision of the year is a stern warning for repeat offenders who undertake or supervise construction work without a contractor licence. Those seeking to circumvent the Act must be mindful of the Act’s paramount obligation towards consumers, and the willingness of the Court to uphold these principles.
Editorial: Christine Jones, Eleanor Grounds & Christopher Yong
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The consultation period for proposed changes for NCC 2019 is now open and the ABCB is seeking your feedback. Full details of the changes are provided in the NCC 2019 Public Comment Draft.
Feedback should be submitted using the NCC response sheet and uploaded to the online form located on the ABCB website. Submissions close 13 April 2018. For energy efficiency of commercial buildings, the public comment period closes COB, 20 April 2018. More...
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Komadina trading as We Paint Pools v Kelleher  NSWCATAP 56
COSTS: Whether special circumstances. Civil and Administrative Tribunal Act 2013 (NSW). Civil and Administrative Tribunal Rules 2014 (NSW).
NSW Commissioner for Fair Trading v Rixon (No. 4)  NSWSC 1
CONTEMPT OF COURT – sentencing – breach of consent orders preventing conduct with respect to residential building work – plea of guilty to knowingly breaching orders in five respects – contempt committed during period of suspended prison sentence imposed for a similar breach of the same orders – aggravating factors - no demonstration of remorse – high likelihood of reoffending – significance of both specific and general deterrence – no penalty other than fulltime imprisonment appropriate.
Champion Homes Pty Ltd v Guirgis  NSWCATAP 54
PRACTICE AND PROCEDURE – Interlocutory decision - leave to appeal - relevance of cl 12 of Sch 4 of the Civil and Administrative Tribunal Act 2013 - need to show substantial miscarriage of justice - applicable principles to grant of leave. SUMMONS - application to set aside - applicable principles - need to identify issues in dispute - apparent relevance - “throw light on” issues in dispute - unduly onerous - oppressive.
COSTS - general discretion - partial success in application.
The substantive proceedings in which the Decision was made relate to disputes concerning a contract for residential building works between the builder and the respondent (homeowner).
Athas v Baxter  NSWCATAP 62 (12 March 2018) (A. Coleman SC, Senior Member, D. Goldstein, Senior Member)
Existence of special circumstances to justify a costs order. Civil and Administrative Tribunal Act 2013 (NSW).
Owners Corporation SP 80609 v Paragon Construction (NSW) Pty Limited  NSWSC 266 (02 March 2018) (McDougall J)
CIVIL PROCEDURE – application by builder and developer for leave to bring cross claim against principal certifying authority – whether cross claim maintainable at law – whether principal certifying authority owes duty of care to first plaintiff – whether any liabilities which exist are coordinate – where prior questions of law unable to be quickly and easily resolved – where no prejudice to the principal certifying authority exists aside from costs and inconvenience – leave granted.
CIVIL PROCEDURE – offer of compromise accepted between first plaintiff and third defendant – whether judgment should be entered now in accordance with UCPR 20.27 – where issue of potential prejudice or estoppel may arise if judgment is entered – no prejudice in delaying entry of judgment until trial – judgment not entered.
The Owners of Strata Plan 84879 v Ex Parte JMA Developments Pty Ltd & Anor  NSWDC 424 (07 August 2017) (Neilson DCJ)
CONTRACTS – BUILDING AND CONSTRUCTION CONTRACT – APPLICATION OF STATUTORY PROVISIONS – first defendant (a builder) constructed four townhouses for second defendant (a developer) – property subsequently came into possession of plaintiff (owners’ corporation) which became “successor in title” to developer and the developer became statutorily liable for any breach by the builder. Claim proceeded ex parte.
Chuang v New Legend Global Developments Pty Ltd  NSWCATCD 101 (20 November 2017) (P French, General Member)
HOME BUILDING – claim by a homebuilder for compensation from a builder for costs of rectifying incomplete and defective home building works; claim by a homebuilder for refund of project management fees paid to a builder in circumstances where the building works were incomplete and defective – claim that the builder engaged in misleading and deceptive conduct – homebuilder’s entitlement to compensation established on the evidence – homebuilder’s entitlement to a refund of project management fees not established on the evidence - homebuilder’s entitlement to relief from payment of project management fee established on the evidence.
PRACTICE & PROCEDURE – application for leave to be represented – where the applicant does not speak English – where the quantum of the claim exceeds $80,000.00 – where there is a degree of legal complexity in the proceedings – where leave has been granted to both parties to be represented in the proceedings in the interlocutory stages – leave granted.
COSTS – homebuilder’s claim for costs of production of an expert report – homebuilder’s claim for costs of the proceedings on an indemnity basis – principles to be applied – costs awarded on the ordinary basis.
Home Building Act 1989 (NSW) (No. 147 of 1989)
Proposed amendment by State Debt Recovery Bill 2017.
Strata Schemes Management Act 2015 (NSW) (No. 50 of 2015)
Proposed amendment by Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017.
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution)
T: +61 2 8083 0477
Stefanie Dunnicliff, Senior Associate
T: +61 2 8083 0464
Divya Chaddha, Associate
T: +61 2 8083 0457
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