How to Defend a Notice To Show Cause and Disciplinary Proceedings

Pursuant to s 53 of the Home Building Act 1989 (NSW) (the Act), a holder of a contractor licence or a supervisor certificate who has control over the carrying out of residential building work or specialist work is guilty of improper conduct if:

• the requirements of the Act are not complied with;
• a breach of a statutory warranty occurs in the course of performing the work; or
• the specialist work is not completed in a workmanlike manner or unsuitable materials are used.

It is a sufficient defence to s 53 of the Act if the holder proves that the holder used all due diligence to prevent the occurrence of the improper conduct. Pursuant to s 18B of the Act, there are various warranties which are implied into every contract for the performance of residential building work. These warranties include:

• the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract;
• all materials supplied by the holder or person will be good and suitable for the purpose for which they are used;
• the work will be done in accordance with the Act or any other relevant law;
• the work will be done with due diligence and within the time stipulated in the contract;
• if the work consists of the construction, addition, renovation or protective treatment of a dwelling, the work will result in a dwelling that is reasonably fit for occupation as a dwelling; and
• the work and any materials used in doing the work will be reasonably fit for the specified.

In the case of Calandra v Director General Department of Finances and Services [2012] NSWADT 144, Mr Calanda made an application to the Administrative Decision Tribunal to review the decision made by the Department of Fair Trading to take disciplinary action against him on grounds of improper conduct pursuant to s 53 and 54 of the Act.

It was alleged that Mr Calandra was the director and nominated supervisor of Calandra Constructions Pty Ltd (CC Pty Ltd) at the time CC Pty Ltd breached statutory warranties pursuant to s 18B of the Act and therefore he had engaged in improper conduct pursuant to s 51(1)(c) of the Act. It was held that Mr Calandra and CC Pty Ltd had not breached the statutory warranties and therefore did not engage in improper conduct. In particular, it was demonstrated by Mr Calandra and CC Pty Ltd that the plans and specifications for which the building inspector had made his decision to issue a Notice to Show Cause and Notice of Decision of Disciplinary Proceedings were both based on incorrect information. This was because the plans and specifications which were tendered to the building inspector were not the same plans which were provided to Mr Calandra and CC Pty Ltd. Furthermore, the homeowner had terminated the contract and therefore the building inspector had inspected a building site where the work was incomplete.

This case demonstrates the importance of a building company to maintain detailed files with respect to each project to ensure that it will be able to pick up on discrepancies with respect to a building inspector’s documentary evidence.

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This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.