On 10 December 2019, the Building and Construction Legislation Amendment Act 2019 amended the Construction Occupations (Licensing) Act 2004 (COLA) among other things to allow for rectification orders to be made in relation to directors of licensed corporations.
The amendments included new sections 39A and 39B. Section 39A allows the Registrar to make a rectification order against a director of a licensed corporation if, before the Registrar makes the order in relation to the corporation, the corporation is wound up, enters external administration, or is deregistered. Section 39B allows the Registrar to make a rectification order against a director of a licensed corporation if, after the Registrar makes the order in relation to the corporation, the corporation is wound up, enters external administration, or is deregistered.
Euca Constructions Pty Ltd (Euca) was registered as a corporation on 28 March 2011. David Hill, the applicant in AT 80/2020 and Kieran Jones, the applicant in AT 86/2020, were appointed as directors of Euca. Mr Hill held a Class B Builder Licence.
On 19 July 2011, Euca lodged an application for a Construction Practitioner Licence – Organisation for a Class Builder Licence. The minimum requirement for a corporation to be eligible to be licensed was that the corporation had a single nominee appointed by it who was responsible for the supervision of the construction services provided by the corporation. The application nominated Mr Hill as the sole nominee of Euca.
In late August 2011, the Crown lessee of Block 25 Section 7 Chifley appointed Euca to construct 11 residential units and basement carpark on the land. A Certificate of Occupancy and Use was issued on 30 April 2012.
Inspections of the premises undertaken in 2015 revealed extensive defects. On 29 July 2015, Euca went into voluntary liquidation. Euca was deregistered on 21 March 2016. In response to a complaint about the quality of the building work Access Canberra inspected the premises and on 23 June 2020, the Deputy Construction Occupations Registrar (Registrar) issued a Notice of Intention to Make a Rectification Order (notice of intention) to Messrs Hill and Jones, inviting submissions about the making of a rectification order within 28 days of receipt of the notice of intention.
On 8 October 2020, the Registrar gave notice of his decision and issued rectification orders under section 39A of COLA against Messrs Hill and Jones.
It was common ground that section 39A(1)(a)(i) was satisfied – i.e. that the Registrar formed the belief, on reasonable grounds, that Euca provided a construction service otherwise than in accordance with section 42 of the Building Act 2004, which is an operational Act for the purposes of the COLA.
The issue in this case was whether section 39A(1)(a)(ii) was satisfied.
The applications were for review of a decision by the Registrar under section 39A to make rectification orders in relation to the former directors of a formerly licensed corporation that was deregistered on 21 March 2016.
The applicants challenge the validity of the orders on two grounds. First, the Registrar lacked jurisdiction to make an order under section 39A. Second, the order was unlawful because it operated retrospectively to impose liability on the directors for past conduct that was not unlawful at the time.
Both issues turned on the construction of section 39A.
Ultimately the Tribunal Member was satisfied that the Registrar lacked jurisdiction to make orders against the applicants. The appropriate order in both applications was to set aside the Registrar’s decision to make a rectification order and substitute a decision that no order should be made under section 39A.
Senior Member Orlov then set out the following guide as to how the December 2019 amendments applied to directors of a corporate entity at or after the time a construction service was provided noting:
(a) such a person as a ‘former director’;
(b) a corporate entity becoming the subject of a winding-up order, or having a controller or administrator appointed, or being deregistered, as the ‘event’.
(c) the registrar forming the belief, on reasonable grounds, that a corporate entity has provided a construction service otherwise than in accordance with the COLA or an operational Act and that it may be appropriate to make a rectification order in relation to the entity, as the ‘requisite belief’.
If the event happens at any time before the registrar forms the requisite belief, the registrar lacks jurisdiction to make a rectification order in relation to a former director. That situation applied in this case of Hill.
If the event happens after the registrar forms the requisite belief but before the registrar gives the entity a notice of intention under section 34(2), the registrar may give a notice to a former director under section 39A(2)(b). The registrar’s jurisdiction to make a rectification order in relation to the former director then depends on satisfaction of the criteria in section 39A(3).
If the event happens after the registrar gives the entity a notice of intention under section 34(2) but before the registrar makes a rectification order in relation to the entity, the registrar may give a former director a copy of the notice of intention and the statement required by section 39A(2)(a). The registrar’s jurisdiction to make a rectification order in relation to the former director then depends on satisfaction of the criteria in section 39A(3).
If the event happens after the registrar makes a rectification order in relation to the entity, pursuant to section 39B(2) the order is taken to have been made in relation to each former director.
Given the reasons for the decision on jurisdiction, the question whether the legislation had retrospective operation did not arise and no view was expressed on this issue.
The appropriate orders under section 68(3) of the ACT Civil and Administrative Tribunal Act 2008 in both applications was to set aside the decisions under review and substitute decisions that no orders should be made under section 39A(3) of the COLA in relation to Mr Hill or Mr Jones.