Builders licensing requirements – who is a “fit and proper person”?

Entry into various professions usually requires that a person be ‘fit and proper’, and that they be granted and continue to hold a licence or registration relevant to that profession.

An authority charged with the administration of a registration scheme or licensing scheme must be satisfied that an applicant is ‘fit and proper’ before granting the licence or registration.

Entering the building profession

The relevant certification authority will depend on the location of the builder’s work. Some examples are:

• NSW Fair Trading, for licensing of builders and tradespersons in New South Wales;
• Victorian Building Authority, for registration and licensing requirements for building and plumbing practitioners in Victoria; and
• Queensland Building and Construction Commission, for  licensing in Queensland.

Although each jurisdiction has its own specific requirements, usually applicants must demonstrate that they firstly have the necessary qualifications, skills, knowledge and experience applicable for the registration or licence sought, and secondly that they satisfy certain probity conditions.

The requirement to be a fit and proper person not only applies to new applicants. It also extends to those wishing to maintain and renew their registration or licence.

How does an authority determine if an applicant is ‘fit and proper’?

The term ‘fit and proper’ is rarely defined in legislation. Rather, there are criteria and certain matters that an authority will consider, many of which relate to a person’s honesty, good character and integrity in commercial and other dealings. It is related to, but not the same as, being a person of good character.

In addition to providing evidence of relevant insurances, qualifications and experience, applicants are requested to disclose details of certain adverse or relevant matters. These are matters that may indicate that he or she is not a fit and proper to practise as a building practitioner. The disclosure of an adverse or relevant matter may trigger a request for further information or investigation.

Details of prescribed offences, convictions, licence or registration suspensions or disqualifications, and court or tribunal orders are amongst those matters investigated by an authority, as is the solvency of an individual or corporate entity.

Also relevant will be any examples of dishonesty or carelessness by the builder when dealing with the regulatory body itself. Even where there is no actual intention to deceive the authorities, failure to declare relevant information can lead to the regulatory body refusing the application. The authorities take a very dim view of builders who do not understand the regulatory regime and the importance of accuracy when dealing with it.

A failure to deal promptly with, or take seriously, customer complaints can also be relevant.

The fit and proper person requirement applies to individuals as well as directors of company entities seeking registration or licensing.

What is a relevant or adverse matter?

The following are common matters that must be disclosed, and will be considered, by an authority when determining if a person is fit and proper to enter (and remain in) the building profession:

• the applicant’s criminal history and whether he or she has been convicted of an offence that involves fraud or dishonesty;
• whether the applicant has had a licence or registration cancelled or suspended;
• whether the applicant has been disqualified from managing a corporation;
• whether the applicant is or has previously been bankrupt;
• whether the applicant is or has previously been involved in the control of a corporate entity under administration or liquidation;
• any previous breaches of the consumer law or contraventions of relevant building legislation and regulations;
• the failure to disclose an adverse matter or the making of false or misleading representations in an application, which subsequently becomes known to the authority;
• whether any court or tribunal orders have been made against the applicant;
• whether the applicant has had an unreasonable number of complaints, penalty notices or cautions issued against him or her;
• any disciplinary or legal action previously taken against the applicant by a regulatory body, authority or person; and
• whether the applicant has previously been refused relevant insurance as a building practitioner.

Disclosure of an adverse or relevant matter does not necessarily mean that registration or licensing will not be granted. The authority will consider all matters, in all circumstances, and whether they establish a pattern of conduct that might deem the applicant does not have the appropriate standards to be considered a fit and proper person. The authority may also consider how recently the conduct took place as well as any relevant or mitigating circumstances. Further, it will assess whether the matters show that improper conduct in the future is likely.

The importance of disclosure – case study

It is important to disclose all information concerning a relevant or adverse matter when seeking registration with a building authority. Failing to do so can seriously jeopardise the application. Such was the case in Taouk v Director General, NSW Fair Trading [2016] NSWCATOD 41.

In this case the applicant was refused a contractor’s licence by NSW Fair Trading on the grounds that he did not meet the relevant industry experience required for the licence sought, and that he was not a ‘fit and proper person’ as required by the relevant legislation.

The applicant sought review by the NSW Civil and Administrative Tribunal.

There were various irregularities and omissions of relevant matters in the application, including a failure to disclose the applicant’s previous directorship of a liquidated company.

While satisfied that the applicant had ‘probably’ met the requirement of relevant experience for the licence sought, and that there was insufficient evidence showing that he was deceptive, the Tribunal nevertheless considered he was:

“…careless in his response to the application form questions that related to previous business difficulties and in regard to the accuracy of the information that he provided…

[The] discrepancies and irregularities and the applicant’s failure to declare his directorship of [the liquidated company] are consistent with the approach that he took in regard to his application. It is apparent from his evidence that he held the view that in order to obtain the licence he just needed to establish that he had two years’ building experience and that any other considerations were secondary … They show a cavalier attitude to the regulatory regime.”

The Tribunal pointed out the consumer protection purpose of the legislation, stating that being fit and proper “involves more than honesty and integrity, it involves knowledge and ability.”

The issues raised regarding the applicant’s honesty and his attitude to the regulatory requirements of the scheme led the Tribunal to believe that he did not demonstrate such knowledge and ability. The Tribunal confirmed that the licence should not be granted until such time as the applicant could satisfy the authority otherwise.

Conclusion

In addition to holding the relevant qualifications and experience, an applicant must be a fit and proper person to be granted registration or a licence in the building industry.

When seeking or renewing registration, applicants must ensure they provide full disclosure of any relevant or adverse matters, have a sound understanding of the regulations, and demonstrate the ability to properly deal with a regulator. Honesty and accuracy when dealing with the regulator are essential.

Applicants who are refused registration and licensing, or have their registration or a licence suspended or cancelled, for failure to meet the fit and proper person test may have a right to an internal review or appeal through the Tribunal of their state.

If you or someone you know wants more information or needs help or advice, please contact us on +61 (2) 9248 3450 or email [email protected].