In a recent unanimous decision – Victorian Building Authority v Andriotis [2019] HCA 22 – the High Court ruled that a building practitioner could not be barred from registering interstate, even though the interstate registration body found the practitioner had lied in their registration application in the first jurisdiction.[1]

At a time when the building industry is in crisis because of the proliferation of serious defects, particularly in multi-dwelling residential buildings, it is concerning that a registration body cannot reject a building practitioner who is not of ‘good character’.

This curious situation came about because of the Commonwealth’s Mutual Recognition Act 1992 (MRA), which has the generally admirable aim of freedom of movement of goods and service providers across Australia. The High Court held that a State authority, in this case the Victorian Building Authority (VBA), does not have a discretionary power to refuse to register a building practitioner who is already registered in another State. In short, the MRA’s ‘mutual recognition principle’ trumps a ‘good character’ requirement in a State Act, in this case the Victorian Building Act 1993 (Building Act).

Background

The mutual recognition principle set out in section 17(1) of the MRA means a person registered for an occupation in one State may be registered in an equivalent occupation in another State, after notifying the local registration authority of the second State.

Section 20(2) provides that the local registration authority ‘may’ grant registration on that ground. Section 17(2) provides for an exception, which is that the mutual recognition principle does not affect the operation of laws that regulate the manner of carrying on an occupation in the second State. This is contingent on those laws not being ‘based on the attainment or possession of some qualification or experience relating to fitness to carry on the occupation’.

Mr Nickolaos Andriotis was registered in New South Wales as a waterproofer. In his application to the New South Wales authority, Mr Andriotis falsely stated that he had particular work experience. After being registered in New South Wales, he then sought registration as a waterproofer in Victoria, pursuant to the MRA. The Victorian Building Practitioners Board (the Board) refused to grant his registration on the basis that his New South Wales application demonstrated dishonesty, and he was therefore not of ‘good character’ as required by section 170(1)(c) of the Building Act, the Victorian scheme regulating registration.

The Administrative Appeals Tribunal affirmed the decision.[2] At Mr Andriotis's appeal to the Federal Court, the VBA (the Board's successor) argued that:

  • a local registration authority retains a discretion to refuse registration under section 20(2) of the MRA; and, in any event
  • the ‘good character’ requirement in section 170(1)(c) of the Building Act falls within the exception to the mutual recognition principle in section 17(2) of the MRA.

The Full Court rejected both arguments and allowed the appeal.[3] The VBA was granted special leave to appeal to the High Court.

The decision

The central issue was whether the MRA permitted the Board to consider whether Mr Andriotis was of ‘good character’, under section 170(1)(c) of the Building Act, when assessing his application for registration. In dismissing the appeal, the High Court held that the MRA did not permit the Board to consider whether Mr Andriotis was of good character.

The High Court held that the words ‘qualification… relating to fitness to carry on the occupation’ in section 17(2) have a broader meaning than a qualification of an educational or technical kind, and clearly encompass section 170(1)(c) of the Building Act. For the Court, that construction was consistent with the aims of the MRA. Under the mutual recognition principle on which the MRA is founded, registration for an occupation in one State is sufficient for recognition in another State, without a need to meet any further requirements of the second State.

The Court held that the word ‘may’ in section 20(2) of the MRA empowers a local registration authority to register a practitioner who is registered in another State or Territory. The word ‘may’ does not grant a broader discretion to refuse registration. The Court also held that a ‘good character’ requirement in State legislation does not fall within the exception to the ‘mutual recognition principle’ in section 17(2) of the MRA.

The appeal was dismissed, with costs awarded against the VBA. The matter was remitted to the Administrative Appeals Tribunal for a re-hearing of the appeal against the Board’s decision.

Practical implications

The VBA believes the High Court’s decision may have profound implications for the building industry across Australia, resulting in the mutual recognition legislation being used to allow less experienced practitioners or persons of poor character to be admitted to the industry.[4] The decision allows these practitioners to become registered in jurisdictions with easier registration requirements, and then use the mutual recognition regime to gain registration in States with tougher requirements (such as Victoria).

The chief executive officer of the VBA, Ms Sue Eddy, believes the decision represents a setback for consumer protection in Victoria:

“Victorian consumers should be entitled to presume that the building practitioners they invite into their homes have the requisite experience and are of good character…[i]n this instance, the applicant lied to the NSW regulator about his previous experience. Due to the manner in which his application for registration in NSW was processed at the relevant time, this was not picked up. In circumstances where the VBA is aware that an applicant has provided false information to gain registration in NSW, it seems incredible that the mutual recognition regime requires the VBA to register him in Victoria, yet this is the effect of the High Court’s decision.”[5]

The VBA has said it would ask the New South Wales regulator to reconsider Mr Andriotis’s registration in light of the AAT’s findings as to his character and the circumstances in which he obtained his original registration.[6] If the New South Wales regulator cancels, suspends or places conditions on Mr Andriotis’s registration, then by virtue of section 33 of the MRA, his registration in Victoria would be affected in the same way.

Some of the Justices of the High Court explained what they considered the Board or another second State regulatory authority could do in a similar situation. Nettle and Gordon JJ emphasised that the regulatory authority in the second State could discipline a practitioner for a breach of the laws of that State despite the MRA. Using the Building Act as an example, their Honours explained that under section 179 of that Act, the Board could have cancelled, suspended or imposed conditions on Mr Andriotis’s registration if the Board found him guilty of unprofessional conduct or found that he had failed to comply with a code of conduct after his registration.[7] Edelman J also pointed out that a second State could take disciplinary action against a person convicted of a serious dishonesty offence while carrying on an occupation in that State, on the basis of lack of good character or fitness or propriety to carry on the occupation.[8]

The High Court’s proposed solution of disciplining a practitioner may be effective when a breach of a law in the second State is identified and disciplinary action commenced shortly after registration. In these situations, it is unlikely consumers would be harmed by building practitioners who would not have passed the requirements in the second State and were only registered due to the MRA. However, where a breach is not identified until long after registration, many consumers could be exposed to work by a practitioner who falls short of the requirements in their State.

This risk of substandard building practitioners is particularly concerning at a time when the building industry is plagued by highly publicised examples of poor workmanship and cost cutting. In light of the High Court’s decision in Victorian Building Authority v Andriotis, State and Territory registration authorities must work together to ensure that unprofessional practitioners are not registered, or are deregistered or placed on conditional registrations.