Upholding the Mutual Recognition Principle: Federal Court Sets Aside VBA’s Decision to Refuse Registration
By Justin Cotton, Director, Lovegrove & Cotton – Construction and Planning Lawyers
A recent decision of the Federal Court of Australia has found that under the Mutual Recognition Scheme, a building registration authority is not entitled to separately consider an applicant’s “good character” as a ground to refuse registration in the second State.
While this case decision concerned a New South Wales waterproofing contractor seeking to gain registration as a contractor in Victoria, it has ramifications that affect mutual recognition in all States, because the Mutual Recognition Act 1992 is Commonwealth legislation.
The case is that of Andriotis v Victorian Building Authority  FCAFC 24, and as of May 2019 it is understood to be subject to an appeal (the appeal’s progress can be followed here), however, as the decision stands, it places a curb on building registration authorities that seek to invoke some wider capacity to “knock back” registration under the Mutual Recognition Scheme than is found in section 23 of the Mutual Recognition Act.
Originally, the Victorian Building Authority had declined to grant Mr Andriotis registration in Victoria, despite his existing registration as a waterproofing contractor in New South Wales. The determination was upheld on review by the Administrative Appeals Tribunal, which found that the VBA was justified in applying the “good character” test pursuant to section 170(1)(c) of the Building Act 1993 (Vic).
Significantly, on appeal to the Federal Court of Australia, the decision was reversed and as the Court stated in its conclusion (paragraph 140): “We have determined that the AAT erred in concluding that it was entitled to take into account and apply the good character qualifications required by s 170(1)(c) of the Victorian Act.”
The “Mutual Recognition Principle” is set out in section 17(1) of the MR Act, while section 17(2) gives an “exception” to that principle.
Section 17(1) reads:
“The mutual recognition principle is that, subject to this Part, a person who is registered in the first State for an occupation is, by this Act, entitled after notifying the local registration authority of the second State for the equivalent occupation:
(a) to be registered in the second State for the equivalent occupation; and
(b) pending such registration, to carry on the equivalent occupation in the second State.”
Section 17(2) sets out the exception in these terms:
“However, the mutual recognition principle is subject to the exception that it does not affect the operation of laws that regulate the manner of carrying on an occupation in the second State, so long as those laws:
(a) apply equally to all persons carrying on or seeking to carry on the occupation under the law of the second State; and
(b) are not based on the attainment or possession of some qualification or experience relating to fitness to carry on the occupation.”
Section 23(1) specifies when a mutual recognition application may be refused and says:
“A local registration authority may refuse the grant of registration if:
(a) any of the statements or information in the notice as required by section 19 are materially false or misleading; or
(b) any document or information as required by subsection 19(3) has not been provided or is materially false or misleading; or
(c) the authority decides that the occupation in which registration is sought is not an equivalent occupation and equivalence cannot be achieved by the imposition of conditions.”
FINDINGS BY THE COURT
The objectives of the MR Act are described in section 3, where it is said that the Act was enacted for the “purpose of promoting the goal of freedom of movement of goods and service providers in a national market in Australia.” It appears that the Federal Court had this objective in mind, when preferring a broader approach to the mutual recognition principal rather than an authority’s capacity to refuse registration.
Section 20 of the Act reads in part:
“(1) A person who lodges a notice under section 19 with a local registration authority of the second State is entitled to be registered in the equivalent occupation, as if the law of the second State that deals with registration expressly provided that registration in the first State is a sufficient ground of entitlement to registration.
(2) The local registration authority may grant registration on that ground and may grant renewals of such registration.”
In this case the Court found that the word “may” in section 20(2) was used in its permissive sense to disclose when the Authority had the power to grant registration, but it did not give a general discretion to reject registration on any grounds. Instead, section 23(1) lays out the bases upon which registration “may” be refused. The first two grounds deal with inaccuracy or incompleteness in the information or documents lodged with the mutual recognition application, while the final third ground is where there is a lack of equivalence between the occupations in each State.
The Court stated (paragraph 108): “That registration could be refused on any ground is untenable. A capacity of that kind would serve to undermine the very objective of the MR Act.” Reading section 20(2) in context with the rejection provision in section 23(1) meant that where the basis for registration in section 20(1) is met then approval must follow unless any of the disqualifying grounds in section 23(1) arise.
Earlier the AAT had decided that the good character benchmark found in section 170(1)(c) of the Building Act 1993 was within the bounds of the exception in section 17(2) of the MR Act, so that the Authority could indeed apply the good character basis for refusing registration on a mutual recognition application. This was on the grounds that good character was not to be seen as some form of “qualification or experience relating to fitness to carry on an occupation.”
The Federal Court came to a contrary view, with the crux of their reasoning being that the Court did not accept any contention that the natural meaning of the word “qualification” did not include concepts of “good character”. The learned Judges said: “Just like physical characteristics or qualities, a person’s moral characteristics, are apt to constitute a condition of suitability for the conferral of some right or status and, in our view, are encompassed by the ordinary and natural meaning of the word “qualification” when used in that context.”
In highlighting this point even further, reference was made to the definition of “occupation” in section 4 of the MR Act where the word “character” was expressly referred to as an example of what was meant by “qualification”. Obviously then it was presumed that the Act as a whole should be construed consistently across its provisions, so as to not separate the concept of “character” from “qualification” when looking at the exception in section 17.
Therefore, while section 17(2) provides an exception to the mutual recognition principle for the operation of laws that “regulate the manner of carrying on an occupation”, and while sub-section 17(2)(b) waters down that exception to say that those laws must not relate to the “possession of some qualification” regarding the “fitness to carry on” the occupation, the Court held firmly that good character was in fact such a qualification.
It followed that the Authority was wrong to consider that character did not fall within the limit on the exception, and was wrong to separately consider the applicant’s character on a mutual recognition application.
Finally, the Court said that the good character component in section 170(1)(c) of the Victorian Act is a law that deals with registration, but was not one that regulates “the manner of carrying on an occupation” within the meaning of section 17(2) of the Act.
It remains to be seen what the outcome will be on any appeal of this decision, but for the moment it is some good news for those seeking to take advantage of mutual recognition laws in construction occupations.
For further advice or assistance in relation to building law matters including construction disputes and building regulation, do not hesitate to contact a legal team with expertise in this area.
Lovegrove & Cotton Lawyers to the building industry
For thirty years, Lovegrove & Cotton have represented builders, building surveyors and building practitioners in Melbourne, Canberra, Sydney and Queensland. Justin Cotton is a leading Australian construction lawyer and widely respected in the building fraternity as evidenced by his appointment as Chairperson of the HIA Industrial Relations and Legal Services Committee, and member of the Regional Executive Committee, for HIA Victorian Chapter. Lovegrove & Cotton can help practitioners resolve any type of building dispute and are preeminent in the area of building practitioner advocacy. If you wish to engage the firm, feel free to contact us via our website or by emailing firstname.lastname@example.org.