QBSA v C-View Windows Pty Ltd
[2011] QCAT 211
•5 May 2011
| CITATION: | Queensland Building Services Authority v C-View Windows Pty Ltd [2011] QCAT 211 |
| PARTIES: | Queensland Building Services Authority |
| v | |
| C-View Windows Pty Ltd |
| APPLICATION NUMBER: | OCR287-10 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Ron Joachim, Member |
| DELIVERED ON: | 5 May 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | [1] That the respondent pay the Queensland Building Services Authority the sum of $8,000. [2] That the respondent pay the costs of the Queensland Building Services Authority in the amount of $250. |
| CATCHWORDS: | Application – disciplinary proceeding |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | No appearance |
| RESPONDENT: | No appearance |
REASONS FOR DECISION
An application was received by the Tribunal on 2 November 2010 from the Queensland Building Services Authority. The respondent is C-View Windows Pty Ltd operating from Burleigh Heads.
The Authority is applying to the Tribunal to conduct a proceeding to decide whether a disciplinary ground is established. Annexure A to the application outlines the orders sought by the Authority and the particulars of the alleged breaches.
The breaches alleged to have occurred are that the respondent has contravened sections 89A and or 89K of the Queensland Building Services Authority Act 1991 in that in the licensed years 2005–2006, 2006–2007, 2007–2008 and 2008–2009 it exceeded its allowable annual turnover by several hundred percent in the first of those three years and twenty percent in 2008–2009 all without first notifying the Authority or obtaining the Authority’s approval. The Authority alleges that the respondents have breached a condition of its license on 4 occasions. The financial requirements for licensing policy provides licensees must not exceed their allowable annual turnover by more than ten percent.
Section 88 of the Queensland Building Services Authority Act 1991 (the QBSA Act) provides that the Authority may apply to the Tribunal to conduct a proceeding to decide whether proper grounds exist for taking disciplinary action.
Section 89A of the QBSA Act provides that proper grounds exist for taking disciplinary action if a licensee contravenes the requirement imposed by the QBSA Act. The penalty the Tribunal may impose by order is a maximum of $100,000. There is no minimum penalty. On 7 February 2011 the Queensland Building Services Authority applied to the Tribunal for a decision/order by consent. This application was heard on 10 February 2011 and resulted in consent orders which were agreed to by the parties. The consent orders essentially were that proper grounds existed for the taking of disciplinary action against the respondent for contravening sections 89A and or 89K of the QBSA Act for the reasons outlined in the Authority’s application.
The particulars of the contraventions will be outlined later in more particularity. It was also ordered by consent that the matters of penalty and costs be determined on the papers not before 1 April 2011 and that the applicant and the respondent provide submissions in respect of both penalty and costs. These submissions have been received by the Tribunal and the Tribunal has considered both submissions.
C-View was registered as a company on 20 May 2005. It has a license number 1079031 from the Authority in “glass glazing and aluminium”. The respondent’s business consists principally of the manufacture and supply of windows for use in the domestic residential market and to a significantly lesser extent the industrial market. Customers of the business are typically builders and the finished products are supplied to builders or home owners for their own installation. The license was required by the respondent in connection with a part of the respondent’s business whereby the respondent installs its own windows for customers.
Submissions of the QBSA
The submissions of the Authority correctly note that the Tribunal decided:
That proper grounds exit for taking disciplinary action against the Respondent in that it contravened sections 89(a) and / or 89(k) of the Queensland Building Services Authority Act 1991 (“QBSA Act”) in that, during its 2005-2006 license year, it exceeded its Allowable Annual Turnover (‘AATO’) by three million, four hundred and ninety-one thousand, five hundred and sixty-eight dollars ($3,491,568) or 294.82% without first notifying the Authority or obtaining the Authority’s approval (the ‘2005-2006’ Breach’).
(ii)That proper grounds exist for taking disciplinary action against the Respondent in that it contravened sections 89(a) and / or 89(k) of the QBSA Act in that, during its 2006-2007 licence year, it exceeded its AATO by four million, two hundred and seventeen thousand, and seventeen dollars ($4,217,017) or 305.3% without first notifying the Authority or obtaining the Authority’s approval (the ‘2006-2007 Breach’).
(iii)That proper grounds exist for taking disciplinary action against the Respondent in that it contravened sections 89(a) and / 89(k) of the QBSA Act in that, during its 2007-2008 licence year, it exceeded its AATO by four million, four hundred and twenty-seven thousand, and eleven dollars ($4,427,011) or 226.4% without first notifying the Authority or obtaining the Authority’s approval (the ‘2007-2008 Breach’).
(iv)That proper grounds exist for taking disciplinary action against the Respondent in that it contravened sections 89(a) and / 89(k) of the QBSA Act in that, during its 2008-2009 licence year, it exceeded its AATO by seven hundred and seventy-two thousand, one hundred and eighty-five dollars ($772,185) or 20.1% without first notifying the Authority or obtaining the Authority’s approval (the ‘2008-2009 Breach’).
The Authority submitted that the primary purpose of disciplinary proceedings is to uphold the statutory regulatory scheme and to protect the public. It further submitted that the penalty must provide a sufficient deterrent to other persons licensed by the Authority. The Authority referred to the matter of Queensland Building Services Authority v Built Queensland Pty Ltd, noting the relevant factors to be taken into account in determining matters involving a licensee breach of their AATO. For convenience these are listed below:
the length of time the licensee has been in business;
whether the breach was an isolated incident or whether there was more than one breach;
whether there is satisfactory explanation for the occurrence of the breach;
whether the breach is likely to reoccur
the size of the licensee’s business or company, both relative to the size of the breach and generally;
the amount by which the AATO was exceeded, both in monetary and percentage terms; and
vii.whether the licensee has been involved in previous events of this nature, or other offences against its statutory obligations and/or failure to comply with statutory standards.
[10] The Authority refers to the Respondent’s license having not been renewed noting that the sole director together with the respondent’s nominee supervisor are the directors of the company CVW Installations Pty who have been granted a license in the glass, glazing and aluminium class. The Authority refers to this in relation to their continuing need for specific deterrents of the respondent director and nominee. The Tribunal places no particular importance on this for the purpose of this matter.
[11] The Authority submits that the respondent has presumably failed to regularly monitor its turnover and other aspects of its financial information during the subject license years. The Authority relies on the comments made in the matter of Queensland Building Services Authority v Janda Commercial Pty Ltd:
“Licensees need to realise that they are required to regularly monitor turnover throughout their licence year towards ensuring compliance and identifying the need to advise the Authority and seek adjustments to an allowance. Failure to do so means that they are open to disciplinary proceedings in the event that they exceed their allowable annual turnover in any licence year.”
[12] The Authority submits the penalty must encourage licensees to be fully aware of the requirements of their licence and their obligations to the Authority. It further submits that the respondent should have demonstrated it has implemented ongoing accounting and business forecasting measures to ensure it does not breach its AATO again in the future and that a significant penalty will serve the purpose of these proceedings by encouraging compliance with the regulatory scheme thus protecting members of the public.
[13] The Authority further submits that the respondent has been specifically notified of aspects of its license conditions relating to the policy on numerous occasions. The Authority submits that the Tribunal should take into account the comment made in the matter of QBSA v Dilizio Painting Pty Ltd that a licence is a privilege and not a right. The Authority argues that the deterrent effect is unlikely to occur should the penalty ordered be insignificant proportionate to the benefit gained by the respondent and argues that the breaches by the respondent occurred over four consecutive licence years. The Authority argues that the most concerning aspect of this case is the fact that the respondents pattern of breaching in four consecutive years.
[14] In 2005-2006 year the breach in percentage terms equated to 294.82% being more than 29 times the 10% leeway allowed under the policy. The 2006-2007 breach in percentage terms, a breach of 305.3% equating to more than 30 times the 10% leeway. The 2007-2008 breach equated in percentage terms or breach of 226.04%, this breach equated to 22 times the 10% leeway allowed under the licensing policy. The 2008-2009 breach equated in percentage terms to a breach of 20.1% or just over twice the 10% leeway.
[15] The Authority argues the primary purpose of the policy is to avoid situations where licensees trade beyond their means and are unable to honour their obligations to consumers, contractors and suppliers. It further argues that its role as regulator is undermined when licensees breach the financial conditions of their license. The Authority provides some comparative cases. The first of these concern the Peninsula Construction Group Pty Ltd who had two breaches – one of 363.1% and the second 504.6%. The penalty in this matter was $8,000.00. The Authority argues that the breaches are not dissimilar in the present case but because there are twice as many breaches a penalty twice as great is an appropriate minimum penalty.
[16] The Tribunal was referred to two matters decided in the former Commercial and Consumer Tribunal which involved one Alfredo Mena. In the first of these matters in 2005 there were two breaches – one of 92% and the second breach three years later of 284%. The penalty was $5,000.00. On the second occasion the breach was for 310.7% and the respondent was ordered to pay a penalty of $7,000.00. The Authority submits this demonstrates the need to increase the penalty attributable to multiple breaches. In the matter of Thomas and Coffey Ltd in 2006 four breaches were found to exist, two of which were AATO breaches coinciding with two breaches during the same licence year relating to failure to maintain a stated level of net tangible assets and the respondent was ordered to pay a penalty of $10,000.
[17] The Authority notes that the Thomas and Coffey Ltd matter is reasonably different to the present case, also noting that the Tribunal should take into account the fact that the value of penalty points since the time of that decision in 2006 has risen by 33%.
[18] Finally the Authority submits that a penalty in the range of $16,000-$20,000 is appropriate. The Authority submits that it be awarded costs, and based on the respondent’s early admission of there being proper grounds, the Authority seeks its costs fixed in the amount of $250.
Submissions of the respondent
[19] The respondent received and considered the submission of the QBSA prior to preparing its submissions. The respondent accepted the following matters:
i.the Tribunal’s decision in relation to the existence of proper grounds for disciplinary action in respect of the four license years where the AATO was exceeded.
ii.that the maximum penalty that may be imposed is $100,000.
iii.the relevant factors that the Tribunal should take into account in determining penalty for a breach of their AATO, as outlined in the QBSA submissions.
[20] By way of background the respondent submitted that C-View Windows Pty Ltd was registered as a company on 20 May 2005. Following registration the respondent engaged the services of its accountant to assist it to apply for a licence which was issued on 26 July 2005, in the class of glass, glazing and aluminium.
[21] The respondent submits that of the gross turnover in the licence year 2005-2006 approximately $400,000 of the $4,675,864 was attributable to the manufacture and installation work performed by the respondent. The equivalent amounts for license years 2006-2007 was 641,000, for 2007-2008 $800,000, and for 2008-2009 $500,000. This represents, the respondent argues, an annual turnover of the respondent’s business of approximately 12% per year. The respondent argues that the company engaged the services of an accountant in good faith to complete the original application and subsequent annual renewal of license application and was at all material times under the honest but mistaken belief that its allowable annual turnover figure related to the value of the installation work not to the value of its overall gross turnover.
[22] The respondent states that he was aware that the value of installation work was far less than the figure returned as its AATO in the relevant license year. The respondent submits that he had an honest but mistaken belief in his obligations and had what he can now see to be a serious misunderstanding with the accountant. The respondent was informed, he says, by its accountant, that if the Authority had any issue with the financial figures, it would be communicated to the respondent. No issues were subsequently raised. The respondent submits that it erroneously assumed it was approved for installation work because the value of that work was significantly less than the AATO advised by the Authority. The respondent submits it did not seek to mislead the Authority because its actual turnover figure for the whole of its operations were quoted and the independent review report provided by Allan’s Australia to the Authority contained the respondents financial information including its annual turnover figure. The respondent argues it laboured under the same misapprehension in subsequent years.
[23] The respondent submits that it has conducted its business in an ethical and professional manner and has observed all industry standards. The respondent further submits that it sought to co-operate fully in the process and obtained legal advice quickly when it became apparent that breaches may have occurred. The respondent submits that the Tribunal should take into account in determining penalty that it acted at all times honestly but ignorantly. The respondent argues that it engaged the services of a professional advisor to advise it in its dealing with the Authority and at no time did the respondent have any cause to consider it may have been acting contrary to the requirements of its license.
[24] The respondent submits that it provided the correspondence in relation to the Authority’s licensing requirements to its advisors with instructions to attend to the matters necessary. The respondent argues that it did not became aware of either the initial offence or the perpetuation of offences in subsequent years because it relied on its advisors in respect of satisfying its licensing requirements.
[25] The respondent says it regrets that did occur. The respondent further submits there is no likelihood of reoccurrence of the breaches. The respondent has not sought to renew its license. The directors have formed CVW Installations Pty Ltd and have successfully obtained a licence. The respondent submits that the formation of CVW Installations Pty Ltd and the applications by it for the licence should not be construed in a sinister light but seen rather as an appropriate rationalisation of the respondent’s business into two separate components of manufacture and installation respectively. The respondent submits that if it had been properly advised at the outset it would have been able to structure its business into separate component entities from that time therefore avoiding the disciplinary action before the Tribunal. The respondent’s directors, it is submitted, had instructed the advisor to CVW to implement all prudent and appropriate accounting and business forecasting measures to ensure strict compliance with its AATO obligations.
[26] The respondent requests the Tribunal to take into consideration the downturn in the building industry in determining any penalty. The respondent further submits that the penalty suggested by the Authority is higher than would be required to meet the deterrent and punitive standards. The respondent submits that the penalty should be more in line with a single breach rather than a serial course of conduct and submits a penalty range of $4,000-$5,000 would be appropriate to the facts.
The Tribunal’s view
[27] The breaches which have occurred in four consecutive years by the respondent are considerable. The Tribunal agrees with the Authority that the closest disciplinary matter to this one is that one involving the Peninsula Construction Group, in which a single penalty of $8,000 was ordered against the respondent, who had only been licensed for a two year period. Breaches in that case have been in the order of 363.1% and 504.6%. The submission of the Authority is that because there are twice as many breaches a penalty of at least twice as great is an appropriate minimum penalty in the circumstances. The Tribunal does not agree with this because of the following reasons:
- The respondent has openly provided information to the Authority for four years. It is only in May 2010 that the Authority examined the reports of the independent reviewer and found that there were breaches. The respondent has given a reasonable explanation for the breaches.
- The respondent engaged the services of professional advisors and relied on their advice in respect of the material put before the Authority.
- The Tribunal considers that it is highly unlikely that the breach will reoccur.
- The licensee has not been involved in previous events of this nature or other offences against its statutory obligations.
- The breach can not be considered as an isolated incident because it happened on four occasions. However the Tribunal partly accepts the submissions of the respondent that the penalty should be aligned more to a single breach rather than to a serial course of conduct.
[28] There are two worrying features in this case, the first is on the part of the Queensland Building Services Authority. The Authority has a responsibility to administer the licensing system which arguably involves some monitoring.
[29] The Authority did not conduct a review of this file until May 2010 when it discovered the breach. Whilst the Tribunal accepts that it is the licensee’s responsibility to meet the financial requirements for licensing, the Tribunal takes the view that the Authority has some responsibility for implementing the policy in a timely manner. Reviewing compliance with allowable annual turnover limits four years after a report has been provided indicates that the BSA has not undertaken compliance checks in a timely manner.
[30] The second worrying aspect is in relation to the respondent. The respondent received a copy of the financial requirements for licensing and passed this material to its financial advisors. Whilst that is a reasonable thing to do, it can not absolve itself from responsibility for being aware of financial requirements. It is for the licensee to know what the requirements are. In addition to this I also note that the respondent argues that the license was required in connection with a minor part of the business, that is when the respondent was called upon by certain customers to install windows ordered from it. In its submission the respondent lists the gross turnover attributable to that part of the business and argues that it is well under the annual allowable turnover figure. Nevertheless the returns provided by way of the independent review report notes the annual allowable turnover as being the total turnover for the company and not the merely the installation component. It appears that at no time has the licensee questioned this with the report writer despite the report being prepared for both the respondent and the Authority. This report provides information about the allowable annual turnover and the actual annual turnover.
[31] It appears to the Tribunal that the respondent did not give sufficient attention to the license requirements in respect of the allowable annual turnover.
[32] The Tribunal accepts the Authority’s submission that there is a need to provide a sufficient deterrent to others and accepts the submission that the respondent has failed to regularly monitor its turnover. The Tribunal accepts that the Authority has referred the respondent to the financial requirements for licensing policy on each license renewal occasion. The Tribunal accepts that the respondent naively relied on advice and naively considered that the Authority would bring any issue to its attention.
[33] The Tribunal accepts that the respondent did not seek to mislead the Authority. The Tribunal accepts that the respondent cooperated fully in the process to have the disciplinary action dealt with by the Tribunal with the least inconvenience to all parties and that its conduct was not in any way wilful or deliberate. The Tribunal is satisfied that there is little likelihood of a reoccurrence of these breaches. The Tribunal does not accept the respondent’s submission that the Tribunal should take into account the downturn which has occurred in the building industry in general and to the respondent’s own business in particular. This is not a factor which the Tribunal should take into account. The matters that the Tribunal takes into account have been articulated earlier.
[34] The Tribunal does not accept the Authority’s submission in respect of the Mena cases in that whilst the Mena cases demonstrate the need to increase the penalty attributable to multiple breaches, Alfredo Mena had already been breached and a penalty applied to those breaches. Mr Mena made a second appearance before the Commercial and Consumer Tribunal. This is not the case with the current respondent who is appearing for the first time.
[35] It is not unreasonable to consider that if the breaches had been picked up after two years by the Queensland Building Services Authority that no further breaches may have occurred. Had this happened the relationship between this case and the Peninsula Construction Group case would have been even similar. In the light of the mitigating circumstances put forward by the respondent, I consider that a penalty similar to the Peninsula case is appropriate.
[36] I order that the respondent pay the Queensland Building Services Authority the sum of $8,000. The respondent made no comment on the Authority’s submissions on costs. I accept the Authority’s submissions and order that the respondent pay the Authority’s costs in the amount of $250.00.
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