QBSA v M & R Hudson Plumbing Pty Ltd
[2010] QCAT 623
•3 December 2010
| CITATION: | Queensland Building Services Authority v M & R Hudson Plumbing Pty Ltd [2010] QCAT 623 |
| PARTIES: | Queensland Building Services Authority |
| v | |
| M & R Hudson Plumbing Pty Ltd |
| APPLICATION NUMBER: | OCR109-10 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | Decision on the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | JR Browne, Member |
| DELIVERED ON: | 3 December 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The Respondent to pay to the Applicant a penalty in the amount of four thousand ($4,000.00) plus costs in the amount of five hundred dollars ($500.00) by 4.00pm on 24 December 2010. |
| CATCHWORDS : | Exceeding Allowable Annual Turnover (“AATO”) – where AATO significantly exceeded; whether respondent provided a satisfactory explanation for the occurrence of the breach; penalty for contravention of section 89 of the Queensland Building Services Authority Act 1991. |
APPEARANCES and REPRESENTATION (if any):
This matter was heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (“QCAT Act”).
REASONS FOR DECISION
The Application
This application for disciplinary proceedings was brought by the Queensland Building Services Authority (“the Authority”) against M & R Hudson Plumbing Pty Ltd (“the Respondent”) alleging that the Respondent has breached a condition of its licence provided in clause 2.3 of the Financial Requirements for Licensing Policy pursuant to the Queensland Building Services Authority Act 1991 (“the QBSA Act”). The basis for the application was that during the 2007-2008 licence year the Respondent exceeded its Allowable Annual Turnover (“AATO”) by seven hundred and eight thousand and seventy-nine dollars ($708,079.00) or 236% without first notifying the Authority or obtaining the approval of the Authority.
The parties agree and the tribunal accepts that proper grounds exist for taking disciplinary action against the Respondent for breaching sections 89(a) and/or 89(k) of the QBSA Act.
The tribunal has power pursuant to section 91(3) of the QBSA Act to make an order imposing a penalty of an amount not more than 1000 penalty units.[1]
[1] The value of a penalty is $100.00 pursuant to section 5 of the Penalties and Sentences Act 1992.
Relevant Issues for Consideration
The Authority has filed written submissions and supporting material in relation to the proceedings. The Respondent has also filed written submissions in response.
The Authority submits that proper grounds exist for taking disciplinary action against the Respondent and in addition to seeking an order that the Respondent pay a penalty pursuant to section 91(3)(b) of the QBSA Act, the applicant seeks an order for costs of and incidental to these proceedings.
By way of background the Respondent was a registered company on 20 July 2004. The Authority granted the Respondent a licence (number 1058031) in the class of “Plumbing and Drainage” on 22 September 2004.
The Respondent’s licence was renewed on 18 September 2007 and based on the information provided by the Respondent the Authority advised that the Respondent’s Allowable Annual Turnover (“AATO”) for its 2007-2008 licence year was three hundred thousand dollars ($300,000.00). The Respondent’s licence was renewed subject to amongst other conditions, that the Respondent was not to exceed its AATO by more than 10% without first notifying the Authority.
On 8 December 2008, the Authority received the Respondent’s Independent Review Report (“IRR”) dated 8 December 2008, certified by their Accountant in support of the Respondent’s licence renewal application. The IRR certifies the Respondent’s financial information for the year ended 30 June 2008 and provides that the actual turnover was one million, eight thousand and seventy-nine dollars ($1,008,079). The Authority therefore submits that the Respondent’s actual annual turnover exceeded its AATO by seven hundred and eight thousand and seventy-nine dollars ($708,079) or 236%.
The tribunal is referred to the decision in Queensland Building Services Authority v Built QLD Pty Ltd[2] in relation to the relevant factors to be considered in determining the penalty where there has been a breach by a licensee of their AATO including:
[2] [2005] CCT 152 at [45].
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 a 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 in percentage terms; and
Whether the licensee has been involved in previous events of this nature, or other offences against statutory obligations/or failure to comply with statutory standards.
The Authority submits that the Respondent, during the four (4) years in which it held its licence, has been advised as to its financial responsibilities and licence conditions by the Authority.
The Authority refers the tribunal to the former Commercial and Consumer Tribunal decision in Queensland Building Services Authority v Lifetime Securities (Australia) Pty Ltd[3] in particular the tribunal findings that:
“It must be understood by licensees that, whatever be their level of activity, their licence obligations have first priority, and cannot be relegated to some lesser priority because of a sudden upsurge in activity”.
[3] [2006] CCT QD002-06 at [24].
The Authority submits that the Respondent’s breach equates to a breach in percentage terms of two hundred and thirty-six percent (236%) and this is effectively a breach which is twenty-three (23) times the ten (10) percent (10%) “leeway allowed” under the Financial Requirements for Licensing Policy.
It is the Authority’s submission that the “high value of the breach” in combination with the Respondent’s “ignorance” of its statutory obligations and licence conditions that demonstrates the Respondent’s systems for ensuring regulatory compliance and monitoring turnover are “manifestly inadequate”. Furthermore, the Authority submits that any explanation by the Respondent should not persuade the tribunal towards a more lenient penalty.
It is the Authority’s submission that the penalty ordered by the tribunal should be made as a deterrence of breaches and must encourage “licensees to be fully aware of the requirements of their licence and their obligations to the Authority”.[4]
[4] Authority’s written Submissions on Penalty and Costs dated 8 July 2010 and Queensland Building Sevrices Authority v McLucas Pty Ltd [2005] CCT L014-05 at [17].
The Authority referred the tribunal to the following cases:
Case $ over AATO % over AATO Penalty
QBSA v G&T Roofing Pty Ltd[5] $612,917 252% $4,000.00
QBSA v Dilizio Painting Pty Ltd[6] $435,205 245% $4,000.00
QBSA v Vbform Pty Ltd[7] $118,838 122% $4,500.00
QBSA v Coastal Interior Linings[8] $3,787,773 226% $4,000.00
QBSA v FDC Construction & Fitout[9] $[unknown] 256% $8,000.00
[5] [2010] QCAT unreported 22 February 2010.
[6] [2009] CCT QD021-09.
[7] [2010] QCAT unreported 21 April 2010.
[8] Pty Ltd [2010] QCAT 165.
[9] [2009] CCT QD016-08.
The Authority submits that the tribunal should order a penalty against the Respondent in the range of four thousand dollars to five thousand dollars ($4,000.00 to $5,000.00). The Authority also seeks an order for costs pursuant to section 102 of the QCAT Act in relation to the proceedings in the amount of five hundred dollars ($500.00) as set out in the Justices Act 1886.[10]
[10] See Queensland Building Services Authoroty v Vu & Vu [2005] CCT L020-05 at paragraph 44.
Respondent’s Submissions
The Respondent in written submissions prepared by Mr Michael Hudson as a Director of M & R Hudson Plumbing Pty Ltd accepts that a “mistake” was made when reporting for the licence year 2007-2008. Mr Hudson argues they have been trading as a small licensed plumber business since 22 September 2004 and the AATO for the first three (3) years was always “well under $300,000.00”. Mr Hudson states that when the business received the renewal of its BSA licence they would “simply tick the appropriate box” and return the licence renewal as there was “never any reason for [them] to seek advice from [their] accountant”.
Mr Hudson makes the following submissions in relation to the appropriate penalty to be ordered by the tribunal:
1.Mr Hudson believed that the turnover at the time of preparing the Authority’s renewal was “not going to exceed $300,000.00” for the next year. However, during the licence year the business “took a different turn which was totally unexpected and unplanned”. Mr Hudson states that he was unaware that if the turnover exceeded the threshold during the licence year it would be necessary to engage an accountant to prepare an Independent Review Report.
2.Mr Hudson argues that “we were also going through a very rough time in our personal lives” and provides further details about the premature birth of his third son and particular personal and health issues affecting his wife. Mr Hudson argues that as a result of the personal issues “our financials were not up to date and our bookkeeping was suffering immensely”. Furthermore, Mr Hudson argues that with the increase in workload and pressure in their personal lives their taxation lodgements were not up to date and as a result “we would have not been aware of the amount of turnover we had at a particular time during that year”.
3.The Respondent has now put in place a system where at the time of preparing a licence renewal arrangements have been made for their accountant to prepare an Independent Review Report. Mr Hudson also states that the business has employed a bookkeeper to assist with “ongoing work load” and performing monthly checks of the business income to ensure compliance with the AATO.
Mr Hudson also states in his written submissions that he has previously requested that the Authority provide a copy of the licence renewal form for the year 2007-2008 however he has been advised by the Authority that they are unable to locate the information. Mr Hudson does not however provide any submissions as to how this is a relevant mitigating factor to be considered by the tribunal in considering the penalty to be ordered.
Tribunal Findings
The tribunal has carefully considered the submissions made by the Authority and the Respondent. The cases referred to by the Authority as to an appropriate penalty to be ordered have also been considered. The decision in Dilizio is similar to these proceedings in terms of the percentage of the breach. One of the mitigating factors argued by the respondent in the Dilizio decision was that the company had undergone a rapid growth and change from domestic to commercial dealings and amongst other things, the breach was “purely an oversight by its office personnel”.[11]
[11] At [31.4].
In the decision of G&T Roofing Pty Ltd the tribunal found that the appropriate penalty was not to be assessed on the basis of the entity’s capacity to pay and consideration was therefore given to the decisions of the former Commercial and Consumer Tribunal as an appropriate guide to penalty. The respondent in G&T Roofing Pty Ltd argued that a relevant mitigating factor to be considered by the tribunal in assessing penalty was that the company was newly registered and it did not accurately forecast the effect of the housing boom.[12] The tribunal was not persuaded in G&T Roofing Pty Ltd that the imposition of a penalty would have “any deterrent value beyond the respondent in any particular case”.
[12] at 3.
The tribunal has considered the submissions made by both the Authority and Respondent. In particular the tribunal has carefully considered the submissions made by Mr Hudson as a Director of the Respondent company in relation to the personal and health issues during the relevant time of the breach and that the Respondent has now adopted certain practices to ensure proper compliance with its AATO. Furthermore, it would appear that this was an isolated incident as there was no submission made by the Authority in relation to previous breaches by the Respondent in relation to its licence conditions. The tribunal is satisfied that these are relevant factors to be considered as held in the decision of Built Qld Pty Ltd. The tribunal accepts the submissions made by the Authority that the “high value of the breach” must be considered by the tribunal in combination with the Respondent’s “ignorance” of its statutory obligations and licence conditions where the Respondent’s systems for ensuring regulatory compliance are inadequate. The tribunal also accepts the Authority’s submission that the appropriate range having regard to recent decisions of this tribunal and former decisions of the Commercial and Consumer Tribunal is $4,000.00 to $5,000.00 and the amount of costs is also reasonable based on the material prepared and filed in relation to the proceedings. The decisions in Dilizio and G&T Roofing Pty Ltd are similar in terms of the percentage of the breach and the penalty ordered. The tribunal has had regard to these particular decisions as an appropriate guide as to the penalty to be ordered in these proceedings and is satisfied based on the submissions made by both parties that a penalty at the lower end of the range would therefore be appropriate.
The tribunal orders that the Respondent pay the amount of $4,000.00 plus $500.00 costs by 4.00pm on 24 December 2010.
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