Queensland Building Services Authority v Dankav Pty Ltd
[2013] QCAT 751
| CITATION: | Queensland Building Services Authority v Dankav Pty Ltd [2013] QCAT 751 |
| PARTIES: | Queensland Building Services Authority (Applicant) |
| v | |
| Dankav Pty Ltd (Respondent) |
| APPLICATION NUMBER: | OCR134-13 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Rogers |
| DELIVERED ON: | 25 November 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | That Dankav Pty Ltd pay to the Queensland Building Services Authority a penalty of $12,500 on or before 31 January 2014. |
| CATCHWORDS: | Exceeding Annual Allowable Turnover – three breaches – impact of unpredictable events- nature of business. Queensland Building Services Authority Act 1991 (Qld) ss 89(a), 89(b), 91(3) Queensland Building Services Authority v Uniport Australia Pty Ltd [2009] QCAT 33 Megasealed Bathrooms Aust. Pty Ltd [2013] QCAT Queensland Building Services Authority v Battaglia Industries Pty Ltd [2012] QCAT 3 |
[1] [2006] CCT QD003-06.
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
Dankav Pty Ltd is a company engaged in building reconstruction services following unpredicted events such as flood, cyclone, fire and storm.
Dankav consented to a finding that proper grounds exist for disciplinary action to be taken against it under s 89 of the Queensland Building Services Authority Act 1991 (Qld) for exceeding its Annual Allowable Turnover (AATO) in the 2007-8, 2010-11 and 2011-12 licence years by more than the permitted 10% without first notifying the Queensland Building Services Authority it was likely to do so and obtaining the Authority’s approval.
The issue to be determined by this Tribunal is the appropriate penalty for these three breaches. It may impose a penalty up to 1000 penalty units equating for the years in question to $100,000.[2]
2Queensland Building Services Authority Act 1991 (Qld) s 91(3) and Penalty and Sentences Act 1992 (Qld) s 5.
Previous cases[3] have provided guidance by identifying the factors that are relevant when deciding the appropriate penalty and those factors will now be considered.
[3] Queensland Building Services Authority v Built Qld Pty Ltd [2005] CCT L018-05 at [45].
The length of time the licensee has been in business.
Dankav was registered as a company on 3 August 2006. It was issued with a licence classes ‘Builder – Open’ and Plumbing and Drainage’ by the Authority on 30 August 2006 and a further licence class ‘Builder-Low Rise’ on 1 August 2007. The breaches occurred in the second, fifth and sixth years of its operation
The number of breaches, the amount by which the AATO was breached and the size of the respondent’s business.
There are three breaches set out below in tabulated form for ease of reference.
Year
AATO ($)
Actual Turnover ($)
Excess ($)
Excess (%)
2007-8
3,000,000
3,497,565
497,565
16.5
2010-11
6,166,649
13,509,983
7,343,334
119.1
2011-12
13,674,450
21,199,613
7,525,163
55.02
The explanation for the breach
Dankav argues the nature of its business, which is providing reconstruction after unpredictable events such as flood, cyclone, fire and storm events, and the speed with which it must respond, makes it difficult to anticipate actual turnover even with regular monitoring. It says the first breach was relatively minor and occurred in the second year of operation when some procedural difficulties were identified. The second and third breaches occurred in years of unprecedented major natural disasters and unforeseeable demand. The disasters included the Toowoomba and Lockyer Valley floods, the Brisbane floods, Cyclone Yasi and Melbourne hailstorm during 2011 and the Roma and Southwest Queensland flood in February 2012.
Whether the breach is likely to reoccur
After the first breach, Dankav says it engaged alternative external accountants and employed an administration manager to better address compliance. Following the second and third breaches, in an environment of rapid expansion of the company, Dankav appointed a General Manager and formed a new accounts team with a total of three staff to work with its external accountants. It has also introduced a quality management system to further improve compliance. As a result of these changes Dankav states it believes similar breaches in the future can be avoided. It is noted Dankav’s AATO is now set at $30,000,026.
Previous failures to comply with statutory standards and Warnings
On 6 August 2008 the Authority issued a warning letter following the detection of a suspected breach for the 2008 licence year. It is acknowledged by the Authority that Dankav has not been the subject of other relevant events, disciplinary actions or convictions.
In light of the number of disciplinary grounds established, the pattern of contravening behaviour and the need for general and specific deterrence, the Authority has submitted a penalty in the range of $20,000-$25,000 is appropriate. It argues the current AATO should not result in a more lenient penalty, as it does not provide any kind of retrospective justification for the breaches.
Dankav argues a penalty of $6,000 - $8,000 is appropriate when consideration is given to the exceptional circumstances that resulted in the breaches, the measures taken to ensure future compliance, its previous unblemished record and the fact that there was never a risk of the company trading beyond its means.
Both parties have submitted and the Tribunal accepts that each party should bear their own costs of or incidental to these proceedings.
The Authority referred to Queensland Building Services Authority v Uniport Australia Pty Ltd,[4] Queensland Building Services Authority v Peninsula Construction Group (Qld) Pty Ltd,[5] Queensland Building Services Authority v Thomas Coffey Ltd[6] and Queensland Building Services Authority v Battaglia Industries Pty Ltd[7] to support its submission on penalty. In addition to these cases Dankav refers Queensland Building Services Authority v Classic Brick and Block Pty Ltd[8] Queensland Building Services Authority v Mainbrace Constructions (NSW) Pty Ltd[9].
[4] [2011] QCAT 612.
[5] [2009] QCAT26.
[6] [2006] CCT QD003-06.
[7] [2012] QCAT 003.
[8] [2011] QCAT130.
[9] [2011] QCAT 933.
The Tribunal has also given consideration to Queensland Building Services Authority v Megasealed Bathrooms Aust Pty Ltd[10] with its helpful comparative schedule.
[10] [2013] QCAT.
The first offense was an excess of 16.5% in just the second year of the company’s operation and an excess of 10% is allowable. Little weight has been given to the first breach. However the other two offences occurred after a warning had been given following the first offence. Dankav argues the excesses arose in circumstances of great unpredictability. The Tribunal is of the view the nature of Dankav’s business does not excuse its non-compliance with the requirements. Indeed, being aware the business reacts to unforeseen disasters makes it more imperative that systems are in place to notify the Authority once it becomes aware the AATO will be exceeded. Dankav states it has taken steps to avoid similar breaches into the future and it has accepted responsibility for the breaches and is remorseful for the errors. Notwithstanding these submissions, it is of great concern that a large company, understanding the nature of its business, and having received a warning, should continue to fail to meet its legislative obligations.
The Authority’s submission that future actions do not justify past breaches is accepted. However the Tribunal is required to consider whether the breaches are likely to recur and the increased AATO and steps taken to ensure adequate financial accountability are relevant to that question.
The most relevant cases to the present circumstances appear to be Battaglia, Uniport and Megasealed. The first case had two breaches, repeated warnings and the percentage excesses were higher that the present case. However annual turnover was not as great as Dankav’s and the breach amount was considerably less. The penalty imposed was $11,000 plus costs. In Uniport there were four breaches in consecutive years and in one year the percentage excess was 1193.3%. This case can be considered more serious that the current case. The penalty imposed was $13,500. In Megasealed there were four breaches, previous warnings and it was a large company. The Tribunal was concerned about Megasealed’s equivocal acceptance of both the need and responsibility for compliance, a factor not present in Dankav. A penalty of $15,000 plus costs of $1,500 was imposed.
Dankav referred to Mainbrace Constructions where a penalty of $7,000 was imposed however the three breaches resulted from the AATO being exceeded by 37.36%, 12.8% and 19.1% and it is not considered comparable. Classic Brick has greater relevance. In that case the first breach was 401% and following warnings the second breach was 19.7%. A penalty of $10,000 was imposed. This case is considered more serious.
The Tribunal has to balance the requirements that the penalty should be sufficiently severe to deter future noncompliance with the licence requirements but at the same time not be punitive.
Having considered all the circumstances of this case, which are set out in the factors discussed above, and the circumstances of those cases with comparative circumstances the Tribunal has decided to impose a penalty of $12,500.
The Tribunal orders that Dankav pay the amount of $12,500 to the Authority on or before 31 January 2014.
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