Queensland Building Services Authority v Fisher Builders Pty Ltd

[2013] QCAT 431

CITATION: Queensland Building Services Authority
 v Fisher Builders Pty Ltd [2013] QCAT 431

PARTIES:	Queensland Building Services Authority (Applicant)
v
Fisher Builders Pty Ltd (Respondent)

APPLICATION NUMBER: OCR052-13

MATTER TYPE: Occupational regulation matters

HEARING DATE: On the papers

HEARD AT: Brisbane

DECISION OF: Jeremy Gordon, Member

DELIVERED ON: 12 August 2013

DELIVERED AT: Brisbane

ORDERS MADE:

1.    Fisher Builders Pty Ltd pay the Queensland Building Services Authority a penalty of $3,800 by 4:00pm on 10 September 2013.

2.    Each party pays its own costs of and incidental to the proceedings.

CATCHWORDS:

OCCUPATIONAL REGULATION MATTERS - Exceeding Annual Allowable Turnover – appropriate penalty

Queensland Building Services Authority Act 1991, ss 89(a), 89(k), 91(3)

Queensland Building Services Authority v. Built Qld Pty Ltd [2005] QCCTB 152
Queensland Building Services Authority v Silverback Constructions Pty Ltd [2013] QCAT 222
Queensland Building Services Authority v Todd’s Plumbing Pty Ltd [2011] QCAT 622

APPEARANCES and REPRESENTATION (if any):

This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).

REASONS FOR DECISION

1. Fisher Builders Pty Ltd hold licences from the Queensland Building Services Authority in the classes of Builder-Medium Rise, General Building Restricted To Three Storeys, and House Building.  These licences are renewable each year.  At the time of renewal, the QBSA determines the licensee’s turnover limit for the year ahead.  This is called the Allowable Annual Turnover.

1. If the turnover limit is exceeded beyond a 10% leeway allowed under the Financial Requirements for Licensing Policy, then this is a breach of the Act which permits the QBSA to take disciplinary action.[1]  

[1]This is a breach of sections 89(a) and 89(k) of the Queensland Building Services Authority Act 1991.

1. The turnover limit is calculated by the QBSA from the licensee’s net tangible assets.  The higher the assets, the greater the turnover is allowed to be.  The aim of this system is to ensure that builders do not over-stretch financially so that they are able to honour their commitments to consumers, contractors and suppliers.  This is achieved by ensuring that the licensee has sufficient financial “cushion” should it encounter problems in the year in question.

1. Fisher had net tangible assets of just over $210,000.  Based on this, Fisher was given a turnover limit of just over $2m for the 2010-2011 licence year. However, Fisher’s turnover was $4.5m.  So its turnover was just over 115% too high. 

1. A licensee can avoid disciplinary action by notifying the QBSA that it is likely to exceed the turnover limit, or it can ask the QBSA for consent to exceed the turnover limit.

1. Fisher did neither of these things.  The QBSA therefore decided to take disciplinary proceedings.  Such proceedings fall to be determined by QCAT as part of its original jurisdiction[2].  I am satisfied that proper grounds exist for taking these disciplinary proceedings against Fisher in the circumstances.

[2]        Queensland Building Services Authority Act 1991ss 88 to 91.

1. The maximum penalty for a corporation is an amount equivalent to 1,000 penalty units.[3]  The value of a penalty unit is currently $110: therefore the maximum penalty which may be imposed is $110,000.

[3] Ibid s 91(3)(b).

1. Certain matters are listed as relevant to penalty in Queensland Building Services Authority v Built Qld Pty Ltd [2005] CCT L018-05 and I shall consider these in turn.

1. Duration of business.  Whilst every licensee should be aware of the turnover rules it might be a mitigating factor that the business was new and an aggravating factor that the business was long standing.  Fisher was issued with its first building licence in 1996.

1. Whether the breach is an isolated incident.  Fisher has never breached the turnover rules before.  The breach only applied to the year in question.  Fisher has not had any disciplinary proceedings against it before.

1. Whether there is a satisfactory explanation for the breach.  It is submitted on Fisher’s behalf that the breach was accidental and that this is a mitigating factor.  It is said that the year in question was exceptional.  The turnover was twice the previous year.  The year after, it returned to normal levels.

1. The QBSA does not argue that the breach was intentional, but points out that the breach was a direct result of carrying out ‘two large jobs’ and says that only slight thought was given to the turnover limit at the relevant time.  It is pointed out that it is the licensee’s responsibility to monitor turnover throughout the year.  

1. To my mind, in most cases exceeding the turnover limit will be inadvertent.  It is unlikely to be intentional.  Where it is intentional, then the penalty would be much higher.  The point of the turnover limit is to try to make sure that the licensee plans ahead sufficiently to ensure that it can deal with cash flow problems which inevitably arise in building projects.  Therefore I do not regard the fact that this breach was accidental as taking this case outside the norm.

1. Whether the breach is likely to re-occur.  Fisher say that immediate and effective steps to prevent a recurrence of the contravention have been taken  because a paper based accounting system in operation at the time of the breach has now been replaced by a computerised one, and a diarised system to monitor turnover has been established.  The QBSA agree that a recurrence of the breach is unlikely to happen given the circumstances of the breach.

1. Size of the business.  Fisher is a small family owned and operated business with only one employee who is a family member, and one or two tradesmen typically engaged as contractors. 

1. The amount the turnover limit was exceeded.  To my mind this is the most important factor.  This is because the turnover limit is established from the net tangible assets of the business and this percentage will therefore usually reflect the level of risk to which the business has exposed its consumers, contractors and suppliers.  And it is the avoidance of this risk to which the turnover rule is aimed.

1. Other points of mitigation.  It is submitted on Fisher’s behalf that it has co-operated fully with the investigation carried out by QBSA and has made frank and honest disclosure of all relevant material.  It is also submitted that the financial health of the business was such that no one was exposed to any material risk as a result of the breach.

1. It is submitted on Fisher’s behalf that a warning would be an appropriate penalty but I do not agree since such a penalty would be quite out of line with previous penalties imposed for a similar contravention.

Conclusion as to penalty

1. A review of previously reported cases in QCAT between 2010 and 2012 demonstrates that the usual penalty imposed where there has been a breach over a single year with no seriously aggravating factors has been between $3,000 and $6,000[4].  In these cases the extent to which the turnover limit was exceeded has been between 36% and 606%.  The median has therefore been 321%.  The average was 263%.

[4]These are helpfully reviewed in Queensland Building Services Authority v Silverback Constructions Pty Ltd [2013] QCAT 222 and Queensland Building Services Authority v Todd’s Plumbing Pty Ltd [2011] QCAT 622.

1. On 21 August 2012 the value of a penalty unit was increased by 10% from $100 to $110.[5]  One of the aims of the use of penalty units is to promote consistency of approach in the sentencing of offenders and to provide sentencing principles when applied by the courts.[6] By analogy it is right to infer that the same aims apply in the case of a penalty imposed under section 91 of the Queensland Building Services Authority Act 1991. Since the value on a penalty unit has now increased by 10% it is right to regard the band of penalties for breaches over a single year with no seriously aggravating factors as now properly enlarged by 10%. This would make the band $3,300 to $6,600 with a median of $5,000.

[5]Section 34 of the Penalties and Sentences and Other Legislation Amendment Act 2012 amending section 5 of the Penalties and Sentences Act 1992.

[6]        Penalties and Sentences Act 1992 s 3.

1. In this case the percentage by which Fisher’s turnover exceeded the turnover limit was less than the median and the average in the previously reported cases in QCAT which establish the band of $3,300 to $6,600.   I do think therefore, that the penalty should be in the lower part of this band.

1. I have considered the other factors raised on Fisher’s behalf in mitigation but I do not consider that they are capable of moving the appropriate penalty any further down the band.  

1. On the above basis in my opinion the appropriate penalty in this case is $3,800.  The QBSA do not seek costs and so I shall say no order as to costs.