Queensland Building Services Authority v GPH Projects Pty Ltd
[2013] QCAT 610
| CITATION: | Queensland Building Services Authority v GPH Projects Pty Ltd [2013] QCAT 610 |
| PARTIES: | Queensland Building Services Authority (Applicant) |
| v | |
| GPH Projects Pty Ltd (Respondent) |
| APPLICATION NUMBER: | OCR162-13 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Hughes |
| DELIVERED ON: | 5 November 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That GPH Projects Pty Ltd pays to the Queensland Building Services Authority a penalty of $3,900 by 4pm on 28 November 2013. 2. That each party pays its own costs. |
| CATCHWORDS: | Exceeding Annual Allowable Turnover – penalty- isolated breach – insight – proportionality Queensland Building Services Authority Act 1991 s 89(a) and (k), 91(3) Queensland Building Services Authority v Alternate Dwellings Pty Ltd [2011] QCAT 460 |
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
What is this Application about?
Builder licence requirements help ensure builders trade within their means and honour their commitments to consumers, contractors and suppliers.
GPH Projects Pty Ltd has been a licensed builder since 9 May 2002. Before exceeding its Allowable Annual Turnover (AATO) by more than 10 percent, GPH must notify or obtain the approval of the Queensland Building Services Authority.
In 2010-11, GPH exceeded its Allowable Annual Turnover (AATO) by $5,235,181 or 153.98 percent. GPH breached its licence requirements by not notifying the Authority or obtaining its consent.
The Authority therefore applied for sanctions against GPH.
On 1 August 2013, the Tribunal directed by consent that GPH contravened sections 89(a) and (k) of the Queensland Building Services Authority Act 1991 in the 2010-11 licence year by exceeding its Allowable Annual Turnover (AATO) by $5,235,181 or 153.98 percent, without first notifying the Queensland Building Services Authority or obtaining its approval.
The Tribunal must then determine penalty. The Tribunal may impose a penalty of an amount up to $110,000.[1] The Authority submits that the appropriate penalty is “in the range of $4,500”[2]. GPH submits that a penalty in this range will deter and impact it financially and that anything higher will cause it financial hardship.[3]
[1]Queensland Building Services Authority Act 1991 s 91(3) and Penalties and Sentences Act 1992 s 5.
[2]Applicant’s Submission on Penalty and Costs at [47].
[3]Respondent’s Submissions on Penalty and Costs at [11] and [12].
What is the appropriate penalty?
What are the relevant factors?
The Tribunal has considered the following relevant factors in determining the penalty for exceeding the allowable AATO[4]:
(a) GPH has been in business since 1999 and first acquired its licence with the Authority in 2002;
(b) the breach is isolated;
(c) the only explanation for the breach is that GPH “did not maintain active diligence” when its volume of work increased[5];
(d) GPH has taken steps to prevent the breaches from recurring by implementing Quality Assurance measures;
(e) GPH’s net tangible assets are $456,272. GPH can be characterised as a medium size business;
(f) GPH exceeded its AATO by $5,235,181 or 153.98 percent; and
(g) GPH has not previously breached its AATO.
[4]Queensland Building Services Authority v Built Qld Pty Ltd [2005] QCCTB 152.
[5]Respondent’s Submissions on Penalty and Costs at [6].
What are comparable previous decisions?
The Tribunal considered comparable previous decisions in the attached schedule.
How does the present application compare with the previous decisions?
The usual penalty for a breach in a single year with no serious aggravating factors is between $3,000 and $6,000.[6] Because the value of a penalty unit increased by 10 percent on 21 August 2012[7], the range is also increased by 10 percent.[8]
[6]Adumbrated in QBSA v Fisher Builders Pty Ltd [2013] QCAT 431 at [19].
[7]Penalties and Sentences Act 1992 s 5 as amended by the Penalties and Sentences and Other Legislation Amendment Act 1992 s 34.
[8]Succinctly explained in QBSA v Fisher Builders Pty Ltd [2013] QCAT 431 at [20].
The two most apposite decisions cited by the Authority are Janda[9] and Alternate Dwellings.[10]
[9]QBSA v Janda Commercial Pty Ltd [2009] QCCTB 241.
[10]QBSA v Alternate Dwellings Pty Ltd [2011] QCAT 460.
Alternate Dwellings attracted a penalty of $3,000. The key difference is the reason for the breach. Unlike GPH, the licensee already had “appropriate mechanisms to monitor its financial position”.[11] The breach only arose because the licensee misunderstood that AATO was not confined to its turnover in Queensland.[12] The learned Member emphasised that the penalty was lower because of this:
The range of penalty therefore needs to be discounted as there has been no risk to the public and there was no question that Alternate Dwellings had appropriate mechanisms to monitor its financial position.[13]
Alternate Dwellings is therefore distinguishable as too low.
[11]QBSA v Alternate Dwellings Pty Ltd [2011] QCAT 460 at [37].
[12]QBSA v Alternate Dwellings Pty Ltd [2011] QCAT 460 at [28].
[13]QBSA v Alternate Dwellings Pty Ltd [2011] QCAT 460 at [37].
Janda attracted a penalty of $4,700. The key difference is that the licensee had almost twice the net tangible assets ($900,395) and was a “reasonably significant licensee”[14]. Janda is therefore distinguishable as too high.
[14]QBSA v Janda Commercial Pty Ltd [2009] QCCTB 241 at [12].
A review of more recent decisions involving isolated breaches reveals Fisher[15] and Coastal Interior[16] to be the most apposite.
[15] QBSA v Fisher Builders Pty Ltd [2013] QCAT 431.
[16] QBSA v Coastal Interior Linings Pty Ltd [2010] QCAT 165.
Fisher attracted a penalty of $3,800. The amount ($2,500,000) was considerably lower and the percentage (115) moderately lower than the current breach. Fisher is therefore distinguishable as too low.
Coastal Interior is the closest decision. Both the amount ($6,787,774) and the percentage (226.3) were only moderately higher than the current breach. However, unlike Coastal Interior, GPH did not attempt to shift any responsibility to the Authority for the breach. Rather, GPH has accepted and adopted the Authority’s submissions almost in their entirety. GPH has thereby demonstrated insight into its responsibilities.
In Coastal Interior, the Tribunal applied a penalty of $4,000. The breach is lower and the insight deeper. Proportionality dictates the penalty must be lower.
The appropriate penalty is therefore $3,900.
What are the appropriate Orders?
The Tribunal orders that GPH pays to the Authority the amount of $3,900 by 4pm on 25 November 2013.
The Authority does not seek its costs and I will therefore order that each party pays its own costs.
Schedule
| Case Name and citation | Breach Amount ($) | Breach (% of AATO) | Years licensed | Penalty | Relevant Factors |
| QBSA v Bellero Constructions Pty Ltd [2004] QCCTB 60 | N/A but “significant” | 18% 171% | N/A | $7,000 | Not deliberate |
| QBSA v Project Coordination (Australia) Pty Ltd [2004] QCCTB 61 | N/A but “significant” | 69.5% - 242% 80% - 131% | N/A | $6,000 | Not deliberate Steps to prevent recurrence Substantial size and standing of licensee |
| QBSA v James L. Williams Pty Ltd [2004] QCCTB 106 | $19,637,894 | 42% | N/A | $5,000 | Not deliberate Isolated Steps to prevent recurrence Proud history of licensee (130 years) |
| QBSA v McLucas Pty Ltd [2005] QCCTB 111 | $457,620 $445,650 | 69% 28% | N/A | $1,200 | Small business Inexperience of licensee Rapidly expanding business No detriment Steps to prevent recurrence |
| QBSA v Janda Commercial Pty Ltd [2009] QCCTB 241 | $1,220,678 | 157.7% | Two | $4,700 | Not deliberate Reasonably significant licensee |
| QBSA v Peninsula Construction Group (Qld) Pty Ltd [2009] QCAT 26 | $907,801 $7,776,351 | 363.1% 504.6% | One | $8,000 | Not deliberate Medium business Experienced directors Ignorance no explanation Steps to prevent recurrence Authority contributed to second breach by not raising first breach |
| QBSA v Mine-Con Plumbing Pty Ltd [2009] QCAT 32 | $2,133,715 | 711.2% | Four | $3,500 | Medium business Young but not new company Benefits of non-compliance Public not at high risk Significant NTA not ground for non-compliance Early admission No history of previous offences Minimal explanation |
| QBSA v Northstar Plumbing Pty Ltd [2009] QCAT 33 | $892,588 | 892.6% | Four | $800 | Moderate business Isolated breach Clerical error Steps to prevent recurrence No obligation on Authority to instruct |
| QBSA v Grasstree Landscaping Design Pty Ltd [2010] QCAT 89 | $1,818,802 | 606.3% | One | $4,000 | Substantial breach Deter other licensees |
| QBSA v Coastal Interior Linings Pty Ltd [2010] QCAT 165 | $6,787,774 | 226.3% | 13 | $4,000 | No material risk as sufficient NTA Failure by Authority to be astute rejected |
| QBSA v Geocal Constructions Pty Ltd [2010] QCAT 460 | $8,197,080 | 1,143.8% | Five | $6,000 | Isolated incident Steps to prevent recurrence Significant breach Increase in turnover did not increase risk – sale of one project only |
| QBSA v Phoenix Constructions (Queensland) Pty Ltd [2010] QCAT 542 | $6,009,618 | 36.3% | 16 | $5,000 | Large business Isolated incident Steps to prevent recurrence Significant amount but not significant percentage Ability to pay for advice but did not – disregard for obligations |
| QBSA v M & R Hudson Plumbing Pty Ltd [2010] QCAT 623 | $708,079 | 236% | Four | $4,000 | Isolated incident Personal and health issues of Director |
| QBSA v Gartess Pty Ltd [2011] QCAT 42 | $1,354,822.83 | 286.9% | Two | $4,500 | Small business Steps to prevent recurrence Unanticipated and unexpected growth Inexperienced Director |
| QBSA v Mainbrace Constructions (NSW) Pty Ltd [2011] QCAT 93 | $18,255,935 | 12.8% | Four | $7,000 | Substantial business Not isolated incident – two previous breaches |
| QBSA v Classic Brick & Block Pty Ltd [2011] QCAT 130 | $1,204,359 $217,415 | 401% 19.7% | Two | $10,000 | Medium business Breaches in two consecutive years demonstrates lack of consideration No steps to prevent recurrence |
| QBSA v C-View Windows Pty Ltd [2011] QCAT 211 | $3,491,568 $4,217,017 $4,427,011 $772,185 | 294.82% 305.3% 226.4% 20.1% | One | $8,000 | Not deliberate Breaches in four consecutive years Considerable breaches Reasonable explanation Licensee relied on professional advice Steps taken to prevent recurrence No history of previous offences Authority delay of four years to review compliance Licensee cooperated with process |
| QBSA v Alternate Dwellings Pty Ltd [2011] QCAT 460 | $4,729,832 | 157.65% | One | $3,000 | Not deliberate Satisfactory explanation No history of previous offences Large amount and percentage but no danger to public as sufficient NTA |
| QBSA v Uniport Australia Pty Limited [2011] QCAT 612 | $423,589 $3,365,502 $15,813,437 $1,500,035 | 21.4% 350.7% 1,193.3% 12.5% | One | $13,500 | Large business and industry leader Breaches in four consecutive years Incorrectly monitored turnover Steps to prevent recurrence No risk as sufficient NTA Licensee cannot ignore Authority publications Breaches significant and continuing |
| QBSA v Todd’s Plumbing Pty Ltd [2011] QCAT 622 | $905,550 $295,148 | 301.8% 16% | One | $6,000 | Medium business High growth without appropriate mechanism Steps taken to prevent recurrence Breach much less in second year |
| QBSA v Battaglia Pty Ltd [2012] QCAT 3 | $1,093,408 $2,018,009 | 364.5% 143.99% | N/A | $11,000 | Substantial breaches Licensee repeatedly warned |
| QBSA v Silverback Constructions Pty Ltd [2013] QCAT 222 | $3,222,761 | 1074% | Three | $4,800 | Medium business No history No explanation Breach not likely to recur Licensee warned High percentage |
| QBSA v Fisher Builders Pty Ltd [2013] QCAT 431 | $2,500,000 | 115% | 14 | $3,800 | Isolated incident |
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