Queensland Building Services Authority v Mainbrace Constructions (NSW) Pty Ltd
[2011] QCAT 93
•22 March 2011
CITATION: PARTIES: | Queensland Building Services Authority v Mainbrace Constructions (NSW) Pty Ltd [2011] QCAT 93 Queensland Building Services Authority |
| v | |
| Mainbrace Constructions (NSW) Pty Ltd |
| APPLICATION NUMBER: | OCR298-10 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Ms Sandra Gai Deane, Member |
| DELIVERED ON: | 22 March 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. Mainbrace will pay the Authority the sum of seven thousand dollars ($7,000.00) by way of penalty on or before 4:00pm on 19 April 2011. 2. The application for costs is dismissed. |
| CATCHWORDS : | Disciplinary proceedings against licensee – exceeding annual allowable turnover – where AATO exceeded – where respondent did not take into account other income Queensland Building Services Authority Act 1991, ss 89(a), 89(k), 91(3)(b) Queensland Building Services Authority v Built Qld Pty Ltd [2005] QCCTB 152 Queensland Building Services Authority v CEC Group Ltd [2006] QCCTB 88 |
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.
REASONS FOR DECISION
This is a disciplinary proceeding brought by the Queensland Building Services Authority (“the Authority”) against the Respondent, Mainbrace Constructions (NSW) Pty Ltd (“Mainbrace”).
The application consists of a charge involving breaches of the Queensland Building Services Authority Act 1991 (“the QBSA Act”).
On 5 January 2011 the parties consented to an order that:
a)proper grounds exist for taking disciplinary action against Mainbrace in that Mainbrace contravened sections 89(a) and/or 89(k) of the QBSA Act in that during its 2008-2009 licence year, Mainbrace exceeded its Allowable Annual Turnover by $18,255,935 or 12.8%, without first notifying the Authority or obtaining the Authority’s approval.
b)the issue of penalty and costs be determined on the papers not before 15 March 2011.
The Tribunal has received submissions on the penalty and costs issue from the Authority on 10 January 2011 and Mainbrace on 11 February 2011.
Background
On 30 January 2009 the Authority renewed Mainbrace’s licence and advised that Mainbrace’s Allowable Annual Turnover (“AATO”) for its 2008-2009 licence year was $142,798,703.
A condition of the renewal was that Mainbrace was not to exceed its AATO by more than 10% during a licence year without reference to the Authority.
On or about 29 October 2009 the Authority received Mainbrace’s Independent Review Report which certified that Mainbrace’s actual turnover for the 2008-2009 year was $161,054,638.
Mainbrace’s actual turnover exceeded its AATO by $18,255,935 or 12.8%. Mainbrace did not provide prior notice to the Authority or obtain the Authority’s approval.
The Authority filed an application for disciplinary proceedings for breach of section 89 of the Queensland Building Services Authority Act 1991 (“the QBSA Act”) on 16 November 2010.
Submissions on Penalty
[10] The Authority has directed the tribunal’s attention to Queensland Building Services Authority v Built Qld Pty Ltd [1] which lists the relevant factors to be taken into account when determining a penalty for exceeding the allowable AATO. As to each of those factors:
[1] [2005] QCCTB 152.
a)Mainbrace held a contractor’s licence to perform building work since 30 August 2003.
b)Mainbrace exceeded its 2006-2007 AATO by $33,610,914 or 37.36% and its 2009-2010 AATO by $24,461,292 or 19.1%.
c)Mainbrace submitted that:
(i)It primarily carries out work in NSW.
(ii)In relation to exceeding the 2006-2007 AATO it had not realised that the AATO applied to all works. It had been under a misapprehension that the AATO related only to work performed in Queensland.
(iii)The revenue applicable to work performed in Queensland was significantly less than the AATO.
(iv)In relation to exceeding the 2008-2009 AATO it had not realised that sundry income, interest received and miscellaneous recoveries formed part of the calculation of Turnover as distinct from project revenue and that based on management reports prepared each month up to late June 2009 Mainbrace’s Forecast Turnover was expected to fall within the permitted 10% variation tolerance. Once final accounts had been prepared the 10% tolerance had been exceeded when income other than project income was taken into account.
(v)In relation to exceeding the 2009-2010 AATO Mainbrace’s calculation was based erroneously on the prior year’s AATO which had not been updated in the relevant spreadsheet. Mainbrace did not contract to perform any building works in Queensland during this year.
(vi)It monitors its turnover throughout the licence year but in the past has factored in the 10% tolerance.
d)Mainbrace has advised that it has put in place measures to ensure that such breaches do not occur in future including no longer factoring in the 10% tolerance before notifying the Authority.
e)Mainbrace is a medium to large sized business with Net Tangible Assets of $6,507,696 and an AATO for 2009-2010 of $141,346,191.
f)The AATO was exceeded by a significant sum though in percentage terms it was not as significant. There have been 3 separate years where the AATO has been exceeded.
[11] The Authority submits that:
a)an appropriate penalty amount would act as a deterrent to discourage Mainbrace and others from breaches of their statutory obligations and be proportionate to the benefit gained.
b)an appropriate penalty amount would encourage compliance with the regulatory scheme and thus protect members of the public.
c)the penalty should reflect the primary purpose of the financial requirements which is to avoid situations where licensees trade beyond their means and are unable to honour their obligations to consumers, contactors and suppliers.
d)the primary purpose of disciplinary proceedings is to protect the public and uphold the integrity of the statutory regulation scheme and thus any penalty should be in the nature of deterrence rather than punishment.
e)its role as regulator is undermined when licensees breach the financial conditions of their licence and the public deserve to be assured they are trading with an entity of proven financial wellbeing.
f)the Tribunal should order a penalty against Mainbrace in the range of nine thousand dollars to eleven thousand dollars ($9,000.00 to $11,000.00).
[12] The Authority referred the Tribunal to two previous decisions:
Case $ over AATO % over AATO Penalty
QBSA v CEC Group Ltd[2] $4,431,519
$9,807,80344.3%
39.5%$7,000 plus
$500 costsQBSA v Phoenix Constructions[3] $6,009,618 36.3% $5,000 plus
$300[2] [2006] QCCTB 88.
[3] [2010] QCAT 542.
Submissions on Costs
[13] 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 three hundred dollars ($300.00) as set out in the Justices Act 1886.
[14] Mainbrace made no submissions as to costs.
Discussion and Decision
[15] The Authority is responsible for regulation of the building industry in a way which gives the public confidence. It is important that licensees understand that compliance with statutory requirements is to be taken seriously and to ensure that the financial backing represented by their licence is real and not fictional.
[16] Mainbrace has misunderstood its obligations in a number of respects and made errors which it is said caused the breaches.
[17] Licensees need to take proper steps to ensure compliance with the statutory regime. Mainbrace is a substantial business. It has not been submitted that Mainbrace could not have afforded to seek and obtain appropriate legal and accounting advice.
[18] The 2008-2009 AATO was exceeded by 12.8% or 2.8% more than the permitted tolerance. Considered on its own I would be of the view that leniency in penalty would be appropriate. However this is not an isolated incident. There was a previous breach where the AATO was exceeded by 37.36% and a subsequent breach where the AATO was exceeded by 19.1%.
[19] The Tribunal imposes a penalty of $7,000.00.
[20] The starting point under section 100 of the Queensland Civil and Administrative Tribunal Act 2009 is that parties must pay their own costs unless one of them can point to a basis that is “in the interests of justice” within section 102.
[21] I am not satisfied that the Authority has sufficiently demonstrated that the interests of justice require the Tribunal to award costs.
Orders
Mainbrace will pay the Authority the sum of seven thousand dollars ($7,000.00) by way of penalty on or before 4:00pm on 19 April 2011.
The application for costs is dismissed.
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