Queensland Building Services Authority v Oj Pippin Pty Ltd
[2010] QCAT 44
•16 February 2010
CITATION: | Queensland Building Services Authority v OJ Pippin Pty Ltd [2010] QCAT 44 |
PARTIES: | QUEENSLAND BUILDING SERVICES AUTHORITY v O J PIPPIN PTY LTD ACN 063 149 922 |
APPLICATION NUMBER: | QD025-09 |
MATTER TYPE: | Building matters |
HEARING DATE: | Decision on the papers |
HEARD AT: | Brisbane |
DECISION OF: | Ms M Howard |
DELIVERED ON: | 16 February 2010 |
DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. That the respondent pay to the applicant a penalty of one thousand five hundred dollars ($1500.00) within 21 days of this order. 2. That the respondent pay the applicant’s costs fixed in the sum of six hundred dollars ($600.00) within 21 days of this order. |
CATCHWORDS: | Penalty-demand for completion payment before practical completion – section 67(2) Domestic Building Contracts Act 2000 – disciplinary proceedings by Queensland Building Services Authority – Queensland Building Services Authority Act 1991 |
| APPEARANCES and REPRESENTATION (if any): |
This matter was determined on the papers by agreement between the parties.
REASONS FOR DECISION
History of Application
On 14 February 2005, the respondent entered into a regulated contract under the Domestic Building Contracts act 2000 with William Armstrong for the construction of three houses at 133-137 Sylvan Road, Toowong. Final inspection for Lots 3 and 1 respectively were conducted on 10 August 2006 and 27 April 2006.The practical completion payment under the contract entered into by the respondent and the owner was specified at 15%, which equates to $123,026.40. On 3 November 2005, the respondent issued the owner with a tax invoice demanding payment of $100,000 as part of the completion payment, prior to practical completion. On 8 November 2005, the owner made a payment of $100,000 to the respondent. The respondent holds a license in the class of Builder-Open issued by the applicant on 30 August 2003.
The original contract between the respondent and the owner was for the houses at 133-137 Sylvan Road, Toowong. However, as the project commenced, additional work was agreed at an additional quoted amount, increasing the value of the contract from $820,176 to $1,096,836. Works were carried out concurrently on the houses and the additional work.
The Queensland Building Services Authority ('QBSA' or 'the Authority') issued an infringement notice to the respondent alleging an offence under section 67(2) of the Domestic Building Contracts Act 2000 (DBC Act), namely demanding a completion payment before practical completion of house properties at 133-137 Sylvan Road, Toowong. The offence was alleged to have been committed on one occasion and a penalty amount of $750 was imposed.
The respondent made an election, on the basis of legal advice, for a 'court hearing' rather than paying the penalty imposed by the infringement notice.
The Application
On 23 July 2009, the QBSA filed an application for a disciplinary proceeding in the Commercial and Consumer Tribunal (CCT or the former tribunal) seeking disciplinary action against O J Pippin Pty Ltd because of the alleged breach and seeking the imposition of a penalty and the QBSA's costs as agreed or assessed.
On 4 September 2009, the QBSA and the respondent signed a consent notice consenting to certain orders being made by the CCT. In essence, the parties agreed that there had been a breach as alleged by the QBSA, and that the issue of penalty and costs be determined on the papers.
On 8 September 2009, the CCT made an order in terms of the agreement.
The Applicable Law
From 1 December 2009, the jurisdiction of the CCT to deal with this proceeding was effectively transferred to the Queensland Civil and Administrative Tribunal (QCAT) under the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act) and associated amendments to the QBSA Act. The relevant transitional provisions, particularly section 271 of the QCAT Act, provide essentially that QCAT has only the powers and functions of the former tribunal in dealing with the proceeding. Accordingly, I must look to the now repealed legislation which applied prior to the QCAT Act and associated legislative amendments.
By virtue of the now repealed section 107(2) of the Commercial and Consumer Tribunal Act 2003 (CCT Act), the former tribunal was empowered in a disciplinary proceeding to make an order imposing a penalty in respect of a corporation of not more than an amount equivalent to 1000 penalty units. Section 70 provided for parties generally to bear their own costs. However, section 71 provided the tribunal with a discretion to award costs; section 71(4) lists factors to which the tribunal may have regard, including the outcome of the proceedings; the conduct of the parties and any contravention of an Act by a party to the proceedings.
The objects of the Queensland Building Services Authority Act 1991 (QBSA Act) include the regulation of the building industry to ensure the maintenance of proper standards in the industry, and provide a reasonable balance between the interests of building contractors and consumers: section 3(a). Under section 88 of the QBSA Act, the QBSA could apply to the CCT, to decide whether proper grounds exist for taking disciplinary action against a person.
Section 67 of the DBC Act provides as follows:
67 Completion payments
(1) This section only applies to a regulated contract for which the subject work consists of—
(a) the erection or construction of a detached dwelling to a stage suitable for occupation; or
(b) the renovation, alteration, extension, improvement or repair of a home to a stage suitable for occupation.
(2) The building contractor under a regulated contract must not demand all or part of the completion payment unless the practical completion stage has been reached.
Maximum penalty--100 penalty units……(6) In this section--
completion payment, for a regulated contract, means a payment required to be made under the contract by the building owner to the building contractor for the practical completion stage.practical completion stage, for a regulated contract, means the stage when—
(a) the subject work has been completed in accordance with the contract and all relevant statutory requirements, either--
(i) without any omissions or defects; or
(ii) apart from minor omissions or minor defects; and(b) the detached dwelling or home is reasonably suitable for habitation.
Section 5 (1) of the Penalties and Sentences Act 1992 provides that the value of a penalty unit is $100.00. Accordingly, the maximum penalty which the tribunal may impose in this case is $10,000.00.
The Submissions
The QBSA submits that in determining the penalty the tribunal should have regard to the following:
·disciplinary proceedings are protective in nature rather than punitive: Queensland Building Services Authority v Taylor R [2005] QCCTB70 [25] citing NSW Bar Association v Evatt (1968) 117 CLR 177 at 183;
·the desirability of imposing a penalty that has deterrent effect, on the respondent but also others who may contemplate a similar breach;
·assessment of the gravity of the breach against the objects of the QBSA Act, which include protection of consumers;
·whether there is a satisfactory explanation for the occurrence of the breach;
·whether the breach is likely to re-occur;
·whether the respondent admitted the breach at the earliest opportunity or consented to orders that proper grounds exist for taking disciplinary action against the respondent;
·the need for consistency in the imposition of penalties.
In the current circumstances, the QBSA submits that no discount 'for early plea' is available as the respondent elected a court hearing. However, the Authority submits that there are mitigating factors to which the tribunal may have regard, namely, that the respondent consented to orders that proper grounds exist following the directions hearing; that there is no record of previous breaches of section 67(2) of the DBC Act by the respondent; and that the respondent has demonstrated remorse for the breach.
The Authority submits that there are no cases on point to guide the Tribunal's determination on penalty. However, it submits that a moderate penalty would recognise the seriousness of the matter and reinforce the deterrent effect with the respondent and the industry. Having regard to the maximum amounts which may be imposed, a penalty in the range of $2500 to $3000 is suggested.
The Authority also seeks its costs of and incidental to the application in the sum of $600 (being $300 for taking instructions and preparing affidavit material and $300 for attending the directions hearing and preparation of submissions). It submits, in essence, a consideration of the factors in section 71(4) of the CCT Act, that the tribunal could exercise its discretion to make a costs order.
The respondent submits, as the tribunal understands it, in essence as follows:
·there was no intention to demand a payment contrary to law and a misinterpretation of the legislation led to the breach;
·there had been an inadvertent error made in not adjusting the value of the relevant claim to include the monetary increase in the contract amount which 'would have negated the allegation of a "Practical Completion Payment" ';
·in mitigation, the respondent submits that it consented to the order that there were proper grounds for disciplinary action; that the election for a 'court hearing' was based on legal advice that the matter was of an amount that placed it within the jurisdiction of the Supreme Court (and otherwise it would not have been made); that there have been no previous breaches by the respondent; and that the respondent has taken steps to ensure that there is no repeat of the breach.
The respondent submits that the penalty should be $750 as was imposed in the infringement notice.
Regarding the application for costs, the respondent does 'not object' to the amount of $600 'to be paid as costs incurred by the applicant'.
Determination on Penalty and Costs
The respondent did not intend to make a demand contrary to the law. The breach occurred in the context of an agreement which had been varied and due, it seems, to a mistake in interpretation of the law. Also, the respondent altered its procedures to ensure that such a breach could not occur again. On the basis of these factors, the Tribunal is satisfied that there is a satisfactory explanation for the occurrence of the breach. There is no relevant history of breaches. Further, the respondent would not have elected a court hearing if not for a mistaken understanding that the matter was within the jurisdiction of the Supreme Court because, it seems, of the amount involved. Further, in mitigation, the respondent did consent to orders that proper grounds exist for taking disciplinary action following the directions hearing; the respondent is remorseful about the breach; and the breach is not likely to re-occur.
The Authority initially imposed a penalty of $750, although it now submits that a 'moderate' penalty in the vicinity of $2500-3000 is appropriate. The respondent submits that the initially imposed penalty was appropriate.
The Tribunal has regard to the protective nature of the proceedings and the desirability of imposing a penalty with deterrent effect and the regulatory function of the QBSA Act, which, among other things provides important consumer protections.
Although the breach occurred as a result of error and misunderstanding, rather than intention, and there are mitigating factors, the breach remains a serious matter. In all of the circumstances, and to recognise the protective function of the proceedings, I consider it appropriate to impose a penalty of $1500.
Regarding the QBSA's application for costs, I have regard to the outcome of the proceedings, namely the imposition of a significant penalty; the fact that the proceedings resulted from the respondent's election; and that the proceedings relate to a contravention of an Act by the respondent. In these circumstances, the respondent should pay the QBSA's costs fixed in the sum of $600.
I make orders accordingly.
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