Queensland Building Services Authority v Sandy Straits Plumbing Pty Ltd
[2011] QCAT 686
•18 October 2011
| CITATION: | Queensland Building Services Authority v Sandy Straits Plumbing Pty Ltd [2011] QCAT 686 |
| PARTIES: | Queensland Building Services Authority |
| v | |
| Sandy Straits Plumbing Pty Ltd |
| APPLICATION NUMBER: | OCR068-11 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | 18 October 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Professor Adrian Ashman, Member |
| DELIVERED ON: | 18 October 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | The Respondent pay the Applicant a penalty of $9,000 within sixty (60) days. |
| CATCHWORDS: | EXCEEDING ANNUAL ALLOWABLE TURNOVER – where Allowable Annual Turnover significantly exceeded – where respondent failed to notify the Building Services Authority Queensland Building Services Authority Act 1991, ss 89(a), 89(k), 91(3)(b) Queensland Building Services Authority v Built (Qld) Pty Ltd [2005] CCT LO18-05 |
APPEARANCES and REPRESENTATION (if any):
Decision was made on the papers without the parties being present.
REASONS FOR DECISION
In the 2007-2008 year, Sandy Straits Plumbing had an Allowable Annual Turnover (AAT) of $398,206. Sandy Straits’ actual turnover for that year was $1,019,332, exceeding the AAT by $621,126 or 156%. Sandy Straits neither notified the Authority that it was likely to exceed the AAT by more than 10%, nor did it obtain the Authority’s consent to exceed the AAT.
In the 2008-2009 year, Sandy Straits had an AAT of $358,670. Its actual turnover for that year was $949,493, exceeding the AAT by $590,823 or 164.7%. Sandy Straits neither notified the Authority that it was likely to exceed the AAT by more than 10%, nor did it obtain the Authority’s consent to exceed the AAT.
The parties agree, and the tribunal accepts, that proper grounds exist for taking disciplinary action against Sandy Straits for breaching sections 89(a) and/or 89(k) of the Queensland Building Services Authority Act 1991. Pursuant to section 91(3)(b) of the Act, the tribunal may impose a penalty of an amount not more than 1,000 penalty units. The decision of the Tribunal dated 15 June 2011 found that the penalty and costs will be determined on the papers. This determination is the subject of this hearing.
Relevant factors for consideration in determining penalty
Authority’s submission
The Authority has submitted that Queensland Building Services Authority v Built Qld Pty Ltd[1] is relevant when the Tribunal is determining facts to take into consideration in regard to a penalty for exceeding the allowable AAT. These include: the length of time the licensee has been in business, whether the licensee previously has been in breach of the Act, whether there is a satisfactory explanation for the breach, whether the breach is likely to recur, the size of the licensee’s company, the amount by which the AAT was exceeded, and whether the licensee has been involved in previous events of this nature or other offences against statutory obligations or standards. Against each of these considerations, the Authority has made submission, as follows.
(a) Sandy Straits Plumbing became a registered corporation on 24 March 2005 and it would, therefore, be aware of its legislative requirements regarding licensing.
(b) Sandy Straits has not previously breached any provisions of the Act.
(c) The Authority asserts that Sandy Straits’ submissions in regard to its misunderstanding that led to the breach is not persuasive as it had access to accounting services.
(d) The Authority submits that it is Sandy Straits’ responsibility to demonstrate that it has accounting systems in place to ensure that another breach will not occur and that the penalty imposed by the Tribunal should encourage Sandy Straits to take such appropriate action. The Authority also asserts that the imposition of a moderate penalty is warranted to act as a deterrent not only for Sandy Straits but also other similarly-sized businesses that might contemplate a similar breach of the Act.
(e) The Authority states that Sandy Straits is a low volume business with a Net Tangible Asset of $27,022 in the licensing year 2009-2010 and an AAT for that year of $450,353. The Authority argues that the penalty imposed on Sandy Straits should not be lenient because of its size.
(f) The size of the two breaches were 158% and 164%.
(g) There appear to have been no previous breaches of the Act by Sandy Straits.
(h) The Authority provided the Tribunal with a Table outlining 15 comparative cases from December 2009 to May 2011 for AAT breaches including the penalties imposed by the Tribunal that ranged from $800 to $10,000. The Authority submitted that an appropriate penalty in the present matter would be between $8,000 and $10,000.
Sandy Strait’s submission
In its submission to the Tribunal, Sandy Straits admits that it committed both offences. It offered comments that the Tribunal might consider when determining the penalty. In summary, these are given below.
(a) Sandy Straits states the offences were committed in successive financial years and that if it had been notified by the Authority of the first offence in 2007/2008, the second offence would not have occurred.
(b) Sandy Straits engaged professional assistance when providing submissions to the Authority. The advisor did not draw its attention to any anomalies, Sandy Straits assumed that all legislative requirements had been fulfilled. Furthermore, it asserts that its breaches were not wilful and it gained no financial advantage as a result of those breaches.
(c) The excess of income over the AAT did not relate to actual profits and due to the buoyant economy, Sandy Straits was working at full capacity.
(d) While the Authority has submitted comparative cases, the circumstances of the present matter might vary from the details of those cases.
(e) Sandy Straits saved the Authority costs that it might have occurred by pleading guilty to the offences.
(f) Sandy Straits will experience hardship as a result of the penalty imposed by the Tribunal. It seeks a penalty for the equivalent of one breach only to minimise financial hardship as it is in the process of minimising or closing its business.
Considerations
Sandy Straits has admitted that it is in breach of the Act and, as such, the Authority has not been required to undertake actions in prosecuting these breaches other than bringing an application to the Tribunal. On 15 June 2011, the Tribunal issued a decision by consent that Sandy Straits accepted that proper grounds exist for taking disciplinary action.
In its first and second points, Sandy Straits appears to be assigning responsibility for the breaches to others. In the first point it argues that the second breach would not have occurred if the Authority had advised it of the 2007/2008 breach. In its second, it states that it assumed that all legislative requirements had been satisfied as its financial advisor did not notify it of any obvious faults.
It is the responsibility of the principal(s) of a business to monitor the affairs of that business to ensure that no breaches of legislation or regulations occur. Notification of a building license approval includes a paragraph stating that it is a condition of the licence that the licensee must not exceed the AAT by more than 10% without reference to the Authority and if it chooses to increase the allowable turnover it must provide the Authority with financial statements that satisfy the licensing requirements for the higher activity level.
While the Tribunal recognises that running a business can be demanding, this does not absolve the principal(s) of the responsibility of fulfilling its statutory obligations. The Tribunal accepts Sandy Straits’ submission that the breaches were not deliberate. That they occurred over two reporting years, however, is an indication that the requirements of the license were ignored, or at least overlooked, and this is an unsatisfactory justification for the occurrence of two breaches.
Sandy Straits draws attention to the comparative cases provided by the Authority and suggests that the circumstances of those cases might not be similar to the present one. Three of the cases noted by the Authority involve multiple breaches.
In the first case in which two breaches occurred[2], the Tribunal was not convinced by the respondent’s explanation that the Authority had not informed it of its first breach. The Tribunal was satisfied that appropriate procedures were put in place subsequent to the breaches to ensure that not further breaches would occur. The penalty imposed was $8,000.
In the second case in which four breaches occurred[3], the respondent had relied on professional advice in respect of material put before the Authority. The Tribunal stated that the respondent could not absolve itself from responsibility for being aware of financial requirements. It is the responsibility of the licensee to know what those financial requirements are. The Tribunal was satisfied that the likelihood of a repeat breach was low. The Tribunal was also critical of the Authority’s delay in informing the respondent of breaches that extended over four years. The penalty imposed was $8,000.
In the third case[4] the respondent had knowledge of the first breach and there was no material before the Tribunal to demonstrate that the respondent had implemented administration or accounting procedures to prevent further breaches. In this case, the penalty imposed was $10,000.
In summary, the Tribunal bases its determination of the penalty on the following matters.
The Authority has asserted that the purpose of disciplinary proceedings is to protect the public, uphold the statutory regulatory scheme, and that any penalty imposed should not be seen as a punishment. Notwithstanding this, the penalty should deter breaches and encourage compliance with the scheme.
The Tribunal accepts that Sandy Straits’ breaches were not deliberate.
Despite being unaware of both breaches until it was notified by the Authority on 26 July 2010, Sandy Strait has demonstrated serious flaws in its business administration and accounting procedures. The fact that the Authority did not inform Sandy Straits of the breaches until 2010 is not a satisfactory defence in this matter as the licensee has a responsibility to ensure that it has procedures in place to enable it to comply with the Act.
It is also not a satisfactory defence that Sandy Straits relied on professional support for submitting material and returns to the Authority. Again, it is the responsibility of the licensee to comply with the Act.
The annual turnover of the company from 2007 to 2009 shows that it was a successful and apparently stable small business.
In its submission, Sandy Straits stated that any penalty will cause hardship. It asserts that it is in the process of minimising or closing its business but there is no material before the Tribunal to elaborate on these statements and there is also no evidence to demonstrate that the company has implemented any management or accounting control procedures to prevent a recurrence of the breach.
The three cases to which reference has been made above suggest an appropriate penalty range for multiple breaches.
I find, therefore, that Sandy Straits Pty Ltd has breached the Queensland Building Services Authority Act1991 and that proper grounds exist for taking disciplinary action against it. Section 91(3)(b) of the Act enables the Tribunal to impose a penalty of an amount not more than 1,000 penalty units. I find that the explanations given by Sandy Straits for the breaches are insufficient mitigating circumstances for any leniency in determining the level of the penalty.
I order Sandy Straits Plumbing Pty Ltd pay the Authority nine thousand dollars ($9,000) within 60 days of today’s date.
The Tribunal on 15 June 2011 decided by consent that each party bear their own costs. I find, therefore, that each party bear its own costs in regard to prosecuting and defending this matter.
[1] Queensland Building Services Authority v Built (Qld) Pty Ltd [2005] CCT LO18-05.
[2] Queensland Building Services Authority v Peninsula Construction Group (Qld) Pty Ltd [2009] QCAT 26.
[3] Queensland Building Services Authority v C-view Windows Pty Ltd [2011] QCAT 211.
[4] Queensland Building Services Authority v Classic Brick & Block Pty Ltd [2007] QCAT 130.
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