Queensland Building Services Authority v Silverback Constructions Pty Ltd

[2013] QCAT 222

CITATION: Queensland Building Services Authority v Silverback Constructions Pty Ltd [2013] QCAT 222

PARTIES:	Queensland Building Services Authority (Applicant)
v
Silverback Constructions Pty Ltd (Respondent)

APPLICATION NUMBER: OCR298-12

MATTER TYPE: Occupational regulation matters

HEARING DATE: On the papers

HEARD AT: Brisbane

DECISION OF: Bevan Hughes, Member

DELIVERED ON: 8 May 2013

DELIVERED AT: Brisbane

ORDERS MADE:

1.    That Silverback Constructions Pty Ltd pay the Queensland Building Services Authority a penalty of $4,800 by 4:00pm on 11 June 2013.

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

CATCHWORDS:

Exceeding Annual Allowable Turnover – where significantly exceeded – different director during relevant period – warning letter sent

Queensland Building Services Authority Act 1991, section 89(a) and (k), section 91(3)
Penalties and Sentences Act 1992, section 5
Queensland Building Services Authority v. Alternate Dwellings Pty Ltd [2011] QCAT 460, cited
Queensland Building Services Authority v. Built Qld Pty Ltd [2005] QCCTB 152, applied
Queensland Building Services Authority v. Coastal Interior Linings Pty Ltd [2010] QCAT 165, cited
Queensland Building Services Authority v. Gartess Pty Ltd [2011] QCAT 42, applied
Queensland Building Services Authority v. Grasstree Landscaping Design Pty Ltd [2010] QCAT 89, cited
Queensland Building Services Authority v. M & R Hudson Plumbing Pty Ltd [2010] QCAT 623, cited
Queensland Building Services Authority v. Phoenix Constructions (Qld) Pty Ltd [2010] QCAT 542, cited
Queensland Building Services Authority v. Todd’s Plumbing Pty Ltd [2011] QCAT 622, cited
Queensland Building Services Authority v. Uniport Australia Pty Ltd [2009] QCAT 33, cited

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?

1. During the 2011-12 licence year, Silverback Constructions Pty Ltd exceeded its Allowable Annual Turnover (AATO) by $3,222,761 or 1074 percent. Silverback did not notify the Queensland Building Services Authority that it was likely to exceed the AATO, nor did it obtain the Authority’s consent to exceed the AATO.

2. This means that Silverback breached its builder licence requirements. The Authority therefore proceeded with a disciplinary application against Silverback.

3. The reason for these requirements is to help ensure that builders trade within their means and are able to honour their commitments to consumers, contractors and suppliers.

4. The Tribunal makes the following orders with the agreement of the Authority and Silverback[1]:

   (a)That proper grounds exist for taking disciplinary action against Silverback Constructions Pty Ltd in that it contravened sections 89(a) and (k) of the Queensland Building Services Authority Act 1991 in the 2011-12 licence year by exceeding its Allowable Annual Turnover (AATO) by $3,222,761 or 1074 percent, without first notifying the Queensland Building Services Authority that it was likely to exceed its AATO or obtaining the Authority’s approval; and

   (b)That each party pays its own costs of and incidental to the proceedings.

   [1]        Statement of Agreed Facts dated 9 April 2013, paragraph 14.

5. It is then for the Tribunal to determine penalty. The Tribunal may impose a penalty of an amount up to $100,000.[2] Silverback and the Authority agree, and the Tribunal accepts, that the appropriate penalty is in the range of $3,000 to $5,000.  

What is the appropriate penalty?

[2]        Queensland Building Services Authority Act 1991, section 91(3) and Penalties and

Sentences Act 1992, section 5.

What are the relevant factors?

1. The Tribunal has considered the following relevant factors in determining the penalty for exceeding the allowable AATO[3]:

   (a)Silverback did not incorporate or seek its licence until 2008;

   (b)There is no history of breaches prior to the 2011-12 licence year;

   (c)There is no explanation for the breach, other than that Silverback’s current director was not the director during the 2011-12 licence year;

   (d)There is no suggestion that the breach is likely to recur;

   (e)As of 13 December 2012, Silverback had issued capital of $336,100. Silverback can be characterised as a medium size business;

   (f)Silverback exceeded its AATO by $3,222,761 or 1074 percent; and

   (g)On 14 October 2010, the Authority sent a letter to Silverback warning it about a suspected breach of its AATO for the 2010-2011 licence year. This means that Silverback had been previously warned about a possible breach of its AATO for the 2011 licence year.

   [3]        Queensland Building Services Authority v. Built Qld Pty Ltd [2005] QCCTB 152.

What are comparable previous decisions?

1. The Tribunal considered comparable previous decisions in the below table.

Case Name and citation	Breach Amount ($)	Breach (% of AATO)	Years licensed	Penalty
QBSA v. Todd’s Plumbing Pty Ltd [2011] QCAT 622	$905,550	301.8%	Two	$6,000
QBSA v. Alternate Dwellings Pty Ltd [2011] QCAT 460	$4,729,832	157.65%	One	$3,000
QBSA v. Gartess Pty Ltd [2011] QCAT 42	$1,354,822.83	286.9%	Two	$4,500
QBSA v. M & R Hudson Plumbing Pty Ltd [2010] QCAT 623	$708,079	236%	Four	$4,000
QBSA v. Phoenix Constructions (Qld) Pty Ltd [2010] QCAT 542	$6,009,618	36.3%	16	$5,000
QBSA v. Grasstree Landscaping Design Pty Ltd [2010] QCAT 89	$1,818,802	606.3%	One	$4,000
QBSA v. Coastal Interior Linings Pty Ltd [2010] QCAT 165	$6,787,774	226.3%	13	$4,000

How does the present application compare with the previous decisions?

1. A $6,000 penalty would be excessive for the present case. The present case is distinguishable from Todd’s Plumbing[4] because the penalty there reflects that the licensee had committed two breaches.[5]

   [4]        QBSA v. Todd’s Plumbing Pty Ltd [2011] QCAT 622.

   [5]        Idem at paragraph 44.

2. A $3,000 penalty would not be sufficient for the present case. The present case is distinguishable from Alternate Dwellings[6] because the licensee committed the breach in its first year of holding its licence.[7]

[6]        QBSA v. Alternate Dwellings Pty Ltd [2011] QCAT 460.

[7]        Idem at paragraph 6.

1. A $4,000 penalty would not be sufficient for the present case. The present case is distinguishable from Hudson Plumbing[8] because the penalty there reflects the director’s personal and health issues at the time of the breach.[9] In Grasstree[10] and Coastal Interior[11] the penalty reflected that the amounts by which the AATO were exceeded were very large in both dollar and percentage terms. The amount and percentage exceeded are even larger in the present case. Similarly, the penalty should be larger.

   [8]        QBSA v. M & R Hudson Plumbing Pty Ltd [2010] QCAT 623.

   [9]        Idem at paragraph 22.

   [10]        QBSA v. Grasstree Landscaping Pty Ltd [2010] QCAT 89 at paragraph 25.

   [11]        QBSA v. Coastal Interior Linings Pty Ltd [2010] QCAT 165 at paragraph 39.

2. The present case is most similar to Phoenix[12] and Gartess[13]. In both cases, the AATOs were substantially exceeded. However, the licensee in Phoenix was a large-sized business while the licensee in Gartess was a moderately sized business in its infancy. The licensee in the present case is also a moderately sized business in its infancy. I therefore consider Gartess to be the most apposite authority.

   [12]        QBSA v. Phoenix Constructions (Qld) Pty Ltd [2010] QCAT 542.

   [13]        QBSA v. Gartess Pty Ltd [2011] QCAT 42.

3. In both Gartess and the present case, the licensees were previously warned about the consequences of this type of breach. However, the penalty of $4,500 imposed in Gartess was for a breach that was substantially less, both in percentage and monetary terms. The AATO here was exceeded by a percentage of 1074, an ostensibly inordinate amount.[14] 

   [14]        The closest previous percentage exceeded appears to be 1,193.3 – see QBSA v.

   Uniport Australia Pty Ltd, [2009] QCAT 33. However, the breach was not isolated.

4. It appears that the licensee enjoyed substantial growth, but it has failed to explain why it did not inform the Authority of this. This is despite the licensee receiving a warning from the Authority.[15]

   [15]        Statement of Agreed Facts dated 9 April 2013, paragraph 13.

5. Given the consumer protection policy rationale for the reporting requirements, this cannot be countenanced:

   “The most concerning breaches of the AATO can occur when a licensee has substantial growth in a year without an appropriate mechanism to monitor and report that growth to the Authority to ensure that it does not trade beyond its means.”[16]

   [16]        QBSA v. Todd’s Plumbing Pty Ltd, idem at paragraph 40.

6. I do not accept the breach occurring before the current director’s tenure to be a mitigating factor. This would be contrary to the principle of separate corporate identity. Further, it is incumbent upon directors to familiarise themselves with the company’s obligations, including the Financial Requirements for Licensing when taking office.[17] An incoming director should conduct due diligence before accepting the office and its commensurate privileges and responsibilities.  

   [17]        QBSA v. Alternate Dwellings Pty Ltd [2011] QCAT 460.

1. The purpose of the penalty here is to remind licensees of the importance of understanding the requirements of their licence and in particular, the AATO policy. Having regard to similar cases, the appropriate penalty range is $4,500 to $5,000. Given that the percentage of the licensee’s AATO substantially exceeds previous cases in this range, a penalty closer to $5,000 is considered appropriate.

2. The Tribunal therefore orders that the licensee pay to the Authority the amount of $4,800 by 4:00pm on 11 June 2013.