Queensland Building Services Authority v Todd's Plumbing Pty Ltd
[2011] QCAT 622
•8 December 2011
| CITATION: | Queensland Building Services Authority v | |
| PARTIES: | Queensland Building Services Authority | |
| v | ||
| Todd’s Plumbing Pty Ltd | ||
| APPLICATION NUMBER: | OCR304-10 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | J Allen, Member |
| DELIVERED ON: | 8 December 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | Todd’s Plumbing Pty Ltd is ordered to pay the Queensland Building Services Authority the sum of $6,000 by way of penalty by 4.00 pm on 22 December 2011. |
| CATCHWORDS: | Penalty – Exceeding Annual Allowable Turnover – breach due to failure to include sales from retail business with construction turnover Queensland Building Services Authority Act 1991, s 91(3)(b) |
APPEARANCES and REPRESENTATION (if any):
The application was heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009.
REASONS FOR DECISION
The Queensland Building Services Authority made application to the Tribunal[1] to determine if grounds exist for taking disciplinary action[2] against Todd’s Plumbing Pty Ltd in respect of a breach of the Allowable Annual Turnover (AATO) for the company in the 2007-2008 and 2008-2009 years.
[1] Section 88 of the Queensland Building Services Authority Act 1991.
[2] Section 89 of the QBSA Act.
The Tribunal made the following order with the agreement of the parties:
(1)That proper grounds exist for taking disciplinary action against the Respondent in that it contravened sections 89(a) and / or 89(k) of the Queensland Building Services Authority Act 1991 in that, during its 2007-2008 licence year, it exceeded its Allowable Annual Turnover by nine hundred and five thousand, five hundred and fifty dollars ($905,550) or 301.8% without first notifying the authority or obtaining the Authority’s approval.
(2)That proper grounds exist for taking disciplinary action against the Respondent in that it contravened sections 89(a) and / or 89(k) of the Queensland Building Services Authority Act 1991 in that, during its 2008-2009 licence year, it exceeded its Allowable Annual Turnover by two hundred and ninety-five thousand, one hundred and forty-eight dollars ($295,148) or 16% without first notifying the authority or obtaining the Authority’s approval
Following the finding that grounds exist for disciplinary action it is then for the Tribunal to determine what orders should be made against Todd’s Plumbing in regard to penalty and costs[3]. The parties have made written submissions which have been considered by the Tribunal.
[3] Section 91(3) of the QBSA Act.
Authority’s Submissions
The Authority submitted that the primary purpose of disciplinary proceedings is to protect the public and uphold the statutory regulatory scheme and that the penalty ordered must provide a sufficient deterrent to other persons licensed by the Authority, that is, general deterrence.
In the case of Queensland Building Services Authority v Built Qld Pty Ltd[4] the relevant factors to be taken into account in determining the penalty in matters involving a licensee’s breach of their AATO were listed as follows:
a)The length of time the licensee has been in business;
b)Whether the breach was an isolated incident or whether there was more than one breach;
c)Whether there was a satisfactory explanation for the occurrence of the breach;
d)Whether the breach is likely to reoccur;
e)The size of the licensee’s business or company, both relative to the size of the breach and generally;
f)The amount by which the AATO was exceeded, both in monetary and percentage terms; and
g)Whether the licensee has been involved in previous events of this nature, or other offences against its statutory obligations and/or failure to comply with statutory standards.
[4] [2005] QCCTB 152.
The Authority advised that it was aware that the Todd’s Plumbing had been incorporated on 27 February 2007 and that it had issued it with licence number 1126780 in the class of ‘plumbing and draining’ on 3 October 2007[5] and on 31 October 2007 the Authority had additionally granted Todd’s Plumbing a licence in the class of ‘Gasfitting’[6].
[5] Exhibit 2 to Affidavit of Michelle Ann Lockton at page 73.
[6] Exhibit 3 to Affidavit of Michelle Ann Lockton at page 75.
The breaches of the AATO occurred in its first and second licence years.
Todd’s Plumbing may be characterised as a medium sized business.
Todd’s Plumbing has been specifically notified of the relevant aspects of the Financial Requirements for Licensing Policy on numerous occasions through the licence application and renewal process.
[10] Todd’s Plumbing has failed to appropriately understand its statutory obligations and monitor its turnover and other aspects of its financial information during the licence year. The Authority relied on the comments in Queensland Building Services Authority v Janda Commercial Pty Ltd[7] in that regard.
[7] [2009] CCT QD015-09.
[11] Todd’s Plumbing should demonstrate it understands its statutory obligations and has implemented ongoing accounting and business forecasting measures to ensure it does not breach its AATO again in the future.
[12] The primary purpose of the Financial Requirements for Licensing Policy is to avoid situations where licensees trade beyond their means, and are unable to honour their obligations to consumers, contractors and suppliers.
[13] The Authority’s role as regulator is undermined when licensees breach the financial conditions of their licence. The public, in its dealings with licensees, deserve to be assured that they are dealing with a substantive entity with proven financial wellbeing.
[14] The penalty ordered must deter breaches, both by Todd’s Plumbing and by licensees generally. A deterrent effect is unlikely to occur should the penalty ordered be insignificant proportionate to the benefit gained by Todd’s Plumbing.
[15] The 2007-2008 year breach occurred when Todd’s Plumbing Actual Annual Turnover was $1,205,550. Because Todd’s Plumbing AATO was $300,000, it breached its AATO by an amount of $905,550 which equated to a percentage of 301.8%. The breach equated to more than 30 times the ten percent leeway allowed under the Financial Requirements for Licensing Policy.
[16] The 2008-2009 year breach occurred when Todd’s Plumbing Actual Annual Turnover was $2,175,339. Because Todd’s Plumbing AATO was $1,880,191, it breached its AATO by an amount of $295,148 which equated to a percentage of 16%. The breach exceeded the ten percent leeway allowed under the Financial Requirements for Licensing Policy.
[17] That the only matter decided by the Tribunal to date that involves two disciplinary grounds relating to AATO breaches is Queensland Building Services Authority v Peninsula Construction Group (Qld) Pty Ltd [2009] QCAT 26. The first breach in that matter was by an amount of $907,801 or 363.1%. The second breach was by an amount of $7,776,351 or 504.6%. The breaches also occurred in the company’s first and second year of holding a licence. A single penalty of $8,000 was ordered.
[18] The authority submitted that it is appropriate that a similar penalty be ordered in the present case.
[19] The Authority also provided a list of comparative cases involving a single disciplinary ground for a breach of the AATO. These were said to represent matters where the respondents were licensed for only a short period prior to the breach occurring.
Case Name and citation
Penalty
Breach ($)
Breach % of AATO
Years Licensed
QBSA v M&R Hudson Plumbing Pty Ltd [2010] QCAT 623
$4,000
$708,079
236%
4
QBSA v Grasstree Landscaping & Design Pty Ltd [2009] QCAT OCR033-09
$4,000
$1,818,802
606.3%
2
QBSA v G & T Roofing Pty Ltd [2010] QCAT QD031-09
$4,000
$912,917
252.5%
2
QBSA v Janda Commercial Pty Ltd [2009] CCT QD15-09
$4,700
$1,220,678
157.7%
1
QBSA v Dilizio Painting Pty Ltd [2009] CCT QD012-09
$4,000
$735,205
245.1%
6
[20] The Authority submitted that a penalty in the range of $8,000 to $9,000 is appropriate in the circumstances, in light of the respondent’s pattern of breaching its licence conditions, the need for both general and specific deterrence, and the fact the Respondent has breached its AATO by a significant amount in both percentage and dollar terms.
[21] The Authority submitted that it is appropriate in this case, being a disciplinary proceeding, that it be awarded costs fixed in the amount of $250 which is commensurate with the costs schedules pursuant to the Justices Regulation 2004.
Todd’s Plumbing Submissions
[22] Todd’s Plumbing submitted that it had consented to the finding of breach of the AATO provisions.
[23] Todd’s Plumbing agrees with the Authority’s submission as to the purpose of disciplinary proceedings and the factors to be taken into account.
[24] Todd’s Plumbing is the supplier and installer of solar products.
[25] That the business is a small family business with manual paper accounting ledgers.
[26] Todd’s Plumbing did not envisage the speed of growth of its business and that growth resulted in the growth of the solar industry.
[27] That one of the main purposes of the statutory regime is to protect the public. In this instance the public was not at risk as the Respondent owns (jointly with his wife) his house outright valued at $850,000 and that asset would have been available to satisfy creditors.
[28] The breaches by Todd’s Plumbing occurred in is first two years of operation and this unfortunately is when mistakes will occur.
[29] Todd’s Plumbing agrees with the authority that it has failed to understand its statutory obligations.
[30] Todd’s Plumbing has recently secured the services of a full time accountant to assist with running the bookkeeping system and overseeing all other financial aspects of the business. It is anticipated that this closer scrutiny will ensure turnover estimates are more accurate and monitored more closely in the future.
[31] While accepting the details of the breaches Todd’s Plumbing noted that the breaches were not brought to its attention until these proceedings were commenced. This is not a case where one offence is committed, that offence is brought to the attention of the offender and another offence is subsequently committed.
[32] Todd’s Plumbing accepts that this does not detract from its obligation to comply with the Authority’s financial requirements, however it is submitted that essentially this is one course of conduct which has lead to two offences and in that sense it is akin to only one offence occurring.
[33] Todd’s Plumbing has not breached the Authority’s financial requirements since its first two years of trading.
[34] In regard to QBSA v Peninsula Construction Group (QLD) Pty Ltd it is submitted that the breach in the second year was worse than the breach in the first year. The breach of Todd’s Plumbing in the second year was less in both dollar terms and percentage terms than the first year. If the Peninsular case is comparable it is a much worse case than that of Todd’s Plumbing.
[35] The other comparable cases referred to by the authority, while examples of only a single breach, involve breaches which in dollar terms exceed the cumulative total of the two breaches of Todd’s Plumbing. In each of those cases the penalty was $4,000.
[36] Although there were two breaches committed by Todd’s Plumbing, this is not a situation where it can be said that the Todd’s Plumbing has a prior history of such a breach and nor is a situation where the first breach was brought to the attention of Todd’s Plumbing before the second one occurred.
[37] If the circumstances of the two offences were considered cumulatively, the appropriate penalty would be a fine in the vicinity of $4,000.
[38] Todd’s Plumbing did not oppose an order that it pay the Authority’s costs fixed in the sum of $250.
Discussion
[39] The AATO requirements are an important part in ensuring that those licensed by the Authority are able to meet their obligations to the public and other stakeholders. For this regime to operate it requires regular monitoring of licensees’ revenue and reporting to the Authority. Where there are breaches of the rules then it is for the Tribunal to ensure that those breaches receive an appropriate penalty.
[40] 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. This is on the submission of Todd’s Plumbing what occurred here. There was high growth with a manual accounting system and no dedicated accounts staff.
[41] The Tribunal notes Todd’s Plumbing submission that the public was not at risk. This is not accepted as the business was carried on by a company and the assets of the company directors would only be available in certain circumstances such as insolvent trading and would require long drawn out proceedings for recovery.
[42] The Authority submitted that as there have been breaches in two separate years the penalty should be commensurately higher. While Todd’s Plumbing counters that it was not advised of the first breach before it committed the second and that the breaches in the comparative case got worse in the second year.
[43] The Tribunal does not accept Todd’s Plumbing submissions that it was not advised of the first breach. The Authority in its licence approval letter of 3 October 2007 advised Todd’s Plumbing that it has an allowable annual turnover of $300,000 and it was required to notify the authority if actual turnover exceeded the AATO by 10%. In the independent review report[8] provided by Todd’s Plumbing accountants to the Authority for the year ended 30 June 2008 actual turnover of $1,205,550 was disclosed. At the time that report was prepared Todd’s Plumbing is assumed to have known it was in breach of its AATO. The Authority’s licence renewal letter dated 6 February[9] disclosed an AATO of $1,880,191 and again advised that it would be a breach to exceed that amount by more than 10%.
[8] Exhibit 4 to Affidavit of Michelle Ann Lockton at page 77.
[9] Exhibit 6 to Affidavit of Michelle Ann Lockton at page 82.
[44] There were two breaches by Todd’s Plumbing and in accordance with Queensland Building Services Authority v Built Qld Pty Ltd this is a factor which must be taken into account. The Tribunal does accept though that unlike the comparative case mentioned by the Authority the breach was much less in the second year in absolute and percentage terms. The Tribunal also takes account of the fact that Todd’s Plumbing has put measures in place to ensure that similar breaches do not occur again.
[45] The Tribunal is satisfied that in a case such as this having regard to the factors in Built Qld and to provide an appropriate deterrent to Todd’s Plumbing and other licensees the penalty should be $6,000.
[46] The Authority has submitted that it should obtain an award of costs in the amount of $250. The Tribunal notes that there was no legal work performed by external lawyers in this case and will not make an award of costs.
Order
[47] Todd’s Plumbing Pty Ltd is ordered to pay the Queensland Building Services Authority the sum of $6,000 by way of penalty by 4.00 pm on 22 December 2011.
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