Queensland Building Services Authority v Uniport Australia Pty Ltd
[2009] QCAT 33
•14th December 2009
Citation: | Queensland Building Services Authority v Northstar Plumbing Pty Ltd [2009] QCAT 33 |
Parties: QUEENSLAND BUILDING SERVICES AUTHORITY
v
NORTHSTAR PLUMBING PTY LTD
Application No: QD022-09
Matter Type: Occupational regulations
Delivered on: 14th December 2009
Delivered at: Brisbane
Decision on the
Papers of: Dr Bridget Cullen Mandikos
Catchwords: Allowable Annual Turnover; Penalty for contravention of section 89 Queensland Building Services Authority Act 1991; Definition of annual turnover as including non-Queensland based income; Queensland Building Services Authority v Built Qld Pty Ltd [2005] QCCTB 152; Queensland Building Services Authority v Mena, A. [2005] QCCTB 155; Queensland Building Services Authority v James L Williams [2004] QCCTB 106; Queensland Building Services Authority v FDC Construction & Fitout Pty Ltd [2009] QCCTB 16; Queensland Building Services Authority v Freitag Pty Ltd [2005] QCCTB 198.
Reasons for Decision
Introduction
This application for disciplinary proceedings was brought by the Queensland Building Services Authority (“the Authority”) against the Respondent, alleging that the Respondent, as a licensee, had contravened a requirement of its license, imposed by the Queensland Building Services Authority Act 1991 (“the QBSA Act”). The basis for the Authority’s application was that, for the license year 2007 - 2008, the Respondent had exceeded itsallowable annual turnover (“AATO”) by eight hundred, ninety-two thousand, five hundred and eighty-eight dollars ($892,588.00) equating to a breach of 892.6%. The Respondent’sallowable AATO turnoverfor the relevant period was $100,000.00.
On 22 July 2009, the then Commercial and Consumer Tribunal (“CCT”) ordered that proper grounds existed for taking the aforementioned disciplinary action against the Respondent. The order further required the parties to notify the CCT, in writing, whether or not they consented to the issue of penalty being determined on the papers. Written consent was received from both parties: filed on 21 August 2009 by the Authority, and on 30 October 2009 by the Respondent. Both parties have filed submissions, and I note that the Respondent filed submissions with the benefit of legal representation.
The Commercial and Consumer Tribunal has amalgamated into the Queensland Civil and Administrative Tribunal (“QCAT”). QCAT now hears and decides all matters previously dealt with by the Commercial and Consumer Tribunal: section 256 Queensland Civil and Administrative Tribunal Act 2009.
Submissions of the parties
For reasons of efficiency, the Authority and Respondent’s submissions have been summarised below. I note that I have considered the entirety of them in forming my view as to the appropriate penalty.
Agreed Facts
The Respondent was registered as a company on 13 September 2004 in New South Wales, and was issued with a licence by the Authority on 14 September 2005, in the classes of “Gasfitting” and “Plumbing and Drainage”. The Respondent has maintained its licence with the Authority for almost four (4) years.
The Respondent is a moderately sized company. The Respondent’s Net Tangible Assets (“NTA”) at the time of the breach were declared to be at least $6,000.00. The Respondent submits that its NTA for the present licence year was declared to be $150,328.98, and the Applicant submits the figure is $106,355.00, however, both parties agree that the Respondent’s AATO is currently set at $2,007,092.00.
In its licence year 2007/2008, the Respondent breached its AATO of $100,000.00 because its Actual Annual Turnover was $992,588. I note that although the Authority refers to the “2006/2007” year as being the applicable period in its submissions as to penalty, that the Application for Disciplinary Proceedings filed by the Authority, as well as the Respondent’s submissions refer to the 2007/2008 period. I have therefore drawn the assumption that this was an error within the Authority’s submissions, and not a disagreement as to the relevant period.
Applicant Authority’s submissions
The Authority submits that regard should be had to Queensland Building Services Authority v Built Qld Pty Ltd [2005] QCCTB 152 (“Built”), and the factors listed in Built as being relevant to the issue of penalty in matters involving a licensee’s breach of their AATO, namely:
i.The length of time the company has been in business;
ii.Whether the breach was an isolated incident or whether there was more than one breach;
iii.Whether there is a satisfactory explanation for the occurrence of the breach;
iv.Whether the breach is likely to reoccur;
v.The size of the licensee’s business or company, both relative to the size of the breach and generally;
vi.The amount by which the AATO was exceeded, both in monetary and percentage terms; and
vii.Whether the licensee has been involved in previous offences of this nature, or other offences against other statutory obligations, and/or failure to comply with statutory standards.
The Authority further submits that:
i.The Respondent should understand and be aware of its license obligations and the penalty should be a “deterrent” to both the Respondent and the public generally.
ii.The Respondent has been advised of its license obligations at several junctures; namely in its annual renewal notice detailing the Respondent’s AATO for the coming licence year, and associated licence conditions.
iii.The Respondent has not provided a satisfactory explanation for the occurrence of the breach.
iv.The definition of “Annual Turnover” in the Authority’s “Financial Requirements for Licensing” Policy, Clause 1.3, is inclusive of revenue derived by the Respondent from all sources (i.e. New South Wales).
v.It is difficult to determine whether or not it is likely the Respondent will again breach its AATO.
vi.The fact that the Respondent’s AATO is currently set at $2,007,092.00 should not result in a more lenient penalty.
vii.The most important aspect of the Respondent’s breach is the fact the Respondent exceeded its AATO by 892.6% - that is, more than eighty-nine (89) times the 10% leeway allowed under the “Financial Requirements for Licensing” Policy.
viii.Considering the quantum of the monetary breach, the Respondent must have, or ought to have, known of the breach. If the Respondent was somehow unaware of the breach, this would demonstrate the Respondent’s systems for monitoring turnover are manifestly inadequate.
ix.The primary purpose of the “Financial Requirements for Licensing” Policy is to protect the public from the harm caused when licensees trade beyond their means, and are unable to honour their liabilities to consumers, contractors and suppliers.
x.The Authority’s regulatory role is undermined when licensees breach their financial reporting requirements.
xi.The Tribunal should order a penalty in the range of seven thousand ($7,000.00) to eight thousand ($8,000.00) dollars.
Respondent’s submissions
The Respondent submits that:
i.It operates its business primarily in New South Wales, and first began trading outside of New South Wales in the 2005/2006 financial year. The 2005/2006 financial year was also the Respondent’s first year of trading in Queensland.
ii.Despite being licensed and carrying out work in Queensland from 2005 until 2008, it had no knowledge that its interpretation of the requirement to disclose expected annual turnover was incorrect. In distinguishing then Member Lohrisch’s comment that “One would expect greater compliance by a company that has been in business for some time” in Queensland Building Services Authority v Built Qld Pty Ltd [2005] QCCTB 152 (“Built Qld”), the Respondent submits that it is a relatively new business to Queensland.
iii.It was not given any indication or advice by the Authority, or otherwise, that it was in breach of its AATO, until it received the Respondent’s Kit for the current proceeding.
iv.The breach is an isolated incident as it resulted from a misunderstanding of the information required in the application form and an instance of human error, in that the Respondent believed that the AATO disclosure obligations applied to works conducted in Queensland only. The license application form is brief and general, and it is reasonable to believe that as the QBSA licence was Queensland specific, it was a logical extension that disclosure obligations did not extend beyond Queensland.
v.Other interstate licensees have encountered the same problem in the past and proceedings have been brought before the Tribunal. The Respondent cites the matters of Queensland Building Services Authority v James L Williams [2004] QCCTB 106 (“James L Williams”) and Queensland Building Services Authority v FDC Construction & Fitout Pty Ltd [2009] QCCTB 16 (“FDC”).
vi.The affidavit of Nathan Joseph Locke (“Mr Locke”), director of the Respondent, sworn to on 21 September 2009 indicates that Mr Locke, when completing the 2007/2008 licence application form, intended to select the $300,000 annual turnover category on the form, however through human error, selected the $100,000 category.
vii.The mistake was honest, and entirely unintentional. The assertion that the mistake was unintentional is supported by the Respondent’s having selected the appropriate $300,000.00 category in the years preceding the financial year in question, and by the fact that the Respondent had more than sufficient tangible assets to support such a selection.
viii.The Respondent acknowledges that it should have sought accounting advice regarding the licensing of the Respondent in Queensland, and endeavours to actively involve qualified professionals in the accounting matters of its business to ensure a breach will not reoccur.
ix.There was little risk to consumers, as the Respondent had sufficient tangible assets to cover its AATO, had it correctly indicated $300,000.00 on the form.
x.The Respondent submits that it received no benefit from the oversight, and that it has no disciplinary history.
xi.The Respondent submits that the “functions and responsibilities” of the Authority’s general manager under the QBSA Act include providing courses of instruction for persons seeking to obtain licences as well as licensees: section18(2) Queensland Building Services Authority Act 1991. The Respondent submits that the QBSA did not offer any courses that could have drawn its attention to the AATO issues it now faces before the Tribunal. The Respondent submits that the Authority has failed in its responsibility to provide information to licensees about the specific requirements of disclosing “Allowable Annual Turnover;” and in failing to clarify that turnover generated from work undertaken interstate must be disclosed for the purpose of obtaining a Queensland licence. The respondent submits that the licence renewal form could be made clearer in this respect.
xii.If the Tribunal awards a penalty, the Respondent submits that it should be limited to $300.00.
Penalty parameters
The applicable penalty range in this instance is an amount equivalent to 1000 penalty units: section 107(2)(b) Commercial and Consumer Tribunal Act 2003 (Qld). Each penalty unit is presently valued at $100.00: section 5 Penalties and Sentences Act 1992 (Qld). Thus, the maximum penalty that the Tribunal may impose is $100,000.00 in this case.
Section 266 of the Queensland Civil and Administrative Tribunal Act 2009 provides that:
Particular penalties payable to particular entities:
The repealed Commercial and Consumer Tribunal Act 2003, section 148, as in force before the commencement, continues to have effect in relation to penalties to which the section applied that are recovered after the commencement as if that Act had not been repealed.
The Authority has asked that I consider, in comparing penalties imposed in other cases, that the value of a penalty unit increased from $75.00 to $100.00 on 1 January 2009, and I have done so.
Decision
The Authority has directed my attention to the cases of Built and Queensland Building Services Authority v Mena, A. [2005] QCCTB 155 (“Mena”). The Authority submits that this case warrants a penalty similar to that imposed in Built ($6,000.00). In my view, the conduct of the Respondent in this case, and the conduct of the party in Built, are not analogous. In Built, then Member Lohrisch considered the explanation for the respondent’s breach therein, finding that “no real explanation (let alone a satisfactory explanation)” had been provided. It is the case that the respondent in Built also alleged that administrative oversight was responsible for the error. In this case, however, I find that the Respondent’s explanation goes further: Mr Locke has sworn that it was his error, that he intended to tick the $300,000.00 category on the form, and through error picked the $100,000.00 category. I accept the Respondent’s submission that Mr Locke’s intention is supported by the fact that he correctly selected the $300,000.00 category in the years that preceded the financial year in question.
Mena is, in my view, also not directly comparable to the instant matter. In Mena, the Respondent had breached its AATO on two occasions, firstly by $231,204.00 or 92%, and secondly by $710,063.00 or 284%, indicating a pattern of conduct. Here, the Respondent has breached its AATO on one occasion only, which I consider to be an important difference. The Authority notes that the cumulative total of the monetary breaches in Mena is similar, and that is the basis for its comparison. Having accepted Mr Locke’s explanation for the mistake on the form, Mena is also distinguishable. In Mena, the successive breaches were due to the respondent’s inability to manage some stressful personal affairs and his business, simultaneously, over an extended period of time. There is no evidence that this is the case here.
The Authority, at paragraph 28 of its submissions, provides the Tribunal with a list of cases that it submits are comparable, namely Queensland Building Services v Marveldale Pty Ltd [2006] QCCTB 67; Queensland Building Services Authority v MGS Technologies Pty Ltd t/a 21st Century Steel Homes [2008] QCCTB 100; Queensland Building Services Authority v Sunland Constructions Pty Ltd [2004] QCCTB 49; and Queensland Building Services Authority v Jeodon Pty Ltd [2006] QCCTB 13. In order to properly consider the cases my attention has been drawn to by both parties, relative to the monetary value and percentage size of the AATO breach, I have produced a comparative table (following). With respect, I have not found the Authority’s submissions in this regard to be helpful. As the table will indicate, there are some large variances between the applicable monetary and percentage value breaches of the cases it cites as comparable (but without detail), and this case. Regardless, I have considered the penalties imposed in the cases cited by the Authority, as they are all cases involving AATO breaches.
| Case Name | Dollar Excess AATO | Percentage Excess AATO | Penalty |
| Queensland Building Services Authority v Built Qld Pty Ltd [2005] QCCTB 152 | $3,537,258.00 | Greater than 1000% | $6,000.00 |
| Queensland Building Services Authority v Mena, A. [2005] QCCTB 155 | (1) $231,204.00; (2) $710,063.00 | (1) 92%; (2) 284% | $5,000.00 for both breaches |
| Queensland Building Services v Marveldale Pty Ltd [2006] QCCTB 67 | $4,307,838.00 | 474% | $4,000.00 |
| Queensland Building Services Authority v MGS Technologies Pty Ltd t/a 21st Century Steel Homes [2008] QCCTB 100 | $1,124,028.00 | 44.9% | $3,500.00 |
| Queensland Building Services Authority v Sunland Constructions Pty Ltd [2004] QCCTB 49 | (1) $33,000,000.00 (2)$28,000,000.00 | (1) 41% (2) 689% | $7,000.00 for both breaches |
| Queensland Building Services Authority v Jeodon Pty Ltd [2006] QCCTB 13 | $2,303,433.00 | 3,071.2% | $5,000.00 |
| Queensland Building Services Authority v James L Williams Pty Ltd [2004] QCCTB 106 | $51,892,371.00 | 363% | $5,000.00 |
| Queensland Building Services Authority v FDC Construction & Fitout Pty Ltd [2009] QCCTB 16 | $129,149,827.00 | 256% | $8,000.00 plus $1,000.00 costs |
| Queensland Building Services Authority v Freitag Pty Ltd [2005] QCCTB 198 | $2,570,619.00 | 823% | $500.00 |
| Respondent | $892,588.00 | 892.6% | $800.00 |
The Respondent has argued that other interstate companies have construed the meaning of “annual turnover” for QBSA licensing purposes in the same fashion, and refers to James L Williams; FDC; and Queensland Building Services Authority v Freitag Pty Ltd [2005] QCCTB 198 (“Freitag”).
In James L Williams, the Tribunal imposed a penalty of $5,000.00, taking into account:
“…the desirability of imposing a penalty that has a deterrent effect on the company and other licensees of similar size and standing.”
The respondent in James L Williams was a company that had been in operation for approximately 130 years, and as such, it would be reasonable to expect greater compliance of it (as per the decision in Built). The Respondent in this case has been licensed by the QBSA for approximately 4-years and is a moderately sized company. These factors need to be taken into account when determining penalty relative to that imposed in James L Williams against a much larger, long-standing company.
In FDC, a penalty of $8,000.00 plus $1,000.00 legal costs was imposed against a large-sized interstate respondent that had breached its AATO by $129,149,827.00. As the Respondent points out in its submissions, the monetary difference between the value of the breach in FDC and in the present case is immense.
The most closely analogous case cited by either party is Freitag, where the respondent breached its AATO by 823%, having made a clerical error by selecting the wrong category of turnover, in indicating $250,000.00 instead of $2,500,000.00. The Respondent in this case has breached its AATO by 892.6%, and submits that in consideration of these similarities, a similar penalty to that imposed in Freitag ($500.00) should be imposed.
The Applicant submits that the appropriate penalty is in the range of $7,000.00 to $8,000.00, having regard to the deterrent factor, and that the Respondent should have known it was in breach. The Respondent submits that the appropriate penalty is $300.00, taking into account the human error, its lack of knowledge about the breach, and the failure of the Authority to notify it of the breach prior to commencing proceedings.
The Respondent has submitted that a breach is not likely to again occur, pointing out that it now understands the requirement to disclose national turnover, and will ensure that all of its accounting matters are dealt with by an external accounting firm.
In my view, the Respondent’s submissions that the Authority failed in its duties to provide “courses of instruction for persons seeking to obtain licenses as well as licensees,” and further asserting that the “Respondent is not aware of any such courses which would have affected it to the issue presently before the Tribunal,” are misguided. As I interpret section 18(2) of the Queensland Building Services Authority Act, the General Manager’s responsibility to provide courses of instruction is not a mandate for the Authority to offer courses of instruction that will resolve any potential query a licensee may have. The Respondent’s suggestion is unreasonable, and a prudent licensee, that had a genuine query, would be wise to raise the matter with the Authority before completing the paperwork required of it.
I accept the Respondent’s submissions that it did not understand that “Annual Turnover” meant the revenue from all sources, including non-Queensland based sources. As this issue has been raised by several respondents before the then Commercial and Consumer Tribunal, and now before QCAT, the Authority may consider that it desires to offer a course of instruction in this regard. However, it remains within the discretion of the Authority to determine how best to distribute a limited pool of educative resources to the collective benefit of licensees and potential licensees.
The Respondent also notes that the Authority’s license renewal form could be made clearer in this respect. It is not for this Tribunal to determine the format or design of the forms that the Authority utilises, but I note that the Respondent’s suggestion, if taken up, would strengthen the Authority’s position in cases such as this. It would be quite difficult for respondents in similar circumstances to argue that they did not understand that “the total revenue derived by the Licensee from all sources” includes all non-Queensland revenue as well.
It is not difficult to understand that licensees may take the view that the income referred to in the phrase “the total revenue derived by the Licensee from all sources” would not include non-Queensland income when they are making application for a Queensland specific license. I am not suggesting that such a position is reasonable, but noting that it could readily be addressed by the Authority in improving its form in this regard.
The deterrent effect of penalties in cases such as this is twofold: (1) to discourage the penalised company from again engaging in such conduct; and (2) to send a message to the broader community of licensees to whom the Queensland Building Services Authority Act 1991 (Qld) applies. I have accepted Mr Locke’s evidence that his error was inadvertent, but note that this does not excuse the Respondent from the consequences of having made the error. I note that the Respondent has no history of previous offences of this nature.
Considering the size and standing of the Respondent, the affidavit evidence of Mr Locke in acknowledging responsibility for the breach, the steps that have been taken by the Respondent to prevent a subsequent breach, the utility of a penalty as a deterrent, the parties’ submissions and matters canvassed above, I consider an appropriate penalty to be Eight Hundred Dollars ($800.00). I order that this amount be paid by the Respondent to the Authority by, 4:00pm on Wednesday, 27 January 2010.
Orders
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 licence year 2007/2008, it exceeded its Allowable Annual Turnover by EIGHT HUNDRED AND NINETY-TWO THOUSAND, FIVE HUNDRED AND EIGHTY-EIGHT DOLLARS ($892,588.00) or 892.6% without first notifying the Authority or obtaining the Authority’s approval.
The Respondent to pay to the Queensland Building Services Authority by way of penalty the sum of EIGHT HUNDRED DOLLARS ($800.00) by 4:00pm on Wednesday, 27 January 2010.
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