A L Builders Pty Ltd v Fatseas

CITATION:

A L Builders Pty Ltd v Fatseas [2015] QCAT 273

PARTIES:	A L Builders Pty Ltd (Applicant)
v
Nicholas Fatseas and Tricia Fatseas (Respondents)

APPLICATION NUMBER:

BDL302-12

MATTER TYPE:

Building matters

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member King-Scott

DELIVERED ON:

10 July 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

The Applicant pay to the Respondents as agreed, or failing agreement within 28 days hereof, as assessed by Queensland Independent Costs Services, Costs Assessors:

[1] The Respondents’ costs of the application on a standard basis, by reference to the District Court of Queensland Scale of Costs;

[2] The Respondents’ costs of the Magistrates Court of Queensland at Brisbane proceeding being M10308/11 reserved to the Tribunal by order of the Magistrates Court of Queensland on 25 September 2012 on a standard basis on the Magistrates Court Scale of Costs;

[3] The Respondents’ costs reserved by order of the Tribunal in proceedings made 21 March 2014 and 24 March 2014 on a standard basis by reference to the District Court of Queensland Scale of Costs;

[4] Half of the Respondents’ costs of the counterclaim on a standard basis by reference to the District Court of Queensland Scale of Costs;

The assessed amounts to be paid within 28 days of delivery of such assessments.

CATCHWORDS:

BUILDING MATTERS - costs – building dispute – award of costs outside the usual rule of the Tribunal that each party bear their own costs – success on some issues – exercise of discretion

APPEARANCES and REPRESENTATION (if any):

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

The decision in this matter was delivered on 8 May 2015. I dismissed the Applicant/Builder’s application for $384,494.85. I allowed only $191,559.86 of the Respondent/Owners’ counterclaim of $1,697,630.80.[1] I directed the parties file their submissions as to costs. Those submissions have been filed within the time limits directed.
[1]There was also an unquantified claim for damages for distress and inconvenience that was disallowed.
The Applicant/Builder [for convenience I will hereinafter refer to the parties as Owner and Builder] failed in its application which was for moneys due under the contract, essentially on the basis of accounting errors. It was apparent on the material that the Owners had paid all of the amounts outstanding and more.
A significant amount of time was spent on the issue of whether the contract between the parties was a fixed price contract as alleged by the Owners, or a costs plus contract as alleged by the Builder. On this issue, I found for the Builder, but it was in a sense a pyrrhic victory, as it recovered nothing.
On the other hand, a substantial part of the counterclaim which I disallowed may have been recoverable had I found it was a fixed price contract.
It was agreed by all parties that the matter was a complex and difficult building dispute. It certainly warranted legal representation and representation by counsel.
Section 77 of the Queensland Building & Construction Commission Act 1991 (Qld) displaces the usual order in Tribunal proceedings that each party bear their own costs.[2] The general rule about costs is thereby incorporated into building disputes before the Tribunal.[3] The general rule is that a successful party is entitled to procure its costs against the other party. That is, costs should follow the event.
[2]Lyons v Dreamstarter Pty Ltd [2012] QCATA 71.
[3]A L Builders Pty Ltd v Nicholas Fatseas and Tricia Fatseas (No 2) [2014] QCATA 319.
That might not be appropriate in some instances, such as the delinquent behaviour of the winning party, or the pyrrhic nature of the win.[4] The Tribunal has a discretion.
[4]See rules 681(1) and 684 Uniform Civil Procedure Rules 1999. Those rules do not apply to the QCAT Act but they do provide some assistance in determining when and what awards of costs should be made in the interests of justice. See QCAT Act s.102(1). Colburt v Beard (1992) 2 Qd R 67.
A lot of hearing time was directed to issues such as the nature of the contract and the principal defects such as the driveway, Travertine tiles and water leaks / waterproofing.
The Builder was successful on the nature of the contract and the driveway and water leaks / waterproofing issues. The Owners were successful on the Travertine tile issue and some other defects.
The Builder tried to have the issue of the nature of the contract, that is, whether it was a fixed contract or a costs plus contract, determined summarily. It failed at first instance.[5]
[5]A L Builders Pty Ltd v Nicholas Fatseas and Tricia Fatseas [2014] QCAT 092.
It appealed and failed on appeal.[6]
[6]A L Builders Pty Ltd v Nicholas Fatseas and Tricia Fatseas [2014] QCATA 171.
The Owners were awarded costs on the Supreme Court scale on a standard basis for the Appeal only. The costs of the initial hearing were reserved.
The Builder initially brought proceedings in the Magistrates Court. Those proceedings were transferred to the Tribunal. The costs were reserved to the Tribunal.
The Builder’s claim for moneys owing under the contract failed because of the poor state of the Builder’s accounts. As I found, on a detailed analysis by the Owners’ legal representatives, it became apparent that nothing was owing. However, the Builder was successful in proving that the contract was a costs plus contract, which had some effect on the Owners’ success in the counterclaim.
It is quite clear from the reasons for the decision, and despite my findings as to the credibility of the principal witnesses, that the decision as to the nature of the contract could only have been properly determined after a full hearing. It was inappropriate to have it determined summarily. For that reason, I am of the opinion the Owners should recover their costs of the hearing before Member Favell[7]. Those costs should be on a standard basis on the District Court scale.
[7]A L Builders Pty Ltd v Fatseas [2014] QCAT 92.
In my opinion, the Owners should also recover the costs of defending the application and I allow those costs on a standard basis on the District Court scale. In addition, I order that the Builder pay the Owners the reserved costs of the Magistrates Court proceeding on a standard basis on appropriate Magistrates Court scale.
With respect to the counterclaim, as I observed earlier, the Owners failed on a number of substantial issues. It was observed by Mr Bowden of Counsel for the Builder in his submissions in relation to costs that out of the 130 claims the Owners advanced, they failed on 92, as well as failing in their claim for damages for distress and inconvenience. I agree they failed on many of their claims.
Taking all of these matters into account and to minimise the difficulty that the costs assessor would have if I directed costs to be paid on success or failure on individual issues, in the exercise of my discretion, I will direct that the Owners recover half only of the costs of the counterclaim to be assessed on a standard basis on the District Court scale.
I order Applicant pay to the Respondents as agreed, or failing agreement within 28 days hereof, as assessed by Queensland Independent Costs Services, Costs Assessors:
a) The Respondents’ costs of the application on a standard basis, by reference to the District Court of Queensland Scale of Costs;
b) The Respondents’ costs of the Magistrates Court of Queensland at Brisbane proceeding being M10308/11 reserved to the Tribunal by order of the Magistrates Court of Queensland on 25 September 2012 on a standard basis on the Magistrates Court Scale of Costs;
c) The Respondents’ costs reserved by order of the Tribunal in proceedings made 21 March 2014 and 24 March 2014 on a standard basis by reference to the District Court of Queensland Scale of Costs;
d) Half of the Respondents’ costs of the counterclaim on a standard basis by reference to the District Court of Queensland Scale of Costs;
The assessed amounts to be paid within 28 days of delivery of such assessments.

A L Builders Pty Ltd, the applicant, sought review of a decision by the Queensland Civil and Administrative Tribunal (QCAT) in a dispute regarding the quality of building work. Fatseas, the respondent, was the builder who had performed the work in question. The dispute primarily revolved around the costs associated with the QCAT proceedings, with A L Builders arguing that the decision to award costs outside the usual rule that each party bear their own costs was an error of law. The case was heard in the Queensland Court of Appeal.

The primary legal issue was whether the QCAT had the discretion to award costs outside the usual rule, and if so, whether it exercised that discretion appropriately. The court had to consider the circumstances under which costs could be awarded beyond the standard rule of each party bearing their own costs. A secondary issue was the correctness of the QCAT's decision to apportion the costs of the counterclaim, which was only partially successful.

The court found that QCAT indeed had the discretion to award costs outside the usual rule when the circumstances warranted it. In this case, the court considered that the respondent had succeeded on some issues, and the award of costs was proportionate to the nature and extent of those successes. The court upheld the QCAT’s exercise of discretion, finding that it was not an error of law. The court also found that the apportionment of the counterclaim costs was appropriate given the partial success of the respondent. The appeal was dismissed, and the original costs order was affirmed.

The court ordered that A L Builders pay the respondents' costs in accordance with the detailed schedule outlined in the orders, which included costs from various stages of the proceedings. These costs were to be paid within 28 days of the assessment by Queensland Independent Costs Services, Costs Assessors.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established