Kilgour v Queensland Building Services Authority - [2010] QCAT 87

CITATION:Kilgour v Queensland Building Services Authority [2010] QCAT 87

PARTIES:Julie Francis Kilgour

V

QueenslandBuilding Services Authority

APPLICATION NO: QR152-07

MATTER TYPE: Building matters

HEARING DATE: On the Papers

DECISION OF: K. Geraghty, Member

DELIVERED AT: Brisbane
DELIVERED ON: 9 April 2010

ORDERS MADE: As per Order

CATCHWORDS Application for costs; consideration of sections 70 and 71 of the Commercial and Consumer Tribunal Act and discretionary factors; whether the Queensland Civil and Administrative Tribunal Act applies.

APPEARANCES and REPRESENTATION (if any)

Decision on the papers.

REASONS FOR DECISION

The applicant applied to the then Commercial and Consumer Tribunal for a review of a decision made by the Respondent. That application has been resolved, but now the applicant seeks her costs on an indemnity basis, while the respondent contends that each party should bear their own costs.
I determine this costs issue “on the papers” as ordered by the former Commercial and Consumer Tribunal on 12 November 2009.

Background

In April/May 2007 the applicant contracted with a contractor, Pepys Projects Pty Ltd to have certain pre-finished wall units installed in her apartment. She complained to the respondent that the contractor’s work was defective and incomplete.
On 2 August 2007 the respondent, by its inspector, inspected the work, and a report dated 8 August 2007 was prepared. That report stated that the installation was not included in the definition of building work in the Queensland Building Services Authority Act 1991. The report also stated that there was no significant defect in the work. It also noted that the applicant had refused to allow the contractor access the job, although the contractor gave the inspector a verbal undertaking to rectify any defects and to complete the work.
Accordingly, by letter dated 9 August 2007 the respondent advised the applicant that it would not do the work and that the respondent was unable to assist.
The applicant then applied to the Commercial and Consumer Tribunal (“CCT”) for a review of this decision on 6 September 2007, claiming that the work was building work and that it was defective. She retained solicitors, and says that she had to obtain an independent expert report.
Applications were made to the CCT on 14 September 2007 for an extension of time to enable the retainer of the expert; and on 14 December 2007 for directions.
Little happened to progress the hearing after that.
The applicant says that in March 2009 (in fact 18 March 2009) the respondent wrote to the CCT advising that the work was building work, and that the CCT made a finding to the effect that the work was also defective. This was in respect of the present applicant’s proceeding against Pepys Projects Pty. Ltd. There was an interlocutory decision made in that matter on 30 March 2009 by the CCT. A perusal of that decision indicates that there was in fact no final determination as to whether the work was defective, but reference was made to evidence supporting the contention that the work was defective “from not only a report prepared by the Building Services Authority, but also a report from a Mr Fritz of Fritz Constructions Pty. Ltd.”
On 24 March 2009 the contractor went into liquidation, and on 28 July 2009 the respondent’s general manager, Mr Jennings, met the applicant to advise her that there was no practical advantage in issuing a direction to the contractor when it was in liquidation. (The applicant says that at that meeting Mr Jennings conceded to her that the work was building work, and was defective).
By letter dated 29 July 2009 the respondent advised the CCT that given that the contractor had gone into liquidation, it intended to apply to seek leave to discontinue its defence and further to seek an order that each party bear their own costs.
The applicant was not at all amenable to the proposition that each party bear their own costs and wanted her costs – see her letter to CCT of 24 August 2009. After receipt of her letter, the CCT then advised the applicant that the Tribunal would issue directions for the further conduct of the proceedings.
By letter dated 2 October 2009, the respondent advised the applicant that they had reviewed the whole matter, and intended to issue a direction to the contractor to cause rectification work to be completed by a licensed contractor under section72 of the Queensland Building Services Authority Act 1991.
On 5 October 2009 the CCT ordered the applicant to inform the Registry by 19 October 2009 whether or not she wanted to withdraw her application. It appears from the applicant’s letter dated 5 October 2009 that the applicant did not wish to withdraw until the direction was actually given to the contractor and further that she wanted her costs on an indemnity basis.
The respondent did issue a direction to rectify on 20 October 2009. This direction identified about 9 items of defective or incomplete building work.
On 22 October 2009 the respondent advised the CCT that it appeared the proceedings could be resolved by consent, and noted that the applicant was seeking costs. The respondent further advised that the writer of the letter had no instructions as to the application for costs, but that it was likely that the application would be opposed, and suggested that directions be issued to the parties to exchange their material relating to the costs issue.
A directions hearing was duly set down for 12 November 2009. Prior to that date, the applicant informed the CCT that the only live issue was costs; and proposed that the matter be heard on the papers and that each party supply written submissions.
The CCT did issue orders on 12 November 2009 relating to each party preparing submissions so that the application for costs could be determined by the Tribunal on the papers. An order was also made for the applicant to inform the Registry in writing whether she did or did not wish to withdraw the application, noting that a direction to rectify was issued by the authority on 20 October 2009, by 4pm on 4 December 2009.
It is not clear to me why the applicant was ordered to inform the Registry as to whether she did or did not wish to withdraw the application, given that she had already advised that the only live issue was costs; and that she had previously indicated that she would withdraw once the direction had been served. In any event, the Queensland and Administrative Tribunal took over the functions of the CCT on 1 December 2009, and at a callover on 11 February 2010 Judge Kingham directed that the application to review the decision be dismissed, because the respondent had made the decision to issue a Notice to Rectify. A further direction was given that the respondent file and serves on the applicant its submissions as to how costs should be assessed, if ordered, and that the applicant could serve any response on the respondent.
The respondent did supply written submissions dated 4 December 2009, and added further submissions dated 19 February 2010.

The Submissions

The respondent’s submissions stated that despite orders by made by the Tribunal and her written advice that she would withdraw her review application subject to the direction being issued, the applicant had refused or neglected to withdraw her application (as at 4 December 2009).
The respondent submitted that the issue of costs was governed by section 102 of the Queensland Civil and Administrative Tribunal Act 2009.
The submissions went on to submit that costs do not prima facie follow the event, citing Tamawood Ltd v Paans (2005) 2QdR 101; and that the proceedings were not civil proceedings between private litigants but proceedings whereby the applicant sought to have an administrative decision reviewed. It was argued that the circumstances of the case did not warrant a departure from the general proposition in section 100 of the QCAT Act that each party must bear the parties’ own costs. The submissions noted that at least up to 23 March 2009 the applicant did not want the contractor back on site, and further claimed that the applicant preferred to have the works removed or demolished and her money paid to date refunded; that she was not entitled to compensation under the Queensland Home Warranty Scheme administered by the authority, and because the direction given did not call for removal of the relevant work but rectification, the applicant had arguably not achieved what she wanted. Further, there were no special or unusual features of the case that justified the making of an indemnity costs order.
The submissions went on to mention that the proceedings had been adjourned to the Registry at the instigation of the applicant between 16 January 2008 and 18 February 2009 and then stayed pending the outcome of the domestic building dispute application by the applicant against Pepys Projects Pty. Ltd. on and from 18 February 2009 and that it was difficult to understand or reconcile that the applicant could have incurred costs during these periods.
In its supplementary submissions, the respondent submitted that if costs were to be awarded, they should be awarded on the District Court scale of costs on a standard basis; and further requested that costs be assessed by:
a.The applicant delivering to the Authority an itemised claim for costs referring to the relevant items contained in the District Court Scale of Costs;
b.If within fourteen (14) days of that delivery, the parties have not agreed to an amount for costs, then:
i.The applicant shall deliver to the respondent a list of three legal cost assessors;
ii.Within seven (7) days of the delivery of the list of legal cost assessors, the respondent will select one of the legal cost assessors from the list; and
iii.The costs shall be assessed by the legal costs assessor chosen by the respondent;
c.The respondent shall pay the applicant’s costs (as agreed or assessed) within fourteen days of such agreement or assessment.
The applicant had effectively made various submissions on costs in letters to the CCT from time to time. Her contentions in those various letters can be summed up as follows:
a.The respondent’s decision caused her to lose the opportunity to obtain a remedy against the contractor because the contractor went into liquidation nearly two years after the event; and that the respondent only changed its mind about the work being building work after the contractor went into liquidation;
b.The respondent’s decision caused her to commence proceedings in the CCT against the contractor;
c.These proceedings caused the applicant’s proceedings against the respondent to be delayed and/or stayed; and further the contractor was able to defend the proceedings against him on the basis that the respondent had made the decision that it was not building work;
d.The respondent’s decision cost her thousands in legal fees (she has estimated various amounts for this, but approximately $6,000.00). It is uncertain whether these legal fees relate to the action against the contractor as well. Further, the applicant says that the decision cost her a lot of stress and anxiety and that she has suffered loss of amenity for the past three years and she had 70 or more boxes stored in her lounge room being unable to unpack them into the wall units which were to house all her clothing, all her household goods, all her cooking and kitchen goods etc. Her apartment was 60 square metres and all these things were stored in her hallway and lounge room. Owing to severe osteoarthritis it was difficult for her to climb ladders, drag out boxes and unpack them and restack them again, the boxes being stacked 14 feet high.
e.No explanation was given to her by the respondent as to why they changed their mind;
f.The respondent did not act as a “model litigant” because it did not advise the CCT that it considered the work to be defective;
g.By its actions, the respondent conceded that its defence was without merit and she cited Minister for Immigration; Ex Parte Lai Qin (1997) 186 CLR 622 at pages 624 – 5 which states:
“In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and [a] party no longer wishes to proceed … the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action …
In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence litigation. Thus, for example, in R v Gold Coast City Council; Ex Parte Raysun Pty. Ltd. [1971] QWN 13, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor.”
h.The applicant claimed indemnity costs, citing:
i.A defendant compels a plaintiff to sue when the defendant has no basis upon which it could oppose proceedings: see Albarran v Theodorou (2006) NSWSC 9;
ii.A party causes undue prolongation of a case by a groundless contentions – Di Carlo v Dubois (2002) QCA 225;
iii.A party’s case is “wholly without any arguable merit” – see ACN 070 037 599 Pty Ltd and Anor v Larbik and Anor (2008) QCA 416;
The applicant said that all of these applied to her case.
i.The applicant quoted section 71(4) of the CCT Act and specifically referred to the outcome of the proceedings; the conduct of the parties to the proceeding before and during the proceedings, and the relative strengths of the claims made by each of the parties and said that these applied to her situation.;
j.She referred to having to pay a filing fee of $240.00; and $790.00 for her expert witness;
k.She said that the direction the respondent ultimately gave was the very relief that she had sought;
l.She noted that the contractor was not licensed to carry out building work and that the direction to the contractor by the respondent was that the contractor should have the rectification work done by a licensed contractor;
m.She referred to numerous photos she had placed on the file of the defective work (it is uncertain whether the respondent saw these photos, and if so, at which time);
n.She had asked the respondent to get a second opinion and the respondent had sent the same inspector as had done the original report to give a “second opinion”;
o.Mr Jennings had inspected the work in her apartment and had immediately conceded that it was building work (it is not stated when this occurred, but apparently on 18 March 2009);

Conclusion

The respondent’s submissions correctly identify this case as being one to which section 256 of the Queensland Civil and Administrative Act 2009 (QCAT Act) applies, and the respondent submits that since section 256 provides that QCAT has jurisdiction to deal with the matter, then the provisions of the QCAT Act as to costs apply.
However, the submission ignores section 271 of the QCAT Act which states:
a.QCAT must deal with the matter, the subject of the existing proceeding under this Act or an enabling Act;
b.However, in relation to the matter:
i.QCAT has, and only has, the functions that the former entity had in relation to the matter under the former Act; and
ii.QCAT can, and can only, make a decision that the former entity could have made in relation to the matter under the former Act.
As I interpret it, this means that I must apply the provisions as to costs contained in the former Commercial and Consumer Tribunal Act 2003, sections 70 and 71. (see also Owen v Adams Group Pty. Ltd. [2010] QCAT 10) These sections are as follows:

Purposes of div 7
“70.The main purpose of this division is to have parties pay their own costs unless the interests of justice require otherwise.
. . .
71
“(4)In deciding whether to award costs, and the amount of the costs, the tribunal may have regard to the following--
(a) the outcome of the proceeding;
(b)the conduct of the parties to the proceeding before and during the proceeding;

(c)           the nature and complexity of the proceeding;
(d) the relative strengths of the claims made by each of the parties to the proceeding;
(e) any contravention of an Act by a party to the proceeding;
(f)for a proceeding to which a State agency is a party, whether the other party to the proceeding was afforded natural justice by State agency;

(g) anything else the tribunal considers relevant
Examples of paragraph (g)—
The tribunal may consider whether a party to a proceeding is acting in a way that unreasonably disadvantages another party to the proceeding. The tribunal may consider whether the proceeding, or a part of the proceeding, has been frivolous or vexatious.

(5)A party to a proceeding is not entitled to costs merely because--
(a)the party was the beneficiary of an order of the tribunal; or

(b) the party was legally represented at the proceeding.
. . .

(7)         The tribunal may direct that costs be assessed--
(a)          in the way decided by a presiding case manager; or
(b)          by a person appointed by the tribunal. “

The Court of Appeal in Tamawood v Paans (supra) states that sections 70 and 71(1) are intended to impose a general rule that good reason must be shown in terms of the interest of justice for making an award of costs in proceedings before the Tribunal. The provisions of the Act were sufficiently clear to negate the proposition that success in the proceedings is sufficient to establish a prima facie entitlement to the beneficial exercise of the discretion conferred by section 71(1) of the Act. The power of a Tribunal to award costs to a party is the creature of statute, and the nature and extent of that power can only be discerned by close consideration of the terms of the statute which creates the power and prescribes the occasions for, and conditions of, its exercise.
I might mention in passing, that at least in the context of this case, I do not see any material difference between the CCT Act provisions and the QCAT Act provisions about costs. Both regimes include “anything else the Tribunal considers relevant”.
In respect of section 71(4) of the CCT Act:
a.I take into account the outcome of the proceeding whereby the respondent did finally give the direction to the contractor which was sought. I do not consider the respondent’s submissions that the applicant sought different remedies to be at all relevant;
b.In respect of the conduct of the parties to the proceeding before and during the proceeding, and the relative strengths of the claims, I consider that, particularly by reason of the respondent’s “capitulation” that the respondent in fact did not have any merit in its defence and its inspector ought to have made a recommendation that the work was building work and that it was defective, particularly given the list of defects contained in the direction which the respondent ultimately gave. The respondent ought to have sent a second inspector (not the same one) to review the situation and indeed when Mr Jennings saw the situation he immediately conceded that it was building work;
c.I recognise that the liquidation of the contractor was not actually foreseen by the respondent, but such long delays always have the potential for events to occur in the interim whereby an applicant could be deprived of a remedy, such as a respondent going into liquidation. In this case, the respondent’s action did in fact result in the applicant having no remedy against the contractor by reason of the long delay.
d.I also consider it relevant that the applicant was caused foreseeable distress and anxiety and loss of amenity; and in particular she was caused to commence further proceedings against the contractor;
e.I consider that the applicant acted reasonably in not withdrawing her review application without the issue of costs being finalised – a withdrawal would have meant (at least to her) abandoning her costs claim.

These considerations in my view constitute a good reason for making an award of costs in the interests of justice.Accordingly I would order that the respondent pay the applicant’s costs. Although the circumstances go some way towards an order for indemnity costs, I do not consider the circumstances sufficient to order indemnity costs. I consider the respondent did act in accordance with its initial report even though that was shown to be mistaken.
In the absence of any objection by the applicant, I would adopt the proposals of the respondent as to costs.
I note that (as the applicant submitted) there is uncertainty as to what legal costs were actually expended in the progress of this action, but that is not a reason not to order costs.

The order of the Tribunal will then be that:
a.The respondent is ordered to pay the applicant’s costs and incidental to this proceeding on a standard basis on the District Court Scale of Costs;
b.It is further ordered that the said costs be assessed by the applicant delivering to the Authority an itemised claim for costs referring to the relevant items contained in the District Court Scale of Costs;
c.If within fourteen (14) days of that delivery, the parties have not agreed to an amount for costs, then:
i.The applicant shall deliver to the respondent a list of three legal cost assessors;
ii.Within seven (7) days of the delivery of the list of legal cost assessors, the respondent will select one of the legal cost assessors from the list; and
iii.The costs shall be assessed by the legal costs assessor chosen by the respondent;
d.The respondent shall pay the applicant’s costs (as agreed or assessed) within fourteen days of such agreement or assessment.