Lowik v Carl Linklater Pty Ltd

[2010] QCAT 287

CITATION:	Lowik v Carl Linklater Pty Ltd [2010] QCAT 287
PARTIES:	Ron Lowik & Debbie Lowik
v
Carl Linklater Pty Ltd
APPLICATION NUMBER:	BD230-09

MATTER TYPE: Building matters

HEARING DATE:     On the papers

HEARD AT:  Brisbane

DECISION OF: Dr Bridget Cullen Mandikos

DELIVERED ON: 21 June 2010

DELIVERED AT:     

Brisbane

ORDERS MADE:

The Respondent, Carl Linklater Pty Ltd, to pay the Applicants', Ronald Lowik and Debra Lowik, the sum of $40,372.25 no later than 4.00 pm on Friday, 30 July 2010.

CATCHWORDS : 

DOMESTIC BUILDING DISPUTE - BUILDING CONTRACT - DEFECTIVE WORKS - Where contractor failed to comply with QBSA Direction to Rectify - Measure of quantum - whether replacement or rectification cost.

DOMESTIC BUILDING DISPUTE - LEAVE FOR LEGAL REPRESENTATION - COSTS - Where applicant represented by counsel and instructing solicitor - Whether costs should be awarded - Costs awarded on Magistrates Court Scale, restricted to cost of either solicitor or barrister, whichever is the lesser.

Queensland Civil and Administrative Tribunal Act 2009
Commercial and Consumer Tribunal Act 2003 (Qld)

Bellgrove v Eldridge (1954) 90 CLR 613, applied
Pulitano v Mikescapes Pty Ltd [2010] QCAT 248, considered
Tamawood Ltd. & Anor v Paans [2005] QCA 111, applied
Tabcorp Holdings Limited v Bowen Investments Pty Ltd [2009] HCA 8, considered

APPEARANCES and REPRESENTATION (if any):

Decision on the papers

REASONS FOR DECISION

Background

1. The Applicants in this matter, Ronald Lowik and Debra Lowik (“Mr and Mrs Lowik”), entered into a contract with the Respondent, Carl Linklater Pty Ltd (“Linklater”) to recoat the pool located at their Jodie Street, Kallangur, property.  The work performed at the property by Linklater was the subject of a Queensland Building Services Authority ("QBSA") Direction to Rectify, Number 32813, requiring Linklater to fix the following defects:

1.   The applied coating to the pool is unsatisfactory and is not to industry standards in that it is delaminating, prematurely faded and has a powdery surface easily rubbed of {sic} by hand causing it to be unfit for purpose.

2.   The steel shell of the pool has been damaged during the rectification of the applied coating making the pool unsatisfactory in that the steel shell has deformed.

2. Linklater did not rectify the defects in accordance with the QBSA's Direction, which led to Mr and Mrs Lowik lodging a Domestic Building Dispute application with the Commercial and Consumer Tribunal ("CCT") on 18 May 2009.  The CCT has subsequently been amalgamated into the Queensland Civil and Administrative Tribunal ("QCAT"). 

3. Following an oral hearing on 12 April 2010, I delivered an ex tempore decision in Mr and Mrs Lowik's favour.  Linklater did not dispute liability at the hearing.   As a result of Mr and Mrs Lowik not having what I considered to be adequate evidence with regards to quantum, the matter was part-heard, and I ordered that the parties make written submissions as to the appropriate quantum of loss.  Both parties have now filed additional evidence relating to quantum in QCAT. 

Appropriate measure of quantum

4. Prior to receipt of the parties' submissions on quantum, and during the hearing on 12 April 2010, I advised the parties that it was my view that the appropriate measure of loss in this matter would be the cost of rectification, in contrast to the cost of replacing the entire pools.  At the hearing, Mr and Mrs Lowik submitted that rectification entailed replacement of the whole of the pool, with the lowest quotation relied upon being $37,500.00.  Mr Linklater gave evidence that it would be possible to repair the shell of the pool, with a related cost of between $5,000.00 and $8,000.00.  At the hearing, Mr and Mrs Lowik did not have any evidence indicating that it was necessary to replace the entire pool, as opposed to rectifying it.  I did not accept Mr and Mrs Lowik's submissions that I was entitled to assume that it was necessary for the entire pool to be replaced, on the basis that Linklater would otherwise have fixed the shell. 

5. My views are, in broad terms, supported by the decisions in Bellgrove v Eldridge (1954) 90 CLR 613 and more recently, Tabcorp Holdings Limited v Bowen Investments Pty Ltd [2009] HCA 8 ("Tabcorp").  In my decision in Pulitano v Mikescapes Pty Ltd [2010] QCAT 248, I summarised the position on replacement vs. rectification as follows:

"The rule expounded in Bellgrove v Eldridge, as it applies to defective building work performed pursuant to a contract (as is the case here) is that a liable contractor is to pay a recovering owner an amount of money equal to the cost of rectifying the defect, such that the building work is substantially in accordance with the contract.  The appropriateness of Bellgrove v Eldridge as the starting point in assessing any damages was confirmed by the High Court in Tabcorp.

In Bellgrove v Eldridge, the High Court determined that it was both necessary and reasonable that the rectification work be performed. The expert evidence in Bellgrove v Eldridge supported a conclusion that the only satisfactory way of rectification was to demolish and rebuild the home."

6. A similar argument is raised by Mr and Mrs Lowik in their material relevant to quantum.

Lowiks' evidence at the hearing

7. The distinction between the cost of replacement vs. cost of rectification is one that should readily be appreciated, in terms of evidence relating to quantum, by legal practitioners appearing in building matters.  Considering that Mr and Mrs Lowik had instructed counsel for the purposes of the hearing, who attended with their instructing solicitor, I was particularly troubled that Mr and Mrs Lowik did not endeavour to obtain any evidence that the only practical method of rectification was, in fact, demolition of the existing pool.  At the hearing itself, Mr and Mrs Lowik called 2 pool industry persons to give evidence, Mr Chris Rothwell of Rothwell Pools and Ms Grace Urbanska of Majestic Pools & Landscapes Pty Ltd ("Majestic Pools").  Both Mr Rothwell and Ms Urbanska provided quotations for the replacement of the pool, as opposed to the rectification thereof, and both gave evidence that they did not inspect the pool with a view to rectifying it.  Mr Linklater gave evidence that rectification at a lower cost was possible, but again without any supporting evidence. 

8. The quotations for pool replacement, as opposed to rectification, presented at the hearing were as follows:

·     Quotation from Factory Direct Pools Pty Ltd t/a Atlantic Pools, dated 20 July 2009 - $42,255.00 inclusive of GST.  Mr and Mrs Lowik claim, post-hearing, that QCAT should also award additional costs to reinstate the landscaping, post-construction, in accordance with this quotation, which contains an allocation for pavers at a cost of $19,800.00, pool fence at a cost of $10,050.00, lawn repair at a cost of $4,500.00, and rubbish removal at a cost of $1,000.00.  I will say more about this request later, but note now that there was no evidence called about the necessity of these costs at the hearing.

·     Quotation from Rothwell Pools, dated 27 July 2009 - $37,500.00 inclusive of GST.

·     Quotation from Majestic Pools, dated 22 July 2009, in the amount of $37,877.00 inclusive of GST for swimming pool replacement, together with "compulsory govt insurance" at a cost of $857.00, inclusive of GST.

Further evidence submitted post-hearing

9. Mr and Mrs Lowik have now submitted further material, relevantly including the following:

·     Quotation from Rod Cameron Pools Pty Ltd, dated 28 April 2010, indicating the rectification is not possible, for a cost of $52,800.00 inclusive of GST;

·     Quotation from Queensland Family Pools Pty Ltd, dated 30 April 2010, for pool replacement as "We deem the existing failed swimming pool structure as unsalvageable and not worthy of a further renovation procedure."  Total price $40,000.00, including GST.  Contains provision of optional items to "Supply and fix mosaic tile band to waterline of pool & spa" at a cost of $2,375.00 inclusive of GST and to "Supply and fix glass pebble to pool & spa interior in lieu of standard gold pebblecrete" at a cost of $2,800.00 inclusive of GST.

·     Quotation from Majestic Pools, dated 12 May 2010, in the amount of $39,726.00 inclusive of GST for swimming pool replacement, together with "compulsory govt insurance" at a cost of $646.25, inclusive of GST.  A separate email from Ms Grace Urbanska of Majestic Pools indicates that Majestic Pools would not quote for pool repairs as "The extend of damage to the existing pool shell and plumbing is difficult to predict therefore the cost may not be foreseen".

·     Quotation from Aquatic Pool Renovations Pty Ltd ("Aquatic") in the amount of $35,200.00 (it is not clear whether this amount is inclusive of, or exclusive of, GST).  This quotation indicates that repair is not possible and that the only option is to rebuild the pool, with the best match being a fibreglass pool.  However, the quotation is for a concrete pool, as Aquatic does not do fibreglass pool installation.

10. Mr and Mrs Lowik express a desire to accept the quotation of Queensland Family Pools Pty Ltd, together with acceptance of the $5,175.00 of additional proposed options that they submit will bring the "new pool to the standard of the pool in existence prior to the defects caused by the Respondent".  The options, as described above are for a "mosaic tile band to waterline of pool & spa" at a cost of $2,375.00 inclusive of GST and to "supply and fix glass pebble to pool & spa interior in lieu of standard gold pebblecrete" at a cost of $2,800.00 inclusive of GST.  With respect, there was no evidence called at the hearing about the necessity of these options.

11. Mr Linklater has also submitted additional information post-hearing, which consists of a letter from Mr Peter Hellen of Malastone Pty Ltd, outlining the steps that are generally taken to repair "Blake-way" pools such as the one in question, and concluding that the average price to supply and install a liner into a concave pool of this variety is approximately $6,900.00, plus GST.  The challenge with this additional information is that Mr Hellen does not indicate that he has seen the Lowik's pool, and that this method of rectification would, in fact, be possible for their specific pool.  As such, I cannot place the same weight upon Mr Linklater's additional information, as I can upon the additional information supplied by Mr and Mrs Lowik, which indicates that the pool companies supplying quotations have seen the actual pool in question.

12. In the circumstances, I am now satisfied that the only feasible method of rectification is to replace the entire pool, and award Mr and Mrs Lowik the sum reflected in Majestic Pools quotation of 12 May 2010, for a total sum of $40,372.25 (consisting of $39,726.00 for swimming pool replacement, together with "compulsory govt insurance" at a cost of $646.25, inclusive of GST).  Although the Aquatic quotation is less, it was not clear to me what impact GST would have upon same, and it is for this reason that I have accepted the Majestic Pools quotation.

13. I decline to award Mr and Mrs Lowik any additional figures for landscaping, or for the options contained in Queensland Family Pools quotation as outlined above.  The Lowiks have not called any evidence about these matters at hearing, nor particularised them in their application at any juncture, nor provided any supporting affidavit material with respect to the necessity of such items.

Costs

14. By way of solicitor's letter dated 14 May 2010, Mr and Mrs Lowik request legal costs, for the reason that "the Respondent never disputed liability". With respect, this submission does not reflect the applicable test for the awarding of costs in a domestic building dispute. As this matter was commenced in the CCT, the starting point vis-à-vis costs is reflected in section 70 of the now repealed Commercial and Consumer Tribunal Act 2003 (Qld)("CCT Act"):

The main purpose of this division is to have parties pay their own costs unless the interests of justice require otherwise.

15. As I interpret section 70, the CCT jurisdiction was not a “costs follow the event” jurisdiction, but rather, if the interests of justice were such that the parties should not pay their own costs, the CCT had authority to make such an order.

16. In considering whether the interests of justice warrant an award of costs, regard must be had to the factors contained in section 71(4) of the CCT Act, namely:

(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 the State agency;

(g) anything else the tribunal considers relevant.

17. Further, section 71(5) of the CCT Act provides that a party 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.

18. In considering the Lowik's request, I have considered the impact of Justice Keane's decision (as His Honour was then) in Tamawood Ltd. & Anor v Paans [2005] QCA 111 “Tamawood”.  In Tamawood, His Honour considered the application of sections 70 and 71 by the then CCT and said:

“As I have already said, in my view, the language of s 70 and s 71(5)(a) is sufficiently clear to negate the proposition that costs should, prima facie, follow the event unless the Tribunal considers that another order is more appropriate. In this regard, it is clear that the power of a court or tribunal to award costs to a party is now a creature of statute. 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. In the performance of this task, observations of the courts in relation to the operation of other statutory regimes relating to costs may afford general assistance but they cannot be allowed to distract attention from the terms of the particular statute in question.”

19. Following on from His Honour’s comments, it is then necessary to determine what circumstances enliven an “interests of justice” consideration sufficient to justify deviation from the main purpose of section 70 of the CCT Act (that parties are to bear their own costs). His Honour next considered the intent of the CCT Act, and provided a general example of circumstances that might warrant the awarding of costs:

“If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves. Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the Tribunal.

To say this is not to ignore s 71(5) (b) of the Act. There is a clear distinction, in terms of the interest of achieving justice, between the mere fact of having representation and the fact of having reasonably obtained that representation because of the complexity of the case. In the absence of countervailing considerations, where a party has reasonably incurred the cost of legal representation, and has been successful before the Tribunal, it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring that party to bear the costs of the representation which was reasonably necessary to achieve that outcome. Finally in this regard, it should also be borne in mind that s 71(4) (a) of the Act expressly recognizes that "the outcome of the proceeding" is a consideration which is relevant to the exercise of the discretion conferred by s 71(1) of the Act.”

Impact of Tamawood on the Lowik's case

20. There is nothing complex about the Lowik's case that would have necessitated legal intervention.  On 18 January 2010, His Honour Justice Wilson gave leave to the Lowik's to have legal representation at a "review hearing" before His Honour on 18 January 2010.  The issue relating to leave for legal representation was not again addressed until the time of hearing, at which point it appeared that the Lowik's legal representatives were labouring under the misimpression that being granted leave to appear at a "review hearing" meant that they were entitled to legal representation from that point forward.  This is not, of course, the case.

21. In any event, as the matter was not addressed until the time of the hearing, I did not then think it would serve the interests of justice to refuse to allow the Lowik's legal representatives, then consisting of both an instructing solicitor and barrister, to appear at the hearing.  In my view, this was not a case that necessitated the appearance of both an instructing solicitor and barrister, and is the sort of case that could have been competently handled by the parties themselves, and certainly by a solitary advocate.  Whilst I am not suggesting that Counsel does not have a welcome place in QCAT, in matters such as this which are not legally complex, in a jurisdiction that contemplates both self-representation and that parties bear their own costs, such decisions should be made carefully and with a modicum of "legal costs economy". 

22. While I am satisfied that Mr and Mrs Lowik did incur legal costs, and consider this to be a case where the Tamawood principles apply in that the Lowik's award (as the aggrieved individual homeowner forced to fight a battle in the Tribunal) would otherwise be frittered away, I do not think Tamawood is carte blanche for solicitors to incur unnecessary costs that are then transferred to the unsuccessful party.

23. It was not necessary in this case to have an instructing solicitor plus a barrister, nor should it have been necessary for the parties (particularly Mr and Mrs Lowik) to make post-hearing submissions about quantum - this information should have been available at the hearing.  I would have been quite prepared for this sort of difficulty with the evidence relating to quantum (that being a lack of evidence about the necessity of replacement, as opposed to rectification) with a self-represented party.  Aside from in cases of self-representation, attending a hearing without evidence clearly outlining the quantum of a party's loss is to ignore half of the case that must be presented in order for a party to recover. 

24. In fairness, I should point out that the Lowik's Counsel did draw my attention to Exhibits AJ and AK, which were Private Certification Compliance Certificates, indicating that at one stage, Mr Linklater considered putting in a new structural shell, and constructing a new swimming pool.  Indeed, Mr Linklater agreed that this was the case, but was done at a point in time when he was negotiating with his subcontractors to assist with repair.  The subcontractors eventually retracted the offers made to Mr Linklater, and he then did not consider proceeding in the way he intended to at the time he obtained the Compliance Certificates. 

25. The Lowik's Counsel submitted that this was a binding admission on the part of Mr Linklater that this was how rectification was to be achieved.  I do not agree – although it was certainly evidence that an entirely new pool would address the problems faced by the Lowiks.  The obligation remained with Mr and Mrs Lowik to establish, on the evidence, that it was necessary to replace the pool, as rectification was not practical.  This evidence was contained in the post-hearing submissions, but should have been provided at the time of hearing.

26. For these reasons, I award Mr and Mrs Lowik their legal costs, on the Magistrates Court Scale, to be assessed, but specifically exclude from the award of costs the costs of having both an instructing solicitor and barrister appear at the hearing, and award the costs of one representative appearing only, whichever is the lesser.

Order

27. The Respondent, Carl Linklater Pty Ltd, to pay the Applicants', Ronald Lowik and Debra Lowik, the sum of $40,372.25 no later than 4.00 pm on Friday, 30 July 2010.