Owen v The Adams Group Pty Ltd t/a Richard Adams Homes Downs Earthmoving Pty Ltd

[2010] QCAT 10

CITATION:Owen v The Adams Group Pty Ltd t/a Richard Adams Homes, Downs Earthmoving Pty Ltd [2010] QCAT 10

PARTIES:  Angela Leith Owen

v

The Adams Group Pty Ltd t/a Richard Adams Homes, Downs Earthmoving Pty Ltd

APPLICATION NO:  BD584-06

MATTER TYPE:   Building dispute

HEARING DATE:   On the papers

DECISION OF:   R Oliver, Senior Member

DELIVERED ON:   6 January 2010

DELIVERED AT:   Brisbane

ORDERS MADE:   As per the 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

1.Subsequent to the Tribunal’s decision of 4 November 2009 dismissing the application the first respondent now makes an application for its costs of the proceeding on an indemnity basis or in the alternative, on a standard basis.

2.The applicant did not join the third party as a party to her claim. The third party was brought in by the first respondent and as the third party proceedings were dismissed, the third party, second respondent, applies for costs against the first respondent on an indemnity basis, or in the alternative, on a standard basis.

3.The applicant resisted the application for costs, principally in reliance on section 70 of the Commercial and Consumer Tribunal Act (“CCT Act”) and certain findings as to the first respondent’s conduct prior to entering into the contract and at the time the excavation.

4.The parties have relied on the CCT Act, and it seems, by reason of the transitional provisions of the Queensland Civil and Administrative Act (“QCAT Act”) the former Act is applicable to this application even though it is not “pending proceeding” within the definition of section 245 of the QCAT Act because at the commencement of the Queensland Civil and Administrative Tribunal on 1 December 2009 this proceeding had been heard and determined. Therefore it is an “other proceeding” within the definition of section 257 of the QCAT Act, which provides

·This section applies to an existing tribunal proceeding that is not a pending proceeding;

·At the commencement, the proceeding is taken to be a proceeding before QCAT;

·QCAT has jurisdiction to deal with the matter the subject of the proceeding under this Act.

5.But both these sections must be read in conjunction with section 252(3) which provides:

·If, under a former Act, a person has applied to a former tribunal to deal with a final decision of the former tribunal and the application has not been heard at the commencement-

·the application is taken to be an application made to QCAT under this Act; and

·in hearing the application, QCAT has, and only has, the functions of the former tribunal under the former Act

6.Here, the application is an application for costs  as a consequence of the final decision and therefore it is an application to “deal with a final decision”. Subsection (5) includes certain matters that are to be included in the definition of “deal with a final decision,” but that definition is not exclusive.

7.Therefore when considering the application for costs, the matters relevant are those contained in the former CCT Act in section 71(4). However, the starting point remains section 70 of the CCT Act which stipulates that the “main purpose” of that Act was that the parties paid their own costs..

8.Section 70 also enlivens a discretion where “the interests of justice” do require otherwise, that is, the making of a costs order.

9.In Tamawood Ltd.& Anor v Paans,[1] Justice Keane considered the application of sections 70 and 71 by the then Commercial and Consumer Tribunal 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”.

[1] (2005) QCA 111.

10.An examination of section 70 then involves a determination of what circumstances can be said to be in the interests of justice to deviate from the “main purpose of the division.” His Honour then considered the intent of the legislation and gave a general example of when a costs order might necessarily be considered and said:

“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”

11.But in doing so regard must be had to the matters in section 71(4) and section 71(5). He went on to say:

“To say this is not to ignore section 71(5)(b). 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 consideration, 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 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 recognised that “the outcome of the proceeding is a consideration which is relevant to the exercise of discretion conferred by s 71(1) of the Act.”

12.It follows that not only must regard be had to section 71(4)(a), but regard must also be had to the remaining subsection of section 71(4) where relevant. If countervailing circumstances can be established having regard to this criteria, then a favourable exercise of discretion would not be warranted.

13.Therefore the starting position here is that the parties have to pay their own costs of the proceeding. The next consideration is whether, having regard to the interests of justice in reliance on the factors set out in section 71(4) and the provisions of section 71(5), another order is warranted.

Outcome of the proceeding

14.Little needs to be said about this. The applicant was unsuccessful against the first respondent and the first respondent was unsuccessful against the second respondent.

The conduct of the parties before and during the proceeding

15.In my view the conduct of the parties is especially relevant  in the circumstances of this case, particularly the conduct of the first respondent.

16.The first respondent relies on the finding that the applicant “knew that all the building contract provided for was an allowance of $4,000.00 to undertake a cut and fill to make provision for a house pad.”   It was also found she could have had “no reasonable expectation that the builder would be responsible for the cost of retention”. Although this is correct in terms of the findings relevant to the issues in dispute, it is also true that the applicant would have reasonably expected that the builder would have investigated the site, attended during the excavation and kept the applicant informed of the consequences of the excavation, in terms of the necessary retention required, as the excavation work progressed. These findings as to what was included in the site allowance,  do not mean that the applicant could reasonably have expected, at the time the contract was signed,  to get a cut as long and as deep as in fact happened without any consultation or input from the first respondent.

17.On this point, the reasons provided in the decision indicate that I was quite critical of the first respondent for firstly not attending the site before or during the excavation, and secondly, letting matters get to a point which left the applicant with absolutely no options. By this I mean, options such as reconsidering the type of cut (whether terracing was an option), changing the house design to include stumps, or simply ensuring, by attendance at site, that the cut remained within the parameters expected by the applicant. However, on the last point, even if this did occur, some redesigning of the house would have been necessary. It would have been immediately apparent to Mr Adams of the first respondent that the fill section, with or without the extended area to the south and the allowance for the tanks, was not going to be sufficient area to comfortably fit the house.

18.Also, I consider it telling that there was no  evidence in the hearing which would have led the applicant to  contemplate a retaining wall of these proportions, up to 7 metres of cut face.  As I have already alluded  I found it quite extraordinary that the first respondent did not visit the site before the cut, with or without the Owens, and certainly at the commencement of works. To this extent, the first respondent must bear some responsibility for consequences of not being actively involved in the excavation, which ultimately led to this dispute.

19.I have come to the conclusion that the conduct of the first respondent is such a countervailing consideration as envisaged by Justice Keane in Tamawood.

Nature and Complexity of the Dispute

20.I can say at the outset and, in my opinion, there can be no doubt, that as between the applicant and the first respondent, this proceeding was complex. As the applicant submits, the pleadings on both sides were voluminous as were the submissions at the conclusion of the hearing. Reference was made to various provisions of the Domestic Building Contracts Act and the corresponding Australian Standards. There was complex expert evidence. The case involved complicated issues of law and fact which are self evident from the decision. The Tribunal was greatly assisted by legal representatives for all of the parties both during the hearing and in the final submissions, and I consider it was entirely reasonable for the parties to engage lawyers to assist them in this complicated dispute.

21.As between the first respondent and the second respondent the issues in dispute were  narrower. Even so legal representation was justified.

22.These factors weigh in favour of the first respondent vis a vis it and the applicant. I am not convinced that they are entirely relevant to the second respondent because the only issue between first respondent and the second respondent essentially was the extent to which the second respondent took directions from Mr Owen .

Relative strengths of the claims made by each of the parties to the proceeding

23.Although the decision came to some definite conclusions about certain matters, e.g. whether the any retaining wall was included in the provisional sum allowance of $4,000.00, these matters were not immediately apparent at the commencement of the hearing. I am far from convinced that the outcome was “obvious.”

24.The first respondent submits that the Tribunal ought be cognisant of the fact that the applicant maintained her substantial damages claim for $460,000.00 throughout the hearing. Although this might be correct, it did become apparent in the early part of the hearing that the actual claim was likely to be the cost of the reinstatement of the land and extra cost of construction, to the point that the applicant led further evidence as to alternate methods of construction to minimise the damages. Clearly, if the applicant succeeded on establishing breach of contract the damages were always going to be substantial.   The bulk of the hearing time was taken up with liability issues, that is, the conversations between the applicant, Mr Owen, and the representatives of the respondents, about retention. I also include Mr Pollard in this category. Even though, as the first respondent submits, the finding was that retention was not included in the $4,000.00, when it came to undertaking the excavation, the first respondent failed to have any regard to the concerns expressed by both Mr and Mrs Owen to Kirby White about the cost of retention and whether a battered wall could be achieved.

Any contravention of an Act by a party to the proceeding

25.Here the applicant relies on the failure of the first respondent to not excavate until the Development Permit issued which it is submitted breached the Integrated Planning Act. This evidence is not contested and I doubt even if the permit did issue it would have made very much difference to what occurred on the day of the excavation. Having said that, had the builder waited and collected or obtained the Development Permit and went to site with it, the outcome may, in those circumstances, have been different. This is particularly so because condition 11 of the permit raised the issue of retaining walls. Again, I come back to the point if the builder had actively supervised the extent of the excavation, the builder could have kept her informed, at the time, of exactly what she was going to be left with, and the size of any potential retaining wall.

26.This consideration is, in my view, in the applicant’s favour.

Balancing the criteria under s 70(4)

27.Although one can readily see that the first respondent does have a prima facie entitlement to a costs order having regard to the complexity of the case and the strength of the first respondent’s defence, this entitlement must be counterbalanced against the conduct of the first respondent, which is a relevant factor to be taken into account in the circumstances of this case. The reason this excavation got out of hand was directly attributable to the delegation of the first respondent’s responsibility to the second respondent in circumstances where the first respondent knew or ought to have known that this was a difficult site. The excavation proceeded without any input from the first respondent and for the reasons stated this is such a countervailing circumstances that it would not be in the interests of justice to make a costs order in its favour.

Second Respondents costs

28.As between the first respondent and the second respondent, the case was not complex.

29.The first respondent provided little information to Mr Davage about the excavation, and basically left it to him to work out the how the cut was to be made. As the decision notes, the first respondent sought to delegate this responsibility to the second respondent in circumstances where, on any thoughtful application of reasonable conduct on the part of the first respondent, it knew or ought to have known that this site had the potential of presenting with difficulties, particularly in view of the discussion with Mr White.

30.The second respondent submits, for a variety of reasons, the first respondent could never have succeeded against it in this litigation. The pleading contends it was an implied term between the first respondent and the second respondent that the earthworks would be undertaken in accordance with the plans provided and the first respondent would exercise care and skill in undertaking the earthworks. Insofar as he could Mr Davage did follow the plans provided to him, and there was no real challenge by the first respondent, in the hearing, that Mr Davage did not exercise reasonable care and skill, nor was any evidence called to support this contention.

31.In fact as has been submitted, the first respondent was aware of the true facts surrounding the excavation as it had a statement from Mr Davage, and of course knew of the arrangement about positioning the shed from the evidence of Mr White and Mr Fowkes. It is submitted, and it seems clear to me, that from this evidence  the claim against the second respondent could never succeed. I agree with the following submission by the second respondent:

“The trust (sic) of the submission for Downs Earthmoving is that the first respondent had in preparation of its case available, a  statement from Mr Davage, access to Mr Fowkes all of whom upon proper questioning before joining the second respondent to the proceedings would have revealed that which the learned Member stated at (103)………………………………….In this case Downs Earthmoving submits that there was an an obvious disregard of know facts such as emanated from Mr Fowkes, and Mr Davage themselves to the specific knowledge of Richard Adams Homes. Despite the known facts (known upon proper proofing of witnesses) Downs Earthmoving was joined to the proceedings. The contentions were groundless and would not have supported a finding as pleaded by the first respondent.”

32.The first respondent then submits that if the above are accepted it should have its costs on an indemnity basis and refers to the Catlow v QBSA.,[2] as well as Tamawood. Although it certainly became clear by the conclusion of the hearing that the case against the second respondent was weak, I do not consider the conduct on the part of the first respondent in the joinder warrants this further sanction.

[2]           (2009)QCCCTB 51.

33.The Tribunal is however persuaded that the aforementioned conduct of the first respondent in attempting to delegate its responsibilities to the second respondent, together with the outcome of the proceeding and the fact that it was brought into the complex proceeding with the applicant in the circumstances outlined in the second respondent’s submissions, does warrant an exercise of the discretion, in the interests of justice, in its favour.

34.It is appropriate, in the circumstances, that the second respondent should have its costs from the first respondent.

Conclusion

35.In accordance with the mandate prescribed by section 70 of the CCT Act the order of the Tribunal will be that as between the applicant and the first respondent each party should bear their own costs. I should also add that even if the QCAT Act did apply to this application, the result would have been the same because in the circumstances of this matter the conduct of the first respondent would fall within section 102(3)(f) of that Act as being something else that I would consider relevant.

36.There will also be an order that the first respondent should pay the second respondents costs to be agreed or assessed on a standard basis.