Queensland Building and Construction Commission v McNab Constructions Australia Pty Ltd - [2014] QCAT 317

CITATION:

Queensland Building and Construction Commission v McNab Constructions Australia Pty Ltd [2014] QCAT 317

PARTIES:	Queensland Building and Construction Commission (Applicant)
v
McNab Constructions Australia Pty Ltd (Respondent)

APPLICATION NUMBER:

BDL075-13

MATTER TYPE:

Building matter

HEARING DATE:

30 May 2014

HEARD AT:

Brisbane

DECISION OF:

Member R F King-Scott

DELIVERED ON:

2 July 2014

DELIVERED AT:

Brisbane

ORDERS MADE:	That the Queensland Building and Construction Commission pay the costs of McNab Constructions Australia Pty Ltd, of and incidental to the Application for leave to extend time under s 72 (8) of the Queensland Building Services Authority Act 1991 to be agreed and failing agreement to be assessed on a standard basis on the District Court scale of costs.
CATCHWORDS:	PROCEDURE - COSTS – ss 100 and 102. Application withdrawn – application commenced with knowledge of proposed settlement agreement – futility of application if settlement terms effected.

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Mr B Codd of Counsel for the Respondent instructed by DibbsBarker.

RESPONDENT:

Mr Turnbull Solicitor of HWL Ebsworth Solicitors for the Applicant.

REASONS FOR DECISION

This is an application by McNab Constructions Australia Pty Ltd (“McNab”) for costs of and incidental to an application for leave to extend time under s 72(8) of the Queensland Building and Services Authority Act 2000 (“QBSA Act”). The Respondent, Queensland Building and Construction Commission (“the Commission”) was the Applicant in the substantive proceedings and was formerly known as the Queensland Building Services Authority (“the Authority”). This is the culmination of a very long and extensive litigation between the parties.
McNab entered into a Construction Management Contract with Advance Traders Pty Ltd (“Advance”) wherein McNab undertook to manage trade contractors engaged by Advance to construct an apartment complex known as the W4 Apartments Project at Teneriffe in Brisbane. McNab was not engaged to build.
Complaints about defective work were made by the body corporate and the owners of units in the W4 Apartments to the Authority. The Authority investigated the complaints and between late 2007 and January 2009, the Authority issued 15 Directions to Rectify (“the first DTRs”) to McNab in respect to the building work completed by Advance’s trade contractors on the apartment complex.
McNab firstly reviewed each of the first DTRs in the Commercial and Consumer Tribunal and then challenged jurisdiction of both the Authority in issuing the first DTRs and the Tribunal (“CCT”) in reviewing the first DTRs.
McNab sought to set aside the DTRs before the Commercial and Consumer Tribunal. No order for costs was made following that hearing but it was picked up on the appeal.[1]
[1] McNab Constructions Australia Pty Ltd v QBSA [2009] QCCTB 188.
McNab appealed the decision and on 7 April 2010 Dorney DCJ dismissed the appeal and ordered the QBSA to pay 25% of McNab’s costs. His Honour also reserved the costs of the interlocutory application to the Tribunal (QCAT) to be determined in accordance with the transitional provisions.
McNab appealed and the Authority cross appealed the decision.[2] The Court of Appeal (by a majority) dismissed the appeal and allowed the cross appeal. It made orders for costs in favour of the Authority. Special leave to appeal to the High Court was refused with costs.[3]
[2] McNab Constructions Australia Pty Ltd v QBSA [2010] QCA 380.
[3] McNab Constructions Australia Pty Ltd v QBSA [2011] HCATrans 204.
Upon return of the reviews to the Tribunal (by then constituted by the Queensland Civil and Administrative Tribunal), McNab then unsuccessfully applied to join a number of other parties as potential recipients of the first DTRs. The application was dismissed and on 20 August 2013 McNab was ordered to pay the Authority’s costs on the standard basis of assessment on the District Court Scale of Costs.[4]
[4]The decision on costs was appealed, the matter has been heard and the decision is reserved.
In January 2013, the Authority issued a further 22 Directions to Rectify (“the second DTRs) to McNab in respect of the building work completed on the apartment complex.
McNab filed reviews in respect of the second DTRs in early February 2013.
The first DTRs and the second DTRs were consolidated by order of the Tribunal.
On 20 February 2013, McNab and Advance entered into a Deed of Compromise of the Supreme Court proceedings that then existed between those parties wherein Advance undertook to rectify all of the defects identified in the first and second DTRs (“the Settlement Agreement”).
On 21 February 2013, the Settlement Agreement was provided to the Authority and to their solicitors with a paragraph, said to relate to the commercial basis of the agreement, omitted.[5] The Settlement Agreement provided, inter alia, that Advance would enter into agreements with the Body Corporate of W4 Apartments and with the owners of the lots in respect of which complaints had been made to the Authority by 28 March 2013. Any such agreements are to include a term or terms that the Body Corporate of W4 Apartments and lot owners withdraw any complaints to the Authority within 14 days of the agreements referred to and authorise Advance to advise Authority to that effect with a view to all directions to rectify issued to McNab being set aside.
[5]Ex ACO – 1 Affidavit of Alexander Charles Orange sworn 14 June 2013.
Notwithstanding the existence of the Settlement Agreement, the Authority maintained its right to maintain the DTRs against McNab.[6]
[6]Email dated 22 February 2013 from solicitors for QBSA to McNab solicitors.
On 14 March 2013, all of the first and second DTRs were declared void by Justice Dalton in the Supreme Court in proceedings McNab Constructions Australia Pty Ltd v QBSA [2013] QSC 57.
Following that declaration, McNab and the Authority agreed to Consent Orders made on 1 July 2013 granting leave to McNab to withdraw its applications for review of each of the 37 DTRs, it was further ordered, by consent, that each party was to bear its own costs.
The Authority then brought, on about 22 March 2013, a s 72(8) application (‘the Application”) seeking leave to serve upon McNab fresh Directions to Rectify in relation to the subject matter of the first and second DTRs. McNab then applied to the Tribunal on 9 May 2013 to dismiss the Application.
On 11 June 2013 the Body Corporate passed motions ratifying the agreement between Advance and McNab. The Authority by its solicitor’s letter dated 12 June 2013 suggested these proceedings be adjourned to the Registry.
On 1 August 2013, the Tribunal granted leave to the Authority to withdraw the Application without resolving the question of costs.
The present proceedings relate to the determination of that costs issue.
The Tribunal may only award costs where legislation enables it to do so, either by the Queensland Civil and Administrative Tribunal Act 2009 (“QCAT Act”) or other enabling legislation. It has no inherent power to do so.[7]
[7] Kim Tran Pty Ltd v Downey [2003] 1 Qd R 651.
The QCAT Act provides:
100. Each party usually bears its own costs.
Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.
…
102. Costs against party in interests of justice.
(1) The tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice require it to make the order.
…
(3) In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following:
(a)whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in s 48(1)(a) to (g);
(b)the nature and complexity of the dispute the subject of the proceeding;
(c)the relative strengths of the claims made by each of the parties to the proceeding;
(d)for a proceeding for the review of a reviewable decision:
(i)whether the applicant was afforded natural justice by the decision-maker for the decision; and
(ii)whether the applicant genuinely attempted to enable to help and help the decision-maker to make the decision on the merits;
(e)the financial circumstances of the parties to the proceeding;
(f)anything else the tribunal considers relevant.
Extensive written submissions have been provided by the legal representatives for both parties.
McNab says the Commission ought to pay the costs for the following reasons:
a)    As a matter of consistency of decision making costs ought to be awarded in this instance given the history of the proceedings and the history of other review proceedings and withdrawals;
b)    The Authority has a long history of being caught by costs orders and of obtaining cost orders in review proceedings and there is nothing to distinguish this application from those circumstances;
c)    It consented to the parties being legally represented and in those circumstances it would be contrary to the interests of justice for the successful party to be required to meet its own costs;
d)    The withdrawal of the application by the Authority necessarily in the face of the Settlement Agreement being implemented equates to a successful disposition of the Application in favour of McNab;
e)    The interests of justice favour an award of costs in the circumstances in which, at best, the Authority was not acting for a proper purpose in purporting to maintain its intention to direct rectification but rather may be inferred to have been attempting to maintain pressure upon McNab in circumstances in which McNab’s obligations, as originally contracted, had been compromised in the Settlement Agreement;
f)     McNab was required to resist the application so as to avoid being in jeopardy of being exposed to either a prosecution (s 71(10)) or disciplinary action (s 72(9)) for non-compliance with the DTRs should Authority have been successful.
The Commission resists the costs order on the following basis:
a)    The proceedings were not overly complex and McNab did not place any material before the Tribunal to suggest that it was a complex application;
b)    In deciding whether the matter is complex the Tribunal has not had the benefit of a hearing the application to be able to determine that issue;
c)    Merely because the parties had consented to legal representation one should not assume the matter was complex. Indeed, it is not a requirement of an application under s 43 for legal representation that the matter be complex;
d)    The Settlement Agreement would not be determinative of the Application. The Commission relies upon the relevant factors set out in QBSA v Bengsten Developments Pty Ltd.[8] It also questions the weight to be afforded the Settlement Agreement where the full document was not disclosed.
e)    It had an arguable case, particularly following the decision of J M Kelly (Project Builders) Pty Ltd v QBSA.[9] At the very least the Tribunal ought not accept that McNab’s case was stronger than the Authority.
f)     There is no evidence that the Application was commenced for other than proper reasons and there was no abuse of process.
g)    Equally, there was no improper purpose.
h)   McNab did not have to resist the Application, as the granting of leave would not expose McNab to a penalty or prosecution, that would only occur if it did not seek a review of the direction and or comply with the direction.
[8]        [2006] CCT L013-05.
[9] [2013] QCAT 489.
I accept the starting point under the QCAT Act is that each party should bear its own costs. Wilson J said in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)[10] at [4]:
This presumption may, however, be displaced if the Tribunal considers it is in the interests of justice to order the party to pay all or part of the costs of another party: s 102 (1). The phrase “in the interests of justice” is not defined in the Act but is to be construed according to its ordinary and plain meaning, which obviously confers a broad discretionary power on the decision maker ².
²Herron v The Attorney General for NSW (1978) 8 NSWLR 601at 613 (per Kirby P)
[10] QCAT [2010] 412.
The Application for which McNab seeks costs has not been determined it was withdrawn by consent of the parties on 1 August 2013. Of course, the fact that an application is withdrawn does not preclude a party being awarded costs.[11] The Authority submitted that it had an arguable case on the Application. It submitted that McNab’s prospects were no better than that of the Authority. It relied upon the authority of J M Kelly (Project Builders) Pty Ltd v QBSA (supra). That decision involved a similar application, however, there the review of the original directions was still before the Tribunal. That is not the case here. Here the Authority consented to McNab being granted leave to withdraw the reviews in respect of the first and second DTRs. The Authority had no other alternative following the decision declaring them void.[12]
[11] Residential Resorts of Australia Pty Ltd v QBSA [2009] QCCTB 039.
[12] Arcon Constructions Pty Ltd v QBSA [2013] QCAT 573.
The Application was filed on 22 March 2013. It was supported by 8 pages of detailed written submissions. It is noteworthy that no where in those submissions is there any reference to the Settlement Agreement which the Authority’s solicitors, at the time, were well aware of.
In support of the Application the Authority submitted that there had been no delay in seeking the extension of time and that favoured an extension being granted. An issue was whether the Authority could have delayed the bringing of the Application pending the carrying out of the terms of the Settlement Agreement or whether out of an abundance of caution it should have proceeded as it did. The Settlement Agreement provided that Advance was to enter into an agreement with the Body Corporate and the lot owners by 28 March 2013. In fact, the agreement was not approved by the Body Corporate until 11 June 2013, but nothing flows from that.
The Authority’s prospects of success on the Application were futile once the terms of the Settlement Agreement were effected.
The Authority submits, that in bringing the Application, it was cognisant of the objects of its charter which included the maintenance of proper standards in the industry and the provision of remedies for defective work.[13]
[13] QBSA Act s 3.
It would have been apparent to the Authority that were the terms of the Settlement Agreement to be carried out then proceeding with the Application would be futile. The filing of the Application (22 March 2013) preceded the date (28 March 2013) of expected performance of terms of the Settlement Agreement by a matter of days. It would seem that any concern about delay in bringing a proposed Application could have been explained away to the Tribunal’s satisfaction on the basis of the expectation that the terms of the Settlement Agreement would be effected. I reject the submission that the omitted provision in the Settlement Agreement somehow affected the weight or how the Authority was to treat the document. Its terms are perfectly clear on its face, the omission could not affect the intent of the agreement.
I do not consider that the Authority’s conduct in filing the Application is an abuse of process. Nor do I consider it has acted improperly. However, having decided to proceed down the path of litigation the Commission, as it is now known, cannot now oppose an order for costs (all other considerations being equal) on the basis that it had no other alternative. It is argued that it was necessary for the Authority to reserve its position, if that is so, and in doing so, it caused McNab to incur unnecessary costs then it is only right (and in the interests of justice) that the Commission should now pay those costs.[14] In my opinion, it was reasonable for McNab to oppose the Application rather than apply to review the directions, if leave was granted. At the very least, I expect that there would have been a potential cost saving in successfully opposing the Application at an early stage.
[14] Imperial Homes (Qld) Pty Ltd v QBCC (No 2) [2014] QCAT 135.
In deciding to award costs against the Commission I have had regard to several of the matters referred to in s 102 (3) of the Act. I consider that the Authority, in issuing the Application when it did, acted in a way that unnecessarily disadvantaged McNab. It could have avoided McNab and itself from incurring unnecessary costs had it been prepared to wait a relatively short time to allow the performance of the terms of the Settlement Agreement. It is highly unlikely, that properly informed, the Tribunal would have considered any additional delay caused by waiting for the performance of the terms of the Settlement Agreement detrimental to a s 72(8) application by the Authority.[15]
[15] QBSA v Bengsten Developments Pty Ltd [2006] QCCTB 31.
In my opinion the Application involved quite complex issues which was acknowledged, implicitly, by the Authority in its submissions in support of the Application where it said ‘Applications of this type are rare… there is limited guidance as to what the relevant factors might be in relation to such an Application’. That submission was relied upon by Authority’s opponent, McNab, in its application for legal representation as evidence of the complexity of the matter.
Although, I have not entered upon a hearing of the substantive matter I have considered the material sufficiently to determine that it was not only of a level of complexity sufficient to warrant legal representation but also consideration under s 103(3) of the QCAT Act for an award of costs.
It was submitted by Mr Codd of Counsel that both parties were sophisticated litigants who ought to be expected to understand the potential costs liability of legal representation. They had been involved in extensive litigation in this and earlier Tribunals, in the District and Supreme Courts, Court of Appeal and the High Court, such litigation involving, essentially, the same subject matter as this Application. In those matters orders for costs had been made in favour of the Authority. Mr Codd of Counsel submitted that it would be inconsistent, contrary to ss 3 and 4 of the QCAT Act, for the Tribunal to refuse costs here where on other occasions the Tribunal has awarded costs in similar circumstances to the Authority, in support he cited Residential Resorts of Australia Pty Ltd v QBSA (supra) where an application for review was withdrawn by the applicant and the Authority successfully recovered an award of costs against the applicant. Although, there is some weight in the argument, every case has to be decided on its own merits and in accordance with the legislation.
In my opinion, in this case I consider that the interests of justice do justify an award of costs in favour of McNab.
I order that the Queensland Building and Construction Commission pay the costs of McNab Constructions Australia Pty Ltd, of and incidental to the Application to be agreed and failing agreement to be assessed on a standard basis on the District Court scale of costs.