Queensland Building Services Authority v Alternate Dwellings Pty Ltd
[2012] QCATA 49
•15 March 2012
| CITATION: | Queensland Building Services Authority v Alternate Dwellings Pty Ltd [2012] QCATA 49 |
| PARTIES: | Queensland Building Services Authority (Applicant) |
| v | |
| Alternate Dwellings Pty Ltd (Respondent) |
APPLICATION NUMBER: APL385-11
| MATTER TYPE: | Appeals |
HEARING DATE: On the papers
HEARD AT: Brisbane
| DECISION OF: | Mr John Jerrard QC, Member |
DELIVERED ON: 15 March 2012
DELIVERED AT: Brisbane
| ORDERS MADE: | 1. Leave to appeal granted; 2. The decision of the Tribunal made on 21 September 2011 is confirmed. |
| CATCHWORDS: | Costs order – where in-house lawyers acting for applicant instead of external lawyers – error of law – where conduct of Authority contributed to breach – whether costs order in the interests of justice Queensland Civil and Administrative Tribunal Act 2009, ss 102, 142(3)(a)(iii) |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers in accordance with s 32 of the Queensland Civil and Administrative Tribunal Act 2009.
REASONS FOR DECISION
This matter is an application bought under s 142(3)(a)(iii) of the Queensland Civil and Administrative Tribunal Act2009, to appeal against a cost order. The applicant, the Queensland Building Services Authority (‘the Authority’) was successful in proceedings heard in the Queensland Civil and Administrative Tribunal (QCAT), in a judgement delivered on 21 September 2011, in which it obtained an order that the respondent Alternate Dwellings Pty Ltd (‘Alternate’) pay the Authority the sum of $3,000 by way of penalty by 4pm on 18 October 2011. The learned Member who constituted the Tribunal ordered that each party bear its own costs. The Authority has sought leave to appeal against that second order contending that the Tribunal Member erred in law in the Member’s Reasons for not giving it costs, and that if the reasons are not corrected on appeal, the decision will serve as a persuasive authority for other Tribunal Members, who may likewise err.
Section 102 of the QCAT Act allows a Member to make an order requiring a party to pay all or a stated portion of the costs of another party to a proceeding, if the Tribunal continues the interest of justice require it to make the order. The learned Member’s reasons for declining to make the order were expressed as follows:
“[38] The authority has requested that it be awarded costs fixed in the amount of $250 which are not opposed by Alternate Dwellings. The Tribunal notes that the authority did not engage external lawyers in this case and that the regulations to the Justices Act1886 which has been cited by the Authority require that costs be incurred. The Tribunal does not consider that it is appropriate to order costs where there has not been external lawyers engaged and so costs have not been incurred.”
The written submission filed by the Authority, and the Member’s written reason have persuaded me that the Member’s reasons do disclose an error of law. Those written submissions referred to a judgement of Davies AJ in Commonwealth Bank of Australia v Hattersley & Anor [2001] NSW SC 60 (20 February 2001), wherein his Honour wrote at para [17]:
“The general appropriateness of treating the work of an employed lawyer on the same basis as that of an independent lawyer has been accepted since the decision in the Attorney-General v Shillibeer [1849] ER 1150.”
And his Honour referred to a later English decision of Re Eastwood (deceased); Lloyds Bank Limited v Eastwood [1974] 3 All ER 603, and decisions applying the same principle in South Australia, Victoria, New South Wales, Western Australia, and Queensland (in Nolan v George [1959] Qd R 315).
Davies AJ went on to observe that
“[20] There is a point of principle behind the approach enunciated in all these cases. It is that employed solicitors are not to be treated as second class professionals. Lawyers are entitled to practice in their profession in a number of ways, one of which is to be a legal officer of a corporation which engages in commercial activity.”
His Honour added; at [21]:
“Practitioners who choose to carry on their profession as an employee of the Crown, of a statutory authority or of a corporation are entitled to have their work assessed on the same basis of as that of independent solicitors exercising comparable skills in the performance of comparable work. It is not the manner in which the practitioner carries on his or her profession which counts, it is the nature of the work, the time spent, and the skill, care, and responsibility involved.”
The applicant’s written submissions refer to a number of first instance decisions in QCAT, or its predecessor, the Commercial and Consumer Tribunal, where the view under appeal (that the Authority was not entitled to legal costs because it was represented by an employed lawyer), had been rejected. Those references persuade me that in this matter the learned Member was in error in reasoning that it was inappropriate to order costs when there had not been external lawyers engaged by the applicant party, as opposed to in-house lawyers. Accordingly, it is appropriate to grant the Authority leave to appeal.
But that is not an end of the matter. These were rather unusual proceedings. The learned Member’s reasons recorded that QCAT had made an order, with the agreement of the parties, in the following terms:
“Proper grounds exist for taking disciplinary action against Respondent in that it contravened ss 89(a) and/or 89(k) of the Queensland Building Services Authority Act 1991 (“QBSA Act”) in that, during its 2008/2009 licence year, it exceeded its Allowable Annual Turnover (“AATO”) by $4,729,832 or 157.65% without first notifying the Authority or obtaining the Authority’s approval.”
The Member’s reasons recorded that Alternate Dwelling was a Victorian based company formed in 1984, and had operated primarily in the Gippsland district, supplying kit homes. It had been a member of the Housing Industry Association for 25 years and the Master Builders Association of Victoria for 10 years. It had recently begun training in New South Wales and had sought its first Queensland domestic building licence for the financial year 2007-2008. Its application for a building licence was approved by a letter from the Authority dated 9 October 2008. This letter stated that ‘based on your notified Net Tangible Assets of $156,001, your Allowable Annual Turnover for the forthcoming year will be $3,000,001”.
The Member’s reasons repeat the Authority’s submissions to the Member, to the effect that the purpose of specifying an allowable annual turnover for a licensee was ‘to avoid the situations where licensees trade beyond means, and are unable to honour their obligations to consumers, contractors and suppliers’. The Authority also contended to the Member that ‘the public, in its dealing with all licensees, deserve to be assured that they are trading with a substantive entity with proven financial wellbeing’.
Consistently with that approach, when Alternate Dwellings applied in 1998 for a license from the Authority for ‘draft persons building design’ and a ‘builder/low rise’, it was required to, and did, provide a copy of its audited financial statements for the year ended 30 June 2007, to which was attached an independent review report, by an accountant showing net tangible assets of $706,169. The 2007 audited reports recorded a gross trading income from sales of $6,663,693. The Authority replied by letter dated 26 August 2008, advising (correctly, as the Member found) that the age of the financial information provided was too old, and for the year ended 30 June 2007, and requesting updated information. That letter also advised that based on a net tangible asset figure of $156,001, the maximum allowable annual turnover figure would be $3,000,001. The company responded by producing a second independent review from the same accountant which contained the same figures as in the first one. The Authority replied by informing the company that its application was being considered, with all details submitted being carefully evaluated, and that it had been approved a license as a ‘builder – open’ and ‘building designer licence’. The company was further informed that ‘Based on your Net Tangible Assets of $156,001 your Allowable Annual Turnover for the forthcoming year will be $3,000,001’.
The company was further advised that it was a breach in of condition for a licensee to exceed the Allowable Annual Turnover by more than 10% during the license period without reference to the Authority. Likewise, the company was informed that it was also a breach of a license condition to reduce the level of net tangible assets, stated in the application, by more than 10% for a period in excess of one month, without reference to the Authority.
As it happened, and as the Member accepted, the company and the Authority had a different understanding of the expression ‘Allowable Annual Turnover’. The company assumed that that referred to the anticipated turnover in Queensland only and that it was permitted to receive up to $3,000,001 in Queensland alone (as opposed to nationally). It believed it was below the Queensland cap, and accordingly there was no need to inform the Authority of the position. That position was revealed when an independent review report was filed on 21 October 2009, in support of the company’s license renewal application for the 2009/2010 year. It reported an actual annual turnover of $7,617,495 and net tangible assets of $463,398. Most of that income was made outside Queensland. It was as a result of that independent review report that an application was made by the Authority for disciplinary action against the company.
The odd thing about all this is that, as the learned Member found, the Authority, at the time it approved the company’s building license with an AATO of $3,000,001, had information from the company which showed it had an annual turnover of $6,663,693 in a previous year. There was also no material indicating why the net tangible assets of the company were set at $156,001 by the Authority, when at the time they were considerably higher, and so could have justified a higher AATO. The breach by the company of its AATO requirement did not result in any danger to the public, (as found by the learned Member), and the Member also found that there was no indication that the company was trading beyond its means. The breach was caused by a lack of understanding of the policy, which policy was designed to ensure that a company had sufficient assets and liquidity to meet its obligations so as to protect the public. That policy required that all of the company’s annual turnover, wherever it was sourced be considered against its net tangible assets, otherwise a false picture would be presented. However, the company’s mistake here is made very understandable when the Authority approved an AATO for 2008/2009 which was less than half what the company had achieved in the previous year, as disclosed by figures previously given to the Authority. As the Member put it:
“[35] In this case Alternate Dwellings made full disclosure to the Authority of its financial position and was approved with AATO well below its current interstate annual turnover. There was always going to be a breach of the rules….’
In those circumstances the Authority might have considered itself equally to blame for the breach. Instead, it bought the proceedings in this Tribunal, in which the company did not contest the charges, and, in its written submission, agreed that the material filed by the Authority in support of the charge was fair and balanced, and simply pleaded instead it misunderstood the meaning of the expression ‘AATO’. It referred to its excellent regulatory record over the proceeding 27 years, and advised that it did not dispute the Authority’s submissions on costs, which the company said were ‘fair and reasonable’.
I am satisfied that the Member could properly have concluded that the interests of justice did not require an order for costs against the respondent, not because the Authority had used ‘in-house’ as against external lawyers, but because the conduct of the Authority contributed to the company’s misunderstanding of what was required of it. As the learned Member found, there is no material which indicates why the net tangible assets of the company were set at $156,001, when at the time they were considerably higher, and so could have justified a higher AATO. Further the company did obtain an AATO of $12,000,000, based on net tangible assets of $484,551, in its 2009/2010 licence approval. The company has a long trading history, was in its first trading year in Queensland, and this was its first and only regulatory breach in Queensland or elsewhere. Although the company did not oppose the application for an order that they pay $250 in costs, it was appropriate for the Member to consider that the interest of justice did not require that any such order be made.
The applicant Authority has not sought the costs of, or incidental, to this appeal and the respondent company has made no appearance, and incurred no costs. Accordingly the orders I make are as follows:
1. Leave to appeal granted;
2. The decision of the Tribunal made on 21 September 2011 is confirmed.
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