Scott v Maycock No. 2
[2011] QCAT 30
•20 January 2011
| CITATION: | Scott v Maycock No. 2 [2011] QCAT 30 |
| PARTIES: | Graham Scott |
| v | |
| Mark Maycock trading as M & S Maycock |
| APPLICATION NUMBER: | BD321-06 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 20 January 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Michelle Howard, Member |
| DELIVERED ON: | 20 January 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. That the application for costs is dismissed. |
| CATCHWORDS : | COSTS - building contract dispute- where applicant successful on some aspects of claim but unsuccessful on others – relevance of applicant’s behaviour and conduct of proceeding Followed Tamawood Ltd v Paans [2005] 2 Qd R 101 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr M Frampton, Frampton Legal, for the Applicant |
| RESPONDENT: | Mr A Collins of Counsel for the Respondent |
REASONS FOR DECISION
The Background
On 11 October 2010, in Scott v Maycock [2010] QCAT 499 (the reasons for decision), I made orders for the payment of damages by the respondent (the Builder) to the applicant (the Homeowner) of the sum of $33,357. The damages were for the cost of restumping the applicant’s pole home which was constructed by the respondent.[1] I found that the Builder had not complied with the specifications in respect of pole embedment resulting in the house being under-braced and not tied down, and as a consequence the house was unstable.[2] I directed that the parties provide written submissions regarding costs. This is the issue now for determination.
[1] Reasons for decision [259-265 and Part C].
[2] Reasons for decision [152, 161].
The applicant had alleged many breaches of contract for a grossly defective and unstable house and sought, in essence, relief by way of damages for demolition and reconstruction of the house, together with costs for removal and storage of contents as well as costs of rental accommodation during demolition and reconstruction; and loss of building materials and work performed by him for extensions. There was also a small claim for damages relating to the replacement of a biocyle system. The quantum of the claim was over $400,000 in total. These remedies were sought at hearing some ten years after construction and handover. The respondent’s case was that the house was built in accordance with the contract; or if in some respects it was not, causation could not be established or there were no damages consequent upon it; and the house is not unstable as a result of the Builder’s work.[3]
[3] Reasons for decision [11].
The proceeding was factually complex, given the effluxion of ten years; various complaints to the Queensland Building Services Authority (QBSA) resulting in numerous rectifications and engineering opinions; expert reports addressing in excess of 200 items; further excavation by the Homeowner after construction by the Builder had been completed, the extent of which was in dispute; and extensions to the premises effected by the Homeowner after the Builder had completed construction.
The application was filed in the Commercial and Consumer Tribunal (the CCT or the former Tribunal). By virtue of section 271 of the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act), this tribunal, when making the decision, has only the functions that the former tribunal had in relation to the matter and can only make an order that the former tribunal could have made about the matter.
Section 70 of the now repealed Commercial and Consumer Tribunal Act 2003 (the CCT Act), provides for parties to pay their own costs unless the interests of justice require otherwise.
Section 71 of the CCT Act provides that the tribunal may award costs as it considers appropriate. Section 71 further provides :
(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 the 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.
In Part 5 Division 5 Case Management of the CCT Act, section 60 provides specifically that:
(1) This section applies if the tribunal considers a party to a proceeding is acting in a way that unreasonably disadvantages another party to the proceeding including by—
(a) not complying with a direction or order of the tribunal without reasonable excuse; or
(b) asking for an adjournment as a result of not complying with a direction or order of the tribunal; or
(c) vexatiously conducting the proceeding; or
(d) causing an adjournment.
(2) The tribunal may—
(a)order that the party causing the disadvantage compensate the other party for any costs incurred unnecessarily; or…
Both parties rely on Tamawood Ltd v Paans[4] (Tamawood), in which the Queensland Court of Appeal considered the construction of sections 70 and 71 of the CCT Act, as setting out the relevant principles in respect of the exercise of the discretion to award costs and I accept that it does. In that case, Keane JA, with whom the other members of the Court agreed, 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.[5]
[4] [2005] 2 Qd R 101.
[5] [2005] 2 Qd R 101, 109-110.
He considered that a finding that each party was justified in engaging legal representatives in light of the complexity of the proceeding, in the absence of any other countervailing issue, may be an adequate basis to conclude that the interests of justice warrant the exercise of discretion to award costs.[6] He referred to the recognition in section 71(4)(a) that the outcome of the proceeding is relevant to the exercise of the discretion to award costs and considered that:
it could not rationally 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 reasonable necessary to achieve that outcome.[7]
[6] [2005] 2 Qd R 101, 111-112.
[7] [2005] 2 Qd R 101, 112.
He regarded the conduct of the respondent prior to the commencement of the proceedings as a relevant factor when exercising the discretion.[8] A decision to pursue legal rights was not considered relevant.[9]
[8] [2005] 2 Qd R 101, 112.
[9] [2005] 2 Qd R 101, 112.
Submissions of the Parties
In essence, the applicant argues in the alternative that the interests of justice require an outcome other than for the applicant to pay his own costs; that the tribunal would consider it appropriate to award costs to the applicant; or that the tribunal would order the respondent to pay the applicant’s costs including legal costs and expert fees because the respondent has acted in a way that has unreasonably disadvantaged the applicant by vexatiously conducting its defence in the proceedings.
In support of these submissions, the applicant says that he could not have personally managed the proceedings and it was common ground that legal representation was required as both parties sought and were granted leave for legal representation; the proceedings were complex; the applicant’s costs will exceed the award ultimately made by the Tribunal and it cannot be in the interests of justice to deter bringing of a bona fide claim or have the success of it eroded by the costs where a respondent departs from the contract specifications and then puts the applicant to proof in the proceedings.
In respect of the factors in section 71(4) of the CCT Act, the applicant refers, among other things, to the applicant’s success in satisfying the Tribunal of a number of breaches of contract by the respondent, and that the tribunal found that two of the breaches resulted in instability of the house causing the applicant loss and damage. In particular, the applicant refers to the reasons for decision as follows:
10.1.1the tribunal found a number of breaches of the contract by the respondent (e.g. pole embedment depth (page28-para152), inadequate bracing and tie down (page30-para161); a number of bearers (page36-para202); bows in the main floor bearer H1 and H2 (page37-para205); joists (page38-para212); rafters (page39-para218); soffits (page39-para222); laminated beam (page40-para227); column 20 (page41-para228); sub floor (page41-para228);
10.1.2the tribunal found (page30,para 161) that two (2) of the above proven contract departures by the Respondent had resulted in the instability of the house and thereby caused the applicant loss and damage;
The applicant submits that the respondent breached sections 45 and 79 of the Domestic Building Contracts Act 2000 by deviating from the contract without signed variations and therefore section 71(4)(e) of the Act is relevant.
It is also argued that factors under section 60(1) are relevant and that the respondent’s denials led the applicant to unnecessarily expend money on experts and in preparation for hearing well after the existence of the breaches would have been apparent to the respondent, and the respondent cannot be said to have made his denials in good faith. It is suggested that the respondent knew or ought to have known that the premises was not completed in accordance with the contract specifications and was consequently unstable.
The respondent agrees that the dispute was a complex matter. However, the respondent argues that the applicant transformed the matter into one of greater complexity than justified and does not warrant a costs order, in circumstances when the party’s principal case for damages was rejected.
Submissions are made that, in view of the varying degrees of success and failure of both parties in respect of the case each made, that there is no basis on which to depart from the general rule set out in Tamawood and therefore good reason must demonstrate that, in the interests of justice, an award for costs should be made.
Throughout the litigation, the respondent argues, the applicant’s only position was that damages should be paid to demolish the house and rebuild a new structure. These claims were made on the basis of the accuracy of an expert report by a builder, Mr Engwirda (the Engwirda report). It is submitted that the result of making a plethora of allegations said to justify this claim was that the respondent had to deal with all of them. This resulted in significant additional costs in responding to the claim, when in respect of many of the items, the applicant failed or could not establish any loss.
The respondent refers to various matters in the reasons for decision which are said to support the position advanced including:
The respondent points to the following significant features:-
(a)the applicant and his wife were not convincing witnesses (paragraph 21);
(b)the applicant blamed others for issues relating to maintenance despite his own inattention (paragraph 21);
(c)The reliance by the applicant on the ‘lost’ witness, Mr Tregeagle (paragraphs 22-23);
(d)The fact that little weight was placed on the Engwirda report (paragraph 33);
(e)The failure of the claim in respect of the Biocycle system (paragraph 76);
(f)The finding that the applicant did not attend to the required maintenance involved in tensioning of the bracing and that this contributed to the movement of the house (paragraph 79);
(g)The unconvincing evidence of the applicant and his wife in respect of the excavation issue (paragraph 93);
(h)The fact the applicant excavated significantly more earth than he admits in the area immediately adjacent to the spoon drain in order to construct his extensions (paragraph 94) and the substantial evidence about this issue;
(i)There was no need for a retaining of the embankment arising from the excavation undertaken by the builder (paragraph 128);
(j)There was no breach of contract in respect of the column excavation depths (paragraph 135);
(k)…
(l)The specifications in Rymark Report were applicable under the contract and accordingly has been complied with by the Builder;
(m)The breach as found related only to the depth of embedment of the poles in Row c and Row D and the underbracing and absence of tie downs (paragraphs 152 and 153)
(n)There is no breach of contract regarding the steel columns (paragraph 166);
(o)The bracing rods were in fact 16mm and 20mm and that the welds were accurate (paragraph 172);
(p)That a protective coaling was applied (paragraph 173);
(q)That the construction is within tolerance for a pole home (paragraph 176);
(r)There was no breach regarding the bracing itself (paragraph 179);
(s)That the bracing in respect of the floor bearers was adequate (paragraph 186);
(t)That no damage suffered as a result of the breach in respect of securing the floor bearers to the columns (paragraph 193);
(u)That no damage is suffered in respect of the breach relating to floor bearers G1 and G2 (paragraph 202);
(v)That no damage is suffered in respect of the breach relating to the floor joints (paragraph 211);
(w)That there was no breach of contract in respect of the height from concrete to joints (paragraph 212).
(x)There was no loss of structural integrity or damage suffered as a consequence of the breach relating to the rafter (paragraph 218);
(y)There is no damage suffered as a consequence of the breach relating to the soffits (paragraph 222)
(z)There is no breach in respect of the living room area (paragraph 224);
(aa)The absence of any breach or alternatively, if a breach, of any causative damage relating to the contents of the Engwirda report (paragraphs 225-242);
(bb)There was no breach of contract in respect of the subsidence issues (paragraph 251) or termite protection (paragraph 254).
The respondent suggests that implicitly the applicant adopts an argument that although many superfluous or irrelevant issues were pursued, the applicant should be awarded costs for all matters.
He says the primary position identified in the legislation that each party should pay its own costs should not be departed from. The respondent, when confronted with a demand for a significant claim, met the allegations and defended it. At no stage, did the applicant adopt a position that only restumping was required. He says there is no evidence of fraudulent or improper conduct. In the circumstances, it is argued that it would be oppressive to now impose the costs of the entire proceeding on the respondent, as much of the claim was without foundation.
The respondent’s reasonable approach and behaviour when dealing with the QBSA and the applicant is also referred to in support of the position argued.
Finally, the respondent suggests that there is an illogicality and artificiality in the applicant’s submissions that he should have all of his costs notwithstanding that he failed to obtain the result he sought, and that the evidence he relied upon was rejected in whole or in part. It is submitted that a party should not benefit from his conduct if it is not justified.
Discussion and Decision
By virtue of sections 70 and 71(5) of the CCT Act, in essence, parties are to pay their own costs unless the interests of justice require otherwise. However, under section 71, the tribunal has a discretion to award costs if it considers it appropriate to do so.
I have considered the matters provided for in section 71(4) of the CCT Act.
Section 71(4)(a): the outcome of the proceeding
It is apparent that the applicant’s success will be eroded if he does not receive an award of costs. This would be unfortunate, as he has a house which I have found is unstable and he has occasioned damage as a result of the Builder’s breach of contract. Had the Builder properly and competently embedded the poles in the first instance, this would not be so.
However, the award of damages fell far short of what was sought by the applicant. Although the applicant was successful in relation to some issues, he was unsuccessful in relation to many others.
Section 71(4)(b): the conduct of the parties to the proceeding before and during the proceeding
The applicant, during QBSA involvement before the proceedings were instituted, at a point in time refused the Builder’s ongoing participation in rectifying issues.[10] It is apparent that the respondent was prepared, throughout the course of the complaints raised by the Homeowner through the QBSA, to address issues. However, at some point the Homeowner advised that he was unwilling to allow the Builder to attend the premises to attend to any further work.[11]
[10] Reasons for decision [109-111].
[11] Reasons for decision [109-111].
During the hearing, Mr Steley was recalled to give evidence about the costs of restumping the house,[12] and in submissions at the conclusion of the hearing, the applicant through his Counsel conceded that if the Tribunal concluded that the only work requiring rectification for non-compliance with the specifications was the pole embedment, damages for the costs of restumping was the appropriate remedy.[13] However, these concessions came very late in the protracted history of the proceeding which had been commenced in 2006.
[12] Reasons for decision [32, 156].
[13] Reasons for decision [263].
As a result of the manner in which the Homeowner conducted his case, the Builder has been occasioned significant legal costs, to defend the claim, at least, some of which could have been avoided if the applicant had not maintained a position until closing submissions of seeking damages for the full amount of demolition and reconstruction of the premises. On the other hand, the respondent made no concessions about the issue of pole embedment, when he must have been aware that the poles were not embedded in accordance with the engineer’s instructions to him.[14]
[14] Reasons for decision [25, 64].
Section 71(4)(c): the nature and complexity of the proceeding
Although Mr Engwirda was deceased at the time of the hearing, his report had been used by the expert subsequently engaged by the applicant, Mr Steley, as a benchmark against which to prepare his report and so his report also addressed the items raised by the Engwira Report. Mr Taylor, the respondent’s expert, was reasonably required to reply to the reports of Mr Steley and Mr Engwirda. At the hearing, Mr Engwirda’s report was required against which to read and understand the responses of both Mr Steley and Mr Tayler[15] although little weight was placed on it by me.[16]
[15] Reasons for decision [26].
[16] Reasons for decision [33].
There is no doubt that the proceedings were complex. However, I accept that they were made more complex than would have been the case if the number of issues raised had been reduced. Mr Engwirda raised in his report which contained some 208 items in total, a variety of issues which I considered were ultimately unhelpful.[17] All of the issues raised were pursued by the applicant. This, no doubt, resulted in both parties occasioning significantly greater legal costs than would otherwise have been the case.
[17] Reasons for decision [30, 33 and 112-258].
There were other factual complexities in the proceeding, most especially regarding the extent of the applicant’s excavation at the premises post completion of construction by the Builder.[18] I found that the applicant excavated substantially more than he admitted.[19] Had the applicant made admissions about the extent of his excavations, considerable evidence about this issue at hearing could have been avoided, although the extent of his excavation did not ultimately affect the outcome.[20] However, as referred to earlier, the respondent also made no concessions about the significant issue of pole embedment when he must have known embedment was not in accordance with the engineer’s instructions.
[18] Reasons for decision [5, 80-97].
[19] Reasons for decision [93-94].
[20] Reasons for decision [93-94, 152].
Section 71(4)(d) the relative strengths of the claims made by each of the parties to the proceeding
The applicant pursued his claim largely on the basis of the expert evidence he obtained. Mr Engwirda’s overall opinion was that the Builder had substantially departed from the contract documents and that major defects were incapable of rectification in order to comply, unless the building was demolished and reconstructed.[21] Mr Steley’s report also opined that it was more economical to demolish and reconstruct.[22] As noted, I also considered the applicant was unconvincing about a variety of matters.[23]
[21] Reasons for decision [30].
[22] Reasons for decision [30].
[23] Reasons for decision [21-22, 73, 76, 82-94].
The respondent relied upon Mr Tayler’s evidence to the effect that if issues were found to be substantiated, the major complaint appears to be with the sub-floor area and if necessary restumping could be done and that reconstructing was not required.[24] Ultimately, the award of damages was for the costs of restumping.
[24] Reasons for decision [31].
Having said that, although the respondent was prepared to make some concessions against his interests, his position regarding the significant issue of pole embedment was contrary to the instructions provided to him by the engineer and the expert evidence. It was this inadequate embedment of the poles and resulting under-bracing and tie-down of the house which I found was responsible for its instability[25] and resulted in the award of damages.[26]
[25] Reasons for decision [43, 51, 64, 151-152, 153-162].
[26] Reasons for decision [259-265, and Part C].
Section 71(4)(e): any contravention of an Act by a party to the proceeding
The applicant raises the issue of there being no signed variations in the breach of the Domestic Building Contracts Act 2000. However, that Act was not in force until 1 July 2000, which is subsequent to the completion and handover of the house.[27] The Queensland Building Services Authority Act 1991, section 59 as in effect at the time of the contract, relevantly provided that any variation must be in writing and signed by both parties. A variation which was not in writing and signed by both parties could not be relied upon by either the builder or the consumer.
[27] Reasons for decision [2].
Essentially, the respondent had proceeded on the basis that this was a design and construct contract and that therefore, variations were not required. I found that although it was initially a design and construct contract, the working drawings later signed by both parties represented a variation and any deviation from the specifications in them required a written variation.[28] The respondent did not obtain any further variations although some changes were made.
[28] Reasons for decision [38-52].
This factor must be viewed in the context of the matter overall. In my view, it alone is not decisive of whether the discretion to order costs should be exercised.
Section 71(4)(f) for a proceeding to which a State agency is a party…
Neither party is a State agency.
Section 71(4)(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.
Although the respondent’s position regarding pole embedment was not congruent with the engineer’s requirements, I do not accept the applicant’s submission that the respondent conducted his case in manner which could be considered vexatious. He was required to respond to the many issues raised by the applicant. The respondent’s approach must be viewed in the context of the case made by the applicant.
Conclusion
Despite the complexity of the proceedings, and the applicant’s partial success, there are countervailing factors, in my view, which militate against the interests of justice warranting the exercise of the discretion to award costs. In particular, these factors are the manner in which the applicant conducted his case which increased the complexity of the proceedings significantly; the applicant’s preparedness to make concessions only at the stage of final submissions; and the applicant’s lack of admissions about the extent of the excavation undertaken by him.
The application for costs is dismissed.
0