Tucker v Queensland Building and Construction Commission (No 2)
[2014] QCAT 234
| CITATION: | Tucker v Queensland Building and Construction Commission (No 2) [2014] QCAT 234 |
| PARTIES: | Mr Jeffrey Tucker (Applicant) |
| v | |
| Queensland Building and Construction Commission (formerly the Queensland Building Services Authority) (Respondent) |
| APPLICATION NUMBER: | GAR013-12; GAR415-12 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Paratz |
| DELIVERED ON: | 28 May 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The Queensland Building and Construction Commission pay the costs of Mr Tucker relating to the subsidence complaint on an indemnity basis in the sum of $3,645.00 within 28 days of the date of this order. |
| CATCHWORDS: | COSTS – where an offer to settle was made – where the items claimed in the offer were wholly unsuccessful – where each party claims to have been successful overall in the proceedings – discretion of the tribunal as to costs – where indemnity costs sought for subsidence issue which was conceded prior to hearing Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 105 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
I delivered a decision in this matter on 28 January 2014 as to the categorisation of defects under the Queensland Home Warranty Scheme. I gave directions as to seeking costs.
Mr Tucker filed submissions on 21 February 2014 seeking the following orders as to costs:
(a)The Applicant’s application for costs is accepted.
(b)The Respondent pay the Applicant’s costs incurred after 3 June 2013 on an indemnity basis in the sum of $28,749.05 within 28 days of the date of this order.
(c)The Respondent pay the applicant’s costs relating to the subsidence complaint on an indemnity basis in the sum of $3,645.00 within 28 days of the date of this order.
(d)The respondent pay the Applicant’s costs of and incidental to the proceedings from 10 April 2012 to 3 June 2013 (inclusive) on a standard basis on the District Court scale as agreed or, failing agreement, as assessed.
(e)The Applicant’s costs under paragraph (d) will be assessed (failing agreement) as follows:
(i)the Applicant will deliver to the Respondent an itemised claim for costs referring to the relevant items contained in the scale; and
(ii)if within 14 days of that delivery, the parties have not agreed to an amount for costs, the costs shall be assessed by Hickey & Garrett, Legal Costs Assessors, Level 21, 141 Queen Street Brisbane (or another nominated costs assessor).
(f)The respondent will pay the Applicant’s costs under paragraph (d) (as agreed or assessed) within 28 days of such agreement or assessment by the appointed costs assessor.
The Commission filed submissions in reply on 4 March 2014. It opposed the application for costs in favour of Mr Tucker, and submitted that the appropriate order was ‘no order as to costs’.
I directed that the issue of costs would be determined on the papers not before 7 March 2014. This is the decision on costs.
The costs questions fall into three groups:
a) The effect of an Offer of Settlement;
b) Costs on the subsidence issue;
c) The discretion of the Tribunal as to costs generally.
Offer of Settlement
Mr Tucker submits that he made an offer to settle by way of a letter sent by email from his Solicitors to the Commission dated 3 June 2013.
The offer was made on the following terms:
Our client will withdraw the applications for review the subject of the proceedings if your client accepts that an insurance payment should be made with respect to the following complaint items and proceeds to issue a further scope of works with respect to these:
1.item 4 in the complaint dated 28 August 2011 and which is the subject of proceeding GAR013-12;
2.item 19, forming part of items 7-14 in the complaint dated 28 August 2011 and which is the subject of proceeding GAR013-12;
3.item 1 in the complaint dated 1 September 2012 and which is the subject of proceeding GAR415-12; and
4.item 2 in the complaint dated 1 September 2012 and which is the subject of proceeding GAR415-12
The email of 3 June 2013 provided that ‘This offer is open for acceptance until 5.00pm on Monday 17 June 2013’, and that ‘We reserve our client’s rights to present this correspondence to the Tribunal on the question of costs, if this offer is not accepted.’
The offer was declined by the Commission in an email dated 11 June 2013, which provided that:
The respondent respectfully declines your “offer to settle the proceedings” as outlined in your correspondence of 3 June 2013. We reserve your rights to present the offer of 3 June 2013 to the Tribunal on the question of costs (in the event the offer is declined).
As has been a difficulty right through this matter, it can be confusing to identify what the various items refer to, and the use of multiple item numbers, rather than descriptions, adds to the difficulty. It would seem that the offer refers to the following items being accepted for payment:
· Item 4 (GAR013-12) – Bush fire requirements
· Item 19 (part of 7-14 in GAR013-12) – Cracks in concrete floor appear wet after heavy rain – 1st floor, Garage
· Item 1 (GAR415-12) – Same item as Item 19 – Cracks in concrete floor of garage appear wet
· Item 2 (GAR415-12) – Brickwork weepholes. Not completed to building code requirements. Weephole guards missing. (This relates to bushfire requirements).
In my decision of 28 January 2014, I did not order any of these items, which are referred to in the offer of settlement, to be accepted under the insurance policy.
The Commission describes the offer as a ‘failed offer of settlement’,[1] and submits that construed properly the offer is irrelevant. Further, the Commission submits that:
24.The thrust of the Applicant’s submissions is that as a result of the rejection of the Offer, the Applicant was forced to run the applications and is therefore entitled to an award of costs. The submission is absurd.
[1]Commission submissions filed 4 March 2014.
Mr Tucker submits that the offer ‘essentially required the rectification of only 2 items of building work’,[2] being bushfire requirements and moisture penetration in the garage. He submits that whilst these items were not directed to be accepted, that 15 other items of building work were determined to be defective works and accepted under the insurance policy. He argues that ‘the decision of the tribunal was not more favourable to the respondent than the offer made to the Applicant dated 3 June 2013’.
[2]Tucker submissions filed 21 February 2014 at [19(b)(1)].
The specific section of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) which refers to offers to settle is s 105 which provides:
The rules may authorise the tribunal to award costs in other circumstances, including for example, the payment of costs in a proceeding if an offer to settle the dispute the subject of the proceeding has been made but not accepted.
Provision is made in Division 3 of Part 8 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) as to settlement offers (rr 65-8), and in r 86.
Where an Offer to Settle is made, it stands on its own terms. The other party considers that offer.
Rule 86 provides, in part, as follows:
86 Additional power to award costs if particular offers to settle rejected
(1)This rule applies if –
(a)a party to a proceeding, other than a proceeding for a minor civil dispute, makes another party to the proceeding a written offer to settle the dispute the subject of the proceeding; and
(b)the other party does not accept the offer within the time the offer is open; and
(c)in the opinion of the tribunal, the decision of the tribunal in the proceeding is not more favourable to the other party than the offer.
(2)The tribunal may award the party who made the offer all reasonable costs incurred by that party in conducting the proceeding after the offer was made.
The importance of an offer to settle is that it has a specific effect. It puts the other party on notice that, if it subsequently transpires that the Tribunal decision was not more favourable than the offer, that the party who rejected the offer will very likely be ordered to pay the costs of the party who made the offer.
I note that the description in the heading of r 86 refers to ‘particular offers’, which suggests that it is the particular offer that should be examined.
The effect of an offer is discretionary in the Tribunal, as r 86(2) says that the Tribunal ‘may’ award costs to the party who made the offer, so the Tribunal still retains an element of discretion.
In considering a particular offer that was made in clear terms, if the matter and the circumstances were seen as appropriate for the awarding of costs, and it is clear that the decision of the Tribunal is not more favourable than the particular offer, there would be a strong imperative for the Tribunal to exercise its discretion to order costs.
A fundamental difficulty in my forming an opinion in accordance with r 86(1)(c) in this matter is that I do not have quantitative material before me which allows me to assess the relative favourability of the particular offer against the decision of the Tribunal in the proceeding.
The most significant work that was referred to in the offer is presumably the repair of the concrete slab in the garage. Given that the view of Mr Tucker’s expert was that a membrane below the slab had failed, or was wholly absent, there might be a very significant cost in repairing or replacing the membrane and slab, which has load bearing walls resting on it. I have no way of knowing how that cost would compare with the cost of the items that have been ordered.
In these proceedings there was a particular offer. The specifics of the offer were wholly unsuccessful. None of the items that were the subject of the offer were ordered to be accepted under the policy, and it is not possible to evaluate on the material before me whether the overall effect of the decision was more favourable than the offer.
I therefore do not consider that an award of costs should be made in these proceedings as a result of the offer, having regard to Rule 86.
The subsidence issue
Mr Tucker seeks costs on an indemnity basis for the costs he has incurred solely with respect to the subsidence issue, from 20 July 2012 when the Commission was provided with the expert report of Jeffrey Hills, to 19 April 2013 when the Commission granted indemnity to Mr Tucker under the insurance scheme.
The costs sought by Mr Tucker under this head are $3,645.00. They are made up of legal fees and disbursements of $1,500.00 plus expert engineer’s fees of $2,145.00.
Mr Tucker relied on his submissions in [44] to [60] of his submissions in the proceedings. He argued that the certifier identified the subsidence issue on 10 October 2007, and that he lodged a complaint against the builder with the Commission identifying the subsidence issue on 13 November 2007. He argues that the Authority did not undertake an inspection by a qualified engineer when it inspected the property on 21 January 2008, or again when it inspected the property on 30 November 2011. He says that he engaged an engineer, Mr Hills who prepared a report on 20 July 2012 which was provided to the Commission.
Mr Tucker argues that the Commission did not accept the subsidence claim after receiving Mr Hills report, which led him to file application GAR415-12 on 10 December 2012. He commissioned Mr Hills to prepare a further report which was provided to the Commission on 15 March 2013. It was only after this that the Commission engaged its own engineer (Mr John van de Hoef) to investigate the subsidence issue, who confirmed the existence of it. He says that the Commission capitulated on 19 April 2013 from its former view and granted indemnity to him for the subsidence issue.
The Commission made submissions in [116] to [120] of its submissions in the proceedings, and repeated and relied on these in its submissions filed on 4 March 2014.
The Commission acknowledges that the report of Mr Hills dated 20 July 2012 addressed cracks and possible foundation movement to the dwelling. Mr Ferguson carried out an inspection on 6 November 2012.
Mr Hills issued a further report in March 2013, and the Commission then engaged an engineer (NJA Consulting) to carry out a further investigation.
The Commission argues that:
The respondent abided by all relevant policies and procedures regarding the investigation and reporting of the subsidence complaint. Only following evidence (by way of the Applicant’s report of 18 March 2013) did it appear that there may be ongoing movement of the dwelling, warranting investigation by a qualified engineer.
The Commission rejected the subsidence claim initially, in the context of its overall rejection of Mr Tucker’s claims. I am not satisfied that the commission did properly consider the subsidence claims in their own context. Once it was addressed by an appropriate engineer on their behalf, a determination that there was subsidence was relatively swiftly made, and the claim was accepted (within about a month). This strongly suggests that the issue had not been properly addressed previously.
I consider that Mr Tucker is entitled to costs on an indemnity basis in respect of this head as he seeks, as this aspect of the claim was not properly addressed, and his claim was vindicated when it was.
The amount that he claims is modest, involves a fair apportionment of the legal costs (which have been discounted by approximately 25% in accordance with the arrangements with his solicitor), is supported by reference to invoices, and is not challenged as to quantum by the commission.
I therefore will order in respect of this head that the Commission pay Mr Tuckers costs of $3,645.00 within 28 days of the date of my order.
Costs of the proceedings generally
The basic approach of the Tribunal is that each party bear their own costs.[3] However, where appropriate if ‘the interests of justice’ require it, costs can be, and are, awarded. It is not uncommon in commercial and construction cases such as this for parties to seek costs, and for costs to be awarded in appropriate cases.
[3]QCAT Act, s 100.
In assessing the ‘interests of justice’ the Tribunal has regard to the conduct of the parties generally, and to the conduct of the proceedings.
An obvious matter to be considered is the outcome of the proceedings. It is often relatively simple to assess who has ‘won’ or ‘lost’, or who has been vindicated and who has not. That is however not a simple assessment in this matter.
I was asked to make determinations as to items that should be accepted under an insurance policy. I was not concerned with, and was not provided with, any assessment of the quantum of the repair involved in each item.
I have made determinations that some items should be accepted, and some items should not be accepted. I do not have material available to me to allow me to quantify the respective total value of what has been allowed and what has been disallowed.
The Commission submits that on balance it was more successful having succeeded entirely in GAR415-12 and on 6 of the 21 items of complaint in GAR013-12.[4]
[4]Commission submissions filed 4 March 2014 at [3(a)].
Mr Tucker, on the other hand, submits that:[5]
7.While it is acknowledged that the Tribunal has found in favour of some of the applicant’s contentions as well as found in favour of the Respondent’s decision on other items of complaint given the extent of the decision in the Applicant’s favour, the Applicant submits he was successful in the proceedings.
[5]Tucker submissions filed 21 February 2014 at [7].
I am therefore faced with opposing parties who each claim to have been more successful than the other. I do not have any material upon which I can assess the validity of either claim in monetary terms.
It is apparent that each party has incurred significant costs in the pursuit of these proceedings. For example, Mr Tucker is seeking costs on an indemnity basis of $28,749.05 for the period only after 3 June 2013. The Commission for its part argues that the decision under review for GAR013-12 originally encompassed 50 items, but that in the end, only 21 of those items were sought, but not before it was put to the cost of addressing all 50 items in its material.
Mr Tucker is an individual home owner, and these proceedings have clearly caused him to incur significant personal expense. The Commission submits for its part that it is self-funded and properly ought not be considered as having the resources of the Queensland government at its disposal.
Given that I am not in a position to determine on any objective basis, which party has been the more successful, and in the face of their opposing contentions as to success, I am unable to determine who has been successful. I cannot therefore be satisfied that the interests of justice require a departure from the starting point of the tribunal that each party bear their own costs.
I therefore do not exercise the discretion provided by s 102, and make no order as to costs generally.
Conclusion
I find that the Offer of Settlement has no application; that no order for costs should be made generally; but that a specific order for costs in relation to the subsidence issue should be made.
I order that:
1. The Queensland Building and Construction Commission pay the costs of Mr Tucker relating to the subsidence complaint on an indemnity basis in the sum of $3,645.00 within 28 days of the date of this order.
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