WA COUNTRY BUILDERS PTY LTD and HATHERSAGE NOMINEES PTY LTD
[2016] WASAT 70
•15 JUNE 2016
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)
CITATION: WA COUNTRY BUILDERS PTY LTD and HATHERSAGE NOMINEES PTY LTD [2016] WASAT 70
MEMBER: MS N OWEN-CONWAY (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 15 JUNE 2016
FILE NO/S: CC 1672 of 2015
BETWEEN: WA COUNTRY BUILDERS PTY LTD
Applicant
AND
HATHERSAGE NOMINEES PTY LTD
Respondent
Catchwords:
Costs Applicant's withdrawal of claim No evidence arising from withdrawal Turns on its facts
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 11, s 49
State Administrative Tribunal Act 2004 (WA), s 9, s 49(1), s 87
State Administrative Tribunal Rules 2004 (WA), r 42(2)
Result:
Application for costs refused
Summary of Tribunal's decision:
The applicant sought an order that the respondent pay the applicant the final instalment of the contract price pursuant to a home building contract. The respondent asserted that the applicant had not constructed the dwelling, the subject of the contract, to the contractually defined stage of 'practical completion'. The applicant asserted that the parties had varied the terms of the contract and by reason thereof, the parties had agreed that completion of specific work would satisfy the practical completion stage of construction. The applicant withdrew its claim against the respondent well before the final hearing of the proceeding. The respondent sought its costs of the proceedings against the applicant. The Tribunal concluded that there was a genuine dispute between the parties and that there was no evidence that the applicant had conducted the proceedings in a manner that prevented the Tribunal from attaining its statutory objectives specified in s 9 of the State Administrative Tribunal Act 2004 (WA) and that the withdrawal alone did not give rise to an inference that the applicant had conceded that its claim was without obvious merit. The respondent's application for an order for costs pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA) and s 49 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) was refused and the Tribunal made an order consistently with s 87(1) of the State Administrative Tribunal Act 2004 (WA) that each party bear their own costs.
Category: B
Representation:
Counsel:
Applicant: Mr A Buchan
Respondent: Mr T Lyons
Solicitors:
Applicant: Hotchkin Hanly
Respondent: Gibson Lyons
Case(s) referred to in decision(s):
Chew and Director General of the Department of Education and Training[2006] WASAT 248
Hoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188
Pearce & Anor and Germain [2007] WASAT 291 (S)
Western Australia Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
REASONS FOR DECISION OF THE TRIBUNAL:
The substantive application
On 26 October 2015, the delegate of the Building Commissioner of Western Australia (Commissioner) made a decision to refer the complaint by WA Country Builders Pty Ltd (applicant) against Hathersage Nominees Pty Ltd (respondent) made on 14 October 2015 to the Tribunal, pursuant to s 11 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act). In that complaint (and the application before the Tribunal), the applicant sought an order that the respondent pay the applicant a sum of money that it said was payable and owing under a Lump Sum Building Contract for the construction of a residential dwelling at No 247 (Lot 3) Carter Road, Wilyabrup (building) between the parties dated 29 March 2012 (contract) as varied by a variation agreement between the parties dated 31 March 2015 (variation). The respondent seeks an order in the sum of $81,107, being the balance of the contract price plus interest on that sum at the rate of 18% per annum from 31 July 2015, being the date when the principal sum was due for payment.
The proceedings in the Tribunal and relevant facts
The proceeding was listed for a directions hearing on 24 November 2015. Orders were made directing the parties to file their respective statements of issues, facts and contentions, documents and witness statements. On 12 January 2016, the orders for directions were amended to allow for additional time for compliance, following a dispute over the respondent obtaining access to the building. It is noted that at this time, the applicant retained and exercised exclusive access to the building. The respondent had sought access to inspect the building but that request had not been granted. Ultimately, the proceeding was listed for a directions hearing to resolve the impasse.
At the directions hearing on 12 January 2016, the Tribunal ordered the applicant to provide the respondent and its experts with access to the building during normal business hours on 20 January 2016. The Tribunal made orders extending the time for compliance with orders made on 4 November 2016. The Tribunal also listed the proceeding for final hearing on 24 March 2016.
The substantive dispute
The applicant's argument on the substantive dispute was that, as a result of the variation, the only factor determinative of whether the building construction had achieved the contractual stage of 'practical completion' or not (and thus whether or not the applicant was entitled to payment of the final instalment of the contract price under the contract as varied, as at 31 July 2015) was whether the remedial works referred to in that variation had been completed as agreed. The applicant's argument that any other defects in construction that might have prevented the construction achieving 'practical completion' under the contract prior to the variation were, in effect, forfeited because of the terms of the variation and the circumstances surrounding the execution of the variation (that is, in the context of earlier Tribunal proceedings and compromise of the same). The respondent did not articulate a submission on the construction of the contract as varied to answer the applicant's case. The respondent's case was that there were defects and omissions in the construction of the building which prevented the same from achieving 'practical completion' as provided for in the contract. Those defects were not limited to the remedial work referred to in the variation.
Therefore, the proper construction of the contract as varied was a live issue to be determined by the Tribunal.
The withdrawal of the proceeding
By letter dated 17 February 2016, following an inspection of the building on 12 February 2016 by the respondent and its experts, the applicant notified the respondent that it intended to seek leave to withdraw the proceeding, having essentially abandoned its claim that the due date for payment of the final instalment of the contract price was 31 July 2015. The proposed withdrawal by the applicant occurred following the inspection on 12 February 2016, and the discovery of various defects and omissions in the contract works. While the various defects and omissions, as a matter of law, may not have precluded a conclusion that the construction of the building had achieved 'practical completion' pursuant to the contract as varied, and that construction of the contract as varied remained a live issue, it appears that the specified engineer's certification was not forthcoming.
Orders were made by consent on 22 February 2016 granting the applicant leave to withdraw the proceeding and directing the parties with respect to the new dispute concerning the costs of the proceeding.
No determination was made by this Tribunal of the substantive issue and no concession was made by the respondent that its claim was not arguable given the terms of the variation made on 31 March 2015.
The respondent's claim for costs of the proceeding
The respondent seeks an order for the payment of its costs of the proceedings which it calculates at $11,668.75. The respondent makes the following submissions:
…
8. The withdrawal of this complaint coming as it did just days prior to a hearing in the Tribunal, apparently came about [as] a result of an expert engaged by the Applicant determining that in fact practical completion had not been reached as at 7 July 2015 or at any time subsequent.
9.[T]he conduct of the Applicant in this matter has caused the Respondent to expend not insignificant monies in opposing a complaint which[,] even on the Applicant's own case, was flawed.
The principles applicable to an order for costs and the statutory framework
Section 87(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) directs that unless otherwise specified in:
•the SAT Act;
•the relevant enabling Act;
•in any other order of the Tribunal made pursuant to s 87(2) to s 87(6) of the SAT Act,
the parties bear their own costs in a proceeding of the Tribunal.
Section 87(2) of the SAT Act confers a discretionary power on the Tribunal to make an order for the payment by a party of all or any of the costs of another party, unless specified to the contrary in the relevant enabling Act.
Section 49 of the BSCRA Act (the enabling Act in this proceeding) relevantly provides:
(1)Subject to this section, the Building Commissioner or the State Administrative Tribunal may make such orders for costs as they think fit in relation to proceedings arising from a building service complaint or a HBWC complaint.
...
(7)This section does not limit the powers of the State Administrative Tribunal under the State Administrative Tribunal Act 2004 Part 4 Division 5.
Section 49 of the BSCRA Act is 'neutral in effect' and should be applied in a manner which is consistent with and reinforces the objectives and procedures of the Tribunal: Hoskins and Daniel Vinci T/As D'Vinci Contracting [2011] WASAT 188 (24 November 2011) (Hoskins). In Hoskins, the Tribunal commented at [19]:
… In the exercise of that discretion all of the considerations identified above in relation to the exercise of the discretion under s 87 of the SAT Act remain relevant. Those considerations are however not exhaustive and any other factors will be relevant which point to the justice of the case requiring an award of costs.
(Tribunal emphasis)
The Tribunal stated in Chew and Director General of the Department of Education and Training[2006] WASAT 248 (Chew) at [85] that in exercising the discretion conferred on the Tribunal by s 87(2) of the SAT Act:
[T]he Tribunal should not generally make an award for costs unless a party has conducted itself in such a way as to unnecessarily prolong the hearing; has acted unreasonably or inappropriately in its conduct of the proceedings, has been capricious; or the proceedings in some other way constitute an abuse of process. The Tribunal might also make an order as to costs where a matter has been brought vexatiously or for improper purposes.
Further, in Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce) at [24], the Tribunal stated:
… Where, however, there is a genuine dispute between the parties to a lease, their respective rights are unclear and one or both seek determination of their rights in the Tribunal, the starting point remains that each party should expect to pay their own costs, unless there are circumstances of the type identified in Chew.
The Tribunal's statements in Hoskins, Chew and Pearce are consistent with Western Australia Planning Commission v Questdale Holdings Pty Ltd[2016] WASCA 32 (Questdale) where the Court of Appeal gave consideration to the operation of s 87(1) of the SAT Act and the exercise of the discretion conferred upon the Tribunal by s 87(2) of the SAT Act, albeit in relation to a different enabling Act. The following relevant principles apply to the resolution of the costs dispute:
1)Beyond s 87(4) and s 87(5) of the SAT Act and r 42(2) of the State Administrative Tribunal Rules 2004 (WA) (SAT Rules), the facts which the Tribunal is bound to consider and is precluded from considering are to be determined by implication from the subject matter, scope and purpose of the SAT Act properly construed: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [48].
2)The discretionary power is to be exercised judicially; that is, not arbitrarily, capriciously or so as to frustrate the legislative intent: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [48].
3)Although not expressed in s 87(2) of the SAT Act or elsewhere that the power is to be exercised if it is fair and reasonable in all the circumstances of the case to do so, the 'judicial nature' of the exercise of the power and the scheme of the SAT Act indicates that legislative intention: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [49].
4)The presumptions as to costs orders that operate in curial litigation have no application, given the provisions of s 87(1) of the SAT Act and the directive contained therein: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [50].
5)The onus is on the party seeking an order in its favour to establish that a favourable order should be made: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [51].
6)The nature of the dispute is a relevant consideration in any application for costs: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [58].
7)Every party to proceedings before the Tribunal is taken to be cognisant of the objectives of the Tribunal as expressly provided for in s 9 of the SAT Act: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [54].
8)It will be relevant to the Tribunal to consider whether and to what extent the party who bears the onus on costs can establish that the other party's conduct in connection with the proceedings has impaired the attainment of the Tribunal's statutory objectives to have the proceedings determined fairly and in accordance with the substantial merits of the matter, with as little formality and technicality as possible and in a way which minimises the costs of the parties: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [54].
9)The mere fact that a party fails on some contentions advanced does not of itself signify that that party has acted 'inconsistently with the objectives in s 9 [of the SAT Act]': Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [55].
10)Unmeritorious claims or claims made or pursued involving misconduct or which are vexatious or grossly exaggerated or presented in a way that is unduly burdensome may justify an exercise of the discretion conferred by s 87(2) of the SAT Act.
11)The weight to be given to the mandatory consideration of a complaint offer is a matter for the Tribunal in each individual case: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [59].
12)Even in a jurisdiction where the general rule is that costs follow the event, it does not follow that the grant of leave to withdraw attracts an order that the withdrawing party pay the costs of the other party. The withdrawing party does not carry any onus to establish it ought not pay the other party's costs: Questdale per Murphy JA (with whom Martin CJ and Corboy J agreed) at [65].
The Tribunal concludes that the discretion conferred by s 87(2) of the SAT Act is informed by the overarching obligation to exercise the discretion judicially and where it is fair and reasonable in all of the circumstances, including a consideration of the nature of the jurisdiction exercised by the Tribunal 'but starting from the position that no order for costs will be made': Questdale per Martin CJ at [9]. Further, the provisions of s 49(1) of the SAT Act do not alter the nature of the discretion to be exercised by the Tribunal in awarding costs to a party pursuant to s 87(1) and s 87(2) of the SAT Act, and do not direct the Tribunal to make orders that are not consistent with the s 9 objectives of the Tribunal.
Tribunal consideration of the factors
In the absence of evidence and submissions at the hearing, the strength or weakness of the applicant's claim in this proceeding cannot be determined by the Tribunal. On the face of it, the subject of the proceeding comprised a genuine dispute concerning the proper construction of the terms of the contract as varied. The respondent's submissions tend to suggest that the applicant's claim was wholly without foundation. The Tribunal is not in a position to accept that proposition without the benefit of argument and evidence concerning the proper construction of the terms of the variation within the context of the terms of the contract. The fact that the applicant has withdrawn its claim of itself does not suggest a concession that its claim was wholly without foundation or that the dispute was not a genuine dispute: Questdale. The Tribunal can draw no inference from the fact that the applicant has withdrawn its proceeding against the respondent.
There is no evidence that any of the conduct by the applicant was unreasonable in the sense described in the authorities referred to above. In the Tribunal's view, there is no evidence of any factors that would warrant the Tribunal exercising the discretion conferred on it by s 87(2) of the SAT Act. That is, there is no evidence before the Tribunal that the applicant's conduct in the proceeding impaired the Tribunal's ability to attain the objectives referred to in s 9 of the SAT Act.
Conclusion
That being the case the Tribunal refuses the respondent's application for an order for costs against the applicant in the sum claimed or any sum at all.
Order
In accordance with s 87(1) of the SAT Act, and further to the order made on 22 February 2016, the Tribunal orders:
1.The respondent's application for an order that the applicant pay the respondent's the costs of the proceeding is refused.
2.Each party shall bear their own costs of the proceeding.
I certify that this and the preceding [19] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS N OWEN-CONWAY, MEMBER
12
3
3