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[2013] QCAT 573
General information, not legal advice.
Queensland Civil and Administrative Tribunal
2013-10-25
Dalton J
Original judgment source is linked above.
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
[1] These proceedings have been withdrawn, and the only outstanding matter is the question of costs.
[2] In brief, in these proceedings the Applicant Arcon Constructions Pty Ltd sought a review of a decision made by the Queensland Building Services Authority about the scope of works to be undertaken under the statutory insurance scheme in order to rectify certain work which the QBSA said was defective. The scope of works was issued on 27 February 2013.
[3] The decision to issue the scope of works was made because (according to the QBSA) Arcon had failed completely to carry out work required in a direction to rectify issued by the QBSA on 24 September 2012.
[4] While the review proceedings were making their way through the Tribunal, on 14 March 2013 the decision of the Supreme Court in McNab Constructions Australia Pty Ltd v Queensland Building Services Authority[1] was handed down. That case concerned the statutory requirement that at least 28 days had to be given to a builder to carry out rectification work in a direction to rectify.[2] Dalton J decided that the 28 days started when the builder received the direction, rather than when the direction was dated and posted to the builder. The QBSA was in the practice of posting directions and only allowing 28 days from the date when this was done.
[5] Because of that decision, the direction to rectify issued by the QBSA on 24 September 2012 and posted on that date to Arcon was known to be void because it did not give the required 28 days period in which to carry out the work.
[6] Solicitors on Arcon's behalf say that the QBSA should have withdrawn the scope of works sent to Arcon on 27 February 2013 as soon as McNab was handed down or at least after they suggested this course of action in a letter of 9 April 2013. They say that because this was not done, further costs were expended in these proceedings and those costs should be paid by the QBSA. They also say that their letter was an offer to settle these proceedings which was not accepted by the QBSA and should have been.
[7] The QBSA says that McNab was not fatal to the decision about the scope of works because a scope of works has validity which is independent of the direction to rectify. Therefore there was no reason to withdraw it. In any case it says that it acted reasonably in the proceedings and there is no reason for QCAT to depart from its usual rule of no order for costs.
[8] However, on 18 June 2013 the QBSA did withdraw the scope of works and immediately issued a new one. On that basis Arcon sought to withdraw the review proceedings and now seek costs incurred since the letter of 9 April 2013 in the sum of $1,870.80.
[9] A scope of works is issued by the QBSA when it intends to carry out rectification or completion of building work under the statutory insurance scheme it operates.[3]
[10] The power to carry out such rectification or completion of building work is in section 74 of the Building Services Authority Act 1991, the relevant part of which reads:
(1) If rectification work in respect of residential construction work is required under this Act and the person required to carry out the work does not carry it out, or have it carried out, within the time allowed by the direction, the authority must seek tenders for carrying out the work.
(2) The authority must also seek tenders for carrying out building work if the authority -
(a) is of the opinion that the building work is defective or incomplete; but
(b) has decided not to give a direction under section 72 for the rectification of the building work.
(3) The authority may accept any tender that it considers appropriate, irrespective whether the tender was for the lowest cost.
[11] It is clear that in order to reach the position envisaged in s 74(3) of accepting a tender, either the route provided in subsection (1) or the route provided in subsection (2) will have been followed. There is no other way to reach s 74(3). This is because in cases where the QBSA intends to carry out rectification or completion of building work under the statutory insurance scheme, inevitably the QBSA will have decided that the building work is defective or incomplete and that rectification work is required. Once that decision is made, then the QBSA will decide whether to issue a direction to rectify. If a direction to rectify is issued and the work is not carried out then the route in subsection (1) is followed. If a direction to rectify is not issued then the route under subsection (2) is followed.
[12] These two routes are therefore separate and independent of each other. In this case it was the route under subsection (1) that was followed. However the relevant direction to rectify was posted to Arcon and gave it 28 days from that date to rectify the work. Under the authority of McNab it was therefore void. This means in turn that the QBSA could not proceed under subsection (1) because there had been no direction to rectify under that subsection. It follows that the decision about the scope of works which was the subject of this review was also invalid, because that decision was in pursuit of the intention to seek tenders for the QBSA to carry out the work.
[13] The decision about the scope of works could not be converted in some way into one under subsection (2). That subsection only applies where the QBSA decides not to give a direction to rectify and that had not happened.
[14] It follows that the proceedings before QCAT for a review of the decision about the scope of works would inevitably succeed because of McNab.
[15] The QBSA were a party to McNab and would have received that decision soon after it was handed down on 14 March 2013 or soon after.
[16] By a letter dated 9 April 2013 the Applicant's solicitors wrote to the solicitors for the QBSA and suggested that the existing scope of works should be withdrawn, and that a fresh direction should be issued complying with section 72 of the Act. They said that if this did not happen then they would have no alternative but to apply to the Supreme Court for declarations. They warned the QBSA that if they had to do this they would seek the costs of the application to the Supreme Court on the indemnity basis.
[17] To my mind for the reasons given above, the only reasonable course of action open to the QBSA in the circumstances was to accept that the original direction was void, and that the decision about the scope of works could not stand either. Inevitably this would have meant that the QCAT proceedings would immediately come to an end. I do not agree with the QBSA that the proceedings could have been converted into a review of some other decision about another scope of works.
[18] The difficulty with a course of action other than withdrawal of the scope of works and an immediate end to the proceedings, was that QCAT had set two timetables for the proceedings in its directions orders of 8 April and 15 April 2013 and these required work to be done by the parties. The first timetable was to deal with Arcon's application for a stay of the decision about the scope of works. Under that timetable Arcon was obliged by 15 April 2013 to serve its application for a stay, then by 19 April 2013 to serve its submissions for the stay. In the review proceedings themselves, Arcon had by 29 May 2013 to serve its statements of evidence. In the order of 15 April 2013 each side had leave to be legally represented. So unless the proceedings were to come to an immediate end, Arcon were incurring legal costs in order to deal with them.
[19] By 19 April 2013 in accordance with the Tribunal's order, Arcon's lawyers prepared and filed the submissions for the stay of the decision about the scope of works. On 29 April 2013, the QBSA agreed by letter to the stay in respect of the scope of works. But that did not address the review proceedings themselves. Further legal costs were expended by Arcon's solicitors discussing with the QBSA's solicitors what should happen to those.
[20] Arcon's solicitors went ahead with the application to the Supreme Court for a declaration that the direction to rectify of 24 September 2012 was void, an application which was almost certain to succeed. Despite the strong merits of that application, the solicitors for QBSA wrote to the Tribunal at that time stating that in their view the scope of works was valid despite any problems with the direction to rectify, and requesting that the proceedings in the Tribunal be 'not further progressed pending the determination of any application to be made by Arcon to the Supreme Court'. The QBSA accompanied this with an application to the Tribunal to revoke the timetable for directions and to give Arcon a deadline in which to apply to the Supreme Court.
[21] Although this letter stated that it was written with a view to saving costs, in fact it may well have had the opposite effect because it encouraged Arcon to apply to the Supreme Court and incur costs in doing so, whilst also requiring Arcon's solicitors to respond to yet another application in the Tribunal, when in fact the only reasonable reaction to McNab was to accept that the process was defective and to start again.
[22] At this time there was correspondence between the solicitors for both sides which did not progress the matter further to its inevitable conclusion.
[23] Finally by letter dated 18 June 2013, the solicitors for the QBSA withdrew the scope of works of 27 February 2013. The withdrawal of the review proceedings soon followed.
[24] In resisting this claim for costs, the solicitors for the QBSA argue that the review proceedings could have proceeded despite the defective direction to notify, because the Tribunal's jurisdiction under section 86 of the 1991 Act is not to review a document (in this case the scope of works), but instead is to review a decision about a document. JM Kelly (Project Builders) Pty Ltd v Queensland Building Services Authority [2013] QCAT 216 is relied on. Therefore it is argued that even if the scope of works is defective, the review proceedings could still have proceeded to decide whether or not the decision about the scope of works was justified.
[25] Technically this argument is correct and in JM Kelly the Tribunal allowed an application to review a decision to issue a direction to rectify to proceed, despite the fact that the direction itself was void by reason of McNab. But the argument ignores the fact that these proceedings involve a later step. The sequence in these proceedings was:
[26] It is correct that only (a) and (c) can be reviewed in the Tribunal. When reviewing (a) the validity of (b), and the validity of (c) and (d) if they are reached, is irrelevant as found in JM Kelly. Equally, when reviewing (c) the validity of (d) is irrelevant. However, the validity of (c) relies upon (a) and (b). If (b) did not happen then it must follow that the decision (c) should not have been made.
[27] Whilst this is a subtle distinction I think it should have been obvious to QBSA that this was the result of McNab fairly quickly after that decision was handed down.
[28] The usual rule in QCAT under section 100 of the QCAT Act is that each party must bear their own costs. Under section 102 costs can be awarded against a party if the Tribunal considers the interests of justice require it to make the order. In deciding whether to do so, the Tribunal may have regard to various matters. The most relevant matters for my consideration is in paragraph (3)(a) that is, whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, and (3)(c) that is, the relative strengths of the claims made by each of the parties to the proceeding.
[29] Once McNab was handed down, the merits of resisting the review proceedings were zero. The QBSA prevaricated in facing the inevitable in these proceedings. What should have happened is that soon after McNab was published and certainly by 9 April 2013 when prompted by Arcon's solicitors to do so, the decision to issue the scope of works should have been reversed and the scope of works should have been withdrawn. Instead, the scope of works was only withdrawn two months later. As a result Arcon was unnecessarily disadvantaged because it incurred further legal expense. Arcon had no choice but to incur that further legal expense since it had to comply with the orders of the Tribunal and to continue to prosecute the review proceedings. In the circumstances I regard it as in the interests of justice to make an order for costs in Arcon's favour in relation to the costs incurred after 9 April 2013. This is because I regard the circumstances as pointing so compellingly to a costs award that they overcome the strong contra-indication against costs orders in section 100 of the QCAT Act.[4]
[30] Section 105 authorises the Tribunal to make a costs order in other circumstances as provided by the rules. One of those circumstances is under Rule 86 which applies where an offer to settle the dispute was made but not accepted. In its submissions the QBSA has argued that Rule 86 does not apply in this case and one of the reasons for that is that no decision has been made by the Tribunal as required by Rule 86(1)(c). Here the application for review was simply withdrawn by Arcon and therefore I agree with this submission by the QBSA. But that is not the ground on which I make this order.
[31] By section 107 of the QCAT Act, the Tribunal is encouraged to fix costs if possible and I have the advantage of a costs statement submitted on Arcon's behalf. The QBSA contend that the amount claimed is excessive for two reasons. Firstly it is based on the scale of costs used in the Supreme Court, and it ought to be based on the scales applicable in the District Court or Magistrates Court. Secondly it includes the cost of communicating with the client about what is happening to the Tribunal proceedings and taking instructions, and therefore the costs claimed include indemnity costs.
[32] I am satisfied that it is appropriate to fix the costs rather than ordering them to be assessed. When fixing costs, the Tribunal is not bound by any particular scale of costs, although the scales used by the mainstream courts can be a useful guide. Also the Tribunal is also not bound by any rules of assessment or usual practice as to the basis of assessment (standard or indemnity). The aim is to make an award which is reasonable and appropriate in the circumstances of the case.
[33] I regard the hourly rates and the itemised costings for each activity in the costs statement submitted on Arcon's behalf as reasonable. I also regard it as reasonable to include in the costs statement the costs of keeping the client informed and where necessary taking instructions from the client. A separate calculation has been made for costs from 9 April 2013 in the sum of $1,870.80. I accept that as a reasonable approach and order the QBSA to pay to Arcon its costs in these proceedings incurred after 9 April 2013 fixed at $1,870.80.
[2] Queensland Building Services Authority Act 1991 s 72(3).
[3] The Queensland Home Warranty Scheme.
[4] the test applied by Justice Wilson President in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 at [29].
Arcon Constructions Pty Ltd
Queensland Building Services Authority [2013] QCAT 573
McNab Constructions Australia Pty Ltd v Queensland Building Services Authority [2013] QSC 057
JM Kelly (Project Builders) Pty Ltd v Queensland Building Services Authority [2013] QCAT 216
Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412