[1] The applicant contractor was successful in a review of a decision by the Queensland Building and Construction Commission ('QBCC') to issue the applicant with a direction to rectify defective building work.
[2] The owner of the property in question at time of complaint to QBCC joined the review as second respondent.
[3] The matter was heard over two days, the hearing adjourned after the first day because of late tender of evidence by the applicant. QBCC was awarded costs of the adjournment against the applicant on a standard basis as agreed or assessed.
[4] The direction to rectify ('DTR') was set aside on the basis the work to be rectified was not building work as defined under the (Qld) given it was not work associated with installation of a water reticulation system, sewerage system or stormwater drain connected to a particular building or to a main of the system or drain.
[5] The applicant now seeks its costs of the proceeding against QBCC. No costs are sought from the second respondent.
[6] The applicant says that from as early as October 2021 in a statement of evidence of its director, Mr Bartholomaeus, it identified that the work complained of was not building work for the purposes of the QBCC Act.
[7] In the statement of evidence Mr Bartholomaeus states he did not understand how QBCC had determined that the field gullies were a structural defect "when the building was structurally sound."
[8] Then he referred to the meaning of "structural defective building work" and pointed out that the property was not identified in the QBCC inspection report as falling within any of the four possible categories of structural defective building work. Rather the only thing identified in the report was that the yard gullies were installed higher than the adjacent ground level and that that was work which did not meet a reasonable standard of construction or finish expected of a competent builder resulting in a visual defect.[1]
[9] Then at [74] he states the QBCC Act defines building work, but excludes work of a kind identified by regulation from the ambit of the definition. He set out the definition of building work including the words in the definition to "drainage in connection with a building" and then "site work ... related to work of a kind referred to above" and added emphasis to those particular words by underlining them.
[10] He went on to say:
[3]
[75] It is uncontroversial that the field gullies are not in connection with the building on the basis that the field gullies are not a mandatory drainage requirement for the building, nor connected to the building's drainage system.
...
[77] ... the field gullies do not connect to any pipe or infrastructure connected to the building. Accordingly, the field gullies are not building work for the purpose of the QBCC Act and therefore, cannot be the subject of a direction to rectify.
[4]
[11] The claim that the work concerned was not building work as defined in the QBCC Act was again reinforced after the hearing was adjourned on 10 November 2023 by letter to QBCC dated 23 January 2024 inviting consent orders setting aside the DTR.
[12] Given there are no pleadings in the Tribunal, the issues for determination are generally derived from the statements of evidence and other materials filed by the parties. The applicant clearly articulated both in the statement of evidence of Mr Bartholomaeus and in correspondence between the parties the role played by s 11 of Schedule 1 of the Queensland Building and Construction Commission Regulation 2018 (Qld) ('QBCC Reg') excluding certain work from the definition of building work for the purpose of the jurisdiction of QBCC to issue directions to rectify.
[13] The applicant says QBCC has ignored the clear words of the legislation and the applicant has instead been put to the cost of procedural steps necessary to defend itself and a hearing.
[14] The defective work identified in the DTR of 4 September 2020 was:
[5]
The drainage work carried out does not meet a reasonable standard of construction or finish expected of a competent holder of a contractor's licence resulting in the finished levels are higher than the adjacent ground level and requires rectification.
[6]
[15] There were two gully traps on the property where the same defect was observed and therefore the applicant was directed to fix both on the basis identified, that is, the finished levels of the traps were higher than the adjacent ground.
[16] When the QBCC filed its Statement of Reasons for the decision however, dated 22 January 2021, the defective work was identified by the building inspector as the laying of turf below the top of the gully traps which prevented water entering the gullies and the "Commission" therefore determining it resulted in a "visual defect".
[17] There was no mention made in the Statement of Reasons of the work being structurally defective building work on the basis the construction adversely affected the health or safety of a person residing in or occupying the house. But that was the basis of claim, that the work was structurally defective building work, pursued by QBCC at the hearing.
[18] It is surprising, given the changing "landscape", as it were, from initial inspection to hearing, that just what was defective about the work claimed to have been performed by the applicant, did not apparently give QBCC pause to consider the merits of pursuit of the matter.
[19] The assertion by the applicant that the QBCC had no power to issue the DTR was made early in the dispute between the parties. The applicant identified just why that was so very early in the action as well. The legislation concerned was not difficult to interpret.
[20] It is rather surprising that QBCC failed to grasp the primary hurdle facing them from outset. But, they failed to do so and the applicant has been put to significant expense in result to prove it was right on what one would think should be bread and butter law to QBCC.
[21] QBCC submit, with respect to costs, that in essence its role in the action has been that of a regulator making an administrative decision. QBCC says it should not be penalised for performing its statutory function by a cost order.
[23] In Marzini Judicial Member McGill SC said at [17]:
[7]
[17] ... when s 100 and s 102 are read together, the position is that no order for costs is to be made unless the Tribunal considers the interests of justice require it to do so. This is in essence the interpretation attributed to the terms of the earlier Act in Tamawood at [28]. The QCAT Act provisions could have been drafted to entrench that approach. The terms of the sections make it clear that the starting point is that no order for costs is to be made, but authorises a costs order if the interest of justice require it. The use of the word "require" suggests that the interests of justice must clearly support a costs order....
[8]
[24] A favourable exercise of discretion under s 102 will necessarily mean a departure from the general position as to costs stated in s 100 of the QCAT Act.[2]
[25] Judicial Member McGill SC went on to set out in Marzini (with approval in Health Ombudsman v du Toit) the following additional comments made by Keane JA in Tamawood Ltd v Paans[2005] QCA 111:
[9]
[10] Keane JA then said that there were three reasons why that Tribunal had erred in not awarding costs in that matter, the first being, at [30]:
[10]
First, the Tribunal found that each party was justified in engaging the services of legal representatives to assist them in the conduct and defence of what the Tribunal recognized to be complex proceedings. That finding alone could be, in my view, a sufficient basis to conclude that the interests of justice warranted the exercise of the discretion to award costs in favour of the successful party, at least in the absence of any countervailing consideration. The Tribunal erred in failing to appreciate the implication of this finding for an understanding of where the interests of justice lay in relation to the costs of the proceedings.
[11]
[11] He said there would be occasions when it would be appropriate for parties to be legally represented because of the nature of the issues involved, and continued at [32]:
[12]
If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves. Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the Tribunal.
[13]
[12] He noted at [33] that there was a clear distinction between merely having legal representation, and having reasonably obtained that representation because of the complexity of the case. He continued:
[14]
In the absence of countervailing considerations, where a party has reasonably incurred the cost of legal representation, and has been successful before the Tribunal, it could not rationally be said to 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 reasonably necessary to achieve that outcome.
[15]
[26] QBCC submits it was the choice of the applicant to engage solicitors and incur costs. The dispute, and the issues in dispute, were not complex. It was not necessary for the applicant to have the assistance of lawyers in order to put forward its evidence and pursue its right of review.
[27] In hindsight, the determinative factor, s 11 of the QBCC Reg, seems rather obvious and straight forward. However the litigation considered from the perspective of the applicant required a defence to sensibly address the additional unnecessary claims and issues raised by QBCC which expanded the litigation in efforts to justify the DTR. That added unnecessary complexity to the litigation.
[28] Then QBCC submits that where it is legally represented it will not as a general rule seek costs against an unsuccessful applicant unless the conduct of the applicant during the proceedings is such as to warrant an award of costs in favour of the QBCC.
[29] I am not sure how, given the State funding of QBCC, that might be said to be a counter-vailing factor against an award of payment of costs incurred by an applicant. Rather it is usually relied on by QBCC to justify expanded use of external legal representation by QBCC when seeking the Tribunal's leave for such. The submission seems inappropriate here however, given QBCC sought its costs thrown away on the adjournment of the hearing on 10 November 2023 when the applicant filed late evidence on the day taking QBCC by surprise, and an order for costs was made against the applicant.
[30] That also answers the submission by QBCC that the late filing of evidence causing an adjournment of the hearing is a factor to be considered against an order for costs on the basis the applicant unnecessarily disadvantaged the other parties to the proceeding. The cost order against the applicant addressed that behaviour and with the adjournment QBCC suffered no disadvantage being allowed to file evidence in answer.
[31] Then QBCC suggests, had QBCC set aside the DTR as requested by the applicant, the issue of the DTR may well have been pursued by the second respondent, Mr Newton, in any case, who argued the DTR should remain in place. That might have occurred, but not necessarily so, and it may have been Mr Newton facing a claim for costs from the applicant. But it did not occur and the QBCC now faces the claim.
[32] QBCC also submits the applicant is a well-known and substantial builder. Whilst the applicant has not disclosed its financial position the outcome will have no adverse financial impact on it. Further, its legal costs might be expected to be tax deductible. There is no financial information to hand. Whether legal costs incurred are tax deductible seems an entirely irrelevant factor to the issue at hand, the cost incurred by the applicant defending against a DTR issued beyond jurisdiction.
[33] Finally, QBCC says an order for costs against it will be paid out of its general statutory fund and that will have a detrimental effect on QBCC in terms of money necessary to administer the QBCC Act.
[34] The following helpfully puts this submission in appropriate context. In Medical Board of Australia v TXA (No 4)[2023] QCAT 360, the panel chaired by Judicial Member McGill SC said in context of a claim for costs against QBCC:
[16]
[22] Another matter I should mention is that there have been decisions to the effect that costs should not be awarded against a regulator, particularly in disciplinary proceedings, because to do so would inhibit the regulator in taking action, presumably in marginal cases....
[23] I have difficulty with the idea that access to justice is enhanced by encouraging regulators to put forward doubtful, let alone bad cases before the Tribunal, secure in the knowledge that if they lose they will almost certainly not have to pay the costs of the successful respondent. That does not obviously have anything to do with access to justice. It may be in the public interest not to act in a way which will lead to excessive regulatory timidity, but protecting regulators from costs orders except in extreme cases strikes me as seeking to avoid the Scylla of regulatory timidity by steering straight for the Charybdis of regulatory overreach.
[24] In most conflicts between a regulator and one of the regulated, the balance of power lies firmly with the regulator. The main weapon the regulated have is the existence of an independent tribunal, before whom allegations must be proved, or before whom decisions can be subjected to merits review. It seems to me that the regulated are likely to be deterred from arguing with a regulator in such a situation if advised that, even if they win, they will almost certainly have to pay their own legal costs anyway.[13] That does not assist access to justice, it detracts from it.
[17]
[35] I determine that it is in the interests of justice that the applicant have its costs of the proceeding.
[18]
[36] The applicant seeks costs on an indemnity basis against QBCC from 1 October 2021, the date the issue of QBCC's lack of jurisdiction to issue the DTR was first raised by the applicant.
[37] The basis for that is limited to the applicant giving early advice from 1 October 2021 that s 11 Schedule 1 of QBCC Reg applied to disallow the DTR.
[38] For an award of indemnity costs to be appropriate there must be some special or unusual feature justifying it. The focus is on the conduct of the losing party, not necessarily the case run by that party.
[39] Campbell v The Body Corporate for 70 Bowen St CTS 15330 & Ors (costs) [2020] QCATA 26 per Member Gordon:
[19]
[23] My task in assessing the costs is to find an amount which is reasonable and appropriate in all the circumstances of the case.[20] On the question whether costs should be awarded on the indemnity basis, I am mindful of the Court of Appeal's warning in Di Carlo v Dubois & Ors[2002] QCA 225 that awarding costs on the indemnity basis should not be seen as too readily available and requires some facts of the type set out in the authorities. I am looking for some special or unusual feature which would justify an award of costs in the indemnity basis. Simply instituting and maintaining proceedings which had no or substantially no prospect of success is insufficient.
[20]
[40] In the Court of Appeal in Legal Services Commissioner v Bone[2014] QCA 179, Fraser, Gotterson and Morrison JJA, on appeal from the Tribunal, the Court referred to the necessity of some "special or unusual feature" or "blameworthy conduct" or "ethical or moral delinquency" to justify indemnity costs.
[41] The applicant identifies no special or unusual feature, no blameworthy conduct, no ethical or moral delinquency here.
[42] There is reference to the letter sent to QBCC on 24 January 2024 proposing a consent order dismissing the proceedings and if that was not agreed, that the letter be produced in support of an application for costs. The letter makes no mention of a claim for indemnity costs in default, sets no date for compliance and cannot amount to correspondence relied on pursuant to r 86 Queensland Civil and Administrative Tribunal Rules 2009 (Qld).
[45] The Tribunal is not bound by a particular scale of costs but in the circumstances costs usually allowed in the District Court is in my opinion an appropriate and useful guide. As stated in Arcon Constructions Pty Ltd v Queensland Building Services Authority[2013] QCAT 573:
[22]
[32] ...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.
[23]
[46] On 9 May 2025 the parties were directed to file additional material addressing the fixing of costs with supporting evidence. By directions made 6 June 2025 the time for QBCC to do that was extended to 20 June 2025. The applicant has filed material addressing the fixing of costs, but not QBCC.
[47] The applicant's solicitors calculate the following costs incurred between solicitor and own client from 1 October 2021 to 17 April 2024 as follows:
[24]
Billed solicitor's fees $37,559
Billed disbursements (Counsel fees) $17,500
Total $55,059
[25]
[48] Copies of the solicitor's various accounts for the period are provided together with copies of Counsel's fee notes. The accounts and fee notes give general particulars of the work done and the basis of charge.
[49] The solicitors ask for 60% of the solicitor's fees ($22,535.40) and 90% of Counsel's fees ($15,750), a total of $38,285.40.
[50] The total of solicitor hours (for Partner, Senior Associate, Associate and Lawyer, excluding para-legal and research clerk) is approximately 54.
[51] Assessing that against the District Court scale of costs set out in the Uniform Civil Procedure Rules 1999 (Qld), Schedule 1 item 16(a) allows solicitors a charge of $385 per hour. Over 54 hours that would calculate out at $20,790 (including GST).
[52] The para-legal and research clerk hours evidenced amount to just over 45 hours and if allowed at $112.20 per hour (item 16(b) Schedule 1) would add an additional $5,049 (including GST).
[53] There might be added a general care and conduct component of say 10%[3] which is $2,583.90 to bring the total calculated on the rates found in Schedule 1 to $28,422.90.
[54] The applicant claims 60% of solicitor own client costs at $22,535.40, which seems reasonable and is allowed.
[55] Counsel's fees are $17,500 (excluding GST) and 90% is claimed which is $15,750. That also seems reasonable and allowed.
[56] The applicant's costs of the proceedings are allowed from 1 October 2021 on a standard basis based on the District Court scale of costs fixed in the amount of $38,285.40.