Rosecove Pty Ltd v Queensland Building and Construction Commission & Anor

• [5] In this matter, the power to award costs is in Division 6 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). The relevant part of these provisions are:

Division 6 Costs

100 Each party usually bears own costs

Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party's own costs for the proceeding.

102 Costs against party in interests of justice

(1) The tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice require it to make the order.

(2) However, the only costs the tribunal may award under subsection (1) against a party to a proceeding for a minor civil dispute are the costs stated in the rules as costs that may be awarded for minor civil disputes under this section.

(3) In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following -

(a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);

(b) the nature and complexity of the dispute the subject of the proceeding; (c) the relative strengths of the claims made by each of the parties to the proceeding;

(d) for a proceeding for the review of a reviewable decision -

(i) whether the applicant was afforded natural justice by the decision-maker for the decision; and

(ii) whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits;

(e) the financial circumstances of the parties to the proceeding;

(f) anything else the tribunal considers relevant.

• [6] Costs could also be awarded in the tribunal under section 47 of the QCAT Act (costs order following dismissal or strike out because the proceeding is frivolous, vexatious, misconceived, lacking in substance or an abuse of process) and also under section 105 and rule 86[2] (offers to settle).
• [7] Here we are concerned with an application for costs under section 102. At first sight section 100 seems to state a general rule, and section 102 gives the tribunal power to order costs if it considers the interests of justice require it to make the order. In Health Ombudsman v du Toit [2024] QCA 235 however, it was said that the words in section 100 'other than as provided under this Act' made section 100 subordinate to section 102, so that the question whether to make a costs order resolves to:[3]

whether the interests of justice require the tribunal to make a costs order

• [8] And the use of the word 'require' in section 102 simply means that the tribunal:[4]

may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party if the Tribunal considers that the interests of justice calls for such an order

• [9] And that when considering that question it would be wrong to have regard to the usual rule in section 100 that each party should pay their own costs because the opening words of section 100 meant that if section 102 applied, then section 100 did not apply.[5]
• [10] I will decide this cost application in the manner stated in du Toit.
• [11] When deciding whether the interests of justice require the tribunal to make a costs order there are various factors which can be considered. Some of these are in sections 102(3)(a) to (f) but others come from case law. The various factors identifiable in this way are whether the success of the costs application would be eroded when it was reasonably necessary to be legally represented to achieve that success and whether there are any countervailing considerations, the nature and complexity of the dispute the subject of the proceeding, whether there was a commercial element in the proceedings, the fact that the tribunal gave leave to be legally represented (or lack of such leave), the 'chilling effect' of costs orders on statutory bodies and review applicants (and effect on access to justice), the reasonable expectations of the parties with respect to costs, the aims and objects of the QCAT Act, whether a party to a proceeding acted in a way that unnecessarily disadvantaged another party to the proceeding including as mentioned in section 48(1)(a) to (g), the relative strengths of the claims made by each of the parties to the proceeding, in reviews whether the applicant was afforded natural justice by the decision maker and whether the applicant genuinely attempted to help the decision maker in making the decision on the merits, the financial circumstances of the parties to the proceeding, and anything else the tribunal considers relevant.
• [12] The importance of these factors, and whether there are any other factors which need to be considered, will vary from case to case, and I take the view that if a factor in sections 102(3)(a) to (f) does not seem to be relevant then it can be ignored.[6]
• [13] I think that the interests of justice involve both what is fair as between the parties but also has a public interest sense, which includes the interests of the administration of justice by the tribunal.[7]
• [14] In this application for costs it seems to me that the most important factors which I need to examine and understand are the commercial undercurrents in the review for the builder and the Council, the merits of each side's case, and the reasonable expectations of those parties when they made decisions about the review. I need to consider whether the Council achieved success in the review and if so, whether that success would be eroded if a costs order were not made. And in all the circumstances whether it is fair that the builder should pay for the Council's decision to take an active role in the proceedings.
• [15] This is not to say that the other factors are not relevant. Some are not in issue, for example, it is agreed that the dispute was complex and justified legal representation, there is no suggestion that either party disadvantaged the other party in a way sufficient to affect costs.
• [16] On behalf of the Council it is suggested that the builder was uncooperative with the decision maker which is a factor in section 102(3)(d). Most of the submission is about being uncooperative with the tribunal as decision maker. Usually the decision maker referred to in this section is thought to be the original decision maker,[8] but it is conceivable that the tribunal may also be a decision maker. Having considered the submissions here, and having read the file and the transcript of the hearing other than the last day, I do not think there is anything in the submission about cooperation which could affect the decision on costs.
• [17] Submissions have been made about the financial position of the parties but again I do not think there is anything in those submissions which could affect the decision on costs.
• [18] As for concern about the 'chilling effect' of a costs order on statutory bodies and review applicants (and effect on access to justice), whether this remains a factor in Queensland is probably a matter of debate having regard to du Toit. Since the closest the builder gets in submissions to raise this issue is to say that a costs order 'would penalise (it) for exercising its statutory rights',[9] I shall not consider this further.
• [19] Naturally the statutory costs provisions need to be read and applied consistently with the objects and purposes of the Act.[10]

• [20] The main point made in initial submissions is that:[11]

This was a complex case that not only warranted but necessitated legal representation and expert evidence to assist the Tribunal in making its decision. As the Council reasonably incurred the substantial costs of legal representation and has been successful before the Tribunal (and the applicant wholly unsuccessful), it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring the Council to bear the costs of that legal representation and expert evidence, which was reasonably necessary to achieve that outcome. In doing so, the Tribunal would be given the same weight to this factor is consistently applied by the Appeal Tribunal in cases outlined below.

• [21] Cited in support of this submission is recent tribunal authority based on the comments of Keane JA in Tamawood Ltd & Anor v Paans [2005] QCA 111:[12]

There is a clear distinction, in terms of the interest of achieving justice, between the mere fact of having representation and the fact of having reasonably obtained that representation because of the complexity of the case. 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.

• [22] In Cowen v Queensland Building and Construction Commission [2021] QCATA 103, at [67] Judicial Member McGill SC described this as a starting point for the costs decision in that case:

The question is whether the interests of justice require that an order for costs, and what order be made. In my opinion the starting point as to the identification of the interests of justice is the passage from Tamawood cited earlier: that it would be unjust for the appellants' success to be substantially eroded by having to pay their own costs incurred in achieving their success in the first review. This was a case where the appellants' legal expenses were reasonably incurred. It is then a question of whether there are any relevant countervailing considerations, and what comes from a consideration of the specific matters in the QCAT Act s 102(3).

emphasis added

• [23] When this argument is put forward it is as follows. The case was complex. It was reasonable to be legally represented. This is shown by the fact that the tribunal granted leave to be legally represented, which it would not have done if this were unreasonable. The Council was successful. If the Council had to pay its lawyers bill exceeding $350,000 it would erode that success. Hence the losing party should pay the bill, or that part of it which survives assessment, instead. The tribunal is compelled to make the costs order against the losing party because Keane JA said that in such circumstances 'it could not rationally be said to be in the interests of justice' for there not to be a costs order in the absence of countervailing considerations. And there are no countervailing considerations. Hence it must be in the interests of justice to make the costs order.
• [24] I consider this in the section 'would no order erode the Council's success?' below.
• [25] One point made in the submissions filed on behalf of the Council is that there was a significant commercial element to the matter and it was 'not a conventional administrative review'.[13] I consider that in the section 'heavy commercial element' below.
• [26] It is also said that the builder had a weak case and it should have been aware of this from the outset. This was because, it is said, the builder's director Mr Holling knew that the builder had failed to have the slab and footing design prepared in accordance with the engineer's design.[14] I consider this in the section 'the merits of each side's case' below.

• [27] The only information about what costs were incurred by the Council are that they 'exceed $350,000 plus GST'. There is affidavit evidence from the Council's solicitors supporting that figure saying that it includes solicitors, barristers, expert witness fees and other disbursements and the cost of a transcript, incurred in participating in the external review from January 2020 to January 2023 and including appearing at the hearing and the preparation of closing written submissions.[15]
• [28] The Council has asked for its costs to be assessed on the District Court scale but the tribunal has a statutory duty to fix the costs if possible.[16] Since no attempt has been made to break down the costs by events and hourly rates, it is impossible to see whether the tribunal could fix the costs. The submissions suggest that one factor in the decision to send the costs to an assessor is the size of costs but I cannot see why that should be so.

• [29] When considering this it is important to understand that the first time any problems with the slab were noticed by the Council was on a maintenance visit some 3½ years after the completion of construction work, when a crack in an internal wall was observed. There was no full inspection at that time. On a later inspection soon after, evidence of subsidence was found.[17] Repairs were done to the house but then a tenant moved in who installed sprinklers, planted a garden and established a lawn. There is then evidence of further subsidence.[18]
• [30] After contacting the builder and after some discussion, the Council commenced District Court proceedings against the builder and the engineer as described below, and then on 12 December 2016 made a complaint to the QBCC about the builder's defective work on the slab and the damage to the house.
• [31] The QBCC commissioned an engineering expert which found a number of probable causes of the movement. One was that the slab was not constructed to suit the soil conditions.
• [32] But other probable causes of the movement were found, as a result of work done by the Council to complete the house after its construction or activities or neglect of the tenants. There was leakage from external hose spigots, extensive gravel surfacing around the house allowing water to pass into the soil below, and it was found that rainwater downpipes had been installed by the Council but it appeared there were no outlets, and the condensate from the air conditioning units and the overflow from the hot water heater were not directed away from the house.
• [33] These things were described as 'abnormal moisture influences' and the report recommended that they be removed. Hence the QBCC asked the Council to attend to this work saying that 'the landscaping and lawn watering has been a significant contributor to the movement within the building'.[19] This work was done and the tenant was instructed to stop all lawn and garden watering.
• [34] The senior member accepted the experts' evidence that the cause of the movement in the slab was abnormal moisture influences on the founding soils and that watering of the garden was the primary factor contributing to the abnormal moisture content around the house. She accepted that the leaking spigots, the air conditioning and hot water arrangements and dry garden beds also contributed.[20]
• [35] In a report dated 25 March 2019 the builder's expert Mr Reid said that as a result of these changes the 'relative differential levels as recorded across the floor surface have reduced dramatically' so that 'the slab system must now be considered to be performing to AS2870 expectations (ie. the damage was caused by poor Home Owner Management)'.
• [36] It is not surprising therefore that the builder was able to argue that the movement of the slab and the resulting damage to the house was not caused by any defect in the slab but by the Council's failure to drain the site properly and to ensure rainwater was directed away from the house, and due to poor home owner management.

• [37] These issues also went to whether it was fair to issue a direction to rectify. The points about fairness were listed in written final submissions filed on the builders behalf and were that the primary cause of the movement was the acts or omissions of the Council, failure of the Council to take reasonable and timely remedial action, commencing District Court proceedings prior to making the complaint, delay in making request to the QBCC, and the serious consequences of failure to comply with direction to rectify, the necessity to strike a reasonable balance between the interests of building contractors and consumers, and desirability of making a decision consistent with similar cases.
• [38] Another reasonably arguable point about fairness was that the Council intended to demolish the house and start again. This was its position in the District Court proceedings (considered in more detail below). A quote had been obtained for this work to be done and there was no alternative method of rectification pleaded in the District Court claim.
• [39] In contrast to what was claimed in the District Court proceedings, the direction to rectify did require the defective slab to be rectified but did not require any works to the house because of movement of the slab to be done at all. So it did not require demolition of the house and rebuild.
• [40] A point made by the builder in the review proceeding was that it would be unfair to direct the builder to rectify the defective slab if the owner intended to demolish and rebuild, particularly when the builder (with others) was being sued for the cost of that demolish and rebuild. It would mean that potentially the builder could have to pay twice for the defect, once when rectifying the defective work under the direction to rectify and again if the District Court proceedings were successful.
• [41] That there was merit in the application for review at least when considering the question of fairness is shown by the final submissions filed on behalf of the QBCC which stated:[21]

The Commission acknowledges that the discretionary considerations are relatively finely balanced; however, for the reasons indicated herein, the Commissioner's submission is that it is appropriate for the Applicant to be directed to rectify and therefore the appropriate decision is for the Tribunal to confirm the Commissioner's decision to issue the Direction to Rectify to the Applicant.

emphasis added

• [42] There was a technical issue raised by the builder, which if accepted, would have resulted in the direction to rectify being set aside. It was that the QBCC had no power to issue a direction to rectify in respect of defective work where there had been no complaint by the home owner within 12 months of becoming aware of the defective work as required by section 71J(4) of the Queensland Building and Construction Commission Act 1991 (QBCC Act) and by the 2014 Rectification Policy.
• [43] This issue was made more difficult to resolve because the 12 months rule had been introduced in two stages straddling the events in this review. The statutory provision in section 71J(4) of the QBCC Act was enacted as from 10 November 2017, whereas the internal review decision to maintain the direction to rectify was on 12 December 2017. There was also a 12 month rule in the Rectification Policy introduced in 2014. Because of these two provisions applying a 12 month time limit for a complaint, there was argument between the parties as to whether these time limits applied in the review.
• [44] The senior member decided that the QBCC was able to issue a direction to rectify for work even where the complaint was outside the 12 month period and so the answers to this preliminary issue became irrelevant when considering the QBCC's power to issue a direction to rectify.[22]
• [45] Having asked for submissions on the point, I had reached the same conclusion as the senior member in MacFarlane v Queensland Building and Construction Commission [2019] QCAT 408.[23] In this respect I note that in Urban Homes Pty Ltd v Queensland Building and Construction Commission [2016] QCAT 131 Member Hughes found that the QBCC could issue a direction to rectify even where there was no complaint at all,[24] and this had been cited and followed by Member Traves in Interlink Developments Pty Ltd v Queensland Building and Construction Commission [2020] QCAT 480,[25] and by Member Cranwell in Body Corporate for Riverside Hamilton v Queensland Building and Construction Commission & Anor [2020] QCAT 65 by reference to the 12 month rule.
• [46] In the light of these decisions, it was always unlikely that the senior member could have been persuaded that the QBCC had no power to issue the direction to rectify here because of the delay in making the complaint as the builder submitted. So there was little merit in the builder's case on this preliminary issue.
• [47] For the same reason there was little merit in the Council's argument on this preliminary issue either. Although the Council accepted that the statute as amended applied at the time of the decision under review which was 12 December 2017, it was argued that the 12 month time limit might not apply to the complaint because that was made in December 2016, before the time limit was imposed by section 71A(4), and such amendments are presumed not retrospectively to affect an accrued right or liability defined by past event. On that basis the 12 month time limit did not apply.[26] As for the 2014 policy, which contained a similar time limit, the Council argued that for consistency with the Home Warranty Insurance provisions the policy in force at the time of the contract was the one for the tribunal to consider on review.[27] Since the contract was 8 April 2010 that was the 2004 Policy which contained no 12 month time limit.
• [48] But since on the authorities referred to above it was irrelevant whether the 12 month time limit applied, this argument would have achieved nothing even if successful. In any case, the senior member disagreed with these submissions and decided that the law at the time of the tribunal's decision applied.[28]
• [49] There was still scope for the senior member to take the view that it would be unfair to issue a direction to rectify because of the Council's delay in making the complaint. That argument prevailed in Christiansen & Anor v Queensland Building and Construction Commission [2020] QCAT 57 which was cited by the builder. There, Member Kanowski considered that although a complaint outside the 12 month period did not remove the QBCC's power to issue a direction to rectify, it was something which would (in that review) make it unfair to issue the direction to rectify.[29] This shows that the point was not without merit as a fairness issue.

• [50] What we are looking for here is the cost applicant's success in the proceedings on one or more issues which were so complex that legal representation was justified, and where (balanced with all the other things which have to be considered) it might be unfair not to make a costs order because otherwise that success would be eroded.
• [51] For this factor to weigh in favour of a costs order, the likelihood of 'erosion' seems to be essential. This because, as pointed out in Bell Lawyers Pty Ltd v Pentalow [2019] HCA 29; (2019) 269 CLR 333 a costs order is not made to 'reward' success itself:[30]

In that regard, costs are a creature of statute. It has never been thought that any of the ubiquitous statutory provisions empowering courts to order costs are available to compensate a litigant for his or her time and trouble in participating in litigation. That is because costs are awarded by way of indemnity; they are not awarded as compensation for lost earnings, much less as a reward for a litigant's success. The courts have long regarded the statutory power to make an order for costs as confined by the concern to provide the successful party with a measure of indemnity against the expense of professional legal costs actually incurred in the litigation.

• [52] Success must refer to an outcome which conferred some benefit on the costs applicant, like achieving a monetary order in their favour, or fighting off some disciplinary action. Then the question would be whether the success would be eroded if there were no costs order, and if so whether it is fair to order the unsuccessful party to costs of the successful party, subject to fixing or assessment.
• [53] If the successful party only had a Pyrrhic victory, then it is difficult to see how it would be fair to make a costs order because of the success. That is because of the unfairness of such an order on the losing party.
• [54] On behalf the builder it has been submitted that there was no 'erosion' of any success of the Council because there was no money order made, and the Council merely preserved the position which pertained at the start of the review.[31]
• [55] There are some tribunal authorities where the nature of the success has been scrutinised to help to decide this issue.
• [56] In Holgar v Chief Executive, Department of Justice and Attorney-General & Ors [2022] QCATA 27, Ms Holgar made a claim against the fund established by the Agents Financial Administration Act 2014 (Qld) which was refused. She then applied to the tribunal for a review and the second and third respondents had automatically been joined in the proceedings under section 103(2)(c) of the Act because they could be liable to compensate the claim fund if Ms Holgar was successful. Ms Holgar was unsuccessful both at first instance and then on appeal. The second and third respondents then applied for their costs of the appeal. The Appeal Tribunal refused to make a costs award. Although it was reasonable for the second and third respondents to be legally represented in the appeal, it was not a case where the benefits of successfully resisting the appeal would be eroded by a failure to award costs. This was because the original decision to refuse the claim had been confirmed, so this protected their interests which benefit was not eroded by having to pay their own costs.[32]
• [57] In Queensland Building and Construction Commission & Benton v Egan (No 2) [2023] QCATA 163 a review application had been brought by the owner who had been refused access to the Home Warranty Insurance Scheme by the QBCC. At first instance the tribunal decided the work was covered by the scheme. The builder and the QBCC successfully appealed this decision on the grounds that the builder's work was not 'residential building work'. So the final decision was that the insurance claim was properly disallowed. The builder was legally represented and sought costs against the owner relying on Tamawood. Judicial Member Peter Murphy SC refused this for various reasons. One was that any 'success' in the review proceedings would not be eroded by failure to make a costs order because the owner's rights of action against the builder were not affected by the result of the review. The work was defective even if not residential building work and the review had no impact on the position between the owner and the builder in any such action.[33]
• [58] In Cowen v Queensland Building and Construction Commission [2021] QCATA 103. In that matter, an owner was successful in a review of a decision by the QBCC to disallow a claim under the statutory insurance scheme. In making a costs order, Judicial Member D J McGill SC said that the outcome of the review gave the owner a financial benefit and so there was potential for the owner's success to be eroded if there was no costs order.[34]

• [59] It seems to me that it is an important factor when considering this issue that there were other proceedings between the Council and the builder.
• [60] The Council commenced a District Court claim on 23 November 2016 and the pleadings up to a Statement of Claim amended on 21 November 2017 were in the hearing book.[35] The Council sued the builder for breach of contract and negligence and other matters, but also sued the engineer and his company through which he operated, for negligence in the design and preparation of plans and specifications for, and inspections of, the slab and footings for the house and in providing Form 15 (design) and Form 16 (inspection) certificates for that work.
• [61] In the District Court claim it was said that because of the various breaches by the builder and engineer it was reasonable and necessary to demolish and rebuild the house at an estimated cost of $504,862.50. There was also a claim for $24,240 for consequential losses arising from various expenses incurred. GST and interest on these amounts were also claimed.
• [62] On 9 April 2018 the builder applied to have GAR055-18 adjourned pending the final outcome of the District Court proceedings and this order was made by the tribunal on 27 April 2018. On 18 November 2019 GAR055-18 was restored in the tribunal. Between the two dates the direction to rectify was on hold because the QBCC extended the time for compliance with the direction to rectify until 10 December 2019.[36]
• [63] The District Court proceedings continued. It was set down for hearing in November and December 2024 but settled soon before. In this application for costs there is no information about the terms of the settlement.

The complaint to QBCC, and the consequences of this

• [64] Three weeks after commencing the District Court proceedings, on 12 December 2016 the Council made a complaint to the QBCC.[37] The complaint was about the slab not being sufficiently deep or rigid and so it was subject to deflection and heave by reactive clays and this had caused damage to the house, which was specified.
• [65] There is no explanation why the complaint was made bearing in mind that District Court proceedings had been commenced shortly before. It seems very unlikely that in making the complaint, the Council's officers foresaw what ultimately materialised, that the QBCC would issue a direction to rectify, that it would be challenged in the tribunal and it would cost the Council in excess of $350,000 to be legally represented and to instruct its own expert in the tribunal proceedings. And that there was uncertainty in obtaining a costs award if the direction to rectify was confirmed by the tribunal.
• [66] Had the Council's officers known that that would be the result of its complaint it would be very unlikely that they would have made the complaint because as can be seen below, the complaint did not provide any benefit, except perhaps a forensic advantage by being able to cross examine the builder's director in advance of the District Court trial.

• [67] At an interlocutory stage in the review proceedings the builder applied for specific disclosure of documents from the Council. This was contested by the Council's lawyers by making written submissions. A decision was made with reasons by Acting Senior Member Traves ordering disclosure of all documents requested by the builder except those in one category.[38] So the Council was not successful in its response to that application.
• [68] As for the preliminary issues, one of these was 'what was the reviewable decision?'. It was submitted on the Council's behalf that the tribunal should determine whether a direction to rectify should have been issued as at 14 December 2017 (when the internal review decision was issued) or alternatively as at 16 January 2018 (when the second direction to rectify was issued). The senior member did not find favour with this formulation of the question saying that it fettered the broad discretion conferred on the tribunal.[39] So that cannot be regarded as success for the Council.
• [69] Another preliminary issue was which version of the QBCC Act and policy applied to the review. The builder's and the QBCC's position was that the law and policy at the time of the tribunal's review should be applied by the tribunal,[40] but the Council argued for an earlier date. The senior member agreed with the submissions of the builder and QBCC on this matter.[41] So that cannot be regarded as success for the Council either.
• [70] As mentioned above when reciting the preliminary issues the Council did not have success in its submissions on the preliminary issue about the 12 month time limit.
• [71] As for the terms of the direction to rectify, the Council made two attempts to have it amended. The first was on day 2 of the hearing when it was suggested that the direction to rectify should be amended to add 'in respect of the consequential damage in the house'.[42] If this amendment had been made it would mean that the builder would have been directed to repair the consequential damage to the house,[43] something not contained in the direction to rectify under review. This resulted in a fair amount of discussion because the suggestion had not previously been made, and after some consideration, on behalf of the Council this suggestion was dropped.[44] So, although an amendment to the direction to rectify to that effect might have benefited the Council, it was not pursued.
• [72] In her decision the senior member noted that the Council wanted the tribunal to amend paragraph 1 of the direction to rectify to read:[45]

The slab and foundation system to the dwelling is not constructed to the requisite depth to accommodate reactivity to the soil profile or with internal beams continuous from edge to edge of the slab in accordance with AS2870:1996. The foundations are not performing which is causing damage to the superstructure and loss of amenity to the occupants. (This pertains to complaint item 1, 2, 3 & 4 of the QBCC complaint form).

• [73] The senior member said she was not inclined to make that amendment,[46] so the Council was unsuccessful in that issue as well.
• [74] One issue was exactly what building work was done by the builder with respect to the slab and to answer this required an examination of the contractual obligations. Here the belief of the builder's director about the contractual documents was not accepted,[47] but the director's factual evidence was accepted,[48] and I note that his answers to questions put to him by counsel for the Council assisted the senior member in deciding this particular issue.[49]
• [75] The senior member accepted the Council's formulation of the builder's breach.[50] When specifying the defects in the construction, the senior member accepted the case presented by the QBCC and the Council, whose experts were in agreement about this.[51]
• [76] On the issues of fairness the senior member did not find the arguments presented by the builder were strong enough to make it right for there not to be a direction to rectify.[52]
• [77] The builder was seeking to have the direction to rectify set aside. The Council submitted that it should not be. The outcome was that it should not be set aside. So on that issue the Council could be regarded as successful. But in so far as that decision resolved the question of fairness, which it seems to me was the main point in the review,[53] it is difficult to say that the Council achieved any 'success' in the forensic sense.

Agreement reached as to necessary rectification work

• [78] It is clear the parties to the review were interested in the necessary rectification work despite this being irrelevant to the review. It was irrelevant because as is usual in directions to rectify there is no direction as to how the defect should be rectified. This would be for discussion with the QBCC, or would be dealt with more formally by the QBCC if a scope of works was required or if the builder failed to comply with the direction. For the builder and the Council, getting some understanding of the necessary rectification work would assist in resolving the District Court proceedings.
• [79] This explains why all three experts were asked to give an opinion of the necessary rectification works.
• [80] What happened is of interest because it shows that the Council's position as stated in the District Court proceedings, that the house needed to be demolished and rebuilt was untenable.
• [81] Mr Lindsay Reid (for the builder), made a number of different proposals. Eventually the various options were discussed in the experts conclave. In the joint report made as a result of the experts conclave,[54] Mr Adam Buckley (for the QBCC) and Mr Peter Wright (for the Council) agreed with one of Mr Reid's proposals for rectification work, that is contained in Drawing No. 22391 Sheet 4 Issue A.[55]
• [82] When proposing this method of rectification, Mr Reid said that because the entire footing and slab system was not flawed, only 'minor upgrading' was required.[56] He described the work as 'reasonably minor additional strengthening .. and the provision of control joints'.[57] His opinion was that underpinning and/or demolition was unnecessary and excessive.[58]
• [83] The provision of control joints in the masonry was explained by the experts when they gave evidence concurrently in the hearing. Mr Reid explained that the control joints would articulate the masonry, which would convert it to an articulated brick veneer building.[59] He said that should have been done in the first place because they were specified by the building certifier. Mr Wright explained that this would make the house more able to withstand slab movement.[60]
• [84] In the joint report, Mr Buckley and Mr Wright also said that the plumbing needed to be articulated. The provision of articulation of the plumbing was explained by the experts when they gave evidence concurrently in the hearing. Mr Buckley explained that this would allow movement to occur without damaging the pipes.[61] There was a difference of opinion expressed in the joint report about whether the builder or the Council should pay for that work.
• [85] Between proposing the rectification work in Drawing No. 22391 Sheet 4 Issue A and the experts conclave, Mr Reid found another solution to rectify the slab which he said would be a cheaper solution,[62] but this did not find favour with the other two experts in the conclave.[63]
• [86] Since the rectification work in Drawing No. 22391 Sheet 4 Issue A was Mr Reid's proposal, and the other two experts agreed it was sufficient, it is fair to say that a workable consensus was reached between the experts in the experts conclave. That was in March 2021.
• [87] Because the necessary rectification work to the slab was irrelevant for the review, prior to the experts giving their concurrent evidence, the senior member expressed the view that the experts would not be asked about it. The representatives of all the parties agreed to this.[64] Hence, when the experts started to discuss rectification work during their concurrent evidence, they were stopped.[65]
• [88] The senior member ultimately decided that there was some limited relevance in the need for rectification work because it showed that there was damage to the house consistent with subsidence and non-performance of the slab.[66]
• [89] The agreement reached in the experts conclave was a significant departure from previous positions held by the experts. In his report dated 6 September 2017 the QBCC's expert Mr Adam Buckley said that underpinning was one solution but that given the extent of the underpinning works required, he recommended that this be compared against the cost of full reconstruction.[67]
• [90] In his report dated 25 March 2019, Mr Reid said that both those options were unnecessary and excessive, opining that the proposed underpinning was a Rolls Royce solution and unnecessary because it was not normal to have established lawns where the house was located, that is less than 200 km from the Simpson Desert. Instead he provided Drawing No. 22391 Sheet 4 Issue A as the solution.
• [91] Mr Buckley changed his mind about the need for underpinning and stated in a report dated 25 July 2019 that Mr Reid's proposal was appropriate.[68]
• [92] In his report of 8 November 2020 the Council's expert Mr Peter Wright said that he had been asked to identify the rectification work which he considered to be reasonable and necessary. He considered that demolition and reconstruction would provide a much more stable support for the dwelling and would allow for a lawn around the property. Another option was underpinning the slab and footing system and jacking it up so that it was no longer supported directly on the ground. This would afford a high level of protection from ground movement, and would also allow for a lawn around the property. Otherwise, he opined that the work proposed by Mr Reid in Drawing No. 22391 Sheet 4 would be considered the next most appropriate remedial work, but establishment of a lawn would be problematical with that solution and lawn watering would have to be very strictly controlled.[69]
• [93] It is clear therefore that in the end, Mr Reid's views prevailed about the reconstruction work. This was good for the builder because it made it much more difficult for the Council to continue to maintain in the District Court proceedings that the reasonable and necessary rectification work was to demolish the whole structure and rebuild.
• [94] The cost of the rectification work as agreed between the experts may be relevant to costs, because it indicates the monetary amount at stake for the parties in maintaining the direction to rectify. Evidence was filed in this costs application on behalf of the Council from a quantity surveyor in a report dated 15 December 2022. The quantity surveyor was asked to cost the work shown in Mr Reid's Drawing No. 22391 Sheet 9 Issue D. This is a different drawing from that before the tribunal in the review.[70] So I have been unable to compare it with Drawing No. 22391 Sheet 4 Issue A which was before the tribunal.
• [95] The quantity surveyor costed the work in Drawing No. 22391 Sheet 9 Issue D at $165,000 at Brisbane prices but $296,000 at Birdsville prices as at 15 December 2022. The quantity surveyor was also asked to consider a quote for underpinning and to cost this work if he disagreed with the quote. For some unexplained reason this part of the experts report has not been provided, and also a large part of the experts report has been removed.[71]
• [96] For comparison the original cost of demolition and rebuild in the Amended Statement of Claim filed on 21 November 2017 was estimated at $504,862.50. Since then it is general knowledge that there has been an increase in building costs.
• [97] If as seems to be suggested, Drawing No. 22391 Sheet 9 Issue D is closely similar to Drawing No. 22391 Sheet 4 Issue A, then the quantity surveyor's evidence might have some value when considering costs. But the costing includes consequential damage. It seems to me that to get a monetary value represented by the direction to rectify the costings must be reduced to remove repair to consequential damage. That is because the direction to rectify did not require rectification of the consequential damage.
• [98] On behalf of the builder, it is said that the rectification cost to comply with the direction to rectify is considerably lower than the amount calculated by the quantity surveyor and that it is estimated by the builder to be approximately $50,000.[72] In those submissions it is confirmed that the plan the quantity surveyor was working from is not that filed in the tribunal for the review. In submissions in reply, it is said that the Council does not accept that the cost of rectification was $50,000,[73] but it is accepted that 'there are varying estimates of the cost of this rectification work'.[74] This does not seem to be a strong rejection of the builder's estimate.
• [99] All that can be said therefore is that the monetary value of the direction to rectify to the Council might be anywhere between $50,000 and about $200,000 (that is the costing of the quantity surveyor less rectification work to repair the consequential damage). If it had been shown that the cost of rectification work was $50,000 this would have been a factor tending to lean against a costs award. This is because the costs expended in excess of $350,000 would be completely out of proportion to the amount at stake. But because of the uncertainty in the cost of rectification work, this cannot be said to be a factor.

No issue estoppel arising from the review proceedings

• [100] This appears from things said by counsel for the Council in the hearing when the senior member queried the interaction between the review proceedings and the District Court proceeding:[75]

MEMBER: But I'm still going to be making findings, aren't I, ultimately at the end of the day in terms of who was responsible for what. Quite possibly the cause of certain aspects of what is said to be a possible or likely cause of subsidence.

MR CAMPBELL: You may well, Member. But also the engineer is a party to the District Court proceedings and they are not a member here. And so issues - questions such as issue estoppel or findings that might otherwise bind the parties do not as a matter of law arise.

• [101] On day 5 of the hearing the Council's case was opened. During his opening speech counsel said:[76]

Now, the applicant also placed great emphasis on the existence of the District Court proceedings and asserted that this tribunal should be very cautious in making any findings. Now, the applicant then, in our view quite properly, expressly disavowed that there was any abuse of process through the continuation of these proceedings commenced by it and the District Court proceedings commenced by the district - by the Diamantina Council. They are entirely different questions which are required to be determined in each proceeding. There's authority that principle - that the principle of an Anshun estoppel would not follow in civil proceedings or vice versa as a result of an administrative decision or the review of that administration decision by this tribunal. That's also because of the entirely different framework, including the statutory framework, in which this tribunal is to determine the matters before it.

• [102] On this basis, the Council's presence as an active party in the review proceedings was never regarded as necessary in order to achieve findings of fact which would bind the judge in the District Court. From the Council's perspective such findings would be irrelevant to the District Court proceedings.

Conclusion on whether no order would erode the Council's success

• [103] It is the Council's position that there could be no issue estoppel arising from the tribunal's decision in the review. So, for the Council, trying to prevent the tribunal setting aside the direction to rectify seems to have had no value. Whatever the outcome of the review the Council could continue the District Court proceedings against the builder and did so. So it's difficult to identify any 'success', in the sense of advancement of position, and it is difficult to say that if there was any success it would be eroded if there were no costs order, except perhaps a forensic advantage by being able to cross examine the builder's director in advance of the District Court trial.
• [104] This is therefore the same as in Egan (referred to above). The outcome of the review did not affect the ultimate rights and obligations and final position of the parties in their civil action.
• [105] I should point out that there is no mention in the submissions on costs that there was any success in the review arising from a claim on the Home Warranty Insurance Scheme. This is probably because the Council was out of time to make a claim under the scheme.[77] But in any case a claim can be made under the scheme in the absence of a direction to rectify.[78]

Why was the Council added as a party to the review?

• [106] The Council was joined as a party to the review by order of 20 January 2020, on the application of QBCC. In that application, the QBCC submitted that the Council's interests may be affected by the proceedings because the tribunal would have to decide whether the builder's work was defective in the manner specified in the complaint, and whether the builder had complied with the Rectification Building Work Policy, whether a direction to rectify should be issued, whether the Council properly performed preliminary rectification works stated by the QBCC, and all factual and legal questions relevant to a determination of these things.[79]
• [107] The submissions said that there was a concern that if not joined, the Council could bring separate review proceedings. In this respect it can be noted that as mentioned elsewhere in this decision the Council did try on two occasions in the review to have the direction to rectify enlarged, so this concern was not fanciful.
• [108] The Council consented to being joined as a party to the review proceedings,[80] but the builder neither consented or objected to the Council being joined as a party.[81]

• [109] Having been joined as a party to the proceedings the Council had to decide whether to take an active role in the review. The alternative was merely to cooperate with the tribunal's processes, to provide oral and documentary evidence to the tribunal and possibly to have an officer attend the hearing without legal representation.
• [110] There is no information showing why the decision was made to take an active part. The Council certainly did do so. It's Chief Executive Officer applied for leave for the Council to be legally represented,[82] and this was granted on 17 February 2020. The Council engaged solicitors and an expert. In a tribunal compulsory conference on 21 February 2020 the Chief Executive Officer attended together with solicitors and counsel. The Council's expert took an active role, including attending a site inspection with the builder's expert and the QBCC's expert and taking part in an experts conclave, which also involved all parties identifying the issues to be decided by the experts. After the date that the Council was joined as a party, there were six directions hearings and the Council was represented by counsel in all of these, sometimes with a solicitor as well, taking an active part in them including drafting proposed directions and arguing for directions which differed from those suggested by the other parties. The Council actively resisted an application for specific disclosure made by the builder.
• [111] Counsel was instructed to attend the hearing of the review on behalf of the Council together with solicitors. The hearing was originally listed for five days. Counsel took an active role on the hearing, participating fully in all matters discussed in the early part of the hearing, that is about timing and procedure and as to the preliminary issues, Counsel cross examined the witnesses for the builder and for the QBCC and made lengthy opening remarks before calling the Council's evidence, that is the Chief Executive Officer, a maintenance officer and a Council worker who had lived in the house as a tenant. The Council's expert gave evidence concurrently with the experts instructed on the builder's behalf and on behalf of the QBCC and counsel took full part in their examination. After the hearing, counsel prepared lengthy written submissions in support of the Council's position, which was that the direction to rectify should be confirmed by the tribunal. Those submissions were some 96 pages with 464 paragraphs, not including an attached chronology of events.
• [112] Since no detail has been provided by the Council about the legal bills, it would be fair to say that as in the usual case there would also have been attendances, conferences, advices and much correspondence generated by the lawyers engaged by the Council.
• [113] Meanwhile the District Court proceedings continued.

Did the Council need to take such an active role in the review proceedings?

• [114] This is relevant to the question of costs because the Council is asking for its legal bill to be paid by the builder, and if there was little point in the Council amassing such a large legal bill it would tend to make it unfair to expect the builder to pay this.
• [115] The submissions for the Council do not explain why the decision was made to take an active role. The costs submissions for the builder did raise this issue however. It was said:[83]

The Council being joined (in) the proceeding on the QBCC's application, has unnecessarily lengthened the proceeding, causes further costs to the parties and has in fact had no utility or purpose where the Council had already commenced the District Court Proceeding in respect of the building work performed by (the builder), seeking an entirely inconsistent outcome. Further, the joinder did not result in the outcome of avoiding multiplicity of proceedings.

• [116] The answer to this in submissions in reply is:[84]

In this regard, the District Court proceedings (which are of a broader scope, concern different issues (being for contract and negligence) and another party (the engineer) is of no relevance to whether costs should be awarded in this proceeding.

and

(the builder) contends that the joinder of the Council to the proceeding unnecessarily lengthened the proceeding and caused further costs to be incurred, and that the joinder of the Council had no utility or purpose due to the District Court proceedings that have been commenced. Again this submission is without basis.

By solicitors letter to the Tribunal dated 15 January 2020, (the builder) neither consented nor objected to the Council be joined .. Further, it has never objected to all parties being granted leave to be legally represented. Given the number of issues the Tribunal was required to determine, made clear form the Reasons for the decision, the costs of that legal representation was reasonably incurred and necessary for the efficient conduct of, and assistance to, the Tribunal in reaching the correct and preferable decision.

And

The evidence and submissions provided by Council (and by all the parties) assisted the Tribunal in reaching the correct and preferable decision in respect of the myriad of legal, engineering and factual issues, reflecting the factually intensive nature and substantial complexity of the dispute that was required to be determined.

emphasis added

• [117] Whilst showing appropriate respect for counsel, I regret that I do not agree with the submissions highlighted in bold. From my reading of the file and material before the senior member in the hearing, and from my reading of the transcript of the hearing except for the last day, it is my view that if the active parties had been limited to the builder and the QBCC, the result of the review would have been the same but would have been reached much more quickly. It is my view for example that the builder and the QBCC would have been able to reach consensus about the preliminary issues and probably also the facts, which would have saved a lot of time, and the evidence would probably have been limited to the builder, the QBCC inspector and two experts, so that the hearing would have been much shorter. It is true that, as can be seen from the transcript, the member was assisted by the Council's cross examination of the builder's director but it seems to me that the information which assisted the member would have emerged in other ways if that cross examination had not taken place. It is true that the senior member was assisted by the opinions of the Council's expert, but the QBCC's expert and the Council's expert agreed on most points. I do not think there was any need for three experts.
• [118] It is not compulsory for a party joined to review proceedings to take an active role in the proceedings.
• [119] As Judicial Member Peter Murphy SC said in Queensland Building and Construction Commission & Benton v Egan (No 2) [2023] QCATA 163, it was 'entirely open' for a builder who was supported by the QBCC in an appeal to the Appeal Tribunal to adopt the QBCC's submissions and have limited representation at the hearing, and doing so is entirely consistent with sections 3(b) and 4(c) of the QCAT Act.[85]
• [120] Of course a party joined to a review may wish to be legally represented and if given leave, has such a right. But the question then arises whether an unsuccessful review applicant should have to pay the legal costs, or such costs as survive an assessment. In this respect Judicial Member Peter Murphy SC said in Egan:[86]

Those statements should not be misunderstood or misconstrued. It is, of course, not at all suggested that Mr Benton was not entitled to secure such representation as he chose and to be represented at the hearing as he chose. Nor, of course, is it suggested that Mr Benton should have been restricted in the filing of such submissions as he might choose. The instant issue is not whether Mr Benton had those entitlements; the issue is whether Dr Egan should pay for how he exercised those entitlements and made those choices.

• [121] These considerations make me lean towards not making an order for costs in this matter.

• [122] It is true, as can be seen from the District Court proceedings, that there were heavy commercial undercurrents to the review. There are often commercial undercurrents to such reviews. In some reviews the non-QBCC parties to the reviews are financially affected by the outcome and sometimes this is not the case. Whether these factors affect a decision on costs will depend on the circumstances.
• [123] Here as can be seen from the analysis above 'would no order erode the Council's success?', the outcome of the review was not going to finalise or resolve the commercial dispute between the Council and the builder.
• [124] Hence I cannot see that my decision on costs can be affected by this factor.

• [125] I take the view that it could be unfair to make a costs order which differs from the reasonable expectation of a party about costs when they make decisions about a matter such as whether to apply for a review, whether to be joined as a party, and whether to be legally represented. This is because it is unfair for a party to be taken by surprise by an application for costs which unexpectedly appears to have a prospect of success. Section 29 of the QCAT Act requires the tribunal to ensure that each party understands (i) the practices and procedures of the tribunal; (ii) the nature of assertions made in the proceeding and the legal implications of the assertions; and (iii) any decision of the tribunal relating to the proceeding. I think this means that parties must have informed knowledge of any serious risk as to costs when they are a party to tribunal proceedings.
• [126] Viewed objectively, when the builder applied to the tribunal for an external review of the direction to rectify on 13 February 2018 it would have expected that if it engaged lawyers to conduct the matter it would most likely have to pay the lawyers' fees itself. It would have expected that although the likelihood was that the QBCC would be legally represented in the review the chance of having to pay those legal fees should the application for review was low. The builder would reasonably have anticipated that it was possible that the Council might wish to be joined as a party to the review since it was the complainant. The reasonable expectation of the builder would have been that if the Council instructed lawyers in the review proceedings the chance of having to pay the Council's legal costs if the application for review were unsuccessful would be fairly low, since at that time the common belief was that there would be no order for costs in the tribunal unless the interests of justice point so compellingly to a costs award that they overcome the strong contra indication against costs orders in section 100 of the Act. This view of the likelihood of an adverse costs order would have been based on the pre-Marzini tribunal case law.[87]
• [127] Certainly it can be said that at the time of the builder's application for review, the possibility of the Council being joined as a party to the review, instructing lawyers, deciding to contest the review robustly, and incur legal costs and experts fees in excess of $350,000 in doing so, and that the Council would try to recover some of this from the builder, would not reasonably have been foreseen by the builder or its legal representatives.
• [128] The same argument applies to the Council. Viewed objectively, when the Council consented to be joined as a party to the review proceedings and decided to instruct lawyers and to take an active role in the review, it would not have expected to be able to obtain a costs order against the builder if the builder failed in the application for review. That is because the Council was joined by order of the tribunal on 20 January 2020 and this was nine months before Marzini was published. The Council took an active role in the review soon after being joined.
• [129] These considerations make me lean towards not making an order for costs in this matter.

(a) The application for review was not without merit, in fact the outcome was finely balanced and could have gone either way.

(b) When the decisions were made by the builder and the Council about the review and whether to be legally represented it would have been reasonable for them to believe that they would have to pay their own costs and that it would be unlikely that they could get an order for costs from the unsuccessful party.

(c) The Council did not have a 'success' which would be 'eroded' if there was no order for costs.

(d) There is no other reason why it might be in the interests of justice to award the Council its costs in these proceedings.

(e) Because of the above, it would be unfair to make an order for costs, and therefore the interests of justice do not require me to make such an order.

• [131] I conclude that the costs application fails.

[1] Rosecove Pty Ltd v Queensland Building and Construction Commission & Anor [2023] QCAT 101.

[2] Queensland Civil and Administrative Tribunal Rules 2009 (Qld).

[6] This seems to be supported by section 32CA of the Acts Interpretation Act 1954 (Qld) which provides that if the word 'may' is used in statute in relation to a power then it indicates that the power may be exercised, or not exercised, at discretion. I note that 'power includes authority': schedule 1.

[7] Brisbane Marine Pilots Pty Ltd (in liquidation) v General Manager of Maritime Safety Queensland, Department of Transport and Main Roads and Ors (costs) [2022] QCAT 225, [95].

[8] As in Whalley v Queensland Building and Construction Commission (No 2) [2017] QCAT 188 Member Paratz, and Yeeha Tours and Holidays Pty Ltd t/as Mile High Aviation v Department of Environment & Science [2020] QCAT 131 Senior Member Howard.

[9] Builder's submissions on costs 31 July 2023 paragraph 113(g).

[10] Health Ombudsman v du Toit [2024] QCA 235, [64].

[11] Paragraph 5 of the submissions of 3 July 2023.

[13] Submissions for costs of 3 July 2023, and submissions in reply on costs received on 17 August 2023.

[14] Paragraph 6 of the submissions received on 3 July 2023.

[19] Letter 5 October 2017 hearing book page 2034.

[21] Final submissions 21 December 2022, paragraph 9.

[26] Submissions of Second Respondent - Applicable Legislation and Rectification Policy, paragraphs 10 and 14, read together with Second Respondent's response - Preliminary Issues to be Considered.

[27] Submissions of Second Respondent - Applicable Legislation and Rectification Policy, paragraph 18.

[31] Submissions 31 July 2023, paragraphs 27, 30 and 76(d).

[32] [20(c)], Senior Member Howard, Member Fitzpatrick.

[38] Rosecove Pty Ltd v Queensland Building and Construction Commission & Ors [2022] QCAT 235.

[43] The QBCC, and in turn the tribunal, would have power to direct this under section 72 of the QBCC Act.

[53] And which was described by counsel for the Council as 'the ultimate issue': transcript 1-12, line 6 and 1-12, line 45.

[54] Page 21 of the joint experts report signed in March 2021.

[62] This was a proposal to replace the existing veranda posts and providing adjustable brackets at the base of those posts for the purpose of facilitating future re-levelling on an 'as required' basis. This was in Drawing No. 22391 Sheet 9 Issue A referred to in his statement of 19 February 2020, hearing book 1888.

[63] Page 21 of the joint experts report signed in March 2021 at the bottom.

[65] Transcript 6-95, line 22, also 6-108, line 3.

[70] The submissions on costs say that it was, but the drawing numbers are different on the pages quoted in the submissions.

[71] The general principle must be that if a document is provided to the tribunal by a party it should be complete, but if only part of the document is provided or it is provided in redacted form, then some explanation should be provided why this is so. This is a matter of fairness for other parties to understand why there is an incomplete document, and is a matter of courtesy to the tribunal, and assists the tribunal to decide whether to call for the missing parts.

[72] Submissions dated 31 July 2023, paragraph 74.

[73] Submissions dated 17 August 2023, paragraph 3.

[74] Submissions in costs in reply 17 August 2023, paragraph 32.

[77] Unless extended the claim must be made within 3 months of the subsidence or settlement first becoming evident - clause 5.5 of the Insurance Policy Conditions Edition 8 effective 1 July 2009.

[78] However, where there is a direction to rectify a claim will not be paid until the QBCC is satisfied that the contractor will not comply with the direction: clause 5.3(b).

[81] Letter from the builder's solicitors dated 15 January 2020.

[82] Application received 10 February 2020.

[83] Submissions on costs 31 July 2023 paragraphs 12(f), 61 and 113(f).

[84] Submissions in reply on costs 17 August 2023 paragraph 11.

[87] Marzini was published on 13 October 2020.