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- Unreported Judgment
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Schofield v Queensland Building and Construction Commission & Anor  QCAT 310
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
SIMON JOBLING TRADING AS S.A.J. CONSTRUCTIONS
10 October 2019
HEARD ON THE PAPERS:
Member Dr Collier
Application for costs is dismissed.
ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – costs – Queensland Civil and Administrative Tribunal Act 2009 (Qld) – s 100, s 102
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – Queensland Civil and Administrative Tribunal Act 2009 (Qld) – s 100, s 102
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 32, s 100, s 102, s 107(1), Chapter 2 Division 3
Uniform Civil Procedure Rules 1999 (Qld), r 360
Ascot v Nursing & Midwifery Board of Australia  QCAT 364
Cachia v Hanes (1994) 179 CLR 403
Calderbank v Calderbank  3 All ER 333
Latoudis v Casey (1990) 170 CLR 534
Lyons v Building Services Authority & Anor  QCATA 240
Lyons v Queensland Building and Construction Commission & Dreamstarter Pty Ltd (in liquidation)  QCAT 218
Oshlack v Richmond River Council (1998) 193 CLR 72
Warley Hospital Inc v Attorney-General for the State of Victoria  VSC 145
The claim for costs was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
REASONS FOR DECISION
- The Schofields, the Applicants in this matter, contracted Simon Jobling, the Second Respondent, (‘builder’) to build a house for them. The house was never completed by the builder following unreasonable delays arising from the builder’s conduct. The Schofields lawfully terminated the contract with the builder on 17 October 2017.
- After the Schofields had terminated the contract with the builder the Schofields applied to the Queensland Building and Construction Commission (‘QBCC’), the Second Respondent, for compensation under the statutory insurance scheme, also called the Home Warranty Scheme.
- The QBCC declined to compensate the Schofields for their loss and damage arising from the builder’s failures on the basis that the Schofields had not lawfully terminated the contract with the builder, termination being an essential pre-condition to being entitled to compensation.
- The QBCC conducted an internal review of its original decision at the request of the Schofields, and affirmed its earlier decision to reject the Schofields’ claim for compensation.
- The Schofields appealed to this Tribunal to set aside the QBCC decision denying them compensation on the basis that they had lawfully terminated the contract on 17 October 2017.
- In its decision dated 15 March 2019 this Tribunal agreed with the Schofields and set aside the decision of the QBCC to deny them compensation under the statutory insurance scheme. In its decision the Tribunal invited the parties to make submissions concerning costs in the principal matter. The Schofields and the QBCC made submissions in respect of costs; the builder made no submissions.
- This decision deals with costs arising from the original proceeding (hereafter, the ‘principal proceeding’).
The rules relating to costs
- While the contract between the Schofields and the builder dealt with the construction of a house, the principal proceeding before the Tribunal was not a building dispute but one involving its review jurisdiction as defined in Chapter 2 Division 3 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’).
- This means the starting point concerning costs in this Tribunal is to be found in s 100 of the QCAT Act, that parties should bear their own costs in proceedings.
- Section 102 of the QCAT Act sets out the basis on which this Tribunal may award costs in a matter:
- 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.
- In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following—
- 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);
- the nature and complexity of the dispute the subject of the proceeding;
- the relative strengths of the claims made by each of the parties to the proceeding;
- for a proceeding for the review of a reviewable decision—
- whether the applicant was afforded natural justice by the decision-maker for the decision; and
- whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits;
- the financial circumstances of the parties to the proceeding;
- anything else the tribunal considers relevant.
- The Tribunal will also assess whether, if costs are to be awarded, they are to be awarded at the standard rate, or some other rate, including indemnity costs.
- Further, section 107(1) of the QCAT Act requires that, ‘If the tribunal makes a costs order under this Act or an enabling Act, the tribunal must fix the costs if possible’.
- The basis on which costs should be considered in this Tribunal is described in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) where the Tribunal said:
Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100.
- In assessing whether to award costs guidance is provided by decisions such as Ascot v Nursing & Midwifery Board of Australia where the Tribunal said:
The public policy intent of the provisions in the QCAT Act is plain. The tribunal was established as a no costs jurisdiction. That may be departed from where the interests of justice require it. The considerations identified in s102(3) are not grounds for awarding costs. They are factors that may be taken into account in determining whether, in a particular case, the interests of justice require the tribunal to make a costs order.
- Further, it is a well-established principle enunciated by the High Court that costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party.
- What may be recovered in costs by a successful applicant are ‘the costs of and incidental to the proceeding’.
- The meaning of the term ‘costs of and incidental to the proceeding’, even interpreted broadly, remains confined to the principal proceeding and preparation for that proceeding.
The Applicant’s case for seeking costs
- The Schofields are seeking costs in this matter from both Respondents comprising two components: an amount of costs of $21,320 or other amount as determined by the Tribunal that relate to solicitor’s costs; and $1,952 being the cost for reports prepared for the Schofields by Datum Building Consultancy, and Coastal Home and Building Inspections.
- The Schofields say that they should be awarded costs on the basis that they succeeded in their application and that costs should follow the event. They say, further, that costs should be awarded on the District Court scale on an indemnity basis, although no rationale is given for this, or, alternatively, on a standard basis.
- They also say that they had to engage lawyers to assist them with the prosecution of their claim against the QBCC. They say that they required legal assistance to understand the QBCC’s decision to reject their claim, and that the subsequent legal proceedings were complex and beyond their ability to pursue without legal assistance.
- They further say that:
The Applicants financial circumstances are a relevant consideration as the costs in pursuing their legal entitlements in claiming under the Scheme and then in pursuing the application before the Tribunal has been an extraordinarily high cost to bear. Ms Schofield has changed her employment from full time to casual in order to prepare and finalise evidence for the proceedings and Mr Schofield left his employment in Africa due to the stress related to the rejection of their claim and the subsequent proceedings and has been an extraordinary burden in terms of costs for them to bear.
- The Schofields were unable to afford representation at the principal proceeding but relied on legal advice they had received earlier when presenting their case before the Tribunal.
- They say that they assisted the QBCC at all times by disclosing all relevant facts and matters, that they made every effort to assist the QBCC throughout the process and responded to requests for information from the QBCC.
- The Schofields assert that they were denied natural justice by the QBCC. However, the basis of this claim is weak.
- They submit that the Calderbank offer made by them on 14 November 2018 to settle the matter, and rejected by the QBCC on 23 November 2018, supports their claim for costs. In this regard, a summary of the terms of the offer they made were:
- The decision by the Queensland Building and Construction Commission to disallow the Applicant’s claim under the statutory insurance scheme be set aside and the Applicant’s claim be accepted;
- Within 7 days of acceptance of this offer the parties consent to discontinue QCAT proceeding GAR077-18; and
- Each party to bear their own costs.
- On its face, however, rather than being a Calderbank offer to settle, this offer appears to be simply another demand that the QBCC accede to the Schofields’ claim for compensation.
- The Schofields say that, as a result of his conduct, the builder should be liable for ‘part or all of the Applicants’ costs after July 2017’. Whether the builder’s liability should be on a joint, or several, or joint and several basis is not explained.
The First Respondent’s case opposing costs
- The QBCC first received a complaint from the Schofields concerning their property on or about 23 October 2017.
- The QBCC says that, on the basis of the evidence provided by the Schofields, the QBCC could not be satisfied that the contract between the Schofields and the builder had been properly terminated and this resulted in the QBCC rejecting the Schofields’ claim against the statutory insurance scheme on 1 December 2017, and again rejecting it on 25 January 2018 after an internal review of its earlier decision by the QBCC.
- The QBCC further says:
- That it did not act in a way that disadvantaged the Schofields;
- The complexity of a case is a factor to be considered in a costs decision but is not determinative;
- That in assessing the relative strengths of the parties’ claims, the evidence suggests that the decision was never a foregone conclusion and that the QBCC was not in the position of being able to weigh the relative strengths of the Schofields’ and the builder’s competing claims;
- That the Schofields were accorded natural justice by the QBCC;
- That the QBCC should not have its decision-making compromised on the basis of a fear of costs consequences;
- That the QBCC has to, and in this case did, act prudently because it is dealing with public funds;
- That it discharged its obligations to act as a model litigant; and
- That, overall, the evidence does not overcome the strong contra-indication against costs being awarded.
Distinguishing the interests of the parties
- The mere fact that the QBCC and the builder were joined as parties to the principal proceeding does not, of itself, make either or both of them liable for the whole of the costs incurred by the Schofields arising from the failures of the builder. It is necessary to distinguish between the costs that may arise against each of the Respondents individually as a result of the decision in the principal proceeding.
- The rationale for this approach, described in an analogous case before this Tribunal, was expressed in the following terms:
The relevant parties to determine the question who lawfully terminated the building contract at whose default are the Applicant and the builder. The relevant proceeding to do that in is the contract proceeding. Adopting Mr Lyons’ proposal to draw the Authority into that argument cannot be readily understood to have any benefit other than expose the Authority to Mr Lyons as a pecunious party against whom he might pursue a claim for costs associated with the issue of liability, if the builder proves impecunious, as Mr Lyons asserts.
- In that case the Tribunal was saying that there were two issues that arose from the builder’s default: a contract issue involving the builder and the home-owner; and an administrative law issue involving the QBCC and the other parties about the termination of the contract (and, therefore, eligibility for compensation under the statutory insurance scheme).
- For this reason the claim for costs by the Applicants should be, and is below, considered against each of the First Respondent and Second Respondent separately.
Claim against the First Respondent
- Costs of proceedings can be recovered if they are ‘necessary and proper costs’ of prosecuting the instant proceedings: Lyons v Queensland Building and Construction Commission & Dreamstarter Pty Ltd (in liquidation)  QCAT 218. In that case, there was an issue whether QBCC was right in deciding that Mr Lyons had not terminated the contract because of the builder’s default and therefore could not make an insurance claim. The Tribunal ordered the QBCC to pay Mr Lyons’ costs reasonably incurred in related proceedings, insofar as they would resolve the issue in those proceedings or were necessary for enforcement against the builder because of the QBCC’s stance on the issue.
- As noted above, a party may only recover costs of and incidental to the proceeding.
- The principal proceeding began no earlier than the date on which the Applicants submitted their claim to the First Respondent, namely, the notice to the QBCC by the Schofields dated 23 October 2018 of their claim against the statutory insurance scheme. The reason for this is that, prior to this date the Schofields had been in dispute only with the builder, and with the First Respondents, the QBCC, only as it related to matters concerning the builder.
- There is evidence in the bills rendered by the Schofields’ solicitors to the Schofields that advice had been provided to the Schofields in relation to their dealings with the QBCC as early as 30 April 2018, however this could not have related to the principal proceeding because that proceeding did not commence until 23 October 2018.
- No claim for costs against the First Respondent arising before 23 October 2018 can be considered unless they relate to advice from the Schofields’ solicitors in preparation for the claim against the QBCC. This is because a party may only recover costs of and incidental to the proceeding.
- The only bills prepared by the Schofields’ solicitor contemporaneous with the principal proceeding were:
- 15 October 2018 for $1,850; and
- 30 November 2018 for $1,650.
- I will accept for the moment that the solicitors’ two bills dated 15 October 2018 and 30 November 2018, totalling $3,500, related to advice concerning the Schofields’ dispute with the QBCC, pending further analysis below.
- The expert report prepared for the Schofields by Datum Building Consultancy was dated 8 February 2018. There is no evidence linking the preparation of this report with the application by the Applicants against the QBCC. The difference in dates speaks against accepting the report being incidental to the principal proceeding. But, even if the report had been prepared for earlier negotiation between the Schofields and the QBCC, the relevant issue at that date concerned the execution of the contract by the builder and not the relevant decision made by the QBCC rejecting the Schofields’ claim for compensation under the statutory insurance scheme.
- In this jurisdiction parties will bear their own costs unless a party seeking costs can overcome the strong contra-indication against costs orders. In assessing an entitlement to costs the factors listed in paragraph  above, and restated by the QBCC in its submission, listed in paragraph  above, are to be taken into consideration by the Tribunal.
- Each of these factors is considered next.
Has the Respondent unnecessarily disadvantaged the Applicants?
- The Schofields have alleged that they were not accorded natural justice by the QBCC but, as noted above, there is no substance to this claim. There is no other evidence that the QBCC unnecessarily disadvantaged the Schofields.
Nature and complexity of the dispute
- The issue of determining when a contract between a builder and a house-owner comes to an end is a frequent cause of dispute. While the QBCC could have concluded that the contract had been properly terminated by the Schofields had it made thorough inquiry and taken notice of the Schofields’ solicitor, the evidence available to the QBCC at the relevant time supporting this conclusion was not compelling. It is difficult to conclude that the QBCC had acted unreasonably in the circumstances.
Relative strengths of the claims made by each of the parties
- In relation to the principal proceeding neither party had a compelling claim.
Were the Applicants afforded natural justice by the decision-maker?
- Despite the Schofields’ claim of being denied natural justice, the QBCC was not dilatory, it made a decision, and it reviewed that decision. I can see no evidence of a want of natural justice having been afforded the Schofields by the QBCC.
Did the Applicants genuinely attempt to assist the decision-maker to make the decision on the merits?
- The Schofields assisted the QBCC as much as they reasonably could.
The financial circumstances of the parties
- The Schofields claim to have been unable to seek assistance from their solicitor at the principal proceeding because of financial constraints, but this did not appear to present an insurmountable problem. Indeed, the Schofields succeeded in gaining from the Tribunal the decision they sought.
- The Schofields, through their solicitor, made an offer of settlement to the QBCC that I referred to above. For the reasons noted earlier I am not satisfied that this offer, such as it was, is relevant in influencing a costs decision in favour of the Schofields.
- I can see no other factors, including the conduct of the QBCC, that could be considered relevant to making a costs order.
- I am not persuaded that the evidence is sufficient to overcome the strong contra-indication against costs orders in respect of the First Respondent.
- Even if I were persuaded that the Applicants had overcome the strong contra-indication against costs orders in respect of the First Respondent, I am not satisfied that any of the costs of the Applicants represent costs of and incidental to the principal proceeding; rather, the costs appear to relate mainly or solely to the Applicants’ dispute with the builder.
Claim against the Second Respondent
- The builder breached his contractual obligations to the Schofields regarding the construction of their house. The Schofields may have a valid cause of action against the builder for his default, but this was not the case argued before the Tribunal in the principal proceeding – this involved the review of an administrative decision that had been made by the QBCC.
- The conduct of the builder may be the root cause of the principal proceeding but, again, the principal proceeding dealt with an administrative decision of the QBCC, not the conduct of the builder.
- However egregious the conduct of the builder may have been, unless the Schofields’ costs arose as a result of the principal proceeding, they are not costs of and incidental to the proceeding.
- I conclude that the significant majority of the costs claimed by the Schofields arose from their dispute with the builder concerning his default under the contract and not from the principal proceeding.
- The Schofields argue that the builder should be liable for part or all of their costs after July 2017. For the same reasons that costs are not awarded against the QBCC, costs cannot be awarded against the builder in regard to the principal proceeding.
- The Schofields cannot recover costs in this matter.
- The Application for costs in this matter is dismissed.
 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)  QCAT 412, .
Ascot v Nursing & Midwifery Board of Australia  QCAT 364, .
 Latoudis v Casey (1990) 170 CLR 534, 543 (Mason CJ), 562-563 (Toohey J), 566-567 (McHugh J); Cachia v Hanes (1994) 179 CLR 403, 410 (Mason CJ, Brennan, Deane, Dawson and McHugh JJ); Oshlack v Richmond River Council (1998) 193 CLR 72.
 Warley Hospital Inc v Attorney-General for the State of Victoria  VSC 145, at 71; Uniform Civil Procedure Rules1999 (Qld), s 670(1) although in this case it is referring only to security for costs; G E Dal Pont, Law of Costs, Lexis Nexis Butterworths, 2018, Australia, pars 1.19 and 1.20.
 Applicants’ Submissions on Costs, par 13.
 Ibid par 15.
 Ibid par 4.
 Ibid par 10.
Calderbank v Calderbank  3 All ER 333.
 Uniform Civil Procedure Rules 1999 (Qld), r 360, also deals with the effect of offers to settle made by a plaintiff.
 Applicants’ Submissions on Costs, SCH-03.
 Ibid par 12.
 First Respondent’s Submissions on Costs dated 29 March 2019, pars 22-33
 Lyons v Building Services Authority & Anor  QCATA 240, ; the whole of - expand on this point.
 Applicants’ Submissions on Costs, attachment SCH-04.
 Ibid attachment SCH-01.
 Ibid par 10.
- Published Case Name:
Schofield v Queensland Building and Construction Commission & Anor
- Shortened Case Name:
Schofield v Queensland Building and Construction Commission
 QCAT 310
Member Dr Collier
10 Oct 2019