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- Unreported Judgment
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Imperial Homes (Qld) Pty Ltd v Boys  QCAT 429
Imperial Homes (Qld) Pty Ltd
Daniel Jay Boys
9 November 2020
On the papers
PROCEDURE – CIVIL PROCEEDINGS IN THE QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – BUILDING CONTRACT – COSTS – where the Applicant was successful in respect of the central issue in complex litigation – where the Respondent was successful in respect of some of the issues relating to the complex litigation - where the Applicant has applied for costs to be calculated on an indemnity basis.
Queensland Building and Construction Commission Act 1991 (Qld), s 77
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 102, s 107
Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r 87
Dyer v Spence (No2)  QCAT 375
Sovereign Homes Qld Pty Ltd v Edwards (No 2)  QCAT 410
Lyons v Dreamstarter Pty Ltd  QCATA 71
L Watt of Becker Watt, Lawyers
D V Ferraro of Counsel
REASONS FOR DECISION
- The decision in these proceedings was delivered on 5 August 2020. In my orders I invited the parties to make submissions regarding any award for costs.
- The Applicant (Miller) submits that costs should be awarded to him on an indemnity basis and he has outlined reasons in support of this claim. In the alternative Miller submits that if indemnity costs are not awarded then costs should be awarded on a standard basis assessed on the District Court Scale by a costs assessor nominated by Miller.
- The Respondent (Boys) submits that each party should bear its own costs, however, if costs are awarded then costs should be awarded on a standard basis assessed on the Magistrates Court Scale.
- Section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act) provides that each party should bear their own costs unless otherwise provided under an enabling Act. In building disputes, the provisions of s 77 of the Queensland Building and Construction Commission Act 1991 (QBCC Act) apply. Relevantly
s 77(3) of the QBCC Act applies. This provision is outlined:
77 Tribunal may decide building dispute
- (3)Without limiting the tribunal’s powers to resolve the dispute, the tribunal may exercise 1 or more of the following powers—
- (a)order the payment of an amount found to be owing by 1 party to another;
- (b)order relief from payment of an amount claimed by 1 party from another;
- (c)award damages, and interest on the damages at the rate, and calculated in the way, prescribed under a regulation;
- (d)order restitution;
- (e)declare any misleading, deceptive or otherwise unjust contractual term to be of no effect, or otherwise vary a contract to avoid injustice;
- (f)avoid a policy of insurance under the statutory insurance scheme;
- (g)order rectification or completion of defective or incomplete tribunal work;
- (h)award costs.
- In deciding to award costs the provisions of s 102(3) of the QCAT Act apply and in building disputes a member of the Tribunal has a wide general discretion whether to award costs. The general rule is that costs follow the event. That is, a successful party is entitled to a costs order against the other party.
- The general principles for awarding costs are set out in Lyons v Dreamstarter Pty Ltd  QCATA 71. In Dreamstarter the Tribunal stated that there is no automatic rule that an unsuccessful party must compensate the successful party. Rather, the discretion to award costs starts with the proposition that it is just and reasonable that a party who causes another to incur costs should reimburse the other party for those costs. The Tribunal stated that the discretion will vary in each case.
Clause 34 of the building contract
- Miller has submitted that the provisions of clause 34 of the Building Contract apply to these proceedings. Clause 34.1 of the Building Contract provides that Boys must pay to Miller any debt collection costs, including any legal fees on a solicitor and own client basis, associated with recovering or the attempted recovery of an amount under the Building Contract. In Sovereign Homes QLD Pty Ltd v Edwards (No 2)  QCAT 410 this issue was examined by the Tribunal. In Sovereign Homes (No2) the Tribunal declined to make an order for indemnity costs because there were issues in dispute in the proceedings and the hearing time was spent on issues other than debt collection. These proceedings involved disputed contractual issues and building defects. Therefore, the provisions of clause 34 of the Building Contract do not apply to these proceedings.
- Miller has submitted that costs should be awarded to him and should be assessed on an indemnity basis. Miller has attached a claim for $150,570.08 and he is willing to provide details of the invoices relating to this claim. The principles relating to the award of indemnity costs are set out in Dyer v Spence (No2)  QCAT 375 in paragraph 41. There the Tribunal stated: ‘... Essentially there needs to be some special feature to justify the exercise of the discretion. The special feature has been described as something “irresponsible” or “unreasonable” on the part of the other party.’
- Miller has raised a number of issues concerning the way Boys litigated this dispute. The issues raised by Miller do not fall into the category of “irresponsible” or “unreasonable”. Further, Miller was not successful in a number of the arguments raised by him. I found that Miller did not comply with clause 25 of the Building Contract, ie. the provision of the defects document and his claim that he reached practical completion by 5 July 2018. Miller’s argument that Boys had not complied with the relevant time to give notice to terminate the Building Contract was also not successful. Further, Boys was successful in his claim for late completion damages up to 11 August 2018.
- Miller has not provided details of any formal offers of settlement that may have been provided to Boys to resolve this dispute. Boys has provided a copy of an offer of settlement dated 14 June 2019. (See attachment A to the submissions of Boys filed 4 September 2020). This offer was rejected by Miller. In summary this offer is for Miller to pay Boys $85,000 and for each party to bear their own costs. Therefore, I cannot take any offer of settlement into account in considering the issue of the award of costs.
- Taking the above factors into account I decline to award costs on an indemnity basis.
- The central issue in these proceedings was the question of whether Boys was entitled to give Miller notice of termination of the Building Contract and take possession of the House on 11 August 2018. In paragraph 237 of the decision, I found that Boys was not entitled to give notice of termination and take possession of the House. Further, I found at paragraph 237 of the decision that Miller accepted Boys’ repudiation of the Building Contract. To determine the central issue required an examination and analysis of all the disputed defects to determine if they were minor, major or structural defects.
- Section 102(1) of the QCAT Act allows me to make an order for costs against a party to pay all or a stated part of the costs of another party in the proceedings if the tribunal considers the interests of justice require it to make the order. Further, s 102 (3) of the QCAT Act lists the relevant factors I should have regard to in making any order for costs. These proceedings were very complex, involving questions of law, fact and very technical building and engineering issues. Given my findings I believe it is in the interests of justice to make an order for Boys to pay the costs of Miller on a standard basis, subject to the following conditions.
- Boys has submitted that a substantial part of the hearing was spent on arguments about the defects in the Scott Schedule. I agree that this was the case. Regarding some of the defects in the Scott Schedule there was agreement between the parties or concessions made by the parties. However, the vast majority of the time at the hearing involving the experts was spent on alleged defects where Miller was ultimately successful. Further, Miller was successful in his claims for variations 20, 30 to 47 (excluding items 33, 36, 40, 45 and 46) and 49 which were contested by Boys.
- In paragraph 193 of the decision I listed the items which required rectification and the cost of rectification of the items. Regarding items 6, 7, 8 and 9 (Flashing); 38, 39, 40, 41, 42, 43 and 44 (kitchen cabinets); 50 and 52 (Stairs); and 79 and 80 (Entry steps and path), there was some disagreement and disputation between the parties/experts. I did make findings in favour of Boys regarding these items. I did make a finding in favour of Boys for item 12 (back patio stairs). However, this defect related to the disputed level of the rear deck. Miller conceded that item 12 required rectification and Miller was in the process of rectifying this defect when Boys took possession of the House on 11 August 2018.
- Taking into account my findings in the decision and my comments outlined in paragraphs 9, 14 and 15 above, I believe that Boys should have the benefit of these findings. I estimate that these issues would have taken up approximately 10% of the disputation in the proceedings and the time at the hearing. Therefore, any award of costs to Miller should be reduced by 10%.
- These proceedings were very complex and involved competing questions of law and fact. As I pointed out in paragraphs 12 and 13 of the decision these proceedings were further complicated by the competing views of the building experts and some very technical building and engineering issues. Also, Boys’ counterclaim as outlined in paragraph 106 of his submissions dated 8 October 2019 was for an amount of $152,801.23. For these reasons the order I propose to make is for Boys to pay 90% of Miller’s costs on a standard basis assessed on the District Court Scale.
- The assessment of costs should not include any work associated with the order of Member Oliver made on 11 September 2019 where there is a separate costs order and the order of Senior Member Brown made on 8 August 2019 where there was agreement between the parties for the adjournment and there is a typographical error in the order.
- Given the history of these proceedings it is very unlikely that the parties will be able to reach agreement on the quantum of the costs that is the subject of this order. Section 107 of the QCAT Act sets out the principles for fixing and assessing costs in the Tribunal. Section 107(1) states that the Tribunal must fix costs if possible. I propose to make orders that the costs will be assessed by an assessor nominated by the Registrar of QCAT pursuant to rule 87(2) of the Queensland Civil and Administrative Tribunal Rules 2009 (QCAT Rules) and the assessor will assess the costs in accordance with Rules 87(3), (4) and (5) of the QCAT Rules.
- This assessment process is expensive so I will stay the effect of this order for a period of 30 days to allow the parties to enter into possible negotiations in an endeavour to reach agreement on the quantum of costs or alternative processes for how the costs should be assessed. If that is the case the parties can apply to the Tribunal for appropriate orders.
- The Respondent is ordered to pay 90% of the Applicant’s costs of and incidental to these proceedings as assessed in accordance with these orders. Such costs shall exclude the work incidental to the adjournment the subject of the order of Senior Member Brown made on 8 August 2019 and the work incidental to the adjourned Experts’ Conclave the subject of the order of Member Oliver made on 11 September 2019.
- The Applicant’s costs shall be assessed by an assessor nominated by the Registrar of this Tribunal pursuant to rule 87(2) of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld).
- The Applicant’s costs shall be assessed by the nominated costs assessor in accordance with the relevant District Court Scale and rules 87(3), (4) and (5) of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld).
- The Respondent is ordered to pay the assessed costs to the Applicant within 30 days of the date of notice of the assessment to the Respondent.
- The effect of these orders is stayed for a period of 30 days to allow the parties to enter into negotiations. If agreement is reached by the parties on the quantum of the costs or how the costs are to be assessed then the parties are at liberty to apply to the Tribunal for appropriate orders in lieu of the above orders.
- Published Case Name:
Imperial Homes (Qld) Pty Ltd v Boys
- Shortened Case Name:
Imperial Homes (Qld) Pty Ltd v Boys
 QCAT 429
09 Nov 2020