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- Unreported Judgment
Richards v Queensland Building and Construction Commission (No 2) QCAT 372
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Richards & Anor v Queensland Building and Construction Commission & Anor (No 2)  QCAT 372
TREVOR JAMES RICHARDS
(ELLEN HANNAH RICHARDS
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
BAX INVESTMENTS PTY LTD
General administrative review matters
6 December 2019
On the papers
The Queensland Building and Construction Commission pay the applicants the sum of $40,000 for costs.
ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – costs – where a decision to refuse cover under the statutory insurance scheme was set aside – where the Queensland Building and Construction Commission did not afford natural justice to the applicants in making its initial decision – where the applicants had a strong case – where the subsequent internal review procedure and then further reconsideration of its decision after commencement of proceedings not appropriately utilised which resulted in disadvantage to the applicants – where the applicants were forced to engage legal representation to have their rights under the statutory insurance policy vindicated – where it was in the interests of justice that the applicants should recover costs – where prudence dictated the failure by the applicants’ solicitors to particularise their invoices called for reduction of the amount assessed as appropriate – costs allowed on a standard basis
Queensland Building and Construction Commission Act 1991 (Qld), s 86
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 32, s 86, s 88, s 100, s 102, s 107
Ascot v Nursing & Midwifery Board of Australia  QCAT 364
Fuge v Queensland Building and Construction Commission  QCAT 383
Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)  QCAT 412
Tamawood Ltd v Paans  QCA 111
J Moxon of Counsel, instructed by Broadley Rees Hogan
N Thirumoorthi, in-house lawyer of Queensland Building and Construction Commission
R O'Regan, solicitor of Quinn & Scattini Lawyers
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).
REASONS FOR DECISION
- This matter involves an application for costs by the applicants against the first respondent, Queensland Building and Construction Commission (‘QBCC’).
- The applicants and the second respondent builder contracted for an extension to their home. The work was never finished. The applicants terminated the contract and claimed under the statutory home warranty insurance scheme for non-completion.
- Their claim was initially disallowed on the basis that they had not properly terminated the contract as required under the policy of insurance. The owners applied for internal review of that first decision. The review decision was not made within the requisite 28 days and accordingly the first decision disallowing their claim was confirmed.
- The applicants applied to the tribunal to review that decision. QBCC informed the tribunal it would reconsider its decision and the matter was sent back to QBCC for that purpose. After reconsidering its decision QBCC again refused the claim for insurance cover.
- The matter was heard before me on 7 May 2019. I found the applicants had validly terminated the contract consequent on a breach of contract by the builder, and made an order that the applicants’ claim under the statutory home warranty insurance scheme be accepted.
- The applicants now seek their costs of the action.
- The tribunal’s jurisdiction to order costs is provided for in Chapter 2 Part 6 Division 6 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’). By s 100, other than as provided under the Act or an enabling Act, each party to a proceeding must bear their own costs.
- By s 102, a party may be ordered to pay costs if it is in the interests of justice to do so. Section 102(3) sets out a number of factors that may be considered in deciding whether to award costs in the interests of justice. It is appropriate that I consider those factors here.
A party unnecessarily disadvantaged by another
- The applicants maintain delay on the part of QBCC disadvantaged the applicants by unnecessarily prolonging the matter.
- The applicants say it took nearly two years for the review application to be heard after they claimed under the home warranty insurance scheme on 26 May 2017.
- QBCC made its initial decision within time. It was wrong but it was within time.
- After that, the applicants, through their solicitors, on 28 July 2017 applied for internal review of the first decision. The solicitors addressed each claim made by the contractor and denied them. The solicitors noted no site investigation had been undertaken by QBCC. It was pointed out the contractor’s claims for payment were premature (not in accordance with the permitted stage claims) with the consequence that the owners were not in breach of the contract.
- There does not appear to have been much done by QBCC in pursuing internal review apart from waiting until 24 days had passed (of the permitted 28 days) before advising the applicants’ solicitor that the reviewing officer had sought, and the internal review would progress after, receipt of that advice. In the same email the officer requested an additional 28 days to make a decision.
- When the request for more time was refused by the applicants’ solicitors, time for the internal review expired which had the effect of confirming the previous decision by default.
- The result of the internal review decision was advised on 14 September 2017. The applicants filed their application in the tribunal seeking external review on 10 October 2017.
- QBCC then said it would reconsider its decision. QBCC proposed that soon after proceedings were commenced, which resulted in the tribunal proceedings being put on hold pending the reconsideration.
- During reconsideration, Mr Klemm, a building inspector, made a site visit on 21 February 2018 and prepared a report on 26 February 2018.
- According to QBCC there was delay on the part of the applicants in providing requested documents. QBCC requested further information from both the applicants and the contractor on 29 November 2017 and the solicitors for the applicants supplied that on 30 January 2018. The solicitor’s reply was fairly detailed.
- On 5 March 2018 QBCC requested information from both the applicants and the builder on the scope of work of the contract.
- An extension of time for QBCC to reconsider its decision was then agreed with the applicants.
- On 30 April 2018 QBCC again concluded that the applicants had not properly terminated the contract, but this time finding that by paying the contractor for some invoices they had affirmed the contract which prevented them from relying on delay in commencing work to terminate it. Of course, the delay in commencing work was never the issue raised by the applicants but failure to complete the work within time, the latter of which prompted their Notice to Remedy Breach.
- I detect no mala fides on the part of the QBCC in reconsidering its decision. However, QBCC show no evidence of having utilised the time made available to it by the internal review process to appropriately consider the matter.
- Nor was the opportunity given to it after institution of proceedings to reconsider its decision utilised to advantage. Rather, QBCC appears again to have focused on the builder’s late start performing the contract and adjusted its view of the law applicable to the contract to accommodate that fixed focus.
- The result was disadvantage caused to the applicants.
Nature and complexity of dispute
- The matter was reasonably complex such that it was appropriate for the parties to have legal representation. Without legal representation the applicants, both elderly and clearly lacking legal knowledge, would probably not have succeeded in establishing their claim to cover under the statutory insurance scheme.
The relative strengths of the claims of each party
- The claim of the applicants was straightforward. They always had a strong case.
- On the other hand, it should have been obvious that the contractor had problems with its contentions.
- The applicants always made clear their position in respect of the builder’s delay in commencement of work under the contract:
Despite entering into the contract on 18 April 2016, the contractor delayed commencing the works until on or about 9 September 2017.
- This clear statement by the applicants in their claim for insurance and its legal ramifications, and in particular the validity of the Notice to Remedy Breach issued to the builder, were either simply missed or ignored by QBCC on more than one occasion.
- QBCC appeared to afford far greater weight to the claims made by the builder than that by the applicants without explaining why. The builder’s claims lacked credibility (for example, that the applicants sought a delay to the start of the contract of October 2016 because of their school holiday commitments – where the applicants were aged 79 and 83 years as at date of hearing) and were clearly outside the written terms of the contract (for example, the erroneous Adjustment Note purportedly allowing the builder to claim early without completing the agreed stages of the contract entitling payment, and the multiple conflicting and confusing invoices not referable to the agreed specified stages of the contract).
Were the applicants afforded natural justice by the decision maker?
- The first decision notice refusing the applicants’ claim under the insurance of 3 July 2017 relied on the following as substantial breaches of the applicants’ obligations under the contract to deny the claim:
- (a)The applicants refused the builder and its employees access to the property;
- (b)The applicants outsourced work the subject of the contract; and
- (c)The applicants issued instructions to suppliers and contractor employees on site.
- In the decision letter QBCC go on to say that they had no evidence or submissions available to suggest otherwise. There was no evidence or submissions available to suggest otherwise because the claims had not been put to the applicants. The applicants were clearly not afforded natural justice at outset in the initial decision refusing their claim. Had they been afforded such, the matter may well have concluded at that stage in their favour. I note Mr Twinn, the QBCC officer who first sought legal advice about the matter, was of the opinion that the applicants had terminated the contract so as to qualify for a claim under the insurance.
Did the applicants genuinely attempt to assist the decision maker make the decision on the merits?
- I find nothing to suggest the applicants did not attempt to provide such information as was required for the decision maker to determine the matter.
- QBCC submits the applicants did not assist because they objected to an extension of time for QBCC to make the internal review decision.
- The solicitor for the applicants responded to the first decision of 3 July 2017 by detailing in a letter dated 28 July 2017 the applicants’ denial of each of the three allegations by the builder relied on by QBCC to refuse the claim. The applicants’ solicitor also noted that the builder’s invoices were premature, did not conform to the payment regime set out in the contract and submitted that accordingly, the applicants were not in breach of the contract. This was all relevant material and in accordance with the findings made at hearing.
- The legislation set the time limit of 28 days to make a decision. The legislature deemed that sufficient. It is not appropriate to treat a refusal for an extension of the statutory 28 day time limit as unreasonable without consideration of the circumstances, and I am unable to conclude it was unreasonable here. This was the second decision by QBCC. There was a deal of material already before it from the first decision.
The financial circumstances of the parties
- The applicants have not provided details of their finances. I note in a letter to QBCC dated 29 March 2018 their solicitor says:
Our clients are 83 and 77 years old respectively. Due to the actions of the builder, they have been forced to live in a half finished house for over a year and spend a significant portion of their life savings on legal costs seeking to enforce their rights to cover under the statutory insurance scheme.
- I conclude the applicants are probably best described as being of modest means. They do own their own home.
- The conduct of the QBCC at the hearing is also criticised, principally the substantial cross-examination of Mrs Richards. Mr Richards did not give evidence. The applicants suggest QBCC descended into the arena by subjecting Mrs Richards to lengthy cross-examination and QBCC made submissions which were not supported on the tendered evidence.
- QBCC was reasonably entitled to test the evidence of the applicants. The cross-examination of Mrs Richards did that without bullying. That would not have been permitted. To some degree the examination was repetitive concerning Mrs Richards’ diary entries, but I cannot conclude it was objectionable or that it demonstrated QBCC was descending into the arena. The conduct of QBCC at the hearing did not unduly disadvantage the applicants.
- It is also claimed that QBCC acted poorly in refusing to engage in settlement discussions by raising a technical argument concerning the scope of s 86 of the QCAT Act.
- Section 86 provides:
Settlement other than in compulsory conference or at conciliation or mediation
- This section applies if a settlement is reached by the parties to a proceeding other than in a compulsory conference or at conciliation or mediation.
- The parties may—
- record the terms of the settlement in writing and sign the written terms; and
- file the signed written terms in the registry.
- QBCC said the terms of settlement proposed by the applicants (there were two proposals) did not extend to include the builder who had been joined to the action. Indeed, the builder rejected the second settlement proposal. QBCC considered the reference to a settlement reached by ‘the parties’ to a proceeding in s 86 required a settlement by all the parties.
- Far from being a mere technical argument, and without being required to decide the matter, I consider the construction placed on s 86 by QBCC appropriate and far from a mere technicality. It is suggestive that by s 88, which refers to giving effect to such a settlement, an order made pursuant to the settlement may be amended but any such application for amendment must be made by ‘all the parties to the proceeding’.
- QBCC’s interpretation of the requirements of settlement under Part 6 Division 4 of Chapter 2 of the QCAT Act seems correct and as such the position adopted by QBCC relying on that cannot be regarded as some form of obstruction disadvantaging the applicants.
- In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2),
Wilson J, the President of 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 Ascot v Nursing & Midwifery Board of Australia, Kingham DCJ, the Deputy President, explained:
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 s 102(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.
- In Fuge v Queensland Building and Construction Commission (‘Fuge v QBCC’), Senior Member Oliver said concerning costs orders sought against a decision maker who is a government department or instrumentality such as QBCC:
…under the QBCC Act, the Commission has a dual function in administrating the Act. That is, to protect the public interest and also the interests of building contractors. In doing so it must not be reticent in discharging its obligations for fear of adverse costs orders against it if it is unsuccessful in responding to an application for review of its decisions unless it can be demonstrated, there is some specific conduct on the part of the Commission, that would ‘so compellingly’ overcome the strong contra-indication against costs orders in s 100 of the QCAT Act.
- The applicants do not seek costs against the second respondent. It was joined to the action late by QBCC. All parties agree the usual order that each party bear their costs should apply as between the applicants and the second respondent.
- The applicants always had a strong case. Immediately upon the applicants being informed of what was alleged by the contractor about an agreed late start to the work (not alleged directly by the contractor but only extracted as comment from correspondence between the contractor and its solicitors, copies of which were provided to QBCC), that claim was denied but QBCC appears simply to have preferred the builder’s claim without ever explaining clearly why the applicants’ position was rejected.
- QBCC gave little consideration to the construction contract being a standard stages contract which only allowed the builder to claim after completion of each agreed stage. The invoices from the builder were clearly outside the stage claims permitted under the contract. That should have been obvious.
- The applicants were not afforded natural justice when QBCC made its first decision.
- QBCC’s efforts in progressing the matter appropriately through internal review and reconsideration periods were less than they should have been in the circumstances and, as a result, unnecessarily disadvantaged the applicants.
- Whilst mindful of the statement in Fuge v QBCC about QBCC not being made reticent about discharging its obligations for fear of adverse cost orders, I also note that the aged applicants have been put to considerable expense in having their claim to insurance cover accepted, as they were entitled to, under the policy. To date the costs are said to be $82,317.98.
- The applicants were obliged to retain legal representation to have their rights under the insurance policy vindicated. The comments by Keane JA in Tamawood Ltd v Paans are aptly applicable here:
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.
- In all these circumstances I determine the interests of justice point compellingly to a costs award which overcomes the strong contra-indication that each party should bear their own costs set out in s 100 of the Act.
- The interests of justice suggest that the appropriate award should be the applicants’ costs of the action on a standard basis for the period subsequent to the internal review decision made on 14 September 2017.
- By s 107(1) of the Act the tribunal must fix costs if possible.
- The applicants’ solicitors set out the amounts of the invoices charged by their firm from commencement to conclusion of the proceedings, but other than for counsel’s fee note, none of the solicitor’s actual accounts are provided and there is limited description of what work was done by them for the money they charged. They should have provided more information about that.
- The application in the tribunal was filed on 10 October 2017.
- The costs rendered by the solicitors after that date amount to $59,341.94.
- Counsel’s fees charged from March 2019 seem reasonable and including the charges for making submissions on costs are $7,865.
- The total of counsel and solicitor fees from commencement of proceedings is therefore $67,206.94.
- Given the failure to particularise, as a matter of prudence, it is appropriate to allow something a little less than two thirds of $67,206.94 as reasonable costs on a standard basis. Accordingly an amount of $40,000 all up is allowed.
 Statement of Reasons, 282 (‘SOR’).
 QBCC submissions, filed 12 August 2019, .
 SOR, 82.
 SOR, 212.
 SOR, 260.
  QCAT 412.
 Ibid .
  QCAT 364.
 Ibid .
  QCAT 383.
 Ibid .
 SOR-5, 212.
  QCA 111.
 Ibid .
- Published Case Name:
Richards & Anor v Queensland Building and Construction Commission & Anor (No 2)
- Shortened Case Name:
Richards v Queensland Building and Construction Commission (No 2)
 QCAT 372
06 Dec 2019