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WCQ Constructions Pty Ltd v Reintals[2020] QCAT 518

WCQ Constructions Pty Ltd v Reintals[2020] QCAT 518

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

WCQ Constructions Pty Ltd v Reintals & Anor [2020] QCAT 518

PARTIES:

wcq constructions pty ltd

ACN 128 038 111

(applicant)

v

dinah reintals

(first respondent)

AND

WALDEMAR REINTALS

(second respondent)

APPLICATION NO/S:

BDL319-19

MATTER TYPE:

Building matters

DELIVERED ON:

2 November 2020

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

ORDERS:

  1. WCQ Constructions Pty Ltd has leave to file the amended Application for domestic building disputes received in the registry on 1 September 2020.
  2. The application for miscellaneous matters filed 14 July 2020 is refused.
  3. Dinah Reintals and Waldemar Reintals must file in the Tribunal two (2) copies and give to WCQ Constructions Pty Ltd one (1) copy of an amended response and counter-application, by:

4:00pm 30 November 2020.

  1. WCQ Constructions Pty Ltd must file in the Tribunal two (2) copies and give to Dinah Reintals and Waldemar Reintals one (1) copy of a response to any amended counter-application, by:

4:00pm on 14 December 2020.

  1. The matter is listed for a Directions Hearing on a date and time to be advised.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS – PROCEDURE – where the respondent seeks security for costs – where the respondent seeks security for costs – where the applicant did not provide requested financial documents to establish financial position– where applicant later presented evidence of financial position – where respondents produced conflicting financial information – where the applicant has held a Builder – Low Rise licence since 2010 – where a precondition to holding this licence is meeting minimum financial requirements – where the applicant has an arguable case with reasonable prospects of success – whether there should be an order for security for costs

Queensland Building and Construction Commission Act 1991 (Qld) s 77

Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018, s 3, Sch 1, s 13, s 14

Bryan E Fencott and Assocs Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497

Lyons v Dreamstarter Pty Ltd [2012] QCATA 71

APPEARANCES:

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

  1. [1]
    WCQ entered into a contract with the Reintels to undertake building work. The parties fell into dispute. WCQ commenced proceedings seeking to recover what it says are monies owed by the Reintels. The amount claimed by WCQ is $64,867.96.
  2. [2]
    The Reintels have filed a response and counter application in which, inter alia, they deny being indebted to WCQ.
  3. [3]
    The Reintels have filed an application for, inter alia, security for costs. The security sought by the Reintels is in the amount of $34,121.75.

Security for costs

  1. [4]
    A party to a proceeding may apply to the tribunal for an order requiring a party to a proceeding to give security for the applicant party’s costs and staying the proceeding until the security is given.[1]
  2. [5]
    In deciding whether to make an order for security for costs, the tribunal may have regard to any of the following matters:
    1. (a)
      The financial circumstances of the parties to the proceeding;
    2. (b)
      The prospects of success or merits of the proceeding;
    3. (c)
      The genuineness of the proceeding against the applicant party;
    4. (d)
      Anything else the tribunal considers relevant.[2]
  3. [6]
    If an order for security for costs is made and the security is not paid within the stipulated period, the tribunal may dismiss the proceeding.[3]

Consideration

The financial circumstances of the parties

  1. [7]
    The Reintels rely upon written submissions and sworn affidavits by Mr Reintels and the solicitor for the Reintels, Mr Kelly.
  2. [8]
    In their submissions regarding the financial position of WCQ the Reintels say:
    1. (a)
      They wrote to WCQ requesting copies of a balance sheet, profit and loss statements and other current information addressing the ‘financial health’ of the company such as its current assets, work in progress and debts and liabilities;
    2. (b)
      WCQ provided none of the requested documentation;
    3. (c)
      WCQ, through its legal representatives, stated that the company was not financially moribund and that the Reintels could not definitively prove that WCQ would be unable to satisfy an adverse costs order;
    4. (d)
      As to the financial circumstances of WCQ:
      1. WCQ has granted charges to a number of companies;
      2. WCQ does not hold any property in Queensland;
      3. WCQ has paid up capital of $20.00;
      4. There has been a substantial decline in the value of work performed by WCQ from the 2011 and 2012 financial years to the 2020 financial year;
    5. (e)
      WCQ was the defendant in District Court proceedings commenced in August 2019 and discontinued in April 2020;
    6. (f)
      Judgment was entered against WCQ in the Magistrates Court in respect of a claim by the same scaffolding company WCQ had subcontracted with in respect of the building works for the Reintels.
  1. [9]
    In response, WCQ says that the Reintels have led no evidence as to their financial circumstances which is a relevant consideration in an application for security for costs.
  2. [10]
    WCQ concedes that it did not, upon request by the Reintels, provide proof of its ability to pay an adverse costs order. Accompanying its submissions is an affidavit by the solicitor for WCQ which it says demonstrates its ability to pay an adverse costs order in the amount of the security sought by the Reintels.
  3. [11]
    The Reintels in their reply submissions object to the admission of the further evidence from WCQ’s solicitor in relation to the financial circumstances of the company on the basis that the material could have been supplied when the Reintels first requested it. The Reintels say that the financial statements attached to the solicitor’s affidavit are inadmissible under the Evidence Act 1977 (Qld).
  4. [12]
    The Reintels make submissions as to what they say are various inconsistencies on the face of the financial statements. I will address the submissions later in these reasons.
  5. [13]
    It is apparent from the parties submissions, and the affidavit evidence relied upon by each, that WCQ did not respond to the requests by the Reintels for evidence as to the financial position of the company.
  1. [14]
    I will address firstly the Reintels’ contentions that the evidence as to the financial position of WCQ contained in the affidavit of the company’s solicitor, Mr Hodgson, should not be admitted. I do not accept the submission that the evidence should be disallowed on the basis that WCQ did not respond to the Reintels’ requests in a timely manner. The reasonableness of the conduct of WCQ in responding to the relevant issues when first raised by the Reintels may however be relevant to an order for costs. It does not mean that the evidence should not be considered in the present application.
  2. [15]
    I do not accept the Reintels’ submission that the financial statements attached to Mr Hodgson’s affidavit are inadmissible under the Evidence Act 1977 (Qld). In conducting a proceeding the tribunal is not bound by the rules of evidence or any practices or procedures applying to courts of record other than to the extent the tribunal adopts the rules, practices or procedures.[4]  However the rules of evidence may be used to assist in assessing the weight to be given to particular evidence.[5] I will return to the question of the weight to be afforded to the financial documentation later in these reasons.
  3. [16]
    It is appropriate at this juncture to address the submission by the Reintels that the evidence relied upon by WCQ is the affidavit of Mr Hodgson and not an officer of the company. It is not uncommon in interlocutory applications of this nature for statements to be made and affidavits to be sworn on the basis of information and belief by the legal representative for a party. Such evidence is admissible in the courts.[6] The procedure for a proceeding is at the discretion of the tribunal, subject to the QCAT Act, an enabling Act and the QCAT rules.[7] Again, it is a question of the weight to be afforded to the evidence which might be affected by matters such as the provenance of the evidence. It should also be noted that Mr Hodgson specifies the source and grounds of his information and belief.[8]
  4. [17]
    I turn now to the evidence before the tribunal as to the financial circumstances of WCQ. The balance sheet for the company for the period July 2020 to September 2020 reveals the following:
    1. (a)
      The company had current assets[9] of $346,602.67;
    2. (b)
      The company had total non current assets[10] of $190,560.00;
    3. (c)
      The company had total current liabilities[11] of $128,514.95;
    4. (d)
      The company had total non current liabilities[12] of $244,986.08;
    5. (e)
      Total equity of $782,148.75.
  1. [18]
    The profit and loss statement for the company for the period July 2020 to September 2020 reveals the following:
    1. (a)
      Income of $117,289.74;
    2. (b)
      Total cost of sales of $57,817.57;
    3. (c)
      Gross profit of $59,472.17;
    4. (d)
      Operating profit of $57,545.11;
    5. (e)
      Net profit of $58,745.11
  1. [19]
    In his affidavit Mr Hodgson attests to the following:
    1. (a)
      He was advised by the director of WCQ, Mr Montesano, that:
      1. the balance sheet and profit and loss statement are accurate in all respects;
      2. WCQ has held a ‘builder – low rise’ licence since 16 February 2016;
      3. It is a regulatory requirement that in order to hold this licence WCQ must hold a prescribed amount of net tangible assets;
      4. At all times WCQ has satisfied, and presently satisfies, the QBCC’s minimum net tangible asset requirements;
    2. (b)
      The balance sheet and profit and loss statement record that WCQ:
      1. Has net assets of $782,148.74;
      2. Has a bank account with a credit balance of $120,097.64;
      3. For the period July 2020 to September 2020 made a net operating profit from carrying out insurance work of $57,545.11.[13]
  2. [20]
    The Reintels assert that the financial statements should not be afforded weight. They say that the statements have not been prepared by an accountant. There is no evidence of this one way or the other. Certainly the Reintels offer no evidence that the financial statements were not prepared by an accountant although I would observe, just who prepared the documents is not referred to in the evidence of WCQ’s solicitor.
  3. [21]
    The Reintels raise in their submissions a number of specific issues in relation to the financial statements. There is before the Tribunal an affidavit by Mr Reintels[14] filed after receiving a copy of Mr Hodgson’s affidavit. Attached to the affidavit is a bundle of documents including a ‘statement of financial position’ provided by a Mr Breen to Mr Reintels in relation to an unrelated Magistrates Court proceeding.
  4. [22]
    It is appropriate to say a number of things about the affidavit of Mr Reintels and the documents attached. Firstly, in their reply submissions, the Reintels object to the admission into evidence of the affidavit of WCQ’s solicitor Mr Hodgson on the basis that it attaches documents not previously supplied. I have already dealt with this issue. However the ‘new evidence’ argument relied upon by the Reintels applies equally to the affidavit of Mr Reintels. No explanation is proffered by the Reintels as to why the documents attached to Mr Reintels affidavit could not have formed part of the material filed in support of the present application. Instead, the Reintels have filed the material without WCQ being afforded an opportunity to respond. This raises issues as to procedural fairness. On this basis alone I would be hesitant to take into consideration the material attached to Mr Reintels’s affidavit.
  5. [23]
    Having said this, and for the reasons that follow, I do not find the affidavit or the attached documents are sufficiently persuasive to make the order for security. 
  6. [24]
    In their reply submissions, the Reintels refer to a comparison between the ‘statement of financial position’ and the balance sheet relied upon by WCQ.  There are a number of observations to be made about the ‘statement of financial position’. It is neither signed nor dated. On its face the document purports to relate to a Supreme Court proceeding however the reference to the relevant registry being ‘Proserpine’ and the file number being ‘M13/2020’ suggest that the document relates to a minor civil dispute in this tribunal. The Reintels say that the ‘statement of financial circumstances’ was completed by Mr Montesano, WCQ’s director, on or about 28 April 2020. This is said to be ‘based on the JP stamp on the attachments’. Presumably the ‘attachments’ referred to by the Reintels are those documents accompanying the ‘statement of financial circumstances’ being a company tax return for WCQ for the financial year 2019, and a profit and loss statement and balance sheet for WCQ for the financial year 2019 (which I will refer to as the 2019 tax documents).
  7. [25]
    In his affidavit Mr Reintels blandly refers to the ‘statement of financial position’ as being a document suggestive that the balance sheet relied upon by WCQ ‘may not be accurate’. There is no affidavit by Mr Breen as to the provenance of the documents relied upon by the Reintels or the contents thereof.
  8. [26]
    There is no cogent evidence before the Tribunal that the ‘statement of financial position’ is Mr Montesano’s document or that it should be treated thus. Indeed there is no evidence as to how the document came into existence.
  9. [27]
    For the reasons outlined, I place no weight upon the document ‘statement of financial circumstances’ insofar as it is relied upon by the Reintels as Mr Montesano’s document or as evidence of the financial circumstances of WCQ or Mr Montesano.
  10. [28]
    Insofar as the Reintels rely upon the 2019 tax documents they say the following:
    1. (a)
      The net assets of WCQ as at 30 June 2019 were only $8,183.25;
    2. (b)
      As a consequence of carried forward tax losses from 2018, WCQ’s taxable income for the 2019 year was $8,651.00.
  1. [29]
    The Reintels say a number of things about the financial documents relied upon by WCQ in support of its financial position which they rely upon in asserting that the financial documents are unreliable. I do not propose to outline each and every one of those submissions. Suffice it to say, the essential thrust of the argument by the Reintels is that the cumulative effect of the inconsistencies identified by them in the documents relied upon by WCQ compels the conclusion that the documents do not support the assertion by WCQ as to its current financial position.
  2. [30]
    The Reintels also rely upon what they say is evidence of WCQ’s refusal to pay amounts owing to sub-contractors and its ongoing failure to pay judgment debts. The evidence relied upon the Reintels is:
    1. (a)
      A decision by default in the tribunal on 20 February 2020 in a minor civil dispute claim against WCQ in the amount of $15,775.31 and an affidavit of debt dated 23 March 2020 attesting to the non-payment of the amount;
    2. (b)
      A decision by default in the tribunal on 12 February 2020 in a minor civil dispute claim against WCQ in the amount of $18,106.81 and an affidavit of debt dated 23 March 2020 attesting to the non-payment of the amount.
  3. [31]
    In respect of both decisions, the affidavits of debt are sworn by Mr Breen who I have referred to earlier in these reasons. It is apparent that Mr Breen has provided the Reintels with certain information regarding WCQ. As I have observed, there is no statement or affidavit by Mr Breen before the tribunal in these proceedings. There is no evidence that the amounts, the subject of the decisions, have not been paid.  The Reintels submit that WCQ has failed to adduce evidence of payment of the judgment sums. The application for security for costs is brought by the Reintels and it was the Reintels to place evidence before the Tribunal in support of the application. In his affidavit Mr Reintels refers to having been provided with certain documents by Mr Breen. Despite this there is no attempt by the Reintels to address whether the judgment sums remain outstanding, either in Mr Reintel’s evidence or evidence from Mr Breen.
  4. [32]
    There is a final observation to be made. It is possible that the resolution of the various proceedings to which the Reintels refer reflects an ability by WCQ to pay its debts.
  5. [33]
    For the reasons I have set out I do not consider the documents relied upon by the Reintels to be persuasive.
  6. [34]
    The Reintels refer to District Court proceedings in which WCQ was named as defendant. The proceeding was discontinued in April 2020. There is no attempt by the Reintels to further elaborate on why these proceedings are relevant in the present application. I do not consider the Reintels’ submissions in this regard to be persuasive.
  7. [35]
    I accept that there are some aspects to the financial documents which would benefit from further clarification. The current assets listed in the balance sheet include ‘Jamie’s personal cash’. This is presumably a reference to a loan from Mr Montesano to the company. The amount is recorded as a debit. Why the amount therefore does not appear as a liability is not clear.  Similar observations may be made regarding a home loan account and a term deposit. Having said this, the current asset position stated in the balance sheet appears to reflect these debit amounts. As the Reintels submit, the current assets also include an amount for ‘Tully profit’. It is not clear what this is a reference to although, appearing as it does in the current assets, it is presumably a profit to be realised within the next 12 months.
  8. [36]
    The current liabilities in the balance sheet refer to a director loan. Presumably this loan is considered to be repayable within 12 months. There is also a ‘director loan’ listed in the non-current liabilities. The reference to the director loan in the current liabilities does tend to indicate a cash injection from Mr Montesano but the import of this is not immediately clear. The balance sheet also refers to retained earnings of $742,514.34. Generally speaking, retained earnings is the amount of net income derived by a company after the payment of dividends to shareholders. It represents the owner’s long-term investment in a business. Without the benefit of WCQ’s 2020 income tax return and financial statements, the details of the retained earnings referred to in the balance sheet cannot be verified.
  9. [37]
    The issues to which I have referred highlight one of the difficulties faced in an application such as this that is, the absence of expert evidence regarding the financial status of the applicant. The Reintels provide no evidence from, for example, a forensic accountant to support the many and varied assertions they make regarding the financial circumstances of the company. Of course, the same criticism may be levelled at WCQ in presenting financial documents which are not certified by an accountant and which are less than ideally explained.
  10. [38]
    However the tribunal is a jurisdiction in which parties are not, and should not be, expected to expend monies in an application such as this as might be expected in the District Court or the Supreme Court in gathering evidence from, for example, a forensic accountant. The tribunal must deal with matters in a way that is accessible, fair, just, economical, informal and quick. The quantum of the claim by WCQ and the counter claim by the Reintels are not large. Costs can quickly escalate in building disputes and become disproportionate to the amounts in dispute. I am therefore not prepared to be critical of either party in not placing before the tribunal expert evidence in relation to the issues relevant in the present application.
  11. [39]
    On balance however I am not persuaded by the Reintels’ submissions that the issues identified by them in relation to the financial documents compel the conclusion that WCQ will be unable to meet an order for costs.
  12. [40]
    The impecuniosity of an applicant will always be a relevant, and sometimes decisive, factor in an application for security for costs.[15] For the reasons set out, and the reasons that follow, I am not persuaded that WCQ is impecunious.
  13. [41]
    A consideration which is, in my view, of some relevance is the QBCC licence history of WCQ.[16] WCQ has held a Builder – Low Rise licence since February 2010. There is no history of the company having any disciplinary record. In the years 2018, 2019 and 2020 WCQ reported, respectively, 5, 6 and 4 jobs and, respectively, value of works of $611,098.44, $648,079.15 and $378,039.45.
  14. [42]
    The main purpose of the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 is to prescribe the minimum financial requirements for, inter alia, a licensee who holds a contractor’s licence.[17] In accordance with the regulation, WCQ is categorised as ‘SC2’ which applies to licensees with a maximum revenue of more than $200,000 but not more than $800,000. A category 2 licensee must hold minimum net tangible assets of $46,000.[18] Net tangible assets is the amount the amount worked out by subtracting all of the licensee’s liabilities, intangible assets and the total amount of the licensee’s disallowed assets from the total amount of the licensee’s assets.[19]
  15. [43]
    The Reintels say that weight should not be afforded to WCQ’s financial history as recorded by the QBCC on the basis that the history is based upon WCQ’s self-reporting.  There is nothing before me to suggest that WCQ has not been forthright and truthful in its reporting to the QBCC. It should be noted that there are significant consequences resulting from a licensee failing to meet the relevant minimum financial requirements and penalties and offences apply if a licensee provides false or misleading information to the QBCC. On balance I find that the QBCC licence search speaks of a company with some degree of financial and general stability and, in my view, tells against the making of an order for security.
  16. [44]
    Taking all of the above matters into consideration I am prepared to accept the evidence of WCQ as to its current financial position. 
  17. [45]
    Finally I note that the Reintels have provided no evidence in relation to their financial position.
  18. [46]
    I am not persuaded that WCQ’s financial circumstances are such that it would likely be unable to meet an adverse costs order. 

The prospects of success or merits of the proceedings

  1. [47]
    In an application such as this care should be exercised when assessing the proportionate strength of the cases of the parties at an early stage of proceedings.[20]
  2. [48]
    The Reintels accept that the claim by WCQ is regular and discloses a cause of action. They concede that, in the absence of evidence to the contrary, the Tribunal should proceed on the basis that the claim is bona fide and has reasonable prospects of success. The Reintels say however that the evidence supports the conclusion that WCQ’s claim does not have reasonable prospects of success.
  3. [49]
    Before considering the submissions by the parties, it is necessary to examine more closely the claim by WCQ.
  4. [50]
    WCQ commenced these proceedings by application filed 13 December 2019. WCQ seeks payment of an amount of $64,867.96. At the time of filing the application WCQ was not legally represented. As is often the case with unrepresented parties, and noting that the tribunal is not a pleadings jurisdiction, the application is not articulated with great clarity. It is sufficient for present purposes to note that the application sets out the following:
    1. (a)
      The parties entered into a building contract for the performance of building work following storm damage caused by Cyclone Debbie;
    2. (b)
      The deposit required under the contract was paid by the Reintels;
    3. (c)
      WCQ ordered materials which were delivered to the site;
    4. (d)
      Scaffolding was erected and sub-contractors were engaged by WCQ;
    5. (e)
      Building work was delayed by approximately 1 week as a result of inclement weather;
    6. (f)
      The Reintels did not have proper cause to terminate the contract;
    7. (g)
      The competent sub-trades engaged by WCQ completed the works;
    8. (h)
      The works were completed as initially instructed and planned by WCQ.
  5. [51]
    The Reintels filed a response prepared by their solicitors in which they say:
    1. (a)
      The application by WCQ should be struck out as an abuse of process;
    2. (b)
      WCQ failed to plead the material matters relied upon by it including:
      1. That the Reintels terminated the contract;
      2. The manner in which the contract was terminated;
      3. The conditions of the contract alleged by WCQ to have been breached by the Reintels;
      4. The basis for the allegation that the reasoning for the cancellation of the contract was not justified;
    3. (c)
      The application discloses no cause of action.
    4. (d)
      The Reintels were entitled to terminate the contract on the basis that WCQ had abandoned the works or alternatively WCQ was in substantial breach of the contract and/or repudiated the contract.
  6. [52]
    The Reintels also assert a right to set-off or counter claim in respect of certain costs associated with, among other things, repairs to the roof of the Reintels’ dwelling.
  7. [53]
    On 1 September 2020 WCQ forwarded to the Tribunal registry an amended Application for domestic building disputes. It is appropriate that WCQ have leave to file the amended Application. It is apparent that the original application fails to adequately particularise the claim by WCQ and the amended application serves to remedy these deficiencies. Further, in order to properly consider all of the issues relevant to the determination of the present application, regard should be had to the amended application. The only possible disadvantage to the Reintels in adopting this course of action is that they have not yet filed an amended response however this is not an issue raised by the Reintels in their submissions.
  8. [54]
    The amended application comprehensively sets out the claim by WCQ and, in so doing, addresses the issues raised by the Reintels in relation to the adequacy of the extent to which the claim by WCQ is articulated. The amended application says the following:
    1. (a)
      The contract price was $102,069.47 payable as follows:
      1. A deposit of $5,103.47 upon the contract being signed;
      2. Progress payment of $20,413.89 payable upon ‘Site mobilisation, measure, engage certifier’;
      3. Progress payment of $25,517.37 payable upon ‘Materials on site, scaffold up’;
      4. Progress payment of $51,034.68 payable upon practical completion;
    2. (b)
      The contract entitled WCQ to claim progress payments when completion of the relevant stages was achieved;
    3. (c)
      The contract provided that if the Reintels disputed a progress payment they pay the undisputed portion of the claim and advise WCQ as to the basis of the dispute;
    4. (d)
      The contract provided that in the event of a substantial breach of the contract, the party not in breach shall give notice to remedy the breach and, if the breach is not remedied within 10 days, the party not in breach may terminate the contract;
    5. (e)
      From 16 September 2019 the Reintels were in substantial breach of the contract as a result of failure to provide to WCQ evidence of their capacity to pay the total contract price;
    6. (f)
      As a result, and by operation of the contract, the date of commencement of the works never arose;
    7. (g)
      Between 1 October 2019 and 27 October 2019 various communications passed between the parties in relation to the works which included, inter alia, changes to the colour of the roofing and the start date for the roofing works;
    8. (h)
      Between 1 October 2019 and 27 October 2019 roofing materials were ordered by WCQ and delivered to the site, scaffolding was erected and arrangements were made for sub-contractors to attend on site to commence the roofing works;
    9. (i)
      On 29 October 2019 the Reintels purported to terminate the contract on the basis that WCQ was in breach of the contract in failing to register the contract/works with the QBCC, failing to engage a certifier, failing to effect insurance; providing false details to the QBCC; asking for ‘an illegal advance’.
    10. (j)
      Prior to the purported termination, the Reintels did not serve upon WCQ a notice of substantial breach in accordance with the terms of the contract;
    11. (k)
      The purported termination of the contract by the Reintels was unlawful and repudiatory of the contract on the basis that WCQ was not in substantial breach, no notice of substantial breach had been served and, at the time of the purported termination, the Reintels were themselves in substantial breach of the contract;
    12. (l)
      By its conduct in removing its equipment and not returning to the site, WCQ accepted the Reintels’ repudiation of the contract and thereby terminated the contract.   
  9. [55]
    Directions have been made for the parties to file their statements of evidence. WCQ has filed its evidence, the Reintels have not. WCQ relies upon a statement of evidence by Mr Montesano. It should be noted that the statement of evidence was filed prior to the filing by WCQ of the amended application for domestic building dispute.
  10. [56]
    It is apparent from the amended application, the response and the statement of Mr Montesano that there is a significant factual dispute regarding the termination of the contract including whether either party had engaged in repudiatory conduct  and whether there was a contractual or a common law right to terminate.
  11. [57]
    It appears on the face of the contract, and in the absence of any specific submissions by the parties, that the parties rights to terminate the contract under the general law were maintained. Under the general law a party has a right to terminate a contract if:
    1. (a)
      The other party has repudiated the contract;
    2. (b)
      Where there has been a breach of an essential term or a sufficiently serious breach of a non-essential term.[21]
  12. [58]
    In their submissions, the Reintels say that they were entitled to terminate the contract under the terms of the contract or under the general law.
  13. [59]
    The Reintels say that Mr Montesano’s own evidence supports the conclusion that, in demanding and receiving payment of the first stage payment WCQ was in substantial breach of the contract.  This allegation is not specifically referred to in the purported notice of termination of the contract from the Reintels to WCQ nor is the assertion found in the Reintels’ response.
  14. [60]
    As I have observed, WCQ says that the Reintels failed to comply with the requirements of clause 19 before purporting to terminate the contract.
  15. [61]
    Until such time as the Reintels have set out comprehensively their response to the amended application it is not appropriate, in determining the present application, to make a determination of WCQ’s prospects of success on the termination issue.
  16. [62]
    The Reintels say that the claim by WCQ that the Reintels were in substantial breach of the contract by failing to provide evidence of their capacity to pay the contract price is ‘disingenuous’. Despite being characterised thus, and noting that the allegation is not specifically denied by the Reintels in their submissions, this is an issue in relation to which the parties will lead evidence and which will be ventilated at a contested hearing.
  17. [63]
    All of these considerations highlight a broader issue. There has been no response to the amended application and the Reintels have filed no evidence in support of the various assertions made as to WCQ’s prospects of success. 
  18. [64]
    I am satisfied that WCQ has an arguable case with reasonable prospects of success.[22]

The genuineness of the proceeding against the Reintels

  1. [65]
    Whether a claim is genuine is a relevant consideration and the motivation of an applicant in bringing proceedings will be taken into account.[23] The Reintels do not submit that the claim by WCQ is not genuine.

Other relevant considerations

  1. [66]
    The Reintels say that there has been no delay in bringing the application for security for costs. An application for security should be brought promptly and without delay.[24] There is no general rule however requiring refusal of an application on the basis of delay alone.[25] The proceedings were commenced in December 2019. The response was filed in January 2020. A compulsory conference was held in May 2020. The present application was filed in July 2020. The Reintels have not yet filed their statements of evidence. I am not persuaded that delay is a relevant consideration.
  2. [67]
    WCQ says that the quantum of the costs sought is excessive. In support of their application, the Reintels rely upon the evidence of Mr Topp, an approved costs assessor. Mr Topp has undertaken the assessment of the Reintels’ costs on the standard basis, on the District Court scale, up to and including the first day of the hearing. WCQ says that the costs should be assessed on the Magistrates Court scale applicable to matters where the amount recovered exceeds $50,000.00. The quantum of the claim does not exceed $150,000.00. Accordingly, the claims are within the monetary jurisdiction of the Magistrates Court.
  3. [68]
    Costs may be awarded in building disputes in the tribunal.[26] The awarding of costs in building disputes is a discretionary matter. The relevant principles are well established.[27]  It is not automatic that costs follow the event in building disputes, however 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 them. Otherwise, the factors affecting the discretion will vary in each case.[28]
  4. [69]
    I have concluded that the interests of justice do not require the making of an order for security for costs. However, if I am wrong in concluding thus, I am of the view that the amount sought by way of security is excessive. Firstly, and as I have observed, the awarding of costs is discretionary. Secondly, the quantum of costs awarded is also discretionary. There is no QCAT scale of costs. In building disputes involving some degree of complexity of law and fact, it is appropriate that costs be assessed on an item scale. In most cases this will be either the District Court scale or the Magistrates Court scale (in respect of the latter, for matters where the amount recovered exceeds $50,000.00 and does not exceed $150,000.00). Any security ordered should reflect a conservative approach.[29]  Further, the tribunal is not bound to give the amount of security the Reintels say will be the amount of their costs.[30] The process of estimation embodies to a considerable extent, necessary reliance on the “feel” of the case after considering relevant factors.[31]
  5. [70]
    In my view the approach to the assessment of costs should start with adopting the Magistrates Court scale applicable to matters where the amount recovered exceeds $50,000.00. That scale is somewhat less than the District Court scale relies upon by Mr Topp. Costs should be assessed on the standard basis. Taking all of these matters into consideration, if security was to be ordered, an amount of $15,000.00 would be more appropriate.

Conclusion and orders

  1. [71]
    For the foregoing reasons, and having considered carefully the totality of the material placed before the Tribunal by the parties, the application for security for costs is refused. It is appropriate that orders are made to progress the proceedings including the filing of an amended application by WCQ and the filing of an amended response by the Reintels. The matter will thereafter be listed for a directions hearing at which time the parties may make submissions regarding a timetable for the filing of statements of evidence.

Footnotes

[1]QCAT Act, s 109(2).

[2]QCAT Act, s 109(4).

[3]QCAT Act, s 109(3).

[4]QCAT Act, s 28(3)(b).

[5]Kirkpatrick v Commonwealth (1985) 9 FCR 36.

[6]See for example, in the context of the Uniform Civil Procedure Rules 1999 (Qld), Gallagher v Boylan [2013] 1 Qd R 204.

[7]QCAT Act, s 28(1).

[8]See Deputy Commissioner of Taxation v Ahern [1988] 2 Qd R 158.

[9]Current assets are assets that can be utilised within the next 12 months.

[10]Non current assets are those that cannot be easily and readily liquidated for use.

[11]Current liabilities are those financial obligations due within the next 12 months.

[12]Non current liabilities are those financial obligations not due within the next 12 months.

[13]Affidavit of Steven James Hodgson dated 17 September 2020.

[14]Affidavit of Waldemar George Reintels dated 1 October 2020.

[15]Hyperion Technology Pty Ltd v Queensland Motorways Ltd [2013] QSC 20

[16]Licence search – attached to Affidavit of Patrick Joseph Kelly dated 14 July 2020.

[17]Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018, s 3.

[18]Ibid, Schedule 1, s 13.

[19]Ibid, s 14.

[20]Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564.

[21]Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115

[22]Staff Development & Training Centre Pty Ltd v Commonwealth of Australia [2005] FCA 1643.

[23]Bhagat v Murphy [2000] NSWSC 892;

[24]Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (1985) 1 NSWLR 114.

[25]Covecorp Constructions Pty Ltd v Indigo Projects Pty Ltd

[26]Queensland Building and Construction Commission Act 1991 (Qld), s 77(3)(h).

[27]Lyons v Dreamstarter Pty Ltd [2012] QCATA 71.

[28]Ibid.

[29]Emanuel Management Pty Ltd (In liq) v Foster’s Brewing Group Ltd & Ors [2003] QCA 552.

[30]Dominion Brewery Ltd v Foster (1897) 77 LT 507

[31]Bryan E Fencott and Assocs Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 at 515 per French J citing Pearson v Naydler [1977] 1 WLR 89

Close

Editorial Notes

  • Published Case Name:

    WCQ Constructions Pty Ltd v Reintals & Anor

  • Shortened Case Name:

    WCQ Constructions Pty Ltd v Reintals

  • MNC:

    [2020] QCAT 518

  • Court:

    QCAT

  • Judge(s):

    Senior Member Brown

  • Date:

    02 Nov 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bhagat v Murphy [2000] NSWSC 892
1 citation
Jump To
Cite 1 - [2000] NSWSC 892
Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497
2 citations
Jump To
Cite 1 - (1987) 16 FCR 497
Cite 2 - (1987) 16 FCR 497
Deputy Commissioner of Taxation v Ahern (No 2) [1988] 2 Qd R 158
1 citation
Jump To
Cite 1 - [1988] 2 Qd R 158
Dominion Brewery Ltd v Foster (1897) 77 LT 507
1 citation
Jump To
Cite 1 - (1897) 77 LT 507
Emanuel Management Pty Ltd (in liq) v Foster's Brewing Group Ltd [2003] QCA 552
1 citation
Jump To
Cite 1 - [2003] QCA 552
Fiduciary Ltd v Morningstar Research Pty Ltd (2004) 208 ALR 564
1 citation
Jump To
Cite 1 - (2004) 208 ALR 564
Gallagher v Boylan[2013] 1 Qd R 204; [2012] QCA 159
1 citation
Jump To
Cite 1 - [2013] 1 Qd R 204
Hyperion Technology Pty Ltd v Queensland Motorways Ltd [2013] QSC 20
1 citation
Jump To
Cite 1 - [2013] QSC 20
Kirkpatrick v The Commonwealth (1985) 9 FCR 36
1 citation
Jump To
Cite 1 - (1985) 9 FCR 36
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115
1 citation
Jump To
Cite 1 - (2007) 233 CLR 115
Lyons v Dreamstarter Pty Ltd [2012] QCATA 71
2 citations
Jump To
Cite 1 - [2012] QCATA 71
Cite 2 - [2012] QCATA 71
Pearson v Naydler [1977] 1 WLR 89
1 citation
Jump To
Cite 1 - [1977] 1 WLR 89
Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114
1 citation
Jump To
Cite 1 - (1985) 1 NSWLR 114
Staff Development & Training Centre Pty Ltd v Commonwealth of Australia [2005] FCA 1643
1 citation
Jump To
Cite 1 - [2005] FCA 1643

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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