Weston v Worthington[2023] QCAT 264

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   In these reasons I address the issue of the costs of the proceeding. 
2. [2]
   The Westons purchased their home from Mr Worthington in 2011. The Westons claimed that a retaining wall, constructed before the house on the property was built, had begun to fail. The Westons claimed damages from Mr Worthington. They said that Mr Worthington had designed the wall, that the design of the wall was not approved and that Mr Worthington was not the holder of an owner-builder permit in respect of the construction of the wall.
3. [3]
   The Westons commenced the proceedings in 2019 claiming damages for breach of contract and for negligence. The matter progressed in the usual way in the Tribunal. The Westons applied to amend their application. They sought to abandon the claim for breach of contract and to amend the claim for negligence. The application to amend came on for hearing on 15 February 2022. On 13 April 2022 the Tribunal refused the application.^[1]
4. [4]
   In dismissing the application, the Tribunal found that the claim by the Westons against Mr Worthington was not a building dispute within the meaning of that term in the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’). The decision was not appealed.
5. [5]
   On 28 July 2022 the Tribunal ordered, by consent, that the Westons’ application be dismissed. The Tribunal also made directions for the parties to file submissions on costs.

Costs in the tribunal

6. [6]
   Subject to the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act') or any relevant enabling Act parties in Tribunal proceedings must bear their own costs.^[2] The Tribunal may make an order requiring a party to pay another party’s costs if the interests of justice require it to make the order.^[3] In deciding whether to make an order for costs, the Tribunal may have regard to a number of matters set out at s 102(3) of the QCAT Act.
7. [7]
   In Steven Bryan Worthington t/as Worthington Simmons Builders v Dr Andrew William Ryan; Dr Andrew William Ryan v Steven Bryan Worthington t/as Worthington Simmons Builders^[4] the QCAT Appeal Tribunal set out the position in relation to awarding costs in building dispute proceedings:

[18]  Costs in building dispute proceedings, including appeals, are governed not by the Queensland Civil and Administrative Tribunal Act 2009 (Qld) but by the Queensland Building and Construction Commission Act 1991 (Qld).

[19] The discretion to award costs in building dispute proceedings must be exercised judicially, not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation. The exercise of a discretion ‘judicially’ means for reasons that can be considered and justified.

[20]  Costs do not follow the event in building dispute proceedings. However, success in a proceeding and the degree of success, particularly one involving complex litigation, are relevant considerations in the exercise of the discretion to award costs. A party’s success may be a significant factor in an application for an order for costs.

[21]  The extent to which success in a proceeding may be eroded if a party is required to bear their own costs was considered by the Queensland Court of Appeal in Tamawood Ltd & Anor v Paans: 

If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves. Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the Tribunal. (footnotes omitted).

Consideration

8. [8]
   The first issue to determine is whether costs fall to be determined under the QCAT Act or under the QBCC Act.
9. [9]
   In DSGN Kartell Pty Ltd v Pathmaperuma & Anor; DSGN Kartell Pty Ltd v Hennig Bros Construction Pty Ltd; DSGN Kartell Pty Ltd v Craig Russell Stranger t/as ACE Space Design^[5] I considered the question of costs in circumstances where a proceeding for a building dispute was found not, in fact, to involve a building dispute. I said:

[23] As a creature of statute, the tribunal has only those powers conferred upon it by the QCAT Act and various enabling Acts. In addition, the tribunal has certain, and limited, implied powers.

[24] The issue I must consider is whether, if a proceeding is commenced in the tribunal for a building dispute, and the dispute is not in fact a building dispute, costs fall for determination under the QBCC Act or the QCAT Act. I have come to the conclusion that, in such circumstances, the costs provisions of the QCAT Act apply.

[25] By s 77(1) of the QBCC Act, a person involved in a building dispute may apply to the tribunal to have the tribunal decide the dispute. The tribunal’s powers to resolve a building dispute, as set out in s 77(3) of the QBCC Act, are broad. However it is important not to confuse jurisdiction on the one hand and the powers conferred upon the tribunal once it has jurisdiction, on the other. To consider the powers of the tribunal before first determining jurisdiction would be to put the cart before the horse. Unless the tribunal has jurisdiction, the powers conferred by an enabling Act cannot be exercised.

[26] Section 77(3) of the QBCC Act provides:

Without limiting the tribunal’s powers to resolve the dispute, the tribunal may exercise 1 or more of the following powers …

[27] The reference in s 77(3) to ‘the dispute’, is a reference to a building dispute as referred to in s 77(1). Accordingly, in my view, the powers conferred by s 77(3) are not enlivened unless the jurisdictional fact of a ‘building dispute’ is established.

[28] In the absence of a ‘building dispute’ the tribunal has no power to award costs pursuant to s 77(3) of the QBCC Act. In such circumstances, costs fall to be determined in accordance with the provisions of the QCAT Act.^[6]

10. [10]
    My views in relation to the application of the costs provisions in the QBCC Act as set out in DSGN Kartell Pty Ltd remain unchanged.
11. [11]
    The Tribunal found that the dispute between the parties was not a building dispute. It follows that the costs of the proceeding fall to be determined in accordance with the provisions of the QCAT Act.

The parties’ submissions

12. [12]
    The Westons say that the Tribunal has no jurisdiction to award costs, either pursuant to the QBCC Act or the QCAT Act. The essence of the Westons’ submissions is this: as the dispute was one in relation to which the Tribunal lacked jurisdiction, there is no basis upon which an order for costs can be made.
13. [13]
    The respondent says that he should have his costs of the proceeding.

Consideration

14. [14]
    I will first address the Westons’ somewhat courageous submission that the Tribunal does not have the power to order costs in the proceeding.
15. [15]
    It is the duty of the Tribunal to resolve jurisdictional facts and to determine its own jurisdiction.^[7] The Tribunal determined that it did not have jurisdiction to determine the Westons’ claim in negligence against Mr Worthington. That the issue of jurisdiction was not resolved until some three years after the proceeding was commenced is, and always was, a matter for the parties. Accordingly, I reject the submission that the Tribunal does not have jurisdiction to make an order for costs.
16. [16]
    Section 102(3) of the QCAT Act provides:

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

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

2. (b)
   the nature and complexity of the dispute the subject of the proceeding;

3. (c)
   the relative strengths of the claims made by each of the parties to the proceeding;

4. (d)
   for a proceeding for the review of a reviewable decision—

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

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

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

6. (f)
   anything else the tribunal considers relevant.

17. [17]
    In Kehl v Board of Professional Engineers of Queensland, Deputy President Judge Kingham (as her Honour then was), in providing guidance as to the approach to be taken to the application of the matters in s 102(3), stated:

The factors listed in s 102 are a guide to the considerations the Tribunal may take into account in deciding whether this is an appropriate case in which to award costs. In any given case, the relative importance of each criterion will vary. Further, their significance may relate to what stage the proceedings have reached. For example, questions about the relative strengths of the parties’ cases may assume less significance upon an initial hearing, yet loom large when it comes to the costs of an application for leave to appeal.^[8]

18. [18]
    Adopting the approach in Kehl, I turn now to a consideration of the matters at s 102(3) of the QCAT Act.

Section 102(3)(a) – whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding including as mentioned in s 48(1)(a) to (g)

19. [19]
    The Westons persisted in prosecuting a proceeding the Tribunal did not have the jurisdiction to determine. In Armstrong v Kawana Island Retirement Village the Tribunal lacked jurisdiction to decide a dispute involving a retirement village. The issue of jurisdiction was raised by the respondent at an early stage of the proceeding. Despite this, the applicant persisted. In considering s 102(3)(a) the Tribunal stated:

[10] Mr Armstrong’s Application was flawed from its inception. He was never a party to the dispute because he never gave Kawana the prescribed Notice. Kawana notified him of this. Moreover, he has a duty to properly prepare his application:

The statutory regime under which QCAT operates places obligations upon parties themselves to take care in their dealings with Tribunal matters, and to act in their own best interests. QCAT’s resources for the resolution of disputes are in high demand and serve, as the High Court has recently observed in relation to court resources, ‘…the public as a whole, not merely the parties to the proceedings’. Finality in litigation is highly desirable, because any further action beyond the hearing can be costly and unnecessarily burdensome upon the parties.

[11] Mr Armstrong failed to properly prepare his Application. He aggravated his failure by persisting even when notified of its flaw. He thereby failed to act in his own interests. His failure did not simply compromise his own interests. It incurred upon the Tribunal’s resources and required Kawana to commit time and resources to respond to the application: …Parties must assume a responsibility to take care in preparing material upon which they seek to rely, and to lodge the correct application. The forms are not difficult to understand, and may even be fairly described as intuitive. 

[12] Mr Armstrong chose to pursue a claim in circumstances where he did not comply with prerequisites to the Tribunal’s jurisdiction. He thereby attempted to circumvent due process. He therefore acted in a way that was unreasonable and unnecessarily disadvantaged Kawana.

[13] Mr Armstrong’s failure to comply with proper processes suggests it is in the interests of justice that he pay costs arising from that failure: Where a party seeks to go outside the normal process which was laid down by the Act this is a major factor from a justice interest’s perspective when the Applicant fails.^[9] (footnotes omitted)

20. [20]
    Mr Worthington says that he first raised the issue of jurisdiction in August 2020.^[10] A more fulsome exposition of the jurisdiction issue was provided by Mr Worthington’s solicitors to the Westons’ solicitors in September 2020. In August 2021 Mr Worthington filed submissions opposing the Westons’ application to amend the application. In those submissions, the jurisdiction issue was again raised together with the further submission that Mr Worthington did not owe to the Westons a duty of care. The Tribunal ultimately determined that the dispute between the parties was not a ‘building dispute’ within the meaning of that term in the QBCC Act. The Tribunal also determined that the building work, the subject of the dispute, was not ‘domestic building work’ that included ‘site works’ or ‘associated work’ for the purpose of s 4 of Schedule 1B of the QBCC Act. This was, in fact, the position taken by Mr Worthington. That position was ultimately vindicated.
21. [21]
    Having made these observations, the fact that a party pursues litigation to an unsuccessful conclusion does not of itself lead to the conclusion that the successful party has been unnecessarily disadvantaged. The pursuit of litigation inevitably results in disadvantage, to some degree, to the parties involved. The disadvantage must be ‘unnecessary’. Section 102(3)(a) is directed to behaviour by a party that has an element of unreasonableness. In my view it was not unreasonable for the Westons to pursue their claim, albeit ultimately to an unsuccessful conclusion. It would have a stifling effect on access to justice in the Tribunal if the spectre of an adverse costs order loomed large on the basis that a party would be considered to have acted unreasonably in pursuing a claim which was ultimately unsuccessful. Such an outcome would be inconsistent with the objects of the QCAT Act and the clear legislative intent of s 100 and s 102.
22. [22]
    The present case may be distinguished from the circumstances in Armstrong v Kawana Island Retirement Village where the applicant persisted in a claim in circumstances where he had failed to comply with mandatory pre-proceedings processes. That failure was ultimately fatal to the applicant’s claim. This is not such case.
23. [23]
    In conclusion, I do not consider that the Westons acted in a way that unnecessarily disadvantaged Mr Worthington.

Section 102(3)(b) – the nature and complexity of the dispute the subject of the proceeding

24. [24]
    There is no doubt that the proceeding involved a dispute of some not inconsiderable complexity both factually and legally. The parties were legally represented. Expert evidence was obtained by both parties. The issues in relation to the construction and failure of the retaining wall were vigorously contested as was the issue of Mr Worthington’s liability for that failure. Although it was ultimately determined that the proceeding did not involve a building dispute, the parties conducted the proceeding on this basis. An award of costs is not uncommon in building disputes in the Tribunal particularly where the dispute is complex.  
25. [25]
    It is readily apparent from the Tribunal decision refusing the Westons’ application to amend, that there had, prior to the decision, been little if any judicial or tribunal consideration of the meaning of subsection (c) of the definition of ‘domestic building dispute’ found in schedule 2 of the QBCC Act. There was therefore a novel element to the claim that added to its complexity.
26. [26]
    These considerations favour an award of costs.
27. [27]
    I will refer later in these reasons to the significance of legal representation in the consideration of costs.

Section 102(3)(c) – the relative strengths of the claims made by each of the parties to the proceeding

28. [28]
    That one party’s arguments prevails over those of the other party is not, of itself, a factor that compels the conclusion that a costs order should be made. In Campaigntrack Victoria Pty Ltd v The Chief Executive, Department of Justice and Attorney-General & Ors^[11] Applegarth J, with whom the other members of the Court of Appeal agreed, stated:

Next, in reliance on s 102(3)(c), Campaigntrack submits that the Chief Executive’s arguments about the absence of the power to extend time under s 61 lacked merit, and were based on a misinterpretation of case law, whereas its submissions were determined to be correct. Campaigntrack had a stronger argument in the appeal to this Court than that advanced by the Chief Executive. However, the Chief Executive’s arguments were not without merit, and the relative strength of the arguments made before the Appeal Tribunal is not a sufficient reason to displace the usual rule as to costs contained in s 100 of the QCAT Act.^[12]

29. [29]
    The only basis upon which the claim by the Westons against Mr Worthington could succeed, aside the issues relating to liability, was that the dispute was a building dispute within the meaning of sub-paragraph (c) of the definition of ‘domestic building dispute’ in schedule 2 of the QBCC Act. The dispute could not, on any view, have fallen within the meaning of sub-paragraphs (a), (b) or (d) of the definition. The claim by the Westons against Mr Worthington could only have been a claim in negligence. The Tribunal stated:

[35] Schedule 2 contemplates that the parties to the claim or dispute include a particular person or class of persons as described in subsections (a), (b) and/or (d). The types of matters or class of matters does not, in my view, include a claim or dispute arising between a homeowner and a former homeowner. A former homeowner is not a person or class of persons mentioned in subsections (a), (b) and/or (d) of Schedule 2.

[36] This approach to determining whether there is a ‘building dispute’ that means a ‘domestic building dispute’ is consistent with the scope and purpose of the Act that is to, amongst other things, achieve a reasonable balance between the interests of building contractors and consumers. In my view the QBCC Act confers original jurisdiction on the Tribunal to determine a claim or dispute involving, for example, a building contractor and building owner or 2 or more building contractors and/or a building owner or a building contractor and/or a person identified under subsection (d)(i) to (vi), inclusive. It does not include a claim or dispute arising between a building owner and a former building owner.^[13]

30. [30]
    The claim in contract, as originally framed by the Westons, relied upon s 47(2) of the QBCC Act which they said implied a warranty into the contract of sale that the construction of the retaining wall was properly carried out. Section 47 of the QBCC Act provides:

47 Warnings

3. (1)
   If—

1. (a)
   building work is carried out on land by a person who is not licensed to carry out that building work; and

2. (b)
   the land is offered for sale within 6 years after completion of the building work;

the vendor must, before the contract of sale is signed by the purchaser, give the prospective purchaser a notice containing details of the building work and a warning in the form required by regulation.

3. (2)
   If a notice is not given as required by this section, the vendor will be taken to have given the purchaser a contractual warranty (which operates to the exclusion of any inconsistent provision of the contract of sale) that the building work was properly carried out.

31. [31]
    It is clear that s 47(2) does not operate to create a separate category of building dispute. Rather, the provision is one for the benefit of a purchaser pursuant to a contract of sale. Any rights accruing to the purchaser are exercisable in an action for breach of the land sale contract. Such a claim does not fall within the meaning of a building dispute. It is unsurprising that the Westons abandoned the claim in contract.
32. [32]
    In my view the claim by the Westons was never a strong one. While of itself this is not sufficient to displace the usual position as to costs, this factor weighs in favour of a costs order in favour of Mr Worthington.  

Section 102(3)(e) - the financial circumstances of the parties to the proceeding

33. [33]
    Neither party has referred to this factor in their submissions and there is no evidence before the Tribunal as to the parties’ respective financial circumstances. It may be observed that both parties were domestic building owners. This factor is not relevant in determining the issue of costs.

Section 102(3)(f) – anything else the tribunal considers relevant

34. [34]
    It is appropriate here to consider the issue of legal representation.
35. [35]
    Very early in the proceeding the parties were given leave to be legally represented. Both parties availed themselves of that opportunity. In Cowen v Queensland Building and Construction Commission Judicial Member McGill SC stated:^[14]

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

36. [36]
    In Tamawood Ltd v Paans Keane JA (as his Honour then was), with whom the other members of the Court of Appeal agreed, stated:

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 …^[15]

37. [37]
    Although the fact that the parties were given leave to be legally represented is not, of itself, decisive, it is nevertheless a factor that weighs in favour of an order for costs in favour of the successful party. Just what weight is afforded to this consideration depends on the facts of the particular case.
38. [38]
    As I have observed, the present proceeding involved a dispute of some legal and factual complexity. The Westons vigorously pursued the claim against Mr Worthington. Both parties were domestic building owners. There is nothing to suggest that either were experienced in litigation. It is unsurprising that both parties sought legal representation. Mr Worthington sold his home to the Westons who subsequently brought the claim against him on the basis of what they said was his failure to design and construct the retaining wall adequately. The Westons claimed damages of in excess of $1,000,000. On any view it was a substantial claim and the consequences for Mr Worthington in the event the Westons were successful were undoubtedly significant. It was certainly appropriate for Mr Worthington to engage legal representation and, ultimately, he was successful. That success would be eroded if he was required to bear his own legal costs.
39. [39]
    In my view, the fact that the parties were legally represented favours the exercise of the discretion to award costs to Mr Worthington.
40. [40]
    In addition to the relevance of the parties being legally represented to the consideration of costs, Mr Worthington says that he made an offer to settle which was in its terms ultimately more favourable to the Westons than the final decision.
41. [41]
    Section 105 of the QCAT Act provides:

The rules may authorise the tribunal to award costs in other circumstances, including, for example, the payment of costs in a proceeding if an offer to settle the dispute the subject of the proceeding has been made but not accepted.

42. [42]
    Rule 86 of the Queensland Civil and Administrative Rules 2009 (Qld) provides:

3. (1)
   This rule applies if—

1. (a)
   a party to a proceeding, other than a proceeding for a minor civil dispute, makes another party to the proceeding a written offer to settle the dispute the subject of the proceeding; and

2. (b)
   the other party does not accept the offer within the time the offer is open; and

3. (c)
   in the opinion of the tribunal, the decision of the tribunal in the proceeding is not more favourable to the other party than the offer.

3. (2)
   The tribunal may award the party who made the offer all reasonable costs incurred by that party in conducting the proceeding after the offer was made.

3. (3)
   If a proceeding involves more than 2 parties, this rule applies only if the acceptance of the offer would have resulted in the settlement of the matters in dispute between all the parties.

3. (4)
   In deciding whether a decision is or is not more favourable to a party than an offer, the tribunal must—

1. (a)
   take into account any costs it would have awarded on the date the offer was given to the other party; and

2. (b)
   disregard any interest or costs it awarded relating to any period after the date the offer was given to the other party.

43. [43]
    Mr Worthington says that the offer he made to resolve the proceeding was in the following terms:

    1. (a)
       The Westons withdraw the proceeding;
    2. (b)
       Mr Worthington would waive any claim for costs.
44. [44]
    An offer to settle, to fall within rule 86, must contain a genuine offer of compromise. Total capitulation by the offeree to the offeror is not a compromise. The offer by Mr Worthington, in effect, required total capitulation by the Westons. There was no element of compromise. I do not take into consideration the offer in determining the question of costs.

Conclusion on s 102

45. [45]
    Ultimately I am persuaded that the nature and complexity of the dispute, the relative strength of Mr Worthington’s position as opposed to the weakness of the Westons’ position and the fact that requiring Mr Worthington to bear his own legal costs would be to erode the success he enjoyed compels an order for costs. It is in the interests of justice that such an order is made in favour of Mr Worthington.

Conclusion

46. [46]
    I am unable to fix the costs based on the material before the Tribunal. In my view it is appropriate that costs be assessed. That assessment should be undertaken on the basis of an item scale. This is the fairest and most accurate way of determining the costs properly recoverable by Mr Worthington. The costs should be agreed or failing agreement assessed on the standard basis on the Magistrates Court scale of fees applicable to claims over $50,000 as if the proceeding had been brought in that court. I order accordingly.