Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QSC
  3. 2020
  4. Kline Industries International Pty Ltd v Queensland Building and Construction Commission - [2020] QSC 294

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  •  Notable Unreported Decision

Kline Industries International Pty Ltd v Queensland Building and Construction Commission[2020] QSC 294

Kline Industries International Pty Ltd v Queensland Building and Construction Commission[2020] QSC 294

     SUPREME COURT OF QUEENSLAND

CITATION:

Kline Industries International Pty Ltd v Queensland Building and Construction Commission [2020] QSC 294

PARTIES:

KLINE INDUSTRIES INTERNATIONAL PTY LTD ACN 094 676 918

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

FILE NO:

13189 of 2019

DIVISION:

Trial

PROCEEDING:

Costs judgment

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

24 September 2020

DELIVERED AT:

Brisbane

HEARING DATE:

On the papers

JUDGE:

Flanagan J

ORDERS:

1. Order 2 of the orders made 11 August 2020 is varied to read:

“Pursuant to s 30(1)(a) of the JR Act, the decision of the respondent dated 18 July 2019 to approve a claim under the Queensland Home Warranty Scheme in the sum of $106,636.69 and subsequently varied to $172,585.51 for work at 5 Golden Grove Blvd, Reedy Creek, Queensland, is set aside.”

2. The respondent pay the applicant’s costs of and incidental to the further amended application for review to be assessed on the indemnity basis.

COUNSEL:

SP Taylor for the applicant

SJ Forrest for the respondent

SOLICITORS:

Duncan Solicitors for the applicant

HWL Ebsworth Lawyers for the respondent

  1. [1]
    On 11 August 2020, pursuant to s 30(1)(a) of the Judicial Review Act 1991 (Qld), the Court ordered that the decision of the respondent dated 18 July 2019 to approve a claim under the Queensland Home Warranty Scheme in the sum of $106,636.69 for work at 5 Golden Grove Blvd, Reedy Creek, Queensland, be set aside.
  2. [2]
    The Court further ordered that it would hear the parties as to any further orders and costs and the parties have now provided written submissions addressing those matters.
  3. [3]
    The only further order sought by the applicant is a variation to order 2 made 11 August 2020, so that it now reads:

“Pursuant to s 30(1)(a) of the JR Act, the decision of the respondent dated 18 July 2019 to approve a claim under the Queensland Home Warranty Scheme in the sum of $106,636.69 and subsequently varied to $172,585.51 for work at 5 Golden Grove Blvd, Reedy Creek, Queensland, is set aside.”

  1. [4]
    The respondent does not oppose this variation.
  2. [5]
    The applicant seeks its costs of the further amended application for review to be assessed on the indemnity basis.  The respondent accepts that it should pay the applicant’s costs on the standard basis but opposes any order for indemnity costs.
  3. [6]
    In the Reasons, the Court outlined the relevant chronology of events.[1]  This chronology revealed that at the time Ms Burslem (of the respondent) accepted the claim on 20 December 2018, the applicant had not received a Direction to Rectify (“DTR”) or a Failure to Rectify Notice.  This remained the case at the time the respondent approved the claim on 18 July 2019.  The respondent conceded at the hearing of the application that at the time of making the decision to accept the claim, Ms Burslem proceeded on the mistaken assumption that the DTR had been given to the applicant.  This was in circumstances where, on 17 December 2018, Mr Kline (for the applicant) telephoned Ms Burslem informing her that the applicant had never received a DTR.
  4. [7]
    The respondent was therefore aware, as early as 17 December 2018, that the applicant was asserting that it had not received a DTR or Failure to Rectify Notice.

The relevant correspondence

  1. [8]
    The parties, through their solicitors, exchanged offers which were either without prejudice save as to costs or open. 
  2. [9]
    In a letter dated 24 September 2019, the solicitors for the applicant wrote to the solicitors for the respondent enclosing, by way of service, an application to the Queensland Civil and Administrative Tribunal seeking a review of various decisions pursuant to s 86 of the Queensland Building and Construction Commission Act 1991 (Qld) (“QBCC Act”), an affidavit of Mr Kline sworn 23 September 2019 and a further application pursuant to the Judicial Review Act 1991 (Qld) ( “JR Act”) seeking a statement of reasons.[2]  The letter referred to these applications being filed “so as to preserve Kline’s rights in law”.  The letter proposed a course of action “in order to avoid unnecessary legal costs” which sought that the respondent withdraw a number of notices.  These included the DTR dated 29 May 2018, the Notice of Failure to Rectify Works dated 12 November 2018, the Scope of Works dated 18 March 2019 and the Notice of Potential Debt dated 18 July 2019.  It was proposed that the respondent issue a fresh DTR, allowing the applicant at least 28 days to comply with the direction.  The letter expressly identified the applicant’s contention that the respondent had failed to effect service of a number of these documents.  The letter further sought confirmation from the respondent that it would not proceed to make payment under the statutory insurance scheme until the issues had been resolved.
  3. [10]
    In a letter dated 6 November 2019, the solicitors for the respondent accepted that the DTR was open to being declared void.  The letter continued:

“…  we disagree that if the Direction to Rectify is declared void then it ought to follow that the Commission did not follow the correct legal process in making the decision to approve a claim under the statutory insurance scheme.”[3]

  1. [11]
    The respondent made an offer in the following terms:

“1. Your client file a Notice of withdrawal in respect of its Application to review a decision filed on 23 September 2019.

  2. Within 7 days of your client filing a Notice of withdrawal:

  1. (a)
    the Commission will withdraw the Direction to Rectify and remove any reference to the Direction from your client’s licence (and as a consequence, the Failure to Rectify will be withdrawn); and
  1. (b)
    the Commission will withdraw the Scope of Works dated 18 March 2019,”
  1. [12]
    By letter dated 11 November 2019, the solicitors for the applicant indicated that the applicant was agreeable to the offer in principle, but required confirmation that no further action (debt recovery or otherwise) would be taken by the respondent in respect of the DTR or any Scope of Works, Notice of Debt or Penalty Notice.[4]  As part of the counteroffer, the applicant sought confirmation in writing that the respondent did not intend to pursue the applicant for any debt recovery action pursuant to s 71 of the QBCC Act in connection with the DTR or the Scope of Works.
  2. [13]
    In a letter dated 21 November 2019, the solicitors for the respondent identified that a decision had not yet been made by the respondent to recover the amount of any payment made on the insurance claim from the applicant pursuant to s 71 of the QBCC Act.  This remained the position when the application was heard on 18 May 2020.[5]
  3. [14]
    In correspondence from the solicitors for the applicant dated 28 January 2020, it was noted that the respondent continued to send the applicant updated notices “which appear to indicate that it intends to recover against it, even though the proper procedure of issuing a DTR has not been followed and in further light of the issues which have been outlined in affidavit material”.  The letter continued:

“As the correspondence between us shows, our client has always desired to resolve this matter without Court action but has now been forced to progress this matter in the Supreme Court of Queensland and now incurs substantial legal costs because the QBCC is unable or unwilling to clarify its position with respect to recovery action against our client.  Is the QBCC at this stage able to clarify its position with respect to future recovery action?”[6]

  1. [15]
    In further correspondence from the solicitors for the applicant dated 13 May 2020, it was noted:

“Prior to commencing this application, we continually requested that the QBCC inform us if they were going to pursue our client for payment under the statutory insurance scheme.  On each occasion we were advised that they had not yet made such a determination.”

  1. [16]
    The correspondence further identified that on the affidavit material that had been filed, the respondent “cannot possibly succeed and properly advised it is bound to fail”.  The applicant sought a written undertaking from the respondent not to pursue the applicant for payment of the insurance claim. 

The parties’ submissions

  1. [17]
    The circumstances in which the Court may award costs on an indemnity basis are not closed.  Some assistance may be derived from Colgate-Palmolive Company & Anor v Cussons Pty Ltd,[7] where Sheppard J identified some of the circumstances that have justified the making of a costs order on an indemnity basis.  One of those circumstances is where there has been an imprudent refusal of an offer to compromise. 
  2. [18]
    The applicant submits that the respondent has acted unreasonably in refusing to confirm that it would not seek to recover against the applicant pursuant to s 71 of the QBCC Act, such that it left the applicant with no reasonable alternative but to commence litigation.  It is therefore appropriate, according to the applicant, to make an award of indemnity costs “where a party compels another to commence proceedings in circumstances where there is no real basis to oppose the proceedings”.[8]  The applicant’s case has always been that it did not receive any DTR from the respondent.  Mr Kline deposed, as early as 10 December 2019, that he made several attempts to explain this issue, including the phone call with Ms Burslem on 17 December 2018.  Mr Kline’s evidence in this respect was never challenged.  Neither Ms Burslem’s affidavit nor her oral evidence sought to address Mr Kline’s evidence that the applicant had never received the DTR.  The applicant further submits that the respondent acted unreasonably by making a late admission that it did not seek to prove that the DTR and other notices were actually received by the applicant.[9]
  3. [19]
    The respondent submits that its refusal to confirm that it would not seek to recover from the applicant pursuant to s 71 of the QBCC Act was not unreasonable.  According to the respondent, the undertakings sought by the applicant did not constitute relief actually sought in the proceedings, and were not relief granted by the Court.  What appears to be foreshadowed by the respondent in this submission is a further decision being made to seek to recover the insurance claim from the applicant.  This is borne out by the following submission:

“The decision to approve the claim has been set aside.  That would not necessarily preclude the respondent from deciding the insurance claim according to law, and if a decision were made to approve the claim, recovering from the applicant in the future.”[10]

  1. [20]
    The difficulty I have with the respondent’s submission is that the application proceeded on the basis that the respondent, through Ms Burslem, was satisfied that the applicant would not comply with the DTR.  This is reflected in the respondent’s correspondence of 21 November 2019:

“At the time the Commission’s liability to pay arose (i.e. at the time the claim was admitted), the Commission was satisfied that your client would not comply with the DTR.  Accordingly, we consider that clause 4.3(b) has been satisfied.”[11]

  1. [21]
    This was the position pressed by the respondent at the hearing.  It was pressed in circumstances where Ms Burslem, having been informed by Mr Kline that the applicant had not been issued with the DTR, should have made enquiries prior to being satisfied that the applicant would not comply with the DTR.  As noted in the Reasons:

“The reason given by Ms Burslem for being satisfied that the applicant would not comply with the DTR was that there had been no request by the applicant for an extension of time to comply with the DTR. Such reasoning is flawed in circumstances where the decision maker is informed that the relevant contractor has not been issued with a DTR.”[12]

  1. [22]
    In circumstances where the respondent unreasonably, in my view, persisted with a case that it could be satisfied in terms of cl 4.3 of the Insurance Policy Conditions that the applicant would not comply with the DTR, an award of indemnity costs is appropriate.  Upon discovering that the DTR and subsequent notices including the Failure to Comply Notice had not been received by the applicant, the respondent should not have persisted in resisting the application.

Disposition

  1. 1.
    Order 2 of the orders made 11 August 2020 is varied to read:

“Pursuant to s 30(1)(a) of the JR Act, the decision of the respondent dated 18 July 2019 to approve a claim under the Queensland Home Warranty Scheme in the sum of $106,636.69 and subsequently varied to $172,585.51 for work at 5 Golden Grove Blvd, Reedy Creek, Queensland, is set aside.”

  1. 2.
    The respondent pay the applicant’s costs of and incidental to the further amended application for review to be assessed on the indemnity basis.

Footnotes

[1]Kline Industries International Pty Ltd v Queensland Building and Construction Commission [2020] QSC 243, [4]-[19].

[2]  Affidavit of Robert Alan Duncan sworn 18 August 2020, exhibit A.

[3]  Affidavit of Robert Alan Duncan sworn 18 August 2020, exhibit A, page 7.

[4]  Affidavit of Robert Alan Duncan sworn 18 August 2020, exhibit A, page 9.

[5]  Transcript, T 1-9, lines 1-11.

[6]  Affidavit of Robert Alan Duncan sworn 18 August 2020, exhibit A, pages 20-21.

[7]  (1993) 46 FCR 225.

[8]  Applicant’s Costs Submissions, para 18.

[9]  Applicant’s Costs Submissions, para 31.

[10]  Costs Submissions on Behalf of the Respondent, para 6.

[11]  Affidavit of Robert Alan Duncan sworn 18 August 2020, exhibit A, page 13.

[12]Kline Industries International Pty Ltd v Queensland Building and Construction Commission [2020] QSC 243, [72].

Close

Editorial Notes

  • Published Case Name:

    Kline Industries International Pty Ltd v Queensland Building and Construction Commission

  • Shortened Case Name:

    Kline Industries International Pty Ltd v Queensland Building and Construction Commission

  • MNC:

    [2020] QSC 294

  • Court:

    QSC

  • Judge(s):

    Flanagan J

  • Date:

    24 Sep 2020

  • White Star Case:

    Yes

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
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 F.C.R 225
1 citation
Jump To
Cite 1 - (1993) 46 F.C.R 225
Kline Industries International Pty Ltd v Queensland Building and Construction Commission [2020] QSC 243
2 citations
Jump To
Cite 1 - [2020] QSC 243
Cite 2 - [2020] QSC 243

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.