Barry Pitt Constructions Pty Ltd v Smith & Anor [2015] QCAT 526

CITATION: Barry Pitt Constructions Pty Ltd v Smith & Anor [2015] QCAT 526 PARTIES: Barry Pitt Constructions Pty Ltd (Applicant) V Shane Harold Smith Agnieska Smith (Respondent) APPLICATION NUMBER: BDL037-13 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Hughes DELIVERED ON: 23 December 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. Shane Harold Smith and Agnieska Smith are to pay to Barry Pitt Constructions Pty Ltd the sum of $3,797.25 by way of interest by 27 January 2016. 2. Shane Harold Smith and Agnieska Smith are to pay to Barry Pitt Constructions Pty Ltd, within 28 days of agreement or assessment as applicable, its costs of: (a) the application (including their remission by the Appeal Tribunal by its order dated 9 December 2014 in APL085-14) on an indemnity basis calculated on the District Court Scale, to be agreed, or absent agreement to be assessed by Hickey & Garrett Legal Costs Assessors, Level 21, 141 Queen Street, Brisbane; and (b) any assessment. -- 1 of 7 -- 2 CATCHWORDS: BUILDING DISPUTE – INTEREST – where liquidated claim for progress payments – where Tribunal may award interest at rate specified by contract – where no basis to award interest for adjustments and variations - COSTS – where general rule that successful party is entitled to costs in building dispute – where essential element of counter-claim not proven – where counter-claim dismissed in entirety – where Tribunal awarded applicant full amount of claim – where applicant wholly successful - whether indemnity costs to be awarded – where parties contractually agreed on basis to recover costs and therefore appropriate to enforce terms of contract to recover costs on ‘solicitor and own client’ or indemnity basis Civil Proceedings Act 2011, ss 5, 58, 59 Domestic Building Contracts Act 2000, ss 30, 66, 92 Queensland Building Services Authority Act 1991, s 77 Queensland Building Services Authority Regulation 2003 (Qld), s 34B Queensland Civil and Administrative Tribunal Act 2009, s 107 A L Builders Pty Ltd v. Fatseas (No. 2) [2014] QCATA 319 Ascot v. Nursing & Midwifery Board of Australia [2010] QCAT 364 Baque v. Rivergum Homes Pty Ltd [2013] QCATA 200 Barry Pitt Constructions Pty Ltd v. Smith & Anor [2014] QCATA 339 Barry Pitt Constructions Pty Ltd v. Smith & Anor [2014] QCAT 025 Commonwealth v. Verwayen (1990) 170 CLR 394 Contrast Constructions Pty Ltd v. Bartlett [2014] QCATA 262 Faulks v. New World Constructions Pty Ltd (No. 2) [2014] QCAT 329 Glamoren Pty Ltd v. Lee & Anor [2012] QCATA 176 Hughes v. Metropolitan Railway Co. (1877) 2 -- 2 of 7 -- 3 App Cas 439 Lyons v. Dreamstarter Pty Ltd [2012] QCATA 71 Stuart Homes and Renovations v. Denton & Anor [2012] QCAT 43 Tamawood Ltd v. Paans [2005] 2 QdR 101 APPEARANCES: This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009. REASONS FOR DECISION What is this Application about? [1] Barry Pitt Constructions Pty Ltd successfully recovered $74,431.50 for building work done for Shane Harold Smith and Agnieska Smith. Mr and Mrs Smith did not succeed in their counter-claim against Pitt for defective works and delay. [2] The Appeal Tribunal then set aside the Tribunal’s decision not to award interest and costs to Pitt and remitted those issues to the Tribunal for determination according to law. [3] Having received submissions from the parties, the issue for the Tribunal to decide now is whether to award interest and costs to Pitt. Preliminary matters [4] In their submissions, Mr and Mrs Smith challenged the Tribunal’s jurisdiction to award costs on the basis that because the contract was not signed, it was not a ‘regulated contract’ and therefore the application is not a ‘building dispute’1. They also argued that the fixing stage amount of $50,000.00 exceeded the allowable percentage of the contract price.2 However, the failure by a builder to sign a contract or otherwise comply with a requirement of the Domestic Building Contracts Act 2000 (Qld) does not make the contract illegal, void or unenforceable.3 The Tribunal therefore has jurisdiction. [5] Alternatively, Mr and Mrs Smith submitted that the evidence before the Tribunal proves that the contract relied upon by Pitt does not exist. They also claimed that no interest is payable because practical completion was not attained and therefore the amounts awarded cannot be due under the contract. However, Mr and Mrs Smith previously did not dispute that Pitt 1 Queensland Building Services Authority Act 1991 (Qld), definition of ‘domestic building dispute’; Domestic Building Contracts Act 2000 (Qld), s 30. 2 Contrary to Domestic Building Contracts Act 2000, (Qld) s 66. 3 Domestic Building Contracts Act 2000 (Qld), s 92. -- 3 of 7 -- 4 was entitled to $70,000.00 for progress payments, subject to any set off for compensation for the cost of any rectification work, cost to complete and damages for delay. Mr and Mrs Smith also counter-claimed for various defects, incomplete works and delay. [6] In these circumstances, Mr and Mrs Smith are estopped from denying the existence of a contract and the attaining of practical completion – the basis of their claim for damages for delay - for the purposes of determining interest and costs. Mr and Mrs Smith are unable to deny the existence of a contract and completion of work not previously disputed.4 [7] Mr and Mrs Smith also filed additional late submissions5 contrary to the Tribunal’s Directions, about the conduct of Pitt during these proceedings and various items of evidence, after the decision of the learned Member. These submissions were not relevant to the issues for me to determine: interest and costs. Should Mr and Mrs Smith pay interest to Pitt? [8] As noted by the Appeal Tribunal, it is not clear from the learned Member’s reasons whether the sum of $74,431.50 arises from a contractual or statutory entitlement. The learned Member dismissed those claims. [9] The contract provided for progress payments at various stages of the works. As noted by the Appeal Tribunal, neither party asserted that the contract had been terminated and there is no reason why the claim of $70,000.00 for the two progress claims should not be characterised as collection of debts under the contract: they are claims for liquidated amounts and not for damages.6 The Tribunal may therefore award interest at a rate specified under the contract.7 [10] If the parties enter a contract and a rate is specified under the contract, then that is the interest payable.8 The contract specified a rate of five percent plus the annual rate equal to the Commonwealth Bank overdraft index rate quarterly charging rate.9 In the absence of evidence of the applicable Commonwealth Bank rate during the relevant period, Pitt seeks a rate of five percent. That is appropriate given that it is the minimum rate specified in the contract. [11] Interest is payable on and from the day after the day the amount became payable until the amount is paid.10 Mr and Mrs Smith paid the full amount of the claim of $74,431.50 on 29 January 2014. The fixing stage progress 4 Hughes v. Metropolitan Railway Co. (1877) 2 App Cas 439, per Lord Cairns at 448; Commonwealth v. Verwayen (1990) 170 CLR 394, per Deane J at [19]. 5 First & Second Respondents’ Submissions In Reply On Costs And Interest filed 2 April 2015. 6 Barry Pitt Constructions Pty Ltd v. Smith & Anor [2014] QCATA 339 at [31] to [32]. 7 Queensland Building Services Authority Act 1991 (Qld), s 77(2)(c); Queensland Building Services Authority Regulation 2003 (Qld), s 34B(1)(a). 8 Contrast Constructions Pty Ltd v. Bartlett [2014] QCATA 262 at [74]. 9 General Conditions, clauses 4.7, 32.1 and 37. 10 Queensland Building Services Authority Regulation 2003 (Qld), s 34B(2). -- 4 of 7 -- 5 payment of $50,000.00 was due and payable under the Contract by 7 December 2012.11 Therefore interest is payable on $50,000.00 at 5% p.a. for 416 days from 8 December 2012 to 29 January 2014, being $2,849.31. The practical completion payment of $20,000.00 was due and payable before 17 February 2013 at the latest.12 Therefore interest is payable on $20,000.00 at 5% p.a. from 17 February 2013 for 346 days, being $947.94. Total interest on the progress claims therefore equates to $3,797.25. [12] The balance of $4,431.50 was awarded for adjustments and variations. These could have been based on a statutory right or a contractual right.13 If statutory and not considered an award of ‘damages’, unlike the Courts14 the Tribunal does not have a wide statutory discretion to award interest.15 If contractual, the Tribunal may again award interest at a rate specified under the contract as above. [13] In the absence of an express finding of fact by the learned Member of the basis for the award of $4,431.50, I am unable to award interest on this amount. Even if the $4,431.50 was considered ‘damages’, in the absence of an express finding by the learned Member of when each adjustment and variation was payable, I am unable to find the amount for each adjustment and variation was payable earlier than the day they were ordered to be paid by the Tribunal, being 14 February 2014. As the full amount of $4,431.50 for each adjustment and variation was paid by then, no interest is payable on this amount. [14] The total interest payable is therefore $3,797.25. Should Mr and Mrs Smith pay costs to Pitt? [15] The Tribunal may award costs when deciding a building dispute.16 This confers a broad and general discretion on the Tribunal to award costs, displacing the usual ‘no costs position’.17 The general rule in building 11 Affidavit of Shane Harold Smith sworn 18 June 2013 at paragraph 12(u) noted the Fixing Stage Invoice dated 30 November 2012 that was not paid. Under Clause 4.5 of the General Conditions, payment was due and payable within five working days of this date. 12 Mr and Mrs Smith calculated their claim for liquidated damages from 12 November 2012 to 11 February 2013 - thereby implicitly conceding a practical completion date of 11 February 2013 - while Pitt conceded in its submissions that payment for practical completion only became payable on 17 February 2013 when proceedings were commenced. 13 Pursuant to the provisions of the Domestic Building Contracts Act 2000. 14 Civil Proceedings Act 2011, ss 58, 59 and s 5 definition of ‘court’. 15 Glamoren Pty Ltd v. Lee & Anor [2012] QCATA 176 at [18], per Wilson J. 16 Queensland Building Services Authority Act 1991 (Qld), s 77(3)(h). 17 Lyons v. Dreamstarter Pty Ltd [2012] QCATA 71 at [3] and unlike Ascot v. Nursing & Midwifery Board of Australia [2010] QCAT 364 at [6] and [28] where Kingham DCJ specifically applied the usual ‘no costs’ position in the absence of other provisions in the relevant enabling Act and further noted considerations peculiar to review proceedings in refusing to award costs against the unsuccessful party. -- 5 of 7 -- 6 disputes is that a successful party is entitled to recover its costs from the other party.18 [16] Although the learned Member dismissed Pitt’s claim for costs on the grounds that Mr and Mrs Smith were able to prove their case “at least in part”,19 most of Mr and Mrs Smith’s claim failed for lack of evidence on the amounts claimed. Although quantum was only one element of their claim, it was an essential element and to be successful, a party must prove all elements of their claim. Because Mr and Mrs Smith did not prove all elements of their claim, they were not successful. [17] The Tribunal therefore dismissed Mr and Mrs Smith’s claim of $238,700.00 in its entirety. Conversely, the Tribunal awarded Pitt the full amount of its claim of $74,431.50. It is difficult to envisage how much more successful Pitt could have been. [18] Pitt had to spend money to succeed in its claim and successfully resist Mr and Mrs Smith’s claim. It would not be fair that it should have to pay those costs.20 [19] Mr and Mrs Smith must therefore pay Pitt’s costs. What costs should Mr and Mrs Smith pay? [20] As noted by the Appeal Tribunal, as a matter of law a contractual entitlement to recover debt collection costs arose at least for the two progress claims.21 Pitt’s application to recover those progress claims wholly succeeded. The parties contractually agreed on the basis to recover costs in these circumstances. It is therefore appropriate to enforce the terms of the contract so that Pitt recovers its costs on a ‘solicitor and own client’ basis.22 Consistent with the finding of the Appeal Tribunal when it awarded the costs of the appeal, this is ‘virtually the same as indemnity costs’.23 [21] Pitt’s successful recovery of the two progress claims totalling $70,000.00 was inextricably intertwined with its claim for adjustments and variations and successful defence of Mr and Mrs Smith’s counter-claim: they arose out of the same facts and circumstances and to wholly succeed in its claim, it had to successfully defend Mr and Mrs Smith’s counter-claim. It is therefore not viable to apportion these costs separately: all of Pitt’s costs of the application and responding to Mr and Mrs Smith’s counter-claim are to be paid on the indemnity basis. 18 Faulks v. New World Constructions Pty Ltd (No. 2) [2014] QCAT 329 at [17]; A L Builders Pty Ltd v. Fatseas (No. 2) [2014] QCATA 319 at [4]. 19 Barry Pitt Constructions Pty Ltd v. Smith & Anor [2014] QCAT 025 at [57]. 20 Tamawood Ltd v. Paans [2005] 2 QdR 101 at [33], cited in Stuart Homes and Renovations v. Denton & Anor [2012] QCAT 43 at [8]. 21 Barry Pitt Constructions Pty Ltd v. Smith & Anor [2014] QCATA 339 at [32]; Clause 33 of the Contract. 22 Pursuant to Queensland Building Services Authority Act 1991 (Qld), s 77(3)(h) and clause 33 of the Contract. 23 Baque v. Rivergum Homes Pty Ltd [2013] QCATA 200 at [9]. -- 6 of 7 -- 7 What are the appropriate Orders? [22] The Tribunal must fix costs if possible.24 Unfortunately, the current evidence does not allow me to fix costs. However, as this was a complex building dispute involving contractual work to a value of approximately $220,000.00 that was contested all the way through hearing and beyond, it was reasonable for Pitt to engage Counsel. [23] The appropriate Orders are therefore that: 1. Shane Harold Smith and Agnieska Smith are to pay to Barry Pitt Constructions Pty Ltd the sum of $3,797.25 by way of interest by 27 January 2016. 2. Shane Harold Smith and Agnieska Smith are to pay to Barry Pitt Constructions Pty Ltd, within 28 days of agreement or assessment as applicable, its costs of: (a) the application (including their remission by the Appeal Tribunal by its order dated 9 December 2014 in APL085-14) on an indemnity basis calculated on the District Court Scale, to be agreed, or absent agreement to be assessed by Hickey & Garrett Legal Costs Assessors, Level 21, 141 Queen Street, Brisbane; and (b) any assessment. 24 Queensland Civil and Administrative Tribunal Act, s 107. -- 7 of 7 --