Barry Pitt Constructions Pty Ltd v Smith & Anor [2014] QCATA 339

CITATION: Barry Pitt Constructions Pty Ltd v Smith & Anor [2014] QCATA 339 PARTIES: Barry Pitt Constructions Pty Ltd (Applicant/Appellant) v Shane Harold Smith Agnieska Smith (Respondents) APPLICATION NUMBER: APL085-14 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member Stilgoe OAM Member Deane DELIVERED ON: 9 December 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. The application for leave to appeal or appeal is allowed. 2. Order 2 of the orders of the Tribunal dated 23 January 2014 is set aside. 3. The matter is remitted to the Tribunal for determination according to law. 4. The proceeding, BDL037-13, is listed for a directions hearing on a date to be fixed. 5. Shane Harold Smith and Agnieska Smith are to pay to Barry Pitt Constructions Pty Ltd, within 14 days of agreement or assessment as applicable, its costs of and incidental to: a) this application for leave to appeal or appeal on an indemnity basis and certified fit for counsel, to be agreed, or absent agreement within 28 days of the date of this order, to be assessed by Hickey & Garrett Legal Costs Assessors, Level 21, 141 Queen Street, Brisbane. b) any assessment as also assessed. -- 1 of 8 -- 2 CATCHWORDS: APPEALS – DOMESTIC BUILDING DISPUTE – failure to award costs – whether inadequate reasons – failure to award interest – failure to give reasons – error of law Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 107, s 121, s 142, s 146, s 147 Queensland Building and Construction Commission Act 1991 (Qld), s 77 Pickering v McArthur [2005] QCA 294 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 Commissioner for Children and Young People and Child Guardian v FGC [2011] QCATA 291 Ricchetti v Lanbuilt Pty Ltd [2011] QCATA 266 Commissioner for Children and Young People and Child Guardian v Eales [2013] QCATA 303 Better Homes Queensland Pty Limited v O’Reilly & Anor [2012] QCATA 37 Ericson v Queensland Building Services Authority [2013] QCA 391 Lida Build Pty Ltd v Miller & Anor [2013] QCATA 139 Campbell v Telford & Anor [2013] QCAT 620 Baque v Rivergum Homes Pty Ltd [2013] QCATA 200 APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). REPRESENTATIVES: APPLICANT: Barry Pitt Constructions Pty Ltd represented by Mr Mark Williams of Counsel, instructed by Bill Cooper & Associates RESPONDENT: Shane Smith and Agnieska Smith represented by Mr Smith, assisted by McKays Solicitors REASONS FOR DECISION [1] Barry Pitt Constructions brought an application for a domestic building dispute against Mr and Mrs Smith, claiming $74,431.50 due under a building contract. Mr and Mrs Smith filed a counterclaim for defective work. The learned Member ordered Mr and Mrs Smith to pay Barry Pitt Construction’s claim but refused its application for costs and interest. -- 2 of 8 -- 3 [2] Barry Pitt Constructions seeks leave to appeal or to appeal the decision on the grounds that the learned Member erred in refusing the costs claim and by failing to award interest. It contends that leave is not required because the entitlement to costs is derived from the contract and, therefore, the learned Member erred at law. [3] Where grounds of appeal consist of an error of fact or mixed law and fact leave to appeal is necessary.1 Leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.2 [4] Barry Pitt Constructions also seeks to appeal against the failure to award interest and contends that as this only involves a question of law, the appeal is as of right and that leave is not required.3 Failure to award costs and interest [5] The appeal is allowed. [6] Barry Pitt Constructions contends that the reasons given were not supported by the substantive decision. [7] We do not accept that the reasons are not consistent with the decision. Mr and Mrs Smith’s counterclaim was based, at least in part, on an allegation that the residence was not built in accordance with the plans. The learned Member found that ‘both parties agree upon the position of the house’4 and that ‘the residence does not conform to the original plans’.5 She accepted that this was a breach of Barry Pitt Constructions’ contractual obligations6 but found that there was no expert evidence which quantified the diminution of the property’s value by the non-compliances7 and that: … the costs of rectification ...would be wholly unreasonable as a method to compensate the Respondent for the variations to the building plan.8 [8] Barry Pitt Constructions submits there was ‘no basis for the learned Member to decide that the usual principle, that costs should follow the event, not to apply’. [9] It is well established that the ‘usual principle’ which applies to costs decisions in the courts does not apply to costs decisions in the Tribunal. This is because the ‘usual principle’ is found in the Uniform Civil Procedure Rules (UCPR). The UCPR is not applicable to the Tribunal. 1 QCAT Act s 142(3)(b). 2 Pickering v McArthur [2005] QCA 294 at [3]. 3 QCAT Act s 142. 4 Reasons at [21]. 5 Ibid at [40]. 6 Ibid at [42]. 7 Ibid at [49]. 8 Ibid at [46]. -- 3 of 8 -- 4 Barry Pitt Constructions acknowledges, in its submissions in reply9, there is no automatic rule in the Tribunal that costs follow the event. The Appeal Tribunal has acknowledged that there is no certainty ‘even considering the broad general discretion conferred by the QBSA Act’10 that a successful party will be awarded costs of the proceedings.11 [10] The originating application made a claim for costs and interest. It did not specify the basis for those claims. Claims for costs and interest did not form part of the issues lists tendered at the hearing. However in the written submissions tendered at the hearing Barry Pitt Constructions did assert an entitlement to interest under the terms of the contract and sought a costs award both on ‘general principles and pursuant to the express terms of the contract’.12 [11] Barry Pitt Constructions contends that the learned Member failed to take into account the terms of the contract which provided a separate right to costs ‘on a solicitor and own client basis associated with recovery ...of an amount under this contract’.13 [12] The learned Member’s reasons do not refer to the terms of the contract as regards any entitlement to costs. Reasons for final decisions are required to be given.14 The Appeal Tribunal15 has recognised that: … they must contain three essential elements: appropriate and sufficient reference to the relevant evidence; the material findings of fact that were made (and the reasons for making those findings); and, the applicable law and the reasons for applying it.....the crucial requirement is for the Tribunal to give reasons which disclose what has been taken into account in a way that means that any error is revealed. [13] It has also been accepted by the Appeal Tribunal that the adequacy of the Tribunal’s reasons is to be considered ‘in light of the simpler, expedited procedures it is obliged to adopt under the QCAT Act’.16 [14] The learned Member gave very brief reasons for the refusal to award costs. These were: ..on the grounds that the Respondents were able to prove their case at least in part, even though this did not result in an award of damages in their favour. [15] The learned Member did not refer in her reasons to the claim for interest. 9 Dated 13 May 2014 [25]. 10 As it was then called, now Queensland Building and Construction Commission Act 1991 (Qld). 11 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 at [38]. 12 Written submissions dated 14 November 2013 at [36]. 13 Clause 33 of the General Conditions. 14 QCAT Act s 121. 15 Commissioner for Children and Young People and Child Guardian v FGC [2011] QCATA 291 at [47]. 16 Ricchetti v Lanbuilt Pty Ltd [2011] QCATA 266 at [3]; Commissioner for Children and Young People and Child Guardian v Eales [2013] QCATA 303 at [44]. -- 4 of 8 -- 5 [16] Even considering the simpler and expedited procedures of the Tribunal, we find that the reasons are inadequate, as they do not disclose why the claim for costs and the claim for interest under the terms of the contract were not allowed. [17] We also find that the reasons are inadequate as they do not clearly disclose the ‘three essential elements’ as referred to earlier in these reasons as to why the broad general discretion to award costs was refused. [18] A failure to provide sufficient or adequate reasons for a decision is an error of law.17 Leave is not therefore required. The appeal is allowed. [19] Mr and Mrs Smith raise a number of matters in their submissions relating to the conduct of Barry Pitt Constructions during the course of the performance of the work, after the dispute arose and after the decision of the learned Member was made.18 These matters are not relevant to whether there is any error of law in the learned Member’s findings. Consequences [20] Section 146 of the QCAT Act sets out the Appeal Tribunal’s powers on appeal where the appeal is on a question of law. It does not provide for rehearing as compared to section 147, which relates to appeals on questions of fact or mixed law and fact.19 If the question of law resolves the matter as a whole then the Appeal Tribunal may substitute its own decision, otherwise it is to remit the matter for further consideration. [21] Barry Pitt Constructions submits that: a) there was evidence before the learned Member that the fixing stage payment in the sum of $50,000 was due on 7 December 2012 and so claims interest on and from 8 December 2012; b) it is entitled to interest on $20,000, the practical completion payment claim on and from 17 February 2013, the date the Tribunal application was commenced; c) it is entitled to interest on the additional amounts found payable in the sum of $4,431.50 on and from 23 January 2014 being the date of the learned Member’s decision; d) the amount of $74,431.50 was paid on 29 January 2014 so that interest ceased to accrue on that date. [22] It is not possible for the Appeal Tribunal to substitute its own decision as it is not possible to calculate interest payable as the learned Member’s reasons do not set out findings of fact in respect of: 17 Better Homes Queensland Pty Limited v O’Reilly & Anor [2012] QCATA 37 at [22]. 18 E.g. Failure to negotiate the defects identified and accepted by the learned Member; breaches of the Domestic Building Contracts Act 2000 (Qld) including a failure to provide written variations. 19 Ericson v Queensland Building Services Authority [2013] QCA 391 at [13]. -- 5 of 8 -- 6 a) whether each amount found to be payable were due and payable under the contract as distinct from under a statutory entitlement20. If the entitlement to payment arose under a statutory entitlement and not under the contract then the contractual entitlement to interest on that amount does not arise; b) when the amounts found to be payable under the contract were due under the contract e.g. when the progress claims were received by the owners and the consequential due dates having regard to the terms of the contract; c) the interest rates applicable and whether they varied across the relevant periods.21 [23] The Appeal Tribunal has previously accepted that where the contract remained on foot the stage claim payments are liquidated claims pursuant to the contract and therefore enlivened an entitlement to ‘recover the cost to recover that sum [under the relevant clause of] the contract’.22 [24] Mr and Mrs Smith contend that the reasons in Lida Build23 do not clearly identify the type of costs that were allowed as ‘debt collection costs’ and the reasons make no reference to costs of the proceeding so that debt collection costs only refers to costs incurred prior to the proceedings commencing. [25] The Tribunal has accepted that costs available under the contract are not subject to s 100 of the QCAT Act and has previously awarded legal costs from the date of initial instructions.24 The Appeal Tribunal has clearly recognised claims for legal costs of building dispute proceedings and a successful appeal under equivalent contractual terms by awarding $95,260.42 as the solicitor and own client costs billed by the builder’s solicitors.25 [26] It is not possible for the Appeal Tribunal to substitute its own decision, as it is not possible to calculate costs payable under clause 33 in respect of the original proceedings. The learned Member’s reasons do not set out findings of fact in respect of whether each amount found to be payable was due and payable under the contract as distinct from under a statutory entitlement and whether those claims were for liquidated claims as distinct from damages. 20 The claims for adjustments/variations and in particular the additional costs of air- conditioning may have been founded under the Domestic Building Contracts Act 2000 rather than the contract. 21 Barry Pitt Constructions submits that interest was sought at 5% in the absence of evidence before the learned Member as to the applicable Commonwealth Bank rate during the relevant period – Submission dated 19 February 2014. 22 Lida Build Pty Ltd v Miller & Anor [2013] QCATA 139 at [44] – [46]. 23 Ibid. 24 Campbell v Telford & Anor [2013] QCAT 620. 25 Baque v Rivergum Homes Pty Ltd [2013] QCATA 200. -- 6 of 8 -- 7 [27] Mr and Mrs Smith refuted the claim for $4,431.50 but did not deny that the stage claims were due under the contract other than asserting a set off by way of damages as set out in their counterclaim. [28] If the entitlement to payment of $4,431.50 arose under a statutory entitlement or as an assessment of damages as distinct from a liquidated amount under the contract then the contractual entitlement to debt collection costs does not arise in respect of that amount and there would need to be a quantification or apportionment of costs incurred in respect of the relevant part of the claim. [29] We have no alternative but to allow the appeal and set aside the decision and return the matter to the learned Member for a fresh determination to be made according to law. Costs of the Appeal [30] Barry Pitt Constructions seek an order that Mr and Mrs Smith pay: a) the costs of the appeal on an indemnity basis and ‘certified fit for counsel’, to be agreed, or absent agreement to be assessed’ or in the alternative on ‘a standard basis in accordance with the District Court Scale of Costs’. b) its costs and the costs generally of such assessment, as assessed. c) the costs within 14 days of agreement or assessment. [31] As outlined earlier in these reasons there are no findings in relation to whether all of the successful claims are properly characterised as debt collection under the contract. There was no assertion by either party that the contract had been terminated so there appears no reason why the claim in respect of the two progress claims ($70,000) ought not to be characterised as collection of debts under the contract. As noted earlier in these reasons they are claims for liquidated amounts and not for damages. [32] As a matter of law a contractual entitlement to recover debt collection costs arose at least in respect of the two progress claims and these appeal proceedings are associated with recovering or attempting to recover an amount under the contract i.e. debt recovery costs. [33] We allow the claim for costs of the appeal having regard to the broad general discretion to award costs in domestic building disputes26 and having regard to the contractual entitlement in clause 33 of the contract which allows recovery of costs on a solicitor and own client basis. The Appeal Tribunal has previously accepted that this is ‘virtually the same as indemnity costs’.27 26 Queensland Building and Construction Commission Act 1991 (Qld) s 77. 27 Baque v Rivergum Homes Pty Ltd [2013] QCATA 200 at [9]. -- 7 of 8 -- 8 [34] We are to fix costs if possible.28 There is no evidence before us to allow us to fix the costs of the appeal. Given the nature of the proceedings and the technical nature of applications for leave to appeal and appeal it was reasonable for counsel to have been retained. If the parties are unable to agree on costs, they ought to be assessed by a costs assessor. 28 QCAT Act s 107. -- 8 of 8 --