Coral Homes Qld Pty Ltd v Queensland Building Services Authority [2013] QCAT 510

CITATION: Coral Homes Qld Pty Ltd v Queensland Building Services Authority [2013] QCAT 510 PARTIES: Coral Homes Qld Pty Ltd (Applicant/Appellant) v Queensland Building Services Authority (Respondent) APPLICATION NUMBER: GAR076-11, GAR177-11, GAR229-11, GAR230-11, GAR133-11, GAR341-11, GAR342-11 and GAR143-11 MATTER TYPE: Building matters HEARING DATE: 16 September 2013 HEARD AT: Brisbane DECISION OF: P Roney QC, Member DELIVERED ON: 26 September 2013 DELIVERED AT: Brisbane ORDERS MADE: The application for orders that the Respondent Authority pay the Applicant’s costs in proceedings numbered GAR076-11, GAR177-11, GAR229-11, GAR230-11, GAR133-11, GAR341-11, GAR342-11 and GAR143-11 is dismissed. CATCHWORDS: PROCEDURE – COSTS – Queensland Civil and Administrative Tribunal Act 2009 ss 100, 102(3) and Rule 86 of the Queensland Civil and Administrative Tribunal Rules – Discretion to award costs in administrative review matters to a successful Applicant – whether prima facie position in s 100 should be displaced and costs ordered against unsuccessful respondent under s 102; Building work – direction to rectify, residential property with defective foundations – costs of applications to review decisions which are initially resisted then conceded - absence of a final hearing on the merits - Calderbank offer; indemnity costs -- 1 of 17 -- 2 LEGISLATION CITED: Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act) ss 19, 20, 21, 100, 102, 102(3) Queensland Building Services Authority Act (QBSA Act) ss 72(2), 72(14) Commercial and Consumer Tribunal Act 2003 (CCT Act) (repealed) ss 70, 71 CASES CITED: McNab Constructions Australia Pty Ltd v Queensland Building Services Authority [2013] QSC 57 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 South East Queensland Electricity Board v Australian Telecommunications Commission Qld [1989] FCA 15 Re Minister for Education and Ethnic Affairs, ex parte Lai Qin (1997) 186 CLR 622 Ustaro v Queensland Building Services Authority [2005] QCCTB 4 Queensland Building Services Authority v O’Brien & Ors [2002] QDC 329 Demac Homes (Qld) Pty Ltd v Queensland Building Services Authority & Others [2011] QCAT 331 Rix v Queensland Building Services Authority [2011] QCAT 333 Queensland Building Services Authority v Johnston [2011] QCATA 265 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr T Matthews, Counsel instructed by Holding Redlich Lawyers RESPONDENT: Mr B Turnbull, Solicitor HWL Ebsworth Lawyers REASONS FOR DECISION Index ......................................................................................................... Page Introduction/Background 3 The current statutory position – ss 100 and 102 of the QCAT Act 5 The Authority‘s reasons for their decisions 8 The Applicant‘s arguments 9 The approach to be adopted absent findings on the merits 11 The relevant considerations under section 102 14 The relevance of the Applicant‘s Calderbank offers 16 -- 2 of 17 -- 3 Introduction/Background [1] This application involves eight separate review proceedings initiated in the Tribunal and in respect of each of those, the Applicant in each case, Coral Homes Qld Pty Ltd, seeks orders that the Queensland Building Services Authority (the Authority) pay the costs of and incidental to each of the applications on an indemnity basis. [2] The relevant applications to which this proceeding relates and the properties to which they relate are as follows: a) 13 Bell Street, Greenmount – GAR076-11; b) 32 Moore Road, Torrington – GAR177-11; c) 30 Pendoma Drive, Hodgson Vale – GAR229-11; d) 68 Gowrie Street, Kingsthorpe – GAR230-11; e) 60 Alawoona Street, Redbank Plains – GAR133-11; f) 23 Davillea Court, Fernvale – GAR341-11; g) 118 Tullamore Way, Gleneagle – GAR342-11; and h) 54 Shoesmith Drive, Westbrook – GAR143-11. [3] In most cases the Applicant primarily sought a review of a decision by the Authority to issue a direction to rectify defective works at each of the eight sites. There was commonality to some significant degree, although not entirely so, in respect of the relevant defective work at each of the relevant sites in that each direction was concerned with the rectification of damage to, and associated with defective footings and slabs associated with the homes constructed. Each involved the use of what appears to have been a defective engineering design based upon conduct by an independent contractor which may have led to those designs being inadequate. There is dispute as to whether there might have been fault attributable to the construction methods adopted by the Applicant in each case and as to whether it was relevant that there might have been contractual responsibility which lay with the Applicant to the relevant homeowner or the condition of those slabs, notwithstanding that the slabs themselves were not designed by the builder, or the builder‘s subcontractor. [4] Some minor distinctions can be drawn between the circumstances of the different review applications. Effectively the proceeding relating to the property at Hodgson Vale was used by the Applicant as a test case for determining the critical legal issues which were said to apply broadly to all eight of them. A number of the relevant applications, namely that at Redbank Plains and at Westbrook involved the issuance of a scope of works rather than directions to rectify. In one of the review applications, that involving the Westbrook property, there was no evidence filed, and no statement of reasons for the decision in that case to issue a scope of works. In most other respects the relevant circumstances to be considered for the purposes of whether to order costs against the Authority are common to all. -- 3 of 17 -- 4 [5] In McNab Constructions Australia Pty Ltd v Queensland Building Services Authority [2013] QSC 57, directions to rectify given by the Authority in respect of defective work were held to be void on the basis that they were required to give 28 days to rectify the works but did not. The decision in McNab was delivered on 14 March 2013. On 29 April 2013, the Authority‘s solicitors wrote to the solicitors for the Applicant advising that on the basis of the reasoning in McNab, the Authority conceded that six of the eight directions which were the subject of applications for review were void. It went on to mention the property at Redbank Plains and suggested that it was not affected by the decision in McNab, and the Authority considered the direction there to be valid. It invited comment. [6] On 1 July the solicitors for the Authority wrote to the solicitors for the Applicant referring to each of the applications, except for that which related to the Redbank Plains property, indicating that, without admission, it was prepared to withdraw the decision, to direct rectification of the Tribunal work and that it would advise the Tribunal that the Authority had withdrawn the decision in each of those cases to ―overcome any perceived (though no admitted) procedural issues‖. It contained a consent order which sought to deal with that position. Since then the relevant directions or decisions to issue a scope of works have been set aside, by consent. [7] When I invited Mr Turnbull, the solicitor for the Authority to explain why two of the proceedings to which the McNab decision did not apply were also now the subject of a concession that the relevant directions or decisions under review ought be set aside, no explanation was forthcoming. I was therefore left in the position, effectively, of being asked by the Applicant to infer that the thing which all proceedings had in common, the defence to them, and indeed the decisions which the Authority had made in respect of them, were manifestly untenable. [8] The submission made for the Applicant, not only in support of the proposition that costs ought be awarded to it, but that they should be awarded on an indemnity basis, was that ―most if not all‖ of the following were made out here: a) good reason was shown than the terms of section 100 of the QCAT Act as to why an order ought be made. These considerations included the nature and complexity of the dispute, the relative strengths of the claims and the fact that it was contended that there were relevant Calderbank offers which had been made; b) the proceedings were commenced and continued in wilful disregard of known facts; c) allegations were made by the Authority which ought never have been made; d) there was undue prolongation of a case by groundless contentions by the Authority; e) there was evidence of particular misconduct that caused loss of time to the Tribunal or other parties; -- 4 of 17 -- 5 f) there were unreasonable refusals of offers to compromise; g) there was irresponsible conduct by the Authority which exposed the Applicant to costs which in fairness should be ordered on an indemnity basis; and h) the Authority persisted in a practically hopeless case which the Authority knew was contrary to the facts or despite receiving evidence that overwhelmingly contradicted that case. The current statutory position – ss 100 and 102 of the QCAT Act [9] The statutory position is that set out in ss 100 and 102 of the QCAT Act. They provide as follows: 100 Each party usually bears own costs Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party's own costs for the proceeding. 102 Costs against party in interests of justice (1) The Tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the Tribunal considers the interests of justice require it to make the order. (2) However, the only costs the Tribunal may award under subsection (1) against a party to a proceeding for a minor civil dispute are the costs stated in the rules as costs that may be awarded for minor civil disputes under this section. (3) In deciding whether to award costs under subsection (1) or (2) the Tribunal may have regard to the following-- (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); (b) the nature and complexity of the dispute the subject of the proceeding; (c) the relative strengths of the claims made by each of the parties to the proceeding; (d) for a proceeding for the review of a reviewable decision-- (i) whether the applicant was afforded natural justice by the decision- maker for the decision; and (ii) whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits; (e) the financial circumstances of the parties to the proceeding; (f) anything else the Tribunal considers relevant. [10] In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 the President Justice Wilson was considering the costs question where the proceeding had been commenced when one statutory costs regime applied, but which concluded under the current scheme under the QCAT Act. He said: 21. The respondent relies on the decision of the Court of Appeal in Tamawood Ltd & Anor v Paans [2005] QCA 111, a case decided under the costs provision of the now repealed Commercial and Consumer Tribunal Act 2003 (CCT Act). Although those provisions are not analogous to the equivalent provisions under the QCAT Act, the principles found in Tamawood provide guidance about the circumstances -- 5 of 17 -- 6 in which it may be in the interests of justice for this Tribunal to award costs against parties. 22. In Tamawood, Ms Paans commenced proceedings in the CCT for damages against Tamawood Ltd and another party. The two matters were heard together and Ms Paans was awarded monetary damages. The CCT, however, refused to order costs in her favour. 23. All parties then sought leave to appeal to the District Court, where the appeals from the respondents were refused, but Ms Paans was awarded her costs in the proceedings. The respondents than sought leave to appeal that costs decision to the Court of Appeal, contending that the decision of the District Court was based on an erroneous construction of ss 70 and 71 of the CCT Act. Those provisions state: 70 Purposes of div 7 The main purpose of this division is to have parties pay their own costs unless the interests of justice require otherwise. 71 Costs … (4) In deciding whether to award costs, and the amount of the costs, the Tribunal may have regard to the following— (a) the outcome of the proceeding; (b) the conduct of the parties to the proceeding before and during the proceeding; (c) the nature and complexity of the proceeding; (d) the relative strengths of the claims made by each of the parties to the proceeding; (e) any contravention of an Act by a party to the proceeding; (f) for a proceeding to which a State agency is a party, whether the other party to the proceeding was afforded natural justice by the State agency; (g) anything else the Tribunal considers relevant. Examples of paragraph (g)— The Tribunal may consider whether a party to a proceeding is acting in a way that unreasonably disadvantages another party to the proceeding. The Tribunal may consider whether the proceeding, or a part of the proceeding, has been frivolous or vexatious. (5) A party to a proceeding is not entitled to costs merely because— (a) the party was the beneficiary of an order of the Tribunal; or (b) the party was legally represented at the proceeding. 24. The similar QCAT Act provision to s 70 is, it might be said, in terms that more plainly indicate that the legislature had turned its face against awards of costs in this Tribunal: s 100 says that ‗Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding‘. 25. In considering ss 70 and 71 Keane JA (as his Honour then was) referred, however, to two matters relevant here. First, his Honour held that the CCT provisions negated the traditional proposition that costs should prima facie follow the event (unless of course that the Tribunal considers that another order is more appropriate) and that the nature and extent of the power to award costs could only be discerned by close consideration of the terms of the statute which created and -- 6 of 17 -- 7 prescribed the occasions and conditions for its exercise 7. Sections 100 and 102 of the QCAT Act attract the operation of the same principles. 26. Second, Keane JA was of the view that where the complexity of the matter justified legal representation, it would not be in the interests of justice to bar the successful party from recovering costs that were reasonably necessary to achieve a satisfactory outcome. 27. That conclusion must, here, be considered in the light of the difference between s 70 of the CCT Act and s 100 of the QCAT Act. Section 70 speaks of a ‗main purpose‘, but s 100 mandates that parties shall bear their own costs. Section 70 contains, within itself, a reference to the condition or circumstance in which the main purpose may be subsumed to the interests of justice; s 100 has no such proviso, although it appears later, in s 102(1). 28. Under that subsection QCAT has a discretion to make a costs order ‘…if the Tribunal considers the interests of justice require it…’. Section 102(3) says that, in deciding whether to award costs, the Tribunal may have regard to matters not dissimilar to those set out in s 71 of the CCT Act including, in particular for present purposes, the nature and complexity of the dispute and the relative strength of each party‘s claims. 29. Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‗the interests of justice‘ point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100. 30. I am satisfied that is the case here. As the voluminous supporting material indicated, the application brought in Ralacom‘s name involved a complex history of disputes between it, and the body corporate. Urgent injunctive relief was sought, as was relief under the BCCMA, which on any view involved some complexity, and urgency, and warranted the instruction of solicitors and counsel by the body corporate. The standing of the company was unclear, and confused by the applicant‘s failure to inform this Tribunal about the real outcome of the Supreme Court Proceedings. [11] Later, in McEwen v Barker Builders Pty Ltd [2010] QCATA 49 the President, Justice Wilson said in an Appeal heard on the papers: [13] As to costs, the starting point in this Tribunal is that each party must bear its own: QCAT Act, s 100. The statutory presumption may be displaced if the Tribunal considers it in the interests of justice to order a party to pay all or part of the costs of another party: s 102(1). The phrase ―in the interests of justice‖ is not defined in the Act but is to be construed according to its ordinary and plain meaning, conferring a broad discretionary power on the decision-maker 8. [14] In determining whether it is in the interests of justice to award costs against another party, the Tribunal may have regard to the nature and complexity of the dispute; the relative strengths of the claims made by each of the parties; and, whether a party has acted in a way that unnecessarily disadvantages another party: QCAT Act, s 102(3). … [17] The language of s 100 plainly indicates that the legislature has turned its face against awards of costs in this Tribunal. The question that will usually arise in each case in which costs are sought is, then, whether circumstances relevant to the discretion inherent in the phrase ‗the interests of justice‘ have arisen; and, whether or not they point to a costs award in a sufficiently compelling way to overcome the statutory hurdle. [12] I respectfully agree with the approach that the President has taken in Ralacom and the McEwen decisions. That means that the relevant task is to proceed on the basis that there is a statutory presumption that parties -- 7 of 17 -- 8 will bear their own costs in a proceeding for the Tribunal, including those in the review jurisdiction of the Tribunal, but that presumption may be displaced if the Tribunal considers it in the interests of justice to order a party to pay some or all of the costs of another. The Authority’s reasons for their decisions [13] The reasons for the decisions to issue the directions to rectify in those matters where directions were issued are not before me. I was however given one of the sets of reasons, and which the parties were content with me to proceed with on the basis that similar if not identical reasons were given in each of the other cases. [14] Those reasons referenced the fact that the Authority had power to direct rectification of defective building work and to direct a person who carried out the work to rectify it. It relied upon the power to take into consideration ―all of the circumstances‖ it considers are reasonably relevant pursuant to section 72(2) of the QBSA Act in determining the direct rectification. The factors it was to take into account were: a) whether the building work was defective under the relevant policy; and b) whether it was reasonable in the circumstances to issue the direction to rectify to the builder. [15] The Authority objectively determined that the building work undertaken by the Applicant was defective. In making the decision the Authority made reference to the fact that the defects were defects about which a direction would normally be issued under the defects policy and that the Authority‘s advising engineer had concluded: a) that the site was a class E site and the site was to be ripped to 800mm deep; b) that the ripping to be undertaken on the site would consist of certain specified depths and areas beyond the edge of the proposed slab. [16] The other matters to which the Authority had regard were that the footing system of the dwelling was a stable slab footing system which was effectively a piered slab that was intended to act as a suspended slab and that soil interaction tended to be prevented by the ripping of the ground surface prior to the construction of the footing system. [17] Furthermore, reference was made to the conclusion that the original site classification did not appear to be correct for the site conditions even given good conditions of drainage and maintenance. [18] Further it was contended that the footing system did not comply with the requirements of the relevant Australian Standard for the original site classification. -- 8 of 17 -- 9 [19] It was concluded that the major contributing causes to the failure of the footing system are: a) ‗possible contribution from poor site drainage conditions that may have been present shortly after the completion of the construction of the dwelling‘; and b) ‗the failure of the ripped soil to prevent soil structure interaction across the majority of the areas of the buildings (sic) footing system‘ . [20] On that basis the Authority concluded that it was not unfair nor unreasonable to issue a direction to the builder. [21] I pause to mention that these reasons do not expressly reference any particular fault on the part of the builder other than to do with the way in which the drainage system and soil conditions were dealt with. Although mention is made of the site classification and the footing system design, they do not expressly say that the builder was responsible for that, nor for that matter does it say that it is not. This issue became important in the argument before me because essentially the Applicant argued that the Authority‘s own material showed that from an early stage the Authority‘s experts who were advising it in relation to the direction, had acknowledged that the failure of the footings had occurred without any fault on the part of the builder in the way the building work was carried out. The Applicant’s arguments [22] The Applicant sought to demonstrate, both in support of the argument that costs ought be ordered, and further that they ought be ordered on an indemnity basis that: a) the Applicant‘s expert evidence and evidence in compliance with the rectification of building work policy showed that there was a high level of commitment to that policy and that its commitment in that regard was not contested by material from the Authority; b) the Applicant had procedures in place to ensure compliance with the subsidence policy, that evidence too not having been contested; and c) the Applicant had a practice of engaging engineers registered with the Queensland Board of Professional Engineers to conduct soil testing and designing of a footing and slab system appropriate to the soil classification and in the case of each of these homes engaged Evolution Professional Engineers Pty Ltd which in these cases went ahead and conducted the relevant design. [23] The material before me does not include any of the relevant construction contracts. It is therefore not clear whether the engineer in question was a nominated contractor or not under those contracts. But having regard to the fact that the material discloses that the Applicant used the same engineer for each of these residences, I am prepared to infer that in each case it was the builder that procured the engineer, and in effect nominated that engineer‘s design as that to be used under the contract. Therefore, to the extent that there might be express or implied warranties in the contract -- 9 of 17 -- 10 as to the suitability of any of the work for its intended purpose, there was always the potential for an argument to the effect that the Applicant might be held to have been in some way at ―fault‖, or at least responsible for the resultant work. That is, even if it cannot be suggested that the builder itself was negligent, or failed to exercise diligence in relation to the quality of the work for the engineering design in question, there might be a level of responsibility for the quality of the finished work. [24] In February 2010 an officer with the Applicant received a telephone call from a Mr Stick from the Authority to discuss a report from the engineer responsible for the design and the possibility that the Authority would issue a direction to rectify. In that discussion, Mr Stick, from the Authority, mentioned that the Applicant would not be found at fault, but that the engineer would. Further, at the nub of the Applicant‘s argument, it is the contention that the Authority‘s decision to issue the directions to rectify were never supported by clear evidence that Coral Homes was actually at fault. [25] One of the matters to which the Applicant specifically made reference in seeking to demonstrate that the Authority did not in fact properly, or bona fide exercise its discretion under section 72(14) of the QBSA Act because the directions issued were issued in order to establish what would amount to be ―test cases‖ which would in some way place these cases before this Tribunal for a determination, so as to provide the Authority with guidance as to the correct way in which to treat builders in the position of this one. In support of that submission reference was made to an email to the Applicant from Mr Stick of the Authority of 2 March 2011 which was in these terms: ... This email is a courtesy to advise of BSA‘s future action on the subsidence related cases before us particularly in the Toowoomba region. I have had the opportunity to fully review the Eric Fox report and the subsequent report from Lindsay Reid and BSA is of the opinion that Coral Homes has a case to answer in terms of these subsidence cases. The suggestion I made to get the engineers together to discuss I believe based upon their reports will not resolve the issues as they are worlds apart. BSA is desirous of drawing a line under these jobs and as such we have determined that Direction to Rectify will be issued against Coral Homes regarding those subsidence cases. By issuing these directions Coral Homes will have the opportunity to review those directions should your company feel aggrieved by BSA‘s determination in QCAT. QCAT will ultimately decide whether BSA‘s position is correct in that building work performed by Coral Homes is defective. There will no doubt be much debate regarding the efficacy of the engineering design etc in any review application that may be lodged and BSA is most supportive of that debate being had in QCAT. I have instructed our Toowoomba office to prepare and issue the Directions to Rectify as a matter of priority as these matters have dragged on to (sic) long already from the relevant homeowner‘s perspective and no doubt also from Coral Homes and BSA‘s alike. -- 10 of 17 -- 11 I expect the relevant directions will be issued by the end of the week. David, whilst I expect Coral Homes will not be happy with our decision a determination is required in these matters to bring some finality but also any QCAT ruling will provide guidance to both Coral Homes and BSA on how these matters should be viewed in the future if similar cases arise. Please feel free to contact me or alternatively Rod Turkington (BSA‘s Toowoomba Area Manager) who will be handling these matters on behalf of BSA. [26] There has of course been no hearing on the issue of whether the Authority did not bona fide exercise the discretion vested in it. It suffices to note that in that email, the fact that the Authority had in fact made a decision is referenced, albeit in the context of recognising that this Tribunal would decide if its position ―was correct‖. The approach to be adopted absent findings on the merits [27] The current proceedings are of course review proceedings in the review jurisdiction in Division 3 of the QCAT Act. Sections 19 and 20 of the QCAT Act make clear that this Tribunal has all the functions of the decision maker for the reviewable decision being reviewed. It also makes clear that the purpose of a review of the decision is to produce the ‗correct and preferable decision‘. The Tribunal is to hear and decide a review by way of a fresh hearing on the merits. Unlike the position that ordinarily prevails in an adversarial environment, the obligation on the Respondent in a review application is to ‗use his or her best endeavours to help the Tribunal so that it can make its decision on the review‘.1 [28] The fact that review applications also invoke different considerations to those in an ordinary inter parties dispute, may be seen from the fact that there are special considerations to be considered under section 102 of the QCAT Act when deciding whether to award costs in such cases. Where the proceeding is of a kind such as that here, relevant matters include whether the Applicant was afforded natural justice by the decision maker, and whether the Applicant genuinely attempted to enable and help the decision maker to make the decision on the merits. I pause to mention that I do not regard either of those factors as being relevant to the decision I am to make here because there is no question that natural justice was afforded and no question about whether the Applicant attempted or did not attempt to help the decision maker make the decision on the merits. [29] The fact that there has been no determination of these issues on the merits presents difficulties for the Applicant in its arguments either in support for any kind of costs order, and even more so for an order that the costs be paid on an indemnity basis. [30] In the context of administrative review, Pincus J, as he then was in South East Queensland Electricity Board v Australian Telecommunications Commission Qld [1989] FCA 15, was dealing with a case where there had not been a final hearing, but where the parties agreed that the Court should deal with the whole question of costs. 1 See section 21 of the QCAT Act. -- 11 of 17 -- 12 [31] His Honour was considering how the discretion should be exercised where there has been no trial. On the issue of the correct approach, His Honour said as follows: 19 Although the parties have agreed that I should determine it on the submissions made to me, there is in my view no certain basis on which to determine the question of liability for costs. One possible solution is simply to make no order as to costs, on the ground that it is not perfectly clear which side, if either, should pay them. 20. As a matter of legal policy, however, that appears to be an unsatisfactory way of disposing of the matter; the Queensland decisions mentioned above, also, tend against it. The parties' submissions are at one in urging upon me the view that litigants should not be forced to go on, or discouraged from settling their differences, by an inability to resolve a dispute as to costs. I agree; if a piece of litigation has become academic, except as to the issue of costs, it appears that the Court should co-operate as far as it reasonably can, in disposing of the question of costs at the parties' request, without requiring a trial to determine who would have won. 21. Here, although the parties have submitted that I should not attempt to say who would have won at a trial, the applicant has placed submissions before me relevant to its claim that it acted reasonably in bringing the proceedings, and I have taken them into account in assessing its case. Those submissions, which rely largely upon documents discovered, have persuaded me that the applicant had, on the face of it, a fairly strong case - one more promising than that of the respondent. I have also taken into account against the respondent that the cause of the litigation's not having culminated in a trial was that the respondent changed its mind, albeit in the circumstances outlined above. It will be ordered that the applicant's costs of the proceedings, including reserved costs, be taxed and that 80% of the sum so fixed be paid by the respondent to the applicant. [32] The relevant circumstances to which his Honour referred were not that the decision maker changed his mind, but there was a change in Government policy; that, as he explained it; 16. While there can be no suggestion that the Minister's statement absolutely forced a reconsideration of the decision complained of in these proceedings, I think I should accept that, as a practical matter, the statement and the change in Government policy it reflected brought about the respondent's abandonment of its previous stance. This is to be distinguished both from the case in which a decision-maker just changes his mind, having reconsidered the facts, and the case where the decision-maker is obliged to reach a new and opposite conclusion by a change in external circumstances. In the former case, but not necessarily in the latter, I should think that the decision-maker would ordinarily pay the costs of incomplete proceedings of this kind; the present situation falls between the two categories just mentioned. [33] The discretion to order costs as the Court saw fit in that case was unimpeded by anything the equivalent of section 100 of the QCAT Act. [34] In Re Minister for Education and Ethnic Affairs, ex parte Lai Qin (1997) 186 CLR 622 at p624, McHugh J was focused primarily upon the proper approach to be taken in administrative judicial review cases, where it appeared that the Defendant had acted unreasonably in exercising or refusing to exercise the relevant power, and the Plaintiff had no reasonable alternative but to commence the litigation. In the course of those reasons, his Honour also made reference to the decision of Pincus J -- 12 of 17 -- 13 to which I have just made reference. McHugh J‘s judgment said as follows at pp624 to 625 (footnotes omitted): In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80% of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. (citing Australian Securities Commission (1993) 44 FCR 194; 116 ALR 523; Seventh Mingcourt Pty Ltd v Lawrence (Fed C, 1 August 1996, unreported) per Branson J; Coleman v City of Melville (SC(WA), 22 September 1994, unreported) per Scott J; Compadres Australia Pty Ltd v Waterfront Place No 2 Pty Ltd (SC(Qld), 15 August 1995, unreported) per MacKenzie J; Inprint Ltd v K & D Media Pty Ltd (administrator apptd) (Fed C, 22 December 1995, unreported) per Einfeld J; Australian Securities Commission v Berona Investments Pty Ltd 18 ACSR 772. The critical question in this case then is whether or not the prosecutrix acted reasonably in bringing these proceedings and whether the respondents acted so unreasonably in not informing the prosecutor that an application to review the decision to refuse a visa was being considered that it would be proper for the minister to pay the whole or part of the cost of the proceedings. [35] In making his finding, His Honour was able, by consideration of the decision under review and the affidavit filed in support of the application for the grant of an order nisi, to conclude that although the prosecutrix had an arguable case, she did not have strong prospects of success. He was able to conclude that if he had been called on to make a prediction about the outcome of her application, he could see that it would probably have failed. He then went on: However, as I have said it is not the function of a court on a costs application — in most cases at all events — to make a prediction as to the outcome of a hypothetical case. It is enough that an applicant has acted reasonably. There is -- 13 of 17 -- 14 nothing to suggest that the prosecutrix acted unreasonably in bringing her application, particularly bearing in mind that she faced imminent deportation unless the decision of the tribunal or the minister was reversed. If the matter had proceeded further, it would also have been reasonable for the minister to defend the decision of the tribunal. If no more appeared in the case, I would think there were no grounds for making an order for costs in favour of the prosecutrix. The relevant considerations under section 102 [36] Section 100 presumes that ordinarily each party to a proceeding would bear that party‘s own costs, irrespective of the result. On that basis there ought be no order for costs even if the Applicant were able to show that it would have almost certainly have succeeded on its application. That is, unless the interests of justice ought lead to a different result. [37] I have carefully considered all the arguments that have been presented on behalf of the Applicant. It refers to a body of authority which it submits establishes that it is unreasonable to issue a direction to rectify to a builder to rectify defective works in circumstances where the builder has simply complied with the requirements and specifications of an external engineering design. Whilst there is some authority in which in particular cases Courts have been prepared to conclude that it was unreasonable to issue such a direction having regard to the facts, it does not seem to me the Respondent would necessarily have failed to show that those cases were distinguishable from the facts here. [38] Nor does it necessarily follow that because a builder has adopted an engineer-prepared design, and the builder had engaged that engineer and his design in many of its construction contracts, that it would be unreasonable for the Authority to issue a direction to rectify to the builder, even if the builder could not be said to have been itself negligent in the design, or application of that design. [39] It should not be thought however that I am expressing a concluded view on the merits of either argument. In Ustaro v Queensland Building Services Authority [2005] QCCTB 4 the Tribunal specifically held that it accepted that the Authority was entitled to have regard to the overriding obligation of a builder to supervise employees and subcontractors, that he was not satisfied in that case that failing some obvious or apparent error in a design by an engineer that a reasonable builder should identify a resolve, that a builder has any obligation to do other than comply with the requirements and specifications of an engineer-prepared design. The ratio of that case is that the case law authorities ‗establish that for the purposes of section 72, the issuing of a direction requires an exercise of a discretion on the part of the Authority (and of course the Tribunal when considering a review). The section does not require that there be any fault on the part of the builder himself prior to the issuing of such a direction. Clearly, the fault or otherwise of the person to whom the direction is to be given is a matter which the Authority and Tribunal must have regard in exercising the discretion. However, it is only one of the matters which must be considered‘. -- 14 of 17 -- 15 [40] Having said that, Member Moon concluded that having regard to the then policy of the Authority which specified that ‗to avoid responsibility for rectification under the subsidence policy, the contractor has only to rely on the information provided by an engineer, follow the requirements of the engineer and specify it and have the works certified by a competent person‖ and the fact that the builder had done precisely that, that it was ―not an appropriate case in which a direction should be given to the builder’. [41] There are other examples of decisions in which, having regard to the particular facts of cases, it is not always unfair to the person to whom a direction is given that that person is being asked to rectify deficiencies in the work as a result of some specific fault on the part of that person. In that regard I refer to the examples discussed by His Honour Judge McGill SC DCJ in Queensland Building Services Authority v O’Brien & Ors [2002] QDC 329 at [33]-[34]. [42] Having regard to the policy in section 100 of the QCAT Act, even were I satisfied that the Respondent ought not in the circumstances have issued a direction to rectify, or issued scopes of works, that alone would not have been the basis for the making of a costs order against it. [43] The issues both of fact and law which arose under the applications were not complex. Notwithstanding the submission of Mr Matthews to the contrary, it does not assist in this case in arriving at a conclusion about the level of complexity of the matter to note that Counsel was briefed for the Applicant. Indeed, the Respondent‘s advocacy was handled by a solicitor. [44] I have already dealt with the question of the relative strength of the claims. Whilst arguably the Applicant may have had better prospects, and certainly was likely to succeed on the basis of the decision in McNab, once it became aware of the argument it presented, I do not consider that it can be said that the decisions of the Respondent under review were demonstrably unreasonable or misconceived. [45] There are no relevant considerations that relate to the financial circumstances of the parties. [46] I do not consider that the mere fact that one of the persons associated with the Authority expressed a view on the matter which may suggest some inconsistency amongst those in the Authority as to whether fault was a relevant factor in the considerations which led to the directions in this case, leads me to the view that this was a case brought in circumstances in which review proceedings were never supported by clear evidence that the Applicant was actually at fault. [47] It may be accepted that the principal, even not the sole reason for the Authority‘s change of position was that the decision in McNab invalidated the directions. Prior to McNab, there was no reason for the Authority to be on notice that those directions were clearly invalid on the basis eventually decided in McNab and the challenge to those decisions did not originally -- 15 of 17 -- 16 invoke the arguments which were successful in McNab. [48] In those circumstances, it does not seem to me that this case bears any resemblance to the circumstances identified by the President in Ralacom, which his Honour found that the Applicant brought an application which was misconceived, futile and persisted in, in circumstances which were unreasonable and irresponsible. His Honour concluded that the conduct in question ‗bordered on the inexplicable‘. This is not the case here. [49] In my view, the interests of justice, in the sense referenced in section 102 of the QCAT Act, do not require the making of a costs order here. [50] It follows that subject to the question of whether the making of offers to resolve the matter ought lead to a different result, I would disinclined to make an order for costs against the Respondent. It obviously follows that I would have not made that order on an indemnity basis even had I otherwise been prepared to make an order for costs. The relevance of the Applicant’s Calderbank offers [51] There is a body of authority which recognises that Calderbank offers may be relevant to the exercise of the discretion to award costs.2 This is implicit also in what appears in Rule 86 of the QCAT Rules. Rule 86 provides as follows: 86 Additional power to award costs if particular offers to settle rejected (1) This rule applies if— (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 (b) the other party does not accept the offer within the time the offer is open; and (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. (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) 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. (4) In deciding whether a decision is or is not more favourable to a party than an offer, the tribunal must— (a) take into account any costs it would have awarded on the date the offer was given to the other party; and (b) disregard any interest or costs it awarded relating to any period after the date the offer was given to the other party. 2 See Demac Homes (Qld) Pty Ltd v Queensland Building Services Authority & Others [2011] QCAT 331; Rix v Queensland Building Services Authority [2011] QCAT 333; Queensland Building Services Authority v Johnston [2011] QCATA 265. -- 16 of 17 -- 17 [52] An offer was made here relatively late in the course of the subject proceedings. An offer was made in a letter dated 27 May 2013. The letter gave notice that if the Applicant was successful in the review proceedings, it would be applying for indemnity costs against the Authority, and would rely upon that letter in support of that application. [53] After setting out why it regarded the Authority as likely to fail, including the assertion that it would be demonstrated that the decision maker for the Authority did not in fact make the decision in dispute at all, an offer was made to resolve the matter on the basis that: a) both parties consent to allowing the setting aside of each direction and review proceeding; b) the directions to rectify were not reissued to the Applicant i.e. there would be no new ones issued; c) the Authority did not pursue the Applicant for any payments made subsequently under the Home Warranty Insurance Scheme in relation to the properties the subject of review proceedings; d) the Applicant would provide a written undertaking that it would not use the Evolution Professional Engineers Pty Ltd or Heltech Industries Pty Ltd footing and slab design in the construction of any future residential homes in Queensland; and e) the Authority pay to the Applicant 80% of all its costs incurred in the review proceedings. [54] On any view of the matter, that offer contained terms which went well beyond the issues which were raised for determination on the review applications. It involved terms which sought to settle other potential and yet to be made claims, such as the right to recover sums paid out under the homeowner‘s policy. Another was that no further directions be issued to the Applicant. That is not a matter that would have been determined in this review application. The offer required that the Authority pay the Applicant 80% of all its costs, in other words, 80% of its costs on an indemnity basis. [55] Obviously, apart from obtaining an order by consent that the directions be set aside, the Applicant has not succeeded in obtaining orders, or a result which was equal to or better than the basis upon which it was prepared to resolve the matter in its Calderbank letter earlier this year. [56] In the circumstances, I do not regard the making of this offer as a basis to depart from the usual rule in section 100, or in the application of the provisions of Rule 86 of the Tribunal‘s Rules. [57] I therefore dismiss the applications. -- 17 of 17 --