Axtens and Anor v Brooks [2011] QCAT 517

CITATION: Axtens and Anor v Brooks [2011] QCAT 517 PARTIES: Jonathan Keith Axtens Karen Axtens v Michael John Brooks APPLICATION NUMBER: BD451-06 MATTER TYPE: Building matters HEARING DATE: 4 October 2011 HEARD AT: Brisbane DECISION OF: Sandra Deane, Member DELIVERED ON: 3 November 2011 DELIVERED AT: Brisbane ORDERS MADE: 1. Mr Brooks is to pay Mr and Mrs Axtens the sum of $7,469.00 together with interest on the sum of $7,469.00 calculated from the date of the Application (1 September 2006) to the date of this decision calculated at the rate of 10% per annum on a simple basis by 4:00pm on 6 December 2011. 2. The Application to Correct Order 1 of 17 November 2009 is allowed. 3. Order 1 of 17 November 2009 will be corrected to provide “The rectification orders (being Orders 1 and 2) made by the Tribunal on 9 March 2009 will be vacated.” 4. Mr and Mrs Axtens’ application for costs in relation to the assessment of damages is dismissed. 5. Mr and Mrs Axtens’ application for costs in relation to the Application for Correction is dismissed. CATCHWORDS: Building Contract – swimming pool depth not in compliance with contract – contractor ordered to rectify – problems implementing order because homeowners sold property before rectification performed – application to reopen allowed – measure of damages – entitlement to costs of rectification or other remedy Commercial & Consumer Tribunal Act 2003, -- 1 of 13 -- 2 s 70, 71, 96 Queensland Civil and Administrative Act 2009, ss 100, 102, 260, 271 Queensland Building Services Authority Act 1991, s 77 Bellgrove v Eldridge (1954) 90 CLR 613 UI International Pty Ltd v Interworks Architects Pty Ltd & Ors[2007]QCA 402 Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253 Hallett & Ors v Queensland Building Services Authority [2011] QCAT 355 Queensland Building Services Authority v Johnston [2011] QCATA 265 Lyons v Dreamstarters [2011] QCATA 142 Oshlak v Richmond River Council (1998) 193 CLR 72 Latoudis v Casey (1990) 170 CLR 534 at 557 APPEARANCES and REPRESENTATION (if any): APPLICANT: Jonathan Keith Axtens and Karen Axtens represented by Mr C Ryall of Counsel instructed by Robert P Palethorpe, Solicitor RESPONDENT: Michael John Brooks represented by Mr HA Mellick Jnr of Mellick Smith & Associates, Solicitors REASONS FOR DECISION Background [1] By direction of the Tribunal dated 11 April 2011 this matter was to be determined on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). As a consequence of the written submissions filed by Mr and Mrs Axtens a short oral hearing was held and the parties supplemented the written submissions with oral submissions. [2] This dispute relates to the construction of a domestic swimming pool. The original contract price was $31,120. As constructed the pool was slightly shallower than specified in the contract. [3] Mr and Mrs Axtens, the homeowners, commenced proceedings in the Commercial and Consumer Tribunal (CCT) on 1 September 2006 and originally claimed $93,764.50 for rectification costs for removing and rebuilding the pool and re-landscaping. -- 2 of 13 -- 3 [4] From an early time Mr Brooks admitted non compliance with the contract and offered to undertake rectification works but contended that this did not require removing and rebuilding the pool.1 [5] An alternative rectification solution was proposed in the report of Mr Colefax of Colefax Associated Consulting Engineers dated 9 March 2007. Mr Brooks, the swimming pool contractor, gave evidence by way of quote dated 15 July 2008 that the costs of this work would be $5,390. [6] The CCT originally heard this matter on 31 July 2008. On 6 November 2008 the CCT made certain findings and made directions seeking further evidence and submissions. These directions were to be carried out by 23 December 2008. [7] Mr and Mrs Axtens gave evidence as to the cost of carrying out of the work proposed by Mr Colefax by submitting a quote by Placid Pools Pty Ltd dated 27 November 2008 that the costs would be $36,190 excluding any rectification of the garden or fencing surrounding the pool if this was damaged in the process. The quote was unsigned and was qualified as it was stated to be “subject to site inspection”. [8] Neither of the quotes submitted set out calculations as to how the amounts were derived. [9] On 9 March 2009 the CCT found that rectification in accordance with Mr Colefax’s report was a reasonable course. In view of the divergent evidence of the costs of such rectification the CCT favoured a rectification rather than a damages order and ordered: a) Mr Brooks to rectify the defective pool depth in accordance with the method described in the report of Mr Colefax of Colefax Associated Consulting Engineers dated 9 March 2007 (including any rectification of the garden or fencing if damaged in the process) by 4pm 30 June 2009. b) That Mr and Mrs Axtens were relieved of any obligation to pay to Mr Brooks the balance of the amounts owing under the building contract in the sum of $1,933.75 to compensate them for their loss, including for inconvenience, disappointment, loss of amenity or enjoyment. c) Mr Brooks was to pay Mr and Mrs Axtens’ costs of the proceedings to be assessed on the standard basis using the District Court scale relating to applications of less than $50,000 to be assessed. [10] In about March 2009 Mr and Mrs Axtens sold the property. [11] Mr and Mrs Axtens did not inform the CCT or Mr Brooks of their intention or decision to place the property on the market. [12] On or about 17 March 2009 Mr Brooks became aware of a sale or proposed sale. 1 Defence dated 25 September 2006 paragraphs 3 and 4. -- 3 of 13 -- 4 [13] On 18 March 2009 in response to an enquiry as to whether the house had been sold Mr and Mrs Axtens’ legal representatives acknowledged to Mr Brooks’ legal representatives that the property had been sold and the contract was at that stage conditional. [14] Mr Brooks was deprived of the opportunity to comply with the order within the time allowed ie by 30 June 2009. [15] In view of the time which elapsed from the CCT decision of 9 March 2009 until the confirmation of the conditional sale there cannot be any adverse inference drawn against Mr Brooks for failure to comply with the rectification order. [16] Section 96 of the Commercial and Consumer Tribunal Act 2003 (Qld) (CCT Act) provided that a party could apply to reopen an order if there were problems with interpretation or implementation of an order. [17] On 27 April 2009 Mr and Mrs Axtens applied to the CCT to reopen the 9 March 2009 decision seeking a monetary order as distinct from rectification because the property was being sold with settlement to take place on 1 May 2009. [18] On 19 August 2009 Mr and Mrs Axtens sought an oral hearing to be allowed to conduct cross examination. For reasons which are not readily apparent from a review of the file the matter proceeded to be determined on the papers without an oral hearing. [19] On 17 November 2009 the CCT allowed the reopening and ordered that: a) The rectification orders made on 31 July 2008 be vacated; b) Mr Brooks pay Mr and Mrs Axtens the sum of $5,390 by 4pm 30 November 2009. [20] The CCT also found that each party should bear their own costs and so no order as to costs was made. [21] From 1 December 2009 the Tribunal replaced the CCT on the commencement of the QCAT Act. [22] On 14 December 2009 Mr and Mrs Axtens filed a Notice of Appeal subject to leave in the District Court seeking to appeal the order that Mr Brooks pay Mr and Mrs Axtens the sum of $5,390 by 4pm 30 November 2009. [23] On 18 December 2009 Mr and Mrs Axtens filed an application in this Tribunal for correction of a decision because there were problems with interpretation of the 17 November 2009 order. [24] The issues were that: a) there was no 31 July 2008 order; -- 4 of 13 -- 5 b) an order made on 9 March 2009 included an order requiring Mr Brooks to carry out rectification work and a costs order; c) Mr and Mrs Axtens contend that the “rectification orders” being vacated did not extend to the costs order. [25] On 18 August 2010 the District Court granted Mr and Mrs Axtens leave to appeal (on the grounds of a denial of natural justice because they were not allowed to test Mr Brooks’ evidence by cross examining him at an oral hearing), allowed the appeal, allowed the application to reopen the 9 March 2009 decision and remitted the application to the Tribunal for determination as to the measure of damages payable. [26] By directions dated 11 April 2011 and 23 June 2011 the parties were to make written submissions as to the quantum of damages and on costs. Discussion and Decision [27] Mr and Mrs Axtens contend that: a) the District Court accepted that the measure of loss was the cost of rectifying the defective workmanship and found that it was an error of law to consider the impact of the breach on the value of the home; b) this Tribunal is limited to assessing the reasonable costs of rectifying the pool in accordance with Mr Colefax’s report; c) the quote by Placid Pools Pty Ltd dated 27 November 2008 in the sum of $36,190 is to be preferred because it is an independent quote; d) if the order of 17 November 2009 vacated the costs order of 9 March 2009, which is denied, they ought to be entitled to their costs of the whole proceedings on the District Court Scale to be assessed or alternatively on the Magistrates Court Scale applicable to the amount awarded pursuant to sections 70 and 71 of the CCT Act; e) if the order of 17 November 2009 did not vacate the costs order of 9 March 2009 they ought to be entitled to their costs since that time on the District Court Scale to be assessed or alternatively on the Magistrates Court Scale applicable to the amount awarded pursuant to sections 70 and 71 of the CCT Act; f) they ought to be awarded interest on any amount awarded as from the filing date of 1 September 2006 pursuant to section 47 of the Supreme Court Act 1995. [28] Mr Brooks submits that the District Court did not go so far as to say that it was an error of law to consider the impact of the breach on the value of the home. I agree with this submission. -- 5 of 13 -- 6 [29] Everson DCJ stated at page 4: “In placing considerable weight on the market value of the applicants’ property as a saleable commodity, the tribunal has misdirected itself and erred in law.” [30] In my view the error found by the District Court was not that the impact on market value was considered but rather the weight given. [31] The District Court remitted for determination the measure of damages. It did not expressly limit this Tribunal to assessing the reasonable costs of rectifying the pool in accordance with Mr Colefax’s report. [32] Mr Brooks contends that: a) the measure of Mr and Mrs Axtens’ loss is the diminution in value, if any, of the house produced by the departure from the plans and specification and any inconvenience and disappointment. b) it has never been alleged that the difference in the depth of the pool led to a diminution of the value of the property. c) there was no evidence of any diminution in the value of the property. d) there was no real evidence of substance that the difference in depth caused any real loss of enjoyment. e) the damages to which Mr and Mrs Axtens are entitled is nominal and in any event does not exceed $2,000. f) no order as to costs is appropriate. [33] At the short hearing of this matter on 4 October 2011 Mr Brooks gave evidence and was cross examined as to his quote dated 15 July 2008. [34] Mr Brooks gave evidence that: (a) he was an experienced pool builder; (b) his quote of $5,390 did not include any allowance for his own labour; (c) he had prepared the quote on the basis of performing much of the work himself; (d) the applicable day rate for his labour was $300-$350; (e) he estimated that the work would take 4 days as against building a whole pool in 7-8 days; (f) he usually applies a 10% profit margin if he needs to get other contractors in to perform work; (g) his day rate does not include a separate profit margin; -- 6 of 13 -- 7 (h) Placid Pool’s profit margin may have been higher than 10%; (i) he assumed that the disparity between the Placid Pool’s quote of $36,190 and his own was because there must be a large profit margin built in; (j) the Placid Pool quote states that it was subject to site inspection which usually means the contractor has not attended at site to inspect prior to providing the quote; (k) he is very familiar with the site; (l) his original price for the pool of $31,120 included $9,104.20 in equipment and equipment installation and a further $3,600 allowance for solar heating, neither of which would need to be duplicated for the rectification work; (m)he disagreed with Mr Mosley’s estimate given in his letter dated 16 August 2007 that you could build four new concrete pool shells in the time frame it would take to perform the rectification work and stated that the rectification work was straight forward. [35] In August 2007 Mr Mosley from Placid Pools, when approached to quote for rectification work proposed by Colefax declined to do so. [36] In November 2008 Mr Mosley from Placid Pools provided a quote for the rectification work, subject to site inspection, which did not provide any detailed pricing breakdown. Mr Mosley was not cross examined. [37] Mr and Mrs Axtens submit that the Placid Pools quote represents the market price of the cost of rectification and should be accepted in preference to Mr Brooks’ evidence. [38] Whilst the Placid Pools quote is an independent quote it must be viewed in the context that Mr Mosley had previously indicated that Placid Pools did not wish to undertake the work and more likely than not has not attended at site to form an informed view of the work required. [39] In forming a view about the reasonable costs of rectification I have considered that this quote is for considerably more than the original contract price to build the whole pool which included a significant quantity of equipment and solar heating. These items represented approximately 40% of the original contract price. If these items are excluded from the comparison then the Placid Pool’s quote is almost twice that of the original pool construction price. [40] Both parties referred to the decision in Bellgrove v Eldridge2 as did the CCT Member as authority for the proposition that the general rule regarding the measure of damages is the difference between the contract price the work was contracted for and the cost of making the work conform to the contract 2 (1954) 90 CLR 613. -- 7 of 13 -- 8 with the addition of appropriate consequential damages provided that undertaking the work to produce conformity is a reasonable course to adopt. If this general rule does not apply then the measure is diminution in value. The Court of Appeal endorsed this approach in UI International Pty Ltd v Interworks Architects Pty Ltd & Ors3 and also confirmed that sale of the property does not necessarily displace the entitlement to the costs of rectification.4 [41] The CCT Member5 noted that “Both the manner of rectification and the costs of performing it must be reasonable”. [42] Mr Brooks submits that: a) the Placid Pool quote is disproportional to the original contract price and therefore does not satisfy the test; b) the appropriate measure is therefore diminution in value of which there is no evidence; c) there was minimal inconvenience and therefore nominal damages should be awarded; d) regard should be had to the fact that the property has been sold. [43] Having regard to the matters in [39]-[42] I prefer the evidence of Mr Brooks, who is an experienced pool builder and is familiar with the site, as to the reasonable cost of performing the rectification work. [44] I find that the reasonable cost of performing the rectification work is $7,469: (a) $5,390 per quote dated 15 July 2008; (b) $1,400 (4 days labour @ $350); (c) $679 (10% profit margin). [45] I assess damages payable by Mr Brooks to Mr and Mrs Axtens in the sum of $7,469. [46] I also award interest on the sum of $7,469 calculated from the date of the Application (1 September 2006) to the date of this decision calculated at the rate of 10% per annum on a simple basis. Application to Correct [47] In relation to the Application to Correct a decision filed 18 December 2009 I have reviewed the orders and the various reasons for decision made in this matter. 3 [2007]QCA 402. 4 Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253. 5 [2008] CCT BD451-06 at [26]. -- 8 of 13 -- 9 [48] The CCT Order of 9 March 2009 contained 5 separate orders. [49] Orders 1 and 2 specifically referred to rectification. [50] Order 3 was in the nature of a damages order in that it relieved Mr and Mrs Axtens from paying the balance of the contract sum to Mr Brooks “having regard to the significant consequential loss …. including inconvenience ….. loss of amenity or enjoyment.”6 [51] Orders 4 and 5 related to costs. [52] The order of 17 November 2009 contained 2 separate orders. [53] Order 1 provided “The rectification orders made by the Tribunal on 31 July 2008 will be vacated.” [54] Order 2 provided for payment of damages in lieu of rectification. This order was subsequently successfully appealed. [55] It is clear that Order 1 erroneously referred to 31 July 2008 and ought to have referred to 9 March 2009. [56] The application before the CCT was in relation to varying the orders requiring rectification be undertaken. [57] The CCT considered the issue of costs7 and considered it appropriate to make no order as to costs. In my view this solely related to the application to vary the orders and not to the proceedings as a whole. [58] I am not satisfied that the CCT intended to vacate all of the orders. If it had intended to do so then it could have done so in express language. [59] In these circumstances I find that “rectification orders” referred to Orders 1 and 2 of the Order of 9 March 2009 and therefore the costs orders in Orders 4 and 5 were not vacated. [60] I allow the Application to Correct Order 1 of 17 November 2009. [61] I order that Order 1 of 17 November 2009 will provide “The rectification orders (being Orders 1 and 2) made by the Tribunal on 9 March 2009 will be vacated.” Costs [62] Mr and Mrs Axtens contend that they should receive the benefit of a costs order pursuant to the now repealed Commercial and Consumer Tribunal Act 2003 (CCT Act) for the proceedings since 9 March 2009. 6 Axtens v Brooks [2009] QCCTB 43 at [11]. 7 Axtens v Brooks [2009] QCCTB 276 at [23]-[26]. -- 9 of 13 -- 10 [63] As set out above the CCT dealt with costs of the application to vary up to 17 November 2009 by making no order as to costs. [64] On the material before the Tribunal this costs decision was not appealed. Any costs order, if ordered, would relate to the Tribunal’s proceedings as to the assessment of damages remitted from the District Court and to the Application to Correct filed 18 December 2009. [65] It is necessary to have regard to the transitional provisions in the QCAT Act. [66] Prior to commencement of the QCAT Act Mr and Mrs Axtens had the right to appeal the CCT decision of 17 November 2009 upon obtaining leave of the District Court. An appeal was filed and subsequently allowed. [67] Section 260 of the QCAT Act applies if the appeal was not commenced prior to 1 December 2009 but commenced within the appeal period or having been commenced was not finally dealt with prior to 1 December 2009. [68] In either of these circumstances where the District Court’s decision was to remit the matter, the Tribunal must deal with the matter under the CCT Act as if it were still in force and only has the functions of the CCT and can only make a decision the CCT could have made in relation to the matter under the CCT Act. The CCT Act and other relevant laws continue to have effect as if they were still in force for these purposes.8 [69] The Tribunal has recently determined that the relevant provisions when considering whether to make an order for costs in existing tribunal proceedings9 are sections 100 and 102 of the QCAT Act.10 [70] In the Hallett decision it was accepted that: a) section 271 of the QCAT Act requires the Tribunal to deal with the matter under the QCAT Act; b) the Tribunal only had the powers that the CCT had, which included the power to award costs; c) the awarding of costs ought to be determined by application of the QCAT Act provisions i.e. section 102. [71] This reasoning was recently accepted by the Appeal Tribunal11. [72] However section 271 of the QCAT Act does not contain the equivalent of section 260(5) of the QCAT Act which provides that “the former Act, and other relevant laws, continue to have effect as if they were still in force”. 8 Section 260(3), (4) and (5) QCAT Act. 9 Section 271 QCAT Act. 10 Hallett & Ors v Queensland Building Services Authority [2011] QCAT 355. 11 Queensland Building Services Authority v Johnston [2011] QCATA 265. -- 10 of 13 -- 11 [73] I accept that the preferred construction of section 260 of the QCAT Act is that the costs application relating to the matter remitted by the District Court continues to be governed by the laws in force prior to 1 December 2009 including the now repealed CCT. [74] Section 77 of the Queensland Building Services Authority Act 1991 (QBSA Act) conferred jurisdiction on the CCT and now on the Tribunal to determine building disputes such as the one brought by Mr and Mrs Axtens. Section 77(1)(h) of the QBSA Act provides that the tribunal may award costs. Prior to 1 December 2009 the “tribunal” was defined as the CCT. [75] This section has recently been considered by the Appeal Tribunal in Lyons v Dreamstarters.12 The Appeal Tribunal noted at [33]-[34] that “A jurisdiction given in general terms allows the Tribunal to make an order as to costs that is justified in the circumstances.13 It is a broad general discretion which must be exercised judicially, not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation.”14 [76] As noted by the Appeal Tribunal above whilst the discretion in section 77(1)(h) of the QBSA Act is broad it must be exercised having regard to relevant facts. [77] Mr and Mrs Axtens have been awarded damages, however they have received an award for a small fraction of the amount originally claimed and did not succeed in the amount contended for in their most recent submissions. This is a factor which militates against exercising a discretion to award costs. [78] Under the CCT Act “the main purpose of this division is to have parties pay their own costs unless the interests of justice require otherwise”.15 The next consideration is whether, having regard to the interests of justice, in reliance on the factors set out in section 71(4) and the provisions of section 71(5) of the CCT Act, another order is warranted. Outcome of the proceeding [79] The proceedings were commenced by Mr and Mrs Axtens seeking damages in the order of $94,000. [80] Whilst they have ultimately been successful the measure of damages awarded to them has been a small fraction of the damages initially sought. Conduct of the parties before and during the proceeding [81] Mr Brooks conceded liability at an early time. Nature and complexity of the proceeding 12 [2011] QCATA 142. 13 Oshlak v Richmond River Council (1998) 193 CLR 72 at 88. 14 Latoudis v Casey (1990) 170 CLR 534 at 557. 15 Section 70 CCT Act. -- 11 of 13 -- 12 [82] The application did not involve overly complex issues. Relative strengths of the claims made [83] The issue for determination was what damages were applicable. Mr and Mrs Axtens were ultimately successful but for a small fraction of the amount originally claimed and did not succeed in the amount contended for in their most recent submissions. Any contravention of an Act [84] This is not a relevant factor in this proceeding. 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 [85] This is not a relevant factor in this proceeding. Anything else the tribunal considers relevant [86] A party to a proceeding is not entitled to costs merely because the party is the beneficiary of an order of the tribunal or the party was legally represented at the proceeding.16 [87] Mr and Mrs Axtens are the beneficiaries of an order for costs made by the CCT on 9 March 2009. [88] Having regard to the above factors some of which are in favour of an award of costs but most which are not, the interests of justice do not point to a costs award to overcome the starting position that each party pay their own costs. [89] It is therefore appropriate that there be no order for costs in relation to the assessment of damages being the matter remitted from the District Court. [90] If I am wrong that the decision of 17 November 2009 to award no costs remains on foot then having regard to the criteria in the CCT Act I find that it is appropriate that there be no order for costs in relation to the application to reopen. [91] In relation to the Application to Correct filed 18 December 2009 that was an application commenced in this Tribunal and the awarding of costs ought to be determined by application of the QCAT Act provisions. [92] Having regard to the conduct of this matter the Application to Correct was very much secondary to the assessment of damages and the parties made limited submissions in relation to it. 16 Section 71(5) CCT Act. -- 12 of 13 -- 13 [93] The QCAT Act provides “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 proceedings.”17 [94] Section 102(1) states “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.” [95] Section 102(3) sets out criteria to which the Tribunal may have regard. [96] Having regard to the criteria the interests of justice do not point so compellingly to a costs award to overcome the starting position that each party bear their own costs. [97] It is appropriate that there be no order as to costs in respect of the Application to Correct. [98] If I am wrong that the awarding of costs in relation to the Application to Correct is governed by the QCAT Act then having regard to the criteria under the CCT Act I find that it is appropriate that there be no order for costs. Orders [99] Mr Brooks is to pay Mr and Mrs Axtens the sum of $7,469.00 together with interest on the sum of $7,469.00 calculated from the date of the Application (1 September 2006) to the date of this decision calculated at the rate of 10% per annum on a simple basis by 4:00pm on 6 December 2011. [100] The Application to Correct Order 1 of 17 November 2009 is allowed. [101] Order 1 of 17 November 2009 will be corrected to provide “The rectification orders (being Orders 1 and 2) made by the Tribunal on 9 March 2009 will be vacated.” [102] Mr and Mrs Axtens’ application for costs in relation to the assessment of damages is dismissed. [103] Mr and Mrs Axtens’ application for costs in relation to the Application for Correction is dismissed. 17 Section 100 QCAT Act. -- 13 of 13 --