Demac Homes (Qld) Pty Ltd v Queensland Building Services Authority & Ors [2011] QCAT 331

CITATION: Demac Homes (Qld) Pty Ltd v Queensland Building Services Authority & Ors [2011] QCAT 331 PARTIES: Demac Homes (Qld) Pty Ltd v Queensland Building Services Authority Michael & Michele Chambers APPLICATION NUMBER: Q033-05 MATTER TYPE: Occupational regulation matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Richard Oliver, Senior Member DELIVERED ON: 8 July 2011 DELIVERED AT: Brisbane ORDERS MADE: 1. The application for costs is dismissed. 2. Each party to pay its own costs. CATCHWORDS : Costs – whether the Commercial Consumer Tribunal Act applies in a matter which commenced in the CCT and finalised in QCAT – consideration of the transitional provisions in the QCAT Act - whether costs order should be made in the interest of justice – where applicant successful party in review proceeding – where difficult and complex proceeding – consideration of section 100 of the QCAT Act – whether strong contra-indication to overcome the mandate in section 100. Queensland Civil and Administrative Tribunal Act sections 100, 102, 103, 245. 252 and 257 Owen v The Adams Group Pty Ltd [2010] QCAT 10; Ralacom v Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412; Tamawood Ltd v Paans [2005] QCA 111; Castro v Hillary & Ors [2003] 1 Qd R 651; Ross v Suncorp Insurance Ltd [2002] QCA 93 -- 1 of 8 -- APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2000 (QCAT Act). REASONS FOR DECISION [1] On 1 March 2005 the Queensland Building Services Authority issued a Direction to Rectify to Demac Homes (QLD) Pty Ltd in respect of building works carried out by it at the Chambers residence at 103 Belay Road, Beachmere. Within the required time Demac Homes filed an application to review the decision to issue the Direction to Rectify in the former Commercial and Consumer Tribunal (“CCT”). [2] The hearing of the application to review was commenced in the CCT on 19 October 2009 and continued to 21 October 2009 inclusive. The hearing was then adjourned due to the unavailability of witnesses and recommenced in QCAT on 18 February 2010. The decision was reserved and subsequently published on 30 April 2010. It was the decision of the Tribunal that the Direction to Rectify dated 1 March 2005 be set aside. [3] Demac Homes now applies to the Tribunal for an order for costs to be made against the Authority. The application is opposed and both Demac Homes and the Authority have filed written submissions in support of their respective positions. Jurisdiction [4] As the application was commenced in the CCT, and was part heard at the commencement of QCAT on 1 December 2009, the transitional provisions of the QCAT Act set out in Chapter 7 Division 1 are applicable. Briefly, it is contended by Demac Homes that in considering the costs application the relevant provisions of the former Commercial and Consumer Tribunal Act should apply whereas the Authority contends that the applicable legislative provisions are those in the QCAT Act. [5] The transitional provisions set out how QCAT should deal with a proceeding that was started in the CCT. There are 2 types of proceedings to be considered, they are “pending proceeding” and “other proceeding”. A “pending proceeding” is to defined1 as a proceeding that if at the commencement of the QCAT, the Tribunal has not started to hear the matter the subject of the proceeding, or has started to hear the matter but has not started to consider the evidence for the purposes of making a final decision. [6] “Other proceeding” is referred to in s 257 but is not specifically defined. The section provides:- (1) This section applies to an existing Tribunal proceeding that is not a pending proceeding. (2) At the commencement, the proceeding is taken to be a proceeding before QCAT.2 1 Queensland Civil and Administrative Act 2009, s245. -- 2 of 8 -- (3) QCAT has jurisdiction to consider the matter the subject of the proceeding under this Act. [7] At the commencement of QCAT the former Tribunal had started to hear the matter the subject of the proceeding and had taken evidence for the purposes of making a final decision. Therefore the proceeding is not a pending proceeding. The proceeding then continued under QCAT with further evidence taken and a final decision being made under QCAT. [8] The factual history as to how this matter has progressed leads to the inescapable conclusion that this proceeding must be defined as an “other proceeding” pursuant to section 257. [9] Although having been referred to section 252 of the Act that section relates to circumstances where there has been a final decision made in the former Tribunal of the type referred to in Owen v The Adams Group Pty Ltd.3 [10] In addition, the costs application was made on 20 July 2010 subsequent to the final decision being made. Therefore, as the proceeding does not fall within the definition of pending proceeding, it is not an existing Tribunal proceeding within the meaning of that term in the definitions. [11] The consideration of the application for costs must be pursuant to the QCAT Act. Costs [12] The starting point for any application for costs is section 100 of the Act. It provides that:- “Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the parties own costs for the proceeding.” [13] The section is quiet specific in that it mandates that parties shall bear their own costs for the proceeding. By way of comparison, the costs provisions in the former CCT Act made reference to the “main purpose” of the section with respect to costs. The applicants rely on Tamawood Ltd v Paans in support of the application for costs but Tamawood takes on a lesser significance now that the legislature has strengthened the intent that the parties pay their own costs by the words used in section 100 of the QCAT Act. [14] The President addressed the application of Tamawood in Ralacom v Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) and identified two relevant matters. Firstly, that the to power award costs must be discerned from the statute which prescribed the occasions and conditions for its exercise. Secondly, that if the matter’s complexity justified legal representation it would not be in the interests of justice to deny the successful party its costs reasonably incurred to achieve a successful outcome. In respect of these matters The President said: 3 [2010] QCAT 10 -- 3 of 8 -- “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 section 100 mandates that parties shall bear their own costs. As section 70 contains, within itself, a reference to the condition or circumstance in which the main purpose may be subsumed to the interest of justice; section 100 has no such proviso although it appears later, in section 102(1).”4 [15] Section 102(3) sets out the criteria which QCAT can have regard to in determining whether, in the interests of justice, a costs order should be made in favour of a party. The question that arises here, having regard to the submissions of the parties, is whether the “interests of justice point so compellingly to a costs order that they overcome the strong contra- indication against costs orders in section 100”.5 [16] I would preface any remarks concerning the application of section 102(3)(b) with the following observations. [17] On any view this was a difficult matter. Prior to the issuing of the Direction to Rectify the Chambers Home had been subjected to serious flooding on a number of occasions. The topography of the land was virtually flat and only a contour survey brought into the focus the differential in heights. There was no history of flooding when the land was first purchased by Mr Chambers nor prior to when the house was built. There were difficulties in the appreciation and application of the Local Authority’s flood policy. Compounding all of these issues was the fact that the house was built on the lowest part of the land. Then, in addition there was the Local Authority’s failure to maintain the storm water drainage system when, over time, land development in the area around Belay Rd diverted natural water flows into these open stormwater drains. [18] I make these observations to inform the parties that, at the very commencement of the hearing, having considered all of the filed evidence, it could not be predicted with any reasonable certainty what the outcome of the proceeding might be. I might also say, uncertainty remained even at the conclusion of the hearing. In that respect I agree with the submissions of the Authority that “neither parties case was obviously stronger than the other”. [19] Demac Homes is critical of the Authority’s investigation of the cause of flooding. It contends that it did not engage an expert hydrologist, did not investigate the views of local residents in the area as to the cause of flooding, nor considered the local authority’s flood policy. It’s approach in simply relying on the Building Code of Australia forced the applicant to expend money and carry out investigations in circumstances where had the matter been properly investigated by the Authority, the Direction to Rectify may firstly not have been issued, and secondly after it was issued, it might have been withdrawn. 4 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412. 5 Ralacom Pty Ltd Supra paragraph 29 -- 4 of 8 -- [20] Balanced against that is the Authority’s position as a regulator of the building industry and the objects it has to discharge pursuant to section 3 of the AUTHORITY Act. It has a statutory responsibility to investigate complaints and if necessary direct rectification. When the complaint was made, there was a serious issue concerning flooding and the Local Authority would not give a final drainage inspection certification because of the flooding the overflow relief gully (ORG) and the household sewage treatment plant (HSTP) was subjected too. That, prima facie, suggested failure to comply with the Building Code of Australia and the Council’s drainage requirements. [21] In addition to that, it was clear that there was not sufficient drainage away from the house as the house was built on the lowest part of the land. Without the full appreciation of all of the external factors affecting the property which came to light at or shortly before the hearing, it was not unreasonable on the part of the Authority to issue the Direction to Rectify given that water penetration into a residential property is a category one defect under the Queensland Building Services Authority Board’s policy. [22] At that point, it seems to me, there can be no serious contention that the Authority was acting in a way which was unnecessarily disadvantaging the applicant. [23] The applicant contends that the very issues upon which it succeeded were raised with the Authority in correspondence in July 2008. The report of Mr Winders did raise issues of external causes including the storm water drainage in the area. Furthermore, he raised the prospect that that consultation with residents in the area would have established that flooding was a common feature during heavy rain events. Demac Homes relies on this evidence to support their submission that the Authority should have heeded this advice and withdrawn the Direction to Rectify. However the positioning of the house on the land was still a causative factor. [24] Subsequent to that report, in July 2009 only 3 months from the hearing date, Demac filed further substantial evidence in support of their position about external causes. I accept the Authority’s submission that the filing of this evidence was in response to an application for an early hearing date as the proceeding had been languishing for some years without progress. The house had been subjected to further flooding. This further evidence certainly had some bearing on the outcome of the proceeding. [25] Given that there were many complex issues for consideration, I am again not satisfied that the position taken by the Authority was such that it intentionally caused any disadvantaged to the applicant in this period leading up to the hearing. [26] There is no doubt that the matter was complex as I have already indicated and both the Tribunal and the parties were assisted with legal representation. -- 5 of 8 -- [27] Once again, as I have already alluded to, the strength of each party’s position in this proceeding was not immediately obvious. On the one hand, Demac Homes can be criticised for constructing a residence on the lower part of the block which made it more susceptible to flooding when it ought to have been apparent to it, with open storm water drains throughout the Beachmere area, that storm water would not readily dissipate. This is compounded with tidal surges. [28] On the other hand, it does seem now, having considered all of the evidence, that the Authority did not fully appreciate, despite being told by the applicant, the impact the Council’s storm water system would have on the Chamber’s property. [29] There was a considerable body of conflicting expert evidence called. There were concessions made by the applicant’s expert Mr Griffiths, that the builder ought to have been concerned about drainage and ought to have looked at neighbouring properties when siting the house. He had specifically said that the Building Code provided that water should not enter a house. [30] There was other corroborating evidence from Mr Aplin about positioning the house on the lowest part of the block. Mr Morgan also said that it was imperative that water be kept away from the footings of the house to prevent soil movement and possible structural damage. [31] These matters in my view, give substance to the legitimacy of the Chamber’s complaint and the action taken by the Authority. [32] It was only on hearing all of the evidence and the various views expressed by the experts that a final decision could be made. I repeat this was not without its difficulty. [33] In summary and having regard to the complexity of the proceeding, the applicant’s success and its compelling submissions in support of the application for costs, I am not satisfied, having regard to the history of this proceeding, the competing evidence that was put before the Tribunal, the application of section 100 of the QCAT Act referred to above, the interests of justice here point compellingly to a costs order they overcome the strong contra-indication against costs orders in section 100. [34] I am also urged to consider the “offer to settle” from the applicant’s solicitor to both the Chamber’s solicitors and the Authority dated 11 August 2005. The document has a heading “without prejudice save as to costs”. In that document Demac Homes put forward an offer to settle, without any admission of liability, and pursuant to provisions of the CCT Act to carry out certain rectification work. [35] I express doubt as to whether the “offer to settle” provisions in the CCT Act apply in QCAT for the same reasons that section 70 of the CCT Act does not apply. I do not have to decide that point for the reasons set out below. -- 6 of 8 -- [36] The obvious intention of the offer to settle was to protect Demac’s position on costs, should the matter proceed further and onto a hearing. The CCT Act specifically provided that if the decision of the Tribunal is not more favourable to the other party than the offer, then the Tribunal should award all reasonable costs incurred by the party in conducting the proceeding.6 [37] I accept the Authority’s submissions that at that point in time, there had already been significant flooding and the proposed works were to divert water into the stormwater channel adjacent to the property which, as matters transpired, did not alleviate the cause of the flooding in heavy rain events. [38] Furthermore, the Authority’s agreement for Demac Homes to do the remedial work suggested, could only have occurred with the concurrence of the Chambers which was not forthcoming. At that point in time it seemed, and I would agree, reasonable not to accept the offer. Even so Demac Homes did carry out further rectification work to try and alleviate the problem. [39] Subsequent to that offer the applicant’s case broadened with the filing of a substantial body of material by Demac Homes months out from the hearing date. As this changed the ambit of the case, the earlier offer became redundant. I accept the Authority’s submissions that I should not have regard to it.7 Any offers to settle whether pursuant to the CCT Act, Calderbank or otherwise should be made at a time when all the relevant facts are known and the recipient can make an informed decision having regard to the consequences of non-acceptance. It is prudent to continually renew or make further offers as the evidence is updated. [40] However, having said that there are special considerations that apply when there is a regulatory authority involved which has its own responsibilities to discharge under its own statutory framework, like the Building Services Authority Act. Here the Authority ought not be fearful of investigating complaints, issuing directions to rectify, and having the Tribunal review its decisions without the fear of adverse costs orders unless it is clear that its conduct would, in the interests of justice, require that such orders be made. Once again this is consistent with the mandate in section 100 of the QCAT Act. [41] Without going into all of the evidence again I am satisfied that there was a sufficient blurring of issues as to the causes for the flooding of the house to warrant the matter going to a hearing. It was only on a full and thorough exploration of all the evidence presented by both parties did those issues become crystallised into whether the primary cause of the flooding was how the house was built and whether there was non-compliance with the Building Code of Australia, or other factors. 6 Commercial and Consumer Tribunal Act 2003 s142(1)(d) and (2) 7 Castro v Hillary & Ors [2003] 1 Qd R 651; Ross v Suncorp Insurance Ltd [2002] QCA 93 -- 7 of 8 -- [42] Therefore the conclusion is that the application for costs should be dismissed. -- 8 of 8 --