Body Corporate Mitre Street, Port Douglas v Queensland Building and Construction Commission [2014] QCAT 380

CITATION: Body Corporate Mitre Street, Port Douglas CTS 35303 v Queensland Building and Construction Commission [2014] QCAT 380 PARTIES: Body Corporate Mitre Street, Port Douglas CTS 35303 (Applicant) v Queensland Building and Construction Commission (Respondent) APPLICATION NUMBER: GAR422-12 MATTER TYPE: General administrative review matters HEARING DATE: 19 February 2014 HEARD AT: Brisbane DECISION OF: Member Paratz DELIVERED ON: 7 August 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. The decision of the Queensland Building and Construction Commission made on 13 March 2013 disallowing the claim under the Statutory Insurance Scheme is confirmed. 2. No order is made as to costs. CATCHWORDS: Where a claim was made by a Body Corporate upon the Statutory Insurance Scheme for defects – where the claim was disallowed as not being residential construction work – where the works were a very large development incorporating 136 residential units and a central building containing a bar, restaurant and spa facilities – where the development was marketed as a resort with external managers of a letting pool - where no copy of the construction contract was available – where it was held that an objective characterisation of the works at the time of the works to determine the dominant or substantial purpose of the works is necessary – where it was held that the -- 1 of 15 -- 2 dominant or substantial purpose of the works must be residential for the works to be characterised as residential Queensland Building Services Authority Act 1991 (Qld) (Reprint No. 8B), Schedule 2 Queensland Building Services Authority Regulation 2003 (Qld) (Reprint No. 1F), s 10, s 11(1), s 13 Parker & Anor v Queensland Building Services Authority [2000] QCA 422 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr J Meredith of Counsel instructed by Plastiras Lawyers RESPONDENT: Ms Shannon Moody of Counsel instructed by the Queensland Building and Construction Commission REASONS FOR DECISION [1] The Body Corporate for Mitre Street, Port Douglas CTS 35303 is the body corporate for scheme land and buildings situated at 22-36 Mitre Street, Port Douglas. The property is a very large development. From April 2006 until around November 2012 it was known as “Sea Temple Resort & Spa Port Douglas”. Since that time it has been known as the “Pullman Port Douglas Sea Temple Resort & Spa”. [2] The development was built in around 2005 to 2006. The principal contractor was Juniper Constructions Pty Ltd (Juniper Constructions). The development consisted of 136 residential units and a central building which contains a bar, restaurant and spa facilities. The total value of the building work was about forty-nine and a half million dollars ($49.52m). [3] On or around 26 April 2006 the Body Corporate entered into a written agreement with Juniper Realty Pty Ltd appointing it as the manager and letting agent for the scheme. [4] On or around 9 May 2006 Juniper Realty Pty Ltd entered into an agreement with Mirvac Hotels Pty Ltd appointing it as its sole and exclusive agent to operate and manage the “serviced apartment business” under the name “Sea Temple Resort & Spa, Port Douglas”. [5] The Body Corporate made a complaint to the Queensland Building and Construction Commission (QBCC) around 8 February 2012 about allegedly defective work performed by Juniper Constructions. The defects involved the failure of waterproof membranes to deck-roofed lots, and lack -- 2 of 15 -- 3 of, or improperly constructed, control joints to separation walls to upper level roof decks. [6] The QBCC wrote to the Body Corporate on 16 November 2012 advising that it could not issue a direction to the builder to rectify defective works as the time period of 6 years and 3 months had expired. [7] The QBCC then assessed the Complaint as a Claim under the Statutory Insurance Scheme pursuant to the Queensland Building Services Authority Act 1991.1 [8] The QBCC made a decision on 13 March 2013 disallowing the claim under the Statutory Insurance Scheme. The basis of the decision was that the works were not “residential construction works” and were not covered by the scheme. [9] The Body Corporate initially filed an application on 17 December 2012 for review of the decision by the QBCC of 16 November 2012 not to direct the builder to rectify the defective work. Subsequently the application was changed by consent, and Directions were issued on 4 April 2013 substituting the decision under review to be the decision of 13 March 2013 disallowing the Insurance Claim. [10] This application thereafter only concerned the Insurance issue, and it is that decision which was the subject of the hearing and of these Reasons. [11] Juniper Constructions was put into receivership, and Pitcher Partners were appointed as receivers. [12] At the hearing I initially considered issues that had arisen as to an application by the Body Corporate for an Order for the production of documents. The documents that were sought were as follows: (1) The construction contract – Notice to be directed at Juniper Constructions Pty Ltd (JCPL), Juniper Property Holdings No. 14 Pty Ltd (JPH14PL), Graeme Juniper and Pitcher Partners. (2) Correspondence between the QBCC and JCPL and JPH14PL between 2003 and 2005 regarding the construction of the complex. (3) Correspondence between JPH14PL and JCPL, Juniper Realty Pty Ltd and Graeme Juniper between 2003 and 2005 as to the way the complex was too be used, and also be directed at Pitcher Partners. (4) Correspondence between the Douglas Shire Council and JHPR14PL, JCPL, and also be directed at Pitcher Partners. (5) Correspondence between the QBCC and Douglas Shire Council between 2003 to 2007. 1 The Body Corporate submits that (Para 9 Submissions 14 March 2014) as the relevant building works commenced in early 2005 the relevant reprint of the QBSA Act is No. 8B (Reprinted as in force on 29 November 2004) and the relevant Queensland Building Services Authority Regulation 2003 is reprint No. 1F (Reprinted as in force on 17 December 2004). -- 3 of 15 -- 4 [13] I heard oral evidence from Graeme Frank Juniper, a former principal of Juniper Constructions, and from Mr Jeffrey Evans, a Building Certifier who was employed by the Douglas Shire Council from 1996 to 2007, and oral submissions from both parties on the application for production of documents. [14] I ruled against making the Order for production of documents as: a) I was not satisfied that a copy of the construction contract was in existence, or of the value of it, as there was unlikely to be a contradiction between the builder and the client who were both members of the same Group and had the same principals. b) I was not satisfied that the other documents did still exist, and was wary of the relevance and cost of the discovery sought from Douglas Shire Council, having regard to the size and complexity of the development and the consequent extensive documentation that would have been generated. [15] The hearing then proceeded. The Body Corporate did not call any oral evidence. Juniper Constructions called Mr Graeme Juniper who gave oral evidence. I then gave directions for the filing of submissions (Including any submissions as to costs) and for responses, with a timetable for doing so. That timetable was subsequently extended upon further application. I directed that my reserved decision would be delivered without further hearing after receipt and consideration of the submissions. [16] The Body Corporate filed Submissions as to the application and as to costs on 14 March 2014, and Submissions in Reply on 8 April 2014. The QBCC filed submissions on 1 April 2014. [17] An Agreed Statement of Facts was filed on 19 February 2013. [18] The internet advertising for the commercial operator at the premises described the property in April 2013 as follows:2 A personal welcome to Pullman Port Douglas Sea Temple Resort and Spa, beautifully located at the southern end of Four Mile Beach, just 60 minutes north of Cairns. Situated in a prestigious location with the Great Barrier Reef, World Heritage listed Daintree Rainforest and Cape Tribulation, the resort offers stunning recreational opportunities in a region of outstanding natural beauty. Designed with the utmost privacy and sophisticated luxury in mind and set on almost 10 acres of tropical splendour, this spectacular resort blends seamlessly with the surrounding natural beach environment including direct beach access. Choose from studio spa rooms; upscale guestrooms or apartments; villas with exclusive private terrace and plunge pool; swim-out apartments to the grand central lagoon and penthouses with exclusive rooftop spa and BBQ sundeck areas, most offering exceptional views of the grand central lagoon 2 www.mirvachotels.com/pullman-port-doglas-sea-temple-resort-spa 12 April 2013. -- 4 of 15 -- 5 pool and lush tropical gardens, or the tranquil fairways of the championship golf course. Relevant Regulations [19] Schedule 2 of the QBSA Act (Reprint 8B) defines “residential construction work” as follows: Residential construction work means building work classified by regulation as residential construction work [20] Section 10 of the QBSA Regulation relevantly states: 10 Classification as residential construction work For the Act, schedule 2, definition residential construction work, the following is classified as residential construction work – (a) primary building work (b) associated building work [21] Section 11(1) of the QBSA Regulation defines “primary building work” to mean: 11 Meaning of primary building work (1) Subject to subsection (3) for section 10(a), building work mentioned in subsection (2) is primary building work if it is – (a) carried out by a building contractor; and (b) for a residence or related roofed building; and (c) of a value of more than $3,300 [22] Section 13 of the QBSA Regulation (Reprint 1F) under the heading “Building work that is not classified as residential construction work” states that certain building work is not classified as construction work: 13 Building work that is not classified as residential construction work Each of the following is not classified as residential construction work – (a) building work on, or on the site of, a building or proposed building that is or forms part of any of the following – (ii) a backpacker’s accommodation, boarding house, caravan park guest house, holiday accommodation, hostel, hotel, lodging house or motel Basis of Argument of the Body Corporate [23] The Body Corporate argues that the QBCC based its determination upon the present day use of the development, and that such an analysis is fundamentally flawed. It says that the critical issue is whether the relevant works were excluded by operation of section 13(a)(ii) of the Regulations. [24] The Body Corporate argues that the issue to be determined by the Tribunal is the correct classification of the works to be carried out in the -- 5 of 15 -- 6 development as at the time of commencement of construction in early/mid 2005.3 [25] It is agreed that the development involved 137 separate lots (being the 136 residential lots on which the residential units are located, and the one lot on which the central building is located) and landscaping throughout. It is also agreed that purchasers of the residential units could reside in their residence if they chose to, or rent them out using any agent of their own choice or the letting pool agent (Mirvac/Pullman). [26] Juniper Property Holdings No 14 Pty Ltd was the original owner of the development site. It entered into a building contract with Juniper Constructions. No copy of the building contract is in evidence. [27] The Douglas Shire Council issued a town planning decision notice dated 24 November 2003 which set out the developer’s proposal as: 136 Multiple Dwelling (Residential/Tourist) Units, consisting of 16 x 3 Bed Villas; 58 x 3 Bed Units (that can be used for 58 Motel units and 58 x 2 Bed Multiple dwellings and/or 58 x 3 Bed Multiple dwellings), 62 x 2 Bed units, Restaurant/Bar, office and ancillary facilities [28] The Body Corporate argues that the residential units constructed in the development comprise residential construction works, and point to the following factors: a) the 136 residential units were constructed on 136 separate lots. b) the residential units were sold under residential contracts. c) homeowners were entitled to live in their properties. d) the development was not a resort that might be usually expected as there was not a single entity that either owned or operated it. e) the possible renting out of a residential unit from time to time by an owner is not a commercial enterprise. [29] It concludes that “the dominant purpose”4 of what was being constructed were residences, not commercial or professional buildings. It argues that5 if “holiday accommodation” were to be interpreted as encapsulating a residential property that might be rented out at some time in the future, such interpretation would have the result that almost no residential property would fall outside such a definition. 3 Body Corp submission para 35. 4 Per Davies JA in Parker & Anor v Queensland Building Services Authority [2000] QCA 422. 5 Body Corp submissions para 118. -- 6 of 15 -- 7 Basis of Argument of the QBCC [30] The QBCC notes that no certificate of insurance was issued by it to Juniper Constructions with respect to the Scheme Construction Works. [31] It points out that the part of the Development Application to the Douglas Shire Council submitted in or around 22 July 2004 relating to “residential work” was not completed. [32] It refers to Mr Juniper’s evidence that the construction contract was drafted in-house and not by external solicitors, that it was based on a standard form industry contract and was signed by either himself or his son, but that he was now unable to locate a copy of it. [33] The QBCC submits6 that the building work to construct the 136 lots was for the purpose (or the substantial purpose)7 of creating a resort, rather than permanent residences, and that this is so even though the 136 lots could each be used as a residence. It argues that it then follows that the 136 lots were not “residential construction works” within the meaning of that expression in s 10 of the QBSA Regulation. [34] It argues that even if the “primary building work” was classified as residential construction work, within the meaning of s 11 of the regulations, that the 136 lots would be excluded from the definition of “residential construction work” by s 13 of the QBSA Regulation as forming part of holiday accommodation or a hotel. [35] It submits that the purpose, or substantial purpose, for which the building works were carried out was to build a resort, and was commercial in nature. It further submits that a resort is a form of holiday accommodation and/or hotel. [36] In paragraphs 99 and 100 of its submissions, the QBCC points to a number of indicators which it argues establishes that the purpose, or substantial purpose of the building works was to build a resort. They can be summarised as follows: (a) Mr Juniper’s evidence as to the building work (b) What buildings and common property comprise the Scheme (c) The Development Permit dated 12 June 2003 (d) The Decision Notice dated 24 November 2003 (e) The Development Application submitted on 22 July 2004 (f) The Douglas Shire Council Development Application Decision Notice of December 2004 (g) The management and letting Agreement (h) The serviced Apartment Management Agreement with Mirvac 6 QBCC Submissions 1 April 2014 para 82. 7 See Parker per Mullins J at [60]. -- 7 of 15 -- 8 (i) The marketing material before and during construction (j) The branding of the development as a “Sea Temple” resort (k) Selling lots off the plan, and the pro-forma contract of sale, correspondence with buyers, offer to buyers to participate in a managed investment scheme (l) The disclosure statement as to the Management and Letting Agreement The development [37] Evidence was given as to the history of the development by Mr Graeme Juniper. I found Mr Juniper to be a genuine and believable witness. He was forthright and open in his recollections. There were times where he freely conceded he could not provide a clear recollection or detailed evidence due to the passage of time, the delegation by him of matters to others in his organisation, and the loss of records due to the external administration of companies in the group. [38] Mr Juniper said that the construction contract was developed “in-house” with pricing, and was signed by either himself or his son. It was based on a standard contract and was entered into before construction commenced, probably between March and May 2005. [39] He had asked the current CEO of the Juniper Group, Mr Tim Bennett (who was now the only full-time employee) to look for the contract, and Wendy who was a part-time legal consultant looked in the storage rooms at the Caribbean Resort, Mooloolaba but was unable to find it. He described the rooms as “standing room only” as the boxes were brought down from North Queensland. There was about 200 square metres of storage filled with floor to ceiling boxes which had come by truck. The contents were not indexed. It was possible there were also still some documents in Cairns Square, and at Soul at the Gold Coast, and there might be some documents with the Receivers. The computer system was no longer available to him and he could not access the electronic records. He said the development was built by a team of people, and the paperwork would be huge, and that looking for the contract was like looking for a needle in a haystack. [40] He said that the way the development was intended to be used is quite clear from the Contracts and marketing material. He said that what was constructed accorded with the plans, as buyers had bought ‘off the plan”. He said that he had elected to pursue the Motel development option approved by the Douglas Shire Council with rooms that allowed for dual occupancy. He described the dual occupancy as having a door that blocks off Bedroom 1, which had no cooking facilities. [41] He described how Mirvac, who had the operating rights, had come onto the site three months before completion to get the development ready for occupation. He said it was necessary to “hit the ground running” as a resort. -- 8 of 15 -- 9 [42] Mr Juniper said that a project like that was about facilities to bring in income. Such a development needed conference facilities, and the “wow” factor. He said it was well regarded as a quality place. Expensive features such as obelisks coming out of the swimming pool were built, which was about “making the difference”. He said that if it had not been intended to be built as a resort that it would not have a one acre swimming pool, and the obelisks. He said more than five million dollars was spent on the restaurant, conference facilities and resort spa, and that these would not have been put in a residential development, as the numbers would not work. He said for a resort the infrastructure needed to be spectacular, and it needed to generate income to offset that expense. [43] He described the 58 motel units as not having cooking facilities, and that you couldn’t sell residential units without cooking facilities. He said he understood a residential unit to be one where someone intended to live. His understanding was that the development was always intended to be a resort. He said that at the time of the scheme commencement that he was not aware of anyone who lived there permanently. [44] He described the whole marketing programme as being as a resort, and was done off the back of the previous Sea Temple at Yorkeys Knob. He said every one of the apartments was sold fully furnished and came complete with a furniture package. [45] Mr Evans was a building certifier involved with the development. He said that he was not aware of any written communications with the QBCC about the Statutory Insurance Scheme at the time. He said that if he determined that the works were not insurable work, then contact with the QBCC was not necessary. He described “holiday accommodation” as commercial in nature, and that this development was a resort intended as holiday accommodation. [46] He did not believe that this development should have been part of the Insurance Scheme, as holiday accommodation was not insurable. He described the facilities and the office as integrated with the resort. He said he based his decision on the plans put before him, and it was holiday accommodation like the resort at Palm Cove which was part of the same chain. Parker [47] Both parties make reference to the decision of Parker8 in their submissions. That case is of direct relevance to this matter, and raises comparable considerations. [48] The Parkers were adding to their existing home a “Proposed Bed & Breakfast Facility” (four bedrooms with kitchen and dining facilities and a lounge were to be added). A central issue was whether the exception in the definition of “home” in s 4(1) of the Act which excludes “premises 8 Parker & Anor v Queensland Building Services Authority [2000] QCA 422. -- 9 of 15 -- 10 constituting, or forming part of, commercial ... premises” had the effect of excluding the subject building work from the ambit of “residential construction work” as defined in the act and regulations. [49] McPherson JA held that the appropriate point at which to determine whether the premises and the work are, properly speaking, residential was “the time at which the contract is entered into”.9 [50] He agreed with the conclusion of Mullins J that the characterisation of the work cannot be left to depend on the “subjective intentions” of the parties to the contract. He said that:10 Whether premises are, or are to be, for residential or for commercial purposes or use inevitably depends, at least in some circumstances, on the intention of those who construct them; but the only proper and available material to determine whether the premises are one rather than the other is the application for building approval, together with the contract, including the plans and specifications, for the work that is to be done. In considering this point at first instance, the Tribunal Chairman spoke of the “design purpose” of the subject building, which seems to me to convey much the same conception, provided it is understood that the purpose is one to be gathered from materials of the kind I have mentioned. They are, after all, what are considered by the assessment manager under s69(2) at the time the development approval is given. [51] Davies JA noted that11 that the dominant purpose is what is to be looked at: The question of what work consists of, for the purpose of the definition of “residential construction work” in s 4 of the Regulation, must, in my view, depend on the dominant purpose of the work as described in the contract. [52] Mullins J referred to the need to look objectively at the work: The definition of residential construction work is critical to the operation of part 5 of the Act which provides for the statutory insurance scheme. The intention of the Act is to provide the insurance cover for residences and not commercial or professional buildings: The Proprietors of “The View” v Queensland Building Services Authority [2000] 1 QdR 405, 407-408. It would not be consistent with achieving that object, if the characterisation of the work for the purpose of considering whether it was residential construction work depended on the subjective intentions of the parties to the contract. To the extent that the purpose of the construction can be objectively determined, it will be done so by focusing on the nature of the work being carried out. [53] She considered the work which must be considered for the purpose of determining whether it is residential construction work is that which is the subject of the relevant contract, and that it is not correct to look at the character of the entire premises after the works had been completed. 9 McPherson JA para 9. 10 Para10. 11 Para 24. -- 10 of 15 -- 11 [54] She observed that where the construction work may be for more than one purpose the question of characterisation is a matter of degree,12 and looked at the “substantial purpose”. [55] Her conclusion in that case was that the substantial purpose was not residential:13 The substantial purpose of the works undertaken under the contract between the respondents and the builder was, in effect, to double the size of the existing house, in order to provide for bed and breakfast facilities in the extension. More than half the contract price was related solely to works to add on the extension containing the additional bedrooms and related facilities. Even if the stated intention of the respondents that they would include those additional bedrooms as part of their residence (when they were not being used by paying guests) is taken into account, the nature of the works remains predominantly the provision of bed and breakfast facilities, as an extension to the existing residence. The works undertaken under the subject contract can not be characterised as works relating to residential premises and therefore do not fall within the definition of residential construction work. Discussion [56] From the principles established in Parker it is clear that an objective characterisation of the works at the time of the contract to determine the dominant or substantial purpose of the works is necessary, in order to determine whether they are properly characterised as “residential”. [57] The basic document which was relied on and referred to in Parker was the construction contract. Such a document is not available in this matter. [58] I am satisfied that a construction contract did exist at some time, but that its location has been lost over time due to the significant disruption arising from the external administration of the builder and associated companies. There is no suggestion that the Contract has been deliberately withheld or that the builder has been obstructive. The document is simply not available, and cannot reasonably be located, if it even still exists, somewhere in the remaining enormous quantity of dispersed and unindexed records of the group. [59] In the absence of the construction contract, it is necessary to look at the other relevant documents and indicators that were in place at the time of entering into the contract. [60] This was not by any measure a small or regular development. It was a high-cost quality development with particular characterising features. It cannot be readily compared to a simple block of units. [61] Whilst many high-rise or villa developments may contain extensive landscaping and facilities such as a pool, spa or gym, it is the scale and extent of the facilities on this development that attracts attention. [62] Mr Juniper describes the cost of the facilities of the restaurant, conference facilities, spa and pool as being five million dollars. The pool is one acre in 12 Para 59. 13 Para 60. -- 11 of 15 -- 12 size and has obelisks rising from it. This is a scale of investment that is far greater than most unit developments would contain. [63] Mr Juniper is very clear in his own mind that the development was always intended to be a commercial resort. He explained that is why it had these extensive facilities. [64] One of the reasons of looking at the construction contract would be to see a meeting of the minds of the builder and the owner. In this case, that is a needless exercise as the owner and the builder are effectively the same person. Mr Juniper’s subjective opinion in this case therefore is of far more significance, as he is effectively both the builder and the owner. The question then becomes whether there is external substantiation of Mr Juniper’s opinion. [65] The units were to be sold to individuals. They had the option to put them into the management pool and have them let out or not. Who would the most likely buyers be anticipated to be – investors seeking a commercial return from a commercial investment, or individuals seeking to be full or part–time owner-occupiers? [66] If the buyers were buying them as for a purely commercial return, then this suggests they were buying into a business. If they were buying as part- time occupiers, this suggests they would be using them for as a personal occasional holiday home, as well as for a commercial return. It is only if the most likely buyer was a full-time owner-occupier that the concept of the development being residential would be strongest. [67] This development was located in a tourist holiday area. There are certainly permanent residents in Port Douglas, but it is a famed tourist and holiday destination. Visitors to a resort expect “resort standard” facilities which are generally larger, more grandiose and luxurious than they have at their own home. [68] The Serviced Apartment Management Agreement with Mirvac Hotels Pty Ltd required it, in performing its duties, to operate the Serviced Apartment Business so as to maximise revenue and profitability “including but not limited to attracting both international and domestic tourists and visitors to the property”.14 [69] There are elements of this development that would appear to make it unattractive to owner occupiers. Clearly the intent was that a significant proportion of the rooms would be in the rental pool. The sophisticated management agreement, and involvement of a major corporate entity such as Mirvac as the manager, suggests a significant expected scale of ongoing letting. This would not be attractive to many owner occupiers who do not like the concept of their complex having high volumes of temporary and itinerant occupiers which may make public areas congested and less private, and may cause increased noise levels and increased pedestrian and vehicular traffic. [70] The cost of maintaining the resort-like facilities would also be significant and lead to high body corporate charges, which many owner occupiers 14 Clause 4.1 Serviced Apartment Management Agreement. -- 12 of 15 -- 13 would be wary of. The cost of maintenance of a one acre swimming pool in a tropical environment, for example, would be very high. It would be extremely unusual for such a pool to be envisaged for an owner-occupier residential development, which may have a large and even lavish pool, but nothing of the extraordinary scale of this pool. [71] Many of the units were built with no cooking facilities and were built as “dual occupancy” which allows them to be rented out as two separate parts, or one part only to be rented out. These are features that would not be sought by a full-time owner occupier. [72] These external indicators – the scale and cost of the development, the nature of the facilities, the design of many of the units, and the operating provisions – all substantiate the opinion of Mr Juniper that the development was envisaged from the outset as a commercial resort development. [73] The attitude of the building certifier at the time is instructive. Mr Evans was clearly of the anticipation that this was a resort. There is no evidence that he turned his mind to the obtaining of insurance under the statutory scheme. No such policy was taken out. The most obvious reason for Mr Evans not turning his mind to the insurance question was because to him it did not even arise. He was plainly comfortable with the concept that this was a commercial resort, following on from a previous such development, and the thought that this was a residential development obviously did not occur to him. [74] There is very little to indicate any basis to support the concept that this was a residential development. It appears clear that the owner, builder, certifier, and manager all had a clear understanding and expectation that this was a commercial resort which individual investors would buy into. [75] Indeed, the suggestion that the development could be characterised as residential in any way only seems to have arisen many years after the construction was completed, when defects were observed on the rooftop apartments and it was sought to claim on the statutory insurance scheme. [76] The body corporate argues that the dominant purpose of the development was as residences, not commercial or professional buildings. They argue that the units were constructed on separate lots and sold under residential contracts, and homeowners were entitled to live in their properties. [77] There is no evidence however to support the contention that, as at the time of the construction contract, the dominant or substantial purpose was residential. The use of dual-key apartments is not indicative of a long-term sole use occupancy. There is no evidence of any marketing targeted at owner-occupiers, such as “this could be your home”. [78] The proposition that just because a residential property can be rented out would lead to a conclusion that any residential property would fall into a commercial category is not sustainable. The actual nature and use of the property in each case would have to be considered. If the situation was that a clearly residential building such as a detached house on a separate title (a “holiday-house”) was being discussed, then there would be strong arguments that the characterisation was not commercial in nature. -- 13 of 15 -- 14 However, where a complex financial structure involving an integrated complex, external managers, office facilities, and a rental pool is involved, the issue would be more open for debate. [79] Overall, I am comfortably satisfied that the dominant or substantial purpose of this development at the time of the building works was as a commercial resort development for holiday accommodation. [80] Consequently, the effect of s 13 is to exclude the building work from the definition of “residential construction work”. [81] I find that the decision of the QBCC of 13 March 2013 disallowing the claim under the Statutory Insurance Scheme should be confirmed. Costs [82] The parties have made submissions as to costs. [83] The Body Corporate submits that no order as to costs in relation to the application for disclosure is appropriate. It submits that it was appropriate to bring the disclosure application, despite it being unsuccessful, that the trial was already proceeding on the day when the application was heard, and that Mr Juniper was already in attendance in order to give evidence at the trial. [84] If it was successful in the principal proceedings, the Body Corporate sought an award of costs. If it was unsuccessful in the principal proceedings, it submitted as follows: 12. Should the applicant be unsuccessful in this proceeding, then it is submitted that the usual order that each party bear their own costs is appropriate: s 100 of the QCAT Act 13. This application involved issues in law that have little jurisprudential precedent. Complex and detailed submissions involving statutory interpretation were necessary. 14. Having regard to the damage suffered by multiple consumer/property owners, the applicant’s position was not unreasonable to any extent. 15. In the event of the application failing, the applicant is unlikely to receive any compensation in respect of the building defects considering that the builder is in external administration. 16. Accordingly, the interests of justice would not be served by a costs award being made as against the applicant, in favour of a government controlled entity. [85] The QBCC seeks its costs of and incidental to the application for disclosure on the grounds that the application (or in any event, most of it) was made without reasonable cause and doomed to fail. It seeks the amount of its costs thrown away by reason of the Body Corporate’s interim application as $2,238.50, being its counsel fees in responding to the interim application, and researching and drafting submissions on the interim application. [86] The QBCC did not make any submission as to the costs of the principal proceedings. -- 14 of 15 -- 15 [87] I consider that the Body Corporate was justified in making the application for disclosure, as the question of the construction contract was an arguably central issue (even though in this particular instance, after hearing Mr Juniper I determined that it would have been unlikely to have been determinative), and that its doing so did not add to the costs of the day. With the co-operation of Counsel, the application for disclosure was dealt with efficiently in the morning, and did not lead to any lengthening of the proceedings on the day. [88] I do not consider that circumstances arise for departure from the usual rule in s100 in respect of the application for disclosure, and make no order for costs in respect of the application for disclosure. [89] I accept the submissions of the Body Corporate as to the costs of the principal proceeding were it unsuccessful, and make no order for costs in that regard either. Orders [90] I confirm the decision of the QBCC made on 13 March 2013 disallowing the claim under the Statutory Insurance Scheme. I make no order for costs. -- 15 of 15 --