Where It All Started
The dispute arose after the respondents undertook works to address issues associated with our client’s leaking swimming pool.
The pool had originally been constructed with a vinyl liner system. However, instead of reinstating the pool to its original specification, the respondents replaced the vinyl liner with a pebblecrete finish.
Our client contended that the works were carried out in a manner inconsistent with the contractual arrangements, accepted industry standards, and the reasonable expectations arising from the original scope of works. As a result, our client suffered loss and damage and was required to incur further expenses to rectify the defective work.
The matter ultimately proceeded to the Queensland Civil and Administrative Tribunal (QCAT) as a building dispute.
Does QCAT Allow Recovery of Legal Costs?
Many people assume that legal costs cannot be recovered in QCAT proceedings. While that is often the starting point, there are important exceptions.
Section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) provides that, unless otherwise permitted by legislation, each party must bear its own costs.
However, building disputes are different.
The Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) gives QCAT the power to award costs in building disputes. In particular, section 77 of the QBCC Act expressly empowers the Tribunal to award costs when determining a building dispute.
In addition, section 105 of the QCAT Act allows the Tribunal to award reasonable costs where a party has made an offer to settle that is subsequently rejected.
The Importance of Calderbank Offers
A Calderbank offer is a formal settlement offer that warns the other party that, if the offer is unreasonably rejected and a better result is ultimately obtained, the rejecting party may be exposed to a costs order.
In Mt Cotton Constructions Pty Ltd v Greer [2020] QCATA 157, the Tribunal stated that where a Calderbank offer also complies with Rule 86 of the QCAT Rules, the Tribunal may consider factors such as:
- the stage of the proceedings at which the offer was made;
- the time available to consider the offer;
- the extent of the compromise offered;
- the offeree’s prospects of success at the time of the offer;
- the clarity of the terms of the offer; and
- whether the offer warned that indemnity costs may be sought if the offer was rejected.
These factors assist the Tribunal in determining whether the refusal of an offer was unreasonable and whether a costs order should be made.
What Happened in Our Client’s Case?
During the proceedings, our client made several settlement offers to the respondents. One of those offers, which complied with the relevant legal requirements, was ultimately rejected.
The Tribunal found that the respondents’ refusal of our client’s third offer was unreasonable.
Our client submitted an itemised bill of costs totalling $120,275.71.
When considering costs, the Tribunal recognised that the appropriate award is one that is reasonable in all the circumstances and that a “broad brush” approach may be adopted when assessing recoverable costs.
The Tribunal accepted that our client had incurred reasonable expenses, including filing fees and expert evidence costs amounting to $4,696.30, which should be recovered in full.
Ultimately, the Tribunal ordered that the respondents pay our client, jointly and severally, $95,059.65 in legal costs.
The Key Lesson
The message is simple: ignoring a valid Calderbank offer can have significant legal consequences.
Although QCAT is generally intended to be a more accessible and cost-effective forum where parties may not necessarily require legal representation, that does not mean substantial costs orders cannot be made.
Where:
- a building dispute falls within the QBCC jurisdiction;
- a properly framed Calderbank offer is made;
- the offer is unreasonably rejected; and
- the circumstances justify a costs order,
a party may become liable for a significant portion of the other side’s legal costs.
Every case is different, and costs recovery will depend on the particular facts, the conduct of the parties, the offers exchanged during the proceedings, and the outcome ultimately achieved.
Do You Need Legal Advice About a QCAT Dispute?
If you are involved in a QCAT proceeding, whether as an applicant or a respondent, it is important to understand your rights, the strength of your case, and the strategic steps that may improve your prospects of success.
A carefully prepared settlement strategy, including the timely use of Calderbank offers, can have a substantial impact on the outcome of a dispute and any subsequent costs application.
If you are involved in a construction or building defect dispute, our experienced team can provide strategic advice and effective representation to protect your interests and help you pursue the most appropriate remedies.
Contact us for tailored legal advice at [email protected] or call 0420 826 770.
Disclaimer: This article provides general information and does not constitute legal advice. External Links (if any) are provided for reference only.