Builder’s claim for unwritten variations failed and each side was left to pay its own legal costs (QCAT, 2026)

What happened

A building company had a contract to build a house for two owners. During the build it carried out work it said was not part of the contract, and it treated that work as variations. A variation is a change to the agreed scope of work. The company did not put the claimed variations in writing, and it had no written agreement with the owners that they would pay for them.

When the house was finished, the company made the scheduled final claim under the contract and was paid in full. Only after that did it ask for payment of the claimed variations, totalling $85,070.89. The owners did not pay, so the company applied to the tribunal in a domestic building dispute filed on 9 September 2022, seeking that amount plus interest it calculated at $13,517.35.

The owners filed a response and counterapplication on 3 November 2022. They disputed the whole of the company's claim and brought their own claim for $7,050 as liquidated damages for late completion (a sum fixed by the contract for delay), unspecified credits for prime cost materials not supplied, and the cost of fixing allegedly defective work. The hearing ran from 13 to 15 November 2024. The company was self-represented, with one of its directors acting as its advocate. The first respondent was represented by counsel. The second respondent did not appear, and the hearing ran as a dispute between the company and the first respondent. During the hearing the owners reduced the liquidated damages claim to $5,150 plus interest, quantified the credits at $3,771.95, and abandoned the rectification claim.

In the decision delivered on 19 May 2025 the tribunal found that the owners should pay the company $9,408.83 (made up of $833.30 in conceded allowances, $7,000 for a back retaining wall and $1,575.53 interest), and that the company should pay the owners $8,871.95 ($5,100 liquidated damages plus $3,771.95 restitution). Setting one against the other left a net $536.88 owing to the company. The tribunal relieved the owners of paying even that, using its power under section 77(3)(b) of the Queensland Building and Construction Commission Act 1991, and dismissed both claims. Costs were reserved, and the parties were directed to file submissions if they could not agree.

What each side wanted

No agreement on costs was reached. The building company argued that each party should bear their own costs, saying the starting point in the tribunal is that each side pays its own way unless the interests of justice require otherwise, and that nothing in the case justified a departure from that. The first respondent argued she was the successful party, or substantially successful, because the company's claim was almost entirely dismissed, and that costs should follow the event, so the company (or alternatively its two directors personally) should pay her costs, on various formulations of standard costs to be assessed plus indemnity costs. In her reply submissions she abandoned her argument based on the interests of justice and relied solely on the proposition that costs follow the event. Both sides also pointed to settlement offers and to what was said to have been agreed at a compulsory conference.

What the tribunal decided

The tribunal decided the costs question on the papers and ordered: "Further to Order 3 of the Decision of this Tribunal given 19 May 2025, each party is to bear their own costs of this proceeding."

No money was ordered to be paid by anyone. The request for costs against the company's two directors personally was rejected. The tribunal also apologised for the time taken to finalise the costs decision, which was delivered on 21 October 2026.

Why the tribunal decided it that way

The tribunal first dealt with the settlement material and gave it no weight. Anything said in or arising out of a compulsory conference is inadmissible under sections 67 to 74 of the Queensland Civil and Administrative Tribunal Act 2009 unless an exception in section 74 applies, and none did. Three of the four settlement letters were marked "Without Prejudice" only. That privilege is held jointly by both sides and cannot be given up by one of them alone, so those letters could not be used in the costs argument. The fourth was marked "Without Prejudice save as to Costs", but it reserved nothing about raising it on costs, predated the proceeding, said nothing about the counterclaim, and offered payment on an unexplained payment plan, so it was too vague to be capable of acceptance and meant nothing on costs.

On the law, the tribunal held that in a building dispute the starting point is not section 100 of the QCAT Act (the general rule that each party bears their own costs), and it is not an automatic rule that costs follow the event either. The power comes from section 77(3)(h) of the QBCC Act, which simply gives the tribunal a discretion to award costs. Following recent appeal reasoning, sections 100 and 102 of the QCAT Act do not apply to that discretion, but the discretion still has to be exercised judicially and in line with the objects of the legislation, which require an outcome that is just and fair. The tribunal set out a two-step approach: ask first whether it is just and fair that any costs order be made at all, and only then ask whether the usual order (that the losing side pays) should follow or whether there is good reason to depart from it.

Applying that, the tribunal rejected the claim that the first respondent was the successful party. On the figures, the net result had actually favoured the company, and the only reason no money changed hands was the tribunal's earlier decision to relieve the owners of the $536.88. Viewed by issue rather than by dollars, there were three heads of controversy: the variations claim, the prime cost credits and the liquidated damages. The company lost almost all of the variations claim because nothing was in writing, but won one item after the first respondent conceded under cross-examination that she had asked for the work and knew it would cost money. The owners won the credits claim, which took little hearing time and was not challenged. On liquidated damages each side had partial success. None of the recognised reasons for departing from the usual order were present, and the tribunal took the efficient, "rough and ready" course of netting the results off against each other.

The request for a costs order against the directors personally failed on every limb. The assertion that the company was no longer of substance had no supporting material. That the directors ran the litigation, had an interest in it and acted for the company was unsurprising, because that is how a company operates. The allegation that one director knowingly presented false evidence was not established; the tribunal found he was confused about the evidence and conceded errors, which is not the same thing. The claim was flawed in law, but the tribunal accepted the directors genuinely believed it had substance and did not understand the legislation governing variations. The tribunal also noted no authority or source of power had been identified for making such an order, and said it knew of none.

What this means if you are in a similar position

If you are in a similar position, this decision shows two separate things about how the rules are applied. The first is about variations. Queensland's building legislation and the contract itself required the extra work to be put in writing and agreed in writing before payment could be claimed, and the absence of that paperwork is what defeated almost the whole claim here, even though some of the work had plainly been done and asked for. The timing mattered too: the claim for extras only surfaced after the final progress claim had been made and paid in full, and the tribunal treated that as a reason to relieve the owners of paying the small net balance.

The second is about legal costs in a building dispute at QCAT. Winning on the balance of the money does not mean your costs will be paid. The tribunal has a broad discretion under section 77(3)(h) of the QBCC Act, the test is what is just and fair, and where both sides win some issues and lose others the tribunal can simply net the results off and leave each party to its own costs. Settlement correspondence is also not the lever people often assume: a letter marked "Without Prejudice" alone cannot be put before the tribunal on costs by one side, and anything from a compulsory conference is generally inadmissible. Asking for costs against a company's directors personally needs evidence and a source of power, not assertions.

In disputes of this kind, most people start with a written demand or notice that sets out exactly what is claimed, what the contract and the written records show, and a date for a response, before they lodge a tribunal application. That paper trail is what the tribunal looks at later, whether the fight is about the money or about who pays the legal bill.

How to apply: our step-by-step guide to a QCAT application. More decisions: QCAT cases and builders and building defects.

Source: Jokovich v Garland (No 2) [2026] QCAT 499 (read the full decision). This summary was prepared from the published decision for general information. It is not legal advice, and the tribunal’s own reasons are the authoritative record.