Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2021] QDC 81

DISTRICT COURT OF QUEENSLAND CITATION: Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & another [2021] QDC 81. PARTIES: CHAPEL OF ANGELS PTY LTD (Applicant/ plaintiff) v HENNESSY BUILDING PTY LTD ACN 117 587 998 TRADING AS HENNESSY BUILDING IN ITS OWN CAPACITY AND AS TRUSTEE FOR THE HENNESSY FAMILY TRUST ABN 45 515 151 376 (First respondent/ First defendant) and JOHN PAUL HENNESSY (Second respondent/ Second defendant) FILE NO: BD4124/14 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Brisbane District Court DELIVERED ON: 18 March 2021 (ex tempore) DELIVERED AT: Brisbane HEARING DATE: 17 March 2021 JUDGE: Muir DCJ ORDER: 1. The plaintiff’s application is dismissed. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – APPLICATION FOR REVIEW OF COST ASSESSOR DECISION – DISCRETION OF COST ASSESSOR TO DETERMINE PROCESS – where the first respondent was contracted to construct a building for the applicant designed for use as a wedding chapel – where the proceedings concerned claim for breach of contract, misleading and deceptive conduct and/or restitution for sums paid under the contract against the first respondent/ first defendant and damages for misleading and deceptive conduct against the second respondent/ second defendant – where costs were ordered against the applicant/ plaintiff – where a costs assessor was appointed – whether natural justice was afforded to the applicant in the cost assessor’s process – whether the cost assessor should have allowed the applicant to make written submissions. -- 1 of 8 -- 2 LEGISLATION: Uniform Civil Procedure Rules 1999 (Qld), r 720(2), r 721, r 470, r 742, CASES: Australian Coal and Shale Employees’ Federation v The Commonwealth [1953] 94 CLR 621 Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218 Hill v Peel [1870] LR 5 CP 172 House v The King [1936] 55 CLR 499 Kioa v West [1985] 159 CLR 550 Nashvying Pty Ltd v Giacomi [2009] QSC 31 Pinehurst Nominees v Coeur De Lion Investments Pty Ltd [2015] QSC 122 COUNSEL: A B Balzamo for the Applicant/ plaintiff P A Travis for the Respondent/ defendant SOLICITORS: Olsen Lawyers for the Applicant/ plaintiff Axia Litigation Lawyers for the Respondent/ defendant [1] This is an application by Chapel of Angels Pty Ltd (the applicant) pursuant to rule 740(1) of the Uniform Civil Procedure Rules (UCPR), for review of a decision by a costs assessor dated 16 February 2020. The decision contains the reasoning of the costs assessor in issuing two costs certificates on 4 February 2020. One certificate assessed the costs payable by the applicant to Hennessy Building Pty Ltd (the first respondent), pursuant to an order of Judge Porter QC dated 11 December 2019, in the sum of $216,787.28; and the other assessed the costs payable by the applicant to John Paul Hennessy (the second respondent), under the same order, in the sum of $168,960.74. [2] The orders sought by the applicant are that, pursuant to r 742(6) of the UCPR, this court ought to set aside both of these costs certificates. Contrary to r 742(3) of the UCPR, the application filed on 2 March 2020 did not state any specific or concise ground to support its application. But, at the outset of the hearing, I allowed an oral application by counsel for the applicant (without objection by counsel for the respondents) for leave to amend the application to reflect what the ground of objection was. The sole ground relied upon by the applicant to support the orders sought is set out in the applicant’s minute of orders, and I quote: “The costs assessor failed to comply with UCPR r 720(2) and, particularly, by failing to decide a procedure to be followed that was consistent with the rules of natural justice and fair and efficient, and, particularly, in not allowing or inviting the applicant to provide submissions or evidence in support of the applicant’s case before the costs assessor.” -- 2 of 8 -- 3 [3] During the course of oral submissions before me, this ground was confined further to there having been a lack of natural justice afforded to the applicant in the costs assessment process. This was said to be because the costs assessor did not decide that the assessment procedure to be followed in the circumstances of this case should have allowed for the applicant to provide written submissions. [4] Before turning to a brief overview of the relevant factual background, it is instructive to pause and consider the relevant legal principles that apply to this application. [5] The power to review a costs assessment decision is found in r 742 of the UCPR, which provides, relevantly: 742 Review by court (1) A party dissatisfied with a decision included in a costs assessor’s certificate of assessment may apply to the court to review the decision (2) An application for review must be filed within— (a) if reasons are requested under rule 738(1)—14 days after the party receives those reasons; or (b) otherwise—14 days after the party receives the certificate. (3) The application must— (a) state specific and concise grounds for objecting to the certificate; and … (6) Subject to subrule (5), on the review, the court may do any of the following— (a) exercise all the powers of the costs assessor in relation to the assessment; (b) set aside or vary the decision of the costs assessor; (c) set aside or vary an order made under rule 740(1); (d) refer any item to the costs assessor for reconsideration, with or without directions; (e) make any other order or give any other direction the court considers appropriate. [6] An application to review a decision included in the costs assessor’s certificate of assessment is analogous to an appeal. See Nashvying Pty Ltd v Giacomi [2009] QSC 31 at paragraph 4. As the essential function of a costs assessor involves the exercise of discretion, it follows that the well-known principles pertaining to an appeal against -- 3 of 8 -- 4 the exercise of a discretion, as set out in the House v The King [1936] 55 CLR 499 at 505, are applicable. The misapplication of principle in this case is said to be a failure by the costs assessor to afford procedural fairness to the applicant by not allowing the parties to make submissions. [7] The authorities establish that the court’s discretion on an application under UCPR r 742 is a wide one but that a very wide discretion must necessarily be left to the costs assessor. If the application is effectively an appeal against the exercise of the discretion, then the court will be reluctant to interfere and would, in general, interfere only when the discretion appears not to have been exercised at all or to have been exercised in a manner which is manifestly wrong. See the discussion of the rule by Justice Martin in Pinehurst Nominees v Coeur De Lion Investments Pty Ltd [2015] QSC 122 at paragraphs 7 to 10. [8] As the ground of review centres on the costs assessor’s alleged lack of application of the rules of natural justice or, it seems, given the ground raised, procedural fairness, it is crucial to examine the procedure on assessment provided for by the UCPR. The starting point is r 720 of the UCPR which sets out: 720 Procedure on assessment (1) A costs assessor appointed to carry out a costs assessment is to decide the procedure to be followed on the assessment. (2) However, the procedure must be— (a) appropriate to the scope and nature of the dispute and the amount in dispute; and (b) consistent with the rules of natural justice; and (c) fair and efficient. … (4) Without limiting subrule (1) or (2), the costs assessor may decide to do all or any of the following- (a) hear the costs assessment in private; (b) carry out the costs assessment on the papers without an oral hearing; (c) not be bound by laws of evidence or procedure applying to a proceeding in the court; (d) be informed of the facts in any way the costs assessor considers appropriate; -- 4 of 8 -- 5 (e) not make a record of the evidence given. [9] The matters for consideration within the discretion of a costs assessor are set out in r 721 of the UCPR and relevantly include the following: 721 Discretion of a costs assessor In assessing costs, a costs assessor must consider the following— (e) the interests of the parties; … (g) the general conduct and cost of the proceeding; (h) any other relevant circumstances. [10] The onus to satisfy the court that the exercise of the discretion by the costs assessor not to invite submissions was manifestly wrong rests with the applicant in this case. The following observations of Justice Kitto in Australian Coal and Shale Employees’ Federation v The Commonwealth [1953] 94 CLR 621 at 627 (with reference to the observations of Chief Justice Bovill and Justice Brett in Hill v Peel [1870] LR 5 CP 172 at 180) are apposite to the present case: “a very wide discretion must necessarily be left to the taxing officer, which must be exercised by him after a careful consideration of the particular circumstances of each case; and where, after properly considering the matter, the master has arrived at a decision, it lies upon those who impeach his decision to satisfy the court that he is wrong.” [11] In order, then, to consider whether there has been an error in the exercise of the discretion, it is necessary to consider the relevant background to the costs assessment as elicited from the material and the submissions before me. [12] By way of background, the primary proceeding filed in this court commenced in 2014. The proceeding concerned a building and construction dispute between the parties. The applicant sued the first respondent for damages for breach of contract and misleading and deceptive conduct and/or restitution for sums paid under the building contract that related to a building constructed by the first respondent for the applicant, which was designed for use as a wedding chapel. The applicant’s claim as against the second respondent was a claim for damages for misleading and deceptive conduct. An eight-day trial took place before Judge Porter QC in September and October of 2018. His Honour delivered judgment on the 12th of November 2018 in Chapel of Angels Pty Ltd v Hennessy Builder Pty Ltd & Anor [2018] QDC 218. Then, on 11 December 2018, his Honour made orders and declarations following his decision. Those orders included, relevantly, costs orders including that the applicant pay the second respondent’s costs of the proceedings including reserved costs on an -- 5 of 8 -- 6 indemnity basis and that the applicant pay 75 per cent of the first respondent’s costs of the proceeding including reserved costs. Such costs were to be determined on the standard basis up to 23 May 2018 and thereafter on the indemnity basis. [13] It is uncontroversial that the applicant exhausted its avenues for review of the primary decision, including the costs orders, as appeals were made to the Court of Appeal and special leave to the High Court was sought (but refused). [14] On the 4th of February 2021, the appointed costs assessor delivered costs assessor’s certificates in relation to the court’s costs order and, on the 16th of February 2021, the costs assessor delivered reasons for his decision. In his reasons, the costs assessor expressly refers to having had regard to the trial judge’s decisions on 12 November 2018 and the cost decision of the 11th of December 2018 to understand the background and basis of the costs. [15] The applicant’s written submissions, filed in support of the application, focused on some matters that were ultimately not pursued on this review. For example, the submissions at paragraphs 16 and 24 are premised on the basis that the costs assessor must be seen to have acted arbitrarily and, therefore, unreasonably, and, at paragraph 21, the complaint is that the costs assessor had misread the specific objection schedule. Paragraphs 25 to 27 addressed more specific objections. After an objection by counsel for the respondent, which was not resisted by the applicant’s counsel, the application proceeded before me on the basis that, given the sole ground relied upon by the applicant at the time of the hearing, it was not within the scope of the review for this court to undertake an assessment of the individual complaints set out in the applicant’s submissions. It follows that I have not undertaken such a task. [16] The real question for my determination, in this case, is whether the applicant has shown that, after having received the respondent’s costs statement and the applicant’s objection to these costs statements, the costs assessor’s exercise of discretion not to invite submissions from the parties was wrong because it failed to provide the applicant with a procedure consistent with the rules of natural justice. [17] The evidence before me, in exhibit 1, was that on the 21st of December 2020, the costs assessor wrote to the parties, relevantly, confirming that he had received the costs statements and the objections, and that, in accordance with r 720 of the UCPR, he had decided that the assessment would be carried out on the papers without an oral hearing. There was no evidence that the applicant requested an opportunity to be heard further upon receipt of this letter prior to the costs certificates being issued and the decision being made. [18] The applicant’s written submissions, at paragraph 13, stated that the costs assessor failed to invite the parties to provide submissions, including to present legal submissions for consideration, or otherwise provide directions that might have allowed the applicant to have its objections and the principles underlining those objections clarified. The applicant then pointed to the number of references in the -- 6 of 8 -- 7 costs assessor’s decision (at paragraphs 18, 20 and 22) referring to the costs assessor having difficulty following the objections to the costs statement. The contention being that any difficulty could have been addressed by inviting written submissions. [19] I reject the applicant’s submission that the decision not to invite submissions was an error in the exercise of the costs assessor’s discretion for five main reasons. [20] First, the costs assessor referred to a difficulty understanding some of the objections. But it is evident, on the face of the reasons, that he did not ignore the objections. He just did not accept that some of the objections were maintainable. The costs assessor was cognisant that the other objections included: that some of the items claimed by the first respondent were solely attributable to the second respondent’s case; that some items related to a complaint to the QBCC; that the applicant was concerned for the costs assessor to unravel the one file maintained for both respondents by the solicitors; and that there were some items that were not, for example, referrable to the proceeding and/or that some items were excessive or unnecessary. I am satisfied that the costs assessor carefully considered each item and made an assessment based on his judgment of the objection. In many cases he did not accept the objection and in some cases, he did. [21] Secondly, the objections delivered by the applicant were prepared by the solicitors on behalf of the applicant, although, as the costs assessor stated in his reasons at paragraph 18, they were prepared in a format that was unusual and quite difficult to follow. But I’m not satisfied, from this observation, that it follows that clarification ought to have been sought. It is apparent, on the face of the reasons, that the costs assessor worked his way carefully through all of the material before him, which included a lengthy costs statement, lengthy objections and the respondents’ solicitor’s file which was comprised of 16 archive boxes containing 64 lever arch folders, which included 12 volumes of correspondence and six volumes of court documents. [22] Thirdly, the applicant’s submission overlooks that the applicant was given the opportunity to do the things it now complains has resulted in the lack of procedural fairness. By rule 706(2) of the UCPR, a notice of objection must concisely state the reason for the objection, identifying any issue of law or fact that the objector contends a costs assessor should consider in order to make a decision in favour of the objector. The format of the notice of objection, prepared by the applicant consisted of a general statement of general objection followed by a table setting out 1,285 specific objections, most of which relied on one or other of the matters described as general objection. These objections, in my view, were a submission in the sense that the applicant outlined the contentions that underpinned later specific objections. This was recognised, for example, in the submissions filed on behalf the applicant at paragraph 16, where it was submitted that the costs assessor appears to have misapprehended, misunderstood or ignored “that submission”. “That submission” being some matters set out under general objection 1. Another example is that as part of objection 1, the applicant submitted that the first respondent had failed to serve a costs statement -- 7 of 8 -- 8 compliant with the UCPR. The costs assessor, at paragraph 22 of his reasons, expressly addressed this submission. [23] Fourthly, as Justice Mason observed in Kioa v West [1985] 159 CLR 550 at 582 and 583, the traditional rules of natural justice envisage that a person is entitled to know the case against him and to be given the opportunity of replying to it. In that sense, natural justice and fairness are equated. These concepts are enshrined expressly in UCPR r 720(1) and (2). [24] Fifthly and finally, it is not apparent what further submissions the applicant would have made if it had been given the opportunity. [25] In the exercise of what is a wide discretion, another costs assessor may have taken a different approach in undertaking the costs assessment but this does not mean that, in taking the approach that he did, the costs assessor has erred or made a wrong decision. Indeed, when one looks at r 720(2) of the UCPR, the approach taken was, in my view, appropriate given the scope and nature of the dispute as to costs. It was the fairest and most efficient way to proceed. In that sense, the approach was entirely consistent with the rules of natural justice. [26] It follows that the applicant has not satisfied me that the decision not to invite submissions was wrong and I therefore dismiss the application. -- 8 of 8 --