ACDG Pty Ltd trading as Swimin Construction v Bryant (No 2) [2017] QCAT 216

CITATION: ACDG Pty Ltd trading as Swimin Construction v Bryant (No 2) [2017] QCAT 216 PARTIES: ACDG Pty Ltd trading as Swimin Construction (Applicant) v Paul Bryant and Lisa Bryant (Respondents) APPLICATION NUMBER: BDL076-16 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Kanowski DELIVERED ON: 23 June 2017 DELIVERED AT: Brisbane ORDERS MADE: 1. ACDG Pty Ltd trading as Swimin Construction is to pay Paul Bryant and Lisa Bryant costs in the sum of $6,818.76 by 25 July 2017. 2. The application for costs by ACDG Pty Ltd trading as Swimin Construction is dismissed. CATCHWORDS: Building matters – costs – where offer to settle was rejected – whether interests of justice require costs order Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 100, 102 Queensland Civil and Administrative Tribunal Rules 2009 (Qld) s 86 Amos v Monsour Legal Costs Pty Ltd [2006] QDC 485 Amos v Monsour Legal Costs Pty Ltd [2007] QCA 235 Di Carlo v Dubois and Others [2002] QCA 225 -- 1 of 8 -- 2 APPEARANCES: This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). REPRESENTATIVES: APPLICANT: represented by Mitchell Hall of Broadley Rees Hogan RESPONDENT: represented by Francis Forde of counsel instructed by Gadens REASONS FOR DECISION [1] This proceeding concerns costs applications in a building dispute between ACDG and the Bryants. [2] ACDG built a swimming pool and surrounding landscaping for the Bryants. On 15 April 2016 ACDG started a proceeding in QCAT seeking an order for the payment of $21,565, which it said remained to be paid under the contract, plus interest. The Bryants counter-claimed seeking an order for the payment of $43,200 which they said would be the cost of rectifying defects. The matter proceeded to hearing for two full days on 12 and 13 April 2017. ACDG was represented by Mr Hall, solicitor with Broadley Rees Hogan. The Bryants were represented by Mr Forde of counsel, who attended with an instructing solicitor from Gadens. [3] I decided the matter on 20 April 2017. In relation to whether the Bryants owed money to ACDG for work done, ACDG had maintained its argument that it was owed $21,565 plus interest. The Bryants had argued that the amount owed was only $8,781. I decided that the amount owing was $16,095. In relation to whether ACDG was liable to the Bryants for costs of rectification, ACDG relied on a quote for $18,982, while the Bryants relied on a quote for $41,000. I decided that the reasonable cost was approximately midway between these figures, at $30,000. Deducting $16,095 from $30,000, I decided that ACDG must pay the Bryants $13,905. I also ordered that Master Builders Queensland must release to the Bryants the $20,780 they had paid into the holding account in October 2015 pending dispute resolution. [4] Overall, it can be seen that the monetary result was fairly evenly balanced: a roughly mid-point outcome between the competing positions was reached in respect of each party’s claim. [5] In the course of the proceeding, each party had applied for costs but, of course, neither party had made supporting submissions while the outcome remained unknown. On 20 April 2017 I directed that if either party wished to pursue its application for costs, it was to lodge written submissions in the QCAT registry and give a copy to the other party by 4.00 pm on 4 May 2017. -- 2 of 8 -- 3 [6] Submissions by Mr Forde on behalf of the Bryants were lodged on 4 May 2017, together with an affidavit by Mr Bryant of the same date. [7] On 15 May 2017 I made directions that ACDG was to lodge any response by 29 May 2017, and that the matter would then be decided on the papers. I was unaware at that stage that submissions in response by Mr Hall on behalf of ACDG had already been lodged, on 11 May 2017. [8] In that response Mr Hall points out that Mr Forde’s submissions were not received by his firm until 4.03 pm on 4 May 2017. It is not suggested, however, that any prejudice has flowed from the fact that the submissions were provided three minutes late. In the circumstances, it is appropriate to treat the submissions as having been provided in time. [9] Mr Hall has not filed submissions seeking costs on behalf of ACDG. I infer that ACDG’s costs application signalled earlier in the proceeding is not being pursued. Accordingly, that application will be dismissed. [10] So far as the Bryants’ costs application is concerned, Mr Forde seeks an order for $26,963.58. This amount is made up of several components. The first component is fees of $1,650 paid to Kafrouni Laywers in October 2015. That firm acted for the Bryants in the early stage of the dispute but were no longer acting when the QCAT proceeding was commenced. The second component is Gadens’ fees of $7,782.57. These fees related to the QCAT hearing: mainly for the attendance of the solicitor at the hearing. The third component is counsel’s fees for Mr Forde of $14,850. These related to preparation for the QCAT hearing, representation at the hearing, and preparation of submissions on costs. The fourth component relates to fees charged at various times by Awebbco totalling $2,681.01. Awebbco is the firm run by Mr Rodney Webb, an expert relied on by the Bryants. Most of the fees were for inspection and report-writing, while the final invoice (for $733.76) was for Mr Webb’s attendance to give evidence at the QCAT hearing on 12 and 13 April 2017. [11] In QCAT the starting point is that each party to a proceeding must bear its own costs.1 However, QCAT may make a costs order if the interests of justice require such an order.2 QCAT may have regard to various factors.3 Several of these factors warrant discussion at this stage. [12] The first factor is the nature and complexity of the dispute. The dispute involved some complexity especially in relation to how the building contract applied in the circumstances that developed, and in relation to the scope of work needed to rectify problems with the surround slab and tiles. Mr Forde also points to some factual matters where findings were made in favour of the Bryants: incorrect invoicing by ACDG and a comment by ACDG’s expert, Mr Yourell, suggesting that the Bryants had deliberately failed to 1 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100. 2 Ibid, s 102(1). 3 Ibid, s 102(3). -- 3 of 8 -- 4 maintain the pool in order to enhance their case for damages. In the scheme of things, however, I do not believe that these matters added substantially to the complexity. The complexities of the dispute confronted both parties more or less equally. This first factor does not favour the awarding of costs to any party in particular. [13] The second factor is the relative strengths of the claims made by each party. Mr Forde submits that the Bryants’ case was considerably stronger than ACDG’s. In my view, both parties generally advanced well-reasoned arguments. Neither party had an overwhelmingly strong or weak case. The overall monetary results, as discussed earlier, were approximately mid- point between the competing positions. This second factor does not favour the awarding of costs to any party in particular. [14] Mr Forde also makes submissions about ACDG’s failure to accept settlement offers. Before considering these submissions in the context of section 102, it is convenient to consider them in the context of a specific power to award costs where a settlement offer has been rejected. That power is found in section 86 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld). The section provides that where a party makes an offer to settle, and the other party does not accept the offer, and QCAT’s decision is not more favourable to the other party than the offer, then QCAT may award the party who made the offer all reasonable costs incurred in conducting the proceeding after the offer was made. In deciding whether a decision is more favourable than an offer, QCAT must take into account any costs it would have awarded on the date the offer was made. [15] Mr Bryant’s affidavit describes several written offers that the Bryants made to settle the dispute. On 17 November 2015 the Bryants offered to end the dispute on the basis that ACDG would consent to the funds in the Master Builders Queensland holding account being released back to the Bryants. This offer was repeated on 3 December 2015. On 10 April 2017, two days before the hearing was due to begin, Mr Bryant emailed an offer to settle on the basis that ACDG would consent to the release of the funds in the holding account to the Bryants and that ACDG would pay the Bryants $10,000. The email was sent at 9.00 am and said that the offer remained open for acceptance until 4.00 pm that day. [16] Mr Bryant also described an oral offer made on 27 June 2016, but this is not relevant for present purposes because section 86 applies only to written offers. Mr Bryant says the discussion was followed up by an email on 4 July 2016 (and he has provided a copy). However, the email does not give any details of the offer. I do not regard it as sufficient to constitute a written offer for the purposes of section 86. [17] So far as the three written offers are concerned, only the third was made after the QCAT proceeding was started. Accordingly, in my view, the offer of 10 April 2017 is the only one that comes within the scope of section 86: that section is framed in a way that contemplates an offer to settle an existing dispute in QCAT. -- 4 of 8 -- 5 [18] The offer made on 10 April 2017 was not accepted, and the decision made on 20 April 2017 was not more favourable to ACDG – indeed it was less favourable – than the offer. In reaching this conclusion I have taken into account that I would not have awarded any costs on 10 April 2017 if I had been deciding the question of costs on that date. [19] Therefore I have a discretion under section 86 to award all reasonable costs incurred by the Bryants after 10 April 2017. It was between that date and the first day of the hearing, on 12 April 2017, that the Bryants engaged Gadens to represent them. Gadens in turn briefed Mr Forde. Accordingly, I find that the costs incurred by the Bryants after 10 April 2017 were the fees for Gadens ($7,782.57), the fees for Mr Forde ($14,850), and the fees for Awebbco contained in its final invoice ($733.76). These amounts total $23,366.33. [20] Mr Forde argues that costs should be awarded to the Bryants on an indemnity basis, rather than on a standard basis: in other words that the Bryants should be fully compensated for the costs they incurred rather than merely compensated according to a general scale of fees. Mr Forde submits that ACDG imprudently refused an offer to compromise and that such conduct, as discussed by the Court of Appeal in Di Carlo v Dubois and Others,4 warrants an award on an indemnity basis. Mr Forde says that the refusal of the offer was imprudent because ACDG had experience in the construction of pools and surrounds, actual knowledge of the defects, and actual knowledge of the cost of rectification. I am not satisfied that the evidence established that ACDG had actual knowledge of those matters. There had been quite a deal of controversy between the experts over the extent of work required to rectify the problems with the surround slab, and whether rectification was required for aspects of the pool interior. It was not until the joint expert table was prepared in late March 2017 that a workable (though incomplete) degree of consensus emerged between the experts about what rectification steps should be taken. Even at the hearing neither party’s quotes closely reflected what could be distilled as the jointly recommended method of rectification. So I do not consider that it would have been a simple or straightforward matter for ACDG to compute the cost of rectification. Similarly, there was room for considerable debate about how much was owing for the building work. Further, the ultimate result in the proceeding, while less favourable to ACDG than the offer, was not markedly less favourable. Overall, then, I do not accept that ACDG’s failure to accept the offer can be regarded as so imprudent as to warrant an award on an indemnity basis. [21] Mr Hall submits that a costs order is not appropriate, but if one is made it should be based on the Magistrates Court scale.5 [22] Section 86 is designed to promote the acceptance of appropriate offers so that, where possible, the substantial cost of hearings can be avoided for 4 [2002] QCA 225. 5 Uniform Civil Procedure Rules 1999 (Qld), schedule 3. -- 5 of 8 -- 6 parties and the community. I appreciate that it would have been difficult for ACDG to assess the appropriateness of the offer made on 10 April 2017 because there remained many uncertainties in the case, but of course that is not particularly unusual in litigation. The offer of 10 April 2017 was a late offer and it allowed only a short time for acceptance, but those features would have been difficult to avoid because of the timing of the joint expert table. By the time the offer was made, it had recently become apparent that both experts were recommending extensive rectification work for the pool surrounds. This had the effect of increasing the likely amount of damages for the Bryants. [23] I appreciate that as at 10 April 2017 ACDG was presumably unaware that the Bryants would obtain legal representation for the hearing if the offer was refused. However, I do not regard that as a factor which should detract from a claim for costs under section 86. The Bryants were at liberty to obtain legal representation at any stage. QCAT had granted leave for representation to both parties at an early stage of the proceeding and ACDG had been legally represented throughout. [24] Overall, I consider that the offer made by the Bryants on 10 April 2017 was a very fair offer. It would have been reasonable for ACDG to have accepted that offer in all of the circumstances. The Bryants should have the benefit of a costs order under section 86, though not on an indemnity basis. [25] Having regard to the relatively modest sums involved in the proceeding, I consider that the Magistrates Court scale is appropriate. As the amount found to be payable to the Bryants exceeded $20,000 (before offsetting by the amount found to be payable to ACDG), column G in Part 2 of the schedule (for amounts recovered between $20,001 and $50,000) is the appropriate column. The costs of engaging a solicitor only, but not counsel as well, should be allowed. It is understandable that the Bryants’ solicitors engaged counsel not only because of the additional skills brought by counsel but also because of the very short time available for preparation. However, the shortness of time was the result of the Bryants’ late decision to obtain representation. The case was not so complex, in my view, that it could not have been handled competently by a solicitor. In this regard, it is relevant to observe that ACDG’s solicitors did not engage counsel. [26] The amounts that should be allowed include the following, as per the scale:  $3,215 for preparing for hearing;  $1,415 for the first day of hearing; and  $970 for the second day of hearing [27] For the preparation of the submissions on costs, it is appropriate to allow the equivalent of the amount for half of a subsequent day of hearing, namely $485. -- 6 of 8 -- 7 [28] Mr Hall submits that no allowance should be made for Awebbco’s fees on the basis that Mr Webb was “unlicensed to provide the reports that he did”. I do not accept this submission. Mr Webb’s evidence was allowed and was of value. It is reasonable to award to the Bryants the costs of meeting Mr Webb’s attendance fees. Accordingly, I allow $733.76. [29] The total costs award under section 86 is therefore $6,818.76. [30] Finally, it is relevant to consider whether additional costs should be awarded under section 102, which is the power to award costs where the interests of justice so require. I have earlier discussed a number of pertinent factors, and at this point I will discuss other factors raised by Mr Forde. [31] The first factor is the fact that the Bryants made a series of offers to settle, all of which were more favourable to ACDG than the decision ultimately reached. I accept that the Bryants did make a number of offers. However, when the earlier offers were made the evidence about rectification was quite divided. The tide turned with the tabling of the joint expert table in late March 2017. Accordingly, I do not regard ACDG’s refusal of the earlier offers as unreasonable. [32] The second factor relates to the grant of leave to be legally represented. In April 2016 ACDG had applied for QCAT’s leave to be legally represented. The Bryants submitted at the time that legal representation was not necessary. In May 2016 QCAT granted leave for both parties to be legally represented. Mr Forde submits that as ACDG applied for leave to be legally represented, it “implicitly assumed liability for the [Bryants’] costs in the event that [ACDG] was unsuccessful in these proceedings”. I do not accept that submission, especially as the starting point in the Act is that each party must bear its own costs. Mr Forde submits that support for his argument can be drawn from the fact that ACDG in its statement of claim sought costs. However, in my experience it is quite routine for parties to indicate that they will seek costs in the event of success. I do not regard such an indication as some form of undertaking to meet the costs of the other party in the event of loss. [33] The third factor is Mr Bryant’s evidence that one of the things that propelled him and his wife to obtain representation was a baseless assertion made by ACDG’s expert witness, Mr Yourell, in the joint expert table that the Bryants had intentionally withheld maintenance of the pool to strengthen their claim. Mr Forde submits that where a person’s professional reputation is put at risk by a potential adverse finding, it is reasonable for the person to engage legal representation and recover the costs.6 I note that Mr Bryant is a financial adviser and, no doubt, his reputation is important. An adverse finding on such a matter would reflect on Mr Bryant’s character and could affect his professional reputation. It is possible (though not likely in my view) that such a finding could attract media attention, and it is certainly possible 6 Amos v Monsour Legal Costs Pty Ltd [2006] QDC 485, Amos v Monsour Legal Costs Pty Ltd [2007] QCA 235. -- 7 of 8 -- 8 that clients or potential clients researching Mr Bryant’s background online would come across such a finding. Nonetheless, I do not accept that Mr Bryant’s reputation was seriously imperilled. Mr Yourell’s comment was a brief and unsubstantiated remark in the middle of a table. Of course Mr Yourell might have expanded on the comment in oral evidence (though as it turned out he did not attend the hearing). However, as the allegation was baseless, and Mr Bryant could have been confident in presenting as an impressive witness, the likelihood of an adverse finding was remote. [34] Having considered a range of factors, I am not satisfied that the interests of justice require an order for costs under section 102. Therefore the costs award will be limited to the order under section 86. -- 8 of 8 --