Castle Constructions (Qld) Pty Ltd v Pourasad (No 2) [2015] QCAT 216

CITATION: Castle Constructions (Qld) Pty Ltd v Pourasad (No 2) [2015] QCAT 216 PARTIES: Castle Constructions (Qld) Pty Ltd (Applicant) v Kaveh Pourasad (Respondent) APPLICATION NUMBER: BDL199-13 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Howard DELIVERED ON: 11 June 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. Kaveh Pourasad must pay costs to Castle Constructions (Qld) Pty Ltd fixed in the sum of $11,251.78 by 4pm on 14 July 2015. 2. The claim of Kaveh Pourasad for legal costs is dismissed. CATCHWORDS: DOMESTIC BUILDING DISPUTE – COSTS – whether costs should be awarded under Queensland Building and Construction Commission Act 1991 – where homeowner acted or conducted proceedings in a way which increased legal costs incurred by the builder– where builder’s application had been dismissed and then reopened – where builder could only recover for variations with Tribunal approval- where parties self-represented at hearing- where limited detail provided of the costs and outlays claimed Domestic Building Contracts Act 2000 (Qld) Queensland Building and Construction Commission Act 1991 (Qld) s 77 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 100 -- 1 of 8 -- 2 Castle Constructions (Qld) Pty Ltd v Pourasad [2015] QCAT 017 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 HK Developments Pty Ltd v Carter (No 2) [2014] QCAT 437 Merrin v Commissioner of Police [2012] QCA 181 Cachia v Hanes (1994) 179 CLR 403 Freltag v Bruderle [2012] QSC 207 APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). REASONS FOR DECISION [1] I determined proceedings concerning a domestic building dispute between Castle Constructions (Qld) Pty Ltd (‘the builder’) and Mr Pourasad (‘the homeowner’) after four days of hearing.1 Castle Constructions claimed its final payment under the domestic building contract and costs of variations as well as costs of debt collection and interest under the contract. Mr Pourasad counterclaimed for damages for defective and incomplete building work together with costs and interests under the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’). [2] Ultimately, I allowed Castle Constructions claim in the total sum of $33,554.33 on its claim (for the final claim and variations). I also allowed Mr Pourasad’s claim in the amount of $26,055.00. Offsetting the two amounts, $7,499.33 was payable to Castle Constructions by Mr Pourasad. Castle Constructions was also required to provide the certificates, including the final certificate, to Mr Pourasad. I made directions for both parties to file any submissions about costs as follows: 3. Either party may file submissions in support of any claim for legal costs including a detailed breakdown of the costs claimed by 4:00pm on 19 February 2015. 4. If either party files submissions in accordance with order 3 above, the other party must file its submissions in response by 4:00pm on 12 March 2015. 5. Any claim/s for costs will be determined on the papers without an oral hearing not before 12 March 2015. 6. If no submissions are received from a party concerning their claim for costs in accordance with order 3 above, then the application for costs will be dismissed. 1 Castle Constructions (Qld) Pty Ltd v Pourasad [2015] QCAT 017. -- 2 of 8 -- 3 [3] Castle Constructions filed submissions seeking costs (legal costs of $20,137.00 and expert costs of $7,491.00) totalling $27,628.00 together with its filing fee2 and some unspecified outlays associated with attending the hearing. Although it is not entirely clear, it appears that the ‘outlays’ are in effect a claim for compensation for the time spent in conducting the proceeding by Mr Piran, a director of Castle Constructions. [4] The claim is made under s 77(2)(h) of the QBCC Act.3 It provides that the Tribunal may award costs in deciding a building dispute. Section 77(2)(h) provides a broad general discretion, which must be exercised judicially.4 [5] Upon becoming aware that inadvertently, my earlier directions had not required service of the submissions filed by either party, I made the following further directions: 1. Castle Constructions (Qld) Pty Ltd must make sure a copy of the Costs submissions is served on Mr Kaveh Pourasad and must file an affidavit of service in the Tribunal, by: 4:00pm on 6 May 2015. 2. Kaveh Pourasad must file in the registry two (2) copies and give to Castle Constructions (Qld) Pty Ltd one (1) copy of all submissions in reply to Castle Constructions Costs submissions by: 4:00pm on 13 May 2015. 3. Castle Constructions (Qld) Pty Ltd’s costs application will be determined on the papers, by written submissions from the parties, and without an oral hearing, not before: 9:00am on 14 May 2015. [6] Castle Constructions says that it did not receive the direction promptly and so did not serve its submissions in the time specified or file its affidavit of service as required (although Mr Piran says he later served the submissions and subsequently provided an emailed but unsigned copy of an affidavit as to service). [7] That said, in the meantime, Mr Pourasad filed submissions in response to Castle Constructions submissions about costs claimed. Mr Pourasad submits that the costs application should be dismissed because of Castle Constructions non-compliance with my later directions. Presumably, although it is not stated, this application for dismissal is made under s 48 of the QCAT Act. I am not satisfied that this is appropriate. Mr Piran says he received the Tribunal directions late and the documents he has provided appear to support this. In any event, Mr Pourasad has not been disadvantaged. He is aware of the application for costs and has had the opportunity to respond to it. 2 Castle Constructions specifies the filing fee in its costs submissions as $4,000.00. However, the fee paid on filing its application in the Tribunal was $285.00. 3 Submissions of Castle Constructions filed on 23 February 2015. 4 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142. Section 77(2)(h) of the QBCC Act is a modifying provision which displaces the contra-indication against costs contained in the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) s 100. -- 3 of 8 -- 4 The parties arguments [8] Castle Constructions argues that it commenced the proceeding for a relatively modest amount (its claim was for some $34,000.00). Mr Pourasad’s counterclaim commenced at over $100,000.00 and subsequently increased to over $150,000.00 by the time of the hearing. The costs of the original construction under the contract were $205,300.00. Castle Constructions argues that the counterclaim, which was based on expert evidence, contained extravagant and illogical claims. The Tribunal was satisfied that the expert evidence presented relied upon by Mr Pourasad was not objective.5 As a consequence, the evidence of the expert relied upon by Castle Constructions, Mr Moore, was generally preferred by me. [9] Castle Constructions argues that, as a result, significant time was consumed in dealing with the extravagant and unsuccessful counterclaims. It argues this was unreasonable and attributable to Mr Pourasad’s approach to the proceeding. It submits that it is appropriate for a costs order to be made in its favour because it substantially succeeded, in that it obtained a decision in its favour, for a residual amount of the contract. Further, it argues that although neither party was legally represented at the hearing, Castle Constructions did, in the course of preparing its application and evidence, take legal advice and engage a lawyer. [10] It argues that the respondent also engaged a lawyer and made many applications and conducted the matter in a technical and time-consuming way. It also says because of the expert report presented by Mr Pourasad, the applicant also incurred very substantial expert witness costs for Mr Moore’s attendances. It had to provide a report in response to the allegations made as well as have its expert available at the conclave and subsequently the hearing for a lengthy period, incurring substantial costs as a result. It submits that it is entitled to recover all of the expert evidence costs of the hearing. [11] Itemised accounts have not been provided for the legal costs claimed by Castle Constructions. The costs claimed are as follows:6 4/09/2013 Document preparation and Advice Draft Claim $1,650.00 11/10/2013 Drafting QCAT Aplication (sic) Followup Ecidance (sic) and compliance $3,012.90 20/11/2013 document preparation, statement of evidence (sic) bundle of documents and respondent’s Evidance (sic) $3,832.90 19/03/2014 Professional Advice on QCAT Direction of Hearing $1,120.00 5 Castle Constructions (Qld) Pty Ltd v Pourasad [2015] QCAT 017 at [57]. 6 Submissions filed by Castle Constructions on 23 February 2015, Schedule 1. -- 4 of 8 -- 5 16/04/2014 QCAT Filling (sic), attendance (sic) upon QCAT and respon. Letters $2,882.32 30/05/2014 Letters to Romans, receiving new applications, seelking (sic) second inspection of the House $3,338.85 22/08/2014 Conclave preparation, followup (sic),report review $1,100.00 7/10/2014 discussion with the expert and further evidence (sic)/material $1,550.00 18/11/2014 Final Documment (sic) and Submission preparation $1,650.00 Total Lawyer’s Cost $20,137.00 [12] The expert costs claimed by Castle Constructions are as follows:7 7/07/2014 Report inspection and Scott Schedule – 13/06/2014 $1,969.00 6/08/2014 Expert conclave and Scott Schedule of result of expert conclave $2,662.00 19/08/2014 2 days at court hearing and miscellaneous attendances on lawyers, collect documents and review $1,760.00 20/10/2014 2 days at court hearing 25/9/14 & 1/10/14 $1,100.00 Total Expert Cost $7,491.00 [13] Given the directions made by me, it is apparent that by not filing any submissions in support of his claim for costs that Mr Pourasad does not pursue his claim for costs. [14] In his submission in response to Castle Constructions application for costs, Mr Pourasad submits that as the parties represented themselves at the hearing, and that any costs awarded should be limited to the Tribunal’s filing fee.8 In particular, he refers to a decision in which the Tribunal concluded that compensation for a non-legally represented party’s time is not compensable.9 He also relies upon a decision of the Queensland Court of Appeal which limited the costs awarded to a self-represented party to the court filing fee.10 Further, Mr Pourasad submits that as both parties had some success in the proceeding that each party should bear their own costs. Should a costs order be made in favour of Castle Constructions? [15] Although Castle Constructions has not provided itemised accounts of its legal costs, it is sufficiently clear that the costs largely relate to preparation 7 Submissions filed by Castle Constructions on 23 February 2015, Schedule 1. 8 This submission is based upon HK Developments Pty Ltd v Carter (No 2) [2014] QCAT 437; Merrin v Commissioner of Police [2012] QCA 181; Cachia v Hanes (1994) 179 CLR 403; Freltag v Bruderle [2012] QSC 207. 9 HK Developments Pty Ltd v Carter (No 2) [2014] QCAT 437. 10 Merrin v Commissioner of Police [2012] QCA 181. -- 5 of 8 -- 6 of the witness statements, and other material and submissions relied upon by Castle Constructions in the proceeding. As the claim made is for the full amount of various accounts rendered by its lawyers, it is effectively a claim for indemnity costs. It appears it is made on this basis because of what it describes as Mr Pourasad’s ‘extravagant and illogical’ claims. [16] It is also relevant that earlier on in the proceeding, Castle Constructions application for a domestic building dispute was dismissed. Subsequently, a successful application to reopen the proceeding was made. The lack of itemisation makes it difficult to assess which of the costs claimed are associated with these matters. Mr Pourasad could not reasonably be ordered to pay or contribute to them. [17] Further, although Castle Constructions was largely successful in its claim, I also made findings about defective work against it on Mr Pourasad’s counter-claim. I awarded Mr Pourasad damages in the amount of $26,055.00. That said, Mr Pourasad’s success was modest in the context of his overall counter-claim representing just under 17% of the total claimed by him. Further, I did make findings that the expert evidence relied upon by Mr Pourasad was partisan and did not provide objective expert evidence, Mr Fry instead acting as an advocate for Mr Pourasad. [18] Also, Castle Constructions was unable to recover for the variations it claimed without the approval of the Tribunal, because of its failure to comply with the requirements for documenting of variations specified in the contract and the Domestic Building Contracts Act 2000 (Qld). Therefore, it is reasonable to infer that some of the costs claimed, especially around of making the claim for variations and preparing documentation in support of its claim would have been incurred by it, irrespective of Mr Pourasad’s counter-claim. [19] Mr Pourasad argues that as the parties were self-represented, legal costs cannot be allowed. Although they were self-represented at the hearing, they had both had lawyers appear for them on occasion. In any event, I accept that Castle Constructions incurred legal costs, including for preparation of material and submissions relied upon. Such legal costs incurred are legitimately recoverable if, as an exercise of the Tribunal’s discretion, an order is made for their recovery. [20] On balance, I am satisfied that it is appropriate to exercise my discretion to award a proportion of Castle Constructions claimed costs. I am satisfied that it incurred not insignificant legal costs associated with responding to the many and varied unsuccessful and unmeritorious claims made by Mr Pourasad. By pursuing these claims, he acted in a way which disadvantaged Castle Constuctions and caused it to incur legal costs which should not have been necessary. [21] The limited (and un-itemised) information provided by Castle Constructions about its legal costs creates some difficulty for the Tribunal in assessing reasonable costs. When a costs order is made, it is highly desirable that it is for a specified amount, rather than in terms which require the preparation -- 6 of 8 -- 7 of an itemised account by a costs assessor and subsequent taxation of costs. Further costs would be incurred if orders were made to this effect. I am satisfied that it would not be in the interests of justice to make orders which would result in additional costs. [22] In the circumstances, I consider it appropriate to award a percentage of the legal costs incurred. I consider the appropriate percentage is 25%, taking into account the matters discussed in the preceding paragraphs. That is, I have discounted the costs claimed by 25% in respect of each of three factors. Firstly, Castle Constructions necessarily incurred costs associated with its claim for variations due to its own failures. Secondly, costs associated with the dismissal and reopening of the claim should not be contributed to by Mr Pourasad. Thirdly, Mr Pourasad had some success on his counter-claim. Accordingly, of the $20,137.00 claimed, I order that Mr Pourasad pay legal costs fixed in the amount of $5,034.25. I am satisfied that this amount by way of indemnity costs is reasonable having regard to the quantum of the counter-claim, the manner in which Mr Pourasad conducted his counter-claim and his limited success on it, despite Castle Constructions representing itself at the hearing and on some other occasions. [23] Further, I am satisfied that I should exercise my discretion in respect of a proportion of the expert costs incurred by Castle Constructions. Outlays or disbursements of this nature are recoverable whether a party is legally represented at hearing.11 I am satisfied that the costs of the expert reporting and extent of the expert involvement required in the proceeding generally by Castle Constructions was increased, as well as the hearing more protracted because of unmeritorious counter-claims and the manner in which the expert evidence relied upon by Mr Pourasad proceeded.12 I make orders that Mr Pourasad must pay to Castle Constructions 83% of the expert costs of $7,491.00 incurred by it. That is, $6,217.53. This recognises Mr Pourasad’s success to the extent of some 17% of his counter-claim. [24] As discussed earlier, Castle Constructions submissions do not clearly reveal what the additional outlays associated with attending the hearing of $2,000.00 consists of. However, it appears to be a claim for compensation for Mr Piran’s attendances at the Tribunal hearing. I accept Mr Pourasad’s submissions that such costs are not recoverable.13 [25] In respect of the filing fee paid by Castle Constructions, I do not consider it appropriate to make an order. Castle Constructions failed to properly document variations. Accordingly, it could only recover the amounts in respect of the variations with the Tribunal’s approval by making an application. Accordingly, I am not satisfied that I should exercise my 11 Cachia v Hanes (1994) 179 CLR 403; applied in Rintoul v State pf Queensland & Ors [2015] QCA 79. 12 Castle Constructions (Qld) Pty Ltd v Pourasad [2015] QCAT 017. 13 Cachia v Hanes (1994) 179 CLR 403. -- 7 of 8 -- 8 discretion to make orders for it to be reimbursed for that amount by Mr Pourasad. [26] The total award of costs to Castle Constructions is therefore $11,251.78. Mr Pourasad’s claim for costs is dismissed. I make orders accordingly. -- 8 of 8 --