Body Corporate for Sunnybank v Coming Home Pty Ltd ATF The Coming Home Trust [2014] QCATA 192

CITATION: Body Corporate for Sunnybank v Coming Home Pty Ltd ATF The Coming Home Trust [2014] QCATA 192 PARTIES: Body Corporate for Sunnybank Close CTS 25447 (Applicant/Appellant) v Coming Home Pty Ltd ATF The Coming Home Trust (Respondent) APPLICATION NUMBER: APL487-13 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member Oliver Dr Cullen, Member DELIVERED ON: 30 July 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. Leave to appeal is refused. CATCHWORDS: COSTS – where applicant ordered to pay the respondents costs – where exercise of discretion – whether exercise of discretion miscarried – where application for an injunction to restrain the applicant from acting on a resolution to terminate a caretaking agreement – where contested application – where arguable case – where balance of convenience favoured the respondent Queensland Civil and Administrative Tribunal Act 2009 ss 100, 102, 142 Body Corporate and Community Management Act 1997 ss 102, 126 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41 Cachia v Grech [2009] NSWCA 232 Glenwood Properties Pty Ltd v Delmoss Pty Ltd -- 1 of 6 -- 2 [1986] 2 Qd R 388 McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 House v R (1936) 55 CLR 499 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 APPEARANCES and REPRESENTATION (if any): 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] On 30 September 2013, the Tribunal granted injunctions to restrain the applicant from terminating a caretaking agreement with the respondent after a contested hearing. On the application of the respondent and after hearing submissions from both parties, the Tribunal ordered that the applicant pay the respondent’s costs on the District Court Scale of Costs to be assessed on a standard basis. [2] On 1 November 2013, the applicant filed an application for leave to appeal the Tribunal’s decision to award costs. Section 142(3)(a)(iii) provides that an appeal against a decision on costs can only be made with the Appeal Tribunal’s leave. [3] As there is no appeal as of right, leave to appeal will only be granted in certain circumstances and in accordance with established principles. The usual matters for consideration are: Is there a reasonably arguable case of error in the primary decision?1 Is there a reasonable prospect that the applicant will obtain substantive relief?2 Is leave necessary to correct a substantial injustice to the applicant caused by some error?3 Is there a question of general importance upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?4 [4] The applicant’s grounds of appeal are as follows: 1. The Tribunal erred at law by failing to have regard to the provisions of the Queensland Civil and Administrative Tribunal Act 2009 (‘the Act’); 2. The Tribunal erred at law by failing to apply the standards set down at section 102(1) of the Act, namely that the interests of justice required a departure from the statutory norm set out in section 100 of the Act; 3. That the Tribunal erred at law by failing to apply the facts as set out in section 102(3)(a)-(f) of the Act in reaching its decision on costs; 1 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41. 2 Cachia v Grech [2009] NSWCA 232 at 2. 3 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41. 4 Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 at 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 at 578, 580. -- 2 of 6 -- 3 4. The Tribunal exceeded its jurisdiction by making an order for costs; 5. The facts of the case do not warrant a departure from the statutory norm set out in section 100 of the Act. [5] In dealing with the grounds of appeal, it is probably best to start with the facts of the case. [6] The respondent has a caretaking service agreement with the applicant Body Corporate. There are 57 lots in the community title scheme governed by the caretaking agreement. A dispute developed between the Body Corporate and the respondent whereby the respondent sought to terminate the caretaking agreement by serving on the respondent a Remedial Action Notice (“the Notice”) dated 29 May 2013. [7] It was alleged by the Notice that the respondent failed to carryout its duties under the caretaking agreement and contravened obligations imposed by a code of conduct by failing to carryout the duties. The respondent contended that the Notice did not sufficiently particularise the breaches as is required as a matter of law, and challenged the Notice in a letter from its solicitors to the applicant’s solicitors on 22 August 2013. [8] The procedure adopted by the Body Corporate was that if the respondent did not address the matters in the Notice within the required time, a motion would be put to a meeting of the Body Corporate that the caretaking agreement be terminated. [9] The respondent did not comply with the Notice, given its objection to it, so on 10 September 2012 an extraordinary general meeting of the Body Corporate was convened and it was resolved to terminate the caretaking agreement. [10] Legal proceedings were threatened challenging the validity of the Notice and the subsequent termination of the caretaking agreement by the applicant. Undertakings where sought from the applicant not to act on the termination notice until those proceedings were resolved. No undertaking was provided. [11] In addition, the Body Corporate gave notice to the Commonwealth Bank of Australia of its intention to terminate the caretaking agreement which it could do under s 126 of the Body Corporate and Community Management Act 1997 (Qld). On the basis of this notice, the Bank threatened to appoint a receiver to the respondent. [12] As the matter could not be resolved, the respondent filed an application in the Tribunal for an injunction to restrain the Body Corporate from acting on the resolution passed at the extraordinary meeting until there was a final determination of the respondent’s application for declaration that the Notice was void. [13] The application for the injunction came on for hearing in the Tribunal on 30 September 2013. There was no evidence called, but there were lengthy submissions on the material filed. Essentially, the learned Senior -- 3 of 6 -- 4 Member found that the respondent had an arguable case with respect to the validity of the Notice and further, the balance of convenience favoured the granting of the injunction because of the significant detriment to the respondent if the relief was not granted. The Tribunal found there was no prejudice to the Body Corporate because the respondent would continue to undertake the caretaking duties until there was a final determination of the substantive dispute. [14] Having been successful in seeking the injunction, the respondent applied for costs. There were further submissions with respect to costs and ultimately the Tribunal ordered that the Body Corporate pay the respondent’s costs of and incidental to the application to be assessed on the District Court Scale. It is from that decision that this appeal arises. [15] Section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) provides that ‘Other than as provided under this act or an enabling act, each party to a proceeding must bear the parties own costs for the proceeding’. [16] Despite that specific intention that a party to a proceeding should bear its own costs, s 102 creates an exception where a costs order can be made if it is in the interests of justice to do so. Subsection (3) sets out what matters the Tribunal can have regard to when ordering costs and in particular, it broadens the discretion by permitting the Tribunal to take into account ‘anything else the tribunal considers relevant’.5 [17] It is not contentious that the awarding of costs in any circumstance is discretionary. Section 102(1) sets the parameters for an award of costs if the Tribunal considers that it is in the interests of justice to make such an order. [18] The respondent points out correctly, that for an Appeal Tribunal to interfere with an exercise of discretion, the appellant must be able to identify error of the type referred to in House v R:6 The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. [19] Therefore, it is incumbent upon the appellant here, to demonstrate where or how the learned Senior Member’s exercise of discretion miscarried. 5 Section 102(3)(f). 6 (1936) 55 CLR 499 at 504. -- 4 of 6 -- 5 [20] In its submissions to the Appeal Tribunal, the applicant cited the case of Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)7 where the then President said: Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ point so compellingly to a costs award that they overcome the strong contra- indication against costs orders in s 100. [21] Clearly, in the case at hand, the learned Senior Member did consider that the conduct of the appellant in forcing the respondent’s hand to apply for an injunction in circumstances where an undertaking or, a consent order, would have sufficed was such a contra-indication. [22] Although the learned Senior Member’s reasons for the costs order are somewhat brief, those reasons must be considered in the totality of the exchange between the Tribunal and counsel representing the parties in the hearing of the application. The learned Senior Member quite rightly pointed out that, as the parties’ legal representatives obviously knew, the Tribunal’s function is to deal with matters in a way that is accessible, fair, just, economical, informal and quick.8 [23] The Tribunal’s function is to encourage the early and economical resolution of disputes before the Tribunal including if appropriate through alternate dispute resolution processes. It is also obliged to ensure that proceedings are conducted in an informal way that minimises costs to the parties and is as quick as is consistent with achieving justice.9 [24] With these objects and functions in mind, the Tribunal looked at the behaviour of the applicant and found that it fell short of the mark. The learned Senior Member was mindful of the effect of s 7 because she specifically commented that the ‘general rule is that each party usually bears its own costs’. [25] In deciding whether or not the case for the injunction was meritorious, the learned Senior Member found favour with the respondent’s contention that the Notice upon which the decision to terminate the caretaking agreement was based, could be found deficient. Therefore, had the Body Corporate acted reasonably when the injunction was threatened, the proceeding before the Tribunal could have been avoided thereby saving both parties costs. By not taking the opportunities that were offered to it, to quickly resolve the application for an injunction, the Body Corporate then took the risk of having an adverse costs order made against it in contesting the application. [26] The applicant submits that the Tribunal failed to ‘grapple’ with the ‘strong contra-indication’, against the award of costs. Quite obviously, the 7 [2010] QCAT 412. 8 QCAT Act, s 3. 9 QCAT Act, s 4. -- 5 of 6 -- 6 reasons demonstrate that the Tribunal was aware of the contra-indication and although there was no specific reference made to it or to Ralacom, it is evident that the learned Senior Member was considering the interests of justice when making the decision. [27] The applicant complains that the learned Senior Member did not conduct a ‘balancing exercise’ by reference to the matters set out in subsection (3) however it is evident that she considered the applicant acted to the disadvantage of the respondent in not attempting to resolve the matter, either through the alternate dispute resolution process, or by consent orders, when it ought to have been clear to the applicant that the respondent would be put to cost and inconvenience in prosecuting an application which was bound to succeed. I say bound to succeed purely because the balance of convenience favoured the granting of the injunction. In addition, the Tribunal is not bound to consider only those matters referred to in subsection (3). [28] Having regard to the objects of the QCAT Act and how parties should conduct themselves in the Tribunal, it was open for the learned Senior Member to take the applicant’s conduct into account when considering the interests of justice. Even though the Appeal Tribunal might have come to a different view, it does not demonstrate that the exercise of discretion miscarried. [29] The appellant has not been able to identify any error on the part of the learned Senior Member, there has been no substantial injustice and therefore leave to appeal is refused. Member Dr Cullen [30] I have had the benefit of reading Senior Member Oliver’s reasons in draft. I agree with his reasons, and his conclusions, and the order he proposes. -- 6 of 6 --