Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor (No 2) [2012] QCATA 172

CITATION: Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor (No 2) [2012] QCATA 172 PARTIES: Fast Access Finance (Beaudesert) Pty Ltd and Diamond Clearing House Pty Ltd (Applicants) v Rachael Charter Michael Sinclair (Respondents) APPLICATION NUMBER: APL450-11 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Dr J R Forbes, Member DELIVERED ON: 12 September 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. The Applicants shall pay to the solicitors for the Respondents, by way of costs of their appeal to the Tribunal, the sum of $4,200.00 within 28 days. CATCHWORDS: APPEAL – LEAVE TO APPEAL – MINOR DEBT CLAIM – COSTS – where applicants appealed primary Tribunal decision to Tribunal – where appeal dismissed – where costs proceeded to the respondents – where applicants appealed primary Tribunal decision to Supreme Court – where appeal dismissed by consent – where costs proceeded to respondents – whether an award of costs is in the interests of justice – whether the provision of legal aid acts as a bar to costs order Queensland Civil and Administrative Tribunal Act 2009, ss 32, 100, 102, 103 Uniform Civil Procedure Rules 1999, Schedule 2 -- 1 of 6 -- 2 Board of Professional Engineers of Queensland v Lennox [2011] QCAT 599 Canaan Bay Pty Ltd v Body Corporate for Riviera Resort CTS 17772 [2011] QCAT 288 Carey v Cairns Regional Council and Ors (No 2) [2011] QCAT 372 Charter and Anor v Fast Access Finance (Beaudesert) Pty Ltd and Anor [2011] QCAT 525 Desmond Francis Lewis v Telstra Corporation [1995] AATA 94 Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor [2012] QCATA 51 Grasso and Anor v CMG Consulting Engineers Pty Ltd [2012] QCAT 205 Hill Constructions Qld Pty Ltd v Davis and Pegg [2011] QCAT 57 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No. 2) [2003] VSC 212 Juju Club Pty Ltd v Cromwell Group [2011] QCATA 308 Kapadia Pty Ltd v Trust Company of Australia Ltd [2012] QCAT 194 Kehl v Board of Professional Engineers of Queensland [2010] QCATA 77 Queensland Building Services Authority v Gartess Pty Ltd [2011] QCAT 42 Queensland Building Services Authority v Reid [2012] QCAT 199 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 RCTC Pty Ltd v Rappa [2010] QCAT 300 Veterinary Surgeons Board of Queensland v McIntosh [2011] QCAT 417 Wentworth v Rogers [2002] NSWSC 709 APPEARANCES AND REPRESENTATION (if any): This matter was determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 („QCAT Act‟). REASONS FOR DECISION [1] In the terminology of the QCAT Act and the Queensland Civil and Administrative Tribunal Rules 2009 („QCAT Rules‟), the original respondents are now applicants, and vice versa. For present purposes it is convenient to refer to the present applicants as “Charter and Sinclair” and to the present respondents as “Fast Access”. Background to This Application -- 2 of 6 -- 3 [2] This is an application by Charter and Sinclair, under s 102 of the QCAT Act, for costs of Fast Access‟ unsuccessful appeal to the Tribunal1 from the primary decision of Adjudicator LeMass.2 A further appeal to the Supreme Court was dismissed by consent, with costs of that proceeding to Charter and Sinclair.3 [3] Charter and Sinclair‟s material on this application consists of written submissions filed on 17 April 2012, and the affidavit of their solicitor, Klaire Gweneal Coles, affirmed on 4 April 2012. Submissions by Fast Access were filed on 4 April 2012. [4] Charter and Sinclair seek costs totalling $6,971.21, calculated on the District Court scale. [5] Fast Access submits that there should be no order for costs, but offers no alternative submissions on the quantum of the claim, other than to say that “a large part of [it] is in respect of perusal of [our] submissions, and the drafting and settling of [theirs].”4 In proceedings decided on the papers, that is unsurprising. Is Legal Aid a Bar? [6] In paragraph 25 of its submissions, Fast Access presents an issue that may be dealt with at once. It relates to the fact that Charter and Sinclair were granted legal aid: “[Charter and Sinclair] have not been charged by their representatives and will not personally bear any costs in relation to the matter in any event ... [T]he Tribunal should take into account that [they] will suffer no disadvantage if a costs order is not made in their favour.” [7] In principle and in quantum costs are discretionary, and no doubt the provision of legal aid is a consideration to take into account. But it is not necessarily a disqualification, and in fairness, Fast Access does not assert that it is. Provided that a legal aid organisation (or a “no win, no pay” lawyer) reserves a right to fees if its client is awarded costs, the client may receive such an order.5 Apparently the policy of the law is that there is a public interest in reimbursing legal aid funds with the proceeds of a costs order, when one can properly be made. According to the affidavit of Klaire Gweneal Coles6: “The Caxton Legal Centre is a community legal centre. Where we represent clients we enter into a client agreement. We have entered into a client agreement with Rachael Charter and Michael Sinclair. This 1 Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor [2012] QCATA 51. 2 Charter and Anor v Fast Access Finance (Beaudesert) Pty Ltd and Anor [2011] QCAT 525. 3 Court of Appeal No 3534 0f 2012, Notice of Agreement to Dismissal of Appeal, filed 27 July 2012. 4 Fast Access‟ submissions paragraph 28. 5 Desmond Francis Lewis v Telstra Corporation [1995] AATA 94 at [12]; Wentworth v Rogers [2002] NSWSC 709 at [4]; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No. 2) [2003] VSC 212 at [109], [123]. 6 Affidavit of Klaire Gweneal Coles at [11]. -- 3 of 6 -- 4 agreement provides that we will charge [them] fees for the work completed on their behalf to the extent that those fees can be recovered from another party.” [8] The agreement is not exhibited to Coles‟ affidavit, but its existence and validity are not in dispute. [9] The authorities listed in footnote [5], above, were explicitly or implicitly recognised when Fast Access consented to a substantial order for costs in the Court of Appeal. The Section 100 Hurdle [10] While the fact that they are legally aided does not debar them from recovering costs, it is necessary to consider the effect of s 100 of the QCAT Act. [11] Section 100 notwithstanding, orders “in the interests of justice” are contemplated by s 102. It is now trite law that in this jurisdiction costs orders should be the exception, not the rule, but it would be an exaggeration to describe them as rare.7 Considering the initial discouragement of s 100, and the fact that many requests for costs are perfunctory and poorly related to the s 102 guidelines, the number of successful applications is significant. [12] Almost inevitably, opponents of an application for costs refer to Ralacom (No 2)8 but they seldom mention the result of that case – a particularly potent exercise of the Tribunal‟s mandate, namely, an order against a party‟s representatives. While Ralacom holds that a compelling case is required to displace s 100, it also recognises that the legislative phrase, “in the interests of justice”,9 “obviously confers a broad discretionary power”10. Section 102: Relevant Guidelines [13] The circumstances of cases in which s 102 has been applied are many and various, and a finding that any particular set is “compelling” is a matter 7 See for examples Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412; Kapadia Pty Ltd v Trust Company of Australia Ltd [2012] QCAT 194; Kehl v Board of Professional Engineers of Queensland [2010] QCATA 77; Canaan Bay Pty Ltd v Body Corporate for Riviera Resort CTS 17772 [2011] QCAT 288; Queensland Building Services Authority v Reid [2012] QCAT 199; Hill Constructions Qld Pty Ltd v Davis and Pegg [2011] QCAT 57; Grasso and Anor v CMG Consulting Engineers Pty Ltd [2012] QCAT 205; Queensland Building Services Authority v Gartess Pty Ltd [2011] QCAT 42; Board of Professional Engineers of Queensland v Lennox [2011] QCAT 599; RCTC Pty Ltd v Rappa [2010] QCAT 300; Juju Club Pty Ltd v Cromwell Group [2011] QCATA 308; Carey v Cairns Regional Council and Ors (No 2) [2011] QCAT 372; Veterinary Surgeons Board of Queensland v McIntosh [2011] QCAT 417. 8 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412. Queensland Civil and Administrative Tribunal Act 2009, s 103, in conjunction with s 102. 9 Queensland Civil and Administrative Tribunal Act 2009, s 102(1). 10 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 at [4]. See also Board of Professional Engineers of Queensland v Lennox [2011] QCAT 599 at [20]. -- 4 of 6 -- 5 of judgment and degree. The present application requires consideration of sub-section 102(3), items (b), (c), (e) and (f). Subsection 102(3)(b) [14] Nature and complexity of the dispute: For present purposes the relevant dispute is the contest on appeal to the Tribunal. The first ground of Fast Access‟ application for leave to appeal includes five “further and in the alternatives”, followed by fifteen elaborate grounds of appeal. These intricate pleadings to avoid a judgment debt of just $1,500 are only explicable in the light of an admission, for the first time,11 that “the transaction which the matter considered was representative of [our] main method of trading”12. Subsection 102(3)(c) [15] Relative strength of parties‟ claims: This factor alone is probably sufficient to justify the order sought. In essence, the primary decision-maker found that Fast Access‟ “characterisation of the transaction” as a purchase and sale of diamonds and not as a loan was “so highly unlikely, improbable and implausible as to be a complete fiction.”13 Effectively the Adjudicator held that the transaction was a mere device to evade a statutory limit on interest for consumer loans, and that the de facto interest was grossly in excess of that limit. That finding was not disturbed on appeal to this Tribunal, or by the truncated proceedings in the Supreme Court. The dismissal of the latter proceedings by consent, with costs of $7,060, is no testimonial to the relative strength of Fast Access‟ case. Subsection 102(3)(e) [16] Parties‟ financial circumstances: While Charter and Sinclair secured legal aid, and to that extent financial inequality was redressed, they were young and so impecunious as to seek a high-interest loan to pay for their immediate necessities of life. There is an evident connection between their modest resources and the bargaining inequality considered in [18], below. [17] Fast Access contends that it and Diamond Clearing House are “small proprietary limited companies without significant net assets or profit”.14 However, the internet displays a well-constructed advertisement for an organisation described as “Fast Access Finance”, with offices at Beaudesert, Beenleigh, Ipswich, and many other places in Queensland. While the relationship between these entities is not entirely clear, the Adjudicator found that Fast Access (Beaudesert) Pty Ltd and Fast Access Pty Ltd were related.15 He also noted that Charter received an email from a Mr Legat, who then described himself as “legal director for Fast Access 11 As noted in Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor [2012] QCATA 51 at [35]. 12 Fast Access‟ submissions on costs issue, 17 April 2012, paragraph 30. 13 Charter and Anor v Fast Access Finance (Beaudesert) Pty Ltd and Anor [2011] QCAT 525 at [27]. 14 Submissions 17 April 2012, [30]. 15 Charter and Anor v Fast Access Finance (Beaudesert) Pty Ltd and Anor [2011] QCAT 525 at [14]. -- 5 of 6 -- 6 Finance Group”.16 A letter of 17 April 2012, enclosing Fast Access‟ submissions on costs, is marked “Head Office”, and is signed “Rob Legat, In-house Legal Counsel, Fast Access Pty Ltd.” Experience suggests that small, unprofitable businesses seldom enjoy the luxury of in-house counsel. Nor are they usually able to pursue an action for just $1,100 so far as the Court of Appeal. Sub-section 102(3)(f) [18] Anything else the tribunal considers relevant: Fast Access had the benefit of a “legal director” and an “in-house counsel” to assist it with its documentation in this case. Charter and Sinclair had no legal or other independent advice when they entered the subject transaction. According to the evidence, Charter, at the time, was 20 years of age, and had left school without completing grade 10. Sinclair, then aged 21, was in and out of casual employment as a boilermaker or “sanitary technician”.17 Even if Fast Access is the small and struggling concern it claims to be, there was a significant inequality of bargaining power. [19] Further, when a case for costs is made out, as I consider it is here, it is permissible to take into account the public interest in the conservation of resources of bona fide legal aid organisations.18 Quantum [20] It remains to be seen whether the whole, or only part, of the claim for $6,971.21, based on the District Court scale, should be allowed. Although the amount originally claimed by Fast Access was only $1,100, our present concern is with an unsuccessful appeal. In awarding costs, the Tribunal has usually applied the District Court scale.19 [21] Here the relevant items of that scale are correctly identified; indeed, some small increases introduced in July 2010 are not claimed. However, I do not propose to allow the full amount claimed; a deduction has been made from the care and consideration item, in view of counsel‟s participation. For the same reason, I disallow perusal charges by solicitors as well as counsel.20 I fix the amount payable as $4,200. ORDER [1] The applicants shall pay to the solicitors for the respondents Charter and Sinclair, by way of costs of their appeal to the Tribunal, the sum of four thousand two hundred dollars ($4,200) within twenty eight (28) days. 16 Charter and Anor v Fast Access Finance (Beaudesert) Pty Ltd and Anor [2011] QCAT 525 at [14], emphasis added. 17 Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor [2012] QCATA 51 at [3]. 18 See [7], above. 19 Uniform Civil Procedure Rules 1999, Schedule s. 20 Ibid, [7]. -- 6 of 6 --