Canaan Bay Pty Ltd v Body Corporate for Riviera Resort [2011] QCAT 288

CITATION: Canaan Bay Pty Ltd v Body Corporate for Riviera Resort CTS 17772 [2011] QCAT 288 PARTIES: Canaan Bay Pty Ltd v Body Corporate for Riviera Resort CTS 17772 APPLICATION NUMBER: OCL144-10 MATTER TYPE: Other civil dispute matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Ms Anne Forbes, Member DELIVERED ON: 24 June 2011 DELIVERED AT: Brisbane ORDERS MADE: 1 Body Corporate for Riviera Resort CTS 17772 shall pay to Canaan Bay Pty Ltd the sum of $6,500 by way of costs within 21 days of the date of this order. 2 The Application of Body Corporate for Riviera Resort CTS 17772 for costs is dismissed. CATCHWORDS: Cross-applications for costs – failures to answer correspondence – Respondent’s late abandonment of action – award of part costs to Applicant – Respondent’s claim for costs dismissed Queensland Civil and Administrative Tribunal Act 2009, ss 100, 102 APPEARANCES and REPRESENTATION (if any): This matter was heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009. REASONS FOR DECISION [1] In this case there remain for decision cross-applications for costs under s 102 of the Queensland Civil and Administrative Tribunal Act 2009 (“the Act”). No amounts or particulars were supplied until the Tribunal requested them. Canaan claims $38,457.25; Rivera claims $27,433.84. -- 1 of 8 -- 2 These are impressive claims, in a jurisdiction dedicated to economy of litigation, and in a matter that did not go to trial. [2] This proceeding began on 16 September 2010, when the Applicant Canaan Bay Pty Ltd (“Canaan”) filed two applications against Body Corporate for Riviera Resort CTS 17772 (“Riviera”). One application was for an interim injunction to restrain Riviera from terminating Canaan’s management agreement with Riviera until a dispute about the validity of default notices was resolved. The other sought the resolution of a complex dispute according to the Body Corporate and Community Management Act 1997. [3] The injunction application was listed for hearing on 29 September 2010. Counsel appeared for each party; it was adjourned to 13 October, when a directions hearing was held, with counsel in attendance. Once again it was adjourned, pending a compulsory conference on 29 November 2010, as the proceedings meandered to their conclusion. [4] On 22 November 2010 Canaan noted that Riviera had “unconditionally withdrawn the Notice to Remedy Breach and Remedial Action Notice served 17 July 2010”, and that only costs issues remained. There was yet another adjournment, until, on 2 March 2011 Canaan was allowed to withdraw the substantive applications filed on 16 September 2010, leaving questions of costs be decided on the papers. [5] Riviera filed submissions claiming indemnity costs on 1 April and 1, 9 and 10 June 2011. Submissions on Canaan’s cross-claim reached the Tribunal on 16 May and 10 June 2011. Each party recognises that, in order to succeed, it must demonstrate that its claim escapes section 100 of the Act, and can properly be brought within section 102. Riviera’s Primary Case – 1 April 2011 – Summary [6] Riviera contends that it was unnecessarily disadvantaged by Canaan’s application, brought “precipitously [sic] and in the face of written confirmation ... that the Respondent ... was not going to take any action” on the disputed notices. Riviera gave assurances to that effect on 15, 16 and 27 September 2010. [7] Further, there was no imminent risk of termination of Canaan’s services because the notices could not have full and final effect until they were endorsed by an extraordinary general meeting of the Body Corporate, as Canaan knew, or should have known. No such meeting had been held, or advertised. [8] Further, the orders sought were not limited to the notices served on 17 July 2010, or to action upon them, but were “broad and onerous”. Canaan’s Primary Case – 13 May 2011 – Summary [9] On 22 July 2010 Canaan’s solicitors wrote to Riviera challenging the validity of one of its notices for want of due form, and sought an -- 2 of 8 -- 3 assurance that Riviera would not rely upon it. (An objection to the second notice was made on 4 August 2010.) [10] The letter of 22 July was not answered. On 30 July 2010 Canaan made a detailed reply, in nine single-spaced pages, to the Remedial Action Notice. [11] On 4 August 2010 Canaan elaborated its claim that the notices served on 17 July 2010 were invalid or misconceived. That letter reads in part: “Our client is disturbed that the Body Corporate seeks to engage in a dispute ... in respect of matters [for the most part] beyond the ambit of our client’s duties ... Our client does not think that engaging in contentious litigation ... can possibly be regarded as in the best interests of owners as a whole. Our client remains willing to work with the Body Corporate ... and, if it was the longer term desire of the Body Corporate, to engage in negotiations for an exit strategy for our client as caretaker”. [12] On 10 August 2010 Riviera’s solicitors sent a “holding” letter, promising a reply to Canaan’s letters of 22 July and 4 August 2010. [13] On 13 August 2010, having heard nothing more from the solicitors, Mr George, for Canaan, telephoned Riviera’s lawyers; he was told that the person handling the matter was not available. Mr George requested a return call. None was received. [14] On 10 September 2010 Canaan’s solicitor wrote to his opposite number, with further detailed answers to the Notice to Remedy Breach. No direct response to that letter was received. [15] On 15 September 2010 at 2.52 pm Canaan’s solicitors emailed to Riviera’s lawyers copies of the two subject applications, as lodged at the Tribunal for filing that day. A few minutes later, at 2.55 pm, the addressee emailed in reply: “Due to illness I am out of the office today”. [16] Another email from Riviera’s solicitors on 15 September 2010 stated: “We advise that Mr Herd is unwell and away from the office and will revert [sic] to you tomorrow. ... [T]he Body Corporate has not taken any steps in relation to the notices and ... any application would be premature. Should you proceed to file the application we will raise this letter in relation to costs”. (According to paragraph 21 of the submission, that email was sent at 2.20 pm.) [17] On 16 September 2010 Riviera’s solicitor wrote: “I am instructed that while your client’s conduct under the Agreement is under review the Body Corporate has no intention of acting on the 17 July 2010 notices.” The warning about costs was repeated. [18] Canaan relies on the failure of Riviera or its solicitors to reply to Canaan’s letters of 22 July, 4 August, and 10 September 2010, and the telephone message of 13 September 2010, and says that Riviera “continued to maintain the right to terminate the Agreement by keeping -- 3 of 8 -- 4 alive” the disputed notices. If Riviera really did not intend to take the notices further it should have explicitly withdrawn them following Canaan’s letters of 22 July or 4 August, or by returning the telephone call from its solicitor on 13 August 2010. In that event the Tribunal proceedings would not have commenced. But in the circumstances they were necessary to protect a very substantial investment. [19] Riviera’s abandonment of the notices “came too late and only after these proceedings had been served on [its] solicitors and forwarded to the Tribunal for filing”. Riviera’s failure to respond to earlier communications unnecessarily disadvantaged Canaan. [20] Riviera’s application for costs should be dismissed. Riviera’s Responses to Canaan’s Submissions – 1, 9 and 10 June 2011 – Summary [21] The previous submissions are relied on. [22] The contention that the “breach notice” was invalid is rejected. There is no evidence of an immediate threat to Canaan’s interests, as Riviera did not prosecute the notices beyond service of them. [23] With respect to Canaan’s complaint that its correspondence was ignored, the Body Corporate had no obligation to respond. Canaan’s Response – 10 June 2011 – Summary [24] Direct threats to termination of the agreement are contained in the notices themselves. The applications would not have been necessary if Riviera had withdrawn the notices in a timely manner. The Merits of Riviera’s Claim [25] It is convenient to deal with the Respondent’s claim first, if only because it was the first to raise the issue of costs. [26] Riviera makes two main points: first, that Canaan began legal proceedings when it already knew that Riviera would take no further action upon the notices in question. Second, and alternatively, even if Canaan did not know that before it lodged its papers in the Tribunal, there was no imminent risk to warrant an interim application. [27] On 15 September 2010 Canaan sent its two applications under covering letter to the Registrar of the Tribunal. The precise time and manner of their delivery is unclear. [28] At 2.10 pm on the same day Riviera’s solicitors emailed Canaan’s advisers as follows: “We ... have been provided with a copy of your letter of 15 September 2010 and its enclosure. We advise that Mr Herd has been unwell and -- 4 of 8 -- 5 away from the office and will revert [sic] to you tomorrow. We further advise that the Body Corporate has not taken any steps in relation to the notices and that any Application would be premature. Should you proceed to file the Application we will raise this letter in relation to costs.” [29] Evidently the author of that message was aware that Canaan had prepared an application and was about to file it, although it was half an hour later when Canaan’s solicitors sent copies of the applications, in two parts, to Mr Herd’s office. (An earlier attempt to do so was unsuccessful.) [30] On 16 September 2010 the applications were sealed and filed in the Tribunal’s registry. [31] At 4.05 pm on 16 September Riviera’s solicitors sent an email to Canaan’s advisers, reading in part: “[W]hilst your client’s conduct under the agreement is under review, the Body Corporate is has no intention of acting on the 17 July notices”. [32] This was the first unequivocal sign that the notices could be disregarded. Meanwhile, no doubt, the applications had become part of the Tribunal’s records, and could only be withdrawn by leave, not by unilateral action. [33] The timing of this email supports Canaan’s claim that withdrawal of the notices was reactive rather than proactive. Riviera’s email on the previous day was not an unequivocal withdrawal or promise of withdrawal. It merely said that Riviera had “not taken any steps in relation to the notices”. Considering the history of this matter, and especially the difficulty of obtaining responsive answers – or any answers from Riviera or its solicitors, Canaan could be forgiven for treating Riviera’s letter of 15 September with reserve, and even the letter of 16 September, with its dark hint of a “review”, as less than completely reassuring. [34] However, Riviera’s letter of 16 September was not ignored, and Canaan did not rush headlong to trial. Its subsequent activity in the Tribunal was limited to adjournments, brief procedural appearances and eventually, formal withdrawal. [35] The correspondence shows that Riviera retained its solicitors no later than 4 August 2010. Between that date and 16 September Riviera had ample time to consult its advisers and instruct them to give Canaan the assurance that was given six weeks later, after the applications were filed. By that time it was almost two months since Canaan first manifested its concern – indeed alarm – and six weeks since Canaan’s response to chapter and verse of the notices of default. Further efforts to communicate with Riviera were unavailing. [36] Riviera contends that, peace signals or no peace signals, there was no reason for Canaan to perceive an imminent risk calling for an interim injunction. This submission takes no proper account of the anxiety -- 5 of 8 -- 6 manifest in Canaan’s lengthy response on 30 July 2010, an anxiety later exacerbated, no doubt, by the uncommunicative conduct of Riviera and its advisers. It is undisputed that Canaan had invested a great deal of money in its dealings with Riviera – $250,000 for a caretaker’s unit, and considerably more to acquire the caretaking contract. The conciliatory language of Canaan’s letter of 4 August 2010, as quoted above, does not suggest an eager or reckless litigant. [37] The tests of reasonable resort to quia timet proceedings are no longer inflexible or over-exacting. Authorities indicating a reasonable approach to the mind of a person seeking such relief are analysed by Chesterman J in Kestrel Coal Pty Ltd & Anor v Construction Forestry Mining and Energy Union & Ors.1 There is no “universally applicable criterion as to the degree of probability of apprehended injury”2 and “the cases do not disclose any fixed or absolute standard of proof which is to be required before injunctions quia timet, to prevent apprehended damage, might issue ... much will depend upon the circumstances of the particular case."3 “The decision whether or not to restrain the commission of future acts will depend upon an amalgam of factors which have to be considered and weighed. These include as well as the likelihood of the conduct occurring, the damage the plaintiff will suffer if it does occur and the hardship or inconvenience the defendant will suffer if the injunction is granted. A lesser likelihood of the conduct's occurrence will justify the grant of an injunction where the plaintiff will suffer great loss if the conduct does occur and the defendant will not be put out by the injunction.”4 [38] In Kestrel Coal the court granted a perpetual injunction to a mining company in fear of damaging strike action, although previous action of that kind was abandoned, and no fresh threat of interference had been made. [39] In this case Canaan was in fear of substantial loss, while Riviera waited until the eleventh hour, and beyond, to make it clear that the lingering threat of its notices could be disregarded. Despite Riviera’s assertion that the orders sought were “broad and onerous” the applications, as endorsed, refer specifically to the notices served on 17 July 2010. [40] I need not decide whether the applications would ultimately have succeeded. Suffice it to decide that, on 15 September 2010, Canaan acted in good faith to deal with a risk reasonably perceived as imminent. Canaan had been kept in suspense too long to be reasonably expected to wait and see whether the notices of default, or the claim that they were valid, would be taken further. 1 [2000] QSC 150. 2 Copyright Agency Ltd v Haines [1982] 1 NSWLR 182 at 192. 3 Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd (1997) 142 ALR 198 at 207- 208. 4 Kestrel Coal Pty Ltd & Anor v Construction Forestry Mining and Energy Union & Ors [2000] QSC 150 at [28]. -- 6 of 8 -- 7 [41] I am not persuaded that Riviera was “unnecessarily disadvantaged”, or that its claim for costs satisfies the special requirements of section 102. [42] It is dismissed. The Merits of Canaan’s Claim [43] I turn now to Canaan’s claim for indemnity costs “on the Supreme Court scale”. I need not reiterate the analysis of this case, as set out above. In my opinion Riviera’s persistent neglect of Canaan’s overtures, particularly in view of the conciliatory spirit of its solicitors’ letter of 4 August 2010, effectively goaded Canaan into action, an action from which it gradually withdrew, without requiring Riviera to take part in a contested, substantive hearing. Some historians say that last minute efforts to avert the tragedy of the Great War came too late to cancel the timetables of the troops and munitions trains. Riviera’s retraction when the papers were already in the Tribunal’s registry was too late to avoid the considerable work involved in preparing those papers, and Canaan’s case. [44] In my view it is proper to describe Riviera’s conduct until the late afternoon of 16 September 2010 as conduct that unnecessarily disadvantaged Canaan by causing it to embark on litigation which, as it made clear on 4 August 2010, it was willing, indeed anxious to avoid. That being so, I am satisfied that Canaan is entitled to the benefit of section 102. [45] However, it does not follow that the quantum of Canaan’s claim should be uncritically accepted. When costs are awarded, it does not follow that they should be allowed on an indemnity basis, as distinct from party-and- party (standard) costs. Even in the courts, indemnity orders are by no means lightly made. Nor does it follow that, when legal representation is allowed, that the Tribunal endorses the traditional solicitor-and-counsel practice, so far as section 102 orders are concerned. [46] On 16 September 2010 Riviera informed Canaan in writing: “[T]he Body Corporate has no intention of acting on the 17 July 2010 notices.” By that time Canaan’s solicitors had taken instructions for two applications, and had prepared extensive material for filing. I consider that Canaan is entitled to a moderate award of costs up to, and including 16 September 2010, but no later. As between solicitor and own client, apart from counsel’s fees, Canaan’s costs, to 16 September 2010, amount (in round figures) to $6,700. I have already indicated that I am not prepared to award indemnity costs. Some allowance for counsel’s services in preparing the applications is appropriate. I consider that Riviera should pay to Canaan, by way of costs, the sum of $6,500. ORDERS [47] Body Corporate for Riviera Resort CTS 17772 shall pay to Canaan the sum of $6,500 by way of costs within 21 days of the date of this order. -- 7 of 8 -- 8 [48] The Application of Body Corporate for Riviera Resort CTS 17772 for costs is dismissed. -- 8 of 8 --