Chelbrooke Homes Pty Ltd v Russell and Anor (No 2) [2011] QCAT 279

CITATION: Chelbrooke Homes Pty Ltd v Russell and Anor (No 2) [2011] QCAT 279 PARTIES: Chelbrooke Homes Pty Ltd v Michael Russell and Charmaine Russell APPLICATION NUMBER: BD159-09 MATTER TYPE: Building matters HEARING DATE: 21, 22, 23, 24 and 25 February 2011, thereafter, on the papers HEARD AT: Brisbane DECISION OF: R F King-Scott, Member DELIVERED ON: 21 June 2011 DELIVERED AT: Brisbane ORDERS MADE: 1. The Respondents to pay the Applicant’s costs of and incidental to the proceeding on the District Court scale for matters over $50,000 for costs incurred prior to 1 June 2009. 2. The Respondents to pay the Applicant’s costs of incidental to the proceeding on an indemnity basis for costs incurred after 1 June 2009. 3. If further orders that the Applicant’s costs ordered to be paid be agreed between the Applicant and the Respondents, and failing agreement be assessed by Douglas Anthony Kerr of QICS Law at Southport. 4. It further orders that the Respondents pay the Applicant’s costs as agreed or assessed within 14 days of such agreement or assessment. -- 1 of 6 -- 2 CATCHWORDS: PROCEDURE – COSTS – Formal offer not more favourable – Discretionary matters affecting a decision to award costs Commercial and Consumer Tribunal Act 2003, ss 70, 71, 142. APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Codd of Counsel, instructed by O’Keefe Mahoney Bennett Solicitors RESPONDENT: Mr Hitchcock of Rudkin Hitchcock Lawyers REASONS FOR DECISION Introduction [1] The hearing of this building dispute took 5 days. The Tribunal’s Orders were made on 11 May 2011. On the 9 June 2011 it was necessary for the Tribunal to make further Orders to correct an arithmetical error in the initial Order. [2] At the hearing, the Applicant was substantially successful, although, the Respondents had some success on their counterclaim. [3] When the Tribunal handed down its decision it gave directions as to the timetable for any submissions as to costs. Only the Applicant has responded with detailed submissions. Legislation [4] The proceedings were initiated under the Commercial & Consumer Tribunal Act (CCT Act). The CCT Act was abolished by the Queensland Civil & Administrative Tribunal Act 2009 (QCAT Act). QCAT commenced on 1 December 2009. [5] As the proceeding had not been heard or part heard by the CCT, the proceeding is a ‘pending proceeding’ within the meaning of s 245 of the QCAT Act. [6] Section 256 of the QCAT Act provides: 256 Pending Proceeding (1) This section applies to an existing tribunal proceeding that is a pending proceeding. (2) At the commencement, the proceeding is taken to be a proceeding before QCAT. (3) QCAT has jurisdiction to deal with the matter the subject of -- 2 of 6 -- 3 the proceeding under this Act. [7] Section 271 of the QCAT Act provides: 271 Conduct of a proceeding generally (1) QCAT must deal with the matter the subject of the existing proceeding under this Act or an enabling Act. (2) However, in relation to the matter- (a) QCAT has, and only has the functions that the former entity had in relation to the matter under the former Act; and (b) QCAT can and can only, make a decision the former entity could have made in relation to the matter under the former Act. [8] The empowering provision to award costs in this matter can be found in s 77(2) (h) of the Queensland Building Services Authority Act 1991. [9] Section 70 of the CCT Act provides that parties should pay their own costs unless the interests of justice require otherwise. [10] Further, s 71 provides that the Tribunal has a discretion to award costs if it considers it appropriate and in subsection (4) in exercising its discretion to award costs, it may have regard to: (a) the outcome of the proceeding; (b) the conduct of the parties to the proceeding before and during the proceeding; (c) the nature and complexity of the proceeding; (d) the relative strengths of the claims made by each of the parties to the proceeding; (e) any contravention of an act by a party to the proceeding; … (g) anything else the Tribunal considers relevant. Further, it provides in subsection (5) that a party to a proceeding is not entitled to costs merely because: (f) the party was the beneficiary of an order of the Tribunal; or (g) the party was legally represented at that proceeding. [11] A party may make settlement offers under s.138 of the CCT Act and if the decision of the Tribunal is not more favourable to the other party than the offer made, then the Tribunal under s 142 of the CCT Act must award the party who made the offer all reasonable costs incurred by that party -- 3 of 6 -- 4 in conducting the proceeding after the offer was made. Orders Sought [12] In this matter the Applicant seeks the following orders: (a) An order for costs of and incidental to the proceeding on the District Court scale for matters over $50,000 for costs incurred prior to 1 June 2009; (b) An order for costs of and incidental to the proceeding on an indemnity basis for costs incurred after 1 June 2009; (c) An order that the Applicant’s costs ordered to be paid be agreed between the Applicant and the Respondents, and failing agreement be assessed by Douglas Anthony Kerr of QICS Law at Southport; (d) An order that the Respondents pay the Applicant’s costs as agreed or assessed within 14 days of such agreement or assessment. [13] Alternatively, it seeks costs on a standard basis under the CCT Act 2003 or alternatively orders under the QCAT Act. [14] The relevance of the date 1 June 2009 is that the Applicant made an offer to the Respondents to settle on that date which was more favourable to the Respondents than the subsequent decision of the Tribunal. Offers Made [15] There were three offers to settle this matter. The first offer, made on 10 July 2008, was prior to commencement of proceedings and was that the Respondents pay the Applicant $80,000. The Applicant concedes that the offer could not on a purely mathematical basis be said to have been bettered at trial. [16] The second offer was made on 1 June 2009 and was made under Part 7, Division 7 of the CCT Act, and was to the effect: (i) the Respondents pay the Applicant $40,000; (ii) each party bear its own costs. [17] The offer was rejected within two days of it being made. I am satisfied that the offer was properly served and complies with the procedural requirements of the CCT Act. [18] For completeness, I mention the third offer which was made on 3 June 2010, and was to the effect that the Respondents pay the Applicant $40,000 and that the Respondents pay the Applicant’s costs on an indemnity basis incurred up until the date of acceptance of that offer. Discussion [19] Under s 142(2) of the CCT Act, if the decision of the Tribunal was not more favourable to the Respondents than the Applicant’s offer then the -- 4 of 6 -- 5 Tribunal must award to the Applicant all reasonable costs1 incurred by the Applicant after the offer was made. [20] I am satisfied that the decision of the Tribunal was not more favourable to the Respondents than the offer made on 1 June 2009 and I award the Applicant all its reasonable costs incurred by it after 1 June 2009. [21] In respect of the costs of and incidental to the proceeding before that date I am satisfied that the Applicant should recover its costs on a standard basis on the then District Court scale for matters over $50,000. [22] In exercising my discretion to award costs and the amount of costs before 1 June 2009 I take account of the following matters. The complexity of the proceedings which justified legal representation on both sides. Both sides were legally represented from an early stage even though the Tribunal only made an order on 29 March 2010. It assisted the Tribunal greatly to have the parties legally represented. The Applicant has been substantially successful, and in my opinion, it is in the interests of justice not to allow that success to be eroded by requiring a party to bear its costs of the representation which was necessary to achieve that outcome2. Other issues I have taken into account are that the Respondents abandoned a claim for general damages on the first day of the hearing even though they had been put on notice at an earlier time of the futility of such a claim. I accept the Applicant’s evidence that this component of the Respondents’ counter claim, in preparation, took up a significant amount of time and resources. Finally, the behaviour of the male Respondent in respect of an inspection of the house, by the Applicant’s representatives, which eventually necessitated additional orders to be made by the Tribunal. [23] Were I required to exercise my discretion on costs under the QCAT Act or otherwise, I would have ordered costs to be paid by Respondents on a standard basis on the District Court scale for matters over $50,000. [24] The Applicant seeks an order that the costs be assessed by Douglas Anthony Kerr, a costs assessor of QICS Law at Southport. This is not an appropriate matter in which costs could be fixed by the Tribunal. Section 71(7) CCT Act provides that the Tribunal may direct the costs to be assessed: (a) in the way decided by the presiding Case Manager; or (b) by a person appointed by the Tribunal. [25] I am prepared to make an order that the costs be assessed by Mr. Kerr. [26] The Tribunal orders: 1 It has been held in a number of decisions that that “all reasonable costs” equates to costs on an indemnity basis. See Colgate-Palmolive Co v Cussens Pty Ltd (1992) 118 ALR 248, Bottoms v Reser [2000] QSC 413, Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 and Marshall & Marshall v Seckold [2005] CCTB 370-02 at [54]. 2 See Tamawood Ltd v Paans [2005] 2 Qd R 101 per Keane JA at [33]. -- 5 of 6 -- 6 (a) The Respondents to pay the Applicant’s costs of and incidental to the proceeding on the District Court scale for matters over $50,000 for costs incurred prior to 1 June 2009; (b) The Respondents to pay the Applicant’s costs of and incidental to the proceeding on an indemnity basis for costs incurred after 1 June 2009; (c) It further orders that the Applicant’s costs ordered to be paid be agreed between the Applicant and the Respondents, and failing agreement be assessed by Douglas Anthony Kerr of QICS Law at Southport; (d) It further orders that the Respondents pay the Applicant’s costs as agreed or assessed within 14 days of such agreement or assessment. -- 6 of 6 --