Area Square Pty Ltd v Hill-Douglas [2012] QCAT 154

CITATION: Area Square Pty Ltd v Hill-Douglas [2012] QCAT 154 PARTIES: Area Square Pty Ltd (Applicant) v Sholto Hill-Douglas Louise Hill-Douglas (Respondents) APPLICATION NUMBER: BD017-08 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Richard Oliver, Senior Member DELIVERED ON: 30 March 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. The application for miscellaneous matters filed by Mr and Mrs Hill-Douglas on 15 February 2010 (for orders under s 216 of the QCAT Act, and other orders) is dismissed. 2. The application by Area Square Pty Ltd for costs is dismissed. 3. The application by Mr and Mrs Hill- Douglas for costs is also dismissed. CATCHWORDS: Practice –whether a witness made a false and misleading statement – whether a preference for the evidence of one witness over another constitutes a finding of false and misleading evidence in the face of conflicting evidence Costs – where costs are to be considered under the provisions of the Commercial and Consumer Tribunal Act 2003 – where limited issues proceeded to hearing for determination after a compulsory conference – whether party entitled to indemnity costs as a result of offers to settle – where both parties partially successful in a difficult and complex proceeding – whether -- 1 of 7 -- 2 interest of justice require each party bear its own costs Queensland Civil and Administrative Tribunal Act 2009, ss 6, 7, 100, 216, 245, 246, 271 Commercial and Consumer Tribunal Act 2003, ss 70, 71, 138, 142 Rainbow v Nelson [2010] QCAT 388 Tamawood Ltd v Paans [2005] 2 Qd R 105 Smith v NSW Bar Association (1992) 176 CLR 256 Colgate-Palm Olive Co v Cussen Pty Ltd (1992) 118 ALR 248 Shelbrook Homes Pty Ltd v Russell (No 2) [2011] QCAT 279 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 (QCAT Act). REASONS FOR DECISION [1] This building dispute arises out of the construction of a house by Area Square for Mr and Mrs Hill-Douglas at Toowong. The work proceeded and in October 2007 Area Square issued an invoice for $44,575.33 – on its face, the final invoice for practical completion. It was not paid and as a consequence Area Square began proceedings in QCAT’s predecessor, the Commercial and Consumer Tribunal (CCT), in January 2008. [2] The parties exchanged pleadings and the matter was eventually set down for a hearing in QCAT shortly after the new Tribunal commenced operations on 1 December 2009. On the hearing date, 7 December 2009, an adjournment was sought but the parties then agreed to attempt to resolve the case, and a compulsory conference was held before a QCAT Member. [3] Following that conference consent orders were made by the Member on 8 December 2009. In summary the parties agreed that Area Square’s claims entitled it to a payment of $46,898.62, and Mr and Mrs Hill- Douglas’s claims entitled them to $7,053.58. Some of the issues in dispute were not, however resolved and subsequently went to a hearing before me 10 and 11 December 2009. The remaining issues I was required to determine concerned disputes about the driveway; rendering of brickwork; air-conditioning; the swimming pool; cornices and, the builders claim for a variation to the price. [4] In my decision of 20 January 2010, delivered with Reasons, I allowed Area Square’s claim in respect of the driveway in the sum of $12,000, and -- 2 of 7 -- 3 Mr and Mrs Hill-Douglas’s counter claim for rectification of the swimming pool in the sum of $17,944.31, and therefore ordered that Area Square pay the Hill-Douglas’s $5,944.30.1 [5] Mr and Mrs Hill-Douglas sought leave to appeal my decision. That application for leave to appeal was refused in a joint decision of the President and a QCAT member published on 23 November 2010.2 [6] Subsequently applications have been brought by Area Square for costs in the building case on the standard basis between 18 February and 10 May 2010, and on a standard or indemnity basis thereafter. [7] Mr and Mrs Hill-Douglas have also filed applications seeking their costs in relation to the swimming pool issue on an indemnity basis; costs relating to all claims set out in Area Square’s amended statement of claim of 28 January 2009, also on an indemnity basis; costs relating to ‘all other matters of the proceedings’ on a standard basis; and, orders that ‘…the Tribunal take appropriate measures to enforce s 216 of the Queensland Civil and Administrative Tribunal which has been contravened before and during the hearing of Case BD017-08’; and in what appears to be an application for declaratory relief, a claim that Area Square is ‘…found to have submitted false and misleading information through and on behalf of their representative Matthew Campbell, under cross examination orally and in submitting written statements to the Tribunal known to be false and misleading in order to avoid responsibility for rectification of works for which Area Square was responsible’. Mr and Mrs Hill-Douglas’s application under s 216 QCAT Act [8] Section 216 of the QCAT Act provides that a person must not state to an official anything the person knows is false or misleading in a material particular. A fine may be imposed, up to a maximum penalty of 100 penalty units. ‘Official’ is defined in s 216(4) to include a QCAT Registry or Magistrates Court staff member. [9] Mr and Mrs Hill-Douglas appear to allege that various statements made by one of Area Square’s directors, Mr Matthew Campbell, or otherwise on behalf of Area Square in the proceedings before me were found in my decision to have been false and misleading, and in breach of s 216. The application appears to be based upon what I said at paragraph [51] in my Reasons of 20 January 2010. [10] This part of the dispute concerned the swimming pool. At the end of the hearing it was submitted, by counsel for Area Square, that a contract for fixing some tiles associated with the pool was not between Area Square and Mr and Mrs Hill-Douglas but, rather, between them and another person. I made a specific finding that it was Area Square which engaged that other person and directed how the work should be done, and that the 1 Area Square Pty Ltd v Hill-Douglas & Anor [2010] QCAT 8. 2 Hill-Douglas v Area Square Pty Ltd [2010] QCATA 125. -- 3 of 7 -- 4 ‘…relevant contract for the tiling work was with the applicant (Area Square) and not the respondents (Mr and Mrs Hill-Douglas)’. [11] The finding was made after the Tribunal heard conflicting evidence about the party’s dealings with that other person, a Mr Metcalf, and involved a determination in the face of the conflicting evidence, on the balance of probabilities, which preferred the evidence of Mr and Mr Hill-Douglas over that of Mr Campbell, and Area Square. [12] There was no finding, however, that Mr Campbell knowingly gave false or misleading information to the Tribunal and indeed that was not suggested in their Counsel’s submissions. [13] There is a significant difference between rejecting a person’s evidence, and a finding that they deliberately lied3. The finding here was, rather, made in the context of a legal conclusion that Area Square effectively directed the work to be undertaken; in that sense, the finding did not expressly contradict the factual assertions made by Mr Campbell. [14] It is unnecessary, also, to deal with the question whether or not Mr and Mrs Hill-Douglas actually have standing to make an application for the Tribunal to ‘enforce’ an alleged breach of s 216. Nothing in the evidence suggests Mr Campbell’s statements were false or misleading; this is, rather, a case in which the Tribunal was obliged to make a finding between different versions of events surrounding a building contract. There is no basis for a finding that Mr Campbell knowingly gave false or misleading evidence, in a material particular. Costs [15] Under s 100 of the QCAT Act each party to a proceeding must bear its own costs ‘other than as provided under this Act or an enabling Act’. Under ss 6(7) and 7 of the QCAT Act a ‘modifying provision’ in an enabling Act will prevail over the provisions of the QCAT Act if there is any inconsistency between them. The dispute here was a ‘building dispute’ under the Queensland Building Services Authority Act 1991 and, pursuant to s 77(2)(h) of that Act the Tribunal has the power to award costs. [16] That power is to be exercised in the particular context that, because this proceeding was commenced before the CCT but that former tribunal had not started to hear the matter or consider evidence for the purpose of making its final decision the proceeding was, in QCAT, a ‘pending proceeding’4. Under s 271 of the QCAT Act this Tribunal only had the functions of the CCT in relation to the matter under the CCT Act and could only make a decision that the CCT could have made. In the result, the decision QCAT might now make about costs is governed by the cost provisions in the former Commercial and Consumer Tribunal Act 2003. Section 70 of that Act said that the main purpose of its provisions 3 Smith v NSW Bar Association (1992) 176 CLR 256, at 268. 4 QCAT Act, ss 245, 256. -- 4 of 7 -- 5 concerning costs5 was to ‘…have parties pay their own costs unless the interests of justice require otherwise’. [17] Under s 71 however, the CCT was given a discretion to award costs and, for that purpose, could have regard to the nature and complexity of the proceedings, and the outcome; the relative strengths of the claims made by each party; the conduct of the parties before and during the proceeding; and, anything else the Tribunal considered relevant. [18] Sections 70 and 71 were considered by Keane JA (as his Honour then was) in Tamawood Ltd v Paans [2005] 2 Qd R 105 in which his Honour observed that, while those provisions negate the proposition that costs should ordinarily follow the event unless the Tribunal considers that another order is more appropriate, Parliament plainly did not intend that parties should be prevented from prosecuting complex building cases, with legal representation, because they might be denied their costs; and ‘…where a party has reasonably incurred the costs of legal representation, and has been successful before the Tribunal, it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring that party to bear the costs of the representation which was reasonably necessary to achieve that outcome’6. [19] As I observed in Rainbow v Nelson [2010] QCAT 388, the starting position is that parties have to bear their own costs but the next consideration is whether, having regard to the interests of justice and using, as guideposts, the factors set out in s 71(4) and (5) of the CCT Act, another order is warranted. [20] Area Square’s application for costs has, however, another relevant element: in September 2008 its solicitors offered to settle the entire proceeding on terms that Area Square receive $30,000 from funds then held in the Queensland Master Builders Trust Account, with the balance being paid out to Mr and Mrs Hill-Douglas; that the parties make a joint request that the Tribunal make orders dismissing the claim and counter- claim; and, on the basis that each party bear its own costs. [21] Under s 142 of the Commercial and Consumer Tribunal Act 2003 the Tribunal must order the offeree to pay costs if the offer is properly made in terms of Division 7, is not accepted, and ‘…in the opinion of the Tribunal, the decision…is not more favourable to the other party than the offer’. [22] On its face the offer of 17 September 2008 complies with the technical requirements in s 138 of the CCT Act. The central question is whether, in light of events in the proceeding after September 2008, the Tribunal’s ultimate decision was more favourable to Area Square than the offer. [23] In the proceedings in QCAT the first order made, by consent after the compulsory conference, involved a payment by Mr and Mrs Hill-Douglas to 5 Set out in Part 4, Division 7. 6 At para [35]. -- 5 of 7 -- 6 Area Square of almost $47,000 but, also, a payment by it to Mr and Mrs Hill-Douglas in the amount of $7,000. In the proceedings before me Area Square was ordered to pay Mr and Mrs Hill-Douglas almost $6,000. The result, according to Area Square’s submissions for costs, is a net order in its favour of $33,900. [24] In their submissions Mr and Mrs Hill-Douglas point out that the offer required the parties to ‘…release one another from all claims’ and, they say, would have involved them to relinquish all rights and interests under any continuing or concealed defects; but, they also say, for some time after the offer was made Building Services Authority inspectors were still attending the premises, and directing rectification work which Area Square subsequently undertook and their rights to remedies of that kind would, if they accepted the offer in its terms, have been lost. [25] The other complicating factor, they submit, is that Area Square delivered an amended statement of claim in January 2009 claiming an additional $64,000 but, ultimately, received something less than 30% of the claims raised in that pleading. [26] It follows that the exercise of determining whether or not the Tribunal’s ultimate decision was more favourable than the offer is a complex and multifaceted one. In particular, it is material that the matters which were not resolved after the compulsory conference before another member and which went to a hearing before me were resolved in Mr and Mrs Hill- Douglas’s favour to the extent of about $6,000. [27] Because the balance of the claims were resolved by agreement between the parties after a compulsory conference it cannot immediately be said, then, that the ‘decision’ of the Tribunal, under s 142(1)(d) of the CCT Act, was more favourable to Area Square than the offer. I appreciate that, in considering this question, it may also be appropriate to consider the outcome in its broad canvas but, where what is being sought are indemnity costs (as the phrase ‘or reasonable costs’ in s 143(2) has been held to mean7), it is my view that the word ‘decision’ in s 142(1)(d) should be strictly construed. [28] For these reasons I do not think this is a case in which Area Square can sustain a claim for indemnity costs after its offer in September 2008. [29] It is still necessary, however, to consider its claim for costs in the proceeding under Division 7 of the Commercial and Consumer Tribunal Act 2003. [30] Under s 71(4) the Tribunal may have regard to a number of factors, mentioned above (but is not limited to them). The proceedings were, on any view, of moderate complexity. The relative strength of the party’s claims, and the outcome, are reflected in the compromise mentioned 7 Colgate-Palm Olive Co v Cussen Pty Ltd (1992) 118 ALR 248; Shelbrook Homes Pty Ltd v Russell (No 2) [2011] QCAT 279. -- 6 of 7 -- 7 earlier, and my decision in favour of Mr and Mrs Hill-Douglas in the sum of $5,944.30. In the result, issue by issue (including the terms upon which the parties compromised), Area Square succeeded in its claim for the costs of the driveway in the sum of $12,000 but failed in its claims for the rendering variation; and, Mr and Mrs Hill-Douglas failed in their claims in respect of the variation, the air conditioning system and the cornices but succeeded in their claim for rectification of the swimming pool in the sum of $17,944.31. [31] Other material factors include the history of the proceedings and the manner in which they were conducted, including the facts that Area Square amended its statement of claim, and the Hill-Douglas’ amended their defence and counter-claim on four occasions; the pleadings were detailed and lengthy; and, the matter was originally set down for hearing for 5 days in December 2009. In the hearing before me the driveway claim involved legal questions of some complexity concerning the effect of variation agreements and whether they have been repudiated by Mr and Mrs Hill-Douglas and, if so, to what result. The air conditioning and swimming pool claims involved cross examination of expert witnesses, as did the claim about cornices; and, the claim about the second variation involved a legal question of some complexity – whether the agreement to increase the contract price amounted to an unlawful cost escalation. [32] It is this level of complexity rather than the outcome which, paying full respect to the decision in Tamawood v Paans, suggests both parties have an arguable case for costs. [33] Overall this examination of the relative strengths of the parties claims, the outcomes, and the nature and complexity of the proceedings points, in my conclusion, to a determination that the interests of justice – the primary consideration, under s 70 of the Commercial and Consumer Tribunal Act 2003 – dictate that each party should bear its own costs. [34] As the discussion set out above shows, consideration of the factors in s 71(4) indicates that both faced the same degree of difficulty and complexity in the matter, and each succeeded to a degree. It is true that the aggregate sums awarded to the builder exceeded those ultimately attained by the owners but the exercise of aggregation involved, in large part, a resolution of most of the issues which the parties reached consensually. It might be said that the greater success of the builder, in pure monetary terms, must be balanced against the costs associated with the ultimate hearing in which the owners came out, as it were, on top. [35] For these reasons I am persuaded that the discretion under Division 7 of the Commercial and Consumer Tribunal Act 2003 ought to be exercised in a way which accords with the ‘main purpose’ of that division – namely, to dismiss both parties’ applications for costs. -- 7 of 7 --