Avilake Pty Ltd v Tucker and Anor (No 2) [2012] QCAT 118

CITATION: Avilake Pty Ltd v Tucker and Anor (No 2) [2012] QCAT 118 PARTIES: Avilake Pty Ltd v William Edward Tucker Julie Jean Tucker APPLICATION NUMBER: BD486-09 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Ann Fitzpatrick, Member DELIVERED ON: 14 March, 2012 DELIVERED AT: Brisbane ORDERS MADE: No order as to costs in favour of the applicant or the respondents in relation to the claim or the counter-application. CATCHWORDS: Costs of claim and counter-application where both failed – exercise of discretion as to costs in the Tribunal – costs follow the event and exceptions Queensland Building Services Authority Act 1991, s 77(1)(h) Queensland Civil and Administrative Tribunal Act 2009, ss 3, 100 Anghel v Minister for Transport (No 2) [1995] 2 Qd R 454 Donald Campbell & Co v Pollak [1927] AC 732 Hallett & Ors v Queensland Building Services Authority [2011] QCAT 355 Hally v Dennis (1995) 95 CLR 661 Interchase Corporation Ltd v Grosvenor Hill (Qld) Pty Ltd (No 3) [2003] 1 Qd R 26 Kilvington v Grigg & Ors (No 2) [2011] QDC Lyons v Dreamstarters Pty Ltd [2011] QCATA 142 -- 1 of 6 -- 2 No. 1 North Phoenix Gold Mining Co Ltd v Phoenix Gold Mining Co Ltd (1896) 6 QLJ 307 Oshlak v Richmond River Council (1998) 193 CLR 72 Queensland Building Services Authority v Johnston [2011] QCATA 265 Smith v Madden (1946) 73 CLR 129 Togito Pty Ltd v Pioneer Investments (Aust) Pty Ltd & Ors (No 2) [2011] QSC 21 APPEARANCES and REPRESENTATION (if any): Decision on the papers. REASONS FOR DECISION [1] On 6 January, 2012 a decision in this matter was handed down. The application and counter-application were both dismissed. [2] Both parties were legally represented during the hearing. Both parties have sought costs. The respondents have submitted in the alternative that both applications for costs be dismissed. [3] This proceeding was commenced in the former Commercial and Consumer Tribunal. The functions of that Tribunal are now largely performed by the Queensland Civil and Administrative Tribunal. More recently the Tribunal has determined that pending proceedings such as this proceeding, should have costs issues determined under the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).i Section 100 of the QCAT Act provides that “other than as provided under the QCAT Act or an enabling Act,” each party to a proceeding must bear the party’s own costs for the proceeding. [4] This matter involved a building dispute. The Tribunal draws its jurisdiction to deal with building disputes from the Queensland Building Services Authority Act 1991 (QBSA Act). Section 77(1)(h) provides that the Tribunal “may award costs”, in proceedings arising out of a building dispute. Pursuant to section 7 of the QCAT Act, section 77(1)(h) of the QBSA Act modifies section 100 of the QCAT Act, so that section 77(1)(h) is read as part of the QCAT Act. Section 77(1)(h) does not provide guidance or prescription about the occasions for or conditions of exercise of the power to award costs.ii [5] Deputy President Kingham, in Lyons v Dreamstarters Pty Ltdiii said that a jurisdiction given in general terms, such as the jurisdiction to award costs in s 77(1)(h) of the QBSA Act, “allows the Tribunal to make an order as to costs that is justified in the circumstances. It is a broad general discretion which must be exercised judicially, not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation.”iv -- 2 of 6 -- 3 [6] I would add to her Honour’s analysis the observation made by Professor Dal Pont in “Law of Costs” that “Even a broad discretion as to costs will be read down where it is inconsistent with the purposes of the tribunal in question. In Duke Eastern Gas Pipeline Pty Ltd, for example, dealing with a law empowering the making of “such orders (if any) as to costs in respect of a proceeding as it thinks fit”, the Australian Competition Tribunal remarked that a general “costs follow the event” approach would not be conducive to the effective discharge by the tribunal of its statutory functions…”v [7] Given the outcome of the hearing the ordinary expectation would be that the respondents, as the successful parties in the claim against them, would be awarded costs in relation to defending the claim and the applicant, as the successful party in the counter-application, would be awarded its costs of defending the counter-application. [8] That is consistent with the principle that in the absence of special circumstances the court exercises its discretion to award costs to the successful party.vi The allocation of costs as to the claim and as to the counterclaim is a matter which must then be determined by a costs assessor.vii [9] A court has a power to make another order, but in the exercise of its discretion, it does so only for a good reason.viii This decision will explore whether there is a good reason to depart from the principle that costs follow the event, in light of the broad discretion conferred on the Tribunal by s 77(1)(h) of the QBSA Act, as it would normally be exercised in the civil courts, but with an eye to the objects of the QCAT Act. [10] The applicant has submitted that it is entitled to an order that the respondents pay its costs on an indemnity basis or alternatively on a reasonable standard basis. The applicant does not appear to distinguish between costs of the claim and costs of the counterclaim in its submission. [11] McGill DCJ in Kilvington v Grigg & Ors (No 2) undertook a detailed analysis of the principle that costs follow the event and the circumstances which might justify departure from the principle. His Honour referred to the decisions of Griffith CJ in No. 1 North Phoenix Gold Mining Co Ltd v Phoenix Gold Mining Co Ltd;ix Dixon CJ in Hally v Dennisx and McPherson JA in Anghel v Minister for Transport (No 2)xi which His Honour noted confirm a rule or a rule of practice that a successful defendant may not be ordered to pay the general costs of the proceeding. Although His Honour thought that Oshlak’s case may have recognized a power in the court to make such an order, he thought that the rule was in any event recently confirmed by the Queensland Court of Appeal in Interchase Corporation Ltd v Grosvenor Hill (Qld) Pty Ltd (No. 3)xii. [12] The applicant cited as reasons why the respondents should pay the applicant’s costs, that: a) apart from the Tribunal finding there was no debt due under the contract as at termination of the contract and apart from there being no finding in favour of the applicant in relation to the claim under the preliminary agreement, the Tribunal found in favour of the applicant on every question of fact and law; -- 3 of 6 -- 4 b) the respondents persisted with allegations which ought not to have been made, which unnecessarily disadvantaged the applicant and prolonged the proceedings. The respondents made groundless allegations of defects to seek to create a counterclaim equivalent to the balance due under the contract and virtually all such matters were rejected by the independent inspection of the Building Services Authority. Despite this the respondents persisted at the hearing in alleging the full amount of the originally claimed defects; c) because Mr Tucker asserted that he was a barrister by profession, the applicant perceived a disadvantage which prompted it to seek legal representation; d) the issues to be determined were legally complex; e) the matter was unable to be resolved in two compulsory conferences, where no legal representation was allowed; f) all of the work under the contract was completed with the exception of installation of the spa and the vanity in the bathroom and some consequent plumbing fitting out work. The respondents have the benefit of all the final stage work for which they have not paid the applicant builder; g) none of the cost of the matter or the running of the trial would have been necessary had there not been irresponsible conduct on the part of the respondents and the making of groundless contentions by the respondents in wilful disregard for the true facts which had been pointed out to them by the solicitor for the applicant. [13] These grounds have been advanced by the applicant as to why it should be awarded costs, in the interests of justice, pursuant to section 102(1) of the QCAT Act. The applicant has not specifically addressed the question of whether on the facts of this case, there is sufficiently good reason to depart from the general principle that costs follow the event or the rule of practice that a successful defendant should not be asked to pay the general costs of the proceeding. [14] On the basis that the applicant has had the opportunity to put forward all the facts and arguments as to why it should be paid its costs and has purported to do so, albeit on a different legal ground, I intend to decide the question of whether the applicant should be entitled to its costs by reference to the facts and arguments submitted. [15] I make no finding on the legal question of my power to make such an order, but find that in any event, none of the applicant’s submissions are sufficient to overcome the principle that a successful defendant should not be asked to pay the general costs of the proceeding. I make this finding because it would be unjust to require the successful respondents to pay the applicant’s costs in circumstances where: the applicant failed in its claim for moneys said to be owing under the preliminary agreement principally because it failed to prove the work performed to justify payment of the sum claimed; and -- 4 of 6 -- 5 could not succeed on its claim in debt for the value of the practical completion stage payment because no debt had arisen under the contract and the terms of the relevant legislation had not been met to enable such a claim to be made. [16] Accordingly, the litigation as framed (and in the case of the preliminary agreement as prosecuted), was a wasted exercise which the respondents were required to defend. This is a point made by the respondents in their submissions in relation to costs. [17] For those reasons I decline to order that the respondents pay the applicant’s costs of the claim on an indemnity or on a standard basis. [18] However, that is a different issue from the issue of whether the applicant should be obliged to pay the respondents’ costs in accordance with the general principle that costs follow the event. The applicant did not address that question in its submissions. [19] The respondents have submitted that because of the applicant engaging a lawyer experienced in building disputes during the course of the dispute and the respondents’ lack of knowledge of this area of the law, they felt compelled to engage a solicitor and to continue to engage that solicitor once proceedings were commenced. The respondents submit they raised issues of concern to them with the Queensland Building Services Authority as a means of resolving the dispute with Avilake. That avenue was closed to them once proceedings were commenced by Avilake, so that they had no option but to become involved in litigation and incur the costs of litigation. [20] The respondents have submitted that the applicant should pay their costs, or alternatively, given the claim and counter-application were dismissed, that both applications for costs should be dismissed. [19] On critical questions of fact and law I found against the respondents. In particular, I found that: the applicant was not in breach of contract as asserted by the respondents; the respondents did not lawfully terminate the contract; the respondents were themselves in breach of the contract; by entering into possession of the house when they were not entitled to do so, the respondents made further performance of the contract by the builder impossible, including rectification by the applicant of defects complained of by the respondents in their counter-application. [21] I found that the applicant accepted the respondents’ wrongful repudiation of the contract and lawfully terminated the contract. [22] In these circumstances, I do not think in the exercise of my discretion, that it is just, having found the applicant was the wronged party in this dispute, that it should have to meet the respondents’ costs. Professor Dal Pont in his text “Law of Costs” has said that “Where a litigant succeeds in a case not on any merits of his or her own but, say on a technicality, it is open to the court to make no costs order in his or her favour.”xiii -- 5 of 6 -- 6 [23] I do not consider this conclusion is over-ridden by the respondents’ submissions that they were required to defend the claim and that they required legal assistance to do so effectively. [24] For these reasons and in light of the respondents’ alternative submission that they do not seek costs, I find a departure from the general rule is warranted. [25] I make no order as to costs in favour of the respondents in relation to the application. [26] As to the counter-application, subject to the exercise of my discretion, the applicant may expect its costs on the basis that costs follow the event. The applicant’s costs of the counter-application means the amount by which the costs of the proceedings were increased by the counter-application. Although complex, a costs assessor could calculate the extra costs incurred by the applicant in retaining legal representation to meet the counter- application at the hearing. [27] In this case legal representation was allowed for the hearing only. The hearing took two days. As the evidence unfolded I do not think that the hearing could have been concluded in one day even if there had been no counter-application made. The applicant had in any event engaged legal representation for the purpose of the claim. I do not think that any additional costs are so substantial such that the further costs and delay associated with assessing those costs can be justified in light of the objects of this Tribunal to have matters dealt with in a way that is “accessible, fair, just, economical, informal and quick”.xiv [28] For this reason I determine in the exercise of my discretion that there should be no order for costs in favour of the applicant with respect to the cross- application. i Hallett & Ors v Queensland Building Services Authority [2011] QCAT 355; Queensland Building Services Authority v Johnston [2011] QCATA 265. iiii Lyons v Dreamstarters Pty Ltd [2011] QCATA 142. iii Ibid. iv Ibid at para 33. v Professor GE Dal Pont, Law of Costs, 2nd ed., LexisNexis Butterworths, Australia, 2009, p 164 at [6.19]. vi Oshlack v Richmond River Council (1998) 193 CLR 72. vii Togito Pty Ltd v Pioneer Investments (Aust) Pty Ltd & Ors (No 2) [2011] QSC 21; Smith v Madden (1946) 73 CLR 129. viii Donald Campbell & Co v Pollak [1927] AC 732; Oshlack v Richmond River Council (1998) 193 CLR 72 at para 67; Kilvington v Grigg & Ors (No 2) [2011] QDC. ix (1896) 6 QLJ 307. x (1995) 95 CLR 661. xi [1995] 2 Qd R 454. xii [2003] 1 Qd R 26. xiii Dal Pont, op cit, p.231. xiv Section 3(b) Queensland Civil and Administrative Tribunal Act 2009. -- 6 of 6 --