Dreamstarter Pty Ltd v Lyons [2012] QCAT 65

CITATION: Dreamstarter Pty Ltd v Lyons [2012] QCAT 65 PARTIES: Dreamstarter Pty Ltd t/as Protec Builders v Mr Andrew Lyons APPLICATION NUMBER: BDL222-10 MATTER TYPE: Building matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Peta Stilgoe, Senior Member DELIVERED ON: 15 February 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. Dreamstarter Pty Ltd has leave to withdraw its claim. 2. Mr Lyons’ application to strike out or dismiss the application of Dreamstarter Pty Ltd is dismissed. 3. Mr Lyons’ application for security for costs is dismissed. 4. Dreamstarter Pty Ltd shall pay Mr Lyons’ costs of and incidental to his application for security for costs on a standard basis as agreed, or failing agreement, as assessed by an assessor nominated by Dreamstarter Pty Ltd. 5. Dreamstarter Pty Ltd shall pay Mr Lyons’ costs as assessed or agreed within 14 days of such agreement or assessment. CATCHWORDS: PROCEDURE – leave to withdraw – where application for leave to withdraw – where application resisted PROCEDURE – application to strike out – whether claim “hopeless” PROCEDURE – security for costs – where -- 1 of 7 -- 2 leave to withdraw claim – whether any utility in application for security for costs PROCEDURE – costs – whether respondent entitled to costs of proceeding Queensland Civil and Administrative Tribunal Act 2009, ss 46(2), 47, 49, 102, 107 Queensland Civil and Administrative Tribunal Rules 2009, r 86 Aon Risk Services Australia Limited v Australian National University [2009] 239 CLR 175 Scottish Benefit Society v Chorley (1884) QBD 872 Tamawood Ltd v Paans & Anor [2004] QDC 427 Juju Club Pty Ltd v Cromwell Group [2011] QCATA 308 Malay Industries Pty Ltd v Queensland Building Services Authority [2010] QCAT 310 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] Dreamstarter Pty Ltd has applied for the tribunal‟s leave to withdraw its claim. Mr Lyons opposes the application and, in the alternative, asks the tribunal to: declare that he has validly terminated the building contract with Dreamstarter; dismiss the application; and order that Dreamstarter pay his costs on an indemnity basis fixed at $122,515.90. [2] My Lyons says that, if the tribunal allows Dreamstarter to withdraw its application, it will be able to seek the tribunal‟s leave to bring the claim in the future. As these proceedings have been on foot for 18 months, Mr Lyons asserts that it would not be just to allow Dreamstarter to raise the issue again. He referred the tribunal to the principles in Aon Risk Services Australia Limited v Australian National University1. [3] Section 46(2) of the Queensland Civil and Administrative Tribunal Act 2009 provides that where an application has been withdrawn, that party cannot make a further application relating to the same facts or circumstances without the leave of the tribunal. 1 [2009] 239 CLR 175. -- 2 of 7 -- 3 [4] Even though the former Commercial and Consumer Tribunal had an equivalent provision2, there are been no decisions about the factors a tribunal might take into account when exercising its discretion under s 46(2). Section 49(2) of the QCAT Act provides that a party cannot start another proceeding of the same kind relating to the same matter without the leave of the President or Deputy President if a proceeding has been dismissed or struck out under ss 47 or 48. Section 49(3) states (as s 46 does not) that the President or Deputy President may give leave if they consider the interests of justice require it. In relation to that power to grant leave, the President has said this3: The next question is whether leave should be granted to commence the proposed proceeding. There is an unfettered discretion to grant leave „in the interests of justice‟. If the Club has a grievance that warrants a substantial award – which, of course, remains to be decided – I do not consider that it should be precluded from doing so by a technicality arising from s 145 of the Reform Act. The spirit of the QCAT Act does not require that every application for amendment (and by analogy, every application under s 49) should be refused because it wastes costs and causes some delay. If, as the Respondent contends, the proposed claim is speculative, inflated or otherwise abusive of the Tribunal‟s process, those are matters for the final decision- maker, and may well raise a question of costs. [5] If a member of the tribunal was minded to apply those sentiments to a fresh application from Dreamstarter, and I can see no reason why the tribunal would take a different approach, then Mr Lyons‟ concern that the dispute may start again is well-founded. [6] Mr Lyons is asking the tribunal to dismiss the proceeding because “The builder‟s claim is without foundation.” To support that view, Mr Lyons directs the tribunal‟s attention to the submissions he filed in support of an application for security for costs4. I interpret that submission as an application to dismiss Dreamstarter‟s claim because it is lacking in substance.5 [7] Mr Lyons has provided a careful analysis of Dreamstarter‟s claim. He says that the claim for $98,435.70 is in three parts but that each part is dependent upon Dreamstarter achieving Stage 3 of the contract – “Slabs Pour and Joists in Place”. The three parts are: variation 1; the variation for extra excavation; and the payment due for the stage completed. [8] Mr Lyons has helpfully referred the tribunal to clause 16 of the contract: The Contractor is entitled to claim a Progress Payment when the Contractor has achieved completion of each of the stages set out in Schedule Item 10 and provided evidence to the tribunal that demonstrates that Dreamstarter has not completed the slab pour and joists. [9] Clause 16 must be read as a whole. It goes on to provide: 2 Section 63 Commercial and Consumer Tribunal Act 2003. 3 Juju Club Pty Ltd v Cromwell Group [2011] QCATA 308 at [11]. 4 Filed 21 October 2011. 5 Section 47(1)(b). -- 3 of 7 -- 4 The Owner must pay the Contractor the Progress Payment, or so much of the relevant claim as is not disputed by the Owner, within 5 business days of receipt of the relevant claim. If the Owner disputes the relevant claim for Progress Payment or any part of it, the Owner must within 5 business days of receipt of the relevant claim give to the Contractor a BSA Form 4 Notice of Dispute of Progress Claim with the particulars completed or other appropriate written notice, stating the reasons for so disputing the claim or part of it. [10] Dreamstarter submitted the progress claim on 27 November 2009.6 On 3 December 2009, Mr Lyons sent Dreamstarter an email rescinding his agreement to pay variation 1. Mr Lyons had, by email of 5 November 2009, already disputed Dreamstarter‟s entitlement to the additional excavation works. The email of 5 November does not make any comment about whether or not stage 3 had been completed. Mr Lyons‟ evidence in that regard postdates his communication with Dreamstarter. There is no evidence that he raised this issue with Dreamstarter within the five business days referred to in the contract. [11] The dispute about the amount of the additional excavation work required has not been resolved. The correspondence indicates that Mr Lyons concedes some additional payment is due, although not the full amount claimed by Dreamstarter. Considering all of clause 16 and the correspondence passing between the parties, I do not agree that Dreamstarter‟s claim is “hopeless”. [12] Dreamstarter also claims $25,110 loss of profit on the contract because of Mr Lyons‟ wrongful termination. Mr Lyons‟ points out that Dreamstarter could not have made a profit on this job by referring to other quotes. This information is unhelpful. If Dreamstarter was of the view that it was going to make a profit on the contract, and it could demonstrate that by reference to its own accounts, then the view of other contractors is irrelevant. The real question is whether Mr Lyons wrongfully terminated the contract. [13] When the progress claim for the slab pour and joists was sent to Mr Lyons, Mr Farmer from Dreamstarter wrote: Please pay by 7th December 2009. In the event of non-payment, works will be suspended until payment is received. [14] Mr Lyons correctly points out that the contract does not provide a right to suspend work and that this communication could be read as an intention to breach the contract and/or perform it on its own terms. Mr Lyons says that Dreamstarter repudiated the contract by 1 December 2009 and he was, therefore, entitled to terminate. [15] Mr Lyons issued three notices of default. The notices of 5 and 23 November 2009 relate to a lack of progress in the work. Clause 12 of the contract provides that the Contractor must diligently carry out the work and must not, except as permitted under the contract, delay, suspend or fail to maintain reasonable progress in the performance of that work. Mr Farmer provided a detailed response to the allegation of a lack of progress 6 Paragraph 24 statement of claim. -- 4 of 7 -- 5 by email of 1 December 2009.7 Not surprisingly, he asserts that Mr Lyons must bear responsibility for much of the delay. [16] The tenor of Mr Lyons‟ correspondence suggests that the threat to suspend works was not really the reason for his decision to terminate (or accept Dreamstarter‟s repudiation). His emails show that it was the lack of progress in the works that was the basis for Mr Lyons‟ decision to terminate the contract. In view of the conflicting evidence from the parties, I am unable to say that there was an unreasonable lack of progress in the works and, therefore, that Dreamstarter‟s claim for loss of profit is so lacking in substance that it should be dismissed under s 47. [17] I decline to order that Dreamstarter‟s application be dismissed. I do give leave for the claim to be withdrawn. Costs [18] Mr Lyons submits that Dreamstarter should pay his costs of this proceeding because Dreamstarter‟s application was always doomed to fail and he has been put to substantial expense for no good cause. [19] I have already found that Dreamstarter‟s claim was not “doomed to fail.” Therefore, the power to order costs under s 47(2)(c) is not available. Mr Lyons has rightly referred the tribunal to the costs power in the Queensland Building Services Authority Act 19918. Because the discretion to award costs is in broad terms, and is not fettered by s 100 of the Queensland Civil and Administrative Tribunal Act 2009, the power must be exercised judicially9. His Honour Judge McGill has clarified that concept10: It came to be recognised in time that, in circumstances where a discretion as to costs was conferred on a court or tribunal in such terms, “a successful party in the absence of special circumstances had a reasonable expectation of obtaining an order for costs in its favour unless for some reason connected with the case a different order was specially warranted. Any departure from this expectation would require that there should be material upon which the adverse discretion could be properly exercised. It could not be exercised by reference to idiosyncratic notions or to facts and circumstances irrelevant to the case.” [20] Again, because I have declined to dismiss Dreamstarter‟s application, I cannot find that Mr Lyons was a “successful party” in the terms contemplated by his Honour. Therefore the principle that costs should follow the event does not apply. To enable me to order Dreamstarter to pay Mr Lyons‟ costs, there must be some other rationale, even under s 77(2)(h) of the QBSA Act. [21] There is, of course, a general power to order costs in the interests of justice11 and, as the President pointed out in Juju Club Pty Ltd v Cromwell 7 PF10 affidavit of Paul Farmer sworn 12 November 2010. 8 Section 77(2)(h), Lyons v Dreamstarter Pty Ltd [2011] QCATA 142. 9 Tamawood Ltd v Paans & Anor [2004] QDC 427 at [43]. 10 Tamawood Ltd v Paans & Anor supra at [44]. 11 Section 102 Queensland Civil and Administrative Tribunal Act 2009. -- 5 of 7 -- 6 Group12 it is well settled that costs thrown away by a party‟s major change of direction may be awarded against that party. [22] An examination of the file shows that, even though the initiating application was filed in July 2010, there has been no material filed in relation to the substantive dispute and no progress towards a resolution. The compulsory conference in August 2011 did not advance matters between the parties at all. [23] The effect of me giving leave to withdraw is that Dreamstarter‟s claim falls away but Mr Lyons‟ counterclaim is still on foot. There are no costs thrown away by Mr Lyons filing his response, or attending the compulsory conference, because these steps would have been required in any event in the prosecution of the counterclaim. Mr Lyons will have the opportunity to claim those costs when his counterclaim has been determined. [24] Mr Lyons has rightly excluded a claim for the costs of the appeal, as this is a matter for the appeal tribunal. [25] It is apparent that most of the costs expended by the parties have been directed to the application for security for costs. Dreamstarter is now in the position of respondent and the security for costs provisions13 no longer apply. Despite that consequence, Mr Lyons still wants the tribunal to determine his application for security for costs, albeit by a different member of the tribunal. I can see no purpose in having the issue determined by another member of the tribunal as the argument is now a redundant one. The application for security for costs should be dismissed. [26] Once I have made that decision, it is arguable that the costs incurred in the application for security for costs are costs thrown away by Dreamstarter‟s application for leave to withdraw. [27] It is, however, a “chicken and egg” argument. But for Mr Lyons‟ application for security for costs, Dreamstarter may not have applied for leave to withdraw as a letter from McMillan Legal to Mr Lyons‟ lawyer dated 25 November 2011 says: Over the last 48 hours our client…has considered the position of Dreamstarters … and its ability to meet the frequent detailed submissions prepared by the Respondent and his solicitors. Mr Farmer‟s position is such that he feels he cannot continue this. Our client has instructed us that because of the debts he has incurred, in relation to the building contract, the subject of this litigation, which he has attempted to pay from his own resources, it has become too great a burden to continue to bear. [28] On balance, however, I am satisfied that the President‟s comments in Juju Club Pty Ltd v Cromwell Group justifies an order that Dreamstarter pay something of Mr Lyons‟ costs of and incidental to the application for security for costs. [29] Mr Lyons submits that I have the means to fix costs as is contemplated by s 107 of the QCAT Act. It is the extraordinary quantum of Mr Lyons‟ claim for costs that causes me the difficulty. I accept that he is entitled to the 12 Supra at [14]. 13 Section 109. -- 6 of 7 -- 7 same costs as if he had engaged alternative legal professionals other than the items which were unnecessary because he was his own client.14 When I look at the cost assessor‟s report, I cannot tell whether Mr Lyons is invoking the principle in Scottish Benefit Society v Chorley in respect of solicitors‟ costs, counsel‟s fees or both. If the claim is in respect of both, then there must be a degree of duplication as there are claims for taking instructions to draft material, drafting the material and for counsel settling that material which suggest that Mr Lyons was engaged in all of those steps. Further, the costs have to be reasonable and I am not yet persuaded that the current assessment of costs has taken account of what appears to be Mr Lyons‟ enthusiastic involvement in this proceeding. I decline to fix the costs based on Hartwell‟s assessment. Conclusion [30] Mr Lyons has not persuaded me that Dreamstarter‟s application was so without substance that it should be dealt with under s 47 of the Queensland Civil and Administrative Tribunal Act 2009. I will not dismiss Dreamstarter‟s application but I will give it leave to withdraw. [31] Because Dreamstarter no longer has a claim against Mr Lyons, his application for security for costs is of no utility. It should also be dismissed. [32] Dreamstarter should pay Mr Lyons‟ costs of the application for security for costs as assessed by a costs assessor appointed by the Principal Registrar, which assessor shall not be Hartwell. [33] Dreamstarter shall pay the costs as assessed within 14 days of receipt of the assessment. 14 Scottish Benefit Society v Chorley (1884) QBD 872. -- 7 of 7 --