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- Unreported Judgment
XMR Holdings Pty Ltd v Body Corporate for Xanadu QCAT 27
XMR Holdings Pty Ltd v Body Corporate for Xanadu  QCAT 27
XMR Holdings Pty Ltd
Body Corporate for Xanadu CTS 26361
Body Corporate for Xanadu East CTS 26380
Body Corporate for Xanadu North CTS 26993
Other civil dispute matters
3 August 2015
Member Barlow QC
2 February 2016
is not invalid by reason of any of the grounds raised in the responses of the Respondents to divisions 5A, 5B and 5C of XMR Holdings Pty Ltd’s Second Further Amended Application.
Interest – power of tribunal to award interest on amounts which it has determined ought be paid pursuant to a contract between a body corporate and its manager – whether power to award interest – whether power to award damages on principle under Hungerfords v Walker – date from which interest, if awarded, should be paid
Costs – whether circumstances justify an award of costs in favour of successful party
Anti-Discrimination Act 1991 (Qld), s 209
Body Corporate and Community Management Act 1997 (Qld), s 149B
Queensland Building and Construction Commission Act 1991 (Qld), s 77
Queensland Civil and Administrative Tribunal Act 2009 (Qld), ss 9(4), 14(3), 50(2)(b), 100, 102
Glamoren v Lee  QCATA 176
Herron v Attorney-General for New South Wales (1987) 8 NSWLR 601
Hungerford v Walker (1989) 171 CLR 125
Marshall v Watson (1972) 124 CLR 640
Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1
Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)  QCAT 412
Tamawood Ltd v Paans  QCA 111
This aspect of the matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
- On 19 October 2015, I published reasons for my decision on some preliminary questions in this matter. On 9 December 2015 I published supplementary reasons about the appropriate substantive orders having regard to my reasons, and made directions for submissions on the questions of interest and costs. On each of those occasions I delayed making final orders until all the issues concerning the preliminary questions could be determined together. These reasons concern the questions of interest and costs, and result in formal orders being made. To the extent necessary to understand these reasons, the reader should refer to my earlier reasons.
- The conclusions I reached on the substantive issues result in XMR being owed $335,538.81 by the principal body corporate, XMR owing the East body corporate $24,003.06 and XMR owing the North body corporate $22,284.21, all as at 11 November 2015.
- XMR seeks orders that each debtor pay the creditor interest on the respective debts from the dates that each component of the debts would (or would not) have been payable if the remuneration determined by Mr Little had been known at the due dates, and that the interest be paid at the rates prescribed for interest on default judgments of Queensland courts under the Civil Proceedings Act 2011 (Qld). The earliest due date, on that contention, is 11 February 2013. In XMR’s submission, the appropriate orders for interest up to 31 January 2016 are $33,171.21 payable to XMR, $2,379.24 payable to the East body corporate and $1,806.34 payable to the North body corporate.
- The bodies corporate contend that this tribunal has no power to make an order for the payment of interest, or alternatively that interest should only be payable from the date of Mr Little’s report (2 September 2014). If interest is awarded, the bodies corporate do not dispute the rates, other than to point out an error in XMR’s calculation. In the bodies corporate’s submission, the appropriate orders for interest up to 15 January 2016 are $22,937.31 payable to XMR, $1,644.66 payable to the East body corporate and $1,416.71 payable to the North body corporate.
- The only provisions in the QCAT Act that expressly give the tribunal power to award interest on amounts that it orders one party to pay to another are s 14(3), which permits an order for interest in minor civil disputes, and s 50(2)(b), which provides for orders for interest on debts or liquidated demands when making a decision by default. I have not been directed to any power to award interest under the Body Corporate and Community Management Act 1997 (Qld) (‘BCCM Act’)(the relevant enabling Act in this case).
- XMR nevertheless contends that there is an implied power under the QCAT Act to award interest in all matters, because of the existence of those express powers and the tribunal’s mandate to do all things necessary or convenient for exercising its jurisdiction (QCAT Act, s 9(4)). XMR submits that it would be absurd if Parliament had intended the tribunal to have the power to award interest when making a decision by default but not at the conclusion of a hearing.
- Alternatively, XMR contends that the tribunal has power to make an award of damages that compensates it for being denied the use of the money due to it. It says that would be necessary for the tribunal properly and fully to exercise its power under s 149B of the BCCM Act to “resolve the dispute”. Although not expressly stated, I understand this submission to contend that the tribunal has power to award what are commonly known as Hungerford v Walker damages.
- I do not see any basis for concluding that the QCAT Act gives the tribunal an implied general power to award interest. There are two discrete circumstances in which that power has been granted. I do not agree that it is absurd for Parliament to have granted those express powers but not to have granted a general power to award interest. The bodies corporate, in their submissions in reply, have pointed out a number of logical reasons, both practical and in policy, why Parliament may have given the tribunal only a limited power. I agree with those submissions.
- Apart from the limited express powers in the QCAT Act, it is also notable that, in at least two enabling statutes, the tribunal is given a specific power to award interest on compensation or damages: s 209(1)(g) of the Anti-Discrimination Act 1991 (Qld) and s 77(3)(c) of the Queensland Building and Construction Commission Act 1991 (Qld). This is another indication, although not decisive, that the tribunal only has the power to award interest where it has been specifically granted under its own Act or other enabling Acts.
- Furthermore, it is not for a tribunal such as this to imply, from those specific instances of power, a more general power to award interest. That would be contrary to all principles of statutory interpretation and contrary to authority. In particular, it has been said of the power of courts to construe the meaning of legislation, that:
Granted there may seem to be lacking in the legislation powers that it might be thought the Legislature would have done well to include, it is no power [scil: part] of the judicial function to fill gaps disclosed in the legislation; as Lord Simonds said in Magor and St Mellons RDC v Newport Corp  AC 189 at 191, ‘If a gap is disclosed, the remedy lies in an amending Act’ and not in a ‘usurpation of the legislative function under the thin disguise of interpretation’.
Still less is it a function of the tribunal to usurp such a legislative function.
- In my view there is no general power in the tribunal to award interest. I note that my view accords with that of the former President of the tribunal, Alan Wilson J, who has said that, unlike the courts, the tribunal does not have a wide statutory discretion to award interest.
- Similarly, the tribunal has no general power to award damages. It can only do so where there is an express statutory power to do so. Hungerford v Walker claims comprise claims for damages for breach of contractual or other obligations. If there were a claim for damages for breach of contract before the tribunal, the question would arise whether the tribunal has power to award damages under s 149B of the BCCM Act. The power under that section (in conjunction with s 15 of the QCAT Act) is to resolve a dispute about a contractual matter. The latter term is relevantly defined as a contravention of the terms of the engagement or authorisation of a body corporate manager or letting agent or the exercise of rights under the terms of such an engagement or authorisation.
- The claim in this proceeding does not include a claim for breach of contract. Nor do I consider that, on the evidence relevant and relied on in relation to the separate questions, any breach of contract concerning the remuneration payable to XMR has been demonstrated. The parties simply disagreed on the proper construction of the agreements. XMR’s claim is clearly for a debt, not damages. Therefore, it is unnecessary for me to determine whether s 149B grants a power to award damages in respect of any contravention of an engagement or authorisation. On the claim made, there is no basis to award Hungerford v Walker damages.
- If I were wrong, and there were a power and a requirement to award interest on the debts, in my view any such interest should only begin from the date that the debts became ascertainable – namely, from the date of the Little report. Until then, the parties were (after a considerable delay by XMR in commencing the process) engaged in taking the steps provided for by the agreements to determine the remuneration and it was only determined by Mr Little on the issue of his corrected report. It seems just to award interest (if it had to be awarded) only from that date, particularly when the agreements themselves did not provide for interest in the interregnum.
- In my view, therefore, no interest, nor damages in the nature of interest, can or should be ordered in respect of any of the debts.
- XMR submits that the bodies corporate, or at least the principal body corporate, should be ordered to pay XMR’s costs of the determination of the separate questions, on the standard basis at the District Court scale.
- The starting point for proceedings in the tribunal is that, except as otherwise provided, each party must bear its own costs: s 100, QCAT Act.
- However, the QCAT Act “otherwise provides” in part by s 102, which permits the tribunal to order a party to pay some or all of another party’s costs if the tribunal considers that the interests of justice require it to make such an order. Subsection 102(3) sets out a number of matters to which the tribunal may (but need not) have regard in deciding whether to award costs. The phrase “in the interests of justice” is not defined in the Act but is to be construed according to its ordinary and plain meaning, which confers a broad discretionary power on the decision-maker.
- The nature of the tribunal’s discretion under s 102 was discussed by Alan Wilson J, in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)  QCAT 412. His Honour compared ss 100 and 102 of the QCAT Act with ss 70 and 71 of the Commercial and Consumer Tribunal Act 2003 (Qld) (‘CCT Act’), which governed the discretion as to costs in the predecessor to this tribunal. The principles governing the exercise of the former tribunal’s discretion were set out in the reasons for judgment of Keane JA (as his Honour then was) in Tamawood Ltd v Paans  QCA 111.
- In Ralacom at , Wilson J noted Keane JA’s view that, where the complexity of the matter justified legal representation, it would not be in the interests of justice to bar the successful party from recovering costs that were reasonably necessary to achieve a satisfactory income. In this case, all the parties were legally represented before me.
- However, Wilson J went on to note that Keane JA’s conclusion must be reconsidered in the light of the difference between s 70 of the CCT Act and s 100 of the QCAT Act. Section 70 speaks of a “main purpose” to have the parties pay their own costs unless the interests of justice require otherwise, but s 100 mandates that parties shall bear their own costs, subject to s 102.
- At , Wilson J concluded that under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase “the interests of justice” point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100.
- I respectfully adopt the approach of Wilson J in Ralacom in considering the costs application in this case.
- As I recognised in the first paragraph of my principal decision in this case, the issues were, at least in part, complex. They included a number of legal and factual matters and they were important to the parties, both in principle and in practice: XMR has been awarded an increase in its annual remuneration of over $100,000, and it sought even more. And that award affects its remuneration for at least 3 years and likely for the balance of the contractual term.
- It is relevant, although not determinative, that the tribunal granted the parties the right to legal representation and each party was represented by solicitors and counsel.
- I do not accept XMR’s submission that a failure to order costs in its favour would, or would be likely to, result in the effective substantial erosion of the award. There is no evidence of the extent of its costs concerning the separate questions (although I infer that they are likely to be substantial), but given the practical outcome, this case is clearly distinguishable from cases involving substantially less monetary value.
- XMR submits that the dispute was essentially a commercial dispute, with the parties adopting positions to their potential commercial advantage. I do not accept that submission. XMR is a commercial body, but the bodies corporate represent their unit holders, the vast majority of which are owners of residential units. The bodies corporate, of their nature, are not commercial entities. Naturally they (and XMR) sought to argue matters that were to their respective advantage, but that is always the case in litigation.
- XMR contends that as, between them, the bodies corporate have about 150 unit holders, it would be a just outcome to order that XMR’s standard costs be shared, effectively, between 150 persons rather than “lumping” them all on XMR. I see some justification in this submission, as it serves to demonstrate that the bodies corporate, and each of their members, are unlikely to suffer a substantial economic burden from an order for costs, and to contrast that with the burden probably to be suffered by XMR.
- XMR contends that the bodies corporate added to the costs of the proceeding by running arguments that were unsustainable or, properly advised, ought never to have been made. It points in particular to the questions of whether the New SCAQ was effectively the same as CTIQ Inc, and whether Mr Little had been appointed by the President of the New SCAQ. I agree that the issues with which I dealt under the headings “The entity named in the contract” and “Did New SCAQ’s President appoint Mr Little?” had little or no merit, but the other issues raised substantial questions that were reasonably arguable. I do not consider that the overall costs would have been increased by any substantial proportion by the bodies corporate’s conduct of the proceeding.
- XMR was successful in its arguments and won on every issue. The use of legal representation by both parties was, in my view, justified and was of great assistance to the tribunal. The issues were, in some respects, complex and they were of considerable practical importance to the parties. In my view, having regard to these factors in particular, the interests of justice require that the unsuccessful parties bear the successful party’s costs.
- However, the net result of my determination is that XMR has in fact been overpaid by the East and North bodies corporate. In that sense, those bodies corporate might be said to have won in practice. Nevertheless, the bodies corporate all ran their defences together and the issues were clearly important to all of them. Furthermore, the East and North bodies corporate are the only members of the principal body corporate, they or their unit holders stood to gain by a decision in their favour and, in a practical sense, they can be seen to stand behind the principal body corporate to the extent that any levy on them is required to enable the principal body corporate to pay XMR’s remuneration and any costs ordered against it. The unit holders of the East and North bodies corporate also obtain benefits from the conduct by XMR of its duties under the agreements, and effectively they provide the funds for the principal body corporate to pay its obligations to XMR.
- In all the above circumstances, I consider that only the principal body corporate should pay XMR’s costs. It will no doubt raise a levy on its unit holders, and they will respectively raise levies on theirs, sufficient to pay those costs.
- The relevant costs are only those associated with the separate questions that were argued before me. I wish to minimise any potential for dispute about what costs concerned those questions. Other issues (referred to by the parties as the “termination issues”) remain to be determined and further steps toward the finalisation of those issues have, I understand, been deferred pending my decision on the separate questions. It is not appropriate or possible to make any order for the costs of the proceeding generally. Therefore, I propose to make an order for the costs of the separate questions by reference to the time taken to determine them.
XMR Holdings Pty Ltd v Body Corporate for Xanadu CTS 26361  QCAT 437.
XMR Holdings Pty Ltd v Body Corporate for Xanadu CTS 26361 (No 2)  QCAT, 9 December 2015.
Hungerford v Walker (1989) 171 CLR 125.
Marshall v Watson (1972) 124 CLR 640, Stephens J at 649; see also Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1, Gibbs J at 12, also referring with approval to Lord Simonds’s statement.
Glamoren v Lee  QCATA 176 at .
 I do not comment on or take into account evidence of, or contradicting, alleged breaches of the agreements that is apparently to be relied on by the parties in relation to the balance of the proceeding, which concerns whether the bodies corporate are entitled to terminate the agreements for alleged breaches by XMR. Any such evidence was not before me.
Herron v Attorney-General for New South Wales (1987) 8 NSWLR 601 at 613 per Kirby P.
- Published Case Name:
XMR Holdings Pty Ltd v Body Corporate for Xanadu, Body Corporate for Xanadu East, Body Corporate for Xanadu North
- Shortened Case Name:
XMR Holdings Pty Ltd v Body Corporate for Xanadu
 QCAT 27
02 Feb 2016