Gravenall v Rynne (No 2)[2016] QCAT 73

Queensland Civil and Administrative Tribunal

REASONS FOR DECISION

What is this Application about?

1. [1]
   In a building dispute brought by Dianne Gravenall against Craig Rynne Constructions Pty Ltd, Ms Rynne was awarded $23,542.03 of a claim for S205,270.64.

2. [2]
   Having received submissions from the parties, the remaining issue for the Tribunal to decide is whether to award costs.

Should either party pay the other party's costs?

3. [3]
   The Tribunal may award costs when deciding a building dispute.^[1] This confers a broad and general discretion on the Tribunal to award costs displacing the usual 'no costs position'.^[2]

4. [4]
   The general rule in building disputes is that a successful party is entitled to recover its costs from the other party.^[3] Although Ms Gravenall succeeded in her claim for overpaid wages of $27,004.04 and seven minor claims totalling $1,459.52, Rynne successfully responded to most of Ms Gravenall's claims, in both number and quantum. Most of Ms Gravenall's claim was unsuccessful for lack of evidence.

5. [5]
   The Tribunal does not consider it appropriate to consider the costs of the few claims upon which Ms Gravenall succeeded, separately from the other claims, with a view to apportioning costs. All claims arose out of the same facts and circumstances, proceeded together and were heard and decided together, with a consequential overlapping of work and economies of scale.

6. [6]
   Rynne has successfully responded to most of Ms Gravenall's application. It would not be fair that it should have to pay its costs of responding to that application.^[4]

7. [7]
   Ms Gravenall must pay Rynne's costs.

What costs should Ms Gravenall pay?

8. [8]
   Rynne submits that costs should be awarded on an indemnity basis on and from 1 June 2012, because it offered to settle on these terms:

1. [Rynne] will pay (Ms Gravenali) the sum of $50,000.00 in full and final settlement of all your clients claims in the proceedings. Payment will be made into your trust account within 30 days of receiving your client's notice of acceptance of the offer.
2. The parties will provide mutual release by way of Deed in relation to any rights they have against each other in respect to the Contract being the Master Builders Cost Plus Contract dated 19 December 2009 and all matters in dispute in the proceedings generally including our clients counterclaim in the amount of $29,805.49.
3. Each party will bear their own costs.^[5]

9. [9]
   Although the amounts varied, Rynne submitted later offers in similar terms.^[6] Ms Gravenall also made her own offers to settle.^[7] At one stage, the parties were only $5,000.00 apart.^[8] Regrettably, neither party relented, resulting in them - and the Tribunal - expending considerably more resources to resolve their issues.

10. [10]
    Importantly, it would seem that every offer was made on the basis that each party was to bear their own costs. Ms Gravenall submitted that Rynne's offers are too uncertain for the Tribunal to consider because:

• Each party was to bear their own costs, meaning that the amount was inclusive of costs and could not be reasonably assessed;
• The offer implied that it had been inflated to save Ms Gravenall future legal costs; and
• The offer did not refer to the deposit of $22,142.50, meaning Ms Gravenall was unsure of whether she was to forego this as part of the terms of settlement.

11. [11]
    Ms Gravenall submitted that her costs at the time of the first offer were $27,557.36, meaning she would have received a net amount of $22,442.64. The Tribunal notes that this would mean that Rynne's first offer is not 'more favourable' to Ms Gravenall than the decision of the Tribunal to award her $23,542.03.^[9]

12. [12]
    Regardless, the 'practical difficulties' with offers that are 'inclusive of costs' were highlighted in Elite Protective Personnel Pty Ltd & Anor v. Salmon.^[10] The Court concluded that the Smallacombe^[11] line of authority does not lay down a definitive rule that an "all-in" offer can never be considered on the question of indemnity costs, so as to fetter a discretion on costs. Each case must be considered on its facts.

13. [13]
    However, those cases should guide the exercise of the discretion. A recipient of an offer may not have acted unreasonably if not given an adequate opportunity to consider the offer. A further relevant consideration is '....the difficulties posed when a court comes to consider the reasonableness of the [offer recipient's] conduct in rejecting/not accepting it. In other words such an offer presents practical difficulties.^[12]'

14. [14]
    First, we consider that the 'all in' offer meant that Ms Gravenall was 'placed in a position of not being able to determine the appropriate amount to attribute to the substantive claim, as opposed to the costs incurred in advancing it,’^[13] so that it was not unreasonable for her not to accept it.

15. [15]
    Second, to determine whether the Tribunal's decision is 'not more favourable'^[14] to Ms Gravenall than Rynne's offers, the Tribunal would have to assess Ms Gravenall's ability to calculate the quantum of the costs she would need to pay at the time of the offer, without an assessment. This would require the Tribunal to "become embroiled in collateral issues",^[15] contrary to the Tribunal's mandate to deal with matters in a way that is fair, just, economical, informal and quick.^[16]

16. [16]
    The Tribunal has decided not to award any of Rynne's costs on an indemnity basis. Rynne's costs are to be awarded on the standard basis and limited to those costs that were reasonably necessary to achieve the outcome.^[17]

What are the appropriate Orders?

17. [17]
    The Tribunal must fix costs if possible.^[18] Rynne submitted a Schedule of Legal Costs for $88,791.61. The Tribunal will not fix costs based on this sum as it appears to be calculated on an indemnity basis and is not in assessable form, meaning that Ms Gravenall has not been given an opportunity to consider an assessment of Rynne's costs prepared on a standard basis.

18. [18]
    Applying the Tribunal's mandate to act fairly^[19] and according to principles of natural justice,^[20] the appropriate Orders are:

1. Dianne Gravenall shall pay Craig Rynne Construction Pty Ltd's costs on a standard basis calculated on the District Court Scale within 28 days of agreement or assessment;
2. Craig Rynne Construction Pty Ltd shall deliver an assessment of its costs to Dianne Gravenall by 4 July 2016;
3. Dianne Gravenall shall deliver any response to the assessment by 4 August 2016; and
4. If the parties cannot agree to an amount for costs by 18 August 2016, costs shall be determined by an assessor appointed by the Principal Registrar.