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DBI Group Pty Ltd v Wayne Leslie Banks QCAT 348
DBI Group Pty Ltd v Wayne Leslie Banks T/A Wayne Banks Concreting  QCAT 348
DBI Group Pty Ltd
Wayne Leslie Banks T/A Wayne Banks Concreting
On the papers
Senior Member Brown
13 October 2017
4:00pm on 23 October 2017.
4:00pm on 30 October 2017.
4:00pm on 30 October 2017.
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – where costs sought by respondent – where applicant withdrew the application – where no automatic rule that costs follow the event – where discretion must be exercised in awarding costs – where no special or unusual feature as to allow costs on an indemnity basis – where costs awarded on a standard basis
Queensland Building and Construction Commission Act 1991 (Qld), s 77(3)(h)
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 46(1), s 46(2), s 100, s 106, s 107(1), s 107(2)
Queensland Civil and Administrative Rules 2009 (Qld), r 57A
Uniform Civil Procedure Rules 1999 (Qld), r 307(2)
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Johnson v Clancy  NSWSC 1301
Jones v Jones  QSC 342
Jvancich v Kennedy (No 2)  NSWCA 397
LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo  QCA 305
Lyons v Dreamstarter Pty Ltd  QCATA 142
Lyons v Dreamstarter Pty Ltd  QCATA 071
Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No. 2)  QCAT 497
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
represented by BCCS Law
represented by James & Co Lawyers
REASONS FOR DECISION
- DBI Group Pty Ltd commenced an application for a domestic building dispute against Mr Banks as respondent. DBI subsequently withdrew its application. Mr Banks now seeks his costs of the proceeding.
- DBI constructed a home at Dundowran Beach. DBI engaged Mr Banks to undertake the construction of a driveway at the residence. Mr Banks performed the building work, however DBI claimed that the work was defective.
- The Queensland Building and Construction Commission became involved with the building works after a complaint by the homeowner about the construction of the driveway. The Queensland Building and Construction Commission (“QBCC”) requested DBI to carry out rectification works. The works included rectification of cosmetic issues with the driveway relating to the sealed finish, a slip hazard associated with the sealed finish and cracking to the driveway. Rectification works were carried out however the homeowner remained unhappy with the result of those works.
- DBI commenced this proceeding in the Tribunal on 16 December 2016. A response was filed by Mr Banks on 25 January 2017. The response included a counter application in which Mr Banks sought the dismissal of the application and the payment of his costs. In reality, what was raised in the counter application was not a separate claim by Mr Banks against DBI but rather a prayer for relief.
- The Tribunal ordered that the parties have leave to be legally represented in the proceeding. A compulsory conference was held on 23 March 2017 and directions made for the parties to, among other things, file statements of evidence.
- DBI did not file its statements of evidence as directed. Mr Banks filed his statements of evidence as directed. On 23 June 2017 Mr Banks filed an application seeking orders striking out the application by DBI as a result of its non compliance with Tribunal directions. As events transpired, the Tribunal was not required to determine the strike out application. DBI withdrew its application on 11 July 2017.
- On 27 July 2017 Mr Banks filed an application seeking an order that DBI pay his costs of the proceeding on an indemnity basis or, in the alternative, on a standard basis.
- I do not propose to traverse at length the costs submissions filed by the parties. Suffice it to say, Mr Banks submits that DBI failed to comply with Tribunal directions and that its application was without merit and bound to fail. DBI has filed an affidavit by its director, Mr Boyd. Mr Boyd says that he formed the view that there was ‘no point in chasing Wayne Banks any further’. Mr Boyd says that he was struggling to cope with the recent death of his father and instructed his then solicitors to withdraw DBI’s application. Somewhat tellingly, Mr Boyd says:
At no time whatsoever did Spire Law advise the Applicant that if it withdrew the Application, it may become exposed to an adverse costs order being made in the proceeding. If I had been aware of such exposure, I would not have pursued the withdrawal of the Application by the Applicant but would have instead engaged alternative solicitors to seek an extension of the times for the Applicant’s compliance with the timetable directed by the Tribunal and otherwise have caused the Applicant to progress the Application against the Respondent (who I still believe was the cause of the loss and damage suffered by the Applicant in respect of the defective driveway).
- Not unsurprisingly Mr Banks places some reliance upon what Mr Boyd says about the advice he received, or did not receive, from his solicitors. Mr Banks says that DBI was legally represented, at least from 14 March 2017, and that if Mr Boyd was not advised of any potential costs consequences as a result of withdrawing his application, that is a matter between DBI and its former solicitors.
Awarding costs – the relevant principles
- 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. The relevant enabling Act for the purposes of this proceeding is the Queensland Building and Construction Commission Act 1991 (Qld). The Tribunal may, in a building dispute, award costs.
- Of the operation of s 77(3)(h) of the Queensland Building and Construction Commission Act 1991 (Qld) (“QBCC Act”), which is expressed in general terms, then Deputy President of QCAT Kingham observed:
A jurisdiction given in general terms 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.
There is a clear inconsistency between a provision that confers on the Tribunal a broad and general discretion to award costs (QBSA Act, s 77(1)(h)) and one which states that, unless otherwise provided each party must bear their own costs (QCAT Act, s 100).
- Then QCAT President Alan Wilson J subsequently considered s 77(3)(h), finding:
In building cases that have elements of complexity, the Queensland Court of Appeal has suggested that costs awards will not be surprising. That case concerned, however, costs provisions in different legislation governing QCAT’s predecessor Tribunal.
In any event, the power to award costs under the QBSA Act, while expressed in succinct terms, indicates that the question of costs is to be addressed in markedly different terms from s 100 of the QCAT Act.
The High Court has said that there is no automatic rule that costs ‘follow the event’ (i.e., the outcome of the proceeding) or that the unsuccessful party must compensate the successful one. The discretion to award costs starts with the proposition that it is just and reasonable that a party who causes another to incur costs should reimburse the other party for them. Otherwise, the factors affecting the discretion will vary in each case. (footnotes omitted)
- Alan Wilson J identified as one of the relevant factors that the appellant had been successful in his appeal on all grounds.
- The discretion to award costs must be exercised judicially and in accordance with established principles. A successful litigant is, generally speaking, entitled to an order of costs, and to deprive a successful party of their costs (in circumstances where there is an entitlement to such costs) is an exceptional measure. Whilst a successful party to a building dispute in the Tribunal has no entitlement to costs, in the exercise of the discretion to award costs pursuant to the power conferred by s 77(3)(h) of the QBCC Act, the principle that costs usually follow the event has some significance as one of the relevant discretionary factors.
- Unlike the rules relating to the discontinuance of proceedings under the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), the QCAT Act and the Queensland Civil and Administrative Rules 2009 (Qld) (“QCAT Rules”) are silent on the issue of costs where an application is withdrawn. This is perhaps unsurprising given the general contraindication regarding the awarding of costs found at s 100 of the QCAT Act.
- An applicant in the Tribunal may file a Notice of withdrawal of an application or referral at any stage of a proceeding before the matter is heard and decided. Certain applications or referrals may only be withdrawn with the leave of the Tribunal. The withdrawal of an application for a building dispute does not require leave. To withdraw an application for a building dispute an applicant must file and serve on each other party to the proceeding a notice in the approved form. Once an applicant complies with the requirements under the QCAT Act and Rules for withdrawal, the proceeding is at an end. The Tribunal may however award costs under the QCAT Act or an enabling Act at any stage of a proceeding or after the proceeding has ended.
- The consequences of the withdrawal of an application for a building dispute may include an application for costs by the other party.
- Rule 307(2) of the UCPR provides that if a party discontinues or withdraws with the court’s leave, the court may make the order for costs it considers appropriate. In Jones v Jones McMeekin J, in considering the issue of costs pursuant to s 307(2) of the UCPR, referred to the ‘comprehensive summary of the considerations that should influence the exercise of the discretion in a case where one party withdraws’ found in Johnson v Clancy. Not all of the considerations identified in Johnson are relevant to proceedings for building disputes in the Tribunal, however (and subject to some appropriate modification) they include:
- Costs discretions are truly discretionary and there are no absolute rules; the discretion must be exercised judicially;
- The purpose of a costs order is to compensate, or indemnify, the person in whose favour it is made, not to punish the person against whom it is made;
- Generally, there must be some proper justification, sound positive ground, or a good reason, for departing from the ordinary position that a successful party is entitled to recover their costs of a proceeding;
- Circumstances which might support a departure from the ordinary position include where the proceedings have been rendered unnecessary by circumstances beyond the applicant’s control; where the applicant achieved practical success in the proceedings; or where costs have been significantly increased by the unreasonable conduct of the respondent. If there is to be a departure from the ordinary position regarding costs, it should be done in a particularized, and principled way;
- Where the proceedings are discontinued prior to any hearing on the merits, the Tribunal cannot try a hypothetical action between the parties to determine the question of costs. At the time of withdrawal, usually it will be impracticable to assess the eventual prospects of success in the action;
- It may be necessary to analyse the whole of the proceedings to determine the appropriate costs order. A relevant consideration is whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them; all the relevant circumstances, and not just the fact of discontinuance, should be considered; thus, the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs;
- In a particular case, it might be appropriate for the Tribunal, in its discretion, to consider the conduct of the respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation;
- It is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Tribunal’s discretion otherwise than by an award of costs by the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs;
- Where the proceedings are discontinued after interlocutory relief has been granted, the Tribunal may take into account the fact that that interlocutory relief has been granted;
- There is a risk that the subjective motivations of the applicant in discontinuing may be put forward as a basis for some other order. Except to the extent that such views may have been put before the respondent, for example as a basis for settlement, and are established as such on the evidence, subjective considerations of one party will generally be immaterial, so that the discretion will be exercised on the basis of the objective circumstances established on the evidence;
- The Tribunal is required to make such order as it thinks just in the particular circumstances of the case.
- Although the above considerations arise out of the provisions of the UCPR, rule 307(2) is concerned with the exercise of the discretion to award costs where a proceeding is discontinued or withdrawn. Accordingly, the discretionary considerations are directly relevant and applicable in proceedings in the tribunal in circumstances where the tribunal is required to exercise a broad general discretion, judicially, and not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation.
- Turning then to the relevant considerations, the matter has not been resolved as between the parties such that DBI could be said to have achieved practical success in the proceeding nor is there any evidence before me to suggest that costs have been increased as a result of any unreasonable conduct by Mr Banks.
- Mr Banks in his submissions places some reliance on what he says were DBI’s relatively poor prospects of success in the proceeding. It is not possible to assess the parties eventual prospects of success in the proceeding particularly as only Mr Banks had filed his statements of evidence.
- DBI could not be said to have acted unreasonably in commencing the proceeding nor did Mr Banks act unreasonably in defending the proceeding. That the QBCC withdrew the Direction to Rectify was not determinative of whether work carried out by Mr Banks was defective. This was ultimately a matter for the Tribunal to determine. Nor could it be said that the conduct of Mr Banks precipitated the application by DBI. Mr Banks maintained that the work he carried out was not defective. He considered the actions by the QBCC in withdrawing the Direction to Rectify lent support to his position. It was not unreasonable that he did so.
- This is clearly a case in which DBI has surrendered to Mr Banks rather than there having occurred a supervening event or settlement removing or modifying the subject of the dispute. There remains an issue in dispute between the parties regarding the building works performed by Mr Banks. This much is made clear by Mr Boyd in his affidavit in which he states that he still considers the work performed by Mr Banks to be defective and had he known of the possible costs consequences flowing from the withdrawal of the application he would not have discontinued the proceeding.
- The subjective considerations referred to by Mr Boyd for withdrawing the application, principally the difficulties experienced by Mr Boyd in coping with the death of his father, are irrelevant. There is no evidence before me to suggest that these were matters raised with Mr Banks before the filing of the Notice of Withdrawal or that Mr Banks had any knowledge of Mr Boyd’s subjective motivations in discontinuing the proceeding.
- As the QCAT Appeal Tribunal has observed, in building disputes the Tribunal may make an order for costs that is justified in the circumstances. An order that costs follow the event can be consistent with the overall justice of the case.
- In my view, weighing all of the relevant considerations, it is appropriate that DBI should pay Mr Banks’ costs.
Should costs be on the standard or indemnity basis?
- Mr Banks seeks his costs on the indemnity basis. Circumstances which might give rise to an order for indemnity costs were identified by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd:
- where allegations of fraud have been made knowing them to be false and the making of irrelevant allegations of fraud;
- evidence of particular misconduct that causes loss of time to the court and to other parties;
- the fact that the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;
- the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;
- an imprudent refusal of an offer to compromise.
- As Sheppard J noted in Colgate-Palmolive, the question is whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. The justification for an award of indemnity costs requires some special or unusual feature of the particular case.
- For the reasons I have set out, the circumstances do not warrant the making of an order for costs on the indemnity basis. Mr Banks is entitled to recover his costs of the proceeding on the standard basis and I order accordingly.
Assessing the costs
- The Tribunal should fix costs if possible. It is not possible, in the absence of further submissions from the parties, for me to do so. I direct the parties to file submissions on the assessment and fixing of costs in accordance with these reasons. Upon the filing of those submissions, final orders will be made in relation to the costs of the proceeding.
Letter QBCC to DBI dated 20.06.16.
Direction to Rectify dated 13.10.16.
Notice of Withdrawal dated 30.05.17.
Directions made 23.03.17.
Application for Miscellaneous Matters filed 23.06.17.
Notice of Withdrawal filed 11.07.17.
Affidavit of Anthony John Boyd sworn 04.09.17.
Ibid, 4 .
QCAT Act, s 100.
QBCC Act, s 77(3)(h).
Lyons v Dreamstarter Pty Ltd  QCATA 142, 7 ,  citing Oshlak v Richmond River Council (1998) 193 CLR 72 at 88 and Latoudis v Casey (1990) 170 CLR 534 at 557.
Lyons v Dreamstarter Pty Ltd  QCATA 071, 3 – citing Tamawood Ltd v Paans  QCA 111, per Keane JA at , Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at , Latoudis v Casey (1990) 170 CLR 534 and Donald Campbell & Co v Pollak (1927) AC 732 at 811-12.
Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No. 2)  QCAT 497.
QCAT Act, s 107(1)
Ibid s 107(2).
UCPR, r 307.
QCAT Act, s 46(1).
Ibid, s 46(2).
QCAT Rules, r 57A.
QCAT Act, s 106.
 QSC 342.
 NSWSC 1301.
Jvancich v Kennedy (No 2)  NSWCA 397.
(1993) 46 FCR 225.
LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo  QCA 305.
QCAT Act, s 107(1).
- Published Case Name:
DBI Group Pty Ltd v Wayne Leslie Banks T/A Wayne Banks Concreting
- Shortened Case Name:
DBI Group Pty Ltd v Wayne Leslie Banks
 QCAT 348
Senior Member Brown
13 Oct 2017