Serene Star Pty Ltd v D A Radic Pty Ltd
[2018] QCAT 357
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- Unreported Judgment
- Serene Star Pty Ltd v D A Radic Pty Ltd[2018] QCAT 357
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Serene Star Pty Ltd v D A Radic Pty Ltd[2018] QCAT 357
Serene Star Pty Ltd v D A Radic Pty Ltd[2018] QCAT 357
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION: | Serene Star Pty Ltd v D A Radic Pty Ltd [2018] QCAT 357 |
PARTIES: | SERENE STAR PTY LTD (applicant) |
| v |
| D A RADIC PTY LTD (respondent) |
APPLICATION NO: | BDL271-16 |
MATTER TYPE: | Building matters |
DELIVERED ON: | 24 October 2018 |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Senior Member Brown |
ORDERS: | In the absence of agreement between the parties as to the amount of costs within fourteen (14) days of the date of this order, the costs payable by D A Radic Pty Ltd to Serene Star Pty Ltd pursuant to the decision made 5 March 2018 are to be assessed on the standard basis in accordance with Schedule 3, Part 3 of the Uniform Civil Procedure Rules 1999 (Qld) applicable as at the time of the proceedings, and as if the matter was one that had been heard and decided by the Magistrates Court, by an assessor to be appointed by the tribunal. |
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – OFFERS OF COMPROMISE OR OFFER TO SETTLE OR CONSENT TO JUDGMENT PURSUANT TO RULES – GENERALLY – indemnity costs – power to order – whether interests of justice require an order for costs – where consent orders made compromising dispute – where consent orders require determination of basis upon which costs payable – consideration of scale on which costs should be assessed –whether offer more favourable to offeree than final outcome Queensland Building and Construction Commission Act 1991 (Qld), s 77(3)(h) Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 105, s 107(1), s 107(3) Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r 86 Uniform Civil Procedure Rules 1999 (Qld), Schedule 2, Schedule 3 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo [2013] QCA 305 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 Lyons v Dreamstarter Pty Ltd [2012] QCATA 071 Ricchetti & Ors v Lanbuilt Pty Ltd (No 2) [2012] QCATA 259 Salam & Anor v Henley Properties (QLD) Pty Ltd [2016] QCATA 98 |
REPRESENTATION: |
|
Applicant: | Barron & Allen Lawyers |
Respondent: | AJ & Co Lawyers |
APPEARANCES: |
|
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). | |
REASONS FOR DECISION
- [1]On 5 March 2018 the Tribunal made orders by consent resolving the dispute between the parties. The orders include that D A Radic Pty Ltd (Radic) pay the costs of Serene Star Pty Ltd (Serene Star) to be assessed. The only issue for determination is the basis upon which the costs should be assessed.
- [2]Serene Star says that the Tribunal should fix the costs in the amount of the costs and outlays it has paid to its solicitors, in effect an order for costs on an indemnity basis. Failing this, Serene Star says that the costs should be assessed on the District Court scale.[1] Radic says that costs should be assessed on scale F of the Magistrates Courts scale of costs.[2] Large parts of the submissions by the parties are directed to the substantive merits of their respective claims. It is appropriate therefore to consider briefly the nature and history of the dispute.
- [3]Serene Star filed an application for domestic building disputes claiming damages for breach of the warranties implied into regulated contracts by the Domestic Building Contracts Act 2000 (Qld) in respect of what it alleged was the defective construction of a pool deck and access stairs.[3] An amended application was filed by Serene Star in September 2017.[4] By that amended application, Serene Star alleged that the defective building work performed by Radic related to the pool deck and access stairs and a front landing area.
- [4]It is unnecessary for me to recount in detail the various directions made in the proceeding and the compliance (and non compliance) with those directions although it is appropriate to make some general observations. Serene Star was directed to file its statements of evidence, including expert evidence, by 26 June 2017.[5] On the date Serene Star had been given to comply with the direction, it filed an application for an extension of time to file its evidence. Directions were made requiring the filing by Serene Star of its evidence by 17 July 2017 failing which it was required to file submissions as to why the application should not be dismissed.
- [5]The expert evidence relied upon by Serene Star was not filed until 31 July 2017. Serene Star relied upon an expert report by Mr Dennis Dunn. The late filing of Serene Star’s evidence resulted in an application by Radic to vary the timetable for the filing of its evidence.
- [6]At a directions hearing on 30 August 2017 Serene Star was directed to file an amended application by 14 September 2017 and any other evidence it intended to rely upon by 28 September 2017. Radic was directed to file its statements of evidence by 26 October 2017. An experts’ conclave was listed for 27 November 2017. The amended application was filed, however Serene Star filed no further statements of evidence. Radic filed its expert evidence on 31 October 2017.[6]
- [7]As a result of non compliance by both parties with Tribunal directions regarding the conduct of the experts conclave, the matter was listed for a further directions hearing on 21 November 2017. At that time further directions were made to ensure that the experts’ conclave proceeded and directing the parties to file evidence addressing the cost of rectification works. The matter was listed for a hearing on 6 March 2018.
- [8]The parties subsequently sought orders by consent vacating the experts’ conclave and relisting the conclave on a later date. The experts’ conclave subsequently proceeded on 30 January 2018. The joint experts report identified that while the experts agreed Radic had performed the building works in an appropriate way the experts diverged in their opinions on a number of matters including whether appropriate building materials had been used. Both experts offered opinions on the cost of rectification work.
- [9]On 2 March 2018 the parties informed the Tribunal that they had reached a resolution of the dispute and sought orders by consent including that Radic pay Serene Star’s costs to be assessed.
The statutory framework and costs considerations generally
- [10]In proceedings in the Tribunal, other than as provided under the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act) or an enabling Act, each party must bear their own costs.[7] Here, the relevant enabling Act is the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act). By s 77(3)(h) of the QBCC Act, the Tribunal may, in exercising its powers to resolve a building dispute, award costs.
- [11]The tribunal may make a costs order in a building dispute that is justified in the circumstances. The discretion to award costs is a broad, general one and must be exercised judicially, not upon irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation.[8]
- [12]By s 105 of the QCAT Act, the Queensland Civil and Administrative Tribunal Rules 2009 (QCAT rules) may authorise the tribunal to award costs if an offer to settle has been made but not accepted. By r 86 of the QCAT rules if a party makes a written offer to settle a dispute which is not accepted by the offeree and the decision of the tribunal is not more favourable to the offeree than the offer, the tribunal may award the offeror all reasonable costs incurred by the offeror in conducting the proceeding after the offer was made. While the phrase ‘all reasonable costs’ has been held to refer to costs assessed on an indemnity basis,[9] an award of indemnity costs does not automatically follow a finding by the tribunal that the requirements of r 86 have been satisfied.[10]
- [13]In the present case, orders have been made by consent that Radic pay Serene Star’s costs of the proceeding. The issue for determination is the quantum of those costs. The Tribunal must fix costs if possible.[11] If it is not possible to fix the costs having regard to the nature of the proceeding, the tribunal may make an order requiring that the costs be assessed under the rules.[12] In determining whether to fix costs, the tribunal is required to undertake a process approaching an informal costs assessment.[13] Whether the tribunal can undertake to fix costs will depend upon a range of factors including the nature and complexity of the matter and the evidence before the tribunal in relation to the assessment of costs.
- [14]An applicant for an order for indemnity costs will generally be required to establish some special or unusual feature of the case to justify such an order.[14] The relevant principles guiding consideration as to the appropriateness of an order for indemnity costs are:
- (a)An order for costs other than on the standard basis ought not usually be made;
- (b)The circumstances of the particular case must warrant departure from the usual order. There should be some special or unusual feature in the case;
- (c)Circumstances justifying an order for indemnity costs include: making false or irrelevant allegations of fraud; misconduct causing loss of time to the court and other parties; commencing proceedings for an ulterior motive or in wilful disregard of known facts or clearly established law; making allegations that should not be made; unduly prolonging a matter on the basis of groundless contentions; imprudent refusal of an offer to settle;
- (d)The existence of facts and circumstances capable of warranting an order for indemnity costs does not mean that a court is obliged to make such an order. The discretion to award costs must be exercised judicially having regard to the relevant principles.[15]
- (a)
- [15]These principles may also be relevant considerations when the tribunal is called upon to exercise the discretion under r 86.
What do the parties say?
- [16]Serene Star says that the costs should be awarded on an indemnity basis. Serene Star refers to what it says was Radic’s ‘frivolous opposition’ to its claim and says that Radic’s conduct was poor, stubborn, frivolous or vexatious. The submissions by Serene Star focus principally upon two aspects of the manner in which Radic defended the claim: the assertion by Radic that Serene Star’s claim based on breach of the statutory warranties was made out of time; Radic unreasonably pursuing its defence of the claim when the overwhelming weight of the evidence supported Serene Star’s claim.
- [17]Radic says that the claim by Serene Star changed considerably during the proceeding. Radic points to the original application and the claim by Serene Star that the entire pool deck required replacement noting that the claim for the cost of rectification work was not otherwise particularised in the application. Radic says that Serene Star filed no expert evidence until after Radic had brought an application to dismiss the proceeding. Radic says that the claim as originally brought by Serene Star was ‘grandiose’, ‘unsubstantiated’ and ‘without any evidential foundation’ and that it was not until Serene Star obtained expert evidence that it addressed ‘the real issues’.
Consideration
- [18]In its original application Serene Star claimed that Radic breached the warranties implied into the building contract entered into between the parties. Serene Star said that the building works were not performed in accordance with the plans and specifications; that Radic failed to supply and use building material fit for purpose; that Radic failed to install a waterproof membrane over the concrete sheeting and/or access stairs for the pool deck area and to access the pool deck area. Serene Star also claimed in negligence. Serene Star did not particularise the damages claim in the original application on the basis that it was obtaining ‘an expert report as to the costs of removing the pool deck area and then having it constructed again’.[16] The application identified that the building work was completed on 11 June 2010.[17]
- [19]In its response Radic claimed, among other things, that Serene Star’s claim for breach of warranty had been commenced out of time.
- [20]Serene Star subsequently amended its claim to include, among other things, a claim for defective construction of a front landing area and to particularise the claim for damages arising out of the alleged defective building work. This amendment followed the filing by Serene Star of its statements of evidence including its expert evidence.
- [21]The amended claim was significantly different to the original claim both in scope and particulars. Whereas the original claim encompassed the removal of the entire pool deck, the amended claim restricted the pool deck claim to one relating to the stairs to the pool deck however added a claim in respect of the construction of a front landing.
- [22]After Radic filed its evidence there followed an experts conclave and the preparation and filing of a joint experts’ report. The matter was listed for a hearing and, as I have observed, the parties settled the dispute before the hearing.
- [23]I am able to discern no unusual or special feature of this matter that would justify a departure from an order for the assessment of costs on the standard basis. No false or irrelevant allegations of fraud or inappropriate allegations generally were made by Radic nor is there any suggestion of misconduct by Radic. There was, in my view, no conduct by Radic that could be said to have unduly prolonged the matter on the basis of groundless contentions. As to the respective strengths of the parties positions, as the matter did not proceed to hearing, the evidence, particularly that of the experts, was not tested. It is not appropriate in an application such as this to undertake an assessment of the evidence in order to form a view as to the likelihood of success in the litigation by either of the parties in circumstances where the evidence was contested.
- [24]Serene Star says it made a number of offers to settle the proceeding.[18] The first offer to settle was on the basis that Radic pay to Serene Star $13,000 for damages and costs to be assessed on the District Court scale (‘the first offer’). I am unable to determine whether the final outcome is not more favourable to Radic than the first offer until I consider whether Radic should pay Serene Star’s costs to be assessed on the District Court scale. I will return to the first offer later in these reasons. The second offer was on the basis that Radic pay to Serene Star $13,000 for damages and costs fixed in the amount of $13,000. As the costs payable by Radic to Serene Star are yet to be assessed, and in the absence of any evidence as to what that assessment might be, I cannot form a view one way or the other as to whether the offer is more favourable than the final outcome. The final offer by Serene Star was that Radic pay $6,000, remove and rebuild the rear stairs and pay costs fixed in the amount of $13,000. This offer could not be said to be more favourable than the final outcome.
- [25]On what basis should the costs be assessed? As I have observed, the claim by Serene Star as originally framed encompassed the replacement of the entire pool deck with an unspecified claim for damages. After filing its evidence, it became apparent that the scope of the claim by Serene Star was in some respects far more limited, encompassed a claim not previously articulated and was modest insofar as the damages claimed were particularised.
- [26]The amount claimed by Serene Star was $18,611. The dispute was resolved on the basis that Radic pay to Serene Star an amount of $15,000. The claim by Serene Star was a modest one in terms of quantum. The proceeding was in respect of a standard building dispute, limited in respect of the scope of the alleged defective work and modest in terms of quantum. There was nothing complex about the matter. The fact that both parties had been granted legal representation does not of itself justify an order that costs be assessed on the District Court scale.
- [27]The tribunal has previously accepted that lump sum scales are less suitable for assessing costs than itemised scales.[19] I concur with this view. Taking all matters into consideration, the costs payable by Radic to Serene Star should be assessed on the standard basis in accordance with Schedule 3, Part 3 of the Uniform Civil Procedure Rules 1999 (UCPR) applicable as at the time of the proceedings and as if the matter had been one conducted in the Magistrates Court (which I will refer to as the itemised Magistrates Courts scale).
- [28]I now return to the first offer. The offer by Serene Star was for Radic to pay $13,000 plus costs assessed on the District Courts scale. I have decided that the costs payable by Radic should be assessed on the itemised Magistrates Courts scale. Unless the costs are assessed on both the District Courts scale and the Magistrates Courts itemised scale it is not possible to form a view one way or the other whether the final outcome is, in an overall sense, more favourable to Radic than the first offer. That is to say, unless an assessment of costs is undertaken as I have referred to, it is not possible to conclude that the first offer of $13,000 plus costs on the District Courts scale is more favourable to Radic than an outcome whereby Radic pays $15,000 plus costs on the itemised Magistrates Court scale. Accordingly I am not satisfied that, in respect of the first offer, the operation of rule 86(1) of the QCAT rules has been enlivened.
- [29]The final orders will allow the parties the opportunity to reach an agreement on the quantum of the costs. If agreement cannot be reached, the costs will be assessed.
Final orders
- [30]I order that:
- (a)In the absence of agreement between the parties as to the amount of costs within fourteen (14) days of the date of this order, the costs payable by D A Radic Pty Ltd to Serene Star Pty Ltd pursuant to the decision made 5 March 2018 are to be assessed on the standard basis in accordance with Schedule 3, Part 3 of the Uniform Civil Procedure Rules 1999 (Qld) applicable as at the time of the proceedings, and as if the matter was one that had been heard and decided by the Magistrates Court, by an assessor to be appointed by the tribunal.
- (a)
Footnotes
[1] UCPR, Schedule 2.
[2] Ibid, Schedule 3.
[3] Application for domestic building disputes filed 14 October 2016.
[4] Amended Annexure A filed 14 September 2017.
[5] Direction 2 of the Directions made 29 May 2017.
[6] Report by Leigh Garrett dated 30 October 2017.
[7] QCAT Act, s 100.
[8] Lyons v Dreamstarter Pty Ltd [2011] QCATA 142.
[9] Lyons v Dreamstarter Pty Ltd [2012] QCATA 071.
[10] McGee v Queensland Building and Construction Commission & Anor [2018] QCATA 124.
[11] QCAT Act, s 107(1).
[12] Ibid, s 107(3).
[13] Ricchetti & Ors v Lanbuilt Pty Ltd (No 2) [2012] QCATA 259.
[14] LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo [2013] QCA 305.
[15] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
[16] Application for domestic building disputes filed 14 October 2016, Annexure ‘A’ at 5(i).
[17] Application for domestic building disputes filed 14 October 2016, Part B.
[18] Affidavit of Blayne Ledger filed 26 March 2018.
[19] Salam & Anor v Henley Properties (QLD) Pty Ltd [2016] QCATA 98.