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TLL Investment Pty Ltd v The Body Corporate for the Grange (No 2) QCAT 444
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993 (No 2)  QCAT 444
TLL INVESTMENT PTY LTD
THE BODY CORPORATE FOR THE GRANGE CTS 30993
Other civil dispute matters
11 December 2018
On the papers
The Body Corporate for the Grange CTS 30993 must pay to TLL Investments Pty Ltd the costs of and incidental to the proceeding, including reserved costs and costs of the counterclaim, on the standard basis fixed in the amount of $307,130.86.
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – GENERAL PRINCIPLES AND EXERCISE OF DISCRETION – where body corporate restrained from terminating caretaking agreements – where finding that objective of purported termination was to obtain a financial advantage – whether a costs order should me made – whether costs should be awarded on the Supreme Court scale – whether costs should be awarded on an indemnity basis – whether costs should be fixed
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 100, s 102, s 107
Ascot v Nursing and Midwifery Board of Australia  QCAT 364
Cruceru v Medical Board of Australia  QCAT 111
Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor (No 2)  QCATA 172
Latoudis v Casey (1990) 170 CLR 534
Legal Services Commissioner v Foster  QCAT 101
Queensland Racing Integrity Commission v Vale  QCATA 110
Ralacome Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)  QCAT 412
TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993  QCAT 12
TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993  QCAT 318
Todrell Pty Ltd v Finch & Ors; Croydon Capital Pty Ltd v Todrell Pty Ltd & Anor  QSC 386
Warren v Queensland Law Society Incorporated (No 2)  QCAT 234
B Kidston, instructed by Mahoneys
N Shaw, instructed by Macpherson Kelley
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
- In my decision in TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993, I began by quoting Abraham Lincoln on the desirability of avoiding the costs of litigation. I noted that, on the evidence then before me, the Body Corporate for the Grange (‘the Body Corporate’) had allocated funds of approximately $130,000 and TLL Investment Pty Ltd (‘TLL’) had spent over $100,000 in relation to the proceedings.
- TLL, which was wholly successful in the proceedings, filed an application for miscellaneous matters on 11 October 2018 seeking its costs. In making this decision, I have had the benefit of written submissions from both parties.
- Section 100 of the Queensland Civil and Administrative Act 2009 (Qld) (‘the QCAT Act’) sets out the starting point in relation to costs:
Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.
- Section 102 of the QCAT Act permits the Tribunal to depart from this position if the interests of justice require it to make a costs order:
(1) The tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice require it to make the order.
(2) However, the only costs the tribunal may award under subsection (1) against a party to a proceeding for a minor civil dispute are the costs stated in the rules as costs that may be awarded for minor civil disputes under this section.
(3) In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following—
(a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);
(b) the nature and complexity of the dispute the subject of the proceeding;
(c) the relative strengths of the claims made by each of the parties to the proceeding;
(d) for a proceeding for the review of a reviewable decision—
(i) whether the applicant was afforded natural justice by the decision-maker for the decision; and
(ii) whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits;
(e) the financial circumstances of the parties to the proceeding;
(f) anything else the tribunal considers relevant.
- In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2), Wilson J stated:
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 1.
The circumstances of cases in which s 102 has been applied are many and various, and a finding that any particular set is “compelling” is a matter of judgment and degree.
- In Ascot v Nursing and Midwifery Board of Australia, Kingham DCJ noted:
The considerations identified in s 102(3) are not grounds for awarding costs. They are factors that may be taken into account in determining whether, in a particular case, the interests of justice require the tribunal to make a costs order.
- Section 107 of QCAT Act contains the following additional provisions in relation to costs:
(1) If the tribunal makes a costs order under this Act or an enabling Act, the tribunal must fix the costs if possible.
(2) 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.
(3) The rules may provide that costs must be assessed by reference to a scale under the rules applying to a court.
- In Cruceru v Medical Board of Australia, the Hon J B Thomas stated that:
[T]he discretion to fix costs under s 107 is an extremely wide one and is to be exercised robustly. The fixation of a round or approximate sum will often be a preferable option to increasing costs and wasting money and effort in the production of itemised assessments.
Should a costs order be made?
- In my decision in the substantive proceedings, I found that:
[T]he Body Corporate committee’s objective by at least 13 February 2017 was to terminate the East and West Agreements on the basis that they perceived a financial advantage in doing so.
- In making that finding, I relied in part on the following statement of the Body Corporate committee to the owners:
The owners of properties at The Grange, Brendale (you) pay a caretaker nearly half a million dollars a year. This is an absolutely ridiculous amount of money when you consider that all TLL (Ms Lu) does is mow the grass (and not very well), clean the pools (even in the hottest of weather when the pools go merky (sic), nobody checks or adjusts the chlorine level), and they pay a lady $20/day to clean the 5 pool toilets. We can get individual contractors to do these jobs for far less than $100,000/year and yet we have to pay by way of a terrible contract (for another 20 years!) $500,000 a year, which will exceed $700,000 per year before this contract ends. This is very wrong and not at all beneficial to you, the owners!
Caretakers don’t buy a contract to help us or to clean our toilets or pools – they buy it because they will be assured of a massive income (your money) every year. Why should we make a caretaker a millionaire every 2 years. By the year 2038 we will have had to pay over $12 million. We could save over $300,000 every year by not having a caretaker.
- I also relied on the following statement of the then chairman of the Body Corporate, Stephen O'Pray, in a letter circulated to owners:
We have worked very hard for the last five years and we’ve achieved more than most could possibly hope for. BUT there’s one, and only one, massive milestone we would like to achieve on behalf of owners. We need to rid ourselves of this blood-sucking dysfunctional and truly unfair caretaker’s contract. It’s bleeding us absolutely dry! We have for the past 13-14 years paid in excess of $7,000,000 and will have to pay – by contract – another $10,000,000 or more – currently to the year 2033! Yes – the year 2033! For all this, we get very little work done. The so-called caretaker won’t even deliver an entry notice for owners and we and very very many other have had enough. I have never seen such terrible work ethics in my life.
I will tell you know that I have but one major achievement that I intend to attain should you continue to vote for me as your chairman – and that is to rid ourselves and The Grange of the caretaking/letting contracts that are destroying us. I can, and I will, with your support achieve this end. Of this I am very sure. This – and I won’t lie to you – could cost a considerable amount of money, but bear in mind the end result will save us millions of dollars ultimately!
- On the basis of these statements, the Body Corporate stood to save over $300,000 per year until at least 2033 if it was successful in terminating the caretaking agreements.
- Contrary to TLL’s submissions, there is nothing unlawful per se about this objective. However, it seems to me that where termination is pursued for the purposes of a obtaining a financial advantage, the party pursuing the termination should not escape the financial disadvantage of having to pay a costs order if they are unsuccessful. As McHugh J observed in Latoudis v Casey, “[t]he rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred”.
- Indeed, the evidence before me is that TLL had to take out multiple loans totalling $410,000 in order to fund the proceedings and defend itself against the purported termination by the Body Corporate. Without a costs order, TLL will be left to service and repay the full amount of these loans in the wake of the Body Corporate’s failed attempt to secure for itself a multi-million dollar saving.
- The Body Corporate has provided evidence that it would have to impose a special levy on owners of approximately $1,100 to $1,500 to pay any costs order. The annual levies currently payable by owners are $3,648.50 (or discounted to $3,283.92 if paid on or before the due date). It is submitted that a special levy would result in undue hardship to the owners. This submission may have some merit had the decision to terminate the caretaking agreements been made without reference to the owners. However, the owners voted on two occasions, on 26 June 2017 and 19 March 2018, to terminate the caretaking agreements.
- The hearing before me lasted for 10 days, and included the cross-examination of lay and expert witnesses by both parties. Both parties were represented by competent Counsel. Ipso facto, the proceeding was at the upper end of the range of complexity of matters dealt with by the Tribunal.
- In my decision, I found that each of the five Remedial Action Notices (‘RANs’) relied on by the Body Corporate were invalid, and that none of the other grounds relied upon were available to the Body Corporate as a basis for terminating the caretaking agreements. I was not required to make findings in relation to the alleged failures by TLL to carry out duties under the caretaking agreements, or the allegations that TLL engaged in misconduct or gross negligence.
- I am not satisfied that the Body Corporate has acted in ways that unnecessarily disadvantaged TLL, except in the following respect. On 15 November 2017, the Body Corporate ceased paying the remuneration payable to TLL under the caretaking agreements. In granting a mandatory injunction requiring that the Body Corporate continue to make payments to TLL pursuant to the caretaking agreements, Member Gardiner made the following observations about the Body Corporate conduct:
TLL says it cannot meet its obligations to its banker without being paid the remuneration it is entitled to pursuant to the Caretaking Agreements. TLL says the caretaking agreements have a further 10 years to run.
The matter is set for a long final hearing in the tribunal in August of 2018. If the Body Corporate refuses to pay the caretaker fees until that time, the submission lead (sic) to the strong possibility that TLL, starved of income, will not be in a position to argue its case before this tribunal at the hearing – assuming that it has not gone into liquidation by then in any event.
I am satisfied that the balance of convenience favours the injunction. Without an injunction, the risk is that great injustice may be caused to TLL because of the financial ramifications of non-payment of the caretaking fees.
The Body Corporate has adopted a unilateral course of failing to make regular payments which it is contractually bound to make. It has done so without seeking any entitlement to do so, for example by bringing an application for a declaration that it is not required to make further payment … I do not consider the Body Corporate has adopted an appropriate course by unilaterally breaching its contractual obligations.
- Having regard to all the circumstances of the case, including the matters identified in s 102(3) of the QCAT Act, I am satisfied that the interests of justice point compellingly to a costs award being made in favour of TLL.
What scale should costs be awarded on?
- TLL has sought costs on the Supreme Court scale. The Tribunal has awarded costs on the Supreme Court scale in cases heard by a Supreme Court judge. That is not the position in the present proceedings.
- In Fast Access Finance (Beaudesert) Pty Ltd and Anor v Charter and Anor (No 2), Dr J R Forbes observed that the Tribunal “usually applies the District Court scale”. I see no reason to depart from this practice. I will apply the District Court scale in this case.
Should costs be awarded on an indemnity basis?
- TLL has sought costs on an indemnity basis. In Todrell Pty Ltd v Finch & Ors; Croydon Capital Pty Ltd v Todrell Pty Ltd & Anor, Chesterman J adopted as the test for awarding costs on an indemnity basis “whether there was something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis”.
- In my view, the circumstances do not warrant the making of an indemnity costs order. Notwithstanding what I have said about the Body Corporate’s objective in terminating the caretaking agreements, I do not consider that its conduct has been so irresponsible as to justify such an order.
Should costs be fixed?
- TLL filed an affidavit of Mitchell James Downes sworn on 11 October 2018. Mr Downes deposes to having been admitted as a legal practitioner in Queensland in 2010, and to have practised exclusively in commercial litigation and insolvency. He expressed the following opinion:
Costs assessed on the standard basis of assessment on the Supreme/District Court scale of costs return approximately 70% of the actual legal costs incurred by the client when calculated on a time costed basis, plus disbursements.
- The Body Corporate relied on an affidavit of Christian Hendrik Dreyer sworn on 9 February 2018. Mr Dreyer deposes to having been admitted as a legal practitioner in 1996, and having practised in Queensland since 2012. He practises exclusively in commercial litigation and expressed the following opinion:
In my experience the recovery of costs and disbursements are peculiar to each matter and subject to the application of principles of cost assessment. Various factors come into play, amongst other things, the composition of the fees charged with reference to hourly rates of the practitioners that did the work, the reasonableness of the rates of those practitioners, the necessity and reasonableness of the required involvement of those practitioners, duplication, the complexity and nature of the matter, the nature of proceedings, the applicable scale of costs, the basis of assessment, to name a view (sic).
In my experience, whereas one can estimate the return of actual legal costs incurred, there is no basis for the rule of thumb advanced by Mr Downes, it will invariably differ because of the application of the principles of cost assessment. In my experience recovery of actual legal costs incurred is significantly lower, morel (sic) likely somewhere between 60% and 65%.
- Notwithstanding Mr Dreyer’s reservations about applying a percentage approach, the collective evidence of Mr Downes and Mr Dreyer indicates that, as a general rule, costs assessed on the standard basis will likely be between 60% and 70% of the actual costs. I will adopt the midpoint of this range, and use a percentage estimate of 65%. I note that is within the range put forward by Mr Dreyer.
- The Body Corporate opposes costs being fixed. Paragraph 51 of its submissions dated 13 November 2018 sets out a number of charges in the tax invoices of TLL’s solicitors in respect of which the Body Corporate has concerns. In my view, those concerns do no more than reflect the evidence that a deduction in the order of 35% from the amount billed would be likely to result from an assessment on the standard basis. Further, I note that once GST is added, the Body Corporate’s own legal costs are within $2,500 of TLL’s costs.
- The Body Corporate objected to the inclusion in any costs order of reserved costs from the injunction application heard on 20 December 2017 and the costs of the Body Corporate’s counterclaim. TLL was successful in obtaining an injunction, and the Body Corporate’s counterclaim was withdrawn prior to the trial. In my view, there is no basis for excluding either of these costs from the order.
- It seems to me that the parties have already incurred enough costs without increasing those costs by embarking on the lengthy and expensive process of preparing and submitting an itemised assessment. Such an outcome would not be consistent with objects set out in s 3 of the QCAT Act, which include having the Tribunal deal with matters in a way that is “accessible, fair, just, economical, informal and quick”. If the Tribunal makes a costs order, the costs must be fixed if possible. In these circumstances, I fix the standard costs and outlays at $307,130.86.
- I order that the Body Corporate pay TLL’s costs of and incidental to the proceeding, including reserved costs and costs of the counterclaim, on the standard basis fixed in the amount of $307,130.86.
 QCAT 318, -.
Affidavit of Wendy Lee Kirby sworn on 9 November 2018, para 27.
Affidavit of Mitchell James Downes sworn on 11 October 2018, paras 13 and 17.
 QCAT 412, .
 QCATA 110, .
 QCATA 172, .
 QCAT 364, .
 QCAT 111, .
 QCAT 318, .
Affidavit of Ms Lu sworn on 6 August 2018, exhibit LKL-3, pp 68 and 71.
Ibid, p 62.
(1990) 170 CLR 534, 567.
Affidavit of Katherine Lu sworn on 11 October 2018, para 3(e).
Affidavit of Wendy Lee Kirby sworn on 9 November 2018, para 34.
 QCAT 318, .
 QCAT 318,  and .
TLL Investment Pty Ltd v The Body Corporate for The Grange CTS 30993  QCAT 12, -, , , .
See, eg, Warren v Queensland Law Society Incorporated (No 2)  QCAT 234; Legal Services Commissioner v Foster  QCAT 101.
 QCATA 172, .
 QSC 386, .
Paragraphs 3(c) and (d).
- Published Case Name:
TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993 (No 2)
- Shortened Case Name:
TLL Investment Pty Ltd v The Body Corporate for the Grange (No 2)
 QCAT 444
11 Dec 2018