Silastone Trading Pty Ltd v Body Corporate for Q1 (No 2)
[2018] QCAT 47
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- Unreported Judgment
- Silastone Trading Pty Ltd v Body Corporate for Q1 (No 2)[2018] QCAT 47
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Silastone Trading Pty Ltd v Body Corporate for Q1 (No 2)[2018] QCAT 47
Silastone Trading Pty Ltd v Body Corporate for Q1 (No 2)[2018] QCAT 47
CITATION: | Silastone Trading Pty Ltd v Body Corporate for Q1 and Anor (No 2) [2018] QCAT 47 |
PARTIES: | Silastone Trading Pty Ltd (Applicant) v Body Corporate for Q1 CTS 34498 (First Respondent) and Q1 Management Pty Ltd (Second Respondent) |
APPLICATION NUMBER: | BDL242-16 |
MATTER TYPE: | Building matters |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Member Howe |
DELIVERED ON: | 2 March 2018 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
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CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – where both parties partially successful in their respective claims – where applicant to be viewed as the successful party – offers to settle under r 86 of the Queensland Civil and Administrative Rules 1999 (Qld) – whether the offers complied with the requirements of r 86 of the Queensland Civil and Administrative Rules 1999 (Qld) – where an offer prior to proceedings being instituted – where offer not in writing – where an offer failed to ensure the proposed compromise extended to all parties before the tribunal Queensland Building and Construction Commission Act 1991 (Qld), s 77(3)(g) Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 105, s 107(1) Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r 86 AKS Investments Pty Ltd & Anor v National Australia Bank & Anor (No2) [2012] QSC 282 Fick v Groves (No. 2) [2010] QSC 182 Giller v Procopets (No. 2) [2009] VSCA 72 Gilsan v Optus (No 4) [2005] NSWSC 1073; Lyons v Dreamstarter Pty Ltd [2012] QCATA 071 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 Lyons v Dreamstarter Pty Ltd & Anor [2016] QCATA 43 Oshlack v Richmond River Council (1998) 193 CLR 72 State of Queensland v Hayes (No 2) [2013] QSC 80 |
APPEARANCES: |
|
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).
REASONS FOR DECISION
- [1]By an order made 17 August 2017 following hearing, the Body Corporate for Q1 CTS 34498 (Q1), the body corporate owner of the property, was ordered to pay the applicant builder $5,978.50 plus interest of $669.60. The parties were asked to file submissions on costs, and if no application for costs was made Q1 was to pay the builder’s limited costs claimed in the applicant’s initial application of $481.80.
- [2]The builder and Q1 have however filed submissions on costs.
- [3]Both the builder and Q1 agreed at hearing that no order should be made against the second respondent, Q1 Management Pty Ltd, and no party has sought a contribution to costs from that party, nor has Q1 Management Pty Ltd applied for costs.
- [4]The builder submits it made three written offers of settlement to Q1 and appropriately an order for indemnity costs should be made against Q1 in the builder’s favour.
- [5]Q1 submits r 86 of the Queensland Civil and Administrative Rules 2009 (Qld) (QCAT Rules) do not apply to two of the claimed written offers by the builder and in respect of the third it was reasonable on its part to reject the offer of settlement.
The Parties’ Claims
- [6]The builder commenced proceedings to recover a balance sum of $8,800 owing in respect of concreting work performed at Q1’s residential and holiday resort. Q1 refused to pay and counterclaimed for the cost of rectification of defective work with costs ranging from $23,836 to $41,816 plus GST.
- [7]The builder succeeded in its claim to balance monies owing and Q1 succeeded in setting off from that amount a sum of $2,821.50 to cover the costs of sealing isolation joints in the slab.
- [8]There was no order sought against Q1 Management Pty Ltd by either of the other parties at hearing.
Cost orders
- [9]Both parties were successful in part, and similarly in part unsuccessful. The builder’s claim to $8,800 was reduced by $2,831.50 for the cost of sealing the isolation joints in the slab. Q1’s claim was very much reduced from the damages claimed of up to $41,816 to the sum awarded against the builder for the sealing of the isolation joints.
- [10]Q1 was not unsuccessful in its claim, with the contractor being found to have breached its warranty to carry out the work in an appropriate and skilful way and with reasonable care and skill. The damages sought by Q1 for rectification of that breach however were excessive in the circumstances.
- [11]The matter was not without its complexities and it was appropriate to engage legal representatives. Generally, the builder should be regarded as the successful party in the action however. The substantial part of the hearing concerned the claim by Q1 against the builder for defects which were found in large part to be insubstantial and not to threaten the structural integrity of the slab as claimed. The builder had at all times refuted those claims.
- [12]Had no additional costs been claimed by the parties, the very limited costs of $481.80 claimed in the initial application by the builder would have been ordered to be paid to the builder by Q1. The builder seeks greater costs than that now however, which is reasonable in the circumstances.
- [13]Without assertions of offers of settlement under r 86 of the QCAT Rules, in light of the success of the builder in its action and its success in refuting the claim of the owner Q1 to large damages, I conclude it would be appropriate to allow the builder two thirds of its costs of the action on a standard basis against Q1.
- [14]However, there are offers of settlement under r 86 to be considered, one on 29 February 2016, one on 21 February 2017 and the third on 5 June 2017.
The Legislation
- [1]Section 77(3)(g) of the Queensland Building and Construction Commission Act 1991 (Qld) allows the Tribunal to award costs in building disputes.
- [2]Section 105 of the QCAT Act provides the QCAT Rules may authorise the Tribunal:
…to award costs in other circumstances, including for example, the payment of costs in a proceeding if an offer to settle the dispute the subject of the proceeding has been made but not accepted.
- [3]By r 86 of the QCAT Rules:
Additional power to award costs if particular offers to settle rejected
- (1)This rule applies if—
- (a)a party to a proceeding, other than a proceeding for a minor civil dispute, makes another party to the proceeding a written offer to settle the dispute the subject of the proceeding; and
- (b)the other party does not accept the offer within the time the offer is open; and
- (c)in the opinion of the tribunal, the decision of the tribunal in the proceeding is not more favourable to the other party than the offer.
- (2)The tribunal may award the party who made the offer all reasonable costs incurred by that party in conducting the proceeding after the offer was made.
- (3)If a proceeding involves more than 2 parties, this rule applies only if the acceptance of the offer would have resulted in the settlement of the matters in dispute between all the parties.
- (4)In deciding whether a decision is or is not more favourable to a party than an offer, the tribunal must—
- (a)take into account any costs it would have awarded on the date the offer was given to the other party; and
- (b)disregard any interest or costs it awarded relating to any period after the date the offer was given to the other party.
- [4]Rule 86 of the Rules is intended to encourage settlement. The power to award “all reasonable costs incurred by that party in conducting the proceeding after the offer was made” in r 86(2) should be construed as allowing costs on an indemnity basis.[1]
- [5]The power to grant indemnity costs is still discretionary however, and the power is to be exercised “…judicially in accordance with established principle and factors directly connected with the litigation.”[2]
- [6]The making of an offer to settle in favour of an applicant who rejects the offer but who subsequently fails in his claim at hearing does not necessarily entitle the respondent making the offer to costs on an indemnity basis.[3] One must also determine whether the rejection of the offer was reasonable in the circumstances.[4]
- [7]What circumstances are to be considered? Applegarth J referred to the following in Fick v Groves (No 2):[5]
- (a)the stage of the proceeding at which the offer was received;
- (b)the time allowed to the offeree to consider the offer;
- (c)the extent of the compromise offered;
- (d)the offeree’s prospects of success, assessed as at the date of the offer;
- (e)the clarity with which the terms of the offer were expressed;
- (f)whether the offer foreshadowed an application for an indemnity costs order in the event of the offeree’s rejecting it.
- [8]Calderbank offers have been accepted as relevant to the exercise of the discretion concerning costs provided for in r 86 of the QCAT Rules.[6]
- [9]But there is a difference between Calderbank offers and offers falling within r 86 of the QCAT Rules. A Calderbank offer may be oral,[7] but an offer under rule 86 must be in writing. Further a Calderbank offer is generally labelled “Calderbank” and the phrase “without prejudice save as to costs” appended. There is no such requirement for r 86 to apply.
- [10]The Tribunal’s discretion granted under r 86 is somewhat akin to the formal offer provisions to be found in Chapter 9. Part 5 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR). However, whereas the UCPR provides that costs of a proceeding are in the discretion of the court but follow the event unless the court orders otherwise,[8] that provision is not to be found in the QCAT Act.
The Offers
- [11]Neither the written offer of 29 February 2016 nor the oral offer of 21 February 2017 comply with the requirements of r 86 of the QCAT Rules.
- [12]Rule 86 refers to a party to a proceeding making a written offer to settle the dispute the subject of the proceeding. “Proceeding” is defined in Schedule 3 of the QCAT Act as a proceeding before the tribunal. The offer of settlement was made some 7 months before proceedings were instituted. There was no proceeding before the tribunal at the time of the first offer, and the second offer fell far short of what surely constituted an offer in writing pursuant to r 86. The writing consisted of an email which said simply “Attached quote as discuss (sic) this morning”. The verbal discussion is not set out.
- [13]That leaves the third offer of 21 February 2017. That offer was in writing and the reference in the letter was to Silastone Trading Pty Ltd v Body Corporate for Q1 CTS 34498 Q1 Management Pty Ltd. The reference there is telling. There were two respondents to the builder’s claim. Q1 is a separate legal entity to Q1 Management Pty Ltd and at hearing the following exchange occurred. Mr Ivessa of counsel said he appeared for the builder. Mr Preston said he appeared for Q1. In answer to my query concerning Mr Preston appearing for only one respondent, Mr Ivessa responded:
Member, if I can assist, Mr Peter Frawley, Director of the second respondent is present in the back of the court. … His role today, I anticipate being largely that of a witness. No relief is sought against – by or against that respondent.
- [14]Q1 Management Pty Ltd was joined as a respondent to the action from outset, remained a party throughout the conduct of the litigation through to hearing. The claim for payment of the outstanding moneys due the builder for the concreting work was brought against both respondents. Q1 Management Pty Ltd was a party referred to in the letter of offer of 21 February 2017 although the offer there clearly involved only the builder and Q1. It did not extend to Q1 Management Pty Ltd. The solicitors for Q1 never acted for Q1 Management Pty Ltd.
- [15]By r 86(3), it is a requirement of the provision that if a proceeding involves more than two parties, r 86 applies to the offer only if the acceptance of the offer would have resulted in the settlement of the matters in dispute between all the parties. The reference to all the parties here meant the offer had to extend to Q1 Management Pty Ltd as well and the offer is entirely silent as to any continuation of the builder’s claim against Q1 Management Pty Ltd.
- [16]The basis upon which the builder chose not to pursue Q1 Management Pty Ltd for payment of its outstanding invoice at hearing was not made clear to the tribunal. There is nothing to indicate Q1 Management was not being pursued or could not have been pursued in the action for the money claimed by the builder at the time of the offer of 21 February 2017.
- [17]Accordingly, the third offer of 21 February 2017 failed to qualify as an offer pursuant to r 86 of the rules on the basis that the acceptance of the offer would not have resulted in the settlement of the matters in dispute between all the parties to the action.
- [18]I cannot conclude that any of the offers of settlement appropriately amount to a Calderbank offer of settlement either. None of the offers are described as such and certainly they do not foreshadow an application for an indemnity costs order in the event that Q1 rejected them.
Conclusion
- [19]I have determined the builder should be paid two thirds its costs of the action. Where possible the tribunal is required to fix costs.[9]
- [20]The builder incurred solicitor and own client costs of $3,407.51 with the first solicitors it engaged, then $14,408.20 for its current solicitors and $8,030 for counsel’s fees, which totals $25,845.71. Those costs seem reasonable to me[10] and that amount is accepted as the builder’s solicitor own client costs of the action.
- [21]I assess party and party costs of the builder (standard basis costs) to be two thirds the builder’s solicitor own client costs, which is $17,230.47. Reducing that amount so as to award the builder two thirds its costs of the action, leaves an amount of $11,486.98 payable by Q1.
Footnotes
[1] Lyons v Dreamstarter Pty Ltd [2012] QCATA 071, [24].
[2] Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72, [65] (McHugh J); Lyons v Dreamstarter Pty Ltd [2011] QCATA 142, [33], citing Latoudis v Casey (1990) 170 CLR 534, 557, note the permissive “may award” used in r 86(2) of the QCAT Rules.
[3] AKS Investments Pty Ltd & Anor v National Australia Bank & Anor (No 2) [2012] QSC 282, [11] (Applegarth J); State of Queensland v Hayes (No 2) [2013] QSC 80, [11].
[4] Lyons v Dreamstarter Pty Ltd [2012] QCATA 071 [25]; State of Queensland v Hayes (No 2) [2013] QSC 80, [11].
[5] [2010] QSC 182, [32], adopting what was said in the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian Work Cover Authority (No. 2) [2005] VSCA 298. See also AKS Investments Pty Ltd & Anor v National Australia Bank & Anor (No2) [2012] QSC 282, [11].
[6] Lyons v Dreamstarter Pty Ltd & Anor [2016] QCATA 43, [37] though particulars are not given.
[7] Gilsan v Optus (No 4) [2005] NSWSC 1073; Giller v Procopets (No. 2) [2009] VSCA 72.
[8] UCPR, r 681(1).
[9] QCAT Act, s 107(1).
[10] There is an amount of $600 charged on 11 November 2016 covering the work of the new solicitors reading the files of the previous solicitors and acquainting themselves with the matter generally. That is noted but the builder’s solicitor own client costs are not reduced by that amount on the basis the reduction to two thirds for party and party costs (standard basis) makes sufficient allowance for such.