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STU v JKL (Qld) Pty Ltd QCAT 55
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
STU v JKL (Qld) Pty Ltd & Ors  QCAT 55
JKL (QLD) PTY LTD
5 March 2019
On the papers
Member Ann Fitzpatrick
ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – procedure – costs – whether interests of justice require an order for costs – whether an order for costs should be made after the applicant made an offer to settle which was not accepted
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, 102, 105
Queensland Civil and Administrative Tribunal Rules 2009 (Qld) Rule 86
Hill-Douglas v Area Square Pty Ltd  QCATA 068
Lyons v Dreamstarter Pty Ltd  QCATA 071
McEwen v Barker Builders  QCATA 49
Mount Cotton Constructions Pty Ltd v Greer (No2)  QCAT 98
Neverfail Pty Ltd as Trustee for the Harris Siksana Family Trust & Anor v Radford (No.2)  QCATA 73
Richetti v Lanbuilt  QCATA 111
State of Queensland & Anor v Bell  QCATA 176
Tamawood Limited & Anor v Paans  2 QdR 101;  QCA 111
DP O'Gorman SC, with RE Reid, instructed by Maurice Blackburn Lawyers
R Perry QC, with J Merrell, instructed by Aitken Legal Solicitors
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
- This decision and submissions made by the parties are subject to a non-publication order made on 27 February 2013 prohibiting the publication of any information that may enable any of the parties in this proceeding to be identified. For the avoidance of doubt, I order that the order made on 27 February 2013 have continuing operation.
- In a decision in this matter delivered on 6 December 2016, the Applicant and Third Respondent were ordered to file and serve submissions in relation to costs.
- In the interim, the Third Respondent pursued an appeal to the Appeal Tribunal of this Tribunal. Thereafter, the Third Respondent appealed to the Queensland Court of Appeal. The appeals have now been dealt with, in favour of the Applicant.
- The Applicant seeks her costs for the proceeding, covering costs incurred up to and including the first hearing on 18,19 and 20 February 2013 and costs up to and including a rehearing heard on 18, 19 and 20 May 2016, resulting in the 6 December 2016 decision. On 24 December 2015, an Appeal Tribunal ordered that the 24 August 2014 decision be set aside and that the proceeding be remitted to the Tribunal for the rehearing in May 2016.
- The Applicant also seeks an order that the Third Respondent pay the Applicant’s costs of the proceeding from 7 April 2016 on an indemnity basis pursuant to Rule 86 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) (‘QCAT Rules’).
- I note that the Applicant has not sought the costs of APL423-14, the appeal resulting in the 24 December 2015 decision to remit.
- The Third Respondent submits that:
- (a)the Tribunal should not make an order that the Third Respondent pay the Applicant’s costs of the rehearing as it is not in the interests of justice to do so;
- (b)the Tribunal has no power to make an order that the Third Respondent pay the Applicant’s costs for the preparation for and of the earlier hearing. If it does have power, it is not in the interests of justice to do so;
- (c)the Tribunal’s discretion to award costs on an indemnity basis, under Rule 86 of the Rules, is not triggered because of the form of the Applicant’s offer;
- (d)even if the Applicant’s offer is a Calderbank offer, there is no basis to award costs on an indemnity basis, as from 6 April 2016, as against the Third Respondent;
Costs for the proceeding
Do the costs for the proceeding include the costs of the first hearing?
- This matter has been conducted as one continuous proceeding from the time of its referral from the Anti-Discrimination Commission of Queensland.
- The Third Respondent submits that the decision of the Queensland Civil and Administrative Appeal Tribunal dated 24 December 2015 remitting the matter to the Tribunal for rehearing did not remit the issue of costs of the earlier hearing and did not make any order about the costs of the earlier hearing or about the costs of the appeal.
- The Third Respondent says that I must determine if I have the power to make a costs order in respect of the earlier hearing and, whether I should exercise that power in the Applicant’s favour.
- The Third Respondent submits that there is no power in either s 100 or 102 of the QCAT Act or the Rules for the Tribunal in rehearing the matter on remittal from an appeal decision to order a Respondent to pay costs of an Applicant for the earlier hearing.
- In the alternative it is submitted that if the Tribunal does have such a power, it should not be exercised in the present case because the Applicant agreed to the First and Third Respondents’ appeal being allowed and it is not in the interests of justice for the Tribunal to order the Third Respondent to pay the Applicant’s costs of the earlier hearing for the reasons which relate to the question of costs more generally.
- The Applicant says in reply that the Tribunal does have power under s 102 of the QCAT Act to order a party to ‘a proceeding to pay some or all of the costs of another party’ to the proceeding.
- It is submitted that the first hearing remained part of the proceeding despite the rehearing. The file number did not change. The written and oral evidence admitted in the first hearing, including the exhibits, became evidence in the rehearing. Parts of that evidence were referred to extensively in the Tribunal’s current decision in reaching its findings. The written submissions in the first hearing were available to the Tribunal in the rehearing and the Applicant’s earlier submissions were referred to in the current decision to deal with arguments put by the Third Respondent.
- It is submitted that the fact the Appeal Tribunal did not make an order in respect of the costs of the first hearing is irrelevant.
- Finally, it is submitted that it would be artificial and wrong to exclude costs of the preparation and provision of evidence, submissions and the conduct of the first hearing in QCAT from the costs of the proceeding.
- I accept the Applicant’s submissions.
- I find that I have the power to make the costs order sought by the Applicant under Division 6 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) because the costs incurred, up to and including the first hearing, are costs in the proceeding.
- By Order made 22 February 2016, material admitted into evidence at the rehearing included evidence and the transcript from the initial hearing. The decision dated 6 December 2016 sets out amendments to affidavit material and certain admissions in relation to the content of medical reports.
- The Third Respondent relied extensively on the transcript of the first hearing and the Applicant’s submissions at the time of the first hearing for the purpose of promulgating its argument that the Applicant was not a witness of credit.
- The Applicant’s material, evidence, conduct of the first hearing and submissions were all considered and formed an integral part of the rehearing and consequent decision. The fact that the decision arising out of the first hearing was set aside, does not change the necessity for the Applicant to incur those costs in the ultimate determination of this matter.
- The Appeal Tribunal which ordered remittal of the matter on 24 December 2015 did not make any determination in relation to costs of the first hearing. The matter therefore remains a live issue.
- I consider it irrelevant that the Applicant agreed with the First and Third Respondents’ appeal from the first decision. There is nothing to suggest that the Applicant conceded her case was without merit. On the contrary the step appears to be a pragmatic one which would have had the effect of reducing the costs of the appeal for the Applicant. Remitting the proceeding for rehearing addressed problems in the treatment of evidence, paucity of reasons and a misstatement of s 133 of the Anti-Discrimination Act 1991 (Qld) in the first decision. The appeal decision did not make any findings in favour of the Respondents in relation to the merits of the matter which would justify denying the Applicant her costs of the proceeding leading to the first decision.
- I consider it would be unjust for such extensive costs to be ignored, particularly as the parties took a practical approach in seeking to limit the costs of the rehearing by utilising the evidence and transcript from the first hearing.
- To the extent that I order that the Third Respondent pay the Applicant’s costs of the proceeding, I include the costs related to the first hearing which were necessary and proper costs of prosecuting the matter. I exclude the costs of APL423-14 because they have not been sought.
Is it in the interest of justice that the Third Respondent pay the Applicant’s costs of the proceeding?
- In this case, I consider that there are compelling circumstances which overcome the statutory hurdle in s 100 of the QCAT Act.
- Many factors are relevant to the exercise of my discretion under s 102 of the QCAT Act including the matters set out in s 102(3) of the Act.
- The compelling factors are that:
- (a)the Applicant succeeded in the hearing before me, on appeal to this Tribunal’s Appeal Tribunal and on appeal to the Court of Appeal;
- (b)the Third Respondent failed in all respects in its defence of the matter;
- (c)the Applicant had a strong case;
- (d)the proceeding was complex. The parties were represented by Queen’s Counsel instructed by experienced lawyers. The hearings extended over a number of days and raised difficult issues as to vicarious liability, credit, analysis of medical evidence and questions in relation to mitigation of loss and discounting of damages. The material considered by the Tribunal and the submissions made by the parties was voluminous. Engagement of lawyers was justified in this case;
- (e)a refusal to order costs would diminish or exhaust the award in favour of the Applicant;
- (f)the sexual assault giving rise to this proceeding took place on 1 December 2010. The Applicant has persevered in her claim over an extraordinarily long period of time. She has had to bear the stresses and difficulties of litigation over that period. If her award of compensation is diminished by the need to meet her own costs it would not be unreasonable to conclude the system of justice has failed her as a genuine applicant for relief;
- (g)the Third Respondent is a large commercial concern. Plainly, it has the financial circumstances to conduct proceedings of this type and to bear the costs of its numerous appeals. The Applicant is a young woman who does not have those financial circumstances, particularly given the injuries she suffered as a consequence of the sexual assault to which she was subjected;
- (h)as the Appeal Tribunal said in State of Queensland & Anor v Bell:
Complainants with genuine claims of unlawful discrimination and harassment should not be discouraged in their pursuit of human rights based objectives by fear of adverse costs consequences…
- (i)Finally, the Applicant made an offer of settlement falling within Rule 86 of the QCAT Rules, which was more favourable to the Third Respondent than the ultimate decision. This issue is more fully discussed later in this decision.
- The Third Respondent submits that the First and Third Respondents did not act in a way that unnecessarily disadvantaged the Applicant. I accept that the First and Third Respondents at the earlier hearing and the Third Respondent at the rehearing conducted their defence in a way open to them.
- However, when weighed against the other factors which suggest that it is in the interests of justice that an order for costs be made, the fact that the Respondents may have conducted themselves appropriately is not a sufficient reason to refuse to award costs to the successful Applicant.
- As to the Third Respondent’s submission that at the rehearing the Applicant abandoned her case against the First Respondent and only pursued the Third Respondent, Senior Counsel for the Applicant informed the Tribunal on the rehearing that a decision was taken during the first hearing not to pursue the First Respondent and this was not a fresh position. I note that shortly before the first hearing the Third Respondent admitted it was a party to a contract for services with the Second Respondent. That appears to have resolved the status of the Second Respondent and thereafter the claim against the First Respondent was not pursued. I do not consider it unreasonable given the relationship between the parties for the Applicant to have commenced proceedings against the First Respondent.
- The Third Respondent suggests that the rehearing was necessary because of ‘poor reasoning’ in the earlier decision set aside on appeal. I note the reasons of the Appeal Tribunal in this regard. That factor however does not bear on the fact that costs were necessarily and properly incurred by the Applicant in prosecuting her claim, and that with some amendments, all the material relevant to the first hearing and the transcript of the first hearing formed part of the rehearing.
- It is not the case that I have determined the Third Respondent should pay the Applicant’s costs of the proceeding simply because the Applicant was successful. The factors referred to in this decision are all matters considered by me in the exercise of my discretion.
- In relation to the Third Respondent’s submissions as to the financial circumstances of the parties, I agree that simply because a party is in a poor financial position, they do not have a basis to seek an order for costs. However, it is a relevant factor and in particular goes to diminution of the award made in a party’s favour if their financial circumstances are such that they cannot bear the costs of the proceedings from their own resources.
- The Third Respondent makes the point that the award in favour of the Applicant was not modest. I agree. Nevertheless, I accept the submissions of the Applicant that the costs of the proceeding, given its length and complexity, are high. It is not just that a party should be forced to erode compensatory orders in a case involving a sexual assault, in order to meet costs. That would defeat the purpose of the compensation.
- For the reasons given, I accept the submissions of the Applicant that the Third Respondent pay the Applicant’s costs of the proceeding.
Is the Applicant entitled to indemnity costs after 6 April 2016?
- The Applicant relies upon Rule 86 of the QCAT Rules as entitling her to indemnity costs incurred after the date of an offer of settlement by her, because the award in favour of the Applicant was more favourable than an offer of settlement made to the Third Respondent.
- The Applicant relies upon a written offer made 6 April 2016 under cover of a letter marked ‘without prejudice’. At paragraph 4 of the letter, a counteroffer is put and is said to be ‘subject to the principles set out in Calderbank v Calderbank  All ER 333’. The offer was:
- (a)Your client pay to our client the following amounts, within 14 days of our client executing a settlement agreement:
- $200,000.00 by way of general damages; and
- $100,000.00 as a contribution to legal fees (including disbursements such as Counsel fees and medical reports);
- (b)Your client will provide evidence of a written sexual harassment policy having been implemented, or proposed to be implemented; and
- (c)Our client will discontinue the proceedings against the Respondents.
- I do not accept the Third Respondent’s submissions that the offer should not be treated as a Calderbank offer falling within the scope of Rule 86 of the QCAT Rules.
- The reference to the decision of Calderbank v Calderbank was intended to convey and does convey to a reader able to read the decision, that the counter-offer is ‘without prejudice except as to costs’. It is not necessary to say that the counter-offer is made without prejudice except as to costs because that is what reference to the principles in Calderbank v Calderbank means. It is not necessary to say that the counter-offer is made pursuant to Rule 86, provided it meets the requirements of the Rule, which it does. The Third Respondent and its lawyers are taken to know of the existence of Rule 86 and its scope without it being pointed out by the Applicant.
- I am required to discern the intention of the Applicant in making the counter-offer. I find that the Applicant intended the contents of the letter dated 6 April 2016 to be without prejudice, but that the counter offer contained within the letter was intended to be without prejudice as to costs. If that is not what the Applicant intended, there would be no reason to expressly refer to the counter-offer as being made subject to the principles in Calderbank v Calderbank.
- I find that the counter-offer is properly before the Tribunal.
- The Applicant was awarded the sum of $291,983.67 comprising $70,000.00 for general damages and the balance comprised of interest, past and future economic loss, lost superannuation, special damages and future medical costs.
- Rule 86(4) provides that 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 related to any period after the date the offer was given to the other party.
- These limbs of Rule 86 require me to ask how an offer of $300,000.00 inclusive of costs compares with the sum awarded, less interest and costs related to the period after the offer but including costs up to the date of the offer. In other words, if the decision had been handed down on the date of the offer and an award of costs was made, how does that compare with the offer made at that point in time.
- I have recalculated the interest awarded on general damages, economic loss, lost superannuation and special damages up to the date of the offer on 6 April 2016.
- The calculations are:
- (a)General damages
2% per annum from 1 December 2010 to 6 April 2016 (5.35 years) on $70,000.00 = $7,490. That is $770.00 less than the sum awarded.
- (b)Past economic loss
3.5% per annum from 12 December 2010 to 6 April 2016 (5.32 years) on $145,714.90 = $27,132.15. That is $2,958.02 less than the sum awarded.
3.5% per annum from 12 December 2010 to 6 April 2016 (5.32 years) on $20,257.33 = $3,771.91. That is $411.23 less than the sum awarded.
- (d)Special damages
3.5% per annum from 12 December 2010 to 6 April 2016 (5.32 years) on $396.00 = $73.81. That is $7.96 less than the sum awarded.
- The total interest relevant to the period from 6 April 2016 to the date of the award is $4,147.21. Deducting that from the award the sum arrived at is $287,836.46.
- Returning to the comparison, would it have been more favourable for the Third Respondent to accept the sum of $300,000.00 inclusive of costs compared with $287,836.46 by way of an award plus a sum for costs awarded at the date of the offer?
- To be more favourable to the Third Respondent to accept the offer, any award of costs would have to be more than $12,163.54. The relevant scale of costs for the exercise is the District Court Scale of Costs. Taking into account preparation of contentions, witness statements, preparation of medical and financial evidence, counsel’s fees, costs of medical reports, preparation for hearing and the conduct of a three-day hearing I consider the costs on a standard basis would have exceeded $12,163.54. I do not know exactly what the Applicant’s costs might be to the date of the offer, however, I think that any experienced lawyer could make a broad assessment that they well and truly exceed approximately $12,000.00. I also think that the Third Respondent could make such an assessment being aware at least of the amount of its own costs to that point in time.
- The offer required the Third Respondent to provide evidence of a written sexual harassment policy having been implemented or proposed to be implemented. Such policies are readily available and are a commonplace part of the conduct of business. I do not think that part of the offer affects the analysis of whether the offer is or is not more favourable than the ultimate decision.
- I find that the decision is not more favourable to the Third Respondent than the offer by the Applicant. The upshot is that this Tribunal may under Rule 86(2) award the Applicant all reasonable costs incurred in the proceeding after the offer was made. Reasonable costs in Rule 86(2) has been construed to mean costs on an indemnity basis.
- Even though Rule 86 is engaged, it is only one of the matrix of circumstances to be weighed in exercising the discretion to award costs. It is relevant to ask whether, in the circumstances, it was unreasonable of the Third Respondent to reject the offer of settlement. Considerations have been held to include the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree’s prospects of success assessed at the date of the offer; and the clarity with which the terms of the offer were expressed.
- The offer in question was open for a period of 14 days. It was very clear in its terms. It was made 6 weeks before the commencement of the rehearing. The offer, if accepted, would have avoided the costs of a three-day rehearing. It transpires that it was more favourable than the ultimate decision.
- The Third Respondent submits that at the time of the offer the Respondents were in an advanced stage of preparation for the rehearing and were obliged to consider a fresh expert report from Dr Beech. The Third Respondent submits that given the lateness of the offer it was not unreasonable for it to reject the offer. I do not accept that submission. The offer was made 6 weeks before the hearing. I accept the submission of the Applicant that the Third Respondent had held the report of Dr Beech for some three weeks before the offer was made. The Third Respondent had the advantage of a full hearing in the matter preceding the offer. The issues were clear. The Third Respondent was in a position to make an informed decision. The offer was made in good time and its acceptance could have saved both parties the costs of the rehearing.
- The Third Respondent says it was not clear to whom the offer was actually made. I accept the submissions of the Applicant that the offer could only be understood to have been made to the Third Respondent as the Respondents knew from the first hearing that the Applicant was not proceeding against the First Respondent, and that was in any event confirmed in an email of 6 March 2016.
- The Third Respondent says that the offer did not contain a genuine element of compromise. It says that the offer sought a sum of $200,000 for general damages which does not accord with any comparable decision and further the experts were in disagreement as to the effect of the sexual assault on the Applicant. The Third Respondent submits that it is a reasonable inference the offer had been cast in this way to avoid moneys received by the Applicant being the subject of taxation. I do not think that alleged motivation of the Applicant is relevant to a consideration of whether it was unreasonable of the Third Respondent to reject the offer.
- The Applicant’s claim was for general damages, past and future economic loss, lost superannuation and special damages. Those claims were not abandoned, despite the offer setting a large sum for general damages and not including a figure for the balance of the claims. In deciding whether an offer represents a genuine compromise a prudent party would consider its best and worst case outcome of the proceedings. Reference to all the claims made by the Applicant would inform that decision. It is improbable that a party would not consider the ‘all up’ sum on offer with the total sum likely to be awarded in a worst-case outcome for the Third Respondent. Of course, the Third Respondent should also have been conscious of the need to take into account Rule 86 and in particular Rule 86(4).
- I have concluded earlier in this decision that the offer made was more favourable than the amount ultimately awarded. That same analysis was available to the Third Respondent at the time of the offer so that it might reasonably conclude the offer contained a genuine offer of compromise.
- The Third Respondent submits that its prospects of success at the date of the offer were not weak. I think a better way to look at the problem is whether the Third Respondent’s prospects were so strong that it was worth rejecting the offer of settlement. The Third Respondent failed in the first hearing. The appeal tribunal found that the Member in the first hearing failed to refer to evidence relied upon in arriving at findings and failed to decide certain discrepancies in the witnesses’ evidence. The appeal tribunal also found that the Member incorrectly stated the test in s 133 of the Anti-Discrimination Act 1991 (Qld) in relation to vicarious liability, that the test is in fact broader than that stated by the Member and is more likely to be satisfied.
- The decision of the appeal tribunal did not so undermine the first decision that the Third Respondent could confidently conclude it had a strong case on the re-hearing.
- I accept the submissions of the Applicant that the Third Respondent should have been aware that inconsistencies in the later reports of Dr Mungomery were likely to have raised issues in relation to his reliability and that the vicarious liability issue was strongly arguable by the Applicant on the conventional application of accepted legal principles.
- To the extent that the Third Respondent held the view the Applicant was not credit worthy in relation to her claimed loss and damage, including the claimed psychological effect on her of the sexual assault, it is true that the Tribunal needed to make an assessment at the rehearing. However, the Third Respondent knew that there was a good deal of evidence supporting the Applicant in relation to her claims in terms of the medical evidence of both Dr Mungomery and Dr Beech. That should have been cause for caution on the part of the Third Respondent.
- I conclude that it was not reasonable for the Third Respondent to reject the Applicant’s offer of settlement made on 6 April 2016.
- Having decided that:
- (a)it is in the interests of justice that an award of costs be made in favour of the Applicant;
- (b)the 6 April 2016 offer was more favourable than the decision; and
- (c)it was unreasonable of the Third Respondent to reject the offer.
I find that the Third Respondent should pay the Applicant’s costs of the proceeding on an indemnity basis from 6 April 2016.
- On the basis of the matters set out in this decision, I order that:
- (a)the Order of the Tribunal made 27 February 2013 continues in force;
- (b)the Third Respondent pay the Applicant’s costs of the proceeding on the standard basis up to 6 April 2016 and on an indemnity basis from that date;
- (c)the costs of the proceeding include all costs of preparation for the first hearing and the costs of the first hearing from 18-20 February 2013 as well as the costs of preparation for the rehearing and the costs of the rehearing from 18, 19 and 20 May 2016 together with the costs of the submissions in relation to costs;
- (d)the costs payable by the Third Respondent be on the District Court Scale as agreed or failing agreement to be assessed at the Third Respondent’s expense.
McEwen v Barker Builders  QCATA 49, .
State of Queensland & Anor v Bell  QCATA 176, -; Tamawood Limited & Anor v Paans  2 QdR 101;  QCA 111,.
 QCATA 176, .
T3-2, 20 – 45; T3-3, 25.
Further Amended Contentions of the First, Third and Fourth Respondents, dated 15 February 2013.
See the discussion in Mount Cotton Constructions Pty Ltd v Greer (No 2)  QCAT 98, .
 Lyons v Dreamstarter Pty Ltd  QCATA 071 Justice Alan Wilson, President, ; Hill-Douglas v Area Square Pty Ltd  QCATA 068; Richetti and Ors v Lanbuilt  QCATA 111
Neverfail Pty Ltd as Trustee for The Harris Siksna Family Trust & Anor v Radford (No.2)  QCATA 73, -.
Richetti v Lanbuilt  QCATA 111, .
- Published Case Name:
STU v JKL (Qld) Pty Ltd & Ors
- Shortened Case Name:
STU v JKL (Qld) Pty Ltd
 QCAT 55
Member Ann Fitzpatrick
05 Mar 2019