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  4. Swimsmith Pty Ltd t/as Brisbane Prestige Plunge Pools v McMahon (No 2) - [2021] QCAT 244

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Swimsmith Pty Ltd t/as Brisbane Prestige Plunge Pools v McMahon (No 2)[2021] QCAT 244

Swimsmith Pty Ltd t/as Brisbane Prestige Plunge Pools v McMahon (No 2)[2021] QCAT 244

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Swimsmith Pty Ltd t/as Brisbane Prestige Plunge Pools v McMahon & Anor (No 2) [2021] QCAT 244

PARTIES:

SWIMSMITH pty LTD TRADING AS BRISBANE PRESTIGE POOLS

 

(applicant)

 

v

 

MICHAEL (TONY) MCMAHON

aNNE mCMAHON

 

(respondents)

APPLICATION NO:

BDL330-18

MATTER TYPE:

Building matters

DELIVERED ON:

13 July 2021

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member McVeigh

ORDERS:

  1. The applicant pay the respondents’ costs to 14 October 2020, as agreed or assessed by reference to the Magistrates Court scale.
  2. The respondents pay the applicant’s costs to 14 October 2020, as agreed or assessed by reference to the Magistrates Court scale.
  3. The respondents pay the applicant’s reasonable costs from 14 October 2020, as agreed or assessed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL MATTERS – building contract dispute – costs

Queensland Building and Construction Commission Act 1991 (Qld), s 77(3)(h)

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 105

Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r 86

Fick v Groves (No 2) [2010] QSC 182

Lyons v Dreamstarter Pty Ltd [2011] QCATA 142

Mt Cotton Constructions Pty Ltd v Greer [2020] QCATA 157

Tom Builder Pty Ltd v Quan Duong (No 2) [2013] QCAT 455

APPEARANCES & REPRESENTATION:

 

Applicant:

Construct Law Group Pty Ltd

Respondent:

Beenleigh Law

 

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

Background

  1. [1]
    I heard this minor civil building dispute on 27 November 2020 and delivered my decision on 28 October 2020.  The orders made were that:
    1. (a)
      the respondents pay the applicant the sum of $9,844.68 together with interest at the rate of 18% per annum on that amount from 24 January 2018 to the date of payment;
    2. (b)
      the respondents pay the applicant the sum of $1,050 together with interest at the rate of 18% per annum on that amount from 15 February 2018 to the date of payment; and
    3. (c)
      the applicant pay the respondents $3,300.
  2. [2]
    I made some preliminary comments regarding costs but reserved my decision on costs to enable the parties to provide written submissions regarding the circumstances that I should take into account when making an order as to costs. 
  1. [3]
    I was aware from the evidence before me that at different times, before they were legally represented, each party had made offers to settle:
    1. (a)
      on 22 January 2018, in addition to the promised rectification, the applicant offered a $3,000 discount;[1]
    2. (b)
      on 1 March 2018, the applicant offered to settle for $7,894.68;[2]
    3. (c)
      at the compulsory mediation, the applicant offered to walk away with each party to bear its own costs;[3] and
    4. (d)
      in his statement dated 2 November 2019, Mr McMahon stated that he had decided to accept Mr Smith’s offer to walk away.[4] 
  1. [4]
    The parties did not engage lawyers until October 2020.
  2. [5]
    On 16 December 2020 the applicant’s solicitors filed written submissions seeking orders that the respondents pay the applicant’s costs on an indemnity basis, as agreed or assessed.  The submissions were supported by an affidavit of Ms Ray, solicitor for the applicant.  The affidavit annexed two offers that the applicant had made without prejudice, save as to costs. 
  3. [6]
    The first offer made without prejudice, save as to costs, by the applicant:
    1. (a)
      was dated 14 October 2020;
    2. (b)
      was open for acceptance until 20 October 2020;
    3. (c)
      was expressly made pursuant to Part 8, Division 3 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) (QCAT Rules);
    4. (d)
      was to settle on terms that each party walk away from their respective claims and bear their own costs;
    5. (e)
      expressed disappointment that the respondents had changed their mind regarding acceptance of the walk away offer. 
  4. [7]
    The second offer made without prejudice, save as to costs, by the applicant was:
    1. (a)
      emailed at 4:55pm on 21 October 2020;
    2. (b)
      open for acceptance until 10:00am on 22 October 2020;
    3. (c)
      expressly made pursuant to Part 8, Division 3 of the QCAT Rules;
    4. (d)
      to pay the respondents $500 within seven days;
    5. (e)
      that each party bear their own costs.
  5. [8]
    The affidavit of Ms Ray also annexed correspondence from the respondents’ solicitor dated 22 October 2020.  That letter:
    1. (a)
      rejected the applicant’s offer made on 21 October 2020;
    2. (b)
      was made pursuant to Part 8, Division 3 of the QCAT Rules;
    3. (c)
      contained the respondents’ offer to settle on the basis that they be paid $5,000 and retain the money owing under the contract;
    4. (d)
      was that each party bear their own costs.
  6. [9]
    On or about 16 December 2020 the respondents’ solicitors filed written submissions seeking orders that:
    1. (a)
      each party pay its own costs;
    2. (b)
      alternatively, that the applicant be entitled to costs on the standard basis, as agreed or assessed. 
  7. [10]
    Due to an unfortunate oversight in the registry, I did not receive a copy of the submissions and material referred to therein until early July 2021.

Relevant legislation

  1. [11]
    Section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) provides that, subject to an enabling Act, each party must bear its own costs of the proceedings.  The Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) is the relevant enabling Act for these proceedings.  Section 77 of the QBCC Act confers specific jurisdiction on this tribunal to award costs in building disputes, hence there is no need for me to have regard to the factors listed in section 102(3) of the QCAT Act. 
  2. [12]
    Section 105 of the QCAT Act authorises the tribunal to award all reasonable costs in circumstances in which an offer to settle has been made, but not accepted. 
  3. [13]
    Rule 86 of the QCAT Rules sets out the circumstances in which a decision to award costs if an offer to settle has been rejected might be made.  They are:
    1. (a)
      that the offer be written;
    2. (b)
      that the offer is not accepted within the time it is open;
    3. (c)
      that in the opinion of the tribunal, the decision is not more favourable to the other party than the offer.
  4. [14]
    Rule 86 of the QCAT Rules provides that in deciding whether a decision is or is not more favourable to a party than an offer, the tribunal must:
    1. (a)
      take into account any costs it would have awarded on the date the offer was given; and
    2. (b)
      disregard any interest or costs it awarded relating to any period after the date the offer was given. 

Relevant cases

  1. [15]
    It was held in Lyons v Dreamstarter Pty Ltd[5] that section 77 of the QBCC Act gives the tribunal a broad general discretion to award costs as are justified in the particular circumstances. 
  2. [16]
    It was held in Tom Builder Pty Ltd v Quan Duong (No 2)[6] that section 77 of the QBCC Act is not an exclusive power to award costs in building disputes.  In circumstances in which an offer to settle the dispute the subject of the proceeding has been made, but not accepted, section 105 of the QCAT Act enlivens a further power to order costs. 
  3. [17]
    In Mt Cotton Constructions Pty Ltd v Greer,[7] Senior Member Brown agreed with the following statement in McGee v Queensland Building and Construction Commission & Anor:[8]

[62] In our view, in exercising the discretion to award costs, the relevant matters the tribunal must consider are the same irrespective of whether the written offer is expressed as a Calderbank offer or falls for consideration as an offer under rule 86. Both require a value judgment of the offer and the conduct of the parties in the context of the nature and circumstances of the proceedings.

[63] The costs consequences flowing from a successful offer made under rule 86 were considered in Lyons v Dreamstarter Pty Ltd where Wilson J held:

As to the basis upon which costs should be assessed, it was said in several decisions in this jurisdiction in QCAT’s predecessor, the Commercial and Consumer Tribunal, that the phrase ‘all reasonable costs’, which appeared in s 142 of the Commercial and Consumer Tribunal Act 2003 and now it appears in QCAT r 86(2) should be construed to mean indemnity, rather than standard costs. That construction of the phrase can reasonably be applied to the same words, where they appear in QCAT r 86(2). Plainly, the rule is intended to encourage parties to be realistic about prospects in QCAT proceedings and to carry appropriate sanctions if that does not occur. (footnotes omitted)

  1. [18]
    Senior Member Brown observed that:

Where an offer is expressed as a Calderbank offer and the offer also satisfies r 86 of the QCAT Rules, the same considerations apply in exercising the discretion to award costs, including indemnity costs. There is no prima facie presumption in proceedings in the tribunal that an order for indemnity costs will be made in favour of a party who obtains a final decision more favourable than a Calderbank offer or a r 86 offer.[9]

  1. [19]
    Mt Cotton Constructions Pty Ltd v Greer[10] was the appeal against the decision of Member Howe which the applicant’s solicitors referred to in their submissions.  In the decision at first instance, Member Howe had taken into account a list of factors extracted from Fick v Groves (No 2)[11] when considering whether the rejection of an offer was unreasonable.  The list related to assessing Calderbank offers, not offers under rule 86 of the QCAT Rules.  However, having regard to the decision of Senior Member Brown, the factors are relevant because the same considerations apply in exercising a discretion to award costs under rule 86 of the QCAT Rules.  They are:
    1. (a)
      the stage of the proceedings at which the offer was received;
    2. (b)
      the time allowed to the offeree to consider the offer;
    3. (c)
      the extent of the compromise offered;
    4. (d)
      the offeree’s prospects of success, assessed at the date of the offer;
    5. (e)
      the clarity with which the terms of the offer were expressed; and
    6. (f)
      whether the offer foreshadowed the application for an indemnity costs order in the event of the offeree rejecting the offer. 
  2. [20]
    The respondents’ submissions made reference to a number of cases which are all cases of administrative review decisions.  The principles regarding costs awards referred to in those cases are not relevant to this case, first because this is a building case and second because section 105 of the QCAT Act applies. 

Exercise of discretion

  1. [21]
    If I were exercising the broad general discretion to award costs under section 77(3)(h) of the QBCC Act the facts to be taken into account are:
    1. (a)
      the applicant succeeded on its entire claim for $10,894.68 and interest under the contract;
    2. (b)
      the respondents partially succeeded in their claims, recovering $3,300;
    3. (c)
      the appropriate scale of costs for assessing those amounts is the Magistrates Court scale.
  2. [22]
    Absent the applicant’s offers to settle made without prejudice, save as to costs, I would have ordered:
    1. (a)
      the respondents to pay the applicant’s costs assessed having regard to the relevant Magistrates Court scale; and
    2. (b)
      the applicant to pay the respondents’ costs assessed having regard to the relevant Magistrates Court scale. 
  3. [23]
    However, as the applicant made a number of offers to settle which were not accepted, I turn to consider whether I should award the applicant all reasonable costs, i.e. indemnity costs pursuant to section 105 of the QCAT Act, having regard to the circumstances in which the power to award costs if an offer to settle has been rejected might be made pursuant to rule 86 of the QCAT Rules. 
  4. [24]
    The applicant’s offer dated 14 October 2020 is the only relevant offer to consider pursuant to section 105 of the QCAT Act and rule 86 of the QCAT Rules as:
    1. (a)
      it was written;
    2. (b)
      it was clearly expressed;
    3. (c)
      it foreshadowed the application for an indemnity costs order in the event that the respondents rejected the offer, unlike any previous offer;
    4. (d)
      it was open for a reasonable time, unlike the offer of 21 October 2020;
    5. (e)
      it was made at a stage when the respondents had legal representation so must have been apprised of the potential consequences of not accepting it;
    6. (f)
      it canvassed the respondents’ prospects of success in detail, identifying deficiencies in their defence; and
    7. (g)
      the decision was considerably less favourable to the respondents than the offer. 
  5. [25]
    The applicant’s prospects were always good.  The case turned on the terms of the contract.  The applicant had a contractual right to be paid and an obligation to return to remedy defects in its workmanship.  The respondents denied the applicant access to remedy defects within ten days of installation.  In any case, based on the opinion of the two engineers who gave evidence, the most likely cause of the cracks that appeared within 24 hours of the pool being filled was differential settlement of the uncontrolled fill.  The contractual responsibility for placing the fill rested with the respondents, not the applicant.  The respondents’ defence was doomed to fail. 
  6. [26]
    The offer was made when the proceedings were well advanced.  A significant amount of material had been filed, including evidence from an independent expert engineer.  The offer to walk away, each party bearing its own costs, was a significant compromise by the applicant.  The respondent had a reasonable time to consider the offer.  Indeed, the offer formalised an offer that had previously been made, accepted and subsequently reneged on by the respondents.
  7. [27]
    Had the respondents made a realistic assessment of their prospects in the week commencing 14 October 2020 they should have foreseen that:
    1. (a)
      the likely result, in accordance with the terms of the contract, was that the applicant would recover its claimed progress payments under the contract;
    2. (b)
      there would be adverse consequences for them resulting from denying the applicant its contractual right to access to attempt rectification;
    3. (c)
      their defence could not succeed because they bore the contractual responsibility for placement of fill under the pool; and
    4. (d)
      any amount they might recover on their counterclaim was considerably less than the applicant’s claim.
  8. [28]
    Had the respondents accepted the offer they would not have had to pay the applicant anything.  Instead, they had to pay the applicant a net amount of $13,224.87 (i.e. the amount claimed plus interest less the deduction of $3,300 awarded to the respondents) and will have to pay its costs.  Not having accepted the offer the respondents now face the sanction of indemnity costs. 
  9. [29]
    I reject the applicant’s submission that the costs should be assessed on the District Court scale.  The value of the claim and counterclaim are each well below the starting point of the District Court’s jurisdiction. 

Orders

  1. The applicant pay the respondents’ costs to 14 October 2020, as agreed or assessed by reference to the Magistrates Court scale.
  2. The respondents pay the applicant’s costs to 14 October 2020, as agreed or assessed by reference to the Magistrates Court scale.
  3. The respondents pay the applicant’s reasonable costs from 14 October 2020, as agreed or assessed.

Footnotes

[1]  Exhibit 14, p 29.

[2]  Exhibit 14, p 50.

[3]  Exhibit 15, p 23.

[4]  Exhibit 15, p 23.

[5]  [2011] QCATA 142.

[6]  [2013] QCAT 455.

[7]  [2020] QCATA 157.

[8]  [2018] QCATA 124.

[9]  [2020] QCATA 157, [30].

[10]  Ibid.

[11]  [2010] QSC 182.

Close

Editorial Notes

  • Published Case Name:

    Swimsmith Pty Ltd t/as Brisbane Prestige Plunge Pools v McMahon & Anor (No 2)

  • Shortened Case Name:

    Swimsmith Pty Ltd t/as Brisbane Prestige Plunge Pools v McMahon (No 2)

  • MNC:

    [2021] QCAT 244

  • Court:

    QCAT

  • Judge(s):

    Member McVeigh

  • Date:

    13 Jul 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Fick v Groves (No 2) [2010] QSC 182
2 citations
Jump To
Cite 1 - [2010] QSC 182
Cite 2 - [2010] QSC 182
Lyons v Dreamstarter Pty Ltd [2011] QCATA 142
2 citations
Jump To
Cite 1 - [2011] QCATA 142
Cite 2 - [2011] QCATA 142
McGee v Queensland Building and Construction Commission [2018] QCATA 124
1 citation
Jump To
Cite 1 - [2018] QCATA 124
Mt Cotton Constructions Pty Ltd v Greer [2020] QCATA 157
3 citations
Jump To
Cite 1 - [2020] QCATA 157
Cite 2 - [2020] QCATA 157
Cite 3 - [2020] QCATA 157
Tom Builder Pty Ltd v Quan Duong (No 2) [2013] QCAT 455
2 citations
Jump To
Cite 1 - [2013] QCAT 455
Cite 2 - [2013] QCAT 455

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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