M Plus 2 Projects Pty Ltd v Silvetser
[2022] QCAT 218
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- Unreported Judgment
- M Plus 2 Projects Pty Ltd v Silvetser[2022] QCAT 218
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M Plus 2 Projects Pty Ltd v Silvetser[2022] QCAT 218
M Plus 2 Projects Pty Ltd v Silvetser[2022] QCAT 218
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | M Plus 2 Projects Pty Ltd v Silvetser [2022] QCAT 218 |
PARTIES: | m plus 2 projects pty ltd (applicant) v travis silvetser colleen silveter (respondent) |
APPLICATION NO/S: | BDL085-19 |
MATTER TYPE: | Building matters |
DELIVERED ON: | 21 June 2022 |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Member King-Scott |
ORDERS: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS INSTATE AND TERRITORY COURTS – SECURITY FOR COSTS – PROCEDURE – where the Queensland Civil and Administrative Tribunal may make an order for security for costs – where s 109 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) considered – where the Tribunal considers the financial circumstances of the parties – where the Tribunal finds that the claim has reasonable prospects of success – where the Tribunal considers the prospects of success or merits of the proceeding – where the Tribunal considers delay in bringing the application for security for costs – where the Tribunal considers as a relevant matter the prospects of an order for costs being made pursuant to s 102 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) – where the Tribunal finds that no order for security for costs should be made Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 102(3)(b),102(3)(c), s 109(1), s 109(2), s 109(4), s 109(4)(a) Uniform Civil Procedure Rules 1999 (Qld) Buckley v Bennell (1974) 1 ACLR 301 Covecorp Constructions Pty Ltd v Indigo Projects Pty Ltd [2007] QSC 262 at 25 Greg Black Constructions Pty Ltd v Brodie and Anor [2011] QCAT 671 Ultimate Property One Management Pty Ltd v. Body Corporate for the Pivotal Point Residential CTS 33550 [2017] QCAT 671 |
REPRESENTATION: | |
Applicant: | Romans & Romans Lawyers |
Respondent: | McInnes Wilson 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]In May 2018, the Respondent, M Plus 2 Projects Pty Ltd (‘MP2’) was engaged by the Applicants, Travis and Coleen Silvester (‘Silvesters’) to build a house at Fortitude Valley. A dispute arose and MP2 has sued the Silvesters for monies owing under the contract. There is a counter application by the Silvesters for damages for breach of contract.
- [2]In this application, Silvesters have applied to have MP2 pay security for costs of $20,000 for the upcoming hearing.
- [3]In deciding whether to make an order the Tribunal may have regard to any of the following:
- (a)The financial circumstances of the parties.
- (b)The prospects of success or merits of the proceeding or part of the proceedings.
- (c)The genuineness of the proceeding or part of the proceedings.
- (d)Anything else the tribunal considers relevant.
- (a)
- [4]The Tribunal has a broad discretion to require security which must be exercised judicially.[1]
- [5]
Section 109(4)(a) of the Queensland Civil and Administrative Tribunal Act 2009 is very different in terms from Rule 671(a) of the Uniform Civil Procedure Rules and for good reason. The tribunal is not a court. It has a specific statutory obligation to deal with matters in a way that is accessible, fair, just, economical, informal and quick.[3] It must encourage the early and economical resolution of disputes.[4] It must ensure that proceedings are conducted in an informal way that minimises costs to parties and is as quick as is consistent with achieving justice.[5] It must act with as little informality and technicality and with as much speed as proper consideration of the matter before it permits.[6] Those imperatives are not met by applying a requirement as does rule 671(a), that impecunious corporate plaintiffs will have to provide security for costs before they can seek the assistance of the tribunal.
- [6]The principles expressed in the above passage has not been questioned nor doubted since.
The Silvesters’ case
- [7]The basis of the application is that:
- (a)The Applicant only has a paid share capital of $3.00.
- (b)It has ceased to operate as a building company;
- (c)It has cancelled its licence it could not meet the minimum financial commitments of that licence.
- (d)Mr DeLeon is employed separately from MP2 on a full-time basis.
- (e)On 20 May 2020 Mandy De Leon ceased to be a director of MP2.
- (f)Mr De Leon has been selling the company’s tools and other equipment.
- (g)MP2 appears to have no assets.
- (a)
- [8]The Silvesters submit that MP2 does not have the financial means to satisfy an adverse order for costs. They further submit that there is a strong inference from the above facts that MP2 is impecunious.
- [9]The Silvesters also submit that MP2’s case is weak and its claim for monies under the outstanding invoice is unlawful as the company is not entitled to any further monies under the contract.
MP2’s case
- [10]In its response MP2 submit that:
- (a)MP2 allege that its financial position, inter alia, has been affected by the Silvesters taking possession of the works and failing to pay MP2’s outstanding tax invoice.
- (b)It relinquished its licence because Mr De Leon thought it may not be in a position to meet the minimum financial requirements of its licence.
- (c)The effect of the Covid pandemic added to Mr De Leon’s concern in this regard.
- (d)It disputes that it does not have assets but, I note that it does not provide any evidence of the assets it does have.
- (e)It submits that the Silvesters have not provided any evidence of their financial circumstances nor of their ability to absorb the costs of the dispute.
- (f)It has incurred considerable costs to date in progressing the matter including engaging experts and preparing witness statements.
- (g)Its claim is not without merit.
- (h)The Silvesters have delayed in bring the application which should be brought promptly.
- (a)
Resolution
- [11]I agree that MP2’s claim is not without merit, it is not for the tribunal at this stage to determine the merits of the company’s case as it would at a hearing. Nevertheless, it must satisfy itself that there is a prima facie case, and the claim is neither frivolous nor vexatious.
- [12]MP2 alleges that the Silvesters took possession of the works when they were not entitled to do so. That is disputed. The Silvesters say that MP2 was in breach of the contract and abandoned the works. They alleged that the company had repudiated the contract and they accepted the repudiation and elected to terminate the contract. This is disputed by MP2. In my opinion, there is substance in the claim by MP2 and the disputed facts cannot be determined at this stage.
- [13]In my opinion the Silvesters have been dilatory in bringing this application. I set out the chronology of steps taken in the proceedings.
- (a)19 March 2019 Application for Building Dispute filed.
- (b)22 May 2019 the Silvesters filed their Response and counter-application.
- (c)18 September 2019 the Silvesters’ solicitors first raise the issue of MP2 capacity to pay the Silvesters’ costs.
- (d)10 December 2019 Silvesters file amended Response and counter-application.
- (e)5 February 2020 Silvesters file application to join other parties.
- (f)19 June 2020 that application dismissed.
- (g)23 March 2021 MP2 files expert report.
- (h)13 May 2021 directions made for the exchange of statements of evidence.
- (i)24 August 2021 MP2 files its statements of evidence.
- (j)2 September 2021 Silvesters given extension of time to file their statements of evidence.
- (k)2 September 2021 proposed date for experts’ conclave set for 18 November 2021.
- (l)2 September 2021 Silvesters’ solicitor letter requiring MP2 consent to provide security for costs.
- (m)10 September 2021 MP2 refuses request.
- (n)5 October 2021 application for security for costs filed.
- (o)25 October 2021 application served on MP2.
- (a)
- [14]In Covecorp Constructions Pty Ltd v Indigo Projects Pty Ltd[7] Martin J (as he then was) conveniently set out the relevant principles relating to delay in bringing an application for security for costs:
- [15]They are, omitting citations:
- An application for security must be made promptly.
- It would be unfair to allow a defendant security if that defendant has stood by and allowed the plaintiff to work on its case and incur significant expense.
- Although delay is a significant factor, there is no rule requiring refusal of an application on that basis alone. It is a factor to be taken into account with other discretionary criteria.
- The issue of delay will weigh more significantly in some cases than others.
a) that the hearing or resumed hearing was not immediately imminent; and
b) that there has been some forewarning: usually correspondence concerning the financial standing of those who might benefit from the success of an applicant or plaintiff, and often detailed correspondence foreshadowing an application for security for costs.
- the further a plaintiff has proceeded in an action and the greater the costs it has been allowed to incur without steps being taken to apply for an order for costs, the more difficult it will be to persuade the court that such an order is not, in the circumstances, unfair or oppressive.
- In Buckley v Bennell [8] Moffitt P put the matter as follows:
“The right to seek security for costs and to stay proceedings, with the possible result that a claim for damages is frustrated, is a powerful weapon. Therefore, the litigant who seeks to use it against his opponent is at risk of not having it available, unless the application is made and persevered with in circumstances involving the least oppression of his opponent. The primary reason why the application should be brought promptly and pressed to determination promptly is that the company, which by assumption has financial problems, is entitled to know its position in relation to security at the outset, and before it embarks to any real extent on its litigation, and certainly before it is allowed to or permits substantial sums of money towards litigating its claim.” [emphasis added].
- When determining the weight to be afforded the effect of delay, the following issues need to be considered:
a) is there an explanation for the delay and, if so, what is its weight?
b) the level of prejudice caused to the plaintiff if required to lodge security at a late stage.
c) the timing of the application for security
- [16]The above chronology demonstrates that the Silvesters have not proceeded promptly and without delay in their application for security for costs. MP2 has incurred significant costs including the costs of preparing witness statements and obtaining expert reports. The matter is close to a hearing both parties have exchanged witness statements and have engaged experts. An experts conclave and joint report is the last remaining step before a hearing. It would be oppressive to seek security for costs now.
- [17]The Silvesters have not provided evidence of their capacity to absorb the costs of the litigation nor evidence of their financial position.
- [18]I am also cognisant that this litigation is being conducted in the Tribunal and not a Court and I bear in mind the comments reproduced above of Member Stilgoe in Gregg Black Constructions Pty Ltd v Brodie and Anor (supra).
- [19]In the exercise of my discretion, I dismiss the application.