Exit Distraction Free Reading Mode
- Unreported Judgment
- Gedoun Constructions Pty Ltd v Agius (no. 2)[2022] QCAT 318
- Add to List
Gedoun Constructions Pty Ltd v Agius (no. 2)[2022] QCAT 318
Gedoun Constructions Pty Ltd v Agius (no. 2)[2022] QCAT 318
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Gedoun Constructions Pty Ltd v Agius (no. 2) [2022] QCAT 318 |
PARTIES: | GEDOUN CONSTRUCTIONS PTY LTD (applicant) v Mark Elliot Agius (respondent) |
APPLICATION NO: | BDL308-18 |
MATTER TYPE: | Building matters |
DELIVERED ON: | 31 August 2022 |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Member McVeigh |
ORDERS: |
|
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)(3) Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 105, s 107 Allen & Anor v Contrast Constructions Pty Ltd (No 3) [2021] QCATA 143 Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 531 Cruceru v Medical Board of Australia [2016] QCAT 111 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 Mt Cotton Constructions Pty Ltd v Greer & Anor (No 2) [2016] QCAT 387 Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No. 2) [2016] QCAT 497 Terera & Bohler v Clifford [2016] QCATA 25 W A Gilbey v Continental Liquers Pty Ltd [1964] NSWLR 527 Worthington v Ryan [2022] QCATA 8 |
APPEARANCES & REPRESENTATION: | 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 to this decision regarding costs
- [1]In my decision dated 29 January 2022 I set out the background of the dispute between Gedoun Constructions Pty Ltd (builder) and Mark Agius (owner).
- [2]The hearing commenced on 24 August 2020. On the third day of the hearing, in response to the builder’s objection to the expertise of the person the owner intended to call to give evidence about the wind classification of the site, the owner sought and was granted leave to file a report from an alternative expert. In order not to waste allocated hearing time, the hearing continued to deal with evidence going to issues other than wind classification.
- [3]The builder claimed costs thrown away by the late substitution of the owner’s expert on wind issues, on an indemnity basis. In my decision regarding costs thrown away made 29 January 2021 I ordered the owner to pay the builder costs thrown away as a consequence of granting the indulgence to the respondent. I found that, based on relevant facts set out in that decision, it was just and reasonable to make a costs order in favour of the builder. Further, I found that costs should be ordered on an indemnity basis due to the owner’s irresponsible conduct in continuing to rely on a particular expert (Mr Huynh) for months after questions had been raised about his expertise, only to resile from that position, without argument, on the third day of the hearing. Based on the evidence, I identified costs incurred by the builder that would not have been incurred but for the late substitution of the owner’s expert on wind issues. I fixed the costs thrown away at $42,023.75. In the final paragraph of those reasons, in order to avoid any confusion in future costs considerations, I noted that the fact that the builder had not recovered particular items of costs claimed was purely due to my assessment that they were not thrown way. I noted that should the builder become entitled to its costs in future, there was no reason why it could not claim costs not regarded as costs thrown away.
- [4]After the 14 day hearing, for the reasons set out in my decision dated 29 January 2022, I decided that the builder should pay the owner:
- (a)damages of $190,140;
- (b)liquidated damages of $32,050; and
- (c)interest.
- (a)
- [5]I directed that any application for costs and response thereto be made in writing and that the costs application be determined on the papers.
Submissions regarding costs
- [6]On 28 February 2022 the builder’s submissions were filed. It submitted that the appropriate order would be that the builder pay 50% of the owner’s costs of the proceedings on the standard basis to be assessed in accordance with the District Court scale. The builder gave three reasons that the owner should only recover a portion of his costs:
- (a)first, that the owner was only partially successful in his claims;
- (b)second, the costs order should take account of previously reserved costs; and
- (c)third, the owner attempted to bolster his claim in the final quantum schedule and there should be a consequence for that sounding in costs.
- (a)
- [7]Further, the builder submitted that the following costs should be excluded, i.e., costs of and incidental to:
- (a)experts who did not give evidence at the hearing;
- (b)expert reports not relied on at the hearing;
- (c)the owner’s application to substitute the expert during the trial; and
- (d)the specific items referred to in my decision regarding costs thrown away.
- (a)
- [8]In submissions dated 28 February 2022 the owner sought an order that the tribunal award him costs of the proceedings. His costs submissions were accompanied by an affidavit of his solicitor, Leonard Watt, sworn 28 February 2022. Mr Watt swore that the owner’s costs in this matter were $743,056.53 inclusive of GST.
- [9]The builder’s submissions in reply, dated 14 March 2022, rejected the owner’s claim of having incurred costs of $743,056.53 in relation to this proceeding. The builder submitted that there is no basis for awarding the owner costs on an indemnity basis (as seemed to have been suggested by the evidence submitted by Mr Watt). Further it submitted that on the evidence provided it would be impossible to fix the owner’s costs entitlement. The builder’s submissions in reply were accompanied by an affidavit of its solicitor, Steven Tapiolas, sworn 14 March 2022. Mr Tapiolas listed numerous entries in exhibit CS-2 to the affidavit of Mr Watt which did not appear to relate to the costs of the proceedings. He also made comments about invoices for outlays that were included in the annexure to the owner’s costs submissions.
- [10]In undated reply cost submissions, the owner submitted that there should not be any discount or reduction in the costs ordered for the following reasons:
- (a)the duration of the hearing was the result of lengthy cross-examination of the owner’s witnesses;
- (b)the builder completely failed in its claims while the owner succeeded in the majority of his claims, albeit with reduced quantum;
- (c)reserved costs should follow the event;
- (d)Mr Wright, the builder’s expert on wind related issues, was consistently incorrect; and
- (e)the owner is a private individual who needs to be compensated as a matter of practical justice.
- (a)
- [11]On 18 March 2022 the owner’s solicitors submitted that I should disregard the builder’s submission that:
… there is a charge for listening to an audio file provided by the respondent which appears to be an unauthorised recording of an expert conclave (which he was not permitted to attend)
because it is false. The submission was supported by an affidavit of Mr Watt in which he explained what the narration actually described. He confirmed that he did not attend the conclave. He swore that the audio files that he listened to, which were the subject of the narration, were files recorded by the owner during an inspection of his home by the QBCC. Mr Watt said that he listened to the files to determine if the inspection by the QBCC had any bearing on this matter.
Relevant legislation
- [12]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.
- [13]The Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) is the relevant enabling Act for these proceedings. Section 77(3)(h) of the QBCC Act confers specific jurisdiction on this tribunal to award costs in building disputes.
- [14]Section 107 of the QCAT Act requires that, if possible, when a costs order is made, the costs be fixed.
- [15]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. Rule 86 of the Queensland Building and Construction Commission 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:
- (a)that the offer be written;
- (b)that the offer is not accepted within the time it is open;
- (c)that in the opinion of the tribunal, the decision is not more favourable to the other party than the offer.
- (a)
Relevant cases
- [16]It was held in Lyons v Dreamstarter Pty Ltd [1] that section 77 of the QBCC Act gives the tribunal a broad general discretion to award costs as justified in the particular circumstances.
- [17]In Allen & Anor v Contrast Constructions Pty Ltd (No 3)[2] Deputy President Judge Allen QC and Member Traves, having set out section 100 of the QCAT Act and section 77(3)(h) of the QBCC Act, said:
- [27]The QBCC Act is an enabling Act and s 77(2)(h) is, in our view, a ‘modifying provision’ within the meaning of s 7 of the QCAT Act. …
- [28]To the extent of any inconsistency between them, a modifying provision prevails over the provisions of the QCAT Act and the QCAT Act must be read, with any necessary changes, as if the modifying provision were part of it (s 7(2)(3)).
…
- [32]There is a clear inconsistency between a provision that confers on the Tribunal a broad and general discretion to award costs (QBCC Act, s 77(2)(h)) and one which states that, unless otherwise provided each party must bear their own costs (QCAT Act, s 100).
- [33]Accordingly, the QBCC Act does provide otherwise. As a result, s 100 of the QCAT Act is displaced and s 77(2)(h) is the applicable provision ….
- [18]
- [65]The Tribunal’s discretion to award costs in a building dispute is a broader and more general discretion than the one conferred by the QCAT. However, there is no automatic rule that costs ‘follow the event’ (that is, the outcome of the proceeding) or that the unsuccessful party must compensate the successful one; the discretion to award costs starts with the proposition that it is just and reasonable that a party who causes another to incur costs should reimburse the other party for them; otherwise, the factors affecting the discretion will vary in each case.
- [19]
Costs
- [18]Costs in building dispute proceedings, including appeals, are governed not by the Queensland Civil and Administrative Tribunal Act 2009 (Qld) but by the Queensland Building and Construction Commission Act 1991 (Qld).
- [19]The discretion to award costs in building dispute proceedings must be exercised judicially, not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation. The exercise of a discretion ‘judicially’ means for reasons that can be considered and justified.
- [20]Costs do not follow the event in building dispute proceedings. However, success in a proceeding and the degree of success, particularly one involving complex litigation, are relevant considerations in the exercise of the discretion to award costs. A party’s success may be a significant factor in an application for an order for costs.
- [21]The extent to which success in a proceeding may be eroded if a party is required to bear their own costs was considered by the Queensland Court of Appeal in Tamawood Ltd & Anor v Paans:
If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves. Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the Tribunal.
(footnotes omitted)
- [20]In Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No. 2)[5] Senior Member Brown reviewed the authorities regarding the making of an order for indemnity costs. He quoted at length from Colgate-Palmolive Company v Cussons Pty Ltd[6] in which Sheppard J held that a court ought not usually make an order for the payment of costs on some basis other than the party and party basis unless the circumstances of the case warranted the court in departing from the usual course. While the question will always turn on the particular facts, examples of the circumstances in which departure might be warranted include:
- (a)making allegations of fraud knowing them to be false;
- (b)making irrelevant allegations of fraud;
- (c)evidence of particular misconduct that causes loss of time to the court and to other parties;
- (d)proceedings commenced or continued for some ulterior motive;
- (e)proceedings commenced or continued in wilful disregard of known facts or clearly established law;
- (f)making of allegations which ought never to have been made;
- (g)undue prolongation of a case by groundless contentions;
- (h)an imprudent refusal of an offer to compromise;
- (i)an award of costs on an indemnity basis against a contemnor.
- (a)
- [21]Summarising the position, Senior Member Brown, stated:
- [5]The discretion to award costs must be exercised judicially and in accordance with established principles. A successful litigant is, generally speaking, entitled to an order of costs, and to deprive a successful party of their costs is an exceptional measure. A successful party is entitled to recover their costs of (sic) a standard basis absent some special or unusual feature to justify a court departing from the usual practice.
- [22]In Mt Cotton Constructions Pty Ltd v Greer & Anor (No 2)[7], an interlocutory decision in a building matter, Senior Member Brown said that costs should be assessed using the District Court scale:
Any assessment of costs on the standard basis should be on the District Court scale of fees. When assessing costs on a standard basis, costs are allowed for the “necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed”. (UCPR r 702). Standard costs generally do not include items not strictly necessary for the party to establish their case.
- [23]
Having regard to the objects of the QCAT Act, the discretion to fix costs under s 107 is an extremely wide one and is to be exercised robustly.
Exercise of discretion
Is it just and reasonable for the builder to pay the owner’s costs?
- [24]The short answer to the question is: yes, it is just and reasonable for the builder to pay the owner’s costs. Indeed, in its submissions on costs the builder conceded as much by submitting that the builder should be ordered to pay a percentage of the owner’s costs of the proceedings on the standard basis to be assessed in accordance with the District Court scale.
- [25]While it is not automatic that the tribunal will order the unsuccessful party to pay the costs of the successful party in a building dispute, it would be highly unusual that in a complex case such as this was, in which the unsuccessful party was ordered to pay the successful party almost a quarter of a million dollars, that a costs order would not follow. If costs were not awarded the owner’s success would be eroded, which would be contrary to the interests of justice.
- [26]Had the builder either successfully invoked the operation of section 105 of the QCAT Act or succeeded in its defence of the owner’s claims, possibilities for which I made allowance in my decision regarding costs thrown away and in my substantive decision, the position might have been otherwise.
Should the builder pay costs on an indemnity basis?
- [27]The effect of the owner’s claim for $743,056.53 is that he seeks costs on an indemnity basis.
- [28]This claim is contrary to the general principle, confirmed in Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No. 2),[9] that a successful party is entitled to recover their costs on the standard basis absent some special or unusual feature to justify departure from the usual practice.
- [29]The owner’s submissions present no justification for making an order for costs on an indemnity basis. None of the owner’s submissions identify any special or unusual feature which would warrant a departure from the usual course, if costs are awarded, of awarding costs on the standard basis. Even if it was the case that the builder failed on every point as submitted by the owner, which is far from an accurate submission, that would be no basis for an award of indemnity costs.
- [30]The fact that the owner is a private individual is not a reason to depart from the standard costs order. When considering costs the tribunal must act judicially, not in order to ‘properly compensate… [the owner] as a matter of practical justice.’
- [31]If it is the case that the owner’s submissions regarding Mr Wright’s reports being ‘consistently incorrect’ could be said to be a submission that the builder unduly prolonged the case by making groundless contentions in reliance on Mr Wright, I reject them. I dealt with Mr Wright at paragraphs [36] and [37] of my reasons where I:
- (a)found that Mr Wright was qualified to express opinions on wind loading, footings and other structural issues;
- (b)rejected the owner’s criticism that Mr Wright provided dogmatic evidence and only made concessions as he gave his evidence;
- (c)found his written reports considered;
- (d)noted his engagement in the intellectual discussions with Dr Boughton[10] during which he concurred with most of the reasoning advanced by Dr Boughton and made proper concessions at the appropriate time.
- (a)
- [32]The short answer to the question is: no, the builder should not be ordered to pay costs on an indemnity basis.
How should the owner’s costs be assessed?
- [33]The owner’s costs should be assessed on the standard basis on the District Court scale.
- [34]I reject the builder’s submission that there should be a 50% reduction in costs so assessed. While it is true that the owner did not succeed on every claim, nor to the full extent of the quantum claimed, nonetheless he was the successful party. I reject the submission that a 50% reduction in the entire costs order is the appropriate way to deal with the owner’s new submissions in the final quantum schedule. Those submissions can be dealt with when assessing whether items claimed are properly claimed.
- [35]While it is my preference to fix costs, absent an assessment prepared on the standard basis on the District Court scale, it is not yet possible for me to do so. I will take a robust approach to fixing the costs when I have sufficient material to do so.
Are the costs claimed by the owner necessary or proper for the attainment of justice?
- [36]In an effort to assist in the preparation of the assessment, below I set out matters which I will take into account when I fix the costs.
- [37]I accept the builder’s submissions that ‘necessary or proper’ costs rarely equate to the entire costs the successful litigant has incurred in prosecuting or defending the claim; almost invariably, it will be less (and sometimes considerably less) then those costs.
- [38]The terms ‘necessary’ and ‘proper’ were explained by Asprey J in W A Gilbey v Continental Liquers Pty Ltd[11] as follows:
- “[A]taxing officer in a party and party taxation should allow a successful litigant, in whose favour in order for costs has been made, a just and reasonable amount in respect of each item claimed in such litigants bill of costs where such item was, in fact, incurred on behalf of the litigant by his solicitor in respect of some step or matter in the litigation which either (1) was necessarily taken or performed for the attainment of justice or the maintaining or defending of the litigants rights in the circumstances of the particular case, or, (2) although not necessarily taken or performed for such purposes, would reasonably have been taken or performed for any of those purposes by a solicitor acting at the time when it was taken or performed without extravagance in conformity with the then situation of the case and not in conflict with the statutes and rules, the practise of the court, and the usages of the legal profession appertaining to such a case.
- [39]Mr Tapiolas listed numerous entries in exhibit CS-2 to the affidavit of Mr Watt which did not appear to him to relate to the costs of the proceedings. I accept the builder’s submissions that even on a cursory review of the affidavit of Mr Watt and the supporting annexures, it is clear that the owner has made no attempt to limit his claim for costs to costs of the proceedings or to costs which are necessary or proper. It appears that Mr Watt has supplied a list of every cost that has been incurred since the outset of his retainer by the owner and that no attempt has been made to exclude costs which are not costs of the proceedings or otherwise not necessary or proper.
- [40]I find that it is not proper for the owner to claim the following:
- (a)costs incurred before the proceedings were commenced by the builder in November 2018;
- (b)costs relating to any matters which are not costs of the proceedings, including:
- complaining to the CCC,
- a right to information application to the police;
- drafting a letter to an engineer for a potential claim;
- correspondence regarding the Financial Accountability Act 2009;
- a complaint under s. 132 of the Criminal Code;
- complaining to the Board of Professional Engineers about Peter Wright;
- discussing an LSC complaint against the builder’s representatives;
- advising about ‘adverse effects of the client’s foreshadowed disclosure of his matters to the media and LNP member Tim Mander’;
- (c)costs that relate to 5 separate administrative review proceedings in this tribunal regarding decisions of the QBCC and costs associated with the owner recording events occurring on site while repairs directed by the QBCC were being carried out;
- (d)a security for costs application which was never made;
- (e)correspondence between the parties relating to contractual matters that were not at issue in the proceedings, including access to the property, insurance, and returning a handover package;
- (f)
- (g)costs relating to the preparation and making of the unsuccessful application[13] to issue a notice to Mr Hutton requiring him to attend and give evidence under section 97 of the QCAT Act;
- (h)costs of listening to an audio file provided by the owner, which related to a QBCC inspection, not to these proceedings;
- (i)costs of raising matters for the first time in the proceedings in the final quantum submissions.
- (a)
- [41]The corollary of my decision regarding costs thrown away as a consequence of granting the indulgence to the owner to substitute the expert on wind issues for an alternate expert, is that the owner is not entitled to claim any costs associated with an expert whose evidence the owner chose not to rely on at the hearing. The owner is not entitled to claim any cost relating to briefing, liaising with, obtaining reports from and preparation for hearing with Windtech. Nor is the owner entitled to recover any of his costs relating to the builder’s application for costs thrown away or any costs relating to the enforcement of the decision regarding costs thrown away.
- [42]Mr Tapiolas identified numerous charges for items which appeared to him to be luxuries, including:
- (a)charges for lawyers within Becker Watt liaising with one other about the matter;
- (b)charges for note taking during meetings (in addition to a charge for attendance at the meeting);
- (c)charges for assistants ‘spell checking’ work;
- (d)reading memoranda prepared by juniors;
- (e)numerous internal administration charges;
- (f)charges for lawyers ‘reviewing the matter’ without any further explanation; and
- (g)charges for ‘liaising with the client’ or ‘discussing the matter with the client’.
- (a)
- [43]While such charges might have been within the scope of the client agreement between the owner and his lawyers, they are not costs to be allowed on the standard basis, save as part of the general allowance for care and consideration.
Footnotes
[1] [2011] QCATA 142.
[2] [2021] QCATA 143.
[3] [2016] QCATA 25.
[4] [2022] QCATA 8.
[5] [2016] QCAT 497.
[6] [1993] FCA 531.
[7] [2016] QCAT 387.
[8] [2016] QCAT 111, [49].
[9] [2016] QCAT 497.
[10] The owner relied on Dr Boughton after the third day of the hearing.
[11] [1964] NSWLR 527 at 534, cited in King v Allianz Australia Insurance Limited [2015] QCA 101 at [19].
[12] An expert retained by the owner.
[13] Transcript 12 April 2021 1-69 – 72.