Brown v Osterman[2023] QCAT 314

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   On 22 March 2023 the Tribunal ordered the Respondents Soren John Osterman and Rebecca Olszak Osterman (the Osterman’s) pay the Applicant Matthew Brown (Mr Brown) the sum of $189,782.47 within twenty-eight days. With both parties requesting to be heard on the issue of costs they were ordered to file and give to the other party submissions on costs within twenty-eight days. Thereafter the Tribunal would determine the question of costs.
2. [2]
   The starting point with respect to costs in the Queensland Civil and Administrative Tribunal (QCAT) is spelt out in section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (the Act) which says:

Each party usually bears own costs

Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.^[1]

3. [3]
   The presumption may be displaced if the Tribunal considers it is in the interests of justice to order a party to pay all or part of the costs of another party.^[2]
4. [4]
   The phrase “in the interests of justice “is not defined in the Act but is to be construed according to its ordinary and plain meaning which confers a broad discretionary power on the decision maker.^[3]
5. [5]
   In determining whether it is in the interests of justice to award costs against another party the Tribunal may have regard to whether a party has acted in a way that unnecessarily disadvantages another party, the nature and complexity of the dispute, the relative strengths of the claims made by each of the parties, the financial circumstances of the parties and anything else the Tribunal considers relevant.^[4]
6. [6]
   In an often quoted passage from Ralacom Pty Ltd Justice Wilson held that

Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘interests of justice’ point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in section 100^[5]

7. [7]
   In Ascot v Nursing & Midwifery Board of Australia Judge Kingham stated:

The public policy intent of the provisions in the QCAT Act is plain. The Tribunal was established as a no costs jurisdiction. That may be departed from where the interests of justice require it. The considerations identified in s102(3) are not grounds for awarding costs. They are factors that may be taken into account in determining whether, in a particular case, the interests of justice require the Tribunal to make a costs order.^[6]

That approach sits comfortably with the stated position of Judicial Member D J McGill in Cowen v Queensland Building and Construction Commission where he said:  

8. [8]
   I consider that to say that an order for costs will not be made unless the factors favouring an order are compelling does not accurately state the test for making an order for costs laid down by section 102(1). In my opinion, the Member in this way set the bar too high against the applicants when deciding whether to make an order for costs in this matter. The test is whether the interests of justice require an order for costs, but I do not accept that the circumstances favouring an order for costs must be compelling before the test will be met.^[7]
9. [9]
   For Mr Brown it is put to the Tribunal quoting Keane JA in Tamawood Pty Ltd v Paans:

In the absence of countervailing considerations, where a party has reasonably incurred the cost of legal representation, and has been successful before the Tribunal, it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring that party to bear the costs of the representation which was reasonably necessary to achieve that outcome….^[8]

10. [10]
    But that statement must be construed in the light of section 100 of the Act, that is, the starting point being that each party bears their own costs and section 102(3) being those factors to be considered that might lead to a costs order.
11. [11]
    Firstly, did the Osterman’s act in a way that unreasonably disadvantaged Mr Brown. The parties came to the Tribunal with fundamental differences of opinion about the interpretation and application of their contractual arrangements. With that stark contrast there was always to be one view prevailing to a greater or lesser degree over the other.
12. [12]
    The considerable body of evidence produced by both parties did not unnecessarily disadvantage the other party but rather it was a case of detailing the party’s engagement over an extended period of time with a lot of evidence about what each party considered the contractual arrangements to be, what was included or not included and the parties recollection of what was said or agreed supported to a greater or lesser degree by a number of witnesses all of which are unfortunate characteristics of building disputes. Both parties clearly put a lot of time and effort into their respective cases. Nor was there any evidence that could be said to be unnecessarily putting the other party to expense that might otherwise not have been incurred. In circumstances where both parties came to the Tribunal well prepared and argued their position in a genuine manner it is difficult to see that either party ever disadvantaged the other. The Tribunal considered both parties to generally be honest brokers.
13. [13]
    The nature and complexity of the dispute is a relevant consideration. The application involved the consideration of numerous issues, events, and exchanges over a considerable length of time. That does not necessarily make a matter complex but rather requires unravelling all of those placing them in a chronology that sensibly and ultimately, as here, favours one party’s overall position apropos the other. That does not amount to a factor displacing the strong contra indication against costs orders in section 100 of the Act.
14. [14]
    The relative strengths of the claims made by each of the parties to the proceeding is a further relevant consideration. The strength of Mr Brown’s case can be largely measured in terms of general monetary success. The strength of the Osterman’s case can be largely measured in terms of some diminution of Mr Brown’s claim. There is nothing so overwhelming or divergent in the strength of claim and response such as to warrant departure from the initial principle.
15. [15]
    As for the financial position of the parties there was no evidence of any great disparity between their financial circumstances. Mr Brown was a stand-alone builder of some experience making a living while the Osterman’s were renovating their premises. They had some renovation experience and had borrowed to upgrade their premises.
16. [16]
    Here neither party acted in a manner that was frivolous or vexatious. Complexity as such centred around issues, events and occurrences over a considerable length of time that could have given efficacy to the version put forward by that party. There was a reasonable belief on the part of both parties that they had correctly assessed the whole of the relationship between them. With respect to Mr Brown’s Calderbank claim he must show that in seeking orders for indemnity costs rather than costs on a standard basis for the period 22 February 2021 onwards (the date of Mr Brown’s Calderbank offer of $130.000.00) that the Osterman’s acted unreasonably or imprudently by not accepting the offer at that time; that the Osterman’s should have known they would fail or were at least at risk of failure. But the Osterman’s being self-represented were reasonably of the belief they were in the right and to a minor extent they were or alternatively did not owe Mr Brown any money or even that Mr Brown owed them money. That is clearly borne out by the volume of evidence and arguments they put forward. That is not unreasonable or imprudent conduct particularly as they interpreted the offer, and it seems a subsequent offer, as relieving Mr Brown of liability for latent defects in addition to his statutory warranty obligations under the Queensland Building and Construction Commission Act 1991 (Qld). 
17. [17]
    Considering those factors identified in section 102(3) of the Act there is not enough weight in the evidence and material on record to say that the interests of justice point so compellingly to a costs award that they overcome the strong contra indication against costs orders in section 100 of the Act. Even adopting the test of whether the interests of justice require an order for costs and not accepting that circumstances favouring an order for costs must be compelling the claim for costs, standard or indemnity, on the evidence and material falls short.   
18. [18]
    The order shall be that each party bear their own costs of the proceeding.