Owltown Pty Ltd v Norwinn Commercial (No 3)
[2018] QCATA 94
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- Unreported Judgment
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- Owltown Pty Ltd v Norwinn Commercial (No 3)[2018] QCATA 94
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Owltown Pty Ltd v Norwinn Commercial (No 3)[2018] QCATA 94
Owltown Pty Ltd v Norwinn Commercial (No 3)[2018] QCATA 94
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Owltown Pty Ltd v Norwinn Commercial (No 3) [2018] QCATA 94 |
PARTIES: | OWLTOWN PTY LTD (appellant) |
v | |
BODY CORPORATE FOR THE NORWINN COMMERCIAL COMMUNITY TITLES SCHEME CTS 38094 (first respondent) JM FAMILY HOLDINGS PTY LTD ACN 154 045 128 and BERRIDGE ENTERPRISES PTY LTD ACN 168 647 934 (second respondents) | |
APPLICATION NO: | APL005-17 |
MATTER TYPE: | Appeals |
DELIVERED ON: | 6 July 2018 |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Member Barlow QC |
ORDERS: | The second respondents pay the appellant’s costs of and incidental to the appeal, including the costs of the second respondents’ application for miscellaneous matters filed on 11 April 2018, on the standard basis and at the District Court scale. |
CATCHWORDS: | ADMINISTRATIVE LAW – ADMINSTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – Costs – Whether unsuccessful party should pay successful party’s costs –Offer made before hearing – Whether offer more favourable to unsuccessful party than tribunal’s decision – Whether acceptance of offer would have settled dispute between all parties where body corporate was a party but had no active participation in dispute PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 102, s 105 Queensland Civil and Administrative Tribunal Rules 2009, rule 86 |
REPRESENTATION: | |
Appellant: | K W Wylie, instructed by Zande Law |
Second respondents: | B P Strangman, instructed by Stratum Legal |
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
Introduction
- [1]On 4 January 2018, the tribunal published orders (later amended) and reasons for its decision in this appeal from the decision of an adjudicator under the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act).[1] The appellant was successful. I declared that certain resolutions passed by the body corporate in a general meeting were invalid and I made consequential orders. Although the body corporate was named as first respondent to the appeal, it filed no documents and took no part in the appeal. The active respondents were the second respondents.
- [2]The appellant has now sought an order that the second respondents (to whom I shall refer as the respondents) pay the appellant’s costs of the appeal on the indemnity basis, or alternatively on the standard basis, at the District Court scale. This decision concerns that application.
- [3]In support of its application, the appellant relies in particular on an offer of settlement that it made a few weeks before the hearing of the appeal, which the respondents did not accept. The appellant relies on rule 86 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld), submitting that the tribunal’s decision was not more favourable to the respondents than the offer.
- [4]The respondents oppose any order that they pay the appellant’s costs of the appeal. However, if I do make an order for costs, they do not dispute that the District Court scale is appropriate.
Costs – the general principles
- [5]The principles and bases on which the tribunal will make a costs order, despite the strong indication to the contrary evinced by s 100 and s 102 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), have been discussed in a number of cases including, with respect to an appeal, Better Homes Queensland Pty Ltd v O'Reilly [2013] QCATA 122.
- [6]The starting point for proceedings in the tribunal is that, except as otherwise provided, each party must bear its own costs: s 100, QCAT Act.
- [7]However, the QCAT Act “otherwise provides” in part by s 102, which permits the tribunal to order a party to pay some or all of another party’s costs if the tribunal considers that the interests of justice require it to make such an order. Subsection 102(3) sets out a number of matters to which the tribunal may (but need not) have regard in deciding whether to award costs. 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.[2]
- [8]The nature of the tribunal’s discretion under s 102 was discussed by Alan Wilson J, in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412. His Honour compared s 100 and s 102 of the QCAT Act with s 70 and s 71 of the Commercial and Consumer Tribunal Act 2003, which governed the discretion as to costs in the predecessor to this tribunal. The principles governing the exercise of the former tribunal’s discretion were set out in the reasons for judgment of Keane JA (as his Honour then was) in Tamawood Ltd v Paans [2005] QCA 111.
- [9]In Ralacom at [26], Wilson J noted Keane JA’s view that, where the complexity of the matter justified legal representation, it would not be in the interests of justice to bar the successful party from recovering costs that were reasonably necessary to achieve a satisfactory income. In this case, the parties were legally represented before me.
- [10]However, Wilson J went on to note that Keane JA’s conclusion must be reconsidered in the light of the difference between s 70 of the CCT Act and s 100 of the QCAT Act. Section 70 spoke of a “main purpose” to have the parties pay their own costs unless the interests of justice require otherwise, but s 100 mandates that parties “shall” bear their own costs, except as otherwise provided under that Act or an enabling Act.
- [11]At [29], Wilson J concluded 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 “the interests of justice” point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100.
Should the respondents pay the appellant’s costs?
- [12]It is convenient first to consider whether I should make any order for costs. If I conclude that a costs order is appropriate, then it will be necessary to consider the basis on which costs should be calculated; in particular, whether rule 86 applies.
- [13]In doing so, I respectfully adopt the approach of Wilson J in Ralacom, but subject to the application and effect of s 105 and rule 86.
- [14]The appellant submits that it is in the interests of justice that the respondents pay its costs of the appeal because:
- a)it was wholly successful in the appeal – s 102(3)(c);
- b)the adjudication application and the appeal followed a misuse of the respondents’ majority voting power in the body corporate, by voting for the disallowed resolutions, unnecessarily disadvantaging the appellant – s 102(3)(a); and
- c)the appeal was legally complex, warranting the appearance for both parties of counsel instructed by solicitors pursuant to leave that the tribunal had granted to both parties to be legally represented.
- a)
- [15]The appellant does not rely on its offer as a factor in considering the interests of justice: it expressly addresses s 100 “apart from, and separately to” its submission concerning indemnity costs.
- [16]The respondents submit that the tribunal should make no costs order because:
- a)as Wilson J held in Ralacom, the interests of justice must point compellingly to a costs award so as to overcome the strong contra-indication against costs orders in s 100;
- b)the appellant commenced the adjudication proceeding and, after not succeeding there, this appeal;
- c)the appeal succeeded because the adjudicator had made an error of law;
- d)nothing relied on by the appellant overcomes the statutory contra-indication.
- a)
- [17]I consider that it is in the interests of justice that I make a costs order in this case, for the following reasons.
- [18]First, the appeal was certainly legally complex. The construction of the BCCM Act and the relevant section of the Commercial Module was not easy, either for the parties or for me. The tribunal received considerable assistance from the written and oral submissions of counsel for both parties. It is highly unlikely that the parties themselves, if unrepresented by lawyers, could have made similarly helpful submissions. Their representation by solicitors and counsel was of immense assistance to this tribunal in attempting to do justice.
- [19]Secondly, the appellant, having invested in its lawyers, was wholly successful in the appeal. The consequence was that the respondents were not only unsuccessful in this appeal, but the result of the appeal was that they should never have had the benefit of the resolutions for which they were solely responsible (as they had the majority voting power in the body corporate and voted for the resolutions, against the votes of the other unit holders).
- [20]Thirdly, I do not accept the respondents’ submission that somehow the interests of justice sway in their favour because the appellant pursued its legal rights and succeeded because the adjudicator made an error of law. An appeal can only be brought on a question of law and, if successful, will always be because the tribunal finds that the adjudicator made such an error.
- [21]In my opinion, those reasons suffice to make it compellingly in the interests of justice that a costs order be made. But additionally, although the appellant did not rely on it as a relevant factor, I consider that the fact that the appellant made the offer it did to the respondent is relevant to the interests of justice. While I do not criticise the respondent for preferring to proceed to obtain a judgment of the tribunal, given the difficult questions of law involved, in doing so after receiving such an offer it took the risk that it was wrong and that the tribunal may consider the offer in deciding whether to order that it pay the appellant’s costs. The fact of the offer adds to the compelling indication that it is in the interests of justice that the respondents pay the appellant’s costs.
- [22]I do not agree with the appellant’s submission that the respondents misused their voting power in voting in favour of the resolutions that I have declared were invalid. They were entitled to vote in the manner they did and they clearly believed that the resolutions for which they were voting would, if passed, be valid. That belief was not unreasonable. The fact that I have ultimately held that the resolutions were invalid does not mean that it was a misuse of power to vote in favour of them, nor that, by doing so, the respondents have unnecessarily disadvantaged the appellant.
- [23]In the circumstances, I consider that it is in the interests of justice that the respondents pay the appellant’s costs of and incidental to the appeal. As there is no dispute as to the appropriate scale, those costs should be determined on the District Court scale.
Indemnity or standard costs?
- [24]The next question is whether the costs should be on the standard basis or the indemnity basis. The appellant’s principal contention is that they should be on the indemnity basis because of the offer it made and the effect of rule 86.
- [25]Section 105 of the QCAT Act permits of certain exceptions to the ordinary position that each party should bear its own costs of an application to the tribunal. It provides that,
The rules may authorise the tribunal to award costs in other circumstances, including, for example, the payment of costs in a proceeding if an offer to settle the dispute the subject of the proceeding has been made but not accepted.
- [26]Rule 86 is made under that power. It applies when one party makes an offer to another to settle the dispute the subject of the proceeding, the other party does not accept the offer and the tribunal considers that its decision was not more favourable to that other party than the offer: rule 86(1). However, if a proceeding involves more than two parties, the rule applies only if the acceptance of the offer would have resulted in the settlement of matters in dispute between all parties: rule 86(3).
- [27]If the rule applies, then the tribunal may award the party who made the offer ‘all reasonable costs incurred by that party in conducting the proceeding after the offer was made:’ rule 86(2).
- [28]The appellant made its offer to the respondents by a letter on 24 July 2017, at which time the appeal had been listed for hearing on 21 August 2017. The offer was to the effect that, from its acceptance, the body corporate would operate on the “joint understanding” that s 115(3)(b) of the Commercial Module applies to the lift so that, from that point on, Lot 8 would meet 100% of the expenses associated with the lift; the appeal otherwise be dismissed and each party bear its own costs. Lot 8 would not be required to reimburse the body corporate for the share of the past expenses that it had not paid. The offer was open for 14 days.
- [29]It is readily apparent, as the appellant submits, that the offer (if capable of acceptance) was more favourable to the respondents than my decision, because by my decision I not only declared that the resolutions were invalid (because the Commercial Module required that the respondents bear all the expenses associated with the lift), but I also ordered the respondents to pay that portion of those expenses that they had not paid and the body corporate to reimburse to the other lot owners those portions of the lift expenses for which they had previously been levied by it. Additionally, the respondents would have had no exposure to the risk that the tribunal would order that they pay the appellant’s costs.
- [30]That being my opinion, the appellants submit that it is open to me to make an order under rule 86(2). They submit that “all reasonable costs incurred” by them means their costs on the indemnity basis.[3]
- [31]The respondents contend that rule 86 does not apply because the proceeding involves more than two parties (given that the body corporate is the first respondent) and acceptance of the offer could not have resulted in settlement of all matters in dispute. They submit that a settlement between the appellant and the respondents would not bind or resolve issues concerning the body corporate, and therefore rule 86 has no application. They also submit that, even if the offer had also been made to the body corporate and it had been inclined to accept it, any resulting agreement would have been ineffective and unenforceable because it relied on a construction of s 115(3)(b) of the Commercial Module that was inconsistent with the construction that had been determined by the adjudicator. It would therefore constitute an attempt to waive or limit the exercise of rights under the BCCM Act, or to contract out of the provisions of that Act, each of which is prohibited by s 318 of that Act.
- [32]The appellants have made submissions in reply to those submissions.
- [33]I do not consider it necessary to resolve the respondent’s arguments about the application of s 86, although I tend to the view that it does apply because the body corporate was not an active party and, as I have found, the adjudicator’s construction of the law was wrong. But, in my view, even if any settlement under the offer would resolve all issues between the parties and would be enforceable, it was not unreasonable for the respondents not to accept the offer. They had an adjudicator’s decision in their favour. The legal issues were complex (including, as can be seen, about the enforceability of the agreement proposed) and, at the time of the offer, the respondents could reasonably have considered (and had no doubt been advised by their lawyers) that they had reasonable prospects of success in opposing the appeal.
- [34]In the circumstances, I do not consider it appropriate for me to order that the respondents pay the appellant’s costs on the indemnity basis. They should be on the standard basis.
Costs of the stay application
- [35]After the appellant’s application for costs was filed, the respondent filed an application seeking, in effect, a stay of the application for costs, on the basis that an application for leave to appeal is on foot in the Court of Appeal and it was not appropriate to consider the costs of this application until that Court had decided whether to grant leave to appeal and whether any appeal should succeed.
- [36]On 17 May 2018 I dismissed the respondent’s application and I made directions for submissions on costs, including any submissions on the costs of that application. I directed that Owltown file any additional submissions it wished to file by 22 May, the respondents file their submissions by 25 May and the appellant file any submissions in reply by 4 June.
- [37]No further submissions were filed by the appellant by 22 May. It appears that that may have been the result of an administrative error within the tribunal, that led to my orders not being sent to the parties until the afternoon of 22 May. The respondents filed their submissions on 25 May, noting that they had not received any submission on the costs of their dismissed application and therefore they would not address that issue. Shortly after those submissions were received by the tribunal, it received (on 25 May) submissions from the appellant concerning the costs of the dismissed application. The appellant sought an order that the respondents pay its costs of that application on the standard basis.
- [38]The respondents have not filed submissions in response to the appellant’s submissions on the costs of that application. Instead, the respondents’ solicitors wrote to the tribunal on 30 May, noting the facts stated above and saying that the respondents did not propose to file any further submissions to address the appellant’s submissions, but the respondents relied on their submissions filed on 25 May.
- [39]In my view, it is appropriate that the respondents pay the appellant’s costs of and incidental to the respondents’ failed application for a stay. In part, the reasons I have given above for ordering the respondents to pay the appellant’s costs of the appeal justify such an order. Also, the application was made after the respondents were already in default (although only by a few days) in failing to provide submissions on costs, as they had been directed to do by my directions on 2 March. The respondents gave no explanation for their delay in making the application, nor did they make any attempt by affidavit to justify the reasons why, they contended, costs should not be decided. For these reasons and for the other reasons that I gave for dismissing the respondents’ application, that application was almost, if not certainly, doomed to fail. The respondents also contended in that application that submissions on costs would necessarily be extensive and expensive. They have not turned out to be extensive at all, although it was necessary to consider a number of statutory provisions and cases. As in the balance of the appeal, I derived considerable assistance from both parties’ submissions, which were drawn by counsel.
- [40]In the circumstances, I consider that the interests of justice require that the respondents pay the appellant’s costs of the respondents’ application.
Footnotes
[1] Owltown Pty Ltd v Body Corporate for Norwinn Commercial [2018] QCATA 2. The amended orders were made on 29 January 2018.
[2] Herron v Attorney-General for New South Wales (1987) 8 NSWLR 601 at 613 per Kirby P.
[3] Relying on Tucker v QBCC (No 2) [2014] QCAT 234 at [18]-[21]; Mt Cotton Constructions Pty Ltd v Greer (No 2) [2017] QCAT 98 at [30]; and Lyons v Dreamstarter Pty Ltd [2016] QCATA 43 at [37]-[39].