Lupton Scott v Ryan Stewart
[2022] QCATA 130
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- Unreported Judgment
- Lupton Scott v Ryan Stewart[2022] QCATA 130
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Lupton Scott v Ryan Stewart[2022] QCATA 130
Lupton Scott v Ryan Stewart[2022] QCATA 130
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Lupton Scott v Ryan Stewart [2022] QCATA 130 |
PARTIES: | lupton scott t/as fantasy pools brisbane (applicant/appellant) v ryan stewart (respondent) |
APPLICATION NO/S: | APL187-20 |
ORIGINATING APPLICATION NO/S: | BDL275-18 |
MATTER TYPE: | Appeals |
DELIVERED ON: | 31 August 2022 |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Member Traves Member Howe |
ORDERS: |
|
CATCHWORDS: | APPEAL AND NEW TRAIL – PROCEDURE – QUEENSLAND – POWERS OF COURT – COSTS – where costs refused – where leave to appeal sought – whether leave to appeal should be given – whether error in failure to take into account relevant considerations – whether error in failure to take into account irrelevant considerations – whether costs should be awarded Queensland Building and Construction Commission Act 1991 (Qld), s 77 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 102, s 142(3) Barnett v Pirrone [2019] QCATA 166 House v R (1936) 55 CLR 499 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Tamawood Ltd v Paans [2005] QCA 111 |
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) |
Applicant: | Mr Tom Adames of All Building Law Pty Ltd |
Respondent: | Self-represented |
REASONS FOR DECISION
- [1]This is an application for leave to appeal and, if successful, appeal of a decision not to award costs.
- [2]The matter involved a dispute about a concrete-shell swimming pool built by Mr Scott for Mr Stewart. The matter was commenced by Mr Scott as a minor civil dispute claim for payment of money owed under a building contract for the construction of the pool. This claim was dismissed for lack of jurisdiction. Mr Stewart then commenced a claim for damages as a minor civil dispute to which Mr Stewart filed a counterclaim for payment of unpaid invoices. This claim and counterclaim were transferred to the building list.
- [3]The final hearing was held over two days and a decision was made in favour of Mr Scott. Mr Stewart was ordered to pay to Mr Scott the amount of unpaid invoices (excluding the ‘variation invoice’ and the practical completion invoice), together with interest. Mr Stewart’s counterclaim was largely unsuccessful. Of a claim which developed during the course of the litigation from $24, 000 to eventually exceed $500, 000, only $1, 518 in damages was awarded in his favour.
- [4]The Tribunal made an order for the parties to file submissions regarding any claim for costs, which they did. On 5 June 2020 the Tribunal refused the application for costs made by Mr Scott and refused the application made by Mr Stewart for an extension of time to make further submissions about costs.
- [5]On 6 July 2020 Mr Scott filed an application for leave to appeal or appeal in relation to the costs decision.
Appeals against costs decisions
- [6]An appeal against a costs order may only be made with the leave of the appeal tribunal.[1] The relevant principles to be applied in determining whether to grant leave to appeal are well established: is there a reasonably arguable case of error in the primary decision; is there a reasonable prospect that the applicant will obtain substantive relief; is leave necessary to correct a substantial injustice to the applicant caused by some error; is there a question of general importance upon which further argument, and a decision of the appellate court or Tribunal, would be to the public advantage.[2]
- [7]Mr Scott submits that leave to appeal should be granted because he has demonstrated a reasonably arguable case of error in the primary decision and that he has a reasonable prospect, based on case law, of obtaining substantive relief. Further, Mr Scott submits that the Tribunal has caused a substantial injustice to Mr Scott in that his success in the primary decision has been severely eroded by the decision not to award costs.
- [8]Mr Scott submits that the following question of general importance is raised in the appeal, namely:
Whether the granting of leave by the Tribunal for parties to be legally represented in a building dispute establishes a prima facie right for the successful party to recover its legal costs from the unsuccessful party? The right being similar to the position in the courts where “costs follow the event” absent any disentitling conduct on the part of the successful party.
- [9]Mr Stewart submits that leave to appeal ought be refused in circumstances where the appeal raises no question of general or public importance and where there is no reasonably arguable case that the tribunal member erred. Further, to succeed on appeal, Mr Scott needed to demonstrate an error in the exercise of the “broad general discretion” to award costs conferred by s 77 of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) which, it was submitted, he had no prospects of establishing.
Relevant principles
- [10]The QCAT Act provides that, other than as provided for under the QCAT Act or an enabling Act, each party must bear their own costs.[3] On the other hand, s 77(3)(h) of the QBCC Act provides that the Tribunal may exercise the power to award costs in a building dispute. The section does not provide further guidance or prescription about the occasions for or conditions of exercise of that power.
- [11]The Appeal Tribunal has held that the Tribunal’s discretion to award costs in a building dispute pursuant to s 77(3)(h) of the QBCC Act is a broader and more general discretion than the one conferred by the QCAT Act pursuant to s 100 of the QCAT Act.[4] The QBCC Act confers an express and otherwise unfettered discretion to award costs.
- [12]Section 77(3)(h) of the QBCC Act does not identify matters which should be taken into account in the exercise of the discretion to award costs. In such circumstances it is well established that the obligation is to act judicially.[5] The obligation to exercise the costs discretion ‘judicially’ is discussed in Dal Pont’s The Law of Costs:[6]
The central and overriding principle is that of doing justice to the parties in each particular case, it being judicially remarked that there is ‘no better test than the test of what is fair and just between the parties’.
- [13]In Lyons v Dreamstarter Pty Ltd the then Deputy President, Judge Kingham said:
A jurisdiction given in general terms allows the Tribunal to make an order as to costs that is justified in the circumstances. It is a broad general discretion which must be exercised judicially, not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation.[7]
- [14]Section 7(2) of the QCAT Act provides that if there is an inconsistency between a provision in the QCAT Act and a modifying provision, the modifying provision prevails, accordingly s 77(3)(h) of the QBCC Act prevails over s 100 of the QCAT Act.
- [15]
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 [Latoudis v Casey [1990] HCA 59]. Otherwise, the factors affecting the discretion will vary in each case [Donald Campbell & Co v Pollak (1927) AC 732 at 811-12].
- [16]The learned Member listed the factors he considered relevant to the exercise of his discretion to award costs at [13] of the Reasons. They included:
- (a)that it is not in the interests of justice for a party’s success in a proceeding to be eroded by not making a costs order in its favour; and
- (b)whether it was reasonably necessary for the successful party to incur the cost of legal representation to achieve a satisfactory outcome;
- (a)
- [17]An appeal against costs is an appeal against the exercise of a discretion. Where a decision is based upon the exercise of a discretion, a Court or Tribunal on appeal is not justified in interfering with the decision unless the discretion has not been properly exercised. The relevant principles were set out in House v The King[9] per Dixon, Evatt and McTiernan JJ:[10]
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
Grounds of appeal
- [18]Mr Scott contends that, in refusing to award costs, the Tribunal erred in exercising the relevant discretion in the following respects:
- (a)by failing to take into account a relevant consideration, being the complexity of the matter and the fact the parties had been granted leave to have legal representation (Ground 1);
- (b)by failing to take into account a relevant consideration, being that the respondent pursued misconceived claims (Ground 2);
- (c)by failing to take into account a relevant consideration, being that the applicant’s costs were reasonably incurred (Ground 3); and
- (d)by failing to take into account a relevant consideration, being the factors set out in section 102 of the QCAT Act as addressed in the applicant’s original costs submissions filed 2 April 2020 (Ground 4).
- (a)
- [19]In considering whether leave to appeal should be granted, in particular whether there is a reasonably arguable case that the Tribunal made an error, we propose to deal with each of the grounds of appeal.
Ground One
- [20]Mr Scott contends that the Tribunal’s reasons are, in effect, internally inconsistent. Mr Scott submits that he was given leave to be legally represented pursuant to s 43(2)(b)(iv) of the QCAT Act, presumably on the basis the Member considered the proceeding was likely to involve complex questions of fact or law. Mr Scott makes references to the decision where the Member acknowledged it was “understandable” Mr Scott wished to engage a lawyer and that “many people in his position would have sought initial legal advice, at least. Many would have wanted the assurance of having a lawyer prepare and argue their case.” Mr Scott also refers to a statement made at [17] of the decision that “Overall, the complexity warranted the assistance of a lawyer on procedural matters and in obtaining and understanding expert evidence.”
- [21]Mr Scott submits that despite “seemingly concluding” the matter was sufficiently complex to warrant legal representation that the Member denied the application for costs on the basis that it was “not reasonably necessary for him to [engage a lawyer]” (referring to [38] of the Reasons). Mr Scott submits that the Member gave no weight or insufficient weight to the fact that legal representation had been granted and the Tribunal had acknowledged the matter was complex in considering whether it was necessary for him to reasonably incur the cost of legal representation. Mr Scott respectfully disagrees with the Member’s conclusions that various claims and aspects of the proceeding were not complex.
- [22]Further, Mr Scott relies on the principles in Tamawood Ltd v Paans [2005] QCA 111 to the effect that a finding that a party was justified in engaging lawyers in complex proceedings could alone be a sufficient basis to conclude that the interests of justice warranted an award of costs in favour of the successful party, at least absent any countervailing consideration. Mr Scott submits that this matter was similar to Tamawood and yet he was not awarded costs.
- [23]Mr Stewart submits, generally, in relation to each ground, that the applicant has misapprehended the nature of a decision-maker’s obligation to take into account a relevant consideration. It is submitted that a failure to take into account a consideration can only amount to a jurisdictional error if it is a matter the decision maker was bound to take into account (relying on Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39). Section 77 of the QBCC Act, it is submitted, does not compel a decision-maker to consider any of the matters in grounds 1 to 4 in making a decision about whether to award costs. Rather, the Tribunal has a broad general discretion.
- [24]In relation to ground one, Mr Stewart submits that the reference to [17] of the Member’s reasons is based on a misreading because the Member was summarising there the applicant’s arguments and so it follows, it is submitted, that the applicant’s submissions about the Member’s reasoning being contradictory are misconceived.
- [25]In any event, it is submitted, the Member did take the complexity of the dispute and the granting of leave for legal representation into account in considering whether to award costs and did not therefore err in the exercise of the discretion in the manner contended for in ground 1. Mr Stewart refers to the following passages in the Reasons:
- (a)where the Member says five of the respondent’s claims were unremarkable in the sense they commonly arise in building disputes and fall to be determined in a straightforward manner by making findings of fact and then applying the terms of the contract. They are the sort of matters in which parties often represent themselves (at [22]);
- (b)acknowledged that it was understandable that the applicant wished to engage a lawyer but went on to say, “However the applicant was no less capable than the respondent of directly engaging a structural engineer and understanding the expert evidence. If anything he would have been more capable because of his experience as a builder and his history of interactions with engineers (at [28]);
- (c)noted that the claims pursued by the applicant for payment of invoices was not so complex that they could not have been pursued capably by the applicant without legal representation (at [36])
- (a)
- [26]Further, it is submitted, the reliance on Tamawood is misplaced, given it is concerned with the construction of a different statute (ss 70 and 71 of the Commercial and Consumer Tribunal Act 2003 (Qld)).
- [27]Mr Scott’s claim was a straightforward claim for money owing on invoices. On the other hand, Mr Stewart’s claim was for damages for breach of contract, and the ultimate claim was in excess of $500, 000. It was not for Mr Scott to second guess the veracity of Mr Stewart’s claims – they having been made, he was entitled to engage legal representation to defend them.
- [28]It is plain that the Member did take into account that leave had been granted for legal representation. The Member concluded however, after considering the nature of the claims made by Mr Stewart and by Mr Scott, that while it was “understandable” that Mr Scott engaged a lawyer, that he was “not satisfied, having regard to the nature of claims pursued by both parties, that it was reasonably necessary for him to do so”. Similarly, the Member did not consider it necessary for transcripts to be obtained as the case did not turn on fine points of oral evidence.[11] We do not agree with this finding. Given the nature and extent of the claim, it was reasonable for Mr Scott to engage legal representation. Indeed, it may have been foolhardy of him not to do so.
- [29]It is apparent from the Reasons[12] that the Member drew a distinction between having legal representation on the one hand, and having reasonably obtained and retained it for the hearing on the other.
- [30]At [38] of the Reasons the Member found:
While it was understandable that Mr Scott engaged a lawyer to represent him, I am not satisfied, having regard to the nature of the claims pursued by both parties, that it was reasonably necessary for him to do so. Similarly, I do not consider that it was necessary for transcripts to be obtained, as the case did not turn on fine points of oral evidence.
- [31]Thus, by way of example, the learned Member found that a number of claimed items were “unremarkable in the sense that they were within the range of items that arise not uncommonly in building disputes…the sorts of matters in which parties often represent themselves before the Tribunal” (at [22]); that a claim was “the sort of hopeless item about which a respondent can advocate for themselves” (at [24]); and that “The claim items pursued by Mr Scott, including the quantum meruit arguments, are the types of matters which commonly arise in building disputes. I do not consider that they are so complex that they could not have been pursued capably by Mr Scott without legal representation” (at [36]).
- [32]This was a distinction made by Keane JA in Tamawood Ltd v Paans.[13] However, as Keane JA said in Tamawood:
There is a clear distinction, in terms of the interest of achieving justice, between the mere fact of having representation and the fact of having reasonably obtained that representation because of the complexity of the case. 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.[14]
- [33]The Member in concluding the proceedings were not complex seemed to rely on the fact that the various claims made by Mr Stewart were “hopeless” or “doomed to fail” or that they depended on a finding of fact followed by the application of the contract. With respect to the Member, that is an unduly narrow approach to the issue of complexity. The claims by Mr Stewart started at $24, 000 but were amended a number of times over the course of the litigation to an amount that exceeded $560, 000. Mr Stewart was also a particularly combative litigant, filing frequent interlocutory applications, often at the last minute.
- [34]For the reasons above, while a party is entitled to make such claims it believes open, should they be found to be baseless they remain a relevant consideration on an application for costs. The learned Member found:
In my view, these items were not so much vexatious as reckless. The only logical explanation for them seems to be that fuelled by a sense of grievance, Mr Stewart adopted the attitude that he would make large claims in the hope that he might be at least partially successful.[15]
- [35]In our view, such a finding does not assist Mr Stewart. A party which makes “reckless” claims in the hope it may be at least partially successful cannot complain if the other party seeks legal assistance to refute them.
- [36]Mr Scott, who runs his own business, could not reasonably have been expected to have run these proceedings, facing significant financial consequences including the potential loss of his QBCC licence, without recourse to lawyers. Nor could he, in our view, be expected to know with sufficient certainty whether the claims made by Mr Stewart were “hopeless” or “doomed to fail”. Lay persons are not necessarily equipped in reading and applying the terms of a contract. Litigants do not have the benefit of hindsight when assessing the veracity of claims. In our view, though we agree with the Member that building contract issues and quantum issues are commonplace in building disputes, that does not necessarily mean they are straightforward, particularly to the lay litigant from whose perspective that must be judged. In any event, the Member acknowledged that whether the rectification reasonably required extended to demolition of the pool, was not a baseless claim. This, in itself was a sufficiently drastic possibility, to warrant the conclusion that legal representation was reasonably necessary.
- [37]In conclusion we find that, although the Member had a broad discretion, the matter was complex and the Member erred in finding otherwise. This in turn meant there was an error in concluding that legal representation was not reasonably necessary.
- [38]Leave to appeal should be granted in respect of ground one.
Ground Two
- [39]Mr Scott contends that the Member made an error in failing to take into account how the respondent’s “misconceived claims” caused him “significant and unnecessary expense”. Further, that Barnett v Pirrone [2019] QCATA 166 should have been followed because Mr Stewart ought to have known some of his claims were not maintainable and yet he continued to pursue them.
- [40]In our view, although the Member did acknowledge that some of the claims were reckless, hopeless and doomed to fail, this did not appear to be taken into account in considering whether it would be fair to award costs at least incurred in dealing with those claims. The Member found that the claims were reckless, fuelled by a sense of grievance and the respondent had “adopted the attitude that he would make large claims in the hope that he might be at least partially successful.” Rather than taking that into account as a factor supporting the award of costs, it was taken into account as a factor against the award of costs.
- [41]While this matter is not on all fours factually with Barnett, the principle expressed there is apposite here, namely that “it is sufficient …to enliven the discretion to award [indemnity] costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.”[16] (emphasis added)
- [42]While not reaching the level of the respondent’s conduct in Barnett’s case, where the Tribunal found the party was wrong to continue the dispute in the face of an arborist’s report and warnings from the Tribunal at Directions Hearings that it did not have jurisdiction, the pursuit of “reckless” and “hopeless” cases, persisted with most likely due to a sense of grievance rather than on any legal foundation should, in our view, have been taken into account as a factor in favour of awarding costs.
- [43]It was, in our respectful opinion, an error not to take this into account.
- [44]Leave to appeal is also granted on this ground.
Ground Three
- [45]Mr Scott submits that, even if the Tribunal was of the view that the applicant should not recover costs for dealing with “reckless” or “doomed to fail” claims, the Member failed to consider whether costs should have been awarded for all the other claims, his counter claim (which was substantially successful), the quantum meruit claim, the experts costs and hearing costs. Mr Scott contends that it is in the interests of justice that costs be awarded in his favour and that his success will be entirely eroded if a costs order is not made in his favour.
- [46]Mr Stewart submits that the Member did take these factors into account and refers to paragraph 38 of the Reasons.
- [47]Mr Scott ultimately recovered $8, 257 plus interest calculated in accordance with Order 1 (b). Given he spent over $6, 000 in transcript fees and incurred experts’ costs and legal costs, his victory was undoubtedly Pyrrhic.
- [48]In our view, in considering what is fair, the effect of not awarding costs must be taken into account. It should not be the case that a party, faced with a claim for over $500, 000, engages a lawyer, wins the case but ends up losing financially.
- [49]Leave to appeal is also granted on this ground.
Ground Four
- [50]Mr Scott submits the Member erred in failing to consider the factors in s 102(3) of the QCAT Act.
- [51]Mr Stewart submits that the factors in s 102 are not relevant to the exercise of the discretion to award costs under s 77 of the QBCC Act.
- [52]We have addressed this submission above. We do not consider this ground to be of any moment.
- [53]Ground Four has no merit.
Conclusion
- [54]In our view, the Member erred by finding that it was not reasonable for Mr Scott to engage and retain lawyers for the hearing. The learned Member also erred in failing to take certain matters into account in the exercise of his discretion and in erroneously regarding some factors as supporting no order as to costs when, in our view, they strongly supported an award of costs. We would add that it was palpably unfair in these circumstances not to have awarded costs when the parties had been given leave to be represented, the claim was for over $500, 000, expert engineers were involved, the applicant had a lot to lose, and the applicant was fighting an unpredictable, aggrieved and determined opponent.
- [55]The matter did raise questions of general importance in how the Tribunal exercises its discretion to award costs under s 77 of the QBCC Act when the party has granted leave to be legally represented and is ultimately successful.
- [56]For the reasons above, we grant leave to appeal and allow the appeal.
- [57]The decision of the learned Member is set aside. Having done so it is necessary to exercise our discretion in respect of the correct order.
- [58]We have found above that it was reasonable for Mr Scott to engage and retain legal representation. That is a significant matter in favour of an order for costs.[17]
- [59]Secondly, Mr Stewart was largely successful in the proceeding.
- [60]Thirdly, as the learned Member found, Mr Stewart’s claims were reckless and inflated in the hope that he might receive something in the nature of an award.
- [61]In those circumstances, in our view, Mr Stewart ought to pay Mr Scott’s costs. We make no order with respect to the recovery of the costs of obtaining the transcript. Whether those amounts are recoverable will be a matter for the costs assessor, in the event the costs are not agreed.
- [62]We are unable to fix costs given there was no evidence before us of the costs incurred. In those circumstances, we make the orders as set out below.
Orders
- 1.Leave to appeal is granted.
- 2.The appeal is allowed.
- 3.Ryan Stewart shall pay Lupton Scott’s costs of and incidental to the proceeding at first instance to be agreed, or if not agreed to be assessed on the standard basis in accordance with the District Court Scale.
- 4.The parties must make any submissions in relation to the costs of the appeal by 4:00pm on 28 September 2022.
- 5.Any application for costs of the appeal will be determined by the Tribunal on the papers after 28 September 2022.
Footnotes
[1]QCAT Act, s 142(3)(a)(iii).
[2]QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41; Cachia v Grech [2009] NSWCA 232; Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388, 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577, 578, 580.
[3]QCAT Act, s 100.
[4]Pivovarova v Michelsen [2016] QCATA 45 at [24].
[5]See, for example, Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [2001] NSWCA 137; (2001) 113 LGERA 439, 447 (Stein JA).
[6]G E Dal Pont, Law of Costs (LexisNexis, 3rd ed, 2013) [6.15] citing Earnshaw v Loy (No 2) [1959] VicRep 44; [1959] VR 252, 253 (Sholl J); Howitt v Alexander & Sons Ltd [1948] SC 154, 159 (Lord Russell).
[7]QCATA 142 at [33].
[8][2012] QCATA 71.
[9](1936) 55 CLR 499
[10]Ibid at 404-405.
[11]Reasons at [38].
[12]Ryan Stewart v Lupton Scott trading as Fantasy Pools Brisbane, 5 June 2020, unpublished decision.
[13][2005] QCA 111 at [33].
[14]Ibid.
[15]Ryan Stewart v Lupton Scott trading as Fantasy Pools Brisbane, 5 June 2020, unpublished decision at [32].
[16]Ibid at [51] to [52] citing J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers - Western Australian Branch (unreported decision of 19 February 1993) per French J at p5.
[17]Tamawood Ltd v Paans [2005] QCA 111