Browne v Osterman[2025] QCATA 25

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   This is an appeal from a decision by the Tribunal at first instance that each party bear their own costs of the proceeding. The substantive hearing involved a building dispute, in which the applicant was successful and the respondents were ordered to pay the applicant the sum of $189,782.47.
2. [2]
   In the past, there have been conflicting decisions as to the proper approach to determining applications for costs in relation to matters before the Tribunal. That issue was settled by the 2024 decision of the Court of Appeal in Health Ombudsman v du Toit^[1]. The decision the subject of the present appeal was delivered earlier, on 17 August 2023.^[2] As with many other decisions of the Tribunal, it placed reliance on the decision in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2),^[3] in relation to which decision the Court of Appeal in Health Ombudsman v du Toit^[4] expressed ‘a number of difficulties’.
3. [3]
   The grounds of appeal may be summarised as follows:

1. The Tribunal erred in finding that the starting point for a determination as to costs is s 100 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), in circumstances where the enabling Act made provision in relation to the award of costs and displaced s 100 of the QCAT Act.^[5]
2. The Tribunal erred by failing to apply the power to award costs as provided for in the enabling Act.^[6]

3. The Tribunal erred by failing to apply the general rule that costs are in the discretion of the Tribunal but follow the event unless the Tribunal orders otherwise, in circumstances where the applicant had succeeded on substantial issues in the case and had succeeded overall.

4. The Tribunal erred in failing to award costs on an indemnity basis, in circumstances where a Calderbank offer had been rejected.

4. [4]
   Grounds 1 and 2 of the appeal rely on s 77(3)(h) of the Queensland Building and Construction Commission Act 1991 (Qld) (‘the QBCC Act’), as displacing s 100 of the QCAT Act. Section 77 of the QBCC Act applies where the Tribunal is deciding building disputes. Section 77(3) of the QBCC Act provides, in part:

Without limiting the tribunal’s powers to resolve the dispute, the tribunal may exercise 1 or more of the following powers—

…

8. award costs.

5. [5]
   No reference was made to that provision by the Tribunal at first instance and the focus of the reasoning was on s 100 and s 102 of the QCAT Act. However, in a number of cases it has been held that in terms of s 6(7) and s 7 of the QCAT Act, s 77(3)(h) of the QBCC Act is a modifying provision and prevails over s 100 and s 102 of the QCAT Act,^[7] which are the primary provisions in the latter Act dealing with the award of costs.
6. [6]
   It has also been held that the power to award costs under the QBCC Act allows for the exercise of a broader and more general discretion than that allowed by the QCAT Act, given that s 102 of the QCAT Act qualifies the discretion to award costs.^[8] Nevertheless, it has been said that the distinction is of little moment, since s 102 of the QCAT Act is permissive and permits the taking into account of ‘anything else the tribunal considers relevant’.^[9] Also, as noted in Burnell v Jarvis,^[10] in exercising the discretion to award costs in relation to building disputes it is appropriate to consider the matters set out at s 102(3) of the QCAT Act.
7. [7]
   In Partington & Anor v Urquhart (No 4)^[11], it is stated (footnotes omitted):

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. The obligation to exercise the costs discretion ‘judicially’ is discussed in Dal Pont’s The Law of Costs: 

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’.

8. [8]
   The respondents state that while the Tribunal at first instance did not make reference to s 77(3)(h) of the QCAT Act, it did canvass the matters listed at s 102(3) of the QCAT Act and submit that the same factors referred to in s 102(3) of the QCAT Act are relevant to the exercise of the discretion under s 77 of the QBCC Act.
9. [9]
   However, leaving consideration of the operation of s 77 of the QBCC Act to one side, while the Tribunal at first instance did consider the factors relevant to the interests of justice at s 102 of the QCAT Act, clearly it gave primacy to what was then perceived to be the proper operation of s 100 of the QCAT Act, relative to s 102 of the QCAT Act.
10. [10]
    In concluding that costs should not be awarded, the Tribunal at first instance echoed what was said in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) regarding the role of s 100 of the QCAT Act in stating:^[12]

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.

11. [11]
    In Health Ombudsman v du Toit^[13], the Court of Appeal rejected the proposition that s 100 of the QCAT Act provided for a ‘strong contra-indication against costs’ and held that the focus should be on what is in the interests of justice as provided for in s 102 of the QCAT Act.
12. [12]
    It is evident that reliance on that earlier approach in relation to the role of s 100 of the QCAT Act coloured the Tribunal’s consideration of the factors to be taken into account under s 102 of the QCAT Act. Accordingly, even to the extent that there are parallels between the factors to be taken into account in exercising the discretion under s 102 of the QCAT Act and s 77 of the QBCC Act, the Tribunal fell into error by qualifying those factors by reference to what was said in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2).^[14] It also remains that the Tribunal at first instance made no reference to s 77 of the QBCC Act and the implications that might have for any determination in relation to costs.
13. [13]
    By s 142(3)(a)(iii) of the QCAT Act, leave to appeal is required in relation to an appeal from a decision in relation to costs. Usually, leave will be granted only where an appeal is necessary to correct a substantial injustice to the applicant and there is a reasonable argument that there is an error to be corrected.^[15] The error in the present case is such that it should be corrected and a substantial injustice would arise if that did not occur.
14. [14]
    Accordingly, leave to appeal is granted and the first ground of appeal should be upheld.
15. [15]
    Brief comment is made in relation to the third and fourth grounds of appeal. The third ground of appeal is that costs should follow the event unless the Tribunal orders otherwise. However, as stated by the then president of the Tribunal, Wilson J, in Lyons v Dreamstarter Pty Ltd^[16] (footnotes omitted):

The High Court has said that there is no automatic rule that costs ‘follow the event’ (i.e., 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.

16. [16]
    While in Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No 2),^[17] it was stated that, generally speaking, the successful litigant in building dispute proceedings is entitled to an order for costs it remains that whether or not costs should be ordered will depend on the circumstances of each case.
17. [17]
    The fourth ground of appeal is that the Tribunal erred in failing to award costs on an indemnity basis, in circumstances where a Calderbank offer had been rejected.
18. [18]
    As to when an order for indemnity costs might be justified, in Fick v Groves (No 2) Applegarth J stated (footnotes omitted):^[18]

[3] In Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd (No. 2), McMurdo J cited the leading authorities on the circumstances in which an order for indemnity costs may be justified. Some authorities require unreasonable conduct on the part of a litigant. Chesterman J in Todrell Pty Ltd v Finch (No. 2) preferred a criterion of “something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis”. As McMurdo J observed in Thiess Pty Ltd, whether the criterion is that of unreasonableness or irresponsibility, there must be something about the facts and circumstances beyond the demerit of a party’s case, as reflected in the outcome, before such an order is warranted.

[4]  The judgment of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd is frequently cited in this context. It is authority for the proposition that the circumstances which may be considered to warrant the exercise of the discretion to award costs on an indemnity basis include:

•  the fact that proceedings were commenced or continued in wilful disregard of known facts;

•  the making of allegations which ought never to have been made;

•  the undue prolongation of a case by groundless contentions;

•  evidence of particular misconduct that causes loss of time to the Court and to other parties;

•  any imprudent refusal of an offer to compromise.

19. [19]
    The Tribunal at first instance referred to the indemnity costs issues immediately after or in the context of discussion of the factor at s 102(3)(f) of the QCAT Act; that is, ‘anything else the tribunal considers relevant’. The learned Tribunal Member stated that in relation to the Calderbank offer and the claim for indemnity costs, the applicant must show that the respondents ‘acted unreasonably or imprudently’ by not accepting the offer.^[19]
20. [20]
    The respondents submit that the proper test is whether the party in question objectively acted unreasonably or imprudently, whereas the Tribunal looked at the subjective belief of the respondents and had regard to their status as self-represented litigants. However, it is not clear that the Tribunal did take that approach. While making reference to the fact of self-representation, the Tribunal stated that the respondents were ‘reasonably’ of the belief they were in the right. It should also be noted that reasonableness is not looked at in a vacuum and can vary depending on context.
21. [21]
    In any event, it is evident that the focus of the reasons of the Tribunal at first instance was on whether costs should be awarded. Given its conclusion that costs should not be awarded, it is understandable that only passing reference was made to the question of the basis upon which any costs order might be made.
22. [22]
    Leave to appeal is granted and the appeal is upheld. The matter is remitted to the Member of the Tribunal at first instance to be determined according to law.
23. [23]
    It is appropriate to remit the matter rather than have the Appeal Tribunal determine the application for costs. It is evident that the substantive application involved a number of issues and the hearing was conducted over three days. The Member who conducted the substantive hearing will be more aware of the factors relevant to the considerations to be taken into account in exercising the discretion in relation to costs.