Clemens v Flower[2006] QDC 2

DISTRICT COURT OF QUEENSLAND

1. [1]
   Judgment was given in these appeals from decisions of the Commercial and Consumer Tribunal on 6 December 2005. The appeals were upheld and, in the substantive proceeding, the amount the appellants were ordered to pay the respondent was reduced from $72,248.88 to $25,227.39. The matters were then adjourned to allow the parties to deliver written submissions about interest, and costs.

2. [2]
   Relevantly, the CCT order in the major appeal was made on 21 December 2004 (“the substantive order”). It included an order that each party bear its own costs of the proceedings before the CCT. Then, on 24 December 2004 the CCT made an order reopening the question of costs (“the reopening orders”). Both decisions were appealed, successfully, in this court, reducing the respondent’s judgment under the substantive order in the sums set out earlier, and quashing the reopening orders. The costs associated with those proceedings, and of the appeals to this court against them, fall to be determined.

3. [3]
   It is also necessary to determine who, if anyone, should pay costs associated with the respondent’s application to reopen the appeal (“the appeal reopening application”) heard in this court on 1 August 2005, and dismissed with costs reserved. These diverse elements make it appropriate to set out a short summary of the history of the matter.

4. [4]
   The substantive order came out of proceedings before the CCT about a house building contract. The appellants, the owners, sought leave to appeal both the substantive and costs orders made in the CCT in the respondent builder’s favour and, at the same time, applied for a stay (“the stay application”) of enforcement of the substantive order. The applications for leave and the stay application came before this court on 9 February 2005 but could not be heard, and the matter was adjourned with an order that the appellants pay the respondent’s costs thrown away by that adjournment. On 17 February 2005 this court heard the applications for leave, which was granted on 16 March, as was the stay. The appeals themselves were heard, initially, on 16 May 2005.

5. [5]
   Subsequently the respondent applied to reopen argument and on 1 August 2005 that application was dismissed, with costs reserved.

6. [6]
   On 6 December 2005 the court allowed the substantive appeal and reduced the judgment sum in favour of the respondent to $25,227.39, inclusive of interest to 21 December 2004; allowed the reopening appeal; and, invited the parties to make further submissions about interest, and costs.

7. [7]
   So far as the costs of the proceedings in the CCT are concerned there is not, in fact, any appeal against the decision which accompanied the substantive order, that each party bear its own costs. That decision was in accord with the usual rule in the CCT: Commercial and Consumer Tribunal Act 2003,    s 70.

8. [8]
   The application which led to the reopening order was based upon an offer the respondent had made to settle for $40,000, in February 2004. The CCT apparently accepted that, as the offer was considerably less than the sum awarded to the respondent under the substantive order ($72,248.88) it might be necessary to reconsider the question of costs under the Commercial and Consumer Tribunal Act, section 71.

9. [9]
   This court has now determined that the judgment sum should in fact have been $25,227.39, considerably below the respondent’s offer, which was, therefore, immaterial and effectively excludes any challenge to the CCT’s exercise of the discretion with regard to costs (Act, section 94).

10. [10]
    Even if there had been an appeal against the costs order the result would not be different. The lengthy Reasons of the learned Member of the CCT dated 21 December 2004 show that he properly exercised the discretion he had about costs under the Act. The result in this appeal only strengthens that conclusion.

11. [11]
    The fact each party to the proceedings before the CCT engaged legal representatives is not determinative. True, in Tamawood Limited v Paans (2005) 2 Qd R 101 the Court of Appeal found that the CCT had erred in not awarding costs where the parties were legally represented, but there was no finding here that the proceeding was of such complexity that each party was justified in engaging lawyers. The decision in Tamawood indicates that a costs order might be made where legal representation was reasonably necessary and, in that matter, the CCT had found the proceeding was complex and each party was justified in having representation. In the absence of a similar finding here – which would not, in any event in my view, have been open – there is no indication that the discretion reposed in the learned Member miscarried.

12. [12]
    The costs to be considered then are those which arise from the reopening application; the appellants’ application for a stay; and, the substantive and reopening appeals. I am satisfied the respondent should pay the appellants’ costs of and incidental to the appearance on 1 August 2005 in respect of the unsuccessful reopening application. The respondent approached the court directly, by correspondence, without notice to the appellants or their legal representatives, which was transmitted by the court. The application was, as it was found, entirely unmeritorious; and, properly advised, the respondent ought to have known that it was both without foundation and irrelevant to this court’s consideration of the matters before it. The respondent had solicitors acting for him at the hearing of the appeals (and later) but chose to bring the application himself. These factors also warrant an order that the costs be paid on an indemnity basis.

13. [13]
    The costs associated with the application for a stay of the CCT judgment should be costs in the relevant appeal^[1]. The substantive appeal has been allowed and produced a reduction of the substantial CCT judgment by almost two thirds – circumstances which dictate that it is appropriate, subject to other considerations dealt with later, to allow the appellants the costs associated with the application.

14. [14]
    The decision of the Court of Appeal in Tamawood (supra) confirms that this court has a discretion in respect of the costs of any appeal (save in connection with formal processes associated with the appeal, including the preparation of a transcript). The ordinary rule is that, absent some reason warranting some other order, costs should follow the event. It is relevant, however, that the appellants did not succeed on all of the matters they raised in the appeal. While a lack of success on some appeal points does not necessarily compel an order departing from the usual rule, the question is whether those failures mean the appellants’ success can be categorised as substantial, or only partial^[2].

15. [15]
    The appellants’ primary success was in overturning the basis upon which the CCT assessed the amounts owing under the contract and, in particular, the determination that the respondent was entitled to terminate the contract and entitled to damages assessed under the default provisions of it; and, of course, a consequent reduction in the judgment sum by almost two thirds. Against that, the appellants also devoted time and effort to arguments about the way the CCT estimated and allowed costs associated with variations, and in the reopening of claims about allegedly defective work. These unsuccessful elements constituted a significant part of the argument on appeal, but were without merit.

16. [16]
    The appellants succeeded on a significant point, with significant consequences, but failed on a number of other points and pressed, on appeal, a result which would have been only a small fraction of the amount they have ultimately been ordered to pay the respondent. These circumstances warrant a finding of partial success justifying a costs order in their favour but, also, a finding that the measure of their success was something less than substantial and they should not have all their costs. The factors I have traversed indicate an order that the respondent pay two thirds of their costs of and incidental to the substantive appeal (excluding the costs of and incidental to the filing of the Notice of Appeal and the transcript of evidence, but including the costs associated with the stay application) is appropriate in the circumstances.

17. [17]
    The appellants have succeeded in their reopening appeal and should have their costs of and incidental to it (excluding, again, the costs of and incidental to the filing of the Notice of Appeal and the transcript of evidence).

18. [18]
    As to interest this court has already determined that the appropriate rate is 14.55 per cent. The judgment on appeal allowed interest at that rate up to the date of the CCT judgment, which was included in the figure of $25,227.39. The appellants accept the respondent is entitled to interest up to the date of this court’s final judgment but argue, persuasively, that a period of time associated with the respondent’s reopening application, which delayed the judgment of this court, should be excluded. The respondent raised the matters dealt with in the reopening application by a letter to the court of 13 June 2005. Arrangements were made by the court itself to bring the matter to the attention of the appellants and to have the application dealt with and that could not be affected until 1 August.

19. [19]
    The actual delay (from date of receipt of the respondent’s letter by the court) was 47 days. The period from the CCT substantive order to the date of judgment of this court is, in total, 393 days. The substraction of 47 days means the respondent should have interest, at 14.55 per cent, on the amount found on appeal to be outstanding under the contract ($22,428.91) for 346 days: $3,093.53.

20. [20]
    The orders, then, will be:

1. (a)
   That there be no order as to costs in respect of the proceedings before the Commercial and Consumer Tribunal;

2. (b)
   That the respondent pay the appellants’ costs of and incidental to the appearance in this court on 1 August 2005 assessed on an indemnity basis;

3. (c)
   That the respondent pay two thirds of the appellants’ costs of and incidental to the appeal against the order of the CCT of 21 December 2004 (excluding the costs of and incidental to the filing of the Notice of Appeal and the transcript of evidence, but including the costs of the stay application) assessed on the standard basis;

4. (d)
   That the respondent pay the appellants’ costs of and incidental to the appeal against the order of the CCT of 24 December 2004 (excluding the costs of and incidental to the filing of a Notice of Appeal and the transcript of evidence) assessed on the standard basis;

5. (e)
   That in addition to the sum of $25,227.39 ordered to be paid by the appellants to the respondent in this court on 6 December 2005, the appellants also pay interest thereon up to and including the date of this judgment assessed at $3,093.53.

21. [21]
    In my Reasons published on 6 December 2005 I ordered that the appeal against the order of the CCT of 24 December 2004 be allowed. In his submissions counsel for the appellants contends for a variation, setting aside the first and second orders made by the learned Member on that day and in lieu thereof the imposition of an order that the reopening application be dismissed. Allowing the appeal has, however, the necessary effect and I am not persuaded further orders are required.