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Thompson v Body Corporate for Arila Lodge QDC 134
DISTRICT COURT OF QUEENSLAND
Thompson v Body Corporate for Arila Lodge  QDC 134
BODY CORPORATE FOR ARILA LODGE COMMUNITY TITLE SCHEME 14237
Magistrates Court, Brisbane
5 May 2017
21 April 2017
Butler SC DCJ
HOME AND COMMERCIAL UNITS – body corporate levies – proceedings to recover unpaid contributions – summary judgment - recovery costs – whether costs reasonable
M Walker for the appellant
P Strangman for the respondent
Mahoneys for the appellant
Grace Lawyers for the respondent
- The appellant appeals an order made in the Magistrates Court at Brisbane on 4 November 2016 giving summary judgment for the plaintiff in the sum of $49,037.70, being $16,049.02 in unpaid body corporate contribution instalments, $817.49 in interest and $32,171.21 in recovery costs.
- The plaintiff is a body corporate consisting of eight unit owners, one of whom is the appellant. The body corporate levied the appellant for contributions that became due and payable on or after 1 October 2014. The body corporate brought a claim alleging that the appellant had failed to pay contributions and sought to recover those outstanding contributions along with the costs of recovering them as a debt. On 4 November 2016, the Magistrates Court at Brisbane awarded summary judgment against the appellant and ordered that the appellant’s counter-claim be struck out. The component of that judgment relating to recovery costs is the subject of this appeal.
Conduct of appeal
- The appeal was brought pursuant to s 45(1)(a) of the Magistrates Courts Act 1921 (Qld). The appeal, as argued before me, challenged the learned magistrate’s order for payment of recovery costs. Section 145 of the Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld) (the “Standard Module”) provides for recovery costs to be recovered as a debt. As the order for payment of the debt is a final decision in the proceeding, r 765(1) of the Uniform Civil Procedure Rules 1999 (the “UCPR”) applies to make this an appeal by way of rehearing.
- The High Court in Robinson Helicopter Co Inc. v McDermott summarised the longstanding basis for conducting an appeal by rehearing:
“A court of appeal conducting an appeal by way of rehearing is bound to conduct a ‘real review’ of the evidence given at first instance and of the judge's reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But a court of appeal should not interfere with a judge's findings of fact unless they are demonstrated to be wrong by ‘incontrovertible facts or uncontested testimony’, or they are ‘glaringly improbable’ or ‘contrary to compelling inferences.’”
- The powers of the court on this appeal are set out in s 47 of the Magistrates Court Act 1921 where it is stated:
“47 Jurisdiction of the District Court
On the hearing of an appeal or special case, the District Court may do any of the following—
- (a)draw inferences of fact from facts found by the Magistrates Court, or from admitted facts or facts not disputed;
- (b)order a new trial on such terms as it thinks just;
- (c)order judgment to be entered for any party;
- (d)make any other order, on such terms as it thinks proper, to ensure the determination on the merits of the real questions in controversy between the parties;
- (e)as regards any special case, remit the matter to the Magistrates Court with the opinion of the District Court thereon;
- (f)make such order with respect to the costs of the appeal or special case as it thinks proper.”
- In addition, s 113 of the District Court of Queensland Act 1967 (Qld) provides:
“113 Power of District Court on appeal from Magistrates
The District Court has, for an appeal from a Magistrates Court, the same powers as the Court of Appeal has to hear an appeal.”
- This appeal is brought against an order granting summary judgment in favour of the respondent. Rule 292 of the UCPR provides:
“292 Summary judgment for plaintiff
- (1)A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant.
- (2)If the court is satisfied that—
- (a)the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
- (b)there is no need for a trial of the claim or the part of the claim;
the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.”
- The principles guiding exercise of the court’s power to grant summary judgment are well settled. The relevant enquiry is whether there is no real prospect of success and no need for a trial of the claim. The question is whether there exists a real, as opposed to a fanciful, prospect of the defendant successfully defending the claim.
- In Agar v Hyde the plurality observed that summary judgment should not be granted “except in the clearest of cases”. Their Honours went on to explain:
“Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.”
- The burden of proof on a summary judgment application rests on the applicant but when evidence discharging that burden has been led the evidentiary onus shifts to the respondent. The concept of shifting the evidential burden, as was pointed out by Jones J in Qld Pork Pty Ltd v Lott, is explained in Cross on Evidence as follows:
“… if the tribunal of fact believes the proponent’s witnesses, the requisite inference may be drawn in the proponent’s favour and the chances of this happening will generally be increased by the opponent’s failure to adduce evidence. Nevertheless, it is quite possible that the tribunal of fact will not draw the requisite inference, even if the opponent does not adduce any evidence. The opponent merely runs a risk of losing the issue if the opponent remains silent, and, in such a case, when it is said that the burden of proof is shifted from the proponent to the opponent, all that is meant is that the latter should adduce some evidence as a matter of common prudence.”
- It is apparent from this paragraph that while it may be prudent for the respondent to a summary judgment application to adduce evidence, there is no requirement for it to do so. Consideration of whether a respondent has a real prospect of defending a claim is not limited to matters raised by the respondent. The court may refuse summary judgement if satisfied on the material there is a real issue to be investigated. Ultimately the onus remains on the applicant to persuade the court that the respondent has no real prospect of defending the claim.
Issues on appeal
- At the hearing before me the appellant conceded all grounds for appeal, except for those relating to whether “recovery costs” were “reasonably incurred”. The issue to be determined is whether the learned Magistrate erred in giving summary judgment for the plaintiff under para 1(d) of the Order of the Court in a sum of $32,171.21 as being costs reasonably incurred.
- The appellant does not resist this court affirming judgment for the plaintiff in respect of unpaid contribution instalments and interest. However, the appellant submits that para 1(d) of the Order should be set aside.
- It is submitted on behalf of the appellant that:
“(a) the plaintiff had the onus of establishing that recovery costs were reasonably incurred in order to satisfy r 292;
- (b)the Magistrate misunderstood the test that applied in determining whether recovery costs were reasonably incurred; and
- (c)his Honour could not have been satisfied on the material that there was no need for a trial of the matter in respect of the recovery costs.”
- In response, it is submitted that no error on the part of the learned Magistrate has been demonstrated. The respondent contends that it placed evidence before the Magistrates Court that the costs were reasonably incurred and the appellant failed to advance evidence to the contrary. In addition, it is submitted that in the Magistrates Court there was no specific challenge by the appellant as to the reasonableness of the costs.
- The appellant was legally represented by counsel at the hearing of the appeal but was self-represented at all earlier stages of the proceedings.
- The Statement of Claim sought relief, particularised as being in the sum of $17,751, comprising unpaid contributions of $13,191.66 and costs of $4,559.34.
- The Defence at para 18 reads as follows:
“Regarding paragraphs 30 to 32, the Defendant believes that the claimed recovery costs of $4,189.54 seem very high (approximately 50 per cent of levy money not paid), and were NOT reasonably incurred.”
- The Reply to Defence responded at para 11(e) that the plaintiff:
“(e) denies paragraph 18 of the Defence on the basis that:
- (i)the recovery costs incurred relate to the issuing of arrears notices, letters of demand and preparing and filing a claim and statement of claim, all of which were necessarily incurred by the body corporate in order to recover outstanding contributions which the defendant has freely admitted she was aware of but did not pay; and
- (ii)the reasonableness of the plaintiff’s incurred recovery cost is not assessed on a proportionate basis by reference to the defendant’s outstanding contributions.”
- The reasons for judgment acknowledge that the body corporate was “entitled to all recovery costs reasonably incurred” in the process of recovering outstanding levies. The learned Magistrate referred to the principle “that Judge McGill arrived at with respect to recovery costs” in the decision of Ramzy v Body Corporate for GC3 CTS 38396 & Anor without setting out the principle referred to.
- The learned Magistrate found as follows:
“So far as recovery costs are concerned, as I have already alluded to, s 145, subsection (1), paragraph (c) of the Module provides, the recovery costs reasonably incurred become a debt. Although the recovery costs in this matter seem particular high, there is no material before me that would indicate they have not been reasonably incurred and on the basis of the evidence before me, the only conclusion I can properly come to is that they have been reasonably incurred given the strength of the opposition to the claim that has been mounted by the defendant in the first place and the significant evidential material that the plaintiff has been forced to put on in support of this application.”
- Judgment was given for the full amount of legal and other costs sought by the plaintiff.
- The claim sought an order for unpaid contributions and recovery costs under s 145 of the Standard Module. That provision reads as follows:
“Payment and recovery of body corporate debts
- (1)If a contribution or contribution instalment is not paid by the date for payment, the body corporate may recover each of the following amounts as a debt—
- (a)the amount of the contribution or instalment;
- (b)any penalty for not paying the contribution or instalment;
- (c)any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount.”
- The appellant submits the term “reasonably incurred” should be given the meaning attributed to it in the reasons of McGill DCJ in Body Corporate for Sunseeker Apartments CTS 618 v Jasen and Ramzy v Body Corporate for GC3 CTS 38396 & Anor. His Honour applied the decision of the New South Wales Court of Appeal in Owners of Strata Plan 36131 v Dimitriou where the term “expenses incurred” in similar legislation was held to cover legal costs limited to costs and disbursements reasonably incurred and reasonable in amount. His Honour reasoned:
“It seems to me that if “expenses incurred” are limited by implication to those reasonably incurred and reasonable in amount, then “costs reasonably incurred” must be equally so limited.”
- The respondent raised as an alternative interpretation that the term “reasonably incurred” in s 145(1)(c) does not require an investigation as to whether the legal costs are reasonable in amount. That was only faintly pressed in argument but nevertheless needs to be considered.
- In Queensland the UCPR specifies only two bases for the assessment of costs. Standard costs are “all costs necessary or proper for the attainment of justice or for the enforcing or defending the rights of the party whose costs are being assessed”. Indemnity costs include “all costs reasonably incurred and of a reasonable amount” having regard to certain matters. There is a logical appeal in interpreting “costs reasonably incurred” in s 145 as not being inclusive of a requirement that costs be reasonable in amount. However, it is difficult to conclude that in enacting s 145 the legislature intended to allow body corporates to recover more generous legal costs than are available to other litigants under the civil law. To exclude from the test any consideration as to whether costs are of a reasonable amount may lead to unjust results in many cases.
- In construing the meaning of the term “costs reasonably incurred” in s 145(1)(c), I consider it should be read as referring to “all costs reasonably incurred of a reasonable amount.” This accords with the test for costs on an indemnity basis under the UCPR and with the meaning accorded by the New South Wales Court of Appeal in Dimitriou to the similar term “expenses incurred”.
- There is, however, a further consideration that must be taken into account when applying the words of s 145(1)(c). In the determination of indemnity costs, the “receiving party will be given the benefit of any doubt.” A different onus was found to apply under the New South Wales body corporate legislation in Dimitriou. The onus of proving the costs to be reasonably incurred and reasonable in amount was held to fall on the body corporate. In the judgment of Hodgson JA in Dimitriou, his Honour said:
“In my opinion, the third basis [i.e. indemnity costs] would not be appropriate, because that would include any costs that are not shown to appear to be unreasonable. Further, in my opinion the costs and disbursements cannot be made reasonable by agreement between the owner’s corporation and its legal practitioner…”
Similar wording in the Queensland legislation suggests that s 145 should be given the same interpretation.
- In Body Corporate for Sunseeker Apartments v Jasen, McGill DCJ concluded that the approach in Dimitriou should be followed. I respectfully agree with his Honour’s conclusion. The onus therefore is upon the body corporate, and the appellant is to be given the benefit of any doubt.
- On an appeal by way of rehearing it is necessary for this court to conduct a “real review” of the evidence at first instance and of the learned magistrate’s reasons for judgment. In doing so it is incumbent on this court to have regard to submissions advanced at the appeal, so long as they are properly available on the evidence before the Magistrates Court, even though those submissions were not advanced below.
- The learned magistrate was faced with the difficult task of being confronted by a litigant in person who struggled with the legal concepts and therefore raised a number of untenable arguments. While the appellant clearly put the reasonableness of the “recovery costs” in issue below, she failed to advance before the magistrate a number of relevant matters which have formed the basis for counsel’s submissions before me on the appeal.
- In a civil proceeding, the court must endeavour to maintain an appearance of impartiality and not enter into the contest so as to confer a positive advantage on a litigant in person. However, the court should act “to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored.” In the circumstances of this case, the learned magistrate needed to give consideration to any submission, properly founded in the evidence, which competent counsel would have advanced on behalf of the appellant had she been legally represented.
- The respondent placed affidavit material before the Magistrates Court to establish the amount of the costs sought. In respect of legal fees, this included copies of fee invoices issued by both solicitor and counsel. The invoices varied in the degree of particularisation of the items claimed. Some invoices gave only a general description of the work performed. Other invoices particularised the work but failed to provide units of time or the level of employee performing the work thus making it impossible from the document exhibited to scrutinise the reasonableness of the amount charged.
- In addition to legal costs, expenses were claimed for recovery work performed by the body corporate and by a mercantile agency Kemps Petersons Pty Ltd. The Kemps Petersons invoice failed to particularise the items so as to allow assessment of the reasonableness of the amounts charged. The body corporate recovery costs were particularised as separate items but in all cases are merely described as “Debt Recovery Costs.” There was no identification of the specific work performed.
- The respondent submits that reasonableness of the costs is sufficiently proven through the affidavit of Jason Alexander Carlson, the responsible partner in the solicitor’s firm. Mr Carlson affirmed as follows:
“6. The terms of the Costs Agreement and in particular the rates for which Grace Lawyers charges for professional services are similar to the rates charged by other law firms that also provide legal services to bodies corporate in Queensland, including the recovery of standard contributions, interests, and recovery costs.
- In my experience, the tax invoices issued by Grace Lawyers are the costs reasonably incurred by the plaintiff in recovering the unpaid contributions and penalties from the defendant.
- In my experience, having regard to the costs normally incurred in engaging counsel to settle a reply and answer, to provide an advice on the prospects of a summary judgment and application, and to prepare and attend the hearing of the application, counsel’s fees of $4,510 (including GST) are costs reasonably incurred by the plaintiff in recovering the unpaid contributions and penalties from the defendant.
- Having regard to my experience as a body corporate solicitor and my understanding of the work performed by Body Corporate Services Pty Ltd in attempting to recover the outstanding contributions from the defendant, the costs incurred by Body Corporate Services Pty are the costs reasonably incurred by the plaintiff in recovering the unpaid contributions and penalties from the defendant.”
- The respondent submits this evidence satisfies its evidential burden to establish a prima facie case and in the absence of evidence from the applicant to the contrary, establishes an adequate basis for the grant of summary judgment.
- Counsel for the respondent conceded during argument that the reasonableness of costs charged could not be determined by scrutinising the invoices exhibited in evidence. The respondent solely relies upon the opinions expressed by Mr Carlson to establish that there is no need for a trial of the costs issue. Counsel made this concession:
“Well, the only evidence that goes to whether or not the costs were reasonably incurred is the affidavits of Jason Alexander Carlson… the reasonableness is taken from the paragraphs of the actual affidavit.”
- I am not persuaded that these assertions of opinion as to the reasonableness of the charges, when regard is had to all the information before the court, are sufficient to satisfy the Court that the defendant has no real prospect of successfully challenging the costs sought.
- Firstly, the evidence of Mr Carlson as to his opinion can only be admissible on the basis of special expertise. The conditions for admissibility of expert opinion as stated in Cross on Evidence are helpfully set out in the judgment of Applegarth J in Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors. It is doubtful whether the claim of expertise briefly made in the affidavit is sufficient to justify admissibility of this evidence as expert opinion. Ultimately it will be necessary for the respondent to prove the primary facts founding the opinion and to establish those facts are a proper foundation for the opinion reached. It is enough to observe that costs agreed between solicitor and client, although considered reasonable as between those parties, will not necessarily be reasonably incurred within the meaning of s 145(1)(c) of the Standard Module. The criteria upon which Mr Carlson reached his opinions as to reasonableness is not clearly articulated.
- Furthermore, while the affidavit of Mr Carlson attests to the reasonableness of the legal costs and the body corporate costs, it does not specifically attest to the reasonableness of the costs incurred by Kemps Petersons Pty Ltd.
- As observed above, the onus of establishing that summary judgment should be given ultimately rests with the applicant. In respect of costs, it was necessary on the summary judgment application for the applicant to satisfy the court that the respondent had no real prospect of defending the claim in respect of costs and that there was no need for a trial of that part of the claim. The respondent is entitled to point to features in the evidence placed before the court by the applicant in order to demonstrate that the applicant failed to satisfy its onus.
- The body corporate’s task is made more difficult because the onus of proving costs were reasonably incurred falls upon it, and the unit holder must be given the benefit of any doubt. The learned magistrate appears to have approached the onus on this issue differently. His Honour reasoned:
“Although the recovery costs in this matter seem particularly high, there’s no material before me that would indicate they have not been reasonably incurred…”
- There are features of the evidence relating to costs which prevent me being satisfied that the body corporate will be able to prove to the necessary standard all aspects of its claim for costs.
- The recovery costs claimed total $32,171.21. This sum is strikingly higher than the amount of $16,866.69 in unpaid contributions and interest payable under the claim. In my view, it is not irrelevant to consider the relationship between the amount of costs sought and the amount of the claim.
- The Court of Appeal in Amos v Monsour Legal Costs Pty Ltd, when considering reasonableness in respect of the assessment of costs on an indemnity basis, held that r 704 of the UCPR by necessary implication requires consideration of an element of proportionality and that this approach was consistent with New South Wales authority. In Skalkos v T & S Recoveries Pty Ltd, a case cited with approval in Amos, Ipp JA (other members of the court agreeing) said:
“In my opinion, in determining whether costs have been reasonably and properly incurred, it is relevant to consider whether those costs bear reasonable relationship to the value and importance of the subject matter in issue.”
- As pointed out by the court in Amos, proportionality is but one consideration, along with factors such as any scale of fees and the charges ordinarily payable by a client to a solicitor for the work. Here it is one factor along with others in considering whether there is need for a trial of the costs issue.
- Turning to the material before the court, the appellant pointed to specific entries which it submitted required explanation. There was a claim for a land title search, the purpose of which was not obvious. There was a claim for preparation of documents for disclosure although no disclosure had been sought from the defendant.
- I agree with the appellant’s submission that determination under s 145 of the Standard Module as to the reasonableness of recovery costs requires scrutiny of the individual items claimed and that a global assessment will not suffice. In the case of legal costs that will usually involve referral to a costs accessor, so long as it is ensured that the assessment is not conducted on the indemnity basis, but rather on the basis adopted in Dimitriou as explained by McGill DCJ in Jasen. It is not necessary on a summary judgement application for the applicant to supply evidence in proof of the assessment of individual costs items but the applicant does bear the onus of satisfying the court that there is no need for a trial of the issue by way of receiving evidence or ordering a costs assessment.
- In my respectful opinion, had the learned magistrate given consideration to the features raised above and properly applied the relevant onus of proof, his Honour ought not have concluded that the defendant had no prospect on the part of the claim relating to recovery costs. In my respectful view the learned magistrate erred in giving summary judgment for that part of the claim. The appeal in respect of that part of the claim should be allowed.
- I have given consideration as to whether I should remit the matter to the Magistrates Court to deal with that part of the claim or whether it’s possible to resolve it upon the appeal. I am acutely aware that significant costs have already been incurred and remitting the matter will increase those costs. Where the costs are solely legal costs then the preferred option would be to refer them for costs assessment. Here there are other costs, being the costs of the body corporate and the mercantile agents, which would require assessment of evidence for their resolution. While I am mindful that they represent a minor proportion of the total recovery costs being sought, their resolution makes it necessary for the matter to be remitted to the Magistrates Court. I propose to order accordingly.
- The orders of the court are:
- The appeal is dismissed in respect of sub-paragraphs 1(a), (b) and (c) of the Magistrates Court Order.
- Judgment is given for the plaintiff in the sum of $16,866.69.
- The appeal is allowed in respect of sub-paragraph 1(d) of the Magistrates Court Order.
- The part of the claim seeking $32,171.21 in recovery costs is remitted to the Magistrate’s Court at Brisbane for determination.
- The defendant’s counter-claim is dismissed.
  HCA 22 at ; cited Powell v Chief Executive Officer of Australian Custom Service  QCA 313.
 Nichols Constructions Pty Ltd v Mt Marlo Pty Ltd & Anor  QSC 1 at .
 Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq)  1 Qd R 259 at 264.
 (2000) 2001 CLR 552.
 Ibid at 575-576.
 ANZ Banking Group Ltd v Barry  2 Qd R 12 at 19.
  QCA 27.
 At .
 Probert & Anor v Ericson  QSC 4 at .
 Reardon v Deputy Commissioner of Taxation  QCA 46 at .
 Shaw v Deputy Commissioner of Taxation  QCA 275 at .
 Appellant’s outline of submissions, para 15.
  QDC 397.
 Reasons for judgment 3, ll 25-34.
  QDC 51.
  QDC 397.
  NSWSCA 27.
 Body Corporate for Sunseeker Apartments CTS 618 v Jasen  QDC 51 at .
 Ibid at .
 Rule 207.
 Rule 703.
  NSWCA 27.
 Bottoms v Reser  QSC 413 at 5; adopting the words from EMI Records Ltd v IC Wallace Ltd  1 Ch 59 at 74.
  NSWCA 27 at .
 Ibid at .
  QDC 51 at .
 Robinson Helicopter Co Inc. v McDermott  HCA 22 at .
 Kenny v Ritter  SASC 139 at ; citing Samuels JA in Rajski v Scitec Corp Pty Ltd.
 Affidavit of Jason Alexander Carlson, dated 5 October 2016, JAC-1 Invoice 74304, Invoice 78394; Affidavit of Jason Alexander Carlson, dated 4 November 2016 JAC-1 Invoice 79857.
 Affidavit of Jason Alexander Carlson, dated 5 October 2016, paras 6, 9, 20, 22.
 Appeal transcript 1-37 ll 35-45.
  QSC 131 at .
 Reasons for judgment 3, ll 27-28.
  QCA 235 at .
  NSWCA 281.
 At .
  NSWC 27 at 
  QDC 51 at  and 
- Published Case Name:
Thompson v Body Corporate for Arila Lodge
- Shortened Case Name:
Thompson v Body Corporate for Arila Lodge
 QDC 134
05 May 2017