Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2]
[2023] QSC 120
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- Unreported Judgment
- Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2][2023] QSC 120
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Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2][2023] QSC 120
Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2][2023] QSC 120
SUPREME COURT OF QUEENSLAND
CITATION: | Karam Group Pty Ltd as Trustee for Karam (No. 1) Family Trust v HCA Queensland Pty Ltd & Ors (No 2) [2023] QSC 120 |
PARTIES: | KARAM GROUP PTY LTD AS TRUSTEE FOR KARAM (NO. 1) FAMILY TRUST ABN 47 512 325 943 (applicant) v HCA QUEENSLAND PTY LTD ACN 629 849 814 (first respondent) ADJUDICATION REGISTRAR (QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION) (second respondent) GABRIEL GALLO ADJUDICATOR REGISTRATION NO. J1061234 (third respondent) |
FILE NO/S: | BS No 11883 of 2022 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court of Queensland at Brisbane |
DELIVERED ON: | 5 June 2023 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 10 March 2023 |
JUDGE: | Williams J |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – GENERAL PRINCIPLES AND EXERCISE OF DISCRETION – where the applicant was ultimately successful in respect of both issues to be determined at the hearing – where the applicant contends that the first respondent should pay the applicant’s costs of and incidental to the application on the standard basis – where the first respondent contends that the first and second respondents should pay 50 per cent of the applicant’s costs on the standard basis to be shared equally between the first and second respondents – where the second respondent submits that there should be no costs order as between the applicant and the second respondent because the second respondent had minimal involvement in the hearing – whether costs should follow the event – whether the first and second respondents should share liability for the applicant’s costs PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – DEPRIVING SUCCESSFUL PARTY OF COSTS – OTHER CASES – POWERS OF COURT AND RELEVANT CONSIDERATIONS IN EXERCISE OF DISCRETION – where the applicant was ultimately successful in respect of both issues to be determined at the hearing – where the applicant contends that the first respondent should pay the applicant’s costs of and incidental to the application on the standard basis – where the first respondent contends that the applicant’s costs in respect of the first issue should be reduced because the basis on which the Court reached its conclusion was never advanced by the applicant – where the first respondent contends that it should not bear the cost of defending a case on validity which was not accepted by the Court – whether the award of costs in respect of the first issue should be reduced on that basis Building Industry Fairness (Security of Payment) Act 2017 (Qld), s 85, s 95 Uniform Civil Procedure Rules 1999 (Qld), r 5, r 681, r 684 Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379 Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370 |
COUNSEL: | A Stumer for the applicant D Hume for the first respondent S E Seefeld for the second respondent |
SOLICITORS: | HopgoodGanim Lawyers for the applicant Gilbert and Tobin Lawyers for the first respondent Queensland Building and Construction Commission for the second respondent |
- [1]On 16 December 2022 I made orders (the Final Orders) and published reasons (the Reasons) in an application in respect of the First Decision and the Second Decision of the third respondent purportedly made under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act).
- [2]These reasons use the defined terms set out in the Reasons, unless indicated otherwise.
- [3]The Final Orders were:
“1. Pursuant to section 10 of the Civil Proceedings Act 2011 (Qld), THE COURT DECLARES THAT:
a. The adjudication decision dated 25 August 2022 and issued 26 August 2022 (First Decision); and
b. The amended adjudication decision dated and issued 30 August 2022 (Second Decision),
purportedly made by the Third Respondent (registered adjudicator J1061234) pursuant to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) in Adjudication Application QBCC 1305793 are void and are set aside.
- THE COURT ORDERS THAT the First Respondent pay to the Applicant the sum of $1,821,891.26 that being the amount determined as due and payable pursuant to the Second Decision, paid by the Applicant to the First Respondent as a result of the Second Decision plus interest in the amount of $35,213.09.
- THE COURT DIRECTS THAT the parties file and serve submissions on costs of no more than 3 pages by 3 February 2023.”
- [4]The applicant, the first respondent and the second respondent have filed submissions in respect of costs.
- [5]The applicant contends that the first respondent should be ordered to pay the applicant’s costs of and incidental to the application to be assessed on the standard basis.
- [6]The first respondent contends that the Court should order that the first and second respondents pay 50 per cent of the applicant’s costs, assessed or agreed on the standard basis, to be shared equally between the first and second respondents.
- [7]The second respondent submits that as between the applicant and the second respondent, there should be no order as to costs.
- [8]Further brief oral submissions were made by the parties at a hearing on 10 March 2023.
Applicant’s position
- [9]The applicant contends that it was wholly successful on the application with both the declaration being made and an order that the first respondent re-pay the applicant the relevant money plus interest.
- [10]Further, the applicant submits that the usual rule that costs follow the event should apply and there is no relevant circumstance to warrant a departure from the usual rule. Relevant considerations include:
- (a)The application turned upon the proper construction of the BIF Act and ultimately, the first respondent’s construction was rejected.
- (b)There was no new statutory construction advanced at trial (as alleged by the first respondent) and the applicant’s position was consistent with that ultimately found by the Court.
- (c)The statutory construction of s 85(1) and s 95(7) of the BIF Act was incorporated into the position taken by the applicant: namely, that the First Decision and Second Decision were void because they were not delivered within the time required by s 85(1) of the BIF Act.
- (d)The ultimate construction found by the Court was arguably narrower than the construction advanced by the applicant.
- (e)On either construction, both the First Decision and the Second Decision were void.
- [11]Further, the applicant acknowledges that:
- (a)Whilst the application was opposed by the second respondent, the second respondent advanced no arguments beyond those made by the first respondent.
- (b)The third respondent took no active role and filed a submitting appearance.
- [12]In these circumstances, the applicant contends that the appropriate order is that the first respondent pay the applicant’s costs of and incidental to the application to be assessed on the standard basis.
Second respondent’s position
- [13]The second respondent appeared by Counsel at the hearing but played a very minimal role in the hearing of the application. The appearance on behalf of the second respondent was limited to the first day and specifically to the issue in respect of construction of the relevant provisions of the BIF Act.
- [14]The second respondent was not present on the second day in respect of the submissions that were made as to whether, if invalidity was found, repayment of the money was appropriate.
- [15]The second respondent submits that the second respondent took a view that the Court may be assisted by an appearance given the first issue concerned the proper construction of the BIF Act. This is particularly so where the second respondent has a role of administering certain aspects of the adjudication process under the BIF Act, so it had an interest in the construction of the relevant legislation.
- [16]However, it is submitted that the second respondent’s involvement was negligible and the second respondent filed no material.
- [17]Further, very brief submissions were made on behalf of the second respondent effectively supporting the construction of the BIF Act contended for by the first respondent.
- [18]In the circumstances, it is submitted that the second respondent’s involvement was appropriate, it was minimal and caused no more than a negligible cost to the other parties.
- [19]It is in these circumstances that it is submitted by the second respondent that there should be no order as to costs between the second respondent and the other parties to the application.
Third respondent
- [20]The third respondent did not participate or appear at the hearing.
- [21]No submissions in relation to costs have been received from the third respondent. Further, no other party submits that the third respondent should be liable for costs.
First respondent’s position
- [22]The first respondent contends that it is appropriate in the circumstances to make an order in respect of costs other than the usual order.
- [23]Firstly, the first respondent contends that the basis on which the Court concluded that the decision was invalid was a basis which was never advanced by the applicant or, if it was advanced, was advanced only at the “eleventh hour” in post-hearing submissions.
- [24]The first respondent contends that while the applicant was ultimately successful, the Court did not accept any of the positions advanced by the applicant before and during the litigation in respect of invalidity.
- [25]It is submitted that the first respondent was put to the expense of defending a case on invalidity which was not accepted by the Court. It is in these circumstances that the first respondent contends that the applicant should not obtain an order for payment of the entirety of its costs.
- [26]The first respondent submits that the applicant should be entitled to not more than 50 per cent of its costs, as agreed or assessed on an ordinary basis.
- [27]Further, it is submitted that between the first respondent and the second respondent, the costs liability to the applicant should be shared on an equal basis of 50 per cent each. It is submitted that the second respondent took an active stance in opposing the relief sought by the applicant and adopted the first respondent’s submissions. Whilst the second respondent’s participation was limited, it is submitted that the second respondent still opposed the relief sought.
- [28]The first respondent submits that, in effect, the Registrar’s submissions were “the result of it externalising the costs of its defence to [the first respondent]”.
- [29]The first respondent filed an affidavit in support of its submissions which exhibited the correspondence between the parties and the submissions made before, during and after the trial. Reference is made to the development or refinement of the applicant’s position in respect of the proper construction of the relevant sections of the BIF Act.
- [30]Following the hearing, the parties were given an opportunity to file further written submissions for the purpose of clearly articulating the proper construction of the relevant provisions of the BIF Act.
- [31]The first respondent ultimately contends that “while [the applicant’s] submissions were ambiguous, [the applicant] did not abandon its longstanding position that it was communication of the fact of the decision that was the critical point”.
- [32]It is submitted that this was not the construction that was ultimately adopted by the Court.
- [33]In respect of the starting point that costs follow the event, it is contended on behalf of the first respondent that this is no more than a “guiding principle”.
- [34]Reference is made to exceptions to that guiding principle as including “where a party has succeeded in obtaining the relief sought, but has not succeeded on all bases (factual or legal) upon which it sought such relief”.[1]
- [35]Further, reference is made to the decision of the High Court of Australia in Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal.[2]
- [36]In that case, the appellant succeeded on a ground which had not been advanced in the lower courts and was first advanced in oral argument in the High Court. In those circumstances, the High Court held that “[h]aving regard to the stage at which and circumstances of which the determinative issue in these matters arose, there should be no order for the costs of the proceedings in this Court or in the Full Court of the Federal Court”.[3]
- [37]Applying these principles, the first respondent contends that the applicant should not recover 100 per cent of its costs. It is submitted that the first respondent incurred costs resisting a construction which was not adopted. The first respondent submits that applying the compensatory principle, it would be inappropriate to compensate the applicant for costs incurred in putting a case on which it was unsuccessful.
- [38]It is in submitted that this is a stronger case than in Pilbara. It is contended that the applicant in effect never advanced the construction which was adopted by the Court.
- [39]Ultimately, it is contended that balancing the various considerations, the applicant should only be awarded 50 per cent of its costs assessed on an ordinary basis and the first and second respondents should each be responsible for 50 per cent of those costs.
- [40]At the hearing on costs, the applicant addressed the Pilbara decision and submitted that the current matter was distinguishable from the circumstances considered by the High Court in that case.
Consideration
- [41]The relevant rules in the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) are as follows:
“681 General rule about costs
- (1)Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.
- (2)Subrule (1) applies unless these rules provide otherwise.
…
684 Costs of question or part of proceeding
- (1)The court may make an order for costs in relation to a particular question in, or a particular part of, a proceeding.
- (2)For subrule (1), the court may declare what percentage of the costs of the proceeding is attributable to the question or part of the proceeding to which the order relates.”
- [42]The Court has a wide discretion to make an order for costs, including in relation to a particular question or part of a proceeding. The ultimate issue to be considered is what costs order is appropriate in the circumstances.
- [43]At the hearing of the application, there were two issues to be determined. These are articulated at paragraphs [7] and [12] of the Reasons as follows:
“[7] The first issue for determination is whether the requirement that an ‘adjudicator must decide on the adjudication application’ in s 85(1) of the BIF Act is satisfied by the written document complying s 88(1) and (5) being finalised before the expiry of the time period[4] in circumstances where:
- (a)a copy of the adjudicator’s decision was not given to the Registrar (s 88(6)) and the parties (s 88(7)) before the expiry of the time period; and
- (b)the adjudicator had not communicated that the adjudicator would not communicate the adjudicator’s decision until the adjudicator’s fees and expenses were paid before the expiry of the time period (s 97(7)(d)).[5]
…
- [12]The second issue for determination is whether in circumstances where an adjudicator’s decision is void for jurisdictional error, the adjudicated amount paid pursuant to the purported adjudicator’s decision is to be repaid on the basis that:
- (a)it is within a recognised category of restitution (that is, as part of the category, or a sub-category, of when a judgment of a court is reversed on appeal);
- (b)the payment was made by a compulsion of law; or
- (c)there was a total failure of consideration.”
- (a)
- [44]The applicant was ultimately successful in respect of both issues. However, it is still necessary to consider what is the correct approach to the analysis of the costs issue.
- [45]Rule 684 UCPR provides a discretion to make an order for costs in relation to a particular question or part of a proceeding in circumstances such as this where there are two distinct issues. Rule 684 UCPR provides an approach which enables the result on the two issues to be reflected in the costs order.
- [46]The first issue in dispute between the parties was whether the particular factual circumstances that arose in this case as identified in paragraphs (a) and (b) of paragraph [7] of the Reasons were such as to result in the First Decision and the Second Decision being out of time and therefore invalid.
- [47]In this case, the applicant’s position at all times was that the First Decision and the Second Decision were out of time and therefore invalid. While there may arguably have been some development of the submissions in support of that contention, the applicant’s primary position remained consistent.
- [48]Further, the construction contended for by the first respondent was for the opposite result to that ultimately found by the Court. It is not as though the first respondent took a position on the construction which was in part adopted by the Court. The first respondent was wholly unsuccessful in the position that it put forward on the construction of the relevant provisions of the BIF Act.
- [49]The second respondent agreed with the construction contended for by the first respondent. The second respondent, unlike the third respondent, did participate at the hearing and advocated for a particular construction of the BIF Act. The role of the second respondent was limited but was more than a submitting appearance.
- [50]While the Reasons may not have adopted the applicant’s precise construction of the BIF Act, the applicant was wholly successful on the first issue and the First and Second Decisions were found to have been made out of time and to be invalid.
- [51]The second issue was also fully in dispute between the parties: that is, whether the money needed to be repaid if the First Decision and the Second Decision were invalid and whether interest was payable. The applicant was wholly successful on the second issue, and the first respondent was totally unsuccessful.
- [52]In the circumstances, I consider that it is appropriate to analyse the relevant “event” as each of the two issues which reflect the two orders made. This approach also recognises that it was possible that the applicant could win on the first issue but lose on the second issue, as they were discrete issues.
- [53]Given the success of the applicant in respect of both issues and the relief granted in respect of both issues, it is appropriate to order costs consistent with r 681 UCPR: that is, costs should follow the event unless the Court orders otherwise. On the reasoning set out in the Reasons and the terms of the Final Orders it is not appropriate to order otherwise.
- [54]I do not accept the first respondent’s argument that the development of the applicant’s argument was such as to deprive the applicant of its costs in respect of the first issue. At all times the applicant’s position was that the First and Second Decision was out of time and invalid. The first respondent sought to defend the application by positively contending that the First Decision and the Second Decision were in time and valid. That position was taken with the benefit of experienced legal representation and was strongly argued at the hearing.
- [55]In the circumstances, it is appropriate that the applicant have its costs of and incidental to the application to be paid on the standard basis in respect of both the first and second issues.
- [56]In respect of whether the second respondent should be liable to pay a share of the applicant’s costs, this also falls to be determined under the general discretion of the Court.
- [57]The first respondent was the primary contradictor to the application and made substantive submissions both in writing and orally as to the appropriate approach to both the first and second issues.
- [58]The second respondent had a very limited role in respect of the submissions made in relation to the first issue.
- [59]Whilst the second respondent did ultimately not make substantive submissions in respect of the first issue, it did attend Court and did ultimately adopt the submissions made by the first respondent. To that extent, the second respondent did actively oppose the relief sought by the applicant.
- [60]In these circumstances, there is some persuasiveness in the submission made by the first respondent that the second respondent should have some liability in respect of the applicant’s costs. It is then necessary to consider what share of the costs liability is appropriate in the circumstances.
- [61]The relevant circumstances include:
- (a)The hearing was held over two days and a trial bundle of two lever arch folders was relied on by the applicant and the first respondent in respect of both the first and second issues.
- (b)There were approximately four volumes of authorities which were provided to the Court for consideration in respect of the submissions made by the applicant and the first respondent in respect of the first and second issues.
- (c)The second respondent’s involvement was appropriate and was minimal.
- (d)The second respondent’s involvement did not add to the length of the hearing by the introduction of additional material.
- (e)The second respondent’s role was consistent with the obligations in r 5 UCPR and did not cause any duplication or inefficiencies.
- [62]The first respondent proposes that the first and second respondents share the liability for the applicant’s costs on a 50/50 basis. I do not accept that that is the appropriate outcome.
- [63]The second respondent should only be liable for a smaller proportion of the applicant’s costs in the circumstances identified above. Further, there is nothing to suggest that the first respondent would not have made the same submissions and relied on the same material if the second respondent had not participated in the hearing in respect of the first issue, even on a minimal basis.
- [64]In all of the circumstances, I consider that the appropriate split of the costs liability between the first respondent and the second respondent in respect of the first issue is that the first respondent pay 95 per cent of the applicant’s costs and the second respondent pay 5 per cent of the applicant’s costs on the standard basis.
- [65]As the second respondent was not involved in respect of the second issue, the first respondent remains 100 per cent liable in respect of the applicant’s costs of the second issue.
Orders
- [66]In these circumstances, the orders as to costs are as follows:
- In respect of the first issue as defined in [7] of the Reasons:
a. The first respondent pay 95 per cent of the applicant’s costs of and incidental to the application to be assessed, if not agreed, on the standard basis.
b. The second respondent pay 5 per cent of the applicant’s costs of and incidental to the application to be assessed, if not agreed, on the standard basis.
- In respect of the second issue as defined in [12] of the Reasons, the first respondent pay the applicant’s costs of and incidental to the application to be assessed, if not agreed, on the standard basis.
Footnotes
[1] Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370 at [11].
[2] (2012) 246 CLR 379.
[3] At [121].
[4] Here, midnight on 25 August 2022.
[5] There was no communication of that position to the agent, the parties, or the Registrar prior to midnight on 25 August 2022, regardless of whether the adjudicator had formed the view personally, prior to midnight on 25 August 2022.