Capri Building Group Pty Ltd v Palmer

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QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL


CITATION:

Capri Building Group Pty Ltd v Palmer [2024] QCAT 614

PARTIES:

CAPRI BUILDING GROUP PTY LTD

(applicant)

v

NEIL PALMER

(respondent)

APPLICATION NO/S:

BDL274-23

MATTER TYPE:

Building matters

DELIVERED ON:

9 May 2024

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

ORDERS:

1.     The application for security for costs is allowed.

2.     Capri Building Group Pty Ltd must pay to the trust account of Neil Palmer’s solicitors the sum of $10,000.00 by way of security for costs within fourteen (14) days of this decision.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SECURITY FOR COSTS –AMOUNT AND NATURE OF SECURITY – where respondent applies for security for costs – where applicant claimed amount owed for partial building work – where respondent counter-claims for damages, restitution, liquidated damages – factors to be considered pursuant to section 109(4) of Queensland Civil and Administrative Tribunal Act2009 (Qld) – whether respondent has capacity to absorb costs – early stage of proceeding – proceeding bona fide – applicant’s financial position not caused by respondent – order for costs would not stifle proceeding – costs relating to defence against claim contrasted with costs relating to counter-claim – security for costs awarded

Queensland Civil and Administrative Tribunal Act2009 (Qld), s 109

Allen Dodd as Trustee for the Dodd Superannuation Fund v Shine Corporate Ltd [2018] QSC 40
Greg Black Constructions Pty Ltd v Brodie and Anor [2011] QCAT 671
Hapisun Pty Ltd v Rikys & Moylan Pty Ltd [2013] VSC 730
Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744

Maatschappij Voor Fondsenbezit v Shell Transport and Trading Company [1923] 2 KB 166

APPEARANCES & REPRESENTATION:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act2009 (Qld)

REASONS FOR DECISION

  1. The respondent, Mr Palmer, applies for an order for security for costs.

  2. Section 109 of the Queensland Civil and Administrative Tribunal Act2009 (Qld) (‘QCAT Act’) provides:

    109   Security

    (1)This section applies if, under this Act or an enabling Act, the tribunal may award a party’s costs for a proceeding.

    (2)On the application of a party (applicant party) to the proceeding against whom a claim is made or an outcome or decision sought in a proceeding, the tribunal may make an order—

    (a)requiring another party to the proceeding to give security for the applicant party’s costs within the period stated in the order; and

    (b)staying the proceeding, or the part of the proceeding against the applicant party, until the security is given.

    (3)If the security is not given within the period stated in the order, the tribunal may make an order dismissing the proceeding, or the part of the proceeding against the applicant party.

    (4)In deciding whether to make an order under subsection (1), the tribunal may have regard to any of the following matters—

    (a)the financial circumstances of the parties to the proceeding;

    (b)the prospects of…

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Details
Case
[2024] QCAT 614
Decision Date

CaseChat Overview and Summary

The case of Capri Building Group Pty Ltd v Palmer was heard by the Queensland Civil and Administrative Tribunal (QCAT). The dispute arose from a building renovation contract between Capri Building Group Pty Ltd (Capri) and Neil Palmer. Capri claimed that Mr Palmer owed $72,645.27 for partial building work completed, while Mr Palmer denied any indebtedness and counterclaimed for $190,254.80 for damages, restitution, and liquidated damages. Mr Palmer applied for security for costs under section 109(4) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). The legal issues centred on whether Mr Palmer had a capacity to absorb the costs of the proceeding and if an order for security for costs would stifle the proceeding. The court considered factors such as the financial circumstances of the parties, the stage of the proceeding, and whether the proceeding was bona fide.

The court found that Capri, which had a history of financial difficulties and was at risk of insolvency, was unlikely to be able to absorb the costs if ordered to do so. Mr Palmer, on the other hand, was in a sound financial position with a net equity of $2.5 million. The proceeding was at an early stage, was bona fide, and Capri’s financial position was not caused by Mr Palmer. The court determined that ordering security for costs would not stifle the proceeding, as the costs related to the defence against the claim differed from those related to the counterclaim. The court concluded that an order for security for costs was appropriate and fixed the amount at $10,000 to be paid within 14 days.

The court’s reasoning was based on the financial disparity between the parties and the risk that Capri could not meet its costs obligations if ordered to do so. The court exercised its broad discretion under the QCAT Act to award security for costs, considering the financial circumstances of Capri and Mr Palmer, and the stage and nature of the proceeding. The court also distinguished between the costs of defending the claim and those of the counterclaim, finding that the former was more likely to be affected by Capri’s financial situation. The orders were made to ensure that Mr Palmer could proceed with the litigation without the risk of Capri being unable to pay costs if successful.

Orders

Orders of the court

1. The application for security for costs is allowed.

2. Capri Building Group Pty Ltd must pay to the trust account of Neil Palmer’s solicitors the sum of $10,000.00 by way of security for costs within fourteen (14) days of this decision.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Doing the best I can, and adopting a broad brush, I fix security for costs in the amount of $10,000. Conclusion I order that Capri must pay to the trust account of the solicitors for Mr Palmer the amount of $10,000 within 14 days of the date of this decision.

Ratio Decidendi

Legal Principle Established

Mr Palmer has filed written submissions in support of the application for security for costs. Capri has filed no submissions. Consideration The proceeding is about a building dispute. Capri undertook building renovation work on an existing domestic dwelling owned by Mr Palmer. In its originating application, Capri says that the works reached practical completion when Mr Palmer took possession. Capri claims that $72,645.27 is owed by Mr Palmer for works undertaken to the completion stage. Mr Palmer denies any indebtedness to Capri and counterclaims $190,254.80 for damages, restitution and liquidated damages. The Tribunal has the power to award costs in building disputes. That power is to be exercised judicially in accordance with established principle. It should be noted that costs do not follow the event in building dispute proceedings, however in circumstances where the nature and complexity of a dispute justifies engaging legal representation and expending monies on experts, it could not generally be said to be in the interests of justice for the successful party’s success to be eroded by having to bear their own costs. The starting point in considering the application for security for costs is that in this proceeding there is a broad discretion conferred on the Tribunal to award costs in favour of the successful party. I turn now to a consideration of the matters at s 109(4) of the QCAT Act:The financial circumstances of the parties – s 109(4)(a) As I have earlier observed Capri has filed no submissions. Mr Palmer relies upon an affidavit by his solicitor in which he attests to the following:(a)Capri was the holder of four categories of licence issued by the Queensland Building and Construction Commission (‘QBCC’);(b)All of the licenses were suspended from 25 January 2024 on the basis of the non-payment of debts by Capri;(c)The last financial year in which Capri undertook residential construction work was 2021/2022. The QBCC licence records for Capri indicate that Capri has not undertaken residential construction work since 2021/2022;(d)Capri is the defendant in three current District Court proceedings;(e)A credit search rates Capri ‘E/481 Impaired Risk’. ‘E’ indicates that the company is highly vulnerable to default or insolvency in the short term. 481 is an at risk score out of 850 points which indicates that Capri is at higher adverse financial risk than similar entities;(f)In September 2023 Capri was the subject of two default judgments in the Magistrates Court in amounts of $11,427.30 and $19,816.38;(g)Capri has a paid up share capital of $170,010, the shares being held by two corporate entities and the director of Capri, Mr Eades;(h)Mr Palmer is in a financially sound position, being the owner of a property in which he has a net equity of $2.5 million. Mr Palmer, referring to those matters set out in the preceding paragraph, says that there is strong evidence Capri will be unable to pay Mr Palmer’s costs in the event a costs order is made.