Deck Rite Pty Ltd v Brown
[2013] QCAT 557
| CITATION: | Deck Rite Pty Ltd v Brown [2013] QCAT 557 |
| PARTIES: | Deck Rite Pty Ltd (Applicant) |
| v | |
| Michael Brown (Respondent) |
| APPLICATION NUMBER: | BDL193 -11 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | On the Papers |
| HEARD AT: | Brisbane |
| DECISION OF: | S Gardiner, Member |
| DELIVERED ON: | 21 October 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Brian Leah pay Michael Brown’s costs of this proceeding on an indemnity basis for costs incurred after 27 September 2012, as agreed or failing agreement, as assessed. 2. Michael Brown’s costs will be assessed as follows: a. Michael Brown will deliver to Brian Leah an itemised claim for costs on an indemnity basis; and b. if within 14 days of that delivery, the parties have not agreed to an amount for costs, the costs are to be assessed by Hickey & Garrett, Legal Costs Consultants, Level 21, 141 Queen Street, Brisbane at Brian Leah’s cost. 3. Brian Leah will pay Michael Brown’s costs (as agreed or assessed) within fourteen (14) days of such agreement or assessment. It is further directed that: 4. a copy of the order and reasons in this matter be provided to the Australian Securities and Investment Commission and to the Queensland Building Services Authority. |
| CATCHWORDS: | BUILDING MATTER – Where applicant commenced proceedings – Where a counter claim filed – Where a sole director of the applicant company fraudulently de-registered the applicant company midway through the proceedings – Where no notice of the de-registration was given to the respondent or QCAT – Where costs awarded on an indemnity basis from the date of de-registration. Knight v FP Special Assets Ltd [1992] HCA 28 Queensland Building Services Authority Act 1991 s 77(2)(h) |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
Deck Rite Pty Ltd filed an application against Michael Brown on 8 July 2011 claiming $15,898.10 monies owing by Mr Brown under a building contract between these parties. On 12 August 2011, Mr Brown filed a response and counterclaim for damages for breach of contract in the sum of $51,222.20 and costs.
Brian Leah was the sole director, secretary and shareholder of Deck Rite Pty Ltd from its registration on 2 December 1996.
It appears agreed between the parties, that the contract had been terminated. Deck Rite sought a declaration in its original application to that end.
After the filing of Deck Rite’s application, the company was represented in the Tribunal and in negotiations and correspondence with the solicitors for Mr Brown by Mr Leah.
Unknown to anyone, on 27 September 2012 Mr Leah applied to the Australian Securities and Investment Commission to de-register Deck Rite Pty Ltd and the company was de-registered that day.
Neither the Tribunal nor Mr Brown nor his solicitors were informed by Mr Leah of this action. In fact, Mr Leah continued with Deck Rite’s action as if nothing important had occurred although Mr Leah did send a handwritten letter to Mr Brown in late September 2012 saying:
You can do what ever, I don’t care. Your witness statement will be struck out for failing to comply.
Now go away and bother someone else. In future comply and when you realise what I’m doing it will be over with for you.
Now go away.
After 27 September 2012, the matter progressed in the Tribunal with directions hearings on 12 November 2012 and 10 May 2013 before the de-registration came to light and a final directions hearing was held on 19 June 2013. Mr Brown was given leave to withdraw his counterclaim, there being no point in continuing against a de-registered company.
Understandably, Mr Brown was outraged at Mr Leah’s actions. He made an application for costs against Mr Leah personally based on the decision of the High Court of Australia in Knight v FP Special Assets Ltd[1].
[1] [1992] HCA 28.
Mr Brown was directed to file submissions to support the costs application and did so on 5 July 2013. Mr Leah has filed no submissions. The application comes before this Tribunal as a decision on the papers.
An application for costs is determined for under s 77(2)(h) of the Queensland Building Services Authority Act 1991 (QBSA Act). The effect of this section, which modifies the general position under the QCAT Act, is to give the Tribunal a broad general power to award costs in cases caught by these enabling provisions[2]. This enabling Act allows that while the power must be exercised judicially[3], it is ‘in markedly different terms from s 100 of the QCAT Act’[4] which starts with each party bearing its own costs.
[2] Lyons v Dreamstarter Pty Ltd [2011] QCATA 142.
[3] Ibid at [33].
[4] Ibid at [10].
As His Honour the President of QCAT determined in the appeal decision of Lyons v Dreamstarter Pty Ltd[5] about s 77:
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.
[5] Ibid at [11].
The decision in Knight v FP Special Assets Ltd allowed an award of costs against a non-party to an action under the Rules of the Supreme Court of Queensland. In that decision the award was against a receiver of a company where the receiver was not himself a party to the proceedings.
Chief Justice Mason and Justice Deane[6] in the leading decision in that matter comment[7]:
For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.
[6] With Justices Dawson and Gaudron agreeing and Justice McHugh dissenting.
[7] [1992] HCA 28 at [34].
Applying this High Court decision, the QCAT President in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)[8] ordered costs against a company director. His Honour the President, after referring to the comments of the High Court set out above further said[9]
What the authorities do suggest, however, is that if the conduct of the company officer is sufficiently connected to the matter in important and critical respects, such that they may be described in fact as the real party to the proceeding, and there is evidence showing bad faith, misconduct, or an improper purpose and a personal interest in the successful conclusion of the litigation, then it may be appropriate to order costs against them.
[8] [2010] QCAT 412.
[9] Ibid [39].
Mr Leah fraudulently told ASIC in his application to de-register the company that ‘the company is not a party to any legal proceedings’. Mr Leah certified this information to be true and correct on 25 September 2012. Clearly this was wrong and Mr Leah was well aware of this.
I am satisfied that Mr Leah took a course of action intended to fraudulently thwart the counterclaim made by Mr Brown. Mr Leah applied to ASIC to de-register the company knowing that there were legal applications on foot. I am satisfied that Mr Leah evidenced no intention to tell either Mr Brown or QCAT of the actions he had taken other than to quite gleefully hint at it in a note to Mr Brown.
I am further satisfied that Mr Leah’s conduct as the company officer is sufficiently connected to the matter in important and critical respects to show him as the real party to the proceeding. There is strong evidence of bad faith, misconduct, an improper purpose and a personal interest in the successful conclusion of the litigation both towards Mr Brown and in his dealings with ASIC.
It is appropriate that Mr Leah personally pay Mr Brown’s costs in this matter and I am satisfied that appropriate date for the commencement of these costs is the day Mr Leah fraudulently applied to ASIC, 27 September 2012.
Quantum of Costs
Mr Brown seeks his costs on an indemnity basis. He submits that Mr Leah had no intention of advising him or QCAT of his actions in de-registering the company and that Mr Leah was content to allow the matter to proceed to a hearing, causing significant costs to Mr Brown and a waste of the public purse in the time and resources dedicated to this matter by QCAT.
I am satisfied that Mr Leah should pay Mr Brown’s costs on an indemnity basis because he deliberately de-registered Deck Rite Pty Ltd in fraudulent circumstances and further evidenced no intention to tell Mr Brown or QCAT. It was solely steps taken by the solicitors for Mr Brown which brought the de-registration to the notice of Mr Brown and QCAT.
I will order that Brian Leah pay Michael Brown’s costs of incidental to this proceeding on an indemnity basis for costs incurred after 27 September 2012.
Mr Brown seeks to make further submissions on the quantum of costs once this decision is made. He submits that given the nature and extent of costs this Tribunal is asked to determine, any evidence of the quantum of costs would have to include an assumption about the decision this Tribunal would make.
I accept Mr Brown’s submission on the quantum of costs and will make directions for the provision of an assessment of the costs on the basis of this decision.
Finally, I direct that at copy of the order and the reasons in this matter be provided to the Australian Securities and Investment Commission and to the Queensland Building Services Authority.
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