Lanbuilt Pty Ltd v Ricchetti
[2013] QCAT 209
| CITATION: | Lanbuilt Pty Ltd v Ricchetti [2013] QCAT 209 |
| PARTIES: | Lanbuilt Pty Ltd (Applicant) |
| v | |
| Clem and Angela Ricchetti and Bruno Ricchetti (Respondents) |
| APPLICATION NUMBER: | BD533-07 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Richard Oliver, Senior Member |
| DELIVERED ON: | 21 May 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The respondents pay the applicant’s costs of and incidental to the application from 29 April 2010 on an indemnity basis to be agreed or assessed, or failing agreement; (a) The applicant must file in the Tribunal and give to the respondents a short form assessment of costs prepared by an approved Costs Assessor together with any submissions in support of the costs sought to be paid by 12 July 2013. (b) The respondents must file and give to the applicant any submissions in reply by 9 August 2013. 2. Unless otherwise objected to by either party the amount of the costs payable by the respondents to the applicant will be determined on the papers without an oral hearing. |
| CATCHWORDS: | Costs – where offer to settle more favourable to the applicant than the final decision – where costs ordered on an indemnity basis – where purpose of Rule 86 considered. Queensland Building Services Authority Act 1991 s 77 Rezaee & Anor v Queensland Building Services Authority [2011] QCATA 335 Lyons v Dreamstarter Pty Ltd [2011] QCATA 142 Ricchetti v Lanbuilt Pty Ltd [2012] QCATA 111 |
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
In 2007 Lanbuilt Pty Ltd commenced a proceeding against the Ricchettis to recover monies payable under a building contract for building work undertaken for the respondents at Basewattle Road, Curragong. The Ricchettis did not pay the outstanding balance because they contended that there was defective building work and overcharges. The matter came on for hearing before me on 13 & 14 October 2010. A decision was delivered on 17 December 2010, where I found that the Ricchettis owed Lanbuilt $57,606.00 pursuant to the contract but the Ricchettis were also entitled to rectification costs including supervision of the rectification work in the total sum of $64,870.00. The result was that Lanbuilt was ordered to pay the Ricchettis $7,263.32.
One of the important features of this case was that after both the applicant and the respondent engaged experts, Mr Messer and Mr Brooke, to assess whether and to what extent there was defective building work and the cost of rectification. Well before the hearing they provided a joint expert report where they agreed on the extent of the defective building work and the cost of rectification in the sum of $58,870.00. There were other outstanding matters, including the cost of supervising the actual work involved in rectifying the defects, and other matters which are addressed in paragraph 36 of the decision.
Lanbuilt has now filed an application for costs. Although this proceeding was commenced in the former Commercial and Consumer Tribunal, section 271 of the QCAT Act states the Tribunal must deal with an existing proceeding (which includes a pending proceeding), under the QCAT Act or an enabling Act. It is now well settled that a pending proceeding is taken to be a proceeding before QCAT.[1]
[1] QCAT Act s 256 and Rezaee & Anor v Queensland Building Services Authority [2011] QCATA 335.
Section 77 of the Queensland Building Services Authority Act 1991 confers jurisdiction on the Tribunal to determine building disputes such as this one and also to award costs.[2]
[2] Lyons v Dreamstarter Pty Ltd [2011] QCATA 142.
Lanbuilt relies on not only those factors referred to in section 102 of the QCAT Act, but also on Rule 86 of the QCAT Rules. The Rule applies if a party to a proceeding makes a written offer to settle the dispute, the other party does not accept the offer within the timeframe and, in the opinion of the Tribunal, the decision in the proceeding is not more favourable to the other party than the offer that was made. In those circumstances the Tribunal may award the party who made the offer “all reasonable costs incurred by that party in conducting the proceeding after the offer was made.”
By the time the hearing of this matter commenced, the applicant contended that there was about $74,000.00 owing under the contract. There was a dispute about allowances for provisional sums and prime cost items which required determination. After that determination and making a further adjustment for liquidated damages, the Tribunal found that there was $57,606.00 owing to Lanbuilt as the balance of monies due and payable under the contract. Offset against that was the agreed cost of rectification plus a finding about supervision costs of $6,000.00. These facts are important when considering the offers of settlement made by Lanbuilt well prior to the commencement of the hearing.
The first offer was made on 4 August 2009 in a letter from Lanbuilt’s solicitors, Purcell Taylor, to the Ricchettis’ solicitors, Bolton Clearly & Kearn. In that letter Lanbuilt offered to pay the Ricchettis $15,292.00, which made allowance for variations of $26,236.00, rectification costs of $64,760.00 and supervision of $12,000.00. By comparison at the hearing, rectification costs were agreed at $58,870.00 and prime cost and provisional sum variations were assessed at $29,118.00.
There was no response to the letter of 4 August 2009 so the solicitors for Lanbuilt again wrote on 17 November 2009 repoening the offer made on 4 August 2009.
Again there was no response and a further attempt to settle the matter was made on 15 April 2010. By that stage the joint experts had prepared a report where the rectification costs were agreed at $58,870.00 plus GST. As to the supervision costs, it was suggested that the parties meet halfway on those costs.
The letter set out in detail Lanbuilt’s position on the adjustments that were in dispute.
Contract Price - $693,468.00
Less adjustment for
PC/PS & variations - $25,199.09
Subtotal - $668,268.91
Less liquidated damages - $2,450.00
Less rectification costs - $64,760.00
Less supervision & admin - $14,000.00
Total – ($16,255.09)After setting out the adjustments Lanbuilt made the following offer to settle:-
§Our client pay your client the all up amount of $55,000.00 (settlement amount) within 7 business days of acceptance of this offer;
§Acceptance of this offer is in full and final satisfaction of all actions, suits, claims, complaints and demands of whatsoever nature as at the date of this offer which the parties, and all persons claiming by, through or under the parties, but for the acceptance of this offer, had, have or may hereinafter have had against each other but for acceptance of this offer in relation to the subject contract & works, all defects, the QCAT proceedings and the complaint to the BSA or any matter connected directly or indirectly therewith;
§Each party walk away from this proceeding, including our client’s Claim and your client’s Counterclaim;
§A Notice of Discontinuance is filed; and
§Each party bear their own legal costs.
The Ricchettis did not accept that offer and the matter proceeded to hearing.
Having regard to the the Tribunal’s final decision it is clear that the offers to settle that were submitted to the Ricchettis were more favourable than the decision of the Tribunal delivered on 17 December 2010.
It is evident from these offers to settle that Lanbuilt was making serious attempts to extracate itself from this litigation at significat cost but to no avail.
In response to the application for costs, the Ricchettis rely on section 100 of the QCAT Act that each party to the proceeding must bear their own costs unless, under section 102, the interests of justice require the Tribunal to make another order. They address each of those matters set out in section 102 but these submissions are of little assistance because the basis for the application for costs is not only the power to award costs, under s 77 of the QBSA Act, but also, importantly, the application of Rule 86 and the offers to settle. They make no meaningful submission about why the offers to settle were rejected forcing Lanbuilt to prosecute the application and defend the Ricchetti’s counter claim.
The Ricchettis did make offers to settle which included them engaging subcontractors to complete the work and undertake the rectification, which costs would be deducted from the applicants final account. There were further offers by the Ricchettis which involved Lanbuilt finishing off the works with a payment of money to Lanbuilt. Those offers were made very early in the dispute in 2007 and are not relevant to the costs of the proceedings which escalated after the counterclaim was filed.
Once the joint expert report was prepared and there was an agreement between them as to the cost of rectification, both parties were in a position to make an informed assessment as to their prospects at the hearing. It was at this point that Lanbuilt made a very strong commercial offer to settle with the obvious intention, to avoid the costs of taking the matter to hearing. The purpose of the Rule is to provide some protection on costs to the party who makes a genuine effort to resolve the litigation to avoid incurring the costs of the matter proceeding to a hearing.
There is nothing in the Ricchetti’s submissions which would pursuade me that I should not make an order for costs in Lanbuilt’s favour in consequence of the application of Rule 86.
As I said, the final decision was much more favourable to Lanbuilt than the offers of settlement made and in the absence of any change of circumstances since the offer was made, I feel compelled to make an order that the Ricchettis pay Lanbuilt’s cost of the proceeding from 29 April 2010.[3]
[3] The offer is dated 15 April 2010 and was open for 14 days.
Rule 86 is silent as to any particular scale on which costs should be ordered. The rule refers to “reasonable costs incurred by that party in conducting the proceeding”. Similar to the decision made in Ricchetti v Lanbuilt Pty Ltd [2012] QCATA 111, I see no reason why those costs should not be on an indemnity basis to put Lanbuilt in the position it would have been had the offer of settlement been accepted. Therefore the order of the Tribunal will be that the respondents pay the applicant’s costs of and incidental to the application from 29 April 2010 on an indemnity basis to be agreed or assessed.
I will also make the following orders should the parties not be able to agree on the amount of the costs.
1. The respondents pay the applicant’s costs of and incidental to the application from 29 April 2010 on an indemnity basis to be agreed or assessed, or failing agreement;
(a)The applicant must file in the Tribunal and give to the respondents a short form assessment of costs prepared by an approved Costs Assessor together with any submissions in support of the costs sought to be paid by 12 July 2013.
(b)The respondents must file and give to the applicant any submissions in reply by 9 August 2013.
2.The amount of the costs payable by the respondents to the applicant will be determined on the papers without an oral hearing.
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