Lienhart v Sunrise Homes Pty Ltd

[2010] QCAT 156

CITATION: Lienhart v Sunrise Homes Pty Ltd [2010] QCAT 156

PARTIES:   Edgard Lienhart and Marie-Harriet Lienhart

v

Sunrise Homes Pty Ltd (now known as Kennedy Civil Pty Ltd)

APPLICATION NUMBER:            BD406-06

MATTER TYPE:   Building matters

HEARING DATE:   on the papers

HEARD AT:   Brisbane

DECISION OF:   Peta Stilgoe

DELIVERED ON:   13 January 2010

DELIVERED AT:   Brisbane

ORDERS MADE:   Each party bears their own costs of the proceedings.

CATCHWORDS:  costs, offers to settle

APPEARANCES and REPRESENTATION (if any):

Edgard & Marie-Harriet Lienhart represented by Stuart Latham of Lathams Lawyers

Sunrise Homes Pty Ltd represented by Christian Moore of Aegis Legal     

REASONS FOR DECISION

1. On 14 December 2009, I ordered that the applicants’ claim be dismissed. I invited the parties to make submissions as to costs. The applicants are content with no order as to costs, citing the QCAT legislation and rules. The respondent wants its costs paid on an indemnity basis.

1. The respondent’s grounds for claiming indemnity costs are:

   a.The respondent made numerous settlement offers and the decision of the tribunal was no more favourable to the applicant than those offers.

   b.The applicant’s proceedings were unreasonable.

   c.The interests of justice, following the principles in Tamawood Limited –v- Paans [2005] QCA 111, (“Tamawood”) warrant an order for costs.

Applicable law

1. Section 271 of the Queensland Civil and Administrative Tribunal Act (“QCAT Act”) states that, in relation to an existing matters, QCAT can only make a decision that the former entity could have made. Therefore, my ability to award costs is governed by the provisions of the Commercial and Consumer Tribunal Act, not the QCAT legislation.

Settlement offer

1. Section 142(2) of the Commercial and Consumer Tribunal Act stated that, if:

   a)A party to a proceeding serves another party to the proceeding with a written offer to settle the matters in dispute between the parties; and

   b)The other party does not accept the offer within the time is open; and

   c)The offer complies with this division; and

   d)In the opinion of the tribunal, the decision of the tribunal on the matters in dispute is not more favourable to the other party than the offer;

   the tribunal must award the party who made the offer all reasonable costs incurred by that party in conducting the proceeding after the offer was made.
   Section 138 requires that:

   ·an offer must be made by signed writing served on the party to whom the offer relates.

   ·If it provides for payment of an amount, the offer must state when the amount is to be paid and to whom.

1. By email of 27 August 2008, the respondent offered to settle the dispute as follows:

   As to the defect issue identified by the QBSA report dated 25 July 2008:

   1.the respondent will pay the applicants the sum of $500 in full and final settlement of this matter;

   2.the parties agree to provide their authority to release the CCT settlement monies ($19,190) presently held in the CCT account on the following basis:

   a)The sum of $500 to the Applicants (in consideration of the above proposal);

   b)The sum of $18,690 to the respondent.

   In relation to the proceedings as a whole:

   1.The respondent shall pay the applicants the sum of $5,000.00 in full and final settlement of the proceedings;

   2.The parties shall release and discharge each other from all claims the subject of the proceedings;

   3.The proceedings shall be discontinued within 7 days of receipt of payment by the applicants;

   4.The parties shall bear their own costs of the proceedings.

1. The applicants did not accept the offer.

1. The respondent’s offer does comply with section 138. The offer is “signed” within the context of section 14 of the Electronic Transactions (Queensland) Act and section 44 of the Commercial and Consumer Tribunal Act allows the tribunal to deem informal service as “service” but the offer does not state when the amount is to be paid. Therefore, although I am also satisfied that the decision of the tribunal was not more favourable to the applicant than the offer I am not required to award the respondent all reasonable costs incurred in conducting the proceeding after 27 August 2008.

Tamawood

1. The respondent relies upon Justice Keane’s decision in Tamawood to assert an entitlement to costs for the whole of the proceedings. The parties were given leave to be legally represented. The respondent was the beneficiary of an order. However, the respondent has drawn my attention to the following passage in Justice Keane’s judgment:

   “If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves. Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the Tribunal.”

2. In Tamawood, the appeal was against the District Court’s decision to award costs to the homeowner/applicant. Both the Court of Appeal and the District Court were concerned that a successful applicant of modest means should not have a successful claim eroded by the costs of pursuing that claim. The injustice to which His Honour referred was that just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves (my emphasis). The case is quite different here.

1. Judge Robin QC in Civic Steel Homes –v- Mitra [2006] QDC 322 took the view that section 71(5) was simply one of the factors, in conjunction with section 71(4), to be considered when a tribunal is asked to make a costs order. Therefore, the respondent’s entitlement to costs, if any, requires a consideration of the elements of section 71(4).

1. The respondent seeks indemnity costs because of the applicants’:

   ·Failure to accept the numerous reasonable settlement offers;

   ·Breach of the mediation agreement in attempting to agitate matters that were resolved in that agreement;

   ·Unreasonable conduct in failing to agree to the release of money held in trust.

   The respondent also points to the considerable legal expenses it has incurred and its success in the outcome of the proceedings.

2. The applicant, in urging the exercise of my discretion against any award of costs, pointed to the respondent’s breach of the Domestic Building Contracts Act by demanding completion payments before practical completion, calculating the final payment with reference to an incorrect date of final completion, and demanding payment “well in excess” of the actual final claim.

1. It is true that the applicants wholly failed in their claim as presented at the hearing but, through the mediation agreement, they secured further rectification and the amount paid into trust was significantly less than the amount claimed by the respondent in its defence.

1. The applicants did reject “numerous” settlement offers. Unfortunately for the respondent, it appears that none of the offers complies strictly with the requirements of section 138. Nor did the respondent trouble itself to point out the potential consequences of rejecting a reasonable offer of settlement. Had it done so, I would have been persuaded that the applicants’ failure to accept an offer may have given rise to an entitlement to costs, even if the offers did not strictly comply with the Act. Alternatively, if there were events in the intervening period that made the rejection of the settlement offers, in all the circumstances, unreasonable, the technical non-compliance of the offers would not prevent an order for costs. The respondent has not referred to any such events.

1. The mediation agreement specifically contemplated that the applicants might continue part of their claim. The respondent knew this, although it seems that it contemplated that the proceedings might continue in another jurisdiction. Whether the applicants proceeded in this tribunal or elsewhere, the respondent knew that it was likely that it would incur further cost. Because of the decision of Mr Butler AM SC in the application for summary judgment brought by the respondent, I cannot say that the applicants’ continuation of the claim was unreasonable.

2. I understand the respondent’s argument that the applicants’ refusal to release monies in trust was unreasonable. From a commercial viewpoint, that is certainly true. However, one of the factors that a tribunal is entitled to consider in awarding costs is whether any party has contravened an Act. The genesis of this dispute was the respondent’s claim for final payment before the date of final completion. As the applicants point out, this is a breach of section 67(2) of the Domestic Building Contracts Act.

1. The respondent points out that neither party strictly complied with the terms of the contract. Certainly, that conduct escalated the dispute. The applicants’ failure to comply with the terms of the contract is understandable. The respondent, as a registered builder accustomed to entering into, and operating within, the standard HIA contract should have known better.

1. The proceedings were necessarily complex because of the parties’ non-compliance with the provisions of the building contract. Both parties were at fault. I am grateful for the very comprehensive submissions by both parties’ legal representatives but these do not, in themselves, justify an award of costs.

Reserved costs

1. On 8 February 2008, Mr Butler AM SC reserved the costs of the application for summary judgment. The applicants say that, as the respondent was unsuccessful in that application, they are entitled to their costs in the sum of $1,650.00.

1. The respondent says that, as the applicant was ultimately unsuccessful, it should have the costs of the application. It also says that the application had the effect of assisting the parties in defining critical issues for trial.

1. Given my comments on costs generally, I order that each party bears their own costs of that application.

1. I order that each party bears their own costs of the proceedings.