Lyons v Dreamstarter Pty Ltd
[2012] QCATA 71
•2 May 2012
| CITATION: | Lyons v Dreamstarter Pty Ltd [2012] QCATA 071 |
| PARTIES: | Andrew Lyons (Applicant/Appellant) |
| v | |
| Dreamstarter Pty Ltd t/as Protec Builders (Respondent) |
| APPLICATION NUMBER: | APL234-10 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Alan Wilson, President |
| DELIVERED ON: | 2 May 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the Respondent Dreamstarter Pty Ltd t/as Protec Builders pay to the Applicant Andrew Lyons the sum of $30,660.60 for costs incidental to the appeal. |
| CATCHWORDS: | APPEAL – BUILDING DISPUTE – APPLICATION FOR COSTS – where the Applicant had successfully appealed a decision of the Tribunal – where the original application was returned to the Tribunal – where the Respondent applied for leave to withdraw its original application in the claim in question – where the Tribunal granted leave for the Respondent to withdraw its claim – where the Tribunal ordered that the Respondent pay the Applicant’s costs of and incidental to the original application – where the Applicant made an application for costs associated with the application for leave to appeal and the successful appeal – whether there are grounds for a departure from the standard position under s 100 of the Queensland Civil and Administrative Tribunal Act 1999 that parties will bear their own costs Queensland Building Services Authority Act 1991, s77 A & D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd [2006] FCA 690 |
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
This building dispute has not been without its complications in QCAT. It began with proceedings by a builder, Dreamstarter Pty Ltd for payment of a progress claim and other amounts of $98,734.70 plus interest; and, a claim that the homeowner Mr Lyons had wrongly terminated the building contract, entitling the builder to loss of profits of $25,110.00.
In 2010, a QCAT member dismissed an application by Mr Lyons for an order that Dreamstarter provide security for costs in the sum of $200,000.[1] That decision was successfully appealed by Mr Lyons and Dreamstarter’s original application in the building dispute (BDL222-10) was returned, by the Appeal Tribunal, to the Tribunal for a future directions hearing.[2]
[1] Dreamstarter Pty Ltd v Lyons [2010] QCAT 447.
[2] Lyons v Dreamstarter Pty Ltd [2011] QCATA 142.
Mr Lyons then sought his costs in his successful appeal which was directed, by an order of the Deputy President of 26 August 2011, to be determined on the papers by written submissions from the parties. Subsequent orders up to November 2011 extended the time for the parties’ written submissions.
Dreamstarter then, however, applied to the Tribunal for leave to withdraw its application in the building case. That application was opposed by Mr Lyons. He also sought his costs of the entire building case (excluding his appeal). On 15 February 2012 a Senior Member of the Tribunal ordered, with Reasons, that Dreamstarter have leave to withdraw its claim and also that it pay Mr Lyons’ costs of and incidental to his original application for security for costs on a standard basis as agreed or, failing agreement, as assessed by an assessor nominated by Dreamstarter.
In the present matter the Appeal Tribunal must determine Mr Lyons’ application for costs associated with his application for leave to appeal, and his successful appeal. These will include, he submits, his costs of and incidental to directions hearings in the Appeal Tribunal in the latter part of 2010, and April 2011.
Under the QCAT Act the usual position is that parties will bear their own costs: s 100. That provision contains, however, an introductory phrase (‘Other than as provided under this Act or an enabling Act…’) and, as the Deputy President identified in her decision in Mr Lyon’s appeal, there is a relevant enabling Act which applies to the dispute here and contains a provision about costs: s 77 of the Queensland Building Services Authority Act 1991 which, in s 77(2)(h) gives the Tribunal a power to award costs.
As the learned Deputy President also identified, this is what ss 6 and 7 of the QCAT Act refer to as a ‘modifying provision’ and it prevails over the provision of the QCAT Act which must therefore be read, with any necessary changes, as if the modifying provision was part of the QCAT Act.
The effect, as the learned Deputy President went on to say, is to give QCAT a broad general power to award costs in cases caught by these enabling provisions which, in the case of s 77(2)(h), is to be exercised ‘judicially’[3].
[3]Lyons v Dreamstarter Pty Ltd [2011] QCATA 142, at para [33]; Latoudis v Casey (1990) 170 CLR 534 at 557.
In building cases that have elements of complexity, the Queensland Court of Appeal has suggested that costs awards will not be surprising[4]. That case concerned, however, costs provisions in different legislation governing QCAT’s predecessor Tribunal.
[4] Tamawood Ltd v Paans [2005] QCA 111, per Keane JA at [32].
In any event, the power to award costs under the QBSA Act, while expressed in succinct terms, indicates that the question of costs is to be addressed in markedly different terms from s 100 of the QCAT Act.
The High Court has said that there is no automatic rule that costs ‘follow the event’ (i.e., the outcome of the proceeding) or that the unsuccessful party must compensate the successful one.[5] 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.[6] Otherwise, the factors affecting the discretion will vary in each case.[7]
[5] Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [26].
[6] Latoudis v Casey (1990) 170 CLR 534.
[7] Donald Campbell & Co v Pollak (1927) AC 732 at 811-12.
Here, the elements of the discretion must include the fact the homeowner succeeded in his appeal, on all three of the grounds he relied upon – any one of which, it might be said, would have been sufficient to attract a grant of leave, and a favourable outcome on appeal.
Mr Lyons’ appeal had, also, an additional element: after the QCAT member refused his application for security for costs, he made an open offer to Dreamstarter that the parties consent to an order that, in his appeal, the original Member’s order be set aside – in effect, that the appeal should be resolved, by consent, in his favour.
Rule 86 of the QCAT Rules 2009 gives the Tribunal, in certain circumstances, the discretion to award a party making an offer ‘all reasonable costs incurred by that party in conducting a proceeding after the offer was made’: r 86(2). The Rule is called up when the offer is not accepted, but the eventual outcome is ‘not more favourable’ to the party refusing the offer, than the offer itself.
The homeowner’s letter containing the offer, dated 17 September 2010, pointed out amongst other things that the homeowner had been denied natural justice in the process by which the QCAT Member determined his application for security for costs.
The builder, in a reply of 22 September 2010, expressly rejected that contention but it was the primary basis upon which the learned Deputy President granted leave to appeal, and upheld the appeal – in particular, as her Honour’s reasons show, because Mr Lyons had not been told that his application would be dealt with on the papers, and was wrongly denied the opportunity to make oral or written submissions.
But there were, as her Honour’s reasons in the appeal decision show, multiple appellable errors in the reasons of the learned member at first instance: the denial of natural justice, mentioned above; and, the fact that the learned Member at first instance failed to take into account s 77 of the QBSA Act.
In these circumstances, Mr Lyons’ submissions are compelling. As the reasons of the learned Deputy President made clear, oversights and deficiencies occurred within the Tribunal which meant that his original application for security for costs was not afforded procedural fairness. On any view, his application for leave to appeal and his appeal had strong prospects. The builder was legally advised, and had sufficient opportunity to satisfy itself about the strength of Mr Lyons’ case.
The subsequent reasons of the Appeal Tribunal confirm, in retrospect, that Mr Lyons’ offer was a reasonable one, and ought to have been accepted by the builder. It is not open to the builder to assert, for example, that the matters raised in Mr Lyons’ appeal were speculative or should properly be left to adjudication before the Appeal Tribunal.
For these reasons, this is a case in which the operation of rule 86 strongly supports an award to Mr Lyons for his costs.
Under s 107 of the QCAT Act the Tribunal must fix the costs, if that is possible. Mr Lyons has, through his solicitors, filed a detailed report from an experienced costs assessor showing a claim for costs on the standard basis of $24,871.28, and $30,660.60 on an indemnity basis.
A complicating factor is that Mr Lyons is a barrister and has, as an affidavit from his solicitor shows, undertaken some of the legal work himself, but has kept good records of that.
In London Scottish Benefits Society v Choiley[8] it was held that a solicitor acting for himself in litigation was entitled to the same costs as if he had employed a solicitor, except for items which might be unnecessary because he was his own client – e.g., obtaining instructions, or attendances to that effect. The rule has been supported in decisions of the High Court[9], the Queensland Court of Appeal[10], and the Federal Court[11].
[8] (1884) QBD 872.
[9] Guss v Beenhuizen (No 2) (1976) 133 CLR 47.
[10] Warchild v Petersen [2008] QCA 26.
[11] A & D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd [2006] FCA 690.
As to the basis upon which costs should be assessed, it was said in several decisions in this jurisdiction in QCAT’s predecessor, the Commercial and Consumer Tribunal, that the phrase ‘all reasonable costs’, which appeared in s 142 of the Commercial and Consumer Tribunal Act 2003 and now it appears in QCAT r 86(2) should be construed to mean indemnity, rather than standard costs.[12] That construction of the phrase can reasonably be applied to the same words, where they appear in QCAT r 86(2). Plainly, the rule is intended to encourage parties to be realistic about prospects in QCAT proceedings and to carry appropriate sanctions if that does not occur.
[12]See the discussion of the CCT cases in Malay Industries Pty Ltd v Queensland Building Services Authority [2010] QCAT 310 at [26].
The other matter affecting the decision whether or not to award costs on the higher, indemnity basis is the reasonableness of the builder in rejecting Mr Lyons’ pre-appeal offer.[13] For the reasons discussed earlier, the builder’s response was not reasonable: the appeal was always a strong one, with good prospects.
[13] Fick v Groves (No 2) [2010] QSC 182 at [31] per Applegarth J.
Mr Lyons’ solicitor deposes, and the costs assessor reports, that in both cases (standard, or indemnity) the assessment is conservative. While the costs claim by the homeowner are substantial, I accept that his preparation for his application for leave to appeal, and the appeal, required him to address various elements of the decision of the original Tribunal member and, although he ultimately succeeded with what might be described as relative ease, that could not necessarily be confidently predicted: for example, the application for leave to appeal was brought in a case involving an interlocutory order and, as the Deputy President observed, Appeal Tribunals are notoriously reluctant to interfere in discretionary decisions, at first instance.
The costs assessor’s report sets out the details of his calculations, leading to the claim for $30,660.60 for costs on an indemnity basis. The larger items relate to Mr Lyons’ notional fees, as a barrister, for drawing and preparing submissions, and affidavits pertaining to the application for leave, and the appeal. The costs assessor says that, in calculating these items, he has the approached the matter conservatively (e.g., ignoring what were probably large costs associated with communications with his solicitor, and engrossing documents) and, otherwise, allowing counsel’s fees at current applicable rates but at ‘…the lower end of what might be allowed on a formal assessment of costs’.
Mr Lyons is represented by a very experienced solicitor who swears that his client has kept detailed records of the dates, times and work undertaken in relation to the litigation; and, in the solicitor’s opinion, the assessment is also ‘very conservative’.
The costs assessor’s report and the solicitor’s affidavit are, again, compelling. Although the builder has not filed contrary submissions – and, according to its solicitor, will not be doing so – the material filed on Mr Lyons’ behalf is persuasive that he should have his costs of and incidental to the appeal, assessed on an indemnity basis, in the sum of $30,660.60. There will be an order that the respondent Dreamstarter Pty Ltd pay those costs, in that sum.
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