Office Shop Renovations of Australia Pty Ltd v Zhou
[2014] QCAT 564
•6 November 2014
| CITATION: | Office Shop Renovations of Australia Pty Ltd v Zhou [2014] QCAT 564 |
| PARTIES: | Office Shop Renovations of Australia Pty Ltd (Applicant) |
| v | |
| Ming Hu Zhou (First Respondent) And Hau (AKA Tracey) Zhong |
| APPLICATION NUMBER: | BDL335-12 |
| MATTER TYPE: | Building matters |
| HEARD AT: | On the papers |
| DECISION OF: | Member Howe |
| DELIVERED ON: | 6 November 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The applicant pay the respondents costs of the proceedings excluding those costs relating to the respondents legal representatives appearing at the first hearing of the matter fixed by Member Roney on 28 October 2013 and excluding the costs associated with the preparation of the evidence and the evidence provided to the Tribunal by Mr Launchbury as agreed and failing agreement as assessed by Queensland Independent Costing Services on a standard basis by reference to the Magistrates Court scale of costs, the cost of the assessment to be paid by the applicant. 2. The assessment be paid within 28 days of delivery of the assessment of costs to the applicant. | ||
| CATCHWORDS: | Costs – building matter - general rule costs follow the event – nothing to displace application of the general rule – appropriate scale of costs - costs associated with a particular part of the proceeding – excluding costs for a part of the proceeding | ||
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 (Qld) (QCAT Act).
REASONS FOR DECISION
I made a decision in this matter on 13 October 2014. In broad terms the respondent owners were successful. The applicant builder had sought recovery on variations to the extent of $97,499.93. The builder was successful only in respect of the amount $4,672.80 for one unpaid variation.
The owners opposed that claim and sought costs of rectification for defective building work to the value of $133,391 and also sought recovery of overpayment is made of the builder in additional $88,669.26. The owners succeeded to the extent of $22,347 allowed for costs of rectification in completion of building work and recovered overpayments to the extent of $58,486.61.
The respondent owners seek their costs of the proceedings excluding costs previously fixed at an aborted hearing on 28 October 2013, on the District Court scale of costs to be assessed and that the builder pay the costs of the assessment. The builder submits the appropriate order is that both parties should bear their own costs. Alternatively, the builder says if costs are awarded to the owners the costs should be awarded on the Magistrates Court scale.
The General Rule
The effect of section 77 of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) is to displace the usual order made in Tribunal proceedings that each party bear their own costs. The Tribunal may make an order as to costs that is justified in the circumstances.[1]
[1]Lyons v Dreamstarter Pty Ltd [2012] QCATA 71 at [33]] citing Oshlack v Richmond River Council [1998] HCA 11;(1998) 193 CLR 72.
“The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party[96]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.”[2]
[2]Oshlack at [67] per McHugh J.
On the basis of fairness and the interests of justice, the general rule that a successful party is entitled to recover its costs against the unsuccessful party is usually applied to building disputes before the Tribunal.[3]
[3]The general rule is given statutory form in r689(1) of the Uniform Civil Procedure Rules 1999 (UCPR). The QCAT Act does not incorporate the UCPR but the case law on r689(1) is of assistance in identifiying what the interests of justice might require.
“If orders for costs were not to be made in favour of successful parties in complex cases, then just claims may 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….”[4]
[4]Tamawood Ltd v Paans [2005] QCA 111 per Keane J at [32].
Accordingly it will usually be appropriate to start with the proposition that costs should follow the event. The question then is whether there is sufficient reason not to apply the usual rule either generally or to some extent. It might not be fair or in the interests of justice to apply the general rule where there is misconduct of some kind on the part of the successful party, or in some respect there is a part of the proceeding where the successful party should not be allowed its costs.
“The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd[97], Devlin J formulated the relevant principle as follows:
"No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct."
’Misconduct’" in this context means misconduct relating to the litigation[98], or the circumstances leading up to the litigation[99]. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation[100]; unnecessarily protracts the proceedings[101]; succeeds on a point not argued before a lower court[102]; prosecutes the matter solely for the purpose of increasing the costs recoverable[103]; or obtains relief which the unsuccessful party had already offered in settlement of the dispute[104].”[5]
[5]Oshlack per McHugh J at [69].
Conduct
The hearing in this matter took four days. The matter was complex, not least because of the volume of material involved in both preparation and presentation of the matter but also the legal issues between the parties, sufficiently so in my opinion to justify the appointment of legal representatives. Both parties however allege the conduct of the other has contributed to the complexity of the matter and the protraction of the proceedings.
In large part the owners’ complaint is about delay on the part of the builder in providing all relevant source documents. Orders in that regard were made on 10 July 2013, 28 October 2013 and 29 January 2014. The owners submit it can reasonably be presumed that the builder’s attitude to providing disclosure was designed to cause complexity and ultimately to avoid the source documents being the subject of scrutiny. The inevitable result, the owners say, was that their solicitors were required to undertake an extensive forensic exercise to determine how the amounts sought against them in respect of tax invoices 271 and 305 were calculated.
Given my conclusion that the basis upon which the parties agreed to variations was not cost plus builder’s margin of 20 per cent, but agreed fixed price, the forensic exercise referred to was in large part redundant and irrelevant to outcome and calculation of award. That forensic exercise consisted of and resulted in the affidavit evidence of Mr Launchbury sworn 18 October 2013 and an addendum to that both tendered as exhibit 33 in the proceeding. The report of Mr Salmon giving his estimate of the reasonable costs of the variation work set out in Pages one to four of his reports tendered as exhibit 16, the costs of which were incurred by the builder, was likewise irrelevant to outcome and calculation of award.
I should note the builder denies it conducted itself in a way designed to deliberately and unnecessarily disadvantage the owners. It is submitted any disadvantage arose out of the volume of material in this matter. This was a building dispute and that was not unusual.
In broad terms the complaint by the builder about the owners’ conduct of the proceedings was that the owners made unnecessary complaints about defects and commissioned three separate expert reports which significantly increased costs by increasing the time required to prepare for and conduct the hearing.
I note however that the second report by the owners expert, exhibit 41, was provided as a result of a direction from the Tribunal dated 15 August 2013 requiring additional evidence about three particular defect items, and the third report was made on an inspection undertaken virtually contemporaneously with the inspection undertaken for the purpose of preparing the second report.
Conclusions
I conclude the respondent owners have been the successful party in this action. The builder failed in its claim to be paid for variations totalling $97,499.93 save for one variation in the sum of $4,672.80. After set-off the owners succeeded in obtaining an order against the builder for payment of costs of rectification and recovery of monies overpaid of $76,160.81, regardless that their claim was initially for a sum of over $220,000.
I cannot see why the general rule that costs should follow the event should not apply. Both parties pursued claims that were not entirely successful. I cannot identify any “misbehaviour” on the part of the owners in the Oshlack sense such that the usual order as to costs should not apply. In so far as the owners recovered only approximately one third the amount they initially claimed, the result of that will be that they will recover costs only on the lesser applicable Magistrates Court scale for claims rather than District Court.
That does not conclude the matter however. By section 102(1) of the QCAT Act the Tribunal may make an order requiring a party to pay all or a stated part of the costs of another party if that is the appropriate order in the circumstances. Fairness might dictate the order as to costs be limited in respect of a part of the proceedings.
The forensic exercise undertaken by the owners solicitors resulted in the irrelevant evidence of Mr Launchbury. There was significant cross-examination of the builder on the issue of variations and their pricing based on actual cost plus builder’s margin of 20 per cent. Given my conclusion that variations were fixed price much of the cross-examination on the actual costs incurred by the builder for his work on variations was unnecessary. Clearly the cross-examination was also directed however at discrediting the builder’s credibility generally. Given the way in which both parties had approached the issue of the pricing of variations up to and during hearing, counsel’s cross-examination was understandable. The response of the builder to agreed costs of variations was, strangely enough, not to deny the formula of actual cost plus builder’s margin and assert fixed cost, but to try to reconcile the gross amount of the disputed variations with their composite elements. In large part I conclude that contributed to the owners’ solicitors pursuing the so-called forensic exercise about actual cost of variations.
In all the circumstances I believe what is fair and appropriate is that the respondents recover their costs of proceedings on the appropriate Magistrates Court scale of costs but absent the costs associated with the solicitors “forensic exercise” being the costs associated with the evidence given by Mr Launchbury. Costs of the respondents legal representatives appearing at the first adjourned hearing have already been fixed by Member Roney on 28 October 2013.
Orders
The applicant pay the respondents costs of the proceedings excluding those costs relating to the respondents’ legal representatives appearing at the first hearing of the matter fixed by Member Roney on 28 October 2013 and excluding the costs associated with the preparation of the evidence and the evidence provided to the Tribunal by Mr Launchbury as agreed and failing agreement at the cost of the applicant as assessed by Queensland Independent Costing Services on a standard basis by reference to the Magistrates Court scale of costs and the assessment be paid within 28 days of delivery of the assessment of costs to the applicant.
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