Potts v T & M Buckley Pty Ltd
[2011] QCAT 469
•11 October 2011
| CITATION: | Potts v T & M Buckley Pty Ltd [2011] QCAT 469 |
| PARTIES: | Phillip Potts |
| v | |
| T & M Buckley Pty Ltd t/as Shailer Constructions |
| APPLICATION NUMBER: | B141-04 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Ann Fitzpatrick, Member |
| DELIVERED ON: | 11 October 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | (a) The Decision in this matter, dated 14 December, 2010 be corrected so that the money ordered to be paid pursuant to a quantum meruit based on restitution is $4,009.97, not $5,089.97. Any consequential corrections to the Orders made on 14 December, 2010 are to be made. (b) The respondent pay to the applicant the following, less moneys already paid to the applicant pursuant to the Orders made on 14 December, 2010: Unpaid variations $ 5,818.00 GST $ 581.80 Quantum meruit $ 4,009.97 GST $ 400.99 Retention Money $ 3,535.00 GST $ 353.50 Interest $ 5,675.86 TOTAL $20,375.12 (c) The applicant is to deliver within 7 days of the date of this Decision, a tax invoice to the respondent in relation to the amounts ordered. The respondent must pay the GST component to the applicant within 21 days of receipt of the tax invoice. Apart from the GST component, the respondent must pay the remaining sums, not already paid, within 21 days of the date of this decision. (d) The respondent pay the applicant’s costs of these proceedings on a standard basis to be assessed on the Magistrate’s Court scale of costs. (e) The applicant’s costs be assessed as follows: (i) the applicant shall deliver to the respondent an itemised claim for costs referring to the relevant items contained in the Magistrates Court scale of costs; (ii) if within 14 days of that delivery, the parties have not agreed to an amount of costs, the costs shall be assessed by Hickey and Garrett, Legal costs Assessors, Level 21, 141 Queen Street, Brisbane 4000; (iii) the respondent shall pay the applicant’s costs (as agreed or assessed) within 14 days of such agreement or assessment. (f) The respondent’s application for costs is dismissed. |
| CATCHWORDS: | Final decision – interest – GST – costs in pending proceeding Effect of “all up” offer to settle – costs awarded on standard basis Queensland Building Services Act 1991, s 67P Hallett and Ors v Queensland Building Services Authority (2011) QCAT 355 applied |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of Queensland Civil and Administrative Tribunal Act2009 (QCAT Act).
REASONS FOR DECISION
On 14 December, 2010 a Decision in this matter was delivered. As a result of the decision, it was ordered that the respondent pay to the applicant the sum of ten thousand nine hundred and seven dollars and ninety seven cents ($10,907.97), exclusive of GST, pending further submissions in relation to GST, interest and costs.
It was ordered that the respondent pay to the applicant interest on the sum of five thousand eight hundred and eighteen dollars ($5,818.00) in accordance with the formula set out in section 67P of the Queensland Building Services Authority Act 1991. The interest to be calculated with respect to Variations 147/02, 147/07, 147/08 and 147/10.
I required submissions from the parties in relation to calculation of the interest ordered to be paid, in relation to any GST which the applicant may seek by way of further Order of this Tribunal and in relation to costs.
Those submissions were delivered. In those submissions the applicant sought a further sum of $9,494.00 for allegedly unpaid money under the contract, in addition to the sum already awarded. No specific reference was made to retention money. The respondent objected to the claim for a further sum. With respect to the costs issue both parties disclosed a history of offers of settlement.
By Directions given on 7 March, 2011 I sought from the respondent clarification of its interest calculations, from the applicant I sought a copy of an offer to settle document referred to in its earlier submissions and I asked both parties to advise me whether retention money had been paid to the applicant.
Those matters were attended to, however the respondent discovered a calculation error in the 14 December, 2010 decision with respect to the award for a quantum meruit and sought correction of that sum.
I asked the parties to make further submissions in relation to whether my decision of 14 December, 2010 was a final decision and whether I was able to deal with the claim for unpaid money and retention money and to correct the calculation error.
Further submissions
The applicant submitted in its further and final submissions filed 3 May, 2011 that the Tribunal may order payment of a further sum, which he calculates to be $21,910.98 and retention money in the sum of $3,952.27 together with GST and interest, on the following grounds:
(a)pursuant to s 135(1)(c) of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act) by correcting or adjusting the figure owing; and
(b)because the 14 December, 2010 decision was not a final decision, by making a final decision pursuant to s 121 of the QCAT Act.
The applicant says that he requires a decision not only in relation to the claimed variations which were dealt with in the 14 December, 2010 decision, but also in relation to his claim for an unpaid contract sum. He says the claim for an unpaid contract sum has not been abandoned and he requires a final decision in relation to all matters pleaded and claimed by him.
As to the retention money claimed by the applicant, he says that a claim for the money was set out at paragraphs 11, 16A, 19, 21, 22 (i), and 22(vi) of his Further Amended Statement of Claim and is included in the total amount claimed.
Finally the applicant relies on the respondent’s submissions made on 16 March, 2011 that retention money has not been paid and that the Tribunal may order it to be paid.
The applicant says that his statement dated 20 August, 2010 clearly sets out the financial position in relation to the dispute for the contract price. He says the summary and progress claims summary attached to the respondent’s submissions delivered after the hearing are incorrect, misleading and were not put to him in cross examination.
The respondent in its final submissions says that the 14 December, 2010 decision was final as it was effective and capable of execution and in fact the sum of $10,907 has been paid. It says that the decision was final in relation to all issues except interest, GST and costs.
Further it says that if the Tribunal exercises any power to award a further sum in accordance with the applicant’s submissions the Tribunal would be acting contrary to its objects, particularly as it sought submissions in relation to costs and has been apprised of the parties offers of settlement.
The respondent submits that an order for a further sum is not able to be achieved by correcting a mistake under the Tribunal’s powers to do so. In any event the applicant has not in its Further Amended Statement of Claim sought a sum for retention money.
Correcting Mistake
The respondent has sought correction of the Decision in relation to an error in calculation of the award in favour of the applicant. I accept the respondent’s calculations set out in its submissions filed 15 March, 2011. I am willing to correct the error in calculation at the Tribunal’s own initiative, in accordance with section 135(2) of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
The award in favour of the applicant with respect to a quantum meruit should be $4,009.97, not $5,089.97. I now order that the Decision be corrected to reflect this amount in substitution for the sum erroneously recorded. The total amount awarded to the applicant exclusive of GST, interest and costs is $9,827.97. I note that the applicant agrees with this course.
Claim for additional award of money owed under the contract
The applicant has asked that I make a further award in favour of the applicant representing money owed under the original contract.
In his submissions dated 28 January, 2011, the applicant asserted that the amount unpaid under the original contract was $9,494.00. His methodology was that the original contract price had been short paid by $2,625.91 and that the sum in fact paid included amounts paid for claimed variations in relation to roof insulation ($4,380.00), roof battens ($488) and zincalume downpipes ($2,000.00). He said these sums should have been separately accounted for and cannot be attributed to a payment for the original contract price. By that reasoning he arrives at an amount remaining unpaid from the original contract sum of $9,494.00.
In his submissions dated 3 May, 2011, the applicant does not seek a specific sum in an amount of $9,494. Rather he purports to set an amended contract price by adding to the original contract price of $141,395.00 all the sums awarded by way of variation, on a quantum meruit, allowed to be retained and said to be short paid, arriving at an amended contract sum of $158,090.97. He then deducts the sum he says was paid of $138,769.09, leaving a balance allegedly due under the contract of $19,321.88 (inclusive of retention money). He then applies interest to that sum. I will deal with retention money separately, later in this decision.
The applicant could have, but did not, seek to prove at the hearing the matters set out in his 28 January, 2011 claim. I note that there was evidence tendered in the applicant’s 20 August, 2010 affidavit as to the sums he said he received in payment of the original contract and variations. Nowhere is the evidence isolated to demonstrate what claims the payments were referable to, nor is any supporting evidence given other than a bald assertion as to the amount paid to him.
The applicant does not explain his shift in methodology to that set out in the 3 May, 2011 submissions. To even entertain that submission it would be necessary for me to make a finding that the total sum paid by the respondent was $138,769.09. That is denied by the respondent on the pleadings and is inconsistent with the reconciliation provided by the respondent attached as PP31 to the affidavit of the applicant dated 28 July, 2005, attachment PP35 to the affidavit of the applicant dated 22 July, 2010 and the reconciliation attached to the closing submissions of the respondent. This issue should have been ventilated at the hearing by the applicant or at the very least in his closing submissions so that each party could clearly address their position and supporting evidence. There is no reason why it could not have been.
Without addressing the claim for payment of retention money, I decline to entertain the applicant’s claim for a further award on the basis that the evidence necessary for a finding on the claim should have been put at the hearing. It was not put. No good reason has been advanced as to why it was not, nor has any reopening of the proceeding been sought.
I make this finding even though I consider that the 14 December, 2010 decision was not a final decision as defined in the QCAT Act or within the decision of Master Macready in Max Cooper & Son Builders Pty Ltd v M & E Booth & Sons Pty Ltd[i].Although the 14 December, 2010 decision had partially declared the respondent’s liability for an ascertained amount, the issues of GST, interest and costs remained to be determined to fix the final amount recoverable and render the decision effective and capable of execution.
I do not consider the applicant’s claim to be amenable to determination under section 135 of the QCAT Act. I have found that the applicant did not submit evidence at the hearing sufficient to enable a finding in relation to his claim. Accordingly there has been no error in calculation or the like which can be corrected under section 135.
Retention Money
The respondent submitted in its submissions dated 16 March, 2011, that this Tribunal may order it to pay retention money in the sum of $3,535.00 to the applicant, although it urged the Tribunal not to do so. The respondent acknowledged that the retention money is owed to the applicant. The respondent changed its position in its final submissions of 17 May, 2011, submitting that the 14 December, 2011 decision was a final decision and that no further order should be made. It says that in any event the applicant did not set out a claim for retention money in the relief sought in the further amended statement of claim.
The applicant did not expressly raise retention money at the hearing or in his closing submissions. I raised the issue when attempting to comprehend the applicant’s submissions filed 28 January, 2011, with respect to money owed under the contract. Arguably the claim for retention money is raised on the pleadings as part of the claim for money owed under the contract, and absorbed in the calculation set out at paragraph 22 of the further amended statement of claim. The applicant does not actually undertake a calculation to tell the Tribunal the sum claimed. However, he does not dispute the sum of $3,535.00 referred to in the respondent’s 16 March, 2011 submissions and in fact relies on the respondent’s concession in those submissions that an order could be made for payment of the sum.
Given my finding that there has been no final decision in the matter, I am prepared to make an award in favour of the applicant for the sum of $3,535.00, being retention money owed under the contract to the applicant. I am prepared to do so because of my finding that the claim has been made by the applicant and unlike the other claim for a further sum owing under the contract, there is no dispute as to the amount claimed or the fact that the amount is owing, which would be best dealt with at a hearing.
Interest
The applicant has made 2 different submissions in relation to interest. In the 28 January, 2011 submission he said that he was entitled to interest in an amount of $16,263.00, on the sum of $9,494.00, being the amount he contended remained outstanding under the contract, for the period 25 August, 2004, (the date said by the applicant to be the date of Practical Completion) to 24 January, 2011 (the date of payment of the sum awarded). He further claimed interest in an amount of $18,649.00, on the sum of $10,907.97, being the amount he says was awarded in respect of variations, for the period 25 August, 2004 to 21 January, 2011. The rate applied was 10% per annum plus the 90 day bank bill rate. The total claim for interest was $34,912.00. The final submissions claim $38,156.86, being $2,589.10 on the sum of $15,369.61 (being the sum said to be owing as at 26 August, 2004) up to 25 August, 2005; together with $35,567 on $21,910.98 (being the sum said to be owing as at 25 August, 2005) up to 11 April, 2011. Interest is calculated pursuant to section 67P Queensland Building Services Authority Act 1991. The Tribunal is invited to check the calculations by reference to the “BSH cost calculator”.
I cannot accept the applicant’s calculations in relation to interest, because they are misdirected in relation to the amount on which interest is payable.
The respondent has calculated interest on the sum awarded for unpaid variations, in accordance with section 67P Queensland Building Services Authority Act 1991. It has calculated interest for the period from the date of Practical Completion to the date of payment of the sum awarded for variations. The amount it submits is owing, is the sum of $5,675.86. I accept the respondent’s submissions and mode of calculation and order that the respondent pay to the applicant the sum of $5,675.86 by way of interest on the amount ordered to be paid for variations.
I accept the respondent’s submissions that the interest is not intended by the Queensland Building Services Authority Act 1991 to be compound interest. If the interest was intended to compound, it would be usual for that to be stated and the period over which it was to be compounded to be stated. That has not occurred.
Goods and Services Tax (GST)
Insofar as the applicant submits that it is entitled to the GST components on the sum of $10,907.97 in accordance with the rates and methods as specified in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), I accept that submission, with the rider, that the sum is not all in respect of variations as maintained by the applicant and with the further rider that the error with respect to the amount awarded under a quantum meruit is corrected.
The respondent conceded that a taxable supply has taken place under the GST Act and that the applicant would be entitled to be awarded the GST component on each of the amounts of $5,818.00 and $4,009.97, but also says that because the applicant failed to claim the GST in its claim for the variations performed or as part of the quantum meruit claim, he is not entitled to be awarded additional amounts for GST on the amount decided under the decision.
I reject that submission. I am of the view that it is open to me to raise this issue with the parties prior to final pronouncement of judgment and to consider submissions made on the issue. No evidence is required for this issue to be dealt with. The claim has been made through the submissions of the applicant and as a matter of fairness I intend to deal with it.
For the reasons set out in both parties submissions and in accordance with the decision of Peet Limited v Richmond (No 2)[ii] I find that a taxable supply has taken place in relation to the transactions, resulting in an outstanding sum of $5,818 for variations and in relation to the transactions resulting in the award of $4,009.97 being moneys owing pursuant to a quantum meruit based on restitution.
I note the respondent in its submissions has calculated GST in relation to the retention money. I accept that this is appropriate.
Accordingly I award a GST component on these sums of $1,336.29. I also order the applicant to deliver within 7 days of the date of this Decision, a tax invoice to the respondent, in relation to the amounts ordered. The tax invoice is to facilitate payment of the GST component by the respondent. The respondent must pay the GST component to the applicant within 21 days of receipt of the tax invoice.
Amounts awarded to the applicant exclusive of costs
The award in favour of the applicant, exclusive of costs is:
Unpaid variations $ 5,818.00
GST $ 581.80
Quantum meruit $ 4,009.97
GST $ 400.99
Retention money $ 3,535.00
GST $ 353.50
$14,699.26
Interest $ 5,675.86
TOTAL $20,375.12
By the decision dated 14 December, 2010, the applicant was entitled to retain the sum of $4,380.00 paid in relation to variation claim number 1, although the sum was not found to be referrable to a variation or a quantum meruit entitlement.
Costs
The applicant submits that as he has succeeded in the matter he is entitled to his costs in accordance with the ordinary principle. He also points to a formal offer to settle made by him on 22 June, 2010 and again on 29 June, 2010, pursuant to Division 3, Part 8 of QCAT Rules. The offer was to the effect that he would discontinue the proceedings if the respondent paid the sum of $15,000.00 with 7 days of acceptance of the offer.
The offers were not accepted by the respondent. The applicant submits that the award in his favour is not more favourable to the respondent than the applicant’s offer of settlement.
The applicant claims his costs from the respondent on a variety of bases, including on an indemnity basis pursuant to section 142(2) of the Commercial and Consumer Tribunal Act 2003 (CCT Act); in the alternative, on a standard basis pursuant to section 71 of the CCT Act and calculated by reference to the Magistrates Court Scale of Costs; in the further alternative on an indemnity basis pursuant to section 102 of the QCAT Act and in the further alternative on a standard basis pursuant to section 102 of the QCAT Act and calculated by reference to the Magistrates Court Scale of Costs.
The respondent submits that it is entitled to its costs for the period between 24 November, 2005, being the date of a formal offer to settle, and the date of the Decision on 14 December, 2010. The costs are sought pursuant to section 142(2) of the CCT Act or pursuant to section 105 of the QCAT Act. Alternatively the respondent submits that each party bear their own costs.
The respondent has filed an affidavit of Sean Roberts, the solicitor having carriage of the matter, which sets out the course of settlement offers made by the respondent to the applicant.
I note that on 24 November, 2005 the respondent made a formal offer to settle to the applicant in an amount of $17,500.00 inclusive of GST and costs. That offer was not accepted. On 2 June, 2006, the respondent made a formal offer to settle to the applicant in an amount of $18,000.00 inclusive of GST and costs. That offer was not accepted.
I also note that the respondent made a formal offer to settle to the applicant on 12 July, 2010, in the sum of $15,100.00, inclusive of GST and silent in relation to costs, which I take to be an “all up” offer. That offer was not accepted.
Significance of the offers to settle
The offers to settle made by the parties have the potential to impact on any award of costs the Tribunal may make. As part of its deliberations, the Tribunal may consider whether the decision is or is not more favourable to a party than an offer. This consideration is imposed on the Tribunal in similar terms under both the CCT Act and the QCAT Act.
Rule 86(4) of the QCAT Rules provides:
“In deciding whether a decision is or is not more favourable to a party than an offer, the tribunal must –
(a)take into account any costs it would have awarded on the date the offer was given to the other party; and
(b)disregard any interest or costs it awarded relating to any period after the date the offer was given to the other party.”
As at the time of the respondent’s 25 November, 2005 offer of $17,500 inclusive of GST and costs, the award in favour of the applicant would have been:
·$14,699.27 inclusive of GST, plus
$ 1,098.08 interest (using the respondent’s calculations)
$15,797.35
As at the time of the respondent’s 2 June, 2006 offer of $18,000 inclusive of GST and costs, the award in favour of the applicant would have been:
·$14,699.27 inclusive of GST, plus
$ 1,572.82 interest
$16,272.09As at the time of the applicant’s 29 June, 2010 offer of $15,000 inclusive of GST and costs, the award in favour of the applicant would have been:
·$14,699.27 inclusive of GST, plus
$ 5,277.69 interest
$19,976.96
As at the time of the respondent’s 12 July, 2010 offer of $15,100 inclusive of GST and costs the award in favour of the applicant would have been:
·$14,699.27 inclusive of GST, plus
$ 5,308.50 interest
$19,976.96
The exercise of determining whether a decision is or is not more favourable to a party than an offer, is made very difficult in relation to the respondent’s offers because they are cast as inclusive of costs.
Justice Martin of the Queensland Supreme Court set out an analysis of the authorities with respect to “all up” offers of settlement, in Holloway Nominees (Q)P/L v George & Ors (No 2)[iii].
Justice Martin was concerned with a “Calderbank offer”, which is a written offer made “without prejudice except as to costs” and which has the same effect as a formal offer to settle made under the CCT Act or the QCAT Act. He set out the analysis of Justice McColl in Elite Protective Personnel Pty Ltd v Salmon[iv]:
“There is a line of authority, commencing with Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97, to the effect that a Calderbank letter expressed to be inclusive of costs will not warrant departure from the usual basis upon which a successful party’s costs are calculated...
The underlying premise of such cases rests in the proposition that an offeree cannot be said to have acted unreasonably in not accepting an offer expressed to be inclusive of costs, because the offeree does not have an adequate opportunity to consider the offer and because of the difficulties posed when a court comes to consider the reasonableness of the offeree’s conduct in rejecting/not accepting it. In other words such an offer presents practical difficulties.
First, the recipient of such an offer would not know the likely party and party costs to date on taxation or assessment...Secondly, in considering the reasonableness of the offer at the time the question of its costs consequences arose, it would be necessary to indulge in a taxation, or assessment, of costs...The Court should not be required to postpone the decision as to the basis upon which costs should be awarded while awaiting the outcome of that exercise. Nor should it be required either to speculate as to what the outcome of an assessment might be, not arbitrate on a dispute between the parties on this topic...
In my view, the point was well made by Goldberg J in Dr. Martens where his Honour said:“...An offer inclusive of costs confuses this issue as it puts the offeree in a position of not being able to determine the appropriate amount to attribute to the money sum it is seeking. Although an estimate can be made of what the offeree’s taxed party and party costs might be at the time of the offer, the offeree is not being offered the opportunity to have those costs assessed by taxation in default of agreement, in addition to being made an offer to settle its claim. As a matter of principle, if a party is to be put at risk of losing its costs, even if ultimately successful, by not accepting an offer made to settle or compromise the proceeding at a point of time prior to trial, that risk should only be imposed if the party is given the opportunity, at the time of the offer, to obtain its taxed costs to date in addition to the offer made, knowing that it has been able to make a careful comparative assessment of the value of the offer as against the ultimate relief sought to be obtained.”
...Smallacombe does not lay down a “definitive rule” that an “all-in” Calderbank offer can never be considered on the question of indemnity costs...each case should be considered on its facts, Smallacombe provides sound reasons to discourage offerors from drafting Calderbank letters on an “all-in” basis.”
Justice Martin said he accepted that analysis of the authorities and added “Of course, an “all-up” offer by a plaintiff is different in nature to such an offer being made by a defendant and does not have the same degree of uncertainty as the latter.”
On the basis of these authorities I intend to disregard the offers of settlement made by the respondent which are inclusive of costs. I am unwilling to enter into an estimate of the applicant’s costs at any given point in time in the proceedings to determine if the decision is or is not more favourable than the offer to settle. I have no evidence before me in order to do so. Nor do I intend to adjourn the matter to enable an assessment of costs to be undertaken. I have not been asked by the parties to do so.
I reject the respondent’s application for costs on the basis that I am unable to determine whether the decision is or is not more favourable to the applicant than the respondent’s offers to settle.
The applicant’s offer of settlement made on 29 June, 2010 in the sum of $15,000.00 in full and final settlement of the proceeding, made pursuant to Division 3, Part 8 of the QCAT Rules, is not, as Justice Martin said, attended by “the same degree of uncertainty” as the offers made by the respondent.
On this basis, I am bound to consider the applicant’s offer of 29 June, 2010 as part of my consideration of the arguments with respect to his costs of the proceeding.
Applicant’s Costs
Both parties have submitted that this proceeding is a pending proceeding under the QCAT Act and have referred to section 271 of the QCAT Act which provides:
“(1) QCAT must deal with the matter the subject of the existing proceeding under this Act or an enabling Act.
(2) However, in relation to the matter-
(a) QCAT has, and only has, the functions that the former entity had in relation to the matter under the former Act; and
(b) QCAT can, and can only, make a decision the former entity could have made in relation to the matter under the former Act.”
The CCT Act and the QCAT Act deal differently with the issue of costs and the consequences of refusal to accept offers to settle. The question is which Act should govern a claim for costs in this proceeding?
I find that in the case of a pending proceeding, this Tribunal only has power to apply the terms of the QCAT Act and Rules with respect to costs and the consequence of refusal to accept an offer to settle.
I adopt the reasoning in Hallett and Ors v Queensland Building Services Authority[v]. I also consider that:
(a) Section 271(1) refers to the “matter the subject of the existing proceeding...”. Section 271(2) refers to the “matter” (being shorthand for “the matter the subject of the existing proceeding”).
(b) Matter is defined in the Encyclopaedic Australian Legal Dictionary as
“1. The subject of litigation; matter on which action and testimony is taken: Board v Thomas Hedley &Co Ltd (1951)2 All ER 431...
2. The rights which the plaintiff seeks to have protected.
3. The substance of the claim before the court; Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd (1979)2 NSWLR 243...
4. A justiciable controversy involving rights and obligations: O’Toole v Charles David Pty Ltd (1991) 171 CLR 232...Western Australia v Wardley Australia Ltd (1991) 102 ALR 213...”.
(c) Section 272(2) does not refer to the proceeding. “Proceeding” is defined in the QCAT Act, as relevantly: “(a) generally – means a proceeding before the tribunal ...”.For the purposes of the transitional provisions, it is defined to include “(a) an action before a former tribunal... and (b) a process under a former Act for the consideration of a matter...”.
(d) Section 271(2) does not say the QCAT only has the functions of the CCT and can only make decisions which the CCT could have made in relation to the proceeding.
(e) Costs are a creature of statute and the power to award them or not is set out in the relevant legislation. In my view costs are not part of the “matter”, they are an incident of the proceeding. The consequence with respect to costs, arising from offers to settle made under relevant legislation is also an incident of the proceeding, not part of the matter the subject of the proceeding.
(f) Section 271(4) provides that “anything done or existing in relation to the existing proceeding continues and is taken to be done or existing in relation to the proceeding under this Act.” I take that to encompass an offer to settle made under the CCT Act being taken to be an offer to settle under the QCAT Act and Rules.
(g) As a consequence the QCAT Act and Rules must be applied to the issue of costs and to any offer to settle made at any time in the course of the proceeding. The requirement to exercise the functions the CCT had and to make decisions the CCT could have made is limited to the subject matter of the dispute, which in this case was whether the contract between the applicant and respondent was void on the basis of the state of the applicant’s licence and whether the applicant was entitled to moneys claimed as variations to the Subcontract or alternatively on a quantum meruit.
Section 110 of the QCAT Act provides that other than as provided under the Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.
Section 102 of the QCAT Act provides that the tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice to require it to make the order.
Relevantly, section 102(3) provides that in deciding whether to award costs the tribunal may have regard to the following-
(a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);
(b) the nature and complexity of the dispute the subject of the proceeding;
(c) the relative strengths of the claims made by each of the parties to the proceeding...
(e) the financial circumstances of the parties to the proceeding;
(f) anything else the tribunal considers relevant.
I reject the applicant’s submissions that the general principle in litigious matters should apply, that costs should in the discretion of the Tribunal follow the event. I also reject the applicant’s submissions that costs should be awarded under the CCT Act for the reasons given earlier.
The only circumstances in which this Tribunal is permitted to award costs is pursuant to the QCAT Act, if it considers the interests of justice require it to make the order, or upon a consideration of the matters set out in Rule 86 of the QCAT Rules with respect to failure to accept an offer to settle.
Dealing first with the “interests of justice” consideration, I note the discussion by his Honour Justice Wilson in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartment (No 2)[vi] where he said:
“Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase “the interests of justice” point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s100.”
His Honour referred to the leading decision of Tamawood Limited v Paans[vii] which considered the meaning of the “interests of justice” in the context of the power to award costs pursuant to the CCT Act. Justice Wilson did not say that Tamawood is no longer relevant, in light of the stronger emphasis under the QCAT Act for the parties to bear their own costs, merely that the conclusions in Tamawood have to be considered in the light of the different emphasis in the QCAT Act and that a compelling case has to be demonstrated. His Honour said that the principles found in Tamawood provide guidance about the circumstances in which it may be in the interests of justice for this tribunal to award costs against parties.
The following two propositions raised in Tamawood were said to be relevant:
“First, his Honour held that the CCT provisions negated the traditional proposition that costs should prima facie follow the event (unless of course that the Tribunal considers that another order is more appropriate) and that the nature and extent of the power to award costs could only be discerned by close consideration of the terms of the statute which created and prescribed the occasions and conditions for its exercise. Sections 100 and 102 of the QCAT Act attract the operation of the same principles.
Second, Keane JA was of the view that where the complexity of the matter justified legal representation, it would not be in the interests of justice to bar the successful party from recovering costs that were reasonably necessary to achieve a satisfactory outcome.”
The applicant has submitted that:
(a) but for the respondent’s failure to accept the applicant’s offer, the matter would have settled on or about 29 June, 2010;
(b) the respondent’s failure to accept the applicant’s offer caused the applicant to incur further costs and be unnecessarily disadvantaged as a result;
(c) the complex legal questions involved in determining the matters in dispute meant that each party was required to engage legal professionals and brief counsel to appear at the hearing and prepare materials generally; and
(d) the application was determined on the merits to be preferable to the respondent’s response and counterclaim.
Finally, it was submitted that the applicant was a retired subcontractor and less financially able to bear the costs of bringing this claim than the respondent, being a building company.
The respondent in its submissions as to whether the applicant is entitled to his costs of the proceeding made the following submissions with respect to section 102 of the QCAT Act:
(a) the applicant has acted in a way that has disadvantaged the respondent, in that the respondent has incurred substantial legal costs in defending the proceeding since its offer to the applicant on 24 November, 2005. The respondent has made numerous offers to settle to the applicant which have all been rejected by the applicant.
(b) the nature of the application was not complex. In addition, the applicant’s claim was not strong, as he was only awarded a portion of the total it claimed against the respondent.
(c) the outcome of the proceeding is not a factor listed in section 102(3) of the QCAT Act, and the Tribunal can only consider this element under section 102 (3)(f), being, that it is “anything else the tribunal considers relevant”. The Legislature must not have considered it to be a particularly relevant factor.
I accept the applicant’s submissions that this matter was legally complex and that legal representation, including by counsel was justified. The case involved complex issues of law with respect to section 42 Queensland Building Services Authority Act 1991, the nature of a variation claim pursuant to a contract or a quantum meruit based on restitution, mistake, unjust enrichment, the scope of contract work, waiver and estoppel and section 67P Queensland Building Services Act 1991. The material was voluminous. The hearing took 2 full days. The written submissions following the hearing were lengthy and legalistic. I consider a compelling case is established to award the applicant his costs on the basis that it was reasonable for him to engage lawyers to achieve the success he did. The award he received will be significantly diminished if he has to meet his own costs. Consistent with the principles in Tamawood, the interests of justice are not served if the applicant is to be prejudiced by engaging the qualified help he needed to succeed.
For the reasons given earlier in relation to the uncertainty resulting from “all up” offers of settlement, I do not consider the applicant’s failure to accept the respondent’s offers of settlement to be conduct which unnecessarily disadvantaged the respondent, as contemplated by section 102(3)(a) of the QCAT Act.
Given the justified engagement of legal representation, this is not a case where the outcome of the proceeding can be ignored. It is a relevant factor which I am entitled to consider under section 102(3) of the QCAT Act. It is a necessary incident of considering whether the interests of justice are served consistent with the principles in Tamawood.
For the reasons set out I am prepared to award costs of the proceeding to the applicant under section 102 of the QCAT Act. Given my finding it is not necessary to consider further the submissions of the applicant. For completeness, I note that the decision, if it had been made on the date of the applicant’s 29 June, 2010 offer of settlement, would have amounted to $19,976.96. I find that the decision is not more favourable to the respondent than the 29 June, 2010 offer. However this alone is not determinative of the costs issue. For a range of reasons falling within the scope of section 102 of the QCAT Act I find in favour of the applicant in relation to the costs of the whole proceeding.
The applicant has sought his costs on an indemnity basis or alternatively on a standard basis calculated by reference to the Magistrates Court Scale of Costs.
I intend to award the applicant his costs on a standard basis calculated by reference to the Magistrates Court Scale of Costs. I do not think the respondent’s conduct has been such that an award of costs on an indemnity basis is warranted. The applicant has not addressed the criteria which might justify such an award as set out in Palmolive Co v Cussons Pty Ltd[viii] and discussed in Ralacom[ix] other than a failure to accept the applicant’s offer of settlement. In the context of the genuine dispute between the parties and the arguable defences raised by the respondent to the applicant’s claims, I do not think the respondent’s failure to accept the applicant’s 29 June, 2010 offer could be described as imprudent.
Finally, the respondent has expressed concern that the offers to settle have been disclosed to me prior to a final decision being made. I note that rule 65 of the QCAT Rules is not cast in mandatory terms in this regard. In any event as it has transpired the offers of settlement have not been determinative of the costs issue.
Orders
I order that:
(a) the Decision in this matter, dated 14 December, 2010 be corrected so that the moneys ordered to be paid pursuant to a quantum meruit based on restitution is $4,009,97, not $5,089.97. Any consequential corrections to the Orders made on 14 December, 2010 are to be made;
(b) the respondent pay to the applicant the following, less moneys already paid to the applicant pursuant to the Orders made on 14 December, 2010:
Unpaid variations $ 5,818.00
GST $ 581.80
Quantum meruit $ 4,009.97
GST $ 400.99
Retention Money $ 3,535.00
GST $ 353.50
Interest $ 5,675.86
TOTAL $20,375.12(c) the applicant is to deliver within 7 days of the date of this Decision a tax invoice to the respondent in relation to the amounts ordered. The respondent must pay the GST component to the applicant within 21 days of receipt of the tax invoice. Apart from the GST component the respondent must pay the remaining sums not already paid within 21 days of the date of this decision.
(d) the respondent pay the applicant’s costs of these proceedings on a standard basis to be assessed on the Magistrate’s Court scale of costs.
(e) the applicant’s costs be assessed as follows:
(i)the applicant shall deliver to the respondent an itemised claim for costs referring to the relevant items contained in the Magistrates Court scale of costs;
(ii)if within 14 days of that delivery, the parties have not agreed to an amount of costs, the costs shall be assessed by Hickey and Garrett, Legal costs Assessors, Level 21, 141 Queen Street, Brisbane 4000;
(iii)the respondent shall pay the applicant’s costs (as agreed or assessed) within 14 days of such agreement or assessment.
(f) The respondent’s application for costs is dismissed.
[i] [2003] NSWSC 929.
[ii] (2009) VSC 585.
[iii] (2008) QSC 71.
[iv] (2007) NSWCA 322.
[v] [2011] QCAT 355.
[vi] (2010) QCAT 412.
[vii] (2005) ACA 111.
[viii] (1993) 118 ALR 248.
[ix] Ralacom, op. cit, at (58) – (61).
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