Tom Builder Pty Ltd v Quan Duong (No 2)
[2013] QCAT 455
| CITATION: | Tom Builder Pty Ltd v Quan Duong (No 2) [2013] QCAT 455 |
| PARTIES: | Tom Builder Pty Ltd (Applicant) |
| v | |
| Van Quan Duong (Respondent) |
| APPLICATION NUMBER: | BDL070-11 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Michelle Howard, Member |
| DELIVERED ON: | 30 August 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That both parties must bear their own costs. |
| CATCHWORDS: | COSTS-BUILDING CONTRACT DISPUTE- where offer made before hearing ‘without prejudice save as to costs’- where offer not accepted- where history of non-compliance by party making offer Queensland Building Services Authority Act 1991 (Qld) s77(2)(h) Lyons v Dreamstarters Pty Ltd [2011] QCATA 142 Chesterton as administratrix of the estate of Southion Deceased v Smith [2011] QCAT 458 |
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
On 21 June 2013, I made orders dismissing Mr Duong’s counter-claim for damages for breach of contract of $39,636. I also made directions for the making of any application as to costs, and for the determination of any such application on the papers without an oral hearing, unless otherwise ordered.
The proceeding has a complicated history. On 25 March 2011, an application made by Tom Builder Pty Ltd for damages had previously been dismissed by the Tribunal in November 2011 because it was not progressed.[1] As will be further explained, Mr Doung’s counter-claim had also been previously determined in March 2012 in Tom Builder’s absence, but the orders in Mr Duong’s favour were set aside on appeal and the dispute remitted for hearing.[2] I then made the orders dismissing Mr Duong’s counter-claim which is referred to in paragraph 1.
[1] Tom Builder Pty Ltd v Duong [2012] QCATA 167, at paragraph [36].
[2] Tom Builder Pty Ltd v Duong [2012] QCATA 167, especially at paragraph [38].
Tom Builder seeks his costs in respect of the unsuccessful counter-claim. His application is made in the alternative for costs fixed in the sum of $13,000; costs on an indemnity basis from 22 September 2012 to be assessed if not agreed; or costs on a standard basis in accordance with the District Court Scale, to be assessed if not agreed.
The counter-claim was filed on 20 April 2011. Tom Builder made an offer to settle the counter-claim by letter dated 17 September 2012 which was marked ‘Without Prejudice save as to costs’, on the basis that the counter-claim be dismissed and each party bear their own costs. The offer was open until 5pm on 21 September 2012.
Tom Builder submits that under s 105 of the QCAT Act and Rule 86 of the Queensland Civil and Administrative Tribunal Rules 2009 (QCAT Rules), a costs order should be made in his favour, and that it is in the interests of justice for an order for costs to be made in his favour. He relies upon Armory v QBSA,[3] in which the Tribunal considered the power under section 105 was separate and additional to the power to award costs in the interests of justice under s102 of the QCAT Act.
[3] [2012] QCAT 130.
Mr Duong opposes the application for costs. He submits that the application of section 105 and rule 86 is properly done in the context of a consideration of the interests of justice. He relies upon several QCAT decisions which he says took this approach.[4] He says that consideration should also be given to the stage of the proceeding at which the offer was received; the time allowed for its consideration; the extent of the compromise offered; the offeree’s prospects of success; the clarity of the offer and whether it foreshadowed an application for indemnity costs.[5] He raises various issues in respect of the interests of justice consideration for which he contends. He submits that Tom Builder has persistently failed to comply with Tribunal directions with the consequence that the proceedings have been unnecessarily protracted and as a consequence more costly for him than they should have been.
[4]Reference is made by Mr Duong to Chesterton as administratrix of the estate of Southion Deceased v Smith [2011] QCAT 458; Thomas v Neilson [2012] QCAT 225; Turner v QBSA [2012] QCAT 700.
[5]Reliance is placed on Velvet Glove Holdings Pty Ltd v Mount Isa Mines Limited [2011] QSC 156 at paragraph 25 which was applied in Chesterton as administratrix of the estate of Southion Deceased v Smith and Anor. [2011] QCAT 458.
Also, he says that he had reasons to believe that he had good prospects of success, given his success on his counter-claim at the initial hearing and although those orders were subsequently set aside on appeal, in light of some observations made by the Appeal Tribunal. He also argues that he was given only 4 days to respond to the offer, which is in the context of the proceedings, was unreasonably short. Further, he says that after the offer expired, Tom Builder filed further evidence.
Costs in building disputes
The usual position as to costs in QCAT is set out in the QCAT Act at section 100. Unless otherwise provided under the QCAT Act or an enabling Act, each party must bear their own costs. The President has said this is a strong contra-indication against costs orders.[6] Where section 100 applies, a costs order may nevertheless be made ‘in the interests of justice’ under sections 102, and 103. Further power to award costs is at sections 104 (in relation to intervening parties, which is not relevant here) and 105.
[6]Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412.
Section 77 of the Queensland Building Services Act 1991 (the QBSA Act) confers jurisdiction on the Tribunal to determine building disputes, like the disputes brought by each party in these proceedings. Section 77(2) sets out some of the Tribunal’s powers in resolving building disputes. Section 77(2)(h) provides for the Tribunal to award costs. It does not set out factors to be considered when deciding a costs application.
The Appeal Tribunal in Lyons v Dreamstarters Pty Ltd[7] considered regarding section 77(2)(h) of the QBSA Act that:
It is a broad general discretion which must be exercised judicially, not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation… Accordingly an enabling Act, the QBSA Act, does, provide otherwise. As a result the usual position as to costs in the Tribunal is displaced.[8]
[7] [2011] QCATA 142.
[8] Ibid, at paragraphs [33-34].
Accordingly, the strong-contra-indication against costs which applies under the QCAT Act does not apply to building disputes brought under the QBSA Act.
In Thomas v Neilsen,[9] the learned Tribunal Member considered in exercising the general discretion under the QBSA Act that relevant factors for consideration may include the factors set out in s 102(3). Also, the same learned Tribunal Member decided Chesterton as administratrix of the estate of Southion Deceased v Smith.[10] In her reasons for decision, having considered s 77 of the QBSA Act and the usual provisions of the QCAT Act, she says that ‘It is necessary to consider the matters referred to in s102(3) of the QCAT to the extent that they are relevant to a particular case.’[11] She appears to have considered offers to settle as another relevant factor. It does not appear that either application for costs was brought under s 105 and Rule 86.
[9] [2012] QCAT 225.
[10] [2011] QCAT 458.
[11] Ibid, at paragraph [28].
However, the learned Member did not say that the factors set out in section 102(3) had direct application in an application under s 77 of the QBSA Act, although some of them may coincide with a consideration of relevant factors relating to the litigation or the lead-up to it given that in they include the conduct of the proceeding, the nature and complexity of the dispute, relative strengths of the claims made, and other matters the Tribunal considers relevant. Indeed, in Thomas v Nielsen, only those factors I have referred to were considered, and the others set out in 102(3) were not, including the financial circumstances of the parties.
I accept that there may often be a coincidence between matters relevant to the exercise of a general costs discretion under s 77(2)(h) of the QBSA Act and the matters specified in s 102(3) of the QCAT Act. However, in my view, (and this is not on my reading at odds with the approach taken in Thomsen v Nielsen) the factors in s 102(3) are not directly applicable.
That said, s 105 specifically provides for the Rules to ‘authorise’ the Tribunal to award costs ‘in other circumstances, including’ if an offer to settle has been made and not accepted. Rule 86 does then provide that the Tribunal may award the party who made the offer all reasonable costs incurred after the offer was made. In my view, this constitutes a different basis than an award under section 102. It is expressed in discretionary terms. Once again, factors to be considered are not specified. However, I consider that, consistently with the Appeal Tribunal’s comments in Lyons v Dreamstarters that this is a broad general discretion which must be exercised judicially and having regard to the terms of s105 and Rule 86, based upon facts connected with the litigation and the offer to settle.
Turner v QBSA (No 2),[12] which was also relied upon by Mr Duong did not concern a building dispute. An offer to settle was made and some limited consideration was given to s 105 and r 86, but having regard to the usual costs position under the QCAT Act. The observations made are not of assistance here. Amory v QBSA[13] concerned an application made under section 105 and Rule 86. The Tribunal in that case, considered these provisions afforded a discrete basis for the awarding of costs, as have I.
[12] [2012] QCAT 700.
[13] [2012] QCAT 130.
Having regard to the provisions discussed, it seems to me that in a building dispute such as the one this proceeding is concerned with, that costs may be awarded in appropriate circumstances, under either s 77 of the QBSA Act or, if an offer has been made, under s 105 of the QCAT Act and Rule 86. The usual position as to costs provided for the QCAT Act is displaced by s 77 of the QBSA Act. However, s 77 is not expressed to be an exclusive power to award costs. Therefore, interpreting the provisions in each Act according to their usual meaning, an application under s 105 and Rule 86 is also available to a party to a building dispute.
Should costs be awarded in favour of Tom Builder?
I consider a number of factors are relevant to whether a costs order should be made in favour of Tom Builder.
Nature of the claim
The counter-application involves a building dispute. Under s 77 of the QBSA Act, the Tribunal has a broad general discretion to award costs, in addition to its power under s 105 of the QCAT Act and Rule 86. The Court of Appeal has said that where a party has reasonably incurred legal costs and has been successful, it could not be said to be in the interests of justice to allow that success to be eroded.[14]
[14] Tamawood Limited & Anor. V Paans [2005] QCA 111.
This factor weighs in favour of the granting of a costs order in favour of Tom Builder in respect of the counter-claim.
Strength of the claim
My findings concerning the counter-claim are set out in my reasons for decision dated 21 June 2013. I do not repeat them here. Suffice it to say that Mr Duong was wholly unsuccessful.
I found that he wrongfully repudiated the building contract, which was later terminated by Tom Builder.[15] I made observations that even if this had not been the case and he had lawfully terminated the contract, I would have dismissed Mr Duong’s claim, as his evidence did not establish loss.[16] Therefore, the claim had no merit, even at its highest.
[15] Reasons for decision at paragraph [60-62].
[16] Reasons for decision at paragraph [69-72].
Mr Duong argues that he had reason to think it had merit because of his initial success and comments made by the Appeal Tribunal. However, the orders made in his favour (which were later overturned on appeal) were made in circumstances of a hearing in the absence of Tom Builder (who later claimed he did not receive notice of it).[17] The learned Member did not question his representatives or give reasons for his decision.
[17] Tom Builder Pty Ltd v Quan Duong [2012] QCATA 167.
The Appeal Tribunal found a reasonably arguable case of error in the Member’s finding that the costs of demolition and asbestos was a loss to Mr Duong, and considered that he had not properly addressed the issue of damages.[18] Mr Doung argues that it upheld the dismissal of Tom Builder’s claim. However, the Appeal Tribunal said in effect that the dismissal for non-compliance had effectively occurred in November 2011, pursuant to earlier orders of the Tribunal. The application for leave to appeal was in this regard therefore too late.[19] He relies upon various other comments of the Appeal Tribunal, but these do not assist him in my view.
[18] Ibid, especially at paragraphs [23-38].
[19] Ibid, at paragraph [35-36].
It is also relevant that I found the evidence of both Mr Duong and Mr Huynh, director of Tom Builder ‘somewhat unsatisfactory’.[20] However, ultimately, I preferred Mr Huynh’s evidence as more reliable than Mr Duong’s.[21] Mr Duong resisted answering straight-forward questions and I considered that he gave standard responses when he perceived questions inconvenient to his claim.[22] Mr Huynh, although he failed to explain some issues fully, made appropriate concessions.
[20] Reasons for decision at paragraph [28].
[21] Reasons for decision at paragraph [25-28].
[22] Reasons for decision at paragraph [26].
In all, Mr Doung’s claim was not only unmeritorious, his behaviour as a witness was less than helpful.
These matters weigh in favour of a costs order being made in Tom Builder’s favour.
Did either party unnecessarily disadvantage the other?
In the ordinary course of events, the claim and any counter-claim will be heard together. That did not occur in this instance, where because of Tom Builder’s failure to progress his own claim, it was dismissed. Costs were occasioned for Mr Duong as a result of Tom Builder’s tardiness, both in the eventual need for a second hearing and an appeal by Tom Builder following the first hearing which he failed to attend.
There were clearly delays and disadvantage occasioned by Tom Builder in the lead-up to the first hearing. He did not comply with directions of the Tribunal.[23] He submitted that there were exceptional circumstances for this in the Appeal proceedings, including the death of his wife and illness of his mother in Vietnam (where he lived for significant periods in 2011 and 2012).[24]
[23] Tom Builder Pty Ltd v Duong [2012] QCATA 167, at paragraph [3-4, 10-13, 36].
[24] Tom Builder Pty Ltd v Duong [2012] QCATA 167 especially at paragraphs [3-4, 11-12].
The Appeal Tribunal handed down its decision on 3 September 2010. It vacated the orders made by the learned Member who heard it as far as they determined the counter-claim and awarded costs to Mr Duong. It made directions for Tom Builder to file its material for the further hearing of the proceeding by 24 September. By letter dated 17 September 2012, his lawyers made his offer to settle the proceedings. The offer remained open until 5pm on 21 September, 2012. There was no response to the offer.
Tom Builder then filed further material on 26 September 2012.[25] Mr Duong was to file his further material by 15 October 2012. He did file some by that date.[26] On 24 October 2012, the Tribunal again directed him to file any further material by 29 November 2012 (although he filed no further material in compliance with that direction) and Tom Builder to file any material in response by 20 December 2012. It also listed the proceeding for hearing on 3 June 2013. Further material was filed by Tom Builder on 15 January 2013 and then more on 28 May 2013 and on 31 May 2013. Mr Duong submits that Tom Builder continued to be non-compliant because it filed late material.
[25] Exhibit 10.
[26] Exhibits 3 and 8.
Having regard to the hearing date, there was no disadvantage caused by filing material in January 2013. On the face of it, it appears filing material immediately before the hearing was at least potentially disadvantageous to Mr Duong’s preparation for hearing.
However, Tom Builder had previously filed the affidavit filed on 28 May 2013 in the Appeal proceedings, (although not the statement filed on 31 May 2013). The affidavit relied upon in the appeal proceeding was filed in the building dispute in the days leading to hearing, as I understand it, on the advice of counsel who was concerned that it was not otherwise properly before the Tribunal in the proceeding which was to be heard on 3 June 2013. In any event, its contents were not new. Mr Duong also relied upon his witness statement filed in the appeal proceedings in July 2012 although he had not filed it in the building dispute. No objection was raised by Tom Builder.
The statement filed on 31 May 2013 was brief. It attached, among other documents, a copy of the General Conditions which were not otherwise before the Tribunal. The documents attached were described by Tom Builder, except for the company search related to it, as common to the parties. Other than the General Conditions, they included the contract information statement and plans. Mr Duong objected to the evidence because there was a dispute about whether the General Conditions formed part of the contract and whether the contract information statement had been given. Mr Duong had however relied upon the General Conditions when he purportedly terminated the contract. Also, it was common ground that it was for me to determine whether they did or did not form part of the contract.
In the circumstances, it is surprising to me that neither party had earlier filed a copy. The attachments were clearly relevant to the factual disputes between the parties. I allowed the statement (and attachments) to be relied upon by Tom Builder and provided time for Mr Duong’s lawyers to take further instructions in relation to it before the hearing proceeded.
However, the statement itself is limited, although it attached some documents. Although filed late, none of these was new. Only a brief period was necessary in order for instructions to be taken about the contents. Mr Duong was allowed to give oral evidence-in-chief about the issues raised.
That said, the failure of Tom Builder to progress his claim before the first hearing and the subsequent late filing of material on 31 May 2013 are factors which caused disadvantage to Mr Duong. Also, Tom Builder was not successful on his own claim, albeit it was dismissed because of his failure to progress it as opposed to on its merits.
These factors weigh against the making of a costs order in favour of Tom Builder despite his success on the counter-claim.
The offer
The offer made by Tom Builder to settle on the basis that the counter-claim be dismissed and no order as to costs, was made on 17 September 2012. Had it been accepted, no further costs would have been incurred by either party. The time for acceptance was short, some 4 days. That time frame coincides broadly with the time-frame within which Tom Builder was then required to file further material.
There was no response from Mr Duong. The offer lapsed. Tom Builder then incurred further costs in the preparation of its further statement in September 2012 and in perusing the statements from Mr Duong filed in October 2012. As it transpired, one further statement was prepared by Tom Builder before hearing, that is, the statement filed on 31 May (the statement filed 28 May having already been prepared previously and filed in the appeal proceeding). Then both parties incurred costs associated with the hearing.
Rule 86 requires that I consider whether the offer made was not more favourable to the other party than the offer. The offer was that the application be dismissed; that each party bear their own costs; and each party release the other from any further claims arising from the building contract.
I made orders dismissing the counter-claim. Tom Builder’s claim had already been dismissed. I consider that the order made by the Tribunal is not more favourable to Mr Duong than the offer. This is a factor which weighs in favour of granting a costs order for costs from the time the offer was made.
The time for acceptance and the lengthy history of the proceedings
However, the period for acceptance of the offer was very brief, some 4 days. In the rather long-winded history of the proceeding, I consider unreasonably so, notwithstanding that it was made in the context of the Tribunal’s directions requiring the filing of further material shortly thereafter if not accepted.
Mr Duong was put to the costs of two hearings rather than one and an appeal process. The offer aside, which could have avoided the most recent hearing if accepted, the costs of the first hearing and the appeal would not have been avoided and were incurred largely because Tom Builder neglected to progress the proceeding in the first place. Costs could have been much more limited.
In my view, the offer, open only for a very brief period in the context of the proceedings in total, weighs against the making of a costs order in favour of Tom Builder.
Conclusions
There are factors both in favour of and against the making of a costs order in favour of Tom Builder.
However, in my view, the very brief period that the offer was open, in the context of the lengthy history of the proceedings resulting in disadvantage caused to Mr Duong by Tom Builder deserve greater weight than the other factors. They tip the scale against the making of the order. The proceedings have been on-going since 25 March 2011. Tom Builder failed to progress its own claim resulting in dismissal of it. A hearing was then scheduled of the counter-claim which Tom Builder failed to attend. He subsequently appealed, resulting in the orders being set aside and a further hearing of the counter-claim.
Only after all of that did Tom Builder make the offer to settle. Assuming the offer was received by Mr Duong’s lawyers, read by them and communicated to Mr Duong by close of business the day it was dated, 17 September 2012, that gave him only 4 days to consider it.
Overall, I am not persuaded to exercise the discretion to make an order for costs in favour of Tom Builder. I order that both parties must bear their own costs.
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