Vandenhoven v Queensland Building Services Authority
[2013] QCAT 753
•11 January 2013
| CITATION: | Vandenhoven v Queensland Building Services Authority [2013] QCAT 753 |
| PARTIES: | Diane Patricia Vandenhoven (Applicant) |
| v | |
| Queensland Building Services Authority (Respondent) |
| APPLICATION NUMBER: | GAR369-10 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Rockhampton |
| DECISION OF: | Member Byrne |
| DELIVERED ON: | 11 January 2013 |
| DELIVERED AT: | Rockhampton |
| ORDERS MADE: | 1. Application for costs dismissed. 2. Each party will bear their own costs. |
| CATCHWORDS: | Costs – whether costs order should be made in the interest of justice – where applicant successful party in review proceeding – where legal representation justified – where offer to settle and indemnity costs sought – whether strong contra-indication to overcome the mandate in section 100 against costs Queensland Civil and Administrative Tribunal Act 2009 ss 100, 102, 103 Knight v FP Special Assets Ltd (1992) 174 CLR 178 |
APPEARANCES and REPRESENTATION:
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
Submissions were made on behalf of the Applicant Mrs Diane Patricia Vandenhoven by Kerry Connolly Howard Lawyers, settled in part by Steven Deaves of Counsel.
Submissions were made on behalf of the Queensland Building Services Authority by in-house legal.
REASONS FOR DECISION
On 22 December 2011, I allowed an Application by Mrs Diane Patricia Vandenhoven (Vandenhoven) to review the decision of Queensland Building Services Authority (QBSA) on her claim against the QBSA Act statutory insurance scheme (the statutory insurance scheme).
The Applicant is seeking to recover costs associated with her Application. The costs sought are costs relating to the original Application until 27June 2011 and indemnity costs from that date based on an offer to settle for $15,000 being made by Vandenhoven to the QBSA on that date.
On 11 April 2012, Troy Krahenbring, solicitor of Kerry Connolly Howard Lawyers, and Brett Alexander Louttit, licenced builder trading as Hotondo Rockhampton, each filed an Affidavit in support of Vandenhoven’s costs Application.
On 17 July 2012, I gave directions regarding the matter of costs in the Application above.
The QBSA filed written submissions on costs at QCAT on 20 August 2012.
Vandenhoven’s representatives filed written submissions on costs by letter of 17 August, receipted on 21 August, 2012 at QCAT.
The QBSA then requested an oral hearing of the costs matter confirmed by email of 11 September 2012 to QCAT and filed submissions supporting this request that are date stamped 2 September 2012. (This date seems to be doubtful given the surrounding email material, but is not material.)
Vandenhoven strenuously opposed an oral hearing in her representative’s email to QCAT on 11 September 2012 and provided submissions in response to the QBSA submissions for an oral hearing by email of 27 September 2012 to QCAT.
I considered the submissions and made a decision on 12 October 2012:
a) denying the request for an oral hearing;
b) allowing both parties to make further submissions on costs by 26 October 2012; and
c) that the costs matter would be decided on the papers.
The QBSA filed further extensive submissions on costs in QCAT on 26 October 2012 and Vandenhoven did not file any further material.
In my decision on the original application there were two bases on which I held that Vandenhoven could access the statutory insurance scheme. One was that the letter 11 August 2010 from the QBSA to Vandenhoven amounted to a waiver of the benefit of Clause 2.5 of the Insurance Policy Conditions. This effectively meant that Vandenhoven could access the statutory insurance scheme. The second basis was that, in any event, Vandenhoven had been diligent in seeking the builder to rectify the building defects and, by and large, the builder kept attending the site and appeared to be rectifying defects. On this basis I was prepared to extend the time under the statutory insurance scheme.
There is no common law jurisdiction in tribunals to award costs. The power to order costs is entirely a creation of statute[1].
[1]Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 193.
The public policy intent of the QCAT Act is for the Tribunal to be a no cost jurisdiction, unless the interests of justice require otherwise[2].
[2]Judge Kingham, Deputy President of QCAT in Ascot v Nursing and Midwifery Board of Australia [2010] QCAT 364 at [9].
The Applicant and Respondent agree that the leading decision in the area of costs at QCAT is the decision of the President, Justice Wilson in Ralacom v Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)[3] (Ralacom). What is not agreed is the meaning of that decision and, in particular, its interaction with the Court of Appeal decision in Tamawood Ltd & Anor v Paans[4] involving the Commercial and Consumer Tribunal Act 2003 (CCT Act).
[3]Ralacom v Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412.
[4]Tamawood Ltd & Anor v Paans [2005] QCA 111 (Tamawood).
In Ralacom, Justice Wilson set out the key considerations for the QCAT Act regarding costs[5].
4.The starting point concerning costs in QCAT is that each party must bear its own: QCAT Act, s 100. This presumption may, however, be displaced if the Tribunal considers it in the interests of justice to order a party to pay all or part of the costs of another party: s 102(1). The phrase “in the interests of justice” is not defined in the Act but is to be construed according to its ordinary and plain meaning, which obviously confers a broad discretionary power on the decision-maker.
5.In determining whether it is in the interests of justice to award costs against another party the Tribunal may have regard to the nature and complexity of the dispute; the relative strengths of the claims made by each of the parties; and, whether a party has acted in a way that unnecessarily disadvantages another party: QCAT Act, s 102(3).
[5]Ralacom [4] and [5].
Vandenhoven in submissions indicated[6]:
Justice Wilson's adoption (in Ralacom) of Keane JA's statement that “where the complexity of the matter justified legal representation, it would not be in the interests of Justice to bar the successful legal party from recovering costs that were reasonably necessary to achieve a satisfactory outcome” (Ralacom para 26) is fatal to the Respondent's resistance of a costs order being made under section 102 in the present case.
[6]Applicant’s Response on Costs [3].
I do not share Vandenhoven’s representatives’ view of Ralacom.
On my reading of Ralacom, Justice Wilson does not find he is bound by Tamawood, nor does adopt the relevant part of the ratio of that case. He states that the provisions of the now repealed Commercial and Consumer Tribunal Act 2003 (CCT Act) ‘are not analogous to the equivalent provisions under the QCAT Act’[7] He then goes on to indicate 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’[8].
[7]Ralacom [21].
[8]Ibid [21].
The use of the words ‘provide guidance’ cannot, to my mind, be read to mean that the principles are adopted in any authoritative sense.
Justice Wilson goes on to indicate it might be said that the legislature ‘had turned its face against awards of costs in this tribunal’[9] compared to the legislation in Tamawood. He then notes the findings of Keane JA (as his Honour then was) ‘that CCT provisions negated the traditional proposition that costs should prima facie follow the event 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’[10] Wilson J then expressly adopts these principles in noting that ‘sections 100 and 102 of the QCAT Act attract the operation of the same principles’[11].
[9]Ibid [24].
[10]Ibid [25].
[11]Ibid [25].
Wilson J notes the further principle set by Keane JA in Tamawood that where ‘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’[12], but he does not adopt this. Rather he indicates that this ‘conclusion must, here, be considered in the light of the difference between s 70 of the CCT Act and s 100 of the QCAT Act’[13].
[12]Ibid [26].
[13]Ibid [27].
Finally, Wilson J notes that 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 s 100’[14].
[14]Ibid [29].
These passages, on my reading, distinguish the principle in Tamawood that, if legal representation is appropriate, then so will be a costs order.
Beyond the principles enunciated by Wilson J, the decision in Ralacom is not enlightening in the current matter, as it was a case dealing with an unauthorised application in a company name, withholding of information by the Applicant and the decision on costs took into account that:
The body corporate was, in short, forced to appear at and resist misconceived and unauthorised proceedings. These factors point compellingly to the conclusion that the interests of justice warrant a costs award here, despite the principle set out in s 100[15].
[15]Ibid [31].
His honour went on to find that with respect to one party pursuing the application where ‘[t]o persist, in those circumstances, is behaviour which can fairly be categorised as misconduct, or as acting in bad faith, in the sense discussed earlier’[16].
[16]Ibid [43].
There is no hint in the matter before me on the original Application that the QBSA has acted in any way that could be categorised, in an even vaguely similar manner, to the parties pursuing the Application in Ralacom.
The original Application, in my view, is broadly analogous to the situation in Demac Homes (Qld) Pty Ltd v Queensland Building Services Authority & Ors[17] (Demac). In that matter Richard Oliver, Senior Member of QCAT, found that on reading the material prior to the hearing it could not be said with reasonable certainty what the outcome would be. I find that this was the case in the original Application in this matter concerning the extension of time and the extent of rectification required, particularly with regard to the SHS posts needing to be replaced and the fact that the windows had to be removed and reinstalled. This only became evident after evidence in chief and cross-examination. This oral evidence at the hearing, which I accepted, formed the basis of my decision regarding the posts and windows.
[17][2011] QCAT 331.
Mr Oliver went on to find in Demac that uncertainty remained even at the conclusion of the hearing and that neither party’s case was obviously stronger than the other. I find the same applied in this matter in relation to all aspects, in particular the extent of rectification and extension of time.
I note that the waiver argument was raised, on common ground as I understand it, on the business day before the hearing.
I could not have said with any certainty prior to the leading of evidence and cross-examination that I would have been willing to extend time as I did in my decision. On the face of the documents, prior to hearing, I was inclined to the view that the time involved was too long. I only became persuaded otherwise by the evidence I heard from the witnesses on the day and after much reflection after the hearing.
This case on its merits is a rather extreme example of extension of time. I do not see that prior to the hearing the QBSA should have expected the outcome on the question of time. Rather, I find that it would have been reasonable for the QBSA to hold a view that its prospects of success in the Application were good and, consequently, that it was justified in testing the matter. The waiver question was only raised, as I have indicated, on the business day before the hearing.
I find that the QBSA has not in the Application acted in a way that unnecessarily disadvantaged Vandenhoven within the terms of s 102(3)(a) of the QCAT Act.
It was common ground that this was a reasonably complex matter and I find that to be so. It was appropriate for the parties to have legal representation.
I also find that the strengths of the claims made by each of the parties to the proceeding prior to the hearing were relatively similar in terms of s 102(3)(a) of the QCAT Act.
I note that nothing was put to me regarding matters set out in the QCAT Act, s 102(3)(d) that was material to the costs decision.
I note for completeness that nothing was put to me regarding financial circumstances as set out in the QCAT Act, s 102(3)(e) that was material to the costs decision.
In the circumstances I am not persuaded in the words of Justice Wilson quoted above that the interests of justice point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100 of the QCAT Act.
I make no award of costs. Each party will bear their own costs.
A second aspect of the costs question is the application for indemnity costs from the date of the letter of 27 June 2011 from Troy Krahenbring of Kerry Connolly Howard Lawyers to Scott Seefeld of the QBSA.
My decision on costs above in my opinion means I do not have to address the indemnity aspect as it is encompassed in the order of no award of costs. In case I am not correct in this, I will make specific findings on the issue.
The QBSA replied to the correspondence of 27 June 2011, mentioned above, in an email of 28 June 2011 from Scott Seefeld to Hayley Allwood and Troy Krahenbring of Kerry Connolly Howard Lawyers.
On my reading of the correspondence, Troy Krahenbring was intending to make an offer to settle for $15,000 in his letter of 27 June 2012 to the QBSA. A similar offer appears to have been put at mediation and rejected. I find the 27 June offer was an offer to settle, with no timeframe, separate from anything that happened at mediation. Scott Seefeld apparently took the letter to be seeking a reply to the proposal at mediation and not as a new and separate offer, albeit apparently for the same amount.
I make no adverse finding against the QBSA on this as, on my reading of the correspondence from the QBSA, I perceive it was simply a misunderstanding by the QBSA. This finding also means that I make no adverse finding against the QBSA on the basis that it replied the next day in ‘rejecting’ the offer to settle.
The status of the offer then becomes unclear. The email of 28 June 2011 from the QBSA referred to above makes it clear, it seems to me, that the QBSA is not treating this as a ‘new’ offer to settle, but rather a request for a response to or confirmation of the response made to, the offer made at mediation. This may be understandable given the framing of the letter as it refers to proposals at mediation and states that the QBSA is again invited to consider the proposals that were presumably put at mediation. There is nothing before me to suggest that Vandenhoven informed the QBSA of its error in not regarding the letter as intending to make a separate offer to settle and requesting a formal response to the ‘new’ offer. This means the QBSA has not, in one sense, ever rejected the offer, as it did not realise a new offer was being made.
The onus of establishing that the rejection of the offer should alter the usual cost order is on the Vandenhoven, as the party making the offer[18]. I find Vandenhoven has failed in that onus, as I find that the QBSA has never rejected an offer to settle outside the offer put at mediation, as it did not realise there was a new and separate offer put to it. In the QBSA’s communication to Vandenhoven this seems reasonably clear. The onus was then on Vandenhoven to clarify that it was a separate or new offer, outside the offer put at mediation/compulsory conference, and get the QBSA to respond, or at least ensure the QBSA understood it had an offer to respond to. An offer put at mediation/compulsory conference and rejected, cannot be considered in an Application for costs, as the conference is in confidence[19].
[18]Evans Shire Council v Richardson [2006] NSWCA per Giles, Ipp and Tobias JJA at [26].
[19]QCAT Act s 74 (s 83 mediation).
If I am incorrect in so viewing the material, I make some further findings on the matter.
I am satisfied that prior to the hearing it was reasonable for the Authority to hold the view that it should not extend time. Evidence at the hearing changed my perception of the time issue and it may well have done so for the QBSA. The extent of rectification required, particularly the SHS posts and windows, also did not become clear until the evidence was led and cross-examination occurred.
The QBSA also notes in written submissions[20] that at the time of the offer key evidence was not in its possession such as the Graham Scott reports and a statement by Kirk Story. These are material documents that could have a substantial impact on an offer to settle in this matter.
[20]Respondent’s Submission in Response to Applicant’s Response on Costs filed 26 October 2012 at [27.3].
The QBSA also notes in written submissions[21] that after the time of the offer Vandenhoven’s case changed and broadly I accept those submissions.
[21]Ibid [41] – [59].
On balance, I find that the evidence available to the QBSA at the time of the offer was materially different and less persuasive than the evidence available to it by the time of trial. Further, that the evidence that was adduced at the hearing was again different and more persuasive than the evidence available prior to the hearing. On this basis it is not appropriate to award indemnity costs.[22]
[22]See South Eastern Sydney Area Health Service v King [2006] NSWCA 12 particularly at [22].
I note further that the QBSA had an opportunity to make a counter offer or reconsider the Vandenhoven offer, after more evidence became available to it from Vandenhoven on 4 August 2011, prior to the hearing. On balance, given the documentation available at the time of the hearing, the evidence led at the hearing, the comparative strengths of the parties’ positions, I am not able to find that the QBSA failure to make a further offer is so unreasonable as to warrant a finding of indemnity costs against it.[23]
[23]I make this finding noting my earlier finding that the QBSA did not realise it had rejected a new offer.
I note Vandenhoven’s submission that the waiver issue is a matter of law and that the QBSA could or should have known of the issue without it being specifically raised.
It is my understanding, as a general proposition, that one cannot expect a rejected offer to give rise to indemnity costs where at the time of the offer either:
a) significant facts are not known or a party is not in a position to appreciate them; or
b) where a legal issue has not been raised and the issue would not be reasonably obvious to the other party, so that the latter effectively does not know the legal case against it.
It appears that the QBSA had used the type of letter that was the subject of the waiver argument for some time, as a standard form letter, with no consideration it could be affecting its rights by way of waiver. To take the benefit of the waiver argument in terms of a rejected offer to settle, I find that Vandenhoven needed to put this for consideration of the QBSA, before the offer to settle was made, so the QBSA was able to fully understand the case against it, in reaching its position on the offer to settle.
I find there should be no order for indemnity costs based on:
a) my reasons regarding costs generally in paragraphs [1] to [38] above; or
b) Vandenhoven has failed in the onus in all the circumstances in establishing the QBSA acted unreasonably[24] in rejecting the offer because:
i)material was provided to the QBSA after the offer by Vandenhoven that would have had a significant impact on the decision to settle;
ii)significant evidence came out during the hearing that was not available to the QBSA at the time of the offer; and
iii)the issue of waiver was not put to the QBSA to be taken into account in its consideration of a settlement until the day before the hearing; or
c) there was no rejection of an offer by the QBSA outside of the compulsory conference offer, as no offer was clearly put in all the circumstances to the QBSA so that it understood it was rejecting a new offer to settle.
[24]In the sense set out by His Honour Mason P in Rosniak v GIO (1997) 41 NSWLR 608 at 616.
I conclude the Application for costs should be dismissed and each party bear their own costs.
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