Costs orders at QCAT

Glen Cranwell

In introducing the Queensland Civil and Administrative Tribunal Bill 2009 (Qld), then Attorney-General Cameron Dick said:

“To ensure QCAT is a low-cost jurisdiction, parties must generally bear their own costs unless the tribunal considers it is appropriate in the interests of justice to award costs.”¹

The purpose of this article is to set out the provisions in the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) and the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) (QCAT rules) relating to costs orders, and to provide examples of how those provisions have been applied in practice.

Default position

Section 100 of the QCAT Act sets out the default position in relation to costs:

“Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.”

Section 102 permits the tribunal to depart from this position if the interests of justice require it to make a costs order.

In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No.2),² Justice Wilson 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.”

More recently, in Cowen v Queensland Building and Construction Commission,³ Judicial Member McGill SC said:

“I consider that to say that an order for costs will not be made unless the factors favouring an order are ‘compelling’ does not accurately state the test for making an order for costs laid down by s102(1). In my opinion, the Member in this way set the bar too high against the applicants when deciding whether to make an order for costs in this matter. The test is whether the interests of justice ‘require’ an order for costs, but I do not accept that the circumstances favouring an order for costs must be compelling before that test will be met.”

Nevertheless, Judicial Member McGill SC conceded that the use of the word ‘require’ in s102 means that the default position should not be ‘too readily’ departed from.⁴

Interests of justice

Section 102(3) of the QCAT Act sets out a number of factors which the tribunal may have regard to in deciding whether to award costs.

In Ascot v Nursing and Midwifery Board of Australia, Judge Kingham said:⁵

“The considerations identified in s102(3) are not grounds for awarding costs. They are factors that may be taken into account in determining whether, in a particular case, the interests of justice require the tribunal to make a costs order.”

In Queensland Racing Integrity Commission v Vale, Justice Carmody said:⁶

“The considerations in s102(3) should be considered globally or in a cumulative way. Their mutually reinforcing effect might lead to a different conclusion than considering each of them in isolation.”

I will address each of the factors set out in s102(3) in turn.

Whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding

Unnecessarily disadvantaging another party to a proceeding is dealt with in s48(1) of the QCAT Act, and may include:

(a) not complying with a tribunal order or direction without reasonable excuse, or

(b) not complying with this Act, an enabling Act or the rules, or

(c) asking for an adjournment as a result of conduct mentioned in paragraph (a) or (b), or

(d) causing an adjournment, or

(e) attempting to deceive another party or the tribunal, or

(f) vexatiously conducting the proceeding, or

(g) failing to attend conciliation, mediation or the hearing of the proceeding without reasonable excuse.

The nature and complexity of the dispute the subject of the proceeding

A factor in granting leave for legal representation under s43(3)(b) of the QCAT Act is that the proceeding is likely to involve complex questions of fact or law. Although a grant of leave for legal representation is a factor in favour of making a finding that the interests of justice require a costs order to be made, the usual view taken by the tribunal is that this will not in itself be determinative.

For example, in Annandale Pharmacies (NQ) Pty Ltd v The Angliss Estate (Annandale) Pty Ltd (No.2), the Appeals Tribunal said that:⁷

“It does not follow however from a grant of leave for legal representation that there will be an order for costs. A number of other factors must be taken into consideration including the nature and complexity of the proceedings, the relative strength of Annandale’s claim, whether legal representation was required to achieve a just result and the extent to which a party’s success in a proceeding is eroded by bearing their own costs.”

I note that these are substantially the balance of the factors set out in s102(3).

In TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993 (No.2),⁸ the hearing before me lasted for 10 days, and included the cross-examination of lay and expert witnesses by both parties. Both parties were represented by competent counsel. I observed that, ipso facto, the proceeding was at the upper end of the range of complexity of matters dealt with by the tribunal.

The relative strengths of the claims made by each of the parties to the proceeding

In Till v Work Health and Safety Queensland – Office of Industrial Relations, Queensland Treasury Department & Anor (No.2), Justice Carmody said:⁹

“Litigants need to be held financially accountable for trying to argue hopeless or spurious appeal points where the reasons for the decision at first instance cannot be faulted.”

On the other hand, in Campaigntrack Victoria Pty Ltd v The Chief Executive, Department of Justice and Attorney-General & Ors, Justice Applegarth (with whom President McMurdo and Justice Henry agreed) said:¹⁰

“Campaigntrack had a stronger argument in the appeal to this Court than that advanced by the Chief Executive. However, the Chief Executive’s arguments were not without merit, and the relative strength of the arguments made before the Appeal Tribunal is not a sufficient reason to displace the usual rule as to costs contained in s100 of the QCAT Act.”

In review proceedings:

• whether the applicant was afforded natural justice by the decision-maker for the decision; and
• whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits

In Whalley v Queensland Building and Construction Commission (No.2),¹¹ the tribunal found that it was in the interests of justice to award costs where Mr Whalley was not afforded natural justice and was put to the expense of challenging an ‘unmeritorious or flawed decision’.

On the other hand, in Chapple v Queensland Building and Construction Commission,¹² I accepted that the QBCC did not afford Mr Chapple procedural fairness during its decision-making process, and as a consequence he had no choice but to commence proceedings in the tribunal.

However, I found that a powerful factor against awarding costs was that the QBCC consented at an early stage in the proceedings to reconsidering its decision, which it then did in Mr Chapple’s favour. To the extent that Mr Chapple had no choice but to commence proceedings in the tribunal, the QBCC’s conduct led to the proceedings being resolved in his favour at an early stage.

The financial circumstances of the parties to the proceeding

In Nursing and Midwifery Board of Australia v Faulkner (No.2), Judge Sheridan said:¹³

“An order for the payment by Ms Faulkner of an amount in excess of $50,000.00 would, in her circumstances, have a crippling effect with the resultant punitive element.”

Her Honour recognised this as a relevant factor in exercising the tribunal’s discretion.

Anything else the tribunal considers relevant

The list of factors in s102(3) is not exhaustive. For example, in Ricchetti and Ors v Lanbuilt,¹⁴ the Appeals Tribunal held that refusal of a Calderbank offer which is more favourable than the final decision may also make it in the interests of justice to make an order for costs against a party.

Provisions of an enabling Act

There are a considerable number of enabling Acts which displace the default position in s100 that each party must bear their own costs.

For example, s77(3)(h) of the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act) provides that, in deciding a building dispute (as defined in the QBCC Act), the tribunal may ‘award costs’.

In Lyons v Dreamstarter Pty Ltd, Justice Wilson said:¹⁵

“[T]he power to award costs under the [QBCC Act], while expressed in succinct terms, indicates that the question of costs is to be addressed in markedly different terms from s100 of the QCAT Act.

“The High Court has said that there is no automatic rule that costs ‘follow the event’ (i.e., the outcome of the proceeding) or that the unsuccessful party must compensate the successful one. The discretion to award costs starts with the proposition that it is just and reasonable that a party who causes another to incur costs should reimburse the other party for them. Otherwise, the factors affecting the discretion will vary in each case.”

An example of a less permissive enabling Act is s127(2) of the Guardianship and Administration Act 2000 (Qld), which provides:

“However, the tribunal may order an applicant to pay an active party’s costs and the costs of the tribunal in exceptional circumstances, including, for example, if the tribunal considers the application is frivolous or vexatious.”

Similarly, s123(2)(a) of the Powers of Attorney Act 1998 (Qld) permits a costs order to be made in circumstances where an application is dismissed because it is:

• frivolous, trivial or vexatious, or
• misconceived or lacking in substance.

Section 125(2) also provides that, unless otherwise ordered, costs follow the event in relation to applications under that Act.

Many enabling Acts allow for costs orders to be made in disciplinary proceedings. Without purporting to be an exhaustive list, examples include:

• s462 of the Legal Profession Act 2007 (Qld)
• s131 of the Professional Engineers Act 2002 (Qld)
• s160 and s162 of the Education (Queensland College of Teachers) Act 2005 (Qld)
• s122 of the Surveyors Act 2003 (Qld)
• s59 of Valuers Registration Act 1992 (Qld), and
• s15D of the Veterinary Surgeons Act 1992 (Qld).

Offers to settle

Section 105 of the QCAT Act provides that the QCAT rules may authorise an award costs in other circumstances, including where an offer to settle the dispute the subject of the proceeding has been made but not accepted.

Rule 86 of the QCAT rules authorises an award of costs in the following circumstances:

“(1) This rule applies if—

(a) a party to a proceeding, other than a proceeding for a minor civil dispute, makes another party to the proceeding a written offer to settle the dispute the subject of the proceeding; and

(b) the other party does not accept the offer within the time the offer is open; and

(c) in the opinion of the tribunal, the decision of the tribunal in the proceeding is not more favourable to the other party than the offer.

(2) The tribunal may award the party who made the offer all reasonable costs incurred by that party in conducting the proceeding after the offer was made.”

In this context, ‘reasonable costs’ was construed by Justice Wilson in Lyons v Dreamstarter Pty Ltd¹⁶ to mean indemnity costs.

If Rule 86 is engaged, there is still a discretion whether or not to award costs. In Neverfail Pty Ltd as Trustee for The Harris Siksna Family Trust & Anor v Radford (No.2),¹⁷ the Appeals Tribunal said that “[i]t is not the most important consideration but part of the matrix of circumstances to be weighed in exercising the discretion to award costs”. Other relevant considerations included:¹⁸

a) the stage of the proceeding at which the offer was received

b) the time allowed to the offeree to consider the offer

c) the extent of the compromise offered

d) the offeree’s prospects of success, assessed as at the date of the offer, and

e) the clarity with which the terms of the offer were expressed.

It is important to note that Rule 86 does not apply to disciplinary proceedings¹⁹ or review proceedings.²⁰

Fixing costs where possible

Section 107 of the QCAT Act contains the following additional provisions in relation to costs:

“(1) If the tribunal makes a costs order under this Act or an enabling Act, the tribunal must fix the costs if possible.

(2) If it is not possible to fix the costs having regard to the nature of the proceeding, the tribunal may make an order requiring that the costs be assessed under the rules.

(3) The rules may provide that costs must be assessed by reference to a scale under the rules applying to a court.”

In Cruceru v Medical Board of Australia,²¹ the Judicial Member Hon JB Thomas said that:

“[T]he discretion to fix costs under s107 is an extremely wide one and is to be exercised robustly. The fixation of a round or approximate sum will often be a preferable option to increasing costs and wasting money and effort in the production of itemised assessments.”

My colleague, Member Gordon, has observed that members of QCAT have used no less than 17 different approaches to fix costs.²² A consideration of each of these approaches is beyond the scope of this article.

For what it is worth, in TLL Investment Pty Ltd v The Body Corporate for the Grange CTS 30993 (No.2),²³ I accepted expert evidence that costs assessed on the standard basis will likely be 65% of the actual costs. In fixing costs in the amount of $307,130.86, I observed that the parties had already incurred enough costs without increasing those costs by embarking on the lengthy and expensive process of preparing and submitting an itemised assessment.

For completeness, an enabling Act or the QCAT rules may fix the costs that may be awarded in certain types of matters. For example:

• Section 50C of the Fair Trading Act 1989 (Qld) provides that a costs order in a motor vehicle dispute may only be made against a respondent, and is fixed in the amount of the filing fee.
• Rules 83 and 84 of the QCAT rules fix the costs that may be awarded in minor civil disputes.

Conclusion

In its report entitled ‘Review of the Queensland Civil and Administrative Tribunal Act 2009’, the Department of Justice and Attorney-General noted that it was argued in some submissions that QCAT would be fairer and quicker if ‘costs followed the event’ for the following reasons:²⁴

• the ‘own costs’ rule provides little incentive to settle matters, comply with deadlines set in directions or participate in alternative dispute resolution
• the ‘own costs’ rule can lead to frivolous or vexatious claims being brought, and
• if costs follow the event, the successful party is relieved of the financial burden of paying their own costs.

However, the report made no recommendations for change to the ‘own costs’ rule.

The ‘own costs’ rule appears to be closely aligned to the requirement in s43 of the QCAT Act that, in most cases, parties to a dispute are to represent themselves in proceedings before the tribunal. This contrasts with ‘as of right’ legal representation which applies in the courts.²⁵

In this regard, in Sutton v Tang & Anor,²⁶ the parties were legally represented and jointly submitted that “the potential liability of legal costs is an important commercial factor which assists in ensuring that the parties make all reasonable efforts to resolve issues prior to taking the matter to trial”.

The District Court held that this may be relevant to the exercise of the discretion whether to transfer a matter from a court to QCAT pursuant to s53 of the QCAT Act.

Glen Cranwell is a full-time member of the Queensland Civil and Administrative Tribunal. The views expressed are those of the author, and not those of the tribunal.

Footnotes
¹ Queensland Parliament, Hansard, 19 May 2009, p351.
² [2010] QCAT 412, [29].
³ [2021] QCATA 103, [28].
⁴ Ibid, [27].
⁵ [2010] QCAT 364, [9].
⁶ [2017] QCATA 110, [38] (footnote omitted).
⁷ [2019] QCAT 62, [9] (footnote omitted).
⁸ [2018] QCAT 444, [18].
⁹ [2016] QCATA 172, [10].
¹⁰ [2016] QCA 96, [11].
¹¹ [2017] QCAT, 188, [23].
¹² [2019] QCAT 175, [19].
¹³ [2017] QCAT 273, [29].
¹⁴ [2012] QCATA 111, [44].
¹⁵ [2012] QCATA 71, [10]-[11] (footnotes omitted).
¹⁶ [2021] QCAT 71, [24].
¹⁷ [2017] QCATA 73, [43].
¹⁸ Ibid, [44].
¹⁹ Health Ombudsman v Wabersinke (No.2) [2021] QCAT 58.
²⁰ Perkins & Anor v Queensland Building and Construction Commission & Anor [2018] QCAT 15.
²¹ [2016] QCAT 111, [49].
²² Email from Jeremy Gordon dated 1 January 2021.
²³ [2018] QCAT 444, [31].
²⁴ Department of Justice and Attorney-General, ‘Review of the Queensland Civil and Administrative Tribunal Act 2009’, Report, July 2018, p17.
²⁵ See Magistrates Court Act 1921 (Qld), s18(1)(a); District Court of Queensland Act 1967 (Qld), s52(1)(a); Supreme Court of Queensland Act 1991 (Qld), s90(1)(a).
²⁶ [2015] QDC 191, [30], [32].