QUEENSLAND CIVIL AND 
ADMINISTRATIVE TRIBUNAL

CITATION:	Gedoun Constructions Pty Ltd v Agius [2024] QCATA 43	
PARTIES:	Gedoun Constructions Pty Ltd	

(applicant/appellant)	

	v	
	Mark Elliot Agius	

(respondent)	

APPLICATION NO/S:	APL060-22
APL278-22	
ORIGINATING APPLICATION NO/S:	BDL308-18	
MATTER TYPE:	Appeals	
DELIVERED ON:	27 March 2024	
HEARD AT:	Brisbane	
DECISION OF:	Senior Member Brown
Member Howe
	
ORDERS:	Gedoun Constructions Pty Ltd must pay to Mark Elliot Agius the costs of proceeding APL060-22 and proceeding APL278-22, including the costs of the application by Gedoun Constructions Pty Ltd to adduce fresh evidence but excluding the costs of the application by Mark Elliot Agius to adduce fresh evidence, to be agreed or failing agreement to be assessed on the standard basis on the District Court Scale in accordance with Schedule 2, Part 3 of the Uniform Civil Procedure Rules 1999 (Qld) as if the proceeding had been brought in the District Court.
	
CATCHWORDS:	COSTS – ASSESSMENT OF COSTS – Where respondent made a settlement offer – Where appellant rejected the settlement offer – Whether rejection of offer reasonable - Where respondent claims costs on an indemnity basis – Whether the appellant was in a position to reasonably consider the offer at the time that it was made
COSTS – ASSESSMENT OF COSTS – Where appellant brought an application for leave to adduce fresh evidence on appeal – Where respondent brought an application for leave to adduce fresh evidence on appeal in response – Whether respondent was required to bring the application – Whether respondent should recover the costs of responding to the appellant’s application 
Queensland Building and Construction Commission Act 1991 (Qld) s 77
Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 105
Queensland Civil and Administrative Tribunal Rules 2009 (Qld) r 86
Bailey v Director-General, Department of Natural Resources NSW [2015] NSWCA 318
Calderbank v Calderbank [1975] 3 All ER 333.
Fick v Groves (No 2) [2010] QSC 182.
Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] VSCA 298 
Lyons v Dreamstarter Pty Ltd [2011] QCATA 142
McGee v Queensland Building and Construction Commission & Anor [2018] QCATA 124.
Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No. 2 [2016] QCAT 497
Steven Bryan Worthington t/as Worthington Simmons Builders v Dr Andrew William Ryan; Dr Andrew William Ryan v Steven Bryan Worthington t/as Worthington Simmons Builders [2022] QCATA 8
Tamawood Ltd v Paans [2005] 2 Qd R 101.	
APPEARANCES & REPRESENTATION:	
The matter of costs was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)	

REASONS FOR DECISION
[1]	Following a 14 day hearing in matter BDL308-18 the Tribunal ordered the appellant builder to pay damages of $190,140 and liquidated damages of $32,050 plus interest at the rate of 10% from the date of the decision.
[2]	The appellant appealed that decision to the Appeal Tribunal in matter APL060-22 and also appealed the costs decision made by the Tribunal below that the appellant pay the respondent owner’s costs on the standard basis assessed on the District Court scale in proceedings APL278-22.
[3]	In appeal matter APL060-22 the application for leave to appeal was refused and the appeal dismissed by the Appeal Tribunal on 16 January 2024. That result meant that the costs appeal in APL278-22 also failed with leave to appeal refused.
[4]	The parties were directed to file and exchange submissions on costs in both appeals and to file and exchange submissions in response within 7 days thereafter, with the costs to be decided on the papers in decided in both matters.
[5]	Costs may be awarded in a proceeding for a building dispute. This includes an appeal tribunal proceeding. In determining whether to award costs in a building dispute proceeding the discretion must be exercised judicially on established principles.
[6]	Unlike in the courts, the starting principle in considering an award for costs in a building dispute is not that costs follow the event. Nevertheless, that the fruits of the litigation may be eroded if a successful party is not entitled to recover a part of their costs is a relevant matter when considering whether the interests of justice weigh in favour of a costs award. In Rainbow Builders Pty Ltd v The State of Queensland through the Department of Housing and Public Works (No. 2) the Tribunal held that a successful litigant in building dispute proceedings is, generally speaking, entitled to an order for costs, and to deprive a successful party of their costs is an exceptional measure. 
[7]	The respondent was entirely successful in the appeals. Both parties were legally represented in what were complex proceedings. It was necessary for the respondent to incur the cost of legal representation to achieve the successful outcome. In the absence of any countervailing considerations, the respondent’s success warrants the exercise of the discretion in favour of an order for costs. 
[8]	As to the basis upon which the costs order should be made, the respondent claims costs on an indemnity basis because of an offer of settlement made early in the course of the appeal proceedings. The offer was expressed as a Calderbank offer and, if not accepted by the appellant, as an offer pursuant to r 86 of the QCAT rules.
[9]	The appellant submits the appropriate order is that the appellant pay the respondent’s costs of the appeal on the District Court scale either as agreed or assessed on the standard basis and not on an indemnity basis. This submission is made on two bases. Firstly, the respondent’s offer of settlement was made too early, before the respondent’s position with respect to the grounds of appeal was available and the appellant could assess whether it was reasonable to continue the appeal. Secondly, the offer made said nothing about indemnity costs being sought if the offer was not accepted.
[10]	It is necessary to consider whether the appellant acted reasonably in not accepting the respondent’s offer to settle. 
[11]	In McGee v Queensland Building and Construction Commission & Anor  the Appeal Tribunal stated:
[62] In our view, in exercising the discretion to award costs, the relevant matters the tribunal must consider are the same irrespective of whether the written offer is expressed as a Calderbank offer or falls for consideration as an offer under rule 86. Both require a value judgment of the offer and the conduct of the parties in the context of the nature and circumstances of the proceedings.
[12]	In Fick v Groves (No 2) Applegarth J considered whether the unsuccessful plaintiff’s rejection of an offer was reasonable or not.  Applegarth J adopted what was said by the Victorian Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) [2005] VSCA 298 that a court considering a submission that the rejection of a Calderbank offer was unreasonable should have regard to the following matters:
(a)	the stage of the proceedings 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 at the date of the offer;
(e)	the clarity with which the terms of the offer were expressed; and
(f)	whether the offer foreshadowed the application for an indemnity costs order in the event of the offeree rejecting the offer.
[13]	Here the respondent’s offer was made very early in the proceedings, on 12 May 2022, approximately two months after the application for leave to appeal or appeal was filed and prior to the appellant filing the application to adduce fresh evidence. The Appeal Tribunal subsequently directed that the application for fresh evidence be determined at the appeal. The application of the appellant to adduce fresh evidence was refused at the commencement of the hearing of the appeal. The outcome of that application was unknown at the time the respondent made the offer. Both parties expended considerable effort and costs on the proposed fresh evidence with additional reports obtained from experts by both parties.
[14]	It is also relevant that the offer was made more than two months before the appellant filed its initial submissions in support of its grounds of appeal, when the appeal was in its infancy, and before the respondent filed its submissions in response.
[15]	The offer allowed the appellant 10 days for acceptance.
[16]	The offer was expressed in the following terms: ‘We are instructed that our client is prepared to settle this matter on the following basis: 1. Both parties walk away; 2. The current appeal matter APL060-22 is dismissed; and 3. There is no order as to costs. This offer shall remain open for ten (10) business days from the date of this letter’.  
[17]	The respondent’s offer was essentially a ‘walk away’ offer. 
[18]	The only element of compromise was the respondent foregoing the standard costs and outlays incurred to the date of the offer. While there is nothing before the Appeal Tribunal regarding the amount of those costs, the fact that the offer was made only two months after the appeal was filed and before the parties had filed their appeal submissions tends to indicate that the costs could not have been substantial. There had been correspondence to the Appeal Tribunal from Mr Agius personally railing against the appellant filing the application for leave to appeal or appeal on 7 April 2022 but that without involvement of the respondent’s solicitors. Indeed, looking to the copy invoices supplied by the respondent’s solicitors with its submissions on costs, the first entry is an entry on 12 May 2022 recording the drafting of the offer to settle as the first step taken by the respondent’s solicitors in the appeal proceedings.
[19]	Walking away from the appeal at the time of the offer could not reasonably be said to involve an element of compromise on the part of the respondent. The offer made, when made, was no more than an attempt to gain an advantage on future costs to be incurred without any corresponding cost to be borne by the respondent. In the absence of any evidence as to the costs incurred by the respondent to the date of the offer we are not persuaded that the offer involved a real concession or genuine compromise. 
[20]	As to the respondent’s prospects of success, assessed at the date of the offer, the fact that the respondent was ultimately successful in the appeal is not of itself determinative. Nevertheless, given the respondent’s success in the appeal, it is a relevant factor. 
[21]	There was no mention of a claim to indemnity costs in the letter of offer in the event that the offer was not accepted. What was said was that if the offer was not accepted the letter would be relied on and “section 105 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) and rule 86 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld) as to the question of costs.” Section 105 of the QCAT Act provides that the QCAT rules may authorise the tribunal to award costs in certain circumstances including where an offer to settle has been made and not accepted. Rule 86(2) of the QCAT rules provides that, if a party makes a written offer to settle which is not accepted and the final decision is not more favourable to the other party than the offer, the tribunal may award the offeror all reasonable costs incurred by the offeror in conducting the proceeding after the offer was made. The reference to all reasonable costs in r 86 has been held to mean indemnity costs as opposed to standard costs. It is not mandated that an order for indemnity costs must be made. It will depend on the circumstances of each case. While the offer was expressed with sufficient clarity it failed to directly address that an application for indemnity costs would be pursued in the event the offer was not accepted.  
[22]	Balancing all of these factors, we are of the view that this is not a matter in which the discretion to award indemnity costs should be exercised in favour of the respondent. Costs should be ordered on the standard basis on the District Court scale. 
[23]	This is not an appropriate matter in which to fix costs. The costs incurred are substantial, claimed by the respondent in the amount of $181,122.80. The supplied invoices are not sufficiently detailed to allow the Appeal Tribunal to fix costs with any degree of confidence. It is appropriate that the parties agree on costs, and failing that, that the costs be assessed on the standard basis on the District Court scale. 
[24]	As to the costs of the applications by each party to adduce fresh evidence it is relevant to observe that the respondent’s application was prompted by the appellant’s application. The respondent conceded at the hearing that if the appellant’s application was refused, the respondent would not press his application as it was not necessary to do so. Nevertheless, the respondent was put to the cost of opposing the application. 
[25]	After examining the applicant’s submissions and the proposed fresh evidence, and considering the relevant authorities, we said in our reasons for refusing the application:
We adopt the comments made by Judicial Member McGill in Allen v Queensland Building and Construction Commission in that regard to refuse the appellant’s application to adduce fresh evidence. There has already been a hearing on the merits below. The evidence now sought to be adduced for the first time should have been led in the hearing below. There is no reason given or attempt to explain, again recognising that Mr Somers was not counsel in the heading below, why the evidence was not led below. That failure cannot be remedied by leading it as fresh evidence now in the appeal.
Not only is it a waste of the resources of the Tribunal in allowing that course to be adopted, it is unfair on the respondent to now face, after significant time spent in the hearing below, which time has been the subject of comment this morning, effectively a reopening of the evidence.
[26]	The appellant’s application to adduce fresh evidence was without merit. Nevertheless, the respondent proceeded to make his own application to adduce further evidence. Though it might be argued that the respondent was forced to bring his application, the same observations made when refusing the appellant’s application are relevant. An appeal is not the opportunity to reopen the evidence below which both parties attempted to do. On balance, the respondent should have his costs of the appellant’s application to adduce fresh evidence but not the costs of his own application.