CITATION:	Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ Tyto v Hinchinbrook Shire Council (No 2) [2013] QCAT 500	

PARTIES:	Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ Tyto
(Applicant)	
	v	
	Hinchinbrook Shire Council
(Respondent)	

APPLICATION NUMBER:	RSL067-11	

MATTER TYPE:	Retail shop leases matters	

HEARING DATE:	On the Papers	

HEARD AT:	Brisbane	

DECISION OF:	P Hanly, Presiding Member
S Kairl, Member
D McBryde, Member	

DELIVERED ON:	23 September 2013	

DELIVERED AT:	Brisbane	

ORDERS MADE:	1.	Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ Tyto will pay Hinchinbrook Shire Council’s costs on an indemnity basis on the District Court Scale for costs incurred after 18 April 2012.
2.	Hinchinbrook Shire Council’s costs will be assessed as follows:
(a) Hinchinbrook Shire Council will deliver to Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ Tyto an itemised claim for costs.
(b) If the parties have not agreed to an amount for costs within 14 days of the delivery of the itemised claim, the costs will be assessed by an assessor agreed between the parties or, failing agreement, by an assessor appointed by the Registrar.
(c) Hungry Viking Pty Ltd atf The Wrench Trust t/as Pepper for Passion @ Tyto will pay Hinchinbrook Shire Council’s costs as agreed or assessed within 14 days of such agreement or assessment.	

CATCHWORDS:	Retail Shop Lease – where applicant wholly unsuccessful -  where offers made prior to hearing -  procedure -  costs -  discretion to order costs

Queensland Civil and Administrative Tribunal Act 2009  ss100,102 
Queensland Civil and Administrative Tribunal Rules 2009  Rules 85, 86 	

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

[1]	On 20 March 2013 the Tribunal dismissed Hungry Viking’s claim against the Council. That claim was for compensation for alleged misrepresentation and for failure to deliver premises at the commencement of a lease.
[2]	By consent of the parties, judgment was entered for the Council on the counter-application in the sum of $15,203.00.
[3]	The parties have now made submissions on costs.
[4]	Hungry Viking, through its director, Mr Lyons, made no submissions, save to say that Hungry Viking would not be able to pay any costs order.  Mr Lyons also stated that he “(did) not know how to file to defend against costs as in QCAT you are meant to look after your own costs.”
[5]	The Council stated that it had been completely successful in its defence of Hungry Viking’s claim and sought an order that Hungry Viking pay its costs of the proceedings to be assessed on the standard basis until 18 April 2012, and, thereafter, on an indemnity basis, on the District Court scale. 
[6]	The legislative basis for costs in the Tribunal is found in sections 100 and 102 of the QCAT Act.  Section 100 states, unless otherwise provided under the QCAT Act or an enabling Act, that each party must bear its own costs.  However, this presumption may be displaced if the Tribunal considers it in the interests of justice for one party to be ordered to pay all or part of another party’s costs.  The Act does not define “in the interests of justice” but the term is to be construed according to its ordinary and plain meaning, which confers a broad discretionary power on the decision maker.
[7]	The Council stated that the nature and extent of a power to award costs can only be discerned by close consideration of the terms of the statute which creates the power and prescribes the occasions for, and conditions of, its exercise.  The terms of sections 100 and 102 mean that good reason must be shown in terms of the interests of justice for making an award of costs in proceedings before the Tribunal.
[8]	In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) Justice Wilson referred to the costs provision in the Commercial and Consumer Tribunal Act 2003, and noted that s100 of the QCAT Act “is, it might be said, in terms that more plainly indicate that the legislature had turned its face against awards of costs in the tribunal…”.
[9]	The Tribunal may have regard to a number of factors when determining whether it is in the interests of justice to award costs against another party.  Amongst these factors are the nature and complexity of the dispute; the relative strengths of the claims made by each party against the other; the financial circumstances of the parties to the proceeding and whether a party has acted in a way that unnecessarily disadvantages another party.
[10]	The Council referred to various instances by which it claimed to have been unnecessarily disadvantaged by the actions of Hungry Viking.
[11]	Hungry Viking’s claim was substantial in that it originally claimed compensation in the sum of $531,291.65.  By the time of the hearing the claim had been reduced to $418,259.00.  Hungry Viking filed a significant quantity of material in support of its claim.  The Council was required to disclose a large number of documents, and its witness statements addressed that material.
[12]	The hearing went for 3 days, over two periods.  Both parties were legally represented, and both instructed Counsel.
[13]	The Council rightly points out that this was not a standard dispute occurring over a short period of time involving a small number of witnesses and documents.  Quite the contrary.  There was voluminous material and many witness statements, although most of those from Hungry Viking’s side were not called to give evidence at the hearing.  
[14]	From the Council’s perspective, it was put to considerable expense in responding to the material filed by Hungry Viking.
[15]	The Council stated that Hungry Viking’s case was weak, as evidenced by the fact the claim was wholly dismissed.  However, as was further noted, Hungry Viking’s case was based on oral representations allegedly made by the Council’s employees, necessitating the provision of witness statements from those former and present employees.  
[16]	The financial circumstances of Hungry Viking are not clear, other than Mr Lyons’ assertion that Hungry Viking will be unable to pay any costs ordered against it.  The Council pointed out that Mr Lyons gave evidence at the hearing of his ownership of 104 acres of unencumbered land in Fiji, which was at the time of the hearing listed for sale at $6.2M.  Mr Lyons, however, is not a party to this application.
[17]	The QCAT Rules must also be considered where offers to settle have been made in an application.  There were a number of written offers to settle made by the Council throughout the course of the application.
[18]	The first offer, made on 18 April 2012, rejected Hungry Viking’s offer to settle for $300,000.00.  The Council’s counter-offer was for $30,000.00.  In making that offer the Council’s solicitors expressed their client’s view that the claim had poor prospects of success, and that, in any event, the assessment of any loss that may have arisen grossly exaggerated the likely profit that would have been derived from the business.
[19]	The second offer was made on 28 May 2012 in the sum of $40,000.00.
[20]	The third offer was made on 11 July 2012, the day before the first day of the hearing.  It was for $40,000.00, plus waiver of the Council’s claim for damages on the counter-claim, with each party bearing their own costs.  
[21]	All three offers were made on a without prejudice basis, save as to costs.
[22]	Hungry Viking’s calculations in relation to the likely profit of the restaurant were based on established restaurants in high exposure locations.  The subject restaurant was in a newly established facility 1 kilometre from Ingham in a tropical wetlands being developed in stages.  The Tribunal accepts the Council’s characterisation of the calculations as grossly exaggerated.
[23]	The Tribunal is not satisfied, however, that any order for costs should be made against Hungry Viking up to the date of the first offer.  Although the claim was weak in many respects, Hungry Viking was able to establish at the hearing that the Council had failed to deliver the premises at the commencement of the lease.  Had there been any profit made by the restaurant in its first 6 months of operation there would have been a small sum awarded to Hungry Viking for the short period of time that the premises had not been delivered.
[24]	The Tribunal does not accept that Hungry Viking unnecessarily disadvantaged the Council by its other actions up to the date of the first offer.  The Tribunal considers these issues part of the general vagaries of a hearing.
[25]	However, the final outcome for Hungry Viking was dismissal of its claim and an order that it pay the Council an agreed sum on the counter-claim.
[26]	In Hill-Douglas v Area Square Pty Ltd Justice Wilson referred to Rule 86, observing that where a party does not receive a decision more favourable than an offer, the Tribunal may award ‘all reasonable costs’ incurred.  Justice Wilson noted that the phrase ‘all reasonable costs’ has, in other legislation, been construed to mean costs on an indemnity basis.
[27]	In these circumstances, and having regard to Rule 86, the Tribunal is satisfied that Hungry Viking should pay indemnity costs incurred by the Council after the date of the first offer.
[28]	The Council has not submitted a figure for its costs on the basis that it has not been possible to do so because of the nature, length and complexity of the proceeding.  It has submitted that the costs should be assessed by reference to the District Court scale.  The Tribunal has ordered accordingly.