Harbour Side Resort [2005] QBCCMCmr 741 (13 April 2005)

Last Updated: 13 July 2007

Harbour Side Resort [2005] Q.B.C.C.M.C. mr BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997 ADJUDICATION

Applicant: BODY CORPORATE FOR HARBOUR SIDE RESORT COMMUNITY TITLE SCHEME 15500

Respondent: SUNGOLD RESORTS PTY LTD


STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION AS TO COSTS

On Wednesday, 23rd March 2005 I provided to the parties’ representatives by facsimile transmission and by email my Statement of Adjudicator’s Reasons for Decision and my Orders.

The last paragraph of my Reasons referred to costs of the Adjudication. I refer the parties to Section 280(2) of the Act which prescribes that unless the Adjudicator otherwise orders the Applicant is responsible for costs of the Adjudication. I then directed the parties to provide to me by 4.00 p.m. Friday, 8^th April 2005 any Submissions they wish me to consider in determining this aspect of the Adjudication.

It is interesting to note that when the Body Corporate and Community Management Act 1997 was originally passed and subsequently came into effect on 13^th July 1997 it did not contain any provision which permitted an Adjudicator or a Specialist Adjudicator to award costs in an Adjudication or a Specialist Adjudication. Refer the Original Act in particular Section 223(1) thereof which did not specifically mention costs. The Section merely gave to the Adjudicator or Specialist Adjudicator the power to make an order which is just and equitable in the circumstances.

Mr. John C. Sheahan S.C., Specialist Adjudicator in Grand Marnier [2000] QBCCMCmr 214 (8 May 2000) Application number 0279 of 1998 considered this earlier edition of the Act. Mr. Sheahan examined the provisions of the Act in particular Section 223(1) thereof and considered that he did not have the power to make an order as to the costs of the Specialist Adjudication.

The Act was subsequently amended, no doubt as a result of Mr. Sheahan’s decision, to include the present Section 280.


APPLICANT’S SUBMISSIONS

On 7^th April 2005 the Applicant through its representative Challenge Strata Management provided to me its Submissions. The Submissions were:-

"Further to your order of 25/03/05, we make the following submissions on behalf of the Applicant for a supplementary order that the Respondent should pay the Applicant’s costs of this application.

Reasons in support of this submission are:-

1.	As a general principle of litigation, costs should follow the judgement. There is nothing in the Body Corporate and Community Management Act that would preclude this rule being applied.

2.

The Respondent has displayed a blatant disregard over a considerable period of time for its obligations to the other members of the Applicant body corporate in utilising common areas, both for the carrying out of commercial activities and display of signage, for its own use and benefit to the detriment of the other members.

3.	The Respondent failed to comply with, or even properly address, the several written requests to desist from its said activities, all of which were given before this application was commenced.

4.	The Applicant has successfully established that all elements of its application were justified and has been given orders in its favour in all of them.

5.	The Applicant has at all times acted reasonably and responsibly towards the Respondent.

6.	In all of the circumstances, it would not be reasonable for the other members of the Applicant body corporate to now be required to bear the Applicant’s costs and it would be fair and reasonable for those costs to be paid by the Respondent.

The Applicant’s costs of this application, including GST but not including the Adjudicator’s fee, are as follows:-

Administrative & secretarial costs of reviewing files and $ 880.00
records to retrieve attachments for application, preparing and
filing application, reviewing Adjudicator’s requisitions and
preparing response

Filing fee for application $ 22.60

Outlays for copying documents for application and $ 132.00
Adjudicator, and postage and communication costs between
Committee and body corporate manager
_____.__

Total $ 1,034.60

In addition to an order that the above sum be paid by the Respondent to the Applicant, the Applicant also seeks that the Respondent be ordered to pay all of the Adjudicator’s fees in relation to these proceedings.

That concludes the Applicant’s submissions. Please advise if any other information is required."

RESPONDENT’S SUBMISSIONS

The Respondent did not provide any Submissions.


COSTS - CREATURE OF STATUTE

Costs are a creature of statute. At common law neither the Plaintiff nor the Defendant was entitled to costs. In Re Birkman, Ex-parte Pickering (1860) 1 Q.S.C.R. 14 [Lutwiche J.] at 15.

Connolly J. who wrote the leading Judgment in Queensland Fish Board -v- Bunny 1979 Qd. R. 301 said at 303:-

"It must be remembered that there is a well established principle that apart from the inherent jurisdiction of the court of chancery, costs are entirely the creation of statute and there is no common law jurisdiction in tribunals to grant costs: R -v- Justices of South Brisbane ex-parte Zagami (1901) 11 Q.L.J. 81 at p.83; Garnett -v- Bradley (1878) 3 App. Cas. 944 at p.962. Some of the older decisions suggest that the power to award costs must be conferred in express terms. See eg. Service -v- Flateau (1900) 16 W.N. (NSW) 248; Victorian Phillip-Stephan Photo-Litho Co -v- Davis (1890) 11 L.R.N.S.W. 257 but the better view would seem to be that the power can be conferred expressly or by necessary implication: Spicer -v- Carmody 48 S.R. (NSW) 348 at p350. Having regard to this principle however, the power must at least clearly appear."

See also Knight -v- F.P. Special Assets Ltd [1992] HCA 28; (1992) 174 C.L.R. 178 [H.C.] per Mason C.J. and Deane J. at 182-3, R -v- Scott [1993] FCA 398; (1993) 42 F.C.R. 1 [F.C. Fed Ct.], Canceri -v- Taylor (1994) 123 A.L.R. 667 [Moore J. Industrial Relations Court of Australia] at 672.

There is no doubt in my mind that I have the power to award costs in this Specialist Adjudication pursuant to the provisions of Section 280 of the Body Corporate and Community Management Act 1997 which clearly and unambiguously says so.

The Section gives to the Specialist Adjudicator an absolute and unfettered discretion to award costs or not to award them.

In my view the discretion must be exercised in a judicial manner and not on grounds unconnected with the subject matter of the proceedings between the parties. Main -v- Main [1949] HCA 39; (1949) 78 C.L.R. 636 [H.C.] per Latham C.J., Rich and Dixon J.J. at 643.

Lord Halsbury L.C. in Sharp -v- Wakefield 1891 A.C. 173 [H.L.] at 179 encaptulated the meaning of discretion when he said:-

""Discretion" means when it is said that something is to be done within the discretion of the authorities that that something is to be done according to the rules of good reason and justice, not according to private opinion: Rooke’s Case [(1598) 5 Co Rep 99 b]; according to law, and not humour. It is to be, not arbitrary, vague, and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man competent to the discharge of his office ought to confine himself: Wilson -v- Rastall [(1792) 4 Term Rep at 757]."

I consider the following matters are relevant for my consideration namely:-

(a) Proved facts connected with or leading up to the Adjudication. Tela Pty Ltd -v- Ampol Ltd 1986 A.T.P.R. 48, 120 (Fed Ct. Wilcox J).

(b) Conduct of the parties in relation to the Adjudication. Verna Trading Pty Ltd -v- New India Assurance Co Ltd (1991) 1 V.R. 129 [F.C.].

(c) The success or otherwise of each party in attaining the relief sought. Windsurfing International Inc -v- Petit 1987 A.I.P.C. 37, 861 [NSW Sup Ct Widdell j].


A. PROVEN FACTS CONNECTED WITH OR LEADING UP TO THE ADJUDICATION

The Respondent controlled the Body Corporate from its inception until the Annual General Meeting held on 29^th May 2004.

The Respondent being the sole member of the Body Corporate granted to itself in October 1997 a Property Management Agreement and a Letting Authorisation Agreement for an initial term of five (5) years ending on 13^th October 2002 with four (4) successive options of renewal each for a term of five (5) years.

The Respondent failed to exercise the option contained in the Property Management Agreement and the Letting Authorisation Agreement the consequences of which was that each document ended by the effluxion of time on 13th October 2002.

Notwithstanding the termination of the obligations contained in the documents, the Respondent continued with its commercial operation at the Apartment Complex.

In or about July 2004 a New Community Management Statement was recorded restricting the use of Lots to Accommodation purposes only.

The Respondent was issued with not one (1) but three (3) Notices of Contravention of By-Law which it apparently ignored.

Sections 94(1)(a) and (b) of the Act prescribe:-

"The body corporate for a community titles scheme must -

(a) administer the common property and body corporate assets for the benefit of the owners of lots included in the scheme; and

(b) enforce the community management statement (including any by-laws for the scheme);"

Section 94(2) of the Act prescribes that the Body Corporate must act reasonably in anything it does under Subsection (1).

Section 152(1)(a) of the Act prescribes:-

"The body corporate for a community titles scheme must -

(a) administer, manage and control the common property and body corporate assets reasonably and for the benefit of lot owners."

The word "must" has been used by the draftsmen in both Sections 94 and 152 of the Act.

"Must" is a word of absolute obligation and clearly has a mandatory effect. Posner -v Collector for Interstate Destitute Persons (Victoria) [1946] HCA 50; (1947) 74 C.L.R. 461 [H.C.] per Williams J. at 490-1; Weightman -v- Gold Coast City Council [2003] QPELR 43; (2003) 2 Qd. R. 441 [C.A.].

The draftsman in Section 94(1)(a) has included the words - "for the benefit of the owners of the lots" whilst in Section 152(1)(a) has incorporated the words - "for the benefit of lot owners". Both these phrases in my view have the same meaning. That meaning being for the benefit of all Lot owners.

The draftsman has also incorporated the word "reasonably".

The Courts have since at least 1851 wrestled with the interpretation of this word. In Booth -v- Clive (1851) 10 C.B. 827 at 834, 837: 84 RR 795 at 799 - 800 Cresswell J. in delivering the judgment of the Court consisting of himself, Williams J and Jervis Ch. J. said - The Lord Chief Justice told the jury, that ........... if "reasonably" meant anything else than "in good faith" it meant, "according to this reason", as contradistinguished from "caprice".

The English Court of Appeal in Re A Solicitor 1945 1 K.B. 368 at 371 said:-

"The word "reasonable" has in law the prima facie meaning of reasonable in regard to those existing circumstances of which the actor, called on to act reasonably, knows or ought to know."

In Opera House Investment Pty Ltd -v- Devon Buildings Pty Ltd [1936] HCA 14; (1936) 55 C.L.R. 110 [H.C.] Latham C.J. at 116 said:-

"The word "reasonable" has often been declared to mean "reasonable in all the circumstances of the case." The real question, in my opinion, is to determine what circumstances are relevant. In determining this question regard must be paid to the nature of the transaction. A circumstance which has no relation to the property which was the subject matter of the transaction but which depended entirely upon the person or position or personal desires of the owner of the property, would not, in my opinion, be a relevant circumstance in determining what was reasonable."

On reviewing the case put by the parties in their respective Submissions, the conduct of the parties in responding to my directions, the contents of the documents subsequently provided and my statement of Adjudicator’s Reasons for Decision, I am of the view that the Applicant has at all material times acted reasonably for the benefit of all Lot owners.


B. CONDUCT OF THE PARTIES IN RELATION TO THE ADJUDICATION

Written Directions were given to the parties’ representatives by facsimile transmission on Tuesday, 22^nd February 2005 requiring the parties to provide identified documentation and information by 4.00 p.m. Wednesday, 2^nd March 2005.

Neither of the parties through their representatives provided the information and documentation required by the Direction.

On Tuesday, 8^th March 2005 a further Direction was given requiring the parties through their representatives to comply with the Direction dated 22^nd February 2005 by 4.00 p.m Wednesday, 16^th March 2005.

On Thursday, 10^th March 2005 the Respondent’s Lawyers McCullough Robertson forwarded a letter dated 9^th March 2005 the last of paragraph which states:-

"We apologise for the oversight in not responding and assure you the relevant material will be submitted by 16 March 2005."

No material was received from McCullough Robertson and accordingly the Adjudication proceeded without the benefit of the documentation and information sought from the Respondent.

McCullough Robertson has not provided any explanation for its failure to honour its assurance.

On 16^th March 2005 Challenge Strata Management the representative of the Applicant sought and was granted an extension until the close of business on Friday, 18^th March 2005 to comply with the Directions dated 22^nd February 2005 and 8^th March 2005 respectively.

Challenge Strata Management complied with the Directions at approximately 10.03 a.m. on Friday, 18^th March 2005.

C. SUCCESS OR OTHERWISE OF EACH PARTY IN ATTAINING THE RELIEF SOUGHT

The Applicant was wholly successful in obtaining the relief it sought.

The Respondent was totally unsuccessful in obtaining any of the relief it sought in the Adjudication.


EXERCISE OF DISCRETION

There is a settled practice of the Courts that in the absence of special circumstances, a successful litigant should receive his costs and that it is necessary to show some grounds for exercising the discretion of refusing an order which would give them to him and that discretion must be judicially exercised. Donald Campbell & Co -v- Pollack (1927) A.C. 732 [H.L.] in particular Viscount Cave L.C. at 809, reaffirming the decision in Ritter -v- Godfrey (1920) 2 K.B. 47 [C.A.[. See also Chalet Holmes Pty Ltd -v- Kelly (1978) Qd. R. 389 [Connolly J.] at 393.

This practice is in my view a good yardstick by which one measures the accuracy of one’s reasoning for exercising the discretion as to costs.

It appears to me that the Respondent’s conduct solely precipitated the dispute which has led to this Specialist Adjudication. Such conduct one may say in retrospect was provocative at the very least.

The Respondent’s conduct throughout the Adjudication was nothing less than contemptuous. The Respondent not only ignored both Directions but its legal representatives proffered a written assurance which was dishonoured without explanation.

The meaning ascribed to the word "assure" by the Macquarie Dictionary includes:-

1. To declare earnestly to; inform or tell positively.
2. To make one sure or certain; convince, as by a promise or declaration.
3. To make (a future event) sure; ensure: This assures the success of our work.
4. To secure or confirm; render safe or stable: To assure a persons position.
5. To give confidence to; encourage.

I am of the view that the costs of the Adjudication should be paid by the Respondent.


QUANTIFICATION OF COSTS

Section 280(2) of the Act prescribes:-

"Unless the adjudicator otherwise orders, the applicant is responsible for the costs of the adjudication."

I consider the critical words of this provision to be:-

"the costs of the adjudication."

The word "adjudication" is not defined in the Act nor any of the Modules. Neither is that word defined in the Acts Interpretation Act 1954.

Similarly the word "costs" is not defined in the Act, the Modules or the Acts Interpretation Act 1954.

Rule 679 of the Uniform Civil Procedure Rules 1999 defines the expression "costs of the proceeding" as:-

""Costs of the proceeding" mean costs of all the issues in the proceeding and includes-

(a) costs ordered to be costs of the proceedings; and
(b) costs of complying with the necessary steps before starting the proceeding; and
(c) costs incurred before or after the start of the proceeding for successful or unsuccessful negotiations for settlement of the dispute."

The Uniform Civil Procedure Rules 1999 completely revised the Rules for the Courts of Queensland namely Supreme Court, District Court and Magistrates Court. Those Rules commenced on 1^st July 1999 and were part of a new regime introduced by the Civil Justice Reform Act 1998. Whilst those Rules do not apply to Adjudication pursuant to the provisions of the Body Corporate and Community Management Act 1997 they provide guidance as to possible meanings of words and phrases.

Consequently one cannot say that the content of Rule 679 of the Uniform Civil Procedure Rules to which I have referred is apposite in my deliberations regarding the express - "costs of the adjudication" in Section 280(2) of the Act.

In the Common Law Courts and Courts created by statute, whether superior or inferior, terms used in relation to orders for costs include "costs of the action", "costs of the trial" and "costs of and incidental to the action" are not uncommon. Phillips and Trebilco Bills of Costs with Precedents, 3^rd Ed. p79; Oliver, Law of Costs p3.

The expression "precedings" has now replaced the expression "action".

Isaacs ACJ and Starke J in The Minister for Home and Territories -v- Smith [1924] HCA 41; (1924) 35 C.L.R. 120 at 130 said:-

"It thus appears that the two phrases "costs of" and "costs of and incidental to," when used with respect to an arbitration of this nature, cover the same ground;"

In Smith’s case a disputed claim for compensation in respect of land compulsory acquired by the Commonwealth arose. By agreement the complaint was referred to the Arbitration of a Justice of the High Court. The agreement provided that "the costs of the arbitration and award shall be in the discretion of the arbitrator, who may direct to and by whom and in what manner those costs or any part thereof shall be paid, and may ........... direct a taxation thereof by the proper taxing officer of the said High Court."

The Current Commercial Arbitration Act 1990 S.34(1) prescribes:-

"Unless a contrary intention is expressed in the arbitration agreement, the costs of the arbitration (including the fees and expenses of the arbitrator or umpire) shall be in the discretion of the arbitrator or umpire, who may -

(a) direct to and by whom and in what manner the whole or any part of those costs shall be paid; and

(b) tax or settle the amount of costs to be so paid or any part of those costs; and

(c) award costs to be taxed or settled as between party and party or as between solicitor and client."

Section 34(2) of the Commercial Arbitration Act 1990 prescribes:-

"Any costs of the arbitration (other than the fees or expenses of the arbitrator or umpire) that are directed to be paid by an award shall, except so far as taxed or settled by the arbitrator or umpire, be taxable in the Court."

The Body Corporate and Community Management Act 1997 does not contain any provisions identical to or similar to those contained in the Commercial Arbitration Act 1990 or the Uniform Civil Procedure Rules 1999 concerning the quantification of costs. The Act is silent on the quantification of "the costs of the adjudication" and who is to perform such task.

Section 239 of the Act prescribes how an application for Adjudication is to be made to the Commissioner. If the Adjudication is to be conducted by a Specialist Adjudicator as required by the Act eg. Section 265 the Applicant must disclose in the Application certain information regarding the Adjudicator. I have been provided with a copy of that form. In the information sought from me by the Applicant I disclosed to the Applicant my hourly rate which was inadvertently shown as $485.00 inclusive of GST instead of $385.00 inclusive of GST. A copy of my letter was provided by the Applicant to the Commissioner with the Dispute Resolution Application.

The costs payable to me as the Adjudicator are in my view clearly costs of the Adjudication. Particulars of those costs are:-

Date Particulars Amount
$

09.02.05

Peruse letter from Acting Commissioner for Body Corporate and

and Community Management, scan brief - 5 minutes 29.00

10.02.05 Formal letter to parties - 5 minutes 29.00

14.02.05

Peruse formal letter from McCullough Robertson - 1 minute 6.00

21.02.05 Peruse and consider brief - 60 minutes 350.00


22.02.05 Settle Directions to the parties - 30 minutes 175.00

24.02.05 Inspect site - 45 minutes 262.00

08.03.05 Settle further Directions to the parties - 15 minutes 87.50

10.03.05 Peruse formal letter from McCullough Robertson - 1 minute 6.00

16.03.05 Peruse formal letter from Challenge Strata Management - 1 minute 6.00

Formal response to Challenge Strata Management - 1 minute 6.00

18.03.05

Peruse letter from Challenge Strata Management and six (6)

documents provided - 45 minutes 262.00

21.03.05 Settle Statement of Adjudicator’s Reasons for Decision and
to Orders - 22 pages - 8 hours claimed 2,800.00
23.03.05

11.04.05

Settle Statement of Adjudicator’s Reasons for Decision as to

Costs - 5 pages - 3 hours claimed 1,050.00

5,068.50

GST 506.85

TOTAL $ 5,575.35

As I have previously said the Act is absolutely silent on the quantification of the costs of the Adjudication.

The Act sets out in Sections 1, 2 and 3 the Primary Object of the Act, how the Primary Object is to be achieved and Secondary Objects respectively. Section 4(h) prescribes as one of the Secondary Objects - "To provide an efficient and effective dispute resolution process."

To me the use of the words - "the applicant is responsible for the costs of the adjudication" immediately after the words "Unless the adjudicator otherwise orders" signifies that unless the Adjudicator otherwise orders the Applicant is primarily responsible for and liable to pay the costs of the Adjudication.

It would be absurd if the Legislature intended the interpretation of Section 280(2) was that the Applicant be responsible for and liable to pay the Respondent’s costs of the Adjudication unless the Adjudicator otherwise ordered.

There is no power given to an Adjudicator to award costs of an Adjudication unless the Adjudication be a Specialist Adjudication. I respectfully adopt the reasoning of Adjudicator C.G. Young in Aussie Resort [2000] QBCCMCmr 33 (27 January 2000) in this regard subject to the provisions of the current Act and his examination of the cost free nature of the Dispute Resolution process.

As the Legislature has seen fit not to clearly articulate matters relating to "the costs of the Adjudication" I am of the view that the only costs which can be dealt with under that expression is the Adjudicator’s costs of adjudicating the dispute between the parties.



Consequently the Applicant’s submission that the Respondent pay its costs of and incidental to the Applicant’s costs of the Adjudication must fail.

ORDER 1. The Respondent is responsible for the costs of the Adjudication. 2. The costs of the Adjudication are fixed in the sum of $5,575.35. 3. The Respondent pay the costs of the Adjudication by 4.00 p.m. Friday, 29th April 2005.

Stephen J English
Chambers
13^th April 2005