Tracey Rundle, Partner

The decision of the Commercial and Consumer Tribunal delivered on 20 May 2009 provides a timely reminder of the factors considered by the Tribunal in determining whether indemnity costs should be awarded against a party.

In the recent case of Sheppard and the Residents of Urimbirra Retirement Village v Milstern Retirement Services Pty Ltd, John Sheppard and certain residents of Urimbirra Retirement Village sought orders that their costs of a previous application before the Tribunal concerning GST and accounting requirements under the Retirement Villages Act 1999 be paid by the village operator, Milstern, on an indemnity basis.

Both parties filed written submissions and agreed that the issue of costs be determined on the papers.

Issues considered by the Tribunal

The Tribunal set out and considered the relevant provisions in the Commercial and Consumer Tribunal Act 2003 when determining an application for costs.

Whilst the application was initially heard over a 2 day period, it was then re-listed for a further hearing approximately a week and a half later. In the week prior to the further hearing date, the applicants made an offer of settlement to Milstern which was open for acceptance for 3 days. The offer was not accepted by Milstern.

The applicants conceded that the offer did not comply with Division 7 of the CCT Act as it was not open for at least 14 days. As such the Tribunal could not make a costs order based on the non-acceptance of a non-compliant settlement offer.

The Tribunal confirmed that the proper approach in determining the issue of costs was to consider the factors listed in Section 71(4) of the CCT Act, these being:

  • outcome of the proceedings;
  • conduct of parties to the proceedings;
  • nature and complexity of the proceedings;
  • relevant strengths of the claims of each party;
  • any contravention of an Act by a party; and
  • anything else the Tribunal considers relevant.

Findings of the Tribunal

The Tribunal placed weight on the fact that in this case, there was substantive non-compliance with the RV Act. It was also a significant factor for the Tribunal that Milstern failed to comply with many aspects of the legislation and took the view that the applicants' claim was fundamentality stronger than that of Milstern.

In considering the issue of any contraventions of any legislative provisions, the Tribunal held:

"Again the evidence is clear that the respondents had ignored, were not aware of or infringed important and significant provisions of the Act that were enacted to regulate the retirement villages industry."

In awarding costs, the Tribunal determined that costs were to be awarded against Milstern but on a standard basis only on the District Court scale and not on an indemnity basis.

The message for retirement village operators

Where an operator is found to have been in breach of significant obligations under the RV Act, such actions will weigh heavily with the Tribunal in any costs application.

In contesting any applications made by residents, operators should carefully assess the likelihood of a costs order against them, particularly where there may have been significant breaches of the RV Act by the operator.

A copy of the full decision can be located at www.tribunals.qld.gov.au/RV/rvDecisions.shtm.

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