[7] The State of Queensland says that Rainbow should pay its costs of the application pursuant to s 102 of the QCAT Act or s 47(2) or s 48(2)(c) of the QCAT Act on an indemnity basis or alternatively in an amount to be fixed.

[8] The State says that Rainbow should not have filed the application and that the proceedings were groundless or without any prospect of success, and that Rainbow declined to withdraw the application despite being invited to do so. The State says that Rainbow acted unreasonably in not withdrawing the proceedings.

[9] Rainbow says that it brought the claim on the basis of its belief that it had a genuine claim against the State. Rainbow refers to the financial circumstances of the parties as being "totally unbalanced" and says that it did not have the financial resources to obtain legal advice prior to commencing the proceeding.

Should Rainbow be ordered to pay the State's costs?

[10] It is readily apparent that what Rainbow is saying is that it did not realise when commencing the proceeding that the claim was bound to fail for non-compliance with the relevant provisions of the QBCC Act. Although the submissions do not express it thus, Rainbow did not have the financial capacity to seek legal advice before filing the application for domestic building dispute and if it had received legal advice presumably would have proceeded differently. All of this is, it should be noted, with the benefit of hindsight.

[11] The State's solicitors wrote to Rainbow on 15 September 2016, some two weeks after the application was filed in the Tribunal, in which they advised:

We hereby put you on notice that our client disputes the entirety of your claim and intends to file a counter application within the time prescribed or otherwise specified by the Tribunal. In that regard our client maintains that the Tribunal does not have jurisdiction to deal with your claim, and in any event the dispute must be determined in accordance with clause 47 of the Contract between the parties.[9]

[12] In a further letter from the State's solicitors to Rainbow on 19 September 2016, the respondent's position was articulated in more detail. The State's assertions that the dispute was a major commercial building dispute, that the State did not consent to the Tribunal deciding the dispute and that the Tribunal did not have jurisdiction to hear and decide the dispute, were clearly set out. Rainbow was again invited to withdraw the application.

[13] The claim by Rainbow Builders in the Tribunal was one that could never succeed and was fundamentally flawed from its inception. The claim was always one in respect of a major commercial building dispute, the State at no time consented to the Tribunal deciding the dispute and thus the Tribunal never had jurisdiction in respect of the application.

[14] The State has been entirely successful in resisting the claim by Rainbow, and Rainbow has been entirely unsuccessful in prosecuting the claim. There is no basis to deny the State the recovery of its costs. The State should have its costs of the proceeding and the application for miscellaneous matters filed 29 September 2016 (the strike out application).

[15] The State seeks its costs on the indemnity basis. In Colgate-Palmolive Company v Cussons Pty Ltd[10] Sheppard J held:

In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis.

The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require". Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: "the categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata.

5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes [1989] FCA 540; (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or justice."

[16] The justification for an award of indemnity costs requires some special or unusual feature of the particular case.[11]

[17] In my view, the circumstances do not warrant the making of an order for costs on the indemnity basis. Rainbow is self-represented. It has said in submissions that it held the belief that the claim was a proper one. There is nothing to suggest that Rainbow knew before it commenced the proceeding that the application was misconceived. Whilst the State of Queensland's solicitors communicated with Rainbow and articulated why the State considered the application could not succeed, it is reasonable to assume that Rainbow continued to labour under the erroneous belief that the proceeding could be heard and decided by the Tribunal. This is not an appropriate case in which to exercise the discretion to award costs on the indemnity basis.

[18] The State should be entitled to recover its costs of and incidental to the proceeding, including the strike out application, on the standard basis.

[19] The State claims recovery of the costs and outlays it paid to its solicitors, including counsel's fees, in defending the proceeding and bringing the strike out application. Those solicitors' costs and outlays, including counsel's fees, total $14,471.13.

[20] Rainbow says that any assessment of costs should be on the applicable Magistrates Court scale of fees.[12] The submissions made by Rainbow as to the hourly rate charged by the State's solicitors are not particularly relevant given that I am not prepared to allow costs on the indemnity basis.

[21] Rainbow says that amounts claimed for communications or consultations between an employed solicitor and a partner should not be allowed. Rainbow also says that there is duplication between the work undertaken by the solicitor and the work undertaken by counsel. Putting to one side the issues relevant to whether the claim should proceed to arbitration in accordance with the terms of the contract, the quantum of the claim by Rainbow is within the jurisdiction of the Magistrates Court and it is on the scale of costs in that court (for claims over $50,000), that costs should be assessed.

[22] I have perused carefully the itemised invoices submitted by the State in support of its claim for costs.[13] The amounts claimed are time charged, that is, they are calculated by reference to time spent in undertaking the legal work. The appropriate scale allows for recovery of costs on an item basis and an hourly rate depending upon the nature of the work undertaken. By way of example, the perusal of emails is claimed at $52.50 per email. An ordinary letter, sent or received, is recoverable under the scale in the amount of $28.90. Additionally, much of the work claimed in the invoices is not particularised and it is therefore difficult to undertake a detailed assessment of the costs. The hourly rate charged by the State's solicitors is $525.00 per hour for a partner and $451.00 per hour for a senior associate. Part 3, Schedule 3 of the UCPR allows an hourly rate for work performed by a solicitor involving skill or legal knowledge of $194.40. Aside the difficulties in taking a time costed bill and applying an item based scale to an assessment of the amounts claimed, there is clearly a significant difference between the hourly rates identified in the solicitors' tax invoices and the rate recoverable under the scale.

[23] Notwithstanding these difficulties, I am not prepared to direct that the State undertake the lengthy and expensive process of preparing and submitting an itemised bill of costs. Such a direction would not be consistent with the requirement that the Tribunal deal with matters in a way that is accessible, fair, just, economical, informal and quick.[14] If the Tribunal makes a costs order, the costs must be fixed if possible.[15] In light of the foregoing, I assess the standard costs and outlays at $8,839.50.

[24] I order that Rainbow Builders Pty Ltd pay to the State of Queensland through the Department of Housing and Public Works the costs of and incidental to the proceeding on the standard basis fixed in the amount of $8,839.50 within fourteen (14) days.

[6] In The Will of Bruce George Gillespie Deceased (No 2) [2012] QSC 369.

[7] Lewis v Hillhouse & Anor [2005] QSC 78.

[8] Lyons v Dreamstarter Pty Ltd [2012] QCATA 071 citing Lyons v Dreamstarter Pty Ltd [2011] QCATA 142.

[9] Exhibit MTP-01 to affidavit of Minas Patrick sworn 20 October 2016.

[10] (1993) 46 FCR 225; [1993] FCA 531.

[11] LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo [2013] QCA 305.

[12] Uniform Civil Procedure Rules 1999, Schedule 3, Part 3, Costs (over $50,000).