Mahoneys secures costs for resident manager in landmark QCAT victory

Contributed by Mitchell Downes, MAHONEY LAWYERS – 26 February 2019

Mahoneys secures costs for resident manager in landmark QCAT victory

Recently, Mahoneys acted for a resident manager in a termination dispute with the Body Corporate. The trial lasted 10 days. Our client, the resident manager, was successful in defeating the body corporate’s attempts to terminate the management rights agreement.

In a landmark decision, the Queensland Civil and Administrative Tribunal (QCAT) ordered the Body Corporate to pay the resident manager’s costs of the trial, fixed in a sum exceeding $300,000.

Are costs automatically awarded in QCAT proceedings?

No. The normal position in matters before QCAT is that each party bears their own costs. A party must demonstrate to QCAT that the “interests of justice” require making a cost order. QCAT is empowered to take into account a broad range of matters when deciding if the interests of justice require a cost order. They include the manner in which the proceeding was conducted by a party and the respective financial position of the parties.

Why were costs awarded in this case?

In the trial judgment, QCAT found that the Body Corporate had set out to terminate the management rights because the Body Corporate perceived a financial advantage in doing so. In the cost judgment, QCAT held that a party who attempts to terminate a contract for a collateral purpose (e.g. a perceived financial advantage) and is unsuccessful in court proceedings should not escape a cost order.

The resident manager took out considerable loans to fund the proceedings. QCAT found that the resident manager should not be required to service and repay the loans in the wake of the Body Corporate’s failed attempt to secure a termination.

The Member found that the Body Corporate unnecessarily disadvantaged the resident manager by ceasing to pay the resident manager’s salary while the matter was awaiting trial. The resident manager successfully applied for a mandatory injunction to QCAT to require the body corporate to pay the resident manager’s remuneration.

Why were costs fixed?

QCAT’s legislation requires the tribunal to fix costs where it is appropriate to do so. Here, there was common ground on the evidence that 65% of the costs incurred by the resident manager was a good estimate of the amount that would be been awarded in a cost assessment.

What are the consequences for Bodies Corporate?

Here, the Body Corporate spent around $470,000 in legal fees to defend the termination attempt.

In total, the attempt to terminate the management rights has cost the body corporate around $777,000.

A landmark victory for Mahoneys

The Mahoneys team, led by Mitchell Downes, Partner, secured a total victory for this resident manager.

The cost order against the body corporate is particularly noteworthy given that QCAT has a statutory predisposition against costs.