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DSGN Kartell Pty Ltd v Pathmaperuma; DSGN Kartell Pty Ltd v Hennig Bros Construction Pty Ltd; DSGN Kartell Pty Ltd v Craig Russell Stranger

 

[2020] QCAT 211

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

DSGN Kartell Pty Ltd v Pathmaperuma & Anor; DSGN Kartell Pty Ltd v Hennig Bros Construction Pty Ltd; DSGN Kartell Pty Ltd v Craig Russell Stranger t/as ACE Space Design [2020] QCAT 211

PARTIES:

BDL303-19:

 

DSGN KARTELL PTY LTD

(applicant)

 

v

 

prasanna anuradha pathmaperuma

 

(first respondent)

 

SAMARAGE HASITHA PATHMAPERUMA

(second respondent)

 

BDL304-19:

 

DSGN KARTELL PTY LTD

(applicant)

 

v

 

HENNIG BROS CONSTRUCTION PTY LTD

(respondent)

 

BDL305-19:

 

DSGN KARTELL PTY LTD

(applicant)

 

v

 

CRAIG RUSSELL STRANGER T/AS ACE SPACE DESIGN

 

(respondent)

APPLICATION NO/S:

BDL303-19; BDL304-19; BDL305-19

MATTER TYPE:

Building matters

DELIVERED ON:

5 June 2020

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

ORDERS:

In BDL303-19:

DSGN Kartell Pty Ltd pay Prasanna Anuradha Pathmaperuma’s and Samarage Hasitha Pathmaperuma’s costs of the proceedings to be agreed or failing agreement to be assessed on the standard basis on the District Court scale as if the proceedings had been brought in that court.

In BDL304-19:

DSGN Kartell Pty Ltd pay Hennig Bros Construction Pty Ltd’s costs of the proceedings to be agreed or failing agreement to be assessed on the standard basis on the District Court scale as if the proceedings had been brought in that court.

In BDL305-19:

DSGN Kartell Pty Ltd pay Craig Russell Stranger t/as ACE Space Design’s costs of the proceedings to be agreed or failing agreement to be assessed on the standard basis on the District Court scale as if the proceedings had been brought in that court.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – DISCONTINUANCE OF OR WITHDRAWAL FROM PROCEEDING – where the applicant withdrew proceedings before final determination – where respondents sought order for costs on an indemnity basis –whether applicant acted reasonably in bringing the proceedings – where no special or unusual feature as to allow costs on an indemnity basis – where costs awarded on a standard basis

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – JURISDICTION – GENERALLY – whether dispute is a domestic building dispute for the purposes of determining the tribunal’s power to award costs under an enabling Act or the QCAT Act – where the applicant prepared house plans – where the applicant is a building contractor – where jurisdiction conferred

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – JURISDICTION – GENERALLY – whether dispute is a domestic building dispute and or a commercial building dispute for the purposes of determining the tribunal’s power to award costs under an enabling Act or the QCAT Act – where no contractual relationship between the applicant and the respondents – where no jurisdiction to hear and decide the dispute – where power to award costs under the QCAT Act

Architects Act 2002 (Qld), s 8(1)

Queensland Building and Construction Commission Act 1991 (Qld), s 75, s 76, s 77, s 79, sch 1B, s 1, s 4, sch 2

Queensland Building and Construction Commission Regulation 2018 (Qld), sch 2

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 48(1), s 100, s 102(1), s 103(3)(c), s 105, sch 3

Queensland Civil and Administrative Rules 2009 (Qld), r 57A, r 65(1), r 66(1), r 86

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

DBI Group Pty Ltd v Wayne Leslie Banks T/A Wayne Banks Concreting [2017] QCAT 348

Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354

Jones v Jones [2012] QSC 342

Liverpool City Council v Estephan [2009] NSWCA 161

Mead v Watson as Liquidator for Hypec Electronics (2005) 23 ACLC 718

Oshlack v Richmond River Council (1998) 193 CLR 72

Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

REPRESENTATION:

 

Applicant:

In BDL303-19; BDL304-19; BDL305-19:

Simpsons Solicitors

Respondent:

In BDL303-19:

Stonegate Legal

In BDL304-19:

Mills Oakley

In BDL305-19:

Clyde & Co

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

  1. [1]
    The applicant, DSGN, commenced separate proceedings for a domestic building dispute against Hennig (‘the Hennig proceedings’),[1] ACE (‘the ACE proceedings’)[2] and Mr and Mrs Pathmaperuma (‘the Pathmaperuma proceedings’).[3] I will refer to these proceedings collectively as the tribunal proceedings. DSGN subsequently withdrew each of the applications. The respondents seek their costs of each of the proceedings.

The claims by DSGN

  1. [2]
    Mr and Mrs Pathmaperuma owned land in Buderim. They entered into an agreement with DSGN for the provision of architectural services, specifically the design of a home to be constructed on their land. DSGN prepared plans (‘the original plans’). DSGN and the Pathmaperumas fell into dispute. The Pathmaperumas claimed that DSGN was not appropriately licensed to perform the architectural services and sought to recover monies paid to DSGN under the contract. The Pathmaperumas claimed that a registered architect did not undertake the work. Proceedings were commenced by the Pathmaperumas in the Magistrates Court (‘the Magistrates Court proceedings’). The Magistrate Court proceedings were discontinued following agreement between the parties.
  2. [3]
    DSGN says that Hennig subsequently constructed a home designed by ACE based on the original plans prepared by DSGN. Each of the applications for domestic building dispute filed by DSGN are voluminous, attaching large amounts of material. DSGN asserts:
    1. (a)
      ACE entered into a contract with the Pathmaperumas and/or Hennig (either during the currency of, or after the end of, the contract between DSGN and the Pathmaperumas) for the design of a home (‘the new plans’) based on, and referencing, the original plans;
    2. (b)
      The Pathmaperumas entered into a contract with Hennig for the construction of a home in accordance with the new plans;
    3. (c)
      Hennig undertook construction of the home in accordance with the new plans;
    4. (d)
      Each of the respondents thereby infringed DSGN’s copyright and ‘moral rights’ in respect of the original plans.
  3. [4]
    In respect of each of the respondents DSGN claimed:
    1. (a)
      As against the Pathmaperumas an award of damages of $800,000.00 being damages for: ‘unauthorised access and theft of contents from (DSGN’s) Google Drive’; infringement of copyright; invasion of privacy; breach of confidence; emotional distress;
    2. (b)
      As against each of ACE and Hennig an award of damages of $400,000.00 being damages for: infringement of copyright; breach of confidence; negligence; emotional distress.

The respondents’ responses in the present proceedings

The Pathmaperumas

  1. [5]
    The Pathmaperumas responded to DSGN’s application as follows:
    1. (a)
      QCAT did not have jurisdiction to hear and decide a claim for breach of copyright;
    2. (b)
      The dispute was not a ‘building dispute’ within the meaning of that term in the Queensland Building and Construction Commission Act 1991 (Qld) (‘QBCC Act’) and, accordingly, QCAT did not have jurisdiction to hear and decide the matter;
    3. (c)
      The contract was unenforceable by DSGN as it was not licensed to undertake building work and by operation of s 42 of the QBCC Act the contract between DSGN and the Pathmaperumas was illegal and unenforceable;
    4. (d)
      Even if the dispute was a building dispute, DSGN had failed to comply with s 77(2) of the QBCC Act before commencing the tribunal proceedings;
    5. (e)
      QCAT did not have jurisdiction in respect of the claims by DSGN for breach of privacy or breach of intellectual property;
    6. (f)
      A deed of settlement entered into by the Pathmaperumas and DSGN in respect of the Magistrates Court proceedings was a complete bar to DSGN’s claim.

ACE

  1. [6]
    ACE responded to DSGN’s claim as follows:
    1. (a)
      ACE did not infringe DSGN’s copyright in the original plans;
    2. (b)
      ACE denied the allegations of negligence and unconscionable conduct.

Hennig

  1. [7]
    Hennig responded to DSGN’s claim as follows:
    1. (a)
      QCAT did not have jurisdiction to hear and decide the matter;
    2. (b)
      DSGN had failed to comply with s 77(2) of the QBCC Act prior to commencing the tribunal proceedings.

The applications to dismiss

  1. [8]
    Each of the respondents filed an application to dismiss the proceedings brought by DSGN. The grounds relied upon by the respondents may be summarised as follows:

The Pathmaperumas[4]

  1. (a)
    The tribunal did not have jurisdiction to hear and decide the dispute in relation to the claim for breach of copyright;
  2. (b)
    The claim by DSGN was not a ‘building dispute’ on the basis that the dispute did not relate to ‘reviewable domestic work’;
  3. (c)
    Even if the dispute was a building dispute DSGN had not complied with s 77(2) of the QBCC Act before commencing the proceedings.

ACE[5]

  1. (a)
    The tribunal did not have jurisdiction to hear and decide the claim for breach of copyright;
  2. (b)
    DSGN failed to comply with s 77(2) of the QBCC Act prior to the commencement of the proceedings.

Henning[6]

  1. (a)
    The dispute the subject of the proceedings was not a domestic building dispute;
  1. (b)
    DSGN was neither a building contractor nor a building owner;
  2. (c)
    The building work, the subject of the dispute, was in any event ‘excluded building work’;
  3. (d)
    DSGN failed to comply with s 77(2) of the QBCC Act before commencing the proceedings.
  1. [9]
    The tribunal made directions for the parties to file submissions in respect of the applications to dismiss. Before the applications were determined, DSGN filed Notices of withdrawal in respect of each of the proceedings.[7]

The consequences of withdrawing an application or referral

  1. [10]
    Proceedings in the tribunal may end in a number of ways. Chapter 2, Part 5 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) is concerned with proceedings being brought to an early end. By s 46(1) of the QCAT Act:

An applicant may, in the way stated in the rules, withdraw the applicant’s application or referral for a matter before the matter is heard and decided by the tribunal.

  1. [11]
    Rule 57A of the Queensland Civil and Administrative Rules 2009 (Qld) (‘QCAT Rules’) provides:

57A Notice of withdrawal if tribunal’s leave not required

  1. (1)
    This rule applies if an application or referral may be withdrawn without the leave of the tribunal.

Note—

Section 46(2) of the Act states the applications or referrals that require the tribunal’s leave before they can be withdrawn.

  1. (2)
    An applicant may withdraw the applicant’s application or referral by—
  1. (a)
    filing a notice in the approved form; and
  1. (b)
    giving a copy of the notice to—
  1. (i)
    each other party to the proceeding; and
  1. (ii)
    each other person who was given a copy of the application or referral for the proceeding under section 37 of the Act; and

(iii) any other person directed by the tribunal to be given notice of the withdrawal.

  1. [12]
    In DBI Group Pty Ltd v Wayne Leslie Banks T/A Wayne Banks Concreting[8] I made the following observations in relation to Notices of withdrawal and costs:

[17] Unlike the rules relating to the discontinuance of proceedings under the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), the QCAT Act and the Queensland Civil and Administrative Rules 2009 (Qld) (“QCAT Rules”) are silent on the issue of costs where an application is withdrawn. This is perhaps unsurprising given the general contraindication regarding the awarding of costs found at s 100 of the QCAT Act.

[18] An applicant in the Tribunal may file a Notice of withdrawal of an application or referral at any stage of a proceeding before the matter is heard and decided. Certain applications or referrals may only be withdrawn with the leave of the Tribunal. The withdrawal of an application for a building dispute does not require leave. To withdraw an application for a building dispute an applicant must file and serve on each other party to the proceeding a notice in the approved form. Once an applicant complies with the requirements under the QCAT Act and Rules for withdrawal, the proceeding is at an end. The Tribunal may however award costs under the QCAT Act or an enabling Act at any stage of a proceeding or after the proceeding has ended.

[19] The consequences of the withdrawal of an application for a building dispute may include an application for costs by the other party.

[20] Rule 307(2) of the UCPR provides that if a party discontinues or withdraws with the court’s leave, the court may make the order for costs it considers appropriate. In Jones v Jones McMeekin J, in considering the issue of costs pursuant to s 307(2) of the UCPR, referred to the ‘comprehensive summary of the considerations that should influence the exercise of the discretion in a case where one party withdraws’ found in Johnson v Clancy. Not all of the considerations identified in Johnson are relevant to proceedings for building disputes in the Tribunal, however (and subject to some appropriate modification) they include:

a) Costs discretions are truly discretionary and there are no absolute rules; the discretion must be exercised judicially;

b) The purpose of a costs order is to compensate, or indemnify, the person in whose favour it is made, not to punish the person against whom it is made;

c) Generally, there must be some proper justification, sound positive ground, or a good reason, for departing from the ordinary position that a successful party is entitled to recover their costs of a proceeding;

d) Circumstances which might support a departure from the ordinary position include where the proceedings have been rendered unnecessary by circumstances beyond the applicant’s control; where the applicant achieved practical success in the proceedings; or where costs have been significantly increased by the unreasonable conduct of the respondent. If there is to be a departure from the ordinary position regarding costs, it should be done in a particularized, and principled way;

e) Where the proceedings are discontinued prior to any hearing on the merits, the Tribunal cannot try a hypothetical action between the parties to determine the question of costs. At the time of withdrawal, usually it will be impracticable to assess the eventual prospects of success in the action;

f) It may be necessary to analyse the whole of the proceedings to determine the appropriate costs order. A relevant consideration is whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them; all the relevant circumstances, and not just the fact of discontinuance, should be considered; thus, the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs;

g) In a particular case, it might be appropriate for the Tribunal, in its discretion, to consider the conduct of the respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation;

h) It is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Tribunal’s discretion otherwise than by an award of costs by the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs;

i) Where the proceedings are discontinued after interlocutory relief has been granted, the Tribunal may take into account the fact that that interlocutory relief has been granted;

j) There is a risk that the subjective motivations of the applicant in discontinuing may be put forward as a basis for some other order.  Except to the extent that such views may have been put before the respondent, for example as a basis for settlement, and are established as such on the evidence, subjective considerations of one party will generally be immaterial, so that the discretion will be exercised on the basis of the objective circumstances established on the evidence;

k) The Tribunal is required to make such order as it thinks just in the particular circumstances of the case.

[21] Although the above considerations arise out of the provisions of the UCPR, rule 307(2) is concerned with the exercise of the discretion to award costs where a proceeding is discontinued or withdrawn. Accordingly, the discretionary considerations are directly relevant and applicable in proceedings in the tribunal in circumstances where the tribunal is required to exercise a broad general discretion, judicially, and not upon irrelevant or extraneous considerations but upon facts connected with or leading up to the litigation. (footnotes omitted)

  1. [13]
    The principles to which I referred in DBI Group are also relevant in circumstances when considering awarding costs pursuant to s 102(1) of the QCAT Act.

Jurisdiction to award costs

  1. [14]
    Section 100 of the QCAT Act provides that, other than as provided under the QCAT Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding. The relevant enabling Act falling for consideration is the QBCC Act.
  2. [15]
    Section 77 of the QBCC Act provides:

77 Tribunal may decide building dispute

  1. (1)
     A person involved in a building dispute may apply, as provided under the QCAT Act, to the tribunal to have the tribunal decide the dispute.
  1. (2)
     However, the person may not apply to the tribunal unless the person has complied with a process established by the commission to attempt to resolve the dispute.
  1. (3)
     Without limiting the tribunal’s powers to resolve the dispute, the tribunal may exercise 1 or more of the following powers—

  1. (h)
    award costs.
  1. [16]
    The first issue I must consider is the power of the tribunal to award costs under s 77(3)(h) if a proceeding brought as a building dispute is not, in fact, a building dispute.
  2. [17]
    The substantive jurisdiction of the tribunal is to hear and decide building disputes.[9] A building dispute may be a domestic building dispute[10] or a commercial building dispute.[11] A commercial building dispute may be a major or a minor dispute.[12]
  3. [18]
    Consideration of what is a building dispute involves an examination of the labyrinthine provisions of the QBCC Act and regulations.

Domestic building disputes

  1. [19]
    A domestic building dispute is a claim or dispute relating to the performance of reviewable domestic work, or a contract for the performance of reviewable domestic work, arising between: a building owner and a building contractor; two or more building contractors; or a building owner or a building contractor and one of the following – an architect, an engineer, a surveyor, a quantity surveyor, an electrician or electrical contractor, a supplier or manufacturer of materials used in tribunal work.[13]
  2. [20]
    A domestic building dispute also includes a claim or dispute in negligence, nuisance or trespass related to the performance of reviewable domestic work other than a claim for personal injuries.[14]
  3. [21]
    Reviewable domestic work means ‘domestic building work’.[15] Domestic building work is defined.[16] Domestic building work does not include excluded building work.[17] Excluded building work is defined.[18] However for the purposes of determining the meaning of domestic building work, certain parts of the definition of excluded building work do not apply.[19] Accordingly, design work carried out by an architect, engineer or draftsperson is domestic building work as is the preparation of plans, specifications or bills of quantity for the carrying out of domestic building work.[20]
  4. [22]
    A building owner is defined.[21] A building contractor means a person who carries out, manages, has carried out, has managed or intends to carry out or manage domestic building work.[22]

The power of the tribunal to award costs in building disputes

  1. [23]
    As a creature of statute, the tribunal has only those powers conferred upon it by the QCAT Act and various enabling Acts. In addition, the tribunal has certain, and limited, implied powers.
  2. [24]
    The issue I must consider is whether, if a proceeding is commenced in the tribunal for a building dispute, and the dispute is not in fact a building dispute, costs fall for determination under the QBCC Act or the QCAT Act. I have come to the conclusion that, in such circumstances, the costs provisions of the QCAT Act apply.
  3. [25]
    By s 77(1) of the QBCC Act, a person involved in a building dispute may apply to the tribunal to have the tribunal decide the dispute. The tribunal’s powers to resolve a building dispute, as set out in s 77(3) of the QBCC Act, are broad. However it is important not to confuse jurisdiction on the one hand and the powers conferred upon the tribunal once it has jurisdiction, on the other. To consider the powers of the tribunal before first determining jurisdiction would be to put the cart before the horse. Unless the tribunal has jurisdiction, the powers conferred by an enabling Act cannot be exercised.
  4. [26]
    Section 77(3) of the QBCC Act provides:

Without limiting the tribunal’s powers to resolve the dispute, the tribunal may exercise 1 or more of the following powers …

  1. [27]
    The reference in s 77(3) to ‘the dispute’, is a reference to a building dispute as referred to in s 77(1). Accordingly, in my view, the powers conferred by s 77(3) are not enlivened unless the jurisdictional fact of a ‘building dispute’ is established.
  2. [28]
    In the absence of a ‘building dispute’ the tribunal has no power to award costs pursuant to s 77(3) of the QBCC Act. In such circumstances, costs fall to be determined in accordance with the provisions of the QCAT Act.

Did each of the tribunal proceedings involve a ‘domestic building dispute’?

The Pathmaperuma proceedings

  1. [29]
    I will address first whether the work undertaken by DSGN for the Pathmaperumas was domestic building work.
  2. [30]
    As I have observed, domestic building work does not include excluded building work and excluded building work includes design work carried out by an architect, engineer or draftsperson and the preparation of plans, specifications or bills of quantity for the carrying out of domestic building work. However these categories of excluded building work find their way back into the definition of ‘domestic building work’ by operation of the definitions of ‘reviewable domestic work’ and ‘associated work’.
  3. [31]
    ‘Domestic building work’ includes work associated with the erection or construction of a detached dwelling and work associated with the renovation, alteration, extension, improvement or repair of a home.[23] This is referred to as ‘associated work’. When read together, the result of the various definitions and provisions of the QBCC Act to which I have referred is that design work carried out by an architect, engineer or draftsperson (provided the necessary nexus with ‘domestic building work’ is established) and the preparation of plans, specifications or bills of quantity for the carrying out of domestic building work is ‘associated work’ and thus ‘domestic building work’.
  4. [32]
    Was DSGN an architect, engineer or draftsperson? An ‘architect’ means a person registered as an architect under the Architects Act 2002 (Qld).[24] A ‘draftsperson’ means a person who holds a contractor’s licence authorising the person to prepare plans and specifications for domestic building work.[25]
  5. [33]
    Under the Architects Act 2002 (Qld), only an individual may apply to the board for registration as an architect.[26] DSGN was a corporation. In the material accompanying the Pathmaperumas’ response is a copy of DSGN’s defence filed in the Magistrates Court proceedings. Tellingly, DSGN denies providing architectural services.[27] For present purposes, and in the absence of evidence to the contrary, I accept this denial as the truth.
  6. [34]
    I am satisfied that DSGN did not provide architectural services, that as a corporation it could not be registered as an architect, and therefore DSGN could not be an architect for the purposes of the QBCC Act.
  7. [35]
    A person may hold a ‘Building design – low rise’ licence which entitles the licence holder to prepare plans and specifications for class 1 or class 10 buildings, to prepare plans and specifications for classes 2 to 9 buildings (subject to some restrictions), and to undertake contract administration work in relation to building work designed by the licensee.[28] Such a licence may be held as a contractor or as a nominee supervisor.[29] There is no evidence before me that DSGN held a ‘Building design – low rise’ licence. DSGN was therefore not a draftsperson.
  8. [36]
    There is no suggestion that DSGN was an engineer.
  9. [37]
    I am satisfied that the work undertaken by DSGN was not design work carried out by an architect, engineer or draftsperson.
  10. [38]
    Sub paragraph (c) of the definition ‘excluded building work’ refers to the preparation of plans, specifications or bills of quantity for the carrying out of domestic building work. Unlike sub-paragraph (b) of the definition of ‘excluded building work’, sub paragraph (c) does not specify who must carry out such work to be caught within the definition.
  11. [39]
    Clearly, the work undertaken by DSGN included the preparation of house plans. I am satisfied that the work undertaken by DSGN included the preparation of plans for the carrying out of domestic building work.
  12. [40]
    I am therefore satisfied that DSGN was a person who carried out domestic building work. I find that DSGN was a ‘building contractor’ for the purposes of Schedule 1B of the QBCC Act.
  13. [41]
    Whether DSGN was required to be licensed to carry out such work and, if so, appropriately licensed, is a separate matter and one I will address later in these reasons.
  14. [42]
    The Pathmaperumas say that the tribunal does not have jurisdiction in respect of the claim by DSGN for damages for breach of copyright. The nature of the relief sought by DSGN is not determinative of the cause of action relied upon by it. In the absence of formal pleadings, the issues in dispute in tribunal proceedings are generally identified in the statements of evidence filed by the parties. It is often only after the statements of evidence are filed that the particular cause of action relied upon by a party becomes apparent. I accept that the tribunal does not have jurisdiction in respect of a claim for breach of copyright. However given the early stage at which the proceedings were withdrawn, I am not prepared to find that it was not open to DSGN to pursue another cause of action, one which was within the jurisdiction of the tribunal, including a claim for damages for breach of contract.
  15. [43]
    Whether DSGN was required to be licensed in order to undertake the work pursuant to the contract with the Pathmaperumas involves a consideration of, and findings in relation to, the facts. In the absence of evidence from the parties no such findings can be made. However even if DSGN performed unlicensed building work, this goes to the issue of the enforceability of the contract rather than whether the dispute between the parties was a building dispute.
  16. [44]
    Accordingly I find that the dispute between the Pathmaperumas, as building owners, and DSGN as a building contractor, is a domestic building dispute.
  17. [45]
    It follows that costs in the Pathmaperuma proceedings fall to be determined under the QBCC Act.

The proceedings against Hennig and ACE

  1. [46]
    I am satisfied that both Hennig and ACE were building contractors for the purposes of Schedule 1B of the QBCC Act. I have found that DSGN was also a building contractor for the purposes of Schedule 1B. There was no contractual relationship between Hennig and DSGN or between ACE and DSGN. In order for a dispute to be a claim or dispute relating to the performance of reviewable domestic work or a contract for the performance of reviewable domestic work there must exist the necessary nexus between the substance of the dispute and the performance of the building work or the contract for the performance of the work.
  2. [47]
    I am not satisfied that the necessary nexus exists in respect of the claims by DSGN against either Hennig or ACE. Nor am I satisfied that the claims by DSGN are claims in negligence as referred to in the definition of ‘domestic building dispute’. There is nothing in the material to support the contention that either Hennig or ACE owed a duty of care to DSGN, much less that any such duty was breached.
  3. [48]
    Whether DSGN has a cause of action for breach of copyright against Hennig and/or ACE is not a matter on which a view can be expressed, however the tribunal has no jurisdiction in respect of any such claim.
  4. [49]
    Accordingly, I find that the dispute between DSGN and Hennig and the dispute between DSGN and ACE are not domestic building disputes for the purposes of the QBCC Act.
  5. [50]
    A commercial building dispute is a dispute about reviewable commercial work.[30] Reviewable commercial work means tribunal work other than reviewable domestic work.[31] What is, and what is not, tribunal work is defined.[32] The preparation of plans is tribunal work.[33] A building contractor is defined[34] and includes a person who carries out building work.[35] Building work includes the preparation of plans.[36]
  6. [51]
    For the reasons I have outlined, I am satisfied that the work performed by DSGN was ‘reviewable commercial work’. I am also satisfied that each of DSGN, Hennig and ACE are ‘building contractors’ for the purposes of Schedule 2 of the QBCC Act.
  7. [52]
    Is the dispute a commercial building dispute? As I have observed there was no contractual relationship between Hennig and DSGN or between ACE and DSGN. A claim or dispute relating to the performance of reviewable commercial work or a contract for the performance of reviewable commercial work requires the necessary nexus between the substance of the dispute and the building work or the contract for the performance of the building work. I am not satisfied that the necessary nexus exists in respect of any claim by DSGN against Hennig or any claim by DSGN against ACE. Nor, and for the reasons set out above, am I satisfied that there is any identifiable cause of action by DSGN against Hennig and/or ACE in negligence.
  8. [53]
    Accordingly I find that neither the dispute between DSGN and Hennig nor the dispute between DSGN and ACE are commercial building disputes.
  9. [54]
    It follows that, in respect of the Hennig proceedings and the ACE proceedings, costs fall to be determined under the QCAT Act.

Costs

  1. [55]
    Before proceeding to consider costs in each of the proceedings it is necessary to make some observations regarding the awarding of costs in circumstances where a proceeding has been discontinued before a final determination on the merits.
  2. [56]
    I have referred earlier in these reasons to DBI Group Pty Ltd v Wayne Leslie Banks T/A Wayne Banks Concreting[37] in which I considered an application for costs following the withdrawal of an application for a building dispute. I referred to the decision of McMeekin J in Jones v Jones.[38] His Honour, in Jones, referred to the decision in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin[39] and in particular the following passage from the judgement of McHugh J:

In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action by which settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.

...

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.[40]

  1. [57]
    The reasonableness of DSGN’s actions in bringing each of the proceedings is, in the absence of a determination of each of the matters on the merits, the primary consideration, but not the only consideration, in determining the issue of costs.

The Pathmaperuma proceedings

  1. [58]
    The Pathmaperumas seek their costs on an indemnity basis on the Supreme Court scale. They say that on three separate occasions they told DSGN that the tribunal did not have jurisdiction to hear copyright claims, that the matter was not a building dispute and that the proceedings should be withdrawn.
  2. [59]
    The Pathmaperumas say that DSGN refused to negotiate in good faith to attempt to resolve the dispute. They say that the communications to which I have referred were offers to settle for the purposes of the QCAT Act and QCAT Rules.
  3. [60]
    The Pathmaperumas say that they made a further attempt to resolve the dispute on 21 February 2020. An offer was made to resolve the matter on the basis that DSGN pay costs fixed in the amount of $7,700.00. One further attempt to resolve the matter was made by the Pathmaperumas in the same terms. None of the offers were responded to by DSGN.
  4. [61]
    As framed, the claim by DSGN against the Pathmaperumas appears to have had little prospect of success. Having said this, it is appropriate to make some further observations.
  5. [62]
    DSGN was self represented. Building disputes are often complex, both legally and factually and it is not always apparent to self represented litigants what the jurisdiction of the tribunal is. DSGN does not explicitly state why the proceedings were withdrawn however it can be inferred from its submissions that DSGN likely formed a view as to its prospects of success. However, the proceedings were withdrawn after the summary dismissal application was filed by the Pathmaperumas. It seems that it was the filing of the application that resulted in DSGN giving more detailed consideration to its position including its prospects of success in the proceedings. In my view DSGN withdrew the claim when it realised its prospects of success were poor. Where, as here, a party effectively surrenders to the other, there is an argument in favour of the exercise of the discretion to award costs to the successful party.
  6. [63]
    By s 77(2) of the QBCC Act, a person may not apply to the tribunal to have the tribunal decide a building dispute unless the person has complied with a process established by the QBCC to attempt to resolve the dispute. Whether a process has been established to resolve a dispute is a matter for the QBCC. I am not satisfied that DSGN has established either that it had complied with a process established by the QBCC prior to commencing the proceedings or that there was no such process established by the QBCC. On the material presently before the tribunal I am not persuaded that DSGN has satisfied the requirements of s 77(2) of the QBCC Act. 
  7. [64]
    I find that DSGN acted unreasonably in commencing the proceedings. The claim  had little if no prospects of success. DSGN sought relief the tribunal had no power to grant in respect of a cause of action in which the tribunal had no jurisdiction. There is no cogent evidence[41] of compliance by DSGN with s 77(2) of the QBCC Act or that no dispute resolution process existed. The proceedings were futile.
  8. [65]
    I am persuaded in all the circumstances that it is appropriate that a costs order be made in favour of the Pathmaperumas.
  9. [66]
    The Pathmaperumas say that costs should be awarded on an indemnity basis.
  10. [67]
    The QCAT Rules may authorise the tribunal to award costs in circumstances where a party has made an offer to settle a dispute and the offer is not accepted.[42] An offer to settle must be in writing and may be made at any time before the final decision is made.[43] If the decision of the tribunal is not more favourable to a party than their offer to settle, the tribunal may award to the party all reasonable costs incurred by that party in conducting the proceeding after the offer was made.[44] ‘Decision’ includes the final decision of the tribunal.[45]
  11. [68]
    Here, there has been no final decision by the tribunal. Accordingly, the offer to settle provisions of the QCAT Act and QCAT Rules have no application. It is therefore unnecessary for me to further consider the submissions by the Pathmaperumas in relation to any offers to settle.
  12. [69]
    The discretion to award indemnity costs should be exercised judicially and be the subject of careful reasoning.[46] Generally speaking, an award of indemnity costs requires a sufficient or unusual feature[47] or some relevant delinquency[48] in the relation to the conduct of the case.[49]
  13. [70]
    Indemnity costs may be awarded where a case is hopeless, that is to say, without substance, groundless, fanciful or so weak as to be futile. As framed, the claim by DSGN was bound to fail. The tribunal has no jurisdiction in respect of claims for breach of copyright. Proceedings which are an abuse of process may result in an award of indemnity costs. I am not prepared however to find that the proceedings were commenced other than in good faith or for an ulterior or collateral purpose or were otherwise an abuse of process. 
  14. [71]
    The Pathmaperumas rely upon the effect of the deed of settlement entered into by the parties in respect of the Magistrates Court proceedings. The deed releases the Pathmaperumas from ‘any and all causes of action, claims … actions … suits or proceedings … which (DSGN) may have against (the Pathmaperumas) … with respect to or in any way connected with the matters the subject of the Proceeding or the Counterclaim’. The claim by the Pathmaperumas in the Magistrates Court proceedings was one for damages for breach of contract or, alternatively, damages for misleading and deceptive conduct, or, alternatively, a claim for monies paid under a mistake of fact. The Pathmaperumas claimed that DSGN was not registered or licensed to undertake the preparation of house plans. DSGN and its director, Mr Matzat were named as defendants. The defendants counterclaimed in respect of what they said were monies owing by the Pathmaperumas under a contractual variation.
  15. [72]
    Generally speaking:
    1. (a)
      A release will be confined to the subject matter contained in the recitals;
    2. (b)
      A release is to be construed so that it is confined to the known disputes between the parties;
    3. (c)
      It would be unconscientious for a party to rely upon a release obtained when the releasee knew of a liability (later sought to be enforced) but the releasor did not know. 
  16. [73]
    The claim by DSGN in these proceedings appears to fall outside the parameters of the deed.
  17. [74]
    Not without some hesitation I have come to the conclusion that, in all of the circumstances, it is not appropriate to award indemnity costs. DSGN withdrew the proceedings at an early stage after it became aware of the obstacles to success that it faced. Had DSGN delayed in coming to this conclusion the outcome in respect of costs may have been different.
  18. [75]
    I am unable to fix the costs. It is appropriate that DSGN pay the Pathmaperumas’ costs of the proceedings to be agreed between the parties or, failing agreement, to be assessed on the standard basis on the District Court scale as if the proceedings had been brought in that court.

The Hennig proceedings and the ACE proceedings

  1. [76]
    It is convenient to deal with the Hennig proceedings and the ACE proceedings together.
  2. [77]
    In my view neither proceedings had any realistic prospect of success. I have concluded that, on the evidence before me, the subject matter of each of the proceedings was not a building dispute in relation to which the tribunal had jurisdiction. For the purposes of s 103(3)(c) of the QCAT Act, I conclude that the strength of DSGN’s claims against Hennig and ACE were poor.
  3. [78]
    Having regard to the considerations I have outlined in these reasons and s 103(3)(c) of the QCAT Act, I conclude that it is in the interests of justice that DSGN pay both Hennig’s costs and ACE’s costs of the proceedings.
  4. [79]
    For the reasons I have outlined, I am not persuaded that it is appropriate that costs be awarded on an indemnity basis. DSGN must pay Hennig’s and ACE’s costs to be agreed between the parties or, failing agreement, to be assessed on the standard basis on the District Court scale as if the proceedings had been brought in that court. 
  5. [80]
    I make orders accordingly.

Footnotes

[1]  Application for domestic building disputes filed 6 December 2019.

[2]  Application for domestic building disputes filed 6 December 2019.

[3]  Application for domestic building disputes filed 6 December 2019.

[4]  Application for miscellaneous matters filed 27 February 2020.

[5]  Application for miscellaneous matters filed 14 February 2020.

[6]  Application for miscellaneous matters filed 26 February 2020.

[7]  Notices of withdrawal of applications filed 28 February 2020.

[8]  [2017] QCAT 348.

[9]  QBCC Act, s 77(1), s 77(3).

[10]  Ibid, sch 2.

[11]  Ibid.

[12]  Ibid.

[13]  Ibid.

[14]  Ibid.

[15]  Ibid.

[16]  Ibid, sch 1B, s 4.

[17]  Ibid, sch 1B, s 4(8).

[18]  Ibid, sch 1B, s 1.

[19]  QBCC Act, sch 2.

[20]  Other excluded building work is ‘domestic building work’ however further consideration of this is not relevant for present purposes.

[21]  QBCC Act, sch 1B, s 1.

[22]  Ibid.

[23]  QBCC Act, sch 1B, s 4(3).

[24]  Ibid, sch 2.

[25]  Ibid, sch 1B, s 1.

[26]Architects Act 2002 (Qld), s 8(1).

[27]  Response filed 24 January 2020, attachment WPD5 – Amended defence and counterclaim filed 19 June 2017, 78.

[28]Queensland Building and Construction Commission Regulation 2018 (Qld), sch 2.

[29]  Ibid.

[30]  QBCC Act, sch 2.

[31]  Ibid.

[32]  Ibid, s 75, s 76.

[33]  Ibid, s 75(1)(f).

[34]  Ibid, sch 2.

[35]  Ibid.

[36]  Ibid – definition ‘building work’ – (f).

[37]  [2017] QCAT 348.

[38]  [2012] QSC 342.

[39]  (1997) 186 CLR 622.

[40]Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 624-625.

[41]  Apart from a self serving letter from DSGN to the tribunal attached to the application for domestic building disputes filed 6 December 2019.

[42]  QCAT Act, s 105.

[43]  QCAT Rules, rr 65(1), 66(1).

[44]  Ibid, r 86.

[45]  QCAT Act, sch 3.

[46]Mead v Watson as Liquidator for Hypec Electronics (2005) 23 ACLC 718; Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354.

[47]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.

[48]Oshlack v Richmond River Council (1998) 193 CLR 72.

[49]Liverpool City Council v Estephan [2009] NSWCA 161.

Close

Editorial Notes

  • Published Case Name:

    DSGN Kartell Pty Ltd v Pathmaperuma & Anor; DSGN Kartell Pty Ltd v Hennig Bros Construction Pty Ltd; DSGN Kartell Pty Ltd v Craig Russell Stranger t/as ACE Space Design

  • Shortened Case Name:

    DSGN Kartell Pty Ltd v Pathmaperuma; DSGN Kartell Pty Ltd v Hennig Bros Construction Pty Ltd; DSGN Kartell Pty Ltd v Craig Russell Stranger

  • MNC:

    [2020] QCAT 211

  • Court:

    QCAT

  • Judge(s):

    Senior Member Brown

  • Date:

    05 Jun 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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