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Auspex Property Research Pty Ltd v Morris QCATA 9
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Auspex Property Research Pty Ltd v Morris  QCATA 9
AUSPEX PROPERTY RESEARCH PTY LTD
24 January 2019
On the papers
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEALLIES – ERROR OF LAW – where an adjudicator gave judgement on a claim for a minor debt in the minor civil dispute jurisdiction of the tribunal – whether the respondent had a set-off – where a counter-application is not allowed under the tribunal rules in a minor civil dispute– where the adjudicator held the respondent’s claims were counter applications, and were not set-offs
Queensland Civil and Administrative Tribunal Rules2009 (Qld), r 48, 49
D Galambos & Sons Pty Ltd v McIntyre (1974) 5 ACTR 10
Kuzba v O'Day  QCATA 345
N R Barbi Solicitor Pty Ltd v Miller & Old Coach Developments Pty Ltd  QCAT 057
This matter was heard and determined on the papers pursuant to s 32 of theQueensland Civil and Administrative Tribunal Act 2009 (Qld).
REASONS FOR DECISION
- Auspex Property Research Pty Ltd (‘Auspex’) owns and operates the website auspexresearch.com.au and links real estate industry professionals and professional advisers in the sale of investment properties.
- Mr Morris is a licensed real estate agent.
- Mr Morris filed an ‘Application for minor civil dispute – minor debt’ (‘the MCD application‘) in the Tribunal at Southport on 15 August 2017. Auspex was the respondent. The claim was for the amount of $25,000 plus a filing fee of $326.80, bailiff’s fee of $15.00, and an ASIC search fee of $9.00, being a total claim of $25,356.80.
- The details of the claim were set out in ‘Part B' to the MCD application. The details alleged that in February 2015 Mr Morris and Auspex had entered into an agreement whereby Mr Morris would refer clients to Auspex and, should Auspex sell a property to the referred client, Mr Morris would receive a commission of $25,000 plus GST.
- The details went on to outline the sale of a property at 41 Benhiam Place, Calamvale Queensland, and alleged that Auspex had not paid the commission for the sale to Mr Morris.
- The details alleged that Mr Morris’s solicitor had written to Auspex on 14 July 2017 requesting payment of the sum of $27,500, and that that amount had not been paid.
- Mr Morris described the MCD claim to be calculated as follows:
(Mr Morris) has spent quite a sum of money with the solicitor writing back and forth to (Auspex), and as a consequence (Mr Morris) has had to make a commercial decision in relation to the costs associated with pursuing the $27,500 (incl GST) owed to Mr Morris through the Magistrates Court. To save cost for both parties and to comply with that QCAT’s litigation limitations, (Mr Morris) has reduced the amount he is seeking from (Auspex) to $25,000 (incl GST), which is $22,727.27 (excl GST). This is not an admission by the applicant (Mr Morris) that the amount initially sought from (Auspex) was incorrect.
- Mr Morris initially obtained a default decision against Auspex on 14 September 2017 in the amount of $25,650.63. Auspex filed an application to set aside the default decision on 25 September 2017, on the basis that it had not been served with the MCD application. That judgement was set aside by consent on 24 October 2017, and the matter was set down for hearing on 16 November 2017, but was adjourned to 9 January 2018.
- The application was heard by an adjudicator at Southport on 9 January 2018. Mr Morris appeared on his own behalf, and Mr Royston James (a director) attended and represented Auspex.
- The adjudicator noted in her decision that Auspex was raising a set-off, but held that it could not be entertained:
Mr James, for the respondent, acknowledges that if anything is payable at all to Mr Morris, it is an amount of $17,000 plus GST and no more based on the fact that he has already paid the balance of that $25,000, which is the $8000, to Mr Davis. And so at the most, he is liable for that. Mr James has further, in submissions in response to the application, said that, in any event, there should be set off because Mr Morris owes him approximately $75,000 for other properties that he, in breach of their agreement, did not put through Auspex, so Auspex had missed out on commission there.
I have already told Mr James, and I reaffirm, that I cannot deal with that today because in minor debt applications, in accordance with rule 88 of the – 48 of the QCAT rules, there is no ability to bring a counterclaim against a minor debt. It doesn’t (indistinct) me that your claim is not without merit. You might want to bring that claim in another jurisdiction to ensure that you get your full amount, if you think that’s what you’re entitled to, but I urge you to seek legal advice about that if that’s what you want to do.
But I cannot entertain any offset because the agreement as I see it, provides no scope for that anyway. Right here, all that Mr Morris has to prove is that he had the contractual entitlement, that he did what was required by the agreement in order to earn that referral fee, but nonetheless, that amount wasn’t paid. Accordingly, I’m satisfied that the referral fee should be paid to Mr Morris but reduce it by the amount of $8000 on the basis that – and I accept the evidence of Mr Davis – that he was paid $8000 by Auspex that would otherwise have been payable by Mr Morris.
- The adjudicator ordered that Auspex pay $19,050.80 to Mr Morris within 45 days.
- Auspex filed an ‘Application for leave to appeal or appeal’ on 22 February 2018. The application sought the following orders:
- Leave to appeal be granted;
- The orders of the tribunal dated 9 January 2018 are set aside;
- The respondent’s claim be set off against the amounts owed by the respondent to the applicant;
- In the alternative, the matter be remitted to the tribunal for determination according to law for a differently constituted tribunal.
- The grounds of appeal were stated as follows:
- The Tribunal member erred in treating the applicant’s response as a counterclaim and not a set off (Kuzba v O'Day  QCATA 345);
- The Tribunal member erred in determining that QCAT could not consider a set off claim unless a contractual term permitted such relief when equitable set- off is an available remedy (NR Barbi Solicitor Pty Ltd v Miller & Old Coach Developments Pty Ltd  QCAT 057);
- The Tribunal Member erred in permitting ALLegal to attend the hearing and make submissions on behalf the Respondent when no application for leave to be represented had been made or granted resulting in a lack of procedural fairness because the Applicant was prevented from objecting to the request for representation and seeking leave for their own representation;
- In contravention of Rule 81(2) of the QCAT rules 2009, all relevant documents were not made available by the respondent at the hearing and the respondent failed to provide the applicant with a copy of the written evidence referred to by the respondent at the hearing, resulting in a lack of procedural fairness because the applicant was not given an opportunity to test evidence.
- Directions were given on 8 March 2018 for the parties to file submissions, and providing that unless either party filed an application for an oral hearing, that the application for leave to appeal and the appeal (if the application for leave to appeal was granted) would be determined on the papers.
- Auspex also filed an application to stay the decision of the 22 February 2018. An order was made by a Senior Member on 11 May 2018 staying the operation of the order of the Tribunal dated 9 January 2018 until further order.
- Submissions were received from Auspex and Mr Morris as directed. No request was made for an oral hearing.
- This is the on the papers decision in relation to the application for leave to appeal or appeal.
Submissions of Auspex
- Auspex refers to the terms and conditions of an ‘Introducer Agreement’ signed by Mr Morris with it on or about 8 December 2014.
- It submits that Mr Morris entered into an oral agreement on around 16 February 2015 (‘the consultant agreement’) with Mr Davis whereby Mr Morris would provide leads on transactions to Mr Davis, and if Mr Davis made a sale to lead provided by Mr Morris, Mr Morris would pay Mr Davis $8,800 per sale.
- It says that Mr Davis has informed it that he made a total of five sales to leads referred to him by Mr Morris pursuant to the consultant agreement, and that three sales were submitted directly to vendors rather than via Auspex in breach of clause 7 of the Introducer Agreement.
- Auspex submits that it has a claim against Mr Morris in relation to the three sales that were not submitted to it, in the amount of approximately $99,000 in commission, equating to $33,000 per unsubmitted sale.
- It notes that the prescribed amount for an MCD claim is $25,000, and says that it would reduce its claim to that amount in respect of each of the three sales in order to fit within the jurisdictional limit of the tribunal.
- It submits that its claim against Mr Morris should have been treated as a set-off, and refers to the decision in Kuzba v O'Day.
- It alternately submits that its claim against Mr Miller should have been considered as a defence to the claim made by Mr Morris, referring to N R Barbi Solicitor Pty Ltd v Miller & Old Coach Developments Pty Ltd.
- It notes that Adjudicator Gordon cited D Galambos & Sons Pty Ltd v McIntyre, where it was found that a set-off is available where the equity of the case requires it should be, and that the court would give consideration to how closely the respective claims are related, particularly as to time and subject matter and the general conduct of the respective parties. It notes the comments of Woodward J in that matter that:
…even where one of the claims is not in terms based upon the contract, but it flows out of and is directly connected with it, a court may be prepared to recognise an equitable set-off.
- It notes that Adjudicator Gordon concluded in the Barbi matter that the Tribunal could deal with set-off claims provided they fell within the circumstances detailed in that matter.
- It submits that set-off arises in the circumstances in this matter:
- Mr Morris’s claim is for money due under the contract, and Auspex’s claim for $99,000 is for breach of the same contract. These claims are very closely related and arise out of the same facts. As per NR Barbi Solicitor Pty Ltd v Miller & Old Coach Developments Pty Ltd, these claims can be set off against each other.
- Further, Member Mewing concluded that the Introducer Agreement did not provide for set-off of Auspex’s claim. Even if Auspex’s claim for set-off is not based upon the Introducer Agreement (which is denied), it flows directly out of and is directly connected with it and set-off should be considered.
- Despite this, should the tribunal find that the claim is not directly connected with the Introducer Agreement and cannot be considered, Clause 9 of the Introducer Agreement provides for the recovery of all fees and commissions as a relief for breach of the Introducer Agreement, and therefore a set-off should still be considered given Auspex’s claim is a contractual right agreed to by the respective parties.
- It further submits that Ms Babington of ALLegal (who said she was a process server) attended the hearing as a representative for, and made submissions on behalf of, Mr Morris, without the leave of the Tribunal, in breach of section 43 of the QCAT Act.
- It further submits that documents were handed up to the adjudicator by Mr Morris in support of his claim, which were unknown to Auspex, and were not made available to it. It specifically refers, as an example, to an email referred to in the reasons, from Gai Orphin dated 27 April 2016, as evidence of the referral fee being $25,000, and that a copy of this email was not provided to Auspex.
- It submits that the reliance on documents which had not been provided to Auspex did not afford natural justice to it.
Submissions of Mr Morris
- Mr Morris denies that Auspex is entitled to claim $99,000 for commission on sales. He says that Auspex is not able to make the claim in the Tribunal in that form, but that it had other avenues available to it:
- The applicant seeks to have the set-off claim of $99,000 reduced to $25,000 for each sale to be within the QCAT Minor Civil Dispute jurisdiction. The total amount claimed then would be $75,000 which is still well over the limitation in the Minor Debt jurisdiction of a total of $25,000 per claim.
- The applicant had an opportunity to file a counterclaim as a different application for each claim and request it be heard with the respondents initiating application, however, did not do so.
- The applicant could have filed a statement of claim in the Magistrates Court for money allegedly owed for the three (3) sales, however did not do so.
- There is no avenue within the QCAT minor debt jurisdiction for a party to file a counterclaim, which would also infer that a set-off would not be considered either.
- Mr Morris submits that the claims by Auspex were the subject of totally different claims unrelated to this matter, and had no relation, as they were separate transactions and subjects.
- Mr Morris submits that Ms Babington was a support person who did not speak or represent him at the hearing in any way, and that Auspex was not disadvantaged by her attendance.
- He submits that Auspex advised the Adjudicator that there was no dispute with the claim filed by him.
- Because this is an appeal from a decision of the Tribunal in its minor civil dispute jurisdiction, leave is necessary. Leave to appeal will ordinarily only be granted where there is some question of general importance upon which further argument, and a decision of the Appeal Tribunal, would be to the public advantage; or, there is a reasonably arguable case of error in the primary decision and a reasonable prospectthat the applicant would obtain further substantive relief. Another question sometimes asked is: ‘is leave necessary to correct a substantial injustice to the applicant, caused by some error?’
- Auspex submits that it has an equitable set-off that should have been considered by the adjudicator.
- The QCAT rules expressly refer to a counter-application in response to an application for a minor debt claim, but not to a set-off. The rules as to a counter-application and methods of dealing with them are as follows:
- Respondent may make counter–application except for minor debt claim
- A respondent to an application for referral for proceeding may, in response to the application or referral, apply to the tribunal for stated orders against another person, who may or may not be a party to the proceeding (a counter – application).
- A counter–application may be made instead of making a separate application to the tribunal to deal with the matters in relation to which the orders are sought.
- A counter-application can not be made in response to an application for a minor debt claim.
- Dealing with counter–application matters for minor debt claim
- If there are circumstances suggesting that a respondent to an application for a minor debt claim could have, apart from rule 48 (3), applied for orders against the applicant by way of a counter application, the tribunal may –
- order that the circumstances be dealt with as a separate minor debt claim; and
- give any directions the tribunal considers appropriate in relation to the matter.
- If a respondent has brought a proceeding for an application against an applicant for a matter that, apart from rule 48 (3) may have been the subject of a counter–application to an application for a minor debt claim, the tribunal may-
- order the enforcement of any final decision in the first proceeding be suspended for the time and on the conditions it considers appropriate; and
- give any directions the tribunal considers appropriate in relation to the matter.
The learned Magistrate referred to Mr Kuzba’s claim for a set-off. She acknowledged that Mr Kuzba filed a detailed claim but she did not give the claim any further attention. Her decision to proceed in this way is understandable, but in error. The learned magistrate should have considered the claim of set-off, if only to reject it. Leave to appeal should be granted.
- The ability for the Tribunal to consider a set-off in a minor civil dispute proceeding was discussed in the Barbi matter:
- Mr Barbi’s submission is that the Tribunal cannot look beyond these three things. In particular, he says that the Tribunal cannot consider any claim by the Respondents that the work was defective or of no value.
- I think this ignores the following principles: –
- any applicant must satisfy the court or tribunal hearing the claim that their claim is well-founded; in the case of a solicitor suing for fees this includes showing that the fees were reasonable, a matter which the respondent to the claim may dispute;
- a set-off is available in an appropriate case
- The difference between a counter-claim and a set-off is discussed by Mr Cairns, the author of the text Australian Civil Procedure, as follows;
Quite apart from matters that are a direct answer to the plaintiff’s claim, the defendant may have a cross-claim against the plaintiff that will either extinguish or reduce the plaintiff’s claim. The cross-claim may be such that it is justifiable for the defendant not to pay the plaintiff until the court makes a decision on the defendant’s claim. The cross-claim may be either a set-off or a counterclaim. In either event the cross-claim may be pleaded against the plaintiff in the original proceeding, but a set-off differs in nature from a counter-claim.
A set-off is a defence which precludes the plaintiff enforcing the claim, either in full or in part. A counter-claim is a separate proceeding in its own right. Where a counter-claim is pleaded it proceeds against the plaintiff in the same way as if the plaintiff had been sued by the defendant in a proceeding. If the plaintiff discontinues the proceeding a set-off comes to an end. If the defendants cross-claim is a counterclaim the matter proceeds on the defendant’s claim, irrespective of the fate of the plaintiffs proceeding.
- The adjudicator, as previously quoted, noted in her reasons that Auspex accepted that the debt existed, but was seeking a set-off. 
- The claim by Mr Morris was for payment of commission in relation to the sale of Lot 41 Benhiam Place, Calamvale, as a ‘referral fee’ under the terms and conditions of the Introducer Agreement made between Mr Morris and Auspex. That claim arose under clause 4 of the Introducer Agreement, which reads as follows:
4. The amount of the referral fee payable to the introducer group in respect of each property sold in the terms for payment of the referral fee shall be as notified by Auspex Property Research Pty Ltd from time to time. Auspex Property Research Pty Ltd shall arrange for payment of the referral fee to the introducer group from the fee paid by the seller within seven business days of receipt provided the introducer group has provided a valid tax invoice for each referral fee as directed by Auspex Property Research Pty Ltd and provided that the referral fee may be reduced by: the amount of any expenses incurred by the seller on behalf of the introducer group; any commissions paid to the introducer groups nominated agents; any part of the fee not paid by the seller; and any expenses incurred or arranged by Auspex Property Research Pty Ltd on behalf of the introducer group (including agreed costs of lead generation, etc).
- The claims by Auspex relate to three separate sales (Howden, Rogerson and Grant, Dadhe). Auspex submits that those sales were not submitted through it, and therefore Mr Morris has breached clause 7 of the Introducer Agreement which reads as follows:
7. The parties acknowledge that each party shall introduce to the other party, key contacts including members, member groups, sellers, staff, contractors and clients, and that the relationships between the introducing party and such key contacts are valuable assets of the introducing party. Accordingly each party covenants that, except as permitted by this agreement, it will not, without prior written permission of the introducing party, either directly or through any intermediary or associate, establish or negotiate to establish any business relationship with the other parties key contacts provided that this clause shall not apply to a party in relation to any key contact who was a key contact of that party prior to acceptance of these terms and conditions.
- Auspex says that pursuant to clause 9 of the Introducer Agreement, if Mr Morris breached clause 7, then Auspex is entitled to all fees and commissions relating to the sale. Clause 9 provides as follows:
- The provisions of clauses 7 and 8 shall continue to apply to both parties for a period of 36 months after termination of this agreement. In the event that the Introducer Group breaches clauses 7 or 8 hereof or is declared bankrupt or becomes an externally administered body corporate under the Corporations Act 2001, then Auspex Property Research Pty Ltd shall be entitled to immediately cancel the agreement and deal directly with the Members and their Clients in relation to Auspex Property Research Pty Ltd and in addition to any other remedies shall be entitled to the full benefit of all fees and commissions due to the Introducer Group, whether directly or indirectly, in respect to Auspex Property Research Pty Ltd purchased by its clients or the clients of its members.
- The claims by Auspex therefore arise from different sections of the Introducer Agreement, and relate to different properties. The only similarity between the claims by Auspex and the claim of Mr Morris is that the two parties are involved in both claims, and they both rely on a clause of the Introducer Agreement.
- The claims by Auspex under clauses 7 and 9 do not constitute a defence in any way to the claim by Mr Morris under clause 4.
- Auspex was therefore not raising a defence to the claim by Mr Morris. It was raising three separate claims that it said it had against Mr Morris.
- The essence of a set-off being that it constitutes a defence to a claim, as discussed by Mr Cairns, the claims by Auspex are not a set-off, as they do not constitute a defence to the claim by Mr Morris. No set-off arises in these circumstances.
- The claims by Auspex could form the basis of a counter-application. Auspex had not filed separate applications in respect of its claims, which would be the way to deal with a counter-application in the minor civil dispute jurisdiction, as indicated by rule 49(1)(a). It is not explained why Auspex did not file applications in respect of its claims prior to the hearing of the claim by Mr Morris.
- It is significant that Auspex, in its ‘Response to minor civil dispute – minor debt’, seeks orders for payment of monies to it as follows:
- (Mr Morris) pay (Auspex) commission capped at $25,000 in relation to the sale of the property located at 10 Wonga Court, Morayfield in the state of Queensland to G and R Howden which constituted a breach of clause 7 of the Introducer Agreement (see annexure A).
- (Mr Morris) pay (Auspex) commission capped at $25,000 in relation to the sale of the property located at 1 Baxter Lane, Capestone, Mango Hill in the State of Queensland to D Rogerson and E Grant which constituted a breach of clause 7 of the Introducer Agreement (see annexure A).
- (Mr Morris) pay (Auspex) commission capped at $25,000 in relation to the sale of the property located at 3 Lahey Cove, Coomera in the State of Queensland to R and G Dadhe constituted a breach of clause 7 of the Introducer Agreement (see annexure A).
- Auspex does not purport to raise its claims as a defence or a set-off in its Response. The Response is worded as if it was a counter-application.
- The adjudicator was correct in treating the claims by Auspex as counter-applications. The first and second grounds of appeal, which relate to a set-off, are therefore not made out.
- The third ground of appeal is that the adjudicator erred in permitting ALLegal to attend the hearing and make submissions on behalf of Mr Morris.
- Mr Morris contends that Ms Bevington did not represent the respondent or give any submission whatsoever. Auspex contends that Ms Bevington attended the hearing as a representative for Mr Morris.
- The transcript of the reasons records a person responding to the Adjudicator’s query as to the $15 bonus fee as follows:
Unidentified Speaker: Can I answer that. On the process server, so it was just express post and for the sending of them.
Adjudicator Mewing: Okay
- This exchange in the reasons suggests that the unidentified person was Ms Bevington, and that she requested permission to comment on the cost of service. That intervention would not amount to a submission, but was rather evidence that was not disputed by Auspex. The exchange does not suggest that Ms Bevington was acting as a representative and speaking for Auspex.
- Adjudicators must have wide discretion as to the conduct of minor civil dispute proceedings, which are regularly conducted to tight timeframes, and in a free-flowing manner. I am not satisfied that the QCAT Act or Rules were not complied with in relation to representation, or that the participation of Ms Bevington affected the fairness of the proceedings.
- No error is made out as to ground three.
- The final ground of appeal is as to the admission of documents which were not made available to Auspex at the hearing.
- Auspex refer in the submissions to an email from Gai Orphin dated 27 April 2016 as an example of a document which had not been made available to Auspex.
- The adjudicator referred in her reasons to an email from (Gaye Hawkin) which was not disputed:
Adjudicator Mewing: The referral fee getting down to what appears to be $25,000, as evidenced by an email from (Gaye Hawkin) on 27 April 2016, which Mr James concedes is correct.
- Whilst it is obviously preferable that documents are exchanged between the parties prior to hearing, it is not uncommon for documents to be produced at the hearing of a minor civil dispute and be viewed by the other party at the hearing. If a party has any objection to the document, or advises that it is taken by surprise and wishes to adduce evidence in response to the previously unknown document, the Tribunal can then make appropriate directions, which may involve adjourning the proceedings.
- Ms Orphin is the Contracts Administrator for Auspex, so it is hard to understand how Auspex can say it is taken by surprise by the production, or reliance upon, its own document.
- In this matter, the basis of the email was conceded by Auspex at the hearing as being correct. It cannot be said that any injustice was caused to Auspex by the admission of that evidence.
- The fourth ground of appeal is also not made out.
- No error is established as having been made by the Adjudicator, and no unfairness or injustice is demonstrated as having been caused to, or suffered by, Auspex. The application for leave to appeal is refused, and the appeal is dismissed.
Part B to MCD application, .
Part B to MCD application, .
 Transcript of reasons 1-3, line 30.
Submissions on behalf of Auspex, .
Submissions on behalf of Auspex, .
 QCATA 345.
 QCAT 057.
(1974) 5 ACTR 10.
 Submissions of Mr Morris, -.
 QCATA 345, .
 Ibid, .
 QCAT 57 at -.
Bernard Cairns, Australian Civil Procedure (Lawbook Co of Australasia, 6th ed, 2005), 210.
Transcript of reasons 1-3, line 30.
Annexure ‘A’ to the’ Response to minor civil dispute – minor debt’, [24(d)].
‘Response to minor civil dispute – minor debt’, dated 8 January 2008, part D1.
 Transcript of reasons 1-2, line 4.
- Published Case Name:
Auspex Property Research Pty Ltd v Peter Morris
- Shortened Case Name:
Auspex Property Research Pty Ltd v Morris
 QCATA 9
24 Jan 2019