Vodopevic v Knigge[2003] QDC 37

[2003] QDC 037

DISTRICT COURT

APPELLATE JURISDICTION

JUDGE ROBIN QC

No 3876  of 2002

BRISBANE

DATE 18/03/2003

ORDER

HIS HONOUR:  This is an application for leave to appeal against a decision of the Queensland Building Tribunal made belatedly in the sense that the applicants, Mr and Mrs Vodopevic and Mr and Mrs Liddle were confused by the change in the legislative regime when the former provisions of the Queensland Building Services Authority Act 1991 - which do apply to all relevant proceedings - were replaced with a new regime under which leave was no longer necessary to appeal to this Court from Tribunal decisions.

They made an application within the irregular appeal about October last year seeking the requisite leave and the parties cooperated to the extent of agreeing that the leave application ought to be heard with the appeal. Of course, success on it is a necessary preliminary to the appeal's proceeding.

The respondent, who is the builder, Mr Knigge, cannot point to any particular prejudice flowing from the deficiencies in the applicant's procedure, but points out through his counsel Mr Thomson that the applicants now need the additional indulgence of further time within which to apply for leave. I think that ought to be granted. Albeit by a defective procedure, explicable in the circumstances. I mentioned at the outset, the jurisdiction of this Court was sought to be invoked at a sufficiently early date.

The appeal desired to be brought relates to costs only.

After protracted proceedings in the Tribunal which were commenced by Mr Knigge on or about the 13th of September 1999 and in the course of which further work was done by Mr Knigge and payments were made to him (a good deal of this pursuant to orders of the Tribunal), the parties on the eve of what boded to be a major hearing compromised their differences on the basis that Mr Knigge would be paid $30,000.

No agreement was reached as to costs and that is the issue which was brought before Tribunal member Mr Lohrisch on the 28th of March 2002. I understand that he had been involved in one only of the numerous interlocutory hearings and mentions that took place.

Some of those resulted from case management activities in the Tribunal. It has been suggested from the Bar table today the efforts of the Tribunal were to guide the parties towards a resolution of their differences. The order made by the Tribunal member was for payment to Mr Knigge by the applicants of 80 per cent of the costs they would have obtained in accordance with the Magistrates Court scale of costs applicable to a recovery of an amount of $30,000.

What appears to have influenced the member was that Mr Knigge was successful in securing a monetary payment in that amount. Having noted in paragraph 4 of his reasons that costs lay within the discretion of the Tribunal and ought to be determined upon the basis of what was "just", he noted separately in at least the three paragraphs following that the agreed payment was a favourable outcome for the builder, Mr Knigge.

In paragraph 9, the member said that he wasn't satisfied there was anything in the conduct of the parties so exceptional as to constitutes a reason for exercising the costs discretion either for or against any party. What might have made the matter exceptional was what the member recognised as a Calderbank letter of offer by the applicants made in correspondence of 9th and 10th August 2001. Such correspondence was otherwise "without prejudice", but "open" in the sense that an intention was revealed to draw the letter to the Tribunal's attention on the question of costs.

The later letter said in part, "Our clients hereby offer to pay to your client an amount of $48,000 in full settlement of all claims of your clients. We intend to rely upon this letter, and to the conduct of your client on the question of costs and the respondents intend to seek costs as against the applicant."

The member accepted, against the contention of Mr Knigge's representative, that he could make reference to the letter. In the end, however, he disregarded it, accepting that the form in which the letter was written "clearly indicates that it refers only to the applicant's claim and the not the respondent's counter claim."

The suggestion had been made to him that there was a trap in the offer, acceptance of which might leave Mr Knigge at risk of monetary claims by the present applicants. The Tribunal member stated that Mr Knigge could have followed up the offer with an enquiry as to what the implications of it were, but didn't do so, simply rejecting the offer.

The member said, "It is to be assumed that it was rejected at the time on the basis that the letter did not refer to the respondent's counter claim."  It is difficult to give a meaning to the reference to the respondents' counter claim. The only relevant document from them is the "Respondent's dispute schedule" which under the heading "What the respondent is seeking" mentions two items, "(1) an order that the applicant complete the building works, or alternatively, (2), an order that the respondents are entitled to terminate the building contracts."

I find difficulty recognising in that any monetary claim possibly being pursued against Mr Knigge, although of course, as did happen, he might be required to do work which would involve a cost to him. The member's conclusion was that, "In all the circumstances the letter should not affect the exercise of my discretion."

No reason is given for the reduction of the costs awarded to Mr Knigge to 80 per cent of that indicated by the scale which the member thought most appropriate one to invoke.

While the arrangements under which the Tribunal worked did not at relevant times contain any analogue of "Part 5" offers under the UCPR and while I am aware of judicial statements to the effect that such rules should not be applied too generously by analogy (cf Hofer v Hovell Development Pty Ltd (No 2) 2001 NSWLR 42; BC 200101288, at [18]-[19], I think that Calderbank offers and the like, which are well recognised in Australia, are significant and that the Tribunal member erred in attaching no significance whatever to the offer of which he was made aware. The explanation may be, I think, that he misconstrued the offer as one directed to part only of the parties' differences, namely Mr Knigge's claim, although I accept that may be the literal interpretation, that was an incorrect view, in my opinion.

The prevailing philosophy in present times is that parties in dispute ought to be encouraged to settle them, as these parties ultimately did. It is in line with that approach that steps such as Calderbank letters or more formal offers to settle frequently do result in advantages for those who generate them when costs issues are determined.

Mr Thomson argues that this is not a case for leave because there is no public interest in having this Court sitting as an appellate Tribunal to determine what costs are appropriate in a Building Tribunal matter. He referred to the test as indicated by Judge Forde in Queensland Building Services Authority v Beattie (1999) 20 Queensland Lawyer Reports 109 at 196. That public interest is, of course, a quite different one from the public interest in not having unjust costs orders made, which I accept is probably not relevant here.

In my view the change in the law whereby there is an appeal as of right to this Court from the Tribunal is a factor tending to make it easier for applicants in the last months of the old regime to obtain leave. I think it is in the public interest to have this Court indicate that Calderbank letters ought to be given weight, which needs not be decisive, in costs determination in the Tribunal and also that they are not to be construed in too technical a sense.

I accept Mr Thomson's point that it is not necessarily right to equate an agreed settlement figure like that encountered here with a figure resulting from a Tribunal determination. The $18,000 divergence here is, however, significant. It might also be borne in mind that the $48,000 offer was made at a time during the course of the proceedings in the Tribunal. A sum of $32,000 and I think a further sum of $8,000 had earlier been paid to Mr Knigge.

I was referred to a number of authorities indicating the unwillingness of appeal Courts to interfere with the discretion of a primary Tribunal as to determining what is an appropriate costs order, but from time to time the appeal Court does interfere, a relatively recent example being Di Carlo v Dubois [2002] QCA 225.

In my opinion leave to appeal ought to be granted nunc pro tunc and the appeal ought to be allowed. There seems to be no jurisdiction in this Court under the repealed section 94 of the Queensland Building Services Authority Act which, as I have said, continues to be applied between the present parties, whereby this Court could make any final costs determination. What the Court might have done, I suppose, if it had such a jurisdiction, would range from an order for indemnity costs in favour of the applicants through "no order as to costs" to an order similar in effect to the Tribunal member's. At both ends of the bar table the view has been taken that the appropriate thing for this Court to do is to remit the matter to the Tribunal under section 94(4)(b) for further hearing or rehearing.

A suggestion in the appellant's outline of argument is that the factors bearing on costs listed in section 61 (4) of the Queensland Building Tribunal Act 2000 ought to be applied. As a matter of law, Section 61(4) does not apply. I think no more could be said about it than that it lists the kinds of matters which might be considered. I suppose the Calderbank letters would come within section 61(4)(b) "the conduct of the parties before and after the proceeding".

This Court has ruled that that is a matter that ought to have been considered further. This Court is of the view that consideration ought to be given when the matter is back in the Tribunal to a separate determination of the fair and just incidence of costs in relation to the various hearings that occurred or steps that were taken in the Tribunal.

There has been some discussion as to whether or not the same Tribunal number ought to hear the matter. Judgment about that is perhaps left to the Chairperson of the Tribunal or whoever allocates work there. There seems no particular reason why the same member ought to be involved. He did not have the advantage of particularly close familiarity with the whole saga in the Tribunal. The view might well be taken that in the circumstances it was more appropriate for a different member to be involved.

...

HIS HONOUR:  I will make an order setting aside the orders made in the Tribunal on the 28th of March last year.

I will order that the respondent Mr Knigge pay the cost of the appellants of proceedings in this Court to be assessed and in reliance on my decision in Morris, which Mr Thomson reminded me of; order that there be a certificate under the Appeal Costs Fund.