Nortask Pty Ltd v Rodriguez[2009] QDC 318

DISTRICT COURT OF QUEENSLAND

1. [1]
   Nortask Pty Ltd entered into a building contract with Mr Rodriguez in 2004 which, unfortunately, ended up before the Commercial and Consumer Tribunal in 2008. Nortask claimed $31,427.75 allegedly owed to them for building work, and interest, and Mr Rodriguez counter-claimed for damages for defective work. The Tribunal member heard the matter on 6, 7 and 8 August 2008 and on 28 November 2008 delivered a judgment allowing Nortask’s claim in the amount of $25,838.55 – but, also, allowing Mr Rodriguez’s counter-claim in an identical amount. The proceedings were then, in effect, a tie.

2. [2]
   The parties were subsequently invited to deliver written submissions about costs, and did so. On 6 March 2009 the Tribunal member ordered that Nortask and one of its directors, Mr Speziali, pay Mr Rodriguez’s costs of the proceedings, assessed on the standard basis and using the District Court scales relating to applications of less than $50,000. That order was made despite the fact that Nortask had, very early in the proceedings, offered to settle all claims and counterclaims on a ‘walk away’ basis.

3. [3]
   Nortask applied for leave to appeal that decision about costs. Mr Speziali was not shown as an appellant in the Notice of Appeal when it was filed, but at the commencement of the hearing before me he asked to be joined as a party to that application and, if it succeeds, the appeal. Counsel for Mr Rodriguez did not oppose the filing of the application but did argue against the addition of Mr Speziali, and that question should be addressed first.

4. [4]
   Mr Speziali’s involvement in the matter has been intermittent. He was not shown as a claimant in Nortask’s original claim but was later added as the second applicant. It was alleged by him and Nortask that one, or the other, of them entered into a contract with Mr Rodriguez for the building work which was the subject of the claim.

5. [5]
   When the hearing commenced before the Tribunal member on 6 August 2008 it was conceded that Nortask was the party which contracted with Mr Rodriguez – and, by inference, Mr Speziali had no right to bring any claim in the proceedings. The concession was significant: Mr Speziali was the holder of a licence under the Queensland Building Services Authority Act 1991 (QBSA), but Nortask was not.  This meant Nortask could only sue to recover ‘reasonable remuneration’ for materials and labour, but nothing by way of a profit component: QBSA, s 42(3) and (4), and that is how the Tribunal member ultimately calculated the quantum of Nortask’s claim.  There is no appeal against that part of the decision.

6. [6]
   Mr Speziali’s name remained, however, in the heading of the Tribunal member’s Reasons of 28 November 2008 and 6 March 2009 and the latter contains an order that the ‘applicants’ (plural) will pay the respondent’s costs. The solicitor for the appellants has filed an affidavit saying that Mr Speziali’s name was left off the appeal documents by a mistake. As a matter of first impression those facts – an order against Mr Speziali personally, and an error by lawyers – would tend to compel the conclusion that he should, properly, be added back in as a party.

7. [7]
   The application is nevertheless resisted by Mr Rodriquez on two grounds. The first is that the offer of settlement upon which the Nortask relies was made in March 2006, before Nortask and Mr Speziali amended their claim (in June 2006) to include a claim under s 42 – an amendment which was, by inference, an acknowledgment that Mr Speziali’s licence might be irrelevant because he was not a party to the contract with Mr Rodriguez, and that Nortask could only claim on the limited basis allowed under s 42.

8. [8]
   That does not seem to be determinative: I was not referred to any principle, or authority for the proposition that Mr Speziali may not have the benefit of an offer in proceedings and, indeed, s 142(3) of the Commercial and Consumer Tribunal Act 2003 (CCT Act) specifically provides that if a proceeding involves more than two parties, an offer to settle of the kind referred to in s 142 only has effect if it would have settled all matters in dispute between all parties.  That is a question which is relevant to the issues arising in this appeal.

9. [9]
   The second ground for opposition is that the Tribunal member identified discrete grounds said to justify a personal order for costs against Mr Speziali. Certainly there was a finding^[1] that Mr Speziali’s inclusion in the action unnecessarily expanded and extended the scope of the issues to be met by the respondent ‘ … with the attendant imposition of unnecessary costs and inconvenience’ but that is, again, a matter which may or may not properly be the subject of an application for leave to appeal.  Indeed, the fact Mr Speziali is the subject of specific adverse findings of that kind strengthens, rather than detracts from, his argument that he is a proper party to the appeal. 

10. [10]
    Rule 750 of the Uniform Civil Procedure Rules (concerning the addition of parties to appeals) applies here^[2] and gives the court a discretion to add an appellant who has consented, in writing, to be joined (as Mr Speziali has).  For these reasons just set out, the discretion should be exercised here, and Mr Speziali will be added as an applicant for leave to appeal, and an appellant if leave is granted. 

11. [11]
    The CCT Act permits an appeal from the Tribunal to this court, with the court’s leave and only on the ground of an error of law, or excess or want of jurisdiction: s 100(1). On appeal this court may confirm, annul, vary or reverse the Tribunal’s decision; remit the case to the Tribunal for further hearing, or re-hearing; and, make consequential or ancillary orders or directions; s 100(6). (It is also to be noted that, under s 100(8), the appellant must pay the costs of the appeal, including the costs of any transcript.)

12. [12]
    Because of the way the parties’ arguments unfolded in the hearing before me it is necessary to make a preliminary finding about the ‘error of law’ upon which the appellants rely. This is because their written submissions focussed heavily upon s 142 to the point that, during oral submissions, the respondent’s counsel asserted that the grounds of appeal were ‘…concerned solely with the operation of…’ that section, and not ss 70 and 71 of the Act.

13. [13]
    Sections 70 & 71 appear in Part 5 Division 7 (‘Costs Generally’) and relevantly provide, firstly, that ‘the main purpose of this division is to have parties pay their own costs unless the interests of justice require otherwise’.  Section  70 allows the court to award costs at its discretion and, for that purpose, it may have regard to matters set out in s 71(4): the outcome of the proceeding; the conduct of the parties before and during it; its nature and complexity; the relative strengths of the claims made by each of the parties; any contravention of an Act by a party; if a State agency is a party, whether the other party was afforded natural justice; and, anything else the Tribunal considers relevant.

14. [14]
    Section 142 appears in Part 6 Division 7 (‘Settlement Offers’) and directs that the Tribunal must order a party to pay costs if a settlement offer is not accepted and ‘…in the opinion of the Tribunal, the decision of the Tribunal on the matters in dispute is not more favourable to the other party than the offer’ (s 142(1)(b). 

15. [15]
    While it is true that the appellants’ written outline of argument dated 29 April 2009 and their amended outline filed on 28 August 2009 focus in large part upon s 142, there is also a plain reference to ss 70 and 71^[3].  The Notice of Appeal^[4] is, also, silent about the statutory provisions upon which the appellants rely but the Tribunal’s Reasons of 6 March 2009 (which are attached to the Notice of Appeal) plainly involve, primarily, the consideration of the discretion arising under ss 70 and 71 and, in particular, a detailed traverse of the factors listed in s 71(4).  That part of the Reasons effectively takes up the first four pages and it is only on the final two that the learned Tribunal member turned his attention to s 142 upon which, as he said, the applicants ‘also rely’.  In those circumstances I do not think it can be said that the respondent has been tricked or misled into believing that the appeal is advanced only in reliance upon s 142.

16. [16]
    It is plain that the power to award costs under s 71(1) (‘…The Tribunal may award the costs it considers appropriate…’) is to be read subject to the overriding principle in s 70 that parties will ordinarily pay their own costs unless the interests of justice require otherwise.  The effect of these provisions was explained by Keane JA in Tamawood Limited v Paans [2005] 2 Qd R 101 at pp 108-111 in which His Honour said that these provisions are ‘…intended to impose a general rule that good reason must be shown in terms of the interests of justice for making an award of costs in proceedings before the Tribunal’^[5].

17. [17]
    As I understood the appellants’ case, then, the ‘error of law’ they seek to establish under s 100(1) involves the Tribunal’s decision to award costs with reference both to the general discretion under ss 70 and 71, and also the particular circumstances arising here, with reference to s 142, because an offer of settlement had been made.

18. [18]
    Errors of law are traditionally defined as acting upon a wrong principle; allowing extraneous or irrelevant matters to guide or effect the judgment; making a mistake about the facts; or, failing to take into account some material consideration^[6].

19. [19]
    It is appropriate to consider the decision here in the context of the matters which s 71(4) says the Tribunal may consider in deciding whether to award costs. While reference to things in the list is not mandatory, the items it contains must be taken as a series of guidelines or sign posts, provided by the legislature, of matters likely to be central to the discretion. The notion that an exercise of that kind is appropriate is reinforced by the fact that it is the very course the learned Tribunal member chose to follow, in his Reasons.

20. [20]
    The first is the outcome of the proceedings themselves which, as earlier observed, was that identical sums were owed by each party to the other. It is also said, however, in paragraph 8 of the Reasons that the original findings and the outcome of the proceedings ‘…have fallen generally in favour of the respondent’.  Neither the original Reasons of 28 November 2008 nor the later Reasons on costs of 6 March 2009 quite make it clear, however, how that conclusion can be reached.  Nortask was found to be entitled to ‘reasonable remuneration’ for contract works with a value of $14,515.89, and extra work in the sum of $8,968.25.  At the same time, of course, it was found that rectification of defects, principally in a slab, warranted judgment in the counterclaim in an identical amount.

21. [21]
    The compelling conclusion, in those circumstances, is that the result did not fall in the favour of any party. Any other finding is surprising, and suggestive of an erroneous analysis of a material consideration – the actual outcome of the proceedings – and, therefore, an error of law.

22. [22]
    The second factor concerns the conduct of the parties. The Reasons are critical of the appellant’s late amendment of their claim to recognise that, because Nortask was the only contracting party and it did not have the relevant licence, it could only claim under s 42 of the QBSA. That occurred, however, in June 2006 and the matter was not heard until August 2008. It was always tolerably plain, after that time, that Mr Speziali was unlikely to have a viable claim against Mr Rodriguez. The appropriate concession was apparently made around the time the hearing commenced, and the Tribunal described it as proper^[7]. 

23. [23]
    In those circumstances, the implied criticism of the appellants, in the context of considering the conduct of the parties is surprising^[8].  The appellants are, otherwise, rightly criticised for some disobedience to timetables and interlocutory orders in the course of the action but, the Reasons show, they had already been punished with adverse costs orders in respect of those matters^[9].  It is difficult to see how this factor could have been construed as either neutral or, at worst for the appellants, mildly adverse to them in the discretionary exercise under context of the matters touched upon in s 71(4)(b).

24. [24]
    The next factor – the nature and the complexity of the proceeding – was seen by the Tribunal as essentially neutral. The following factor (the relative strengths of the claims made by the parties) was considered by the Tribunal in the context of the first (the outcome of the proceedings) and, for reasons just discussed, was mistakenly weighed in a way indicating an error of law.

25. [25]
    The factor addressed in s 71(4)(e) – any contravention of an Act by a party – draws forth, in the Reasons, a reference to the fact that Nortask acted unlawfully in carrying out works it was not licensed to do, in breach of the Domestic Building Contracts Act 2000.  As the original Reasons make clear, however, that finding was inevitable in light of the proper concession by Nortask that it could only claim under s 42 of the QPSA and, once that concession was made, the case went ahead on that basis.  For reasons touched upon earlier, so much would have been largely apparent after June 2006.  Once that is understood, the ‘unlawfulness’ is largely academic; it did not prevent Nortask proceeding with a claim which lead to a finding that it was entitled to remuneration.

26. [26]
    The final factor adumbrated in s 71(4)(g) – anything else the Tribunal considers relevant – largely involved an examination of Nortask’s offer to settle in March 2006. The offer was to settle on the basis that the parties discontinue their respective claims against the other, with each bearing its own costs.

27. [27]
    The learned Member rejected the appellant’s argument that the offer was more clearly favourable to the respondent than the outcome on three grounds: that the offer came from Nortask only, and merely proposed discontinuance of the claims, something which would not have ‘…afforded the respondent the comfort and finality of the order ultimately made by the Tribunal, involving as it did a final adjudication on the merits’.  The second ground was that ‘…mere discontinuance of the proceedings would have left the respondent exposed to the possibility that the first applicant might commence and prosecute a fresh proceeding at some future point.  It would not have produced the assurance of finality that the Tribunal’s decision has enlivened’.  The third ground involved a finding that by the time the offer was made the proceedings were well underway and, ‘…given the respondent’s ultimate success in resisting the applicant’s claims, the respondent has a reasonable expectation of a costs award in his favour’^[10].

28. [28]
    The first ground is not tenable. All parties who take proceedings to an ultimate determination by a tribunal, or a court, ordinarily receive the comfort and finality of a final adjudication on the merits. There was no element of this case which, however, made that especially desirable or necessary.

29. [29]
    As expressed, the second ground refers to the possibility that Nortask might commence and prosecution a fresh proceeding. The fear might reasonably apply to Mr Speziali, as well. In neither case was the risk a real one. On any view the proceedings related to building works, plainly identified in the pleadings, and any attempt to revive them after acceptance of the offer would have been an abuse of the process of the Tribunal which it could summarily dismiss under s 126(2)(b).

30. [30]
    The third ground also involves an error. The fact that the respondent might ultimately have expected to succeed in the claim and receive a costs award ignores the fact that neither party actually recovered anything from the other, and the respondent did not, in that sense, succeed in his claim; and, for the respondent to have a ‘…reasonable expectation of a cost award in his favour’ would have always been optimistic in light of s 70.  No element of the respondent’s case could reasonably have led him to believe that, notwithstanding that provision, he had good reason to expect that the discretion under s 71(1) would necessarily be exercised in his favour.

31. [31]
    It follows that the offer was a factor material to the discretion to award costs, but one which weighed strongly against the exercise of that discretion in the respondent’s favour - because the ultimate outcome exactly reflected its terms, and it was made over two years earlier.

32. [32]
    I am satisfied, for these reasons, that the Tribunal’s exercise of the discretion to award costs under s 71(1) involved an error in law of the kind described in House v The King.  The combination of a misunderstanding of the correct principles touching that discretion, an apparent misapprehension about the weight to be attached to factors relevant to it, and the mistaken allowance of extraneous or irrelevant factors to effect the decision under it compel this conclusion; and, it follows, a finding in the appellant’s favour in the appeal itself.  The order contained in paragraph 23 of the Reasons of 6 March 2009 will be set aside.

33. [33]
    That is not, however, the end of the matter. The appellants seek their costs of the proceedings, relying on the offer to settle and s 142. Indeed, s 142(2) attracts a mandatory order about costs after the offer if the eventual outcome does not better it, from the offeree’s standpoint. Although I have concluded that the offer was a factor relevant to the exercise of the discretion under s 71(1) I am not, however, persuaded that the circumstances here compel an order under s 142 in the appellant’s favour. The offer was only made by Nortask, and Mr Speziali was not a party to the action or, then, one of the offerors. As already explained, if Mr Rodriguez had accepted the offer that would, in my view, have provided him with a solid basis for resisting any attempt by Mr Speziali to later bring separate proceedings, but s 142 should, because of its inherent finality and its mandatory requirement for adverse costs orders, only be applied if all its provisions are strictly met. When one appellant was not, on its face, a party to the offer the requirements of the section do not apply – a conclusion reinforced by s 142(3), which provides that, if a proceeding involves more than two parties, the section only applies if the offer would finally resolve all claims between all of them.

34. [34]
    For these reasons the better outcome is, as was fairly conceded by counsel for the appellants in oral submissions^[11], to revert to the usual principle applied in CCT proceedings and direct that each party simply bear its own costs of the proceedings.

35. [35]
    That still leaves, of course, the question of the costs of this appeal, about which I will receive further submissions – while noting s 100(8), which provides that an appellant must pay the costs of the appeal.