Diverse Industries Australia Pty Ltd v Complete Equipment Solutions [2015] QCATA 105

CITATION: Diverse Industries Australia Pty Ltd v Complete Equipment Solutions [2015] QCATA 105 PARTIES: Diverse Industries Australia Pty Ltd (Applicant/Appellant) v Complete Equipment Solutions (Respondent) APPLICATION NUMBER: APL118-15 MATTER TYPE: Appeal HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Justice Carmody, Acting President DELIVERED ON: 14 July 2015 DELIVERED AT: Brisbane ORDERS MADE: THE TRIBUNAL ORDERS THAT 1. Leave to appeal granted. 2. Appeal allowed. 3. The application to set aside the Magistrate’s decision of 20 February 2015 is allowed. 4. The respondent pay the applicant $3,162.45 within 30 days. 5. The respondent pay the applicant the cost of the filing fee for the originating application within 30 days. 6. The respondent pay the applicant the cost of the filing fee for the application for leave to appeal and appeal within 30 days. CATCHWORDS: APPEAL – LEAVE TO APPEAL - MINOR CIVIL DISPUTE – QUANTUM OF COMPENSATION – ERROR OF LAW OR FACT – where the applicant delivered repair services to the machinery of the respondent – where the -- 1 of 8 -- 2 respondent failed to discharge its obligations under a contract of service with the applicant to pay for the repair services delivered – where the respondent argued that the relevant repairs were performed under a warranty – where the Magistrate found that the repair services were not performed under a warranty – where the Magistrate awarded compensation in favour of the applicant for the minor civil debt – where the Magistrate reduced the amount of compensation awarded – whether there are grounds for leave to appeal – whether there was an error of law or fact reducing the compensation awarded to the applicant – whether appeal should be allowed APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act). REASONS FOR DECISION [1] This is an application for leave to appeal against the decision of a Magistrate exercising the minor civil dispute jurisdiction of the Queensland Civil and Administrative Tribunal in relation to an order that the respondent pay $2,343.30 to the respondent within 30 days of 20 February 2015. [2] The applicant appeals against the decision of the Magistrate on the basis that the Magistrate committed an error in law or fact by ruling in favour of the applicant, but subsequently reducing the quantum of compensation. The respondent failed to file any response or submissions with the Tribunal on appeal. [3] Before considering the merits of the respondent’s application, it is convenient to summarise the circumstances giving rise to the application. FACTUAL MATRIX [4] The applicant is a proprietary limited company which supplies mechanical repair services. The respondent is a business which utilises mechanical excavation equipment, colloquially referred to as a “rock crusher”. The applicant was contracted by the respondent to provide repair the radiator of certain excavation equipment. The applicant is not a radiator specialist, and therefore subcontracted the performance of the radiator repair services to Dalby Radiator Works, a Natrad agent specialising in the delivery of radiator repair services. Although the terms and conditions of the subcontract are not among the documents available on appeal, the parties appear to agree that the contract between the applicant and respondent contained a warranty policy protecting the respondent against defective workmanship, but not operational damage caused by adverse environmental conditions. -- 2 of 8 -- 3 [5] Under the contract for services, the applicant assumed possession of the radiator. The applicant conveyed the radiator to Dalby Radiator Works, who administered the repairs. The applicant thereupon returned the radiator to the respondent and installed it into the excavation equipment. Not long after the reinstallation, the radiator exhibited similar defects as those purportedly rectified by the repairs and the respondent refused to make payment under the contract for repair services. [6] The applicant did not admit that the defect in the radiator was caused by poor workmanship. The applicant assumed possession of the radiator and conveyed it to the local Victorian Natrad agent, D&D Radiator Service Centre Pty Ltd, for appraisal and mechanical diagnostics. On the evidence presented to the Tribunal, D&D Radiator Service Centre Pty Ltd is an independent corporation unaffiliated with the applicant or respondent. [7] D&D Radiator Service Centre Pty Ltd provided a brief report diagnosing the defects in the radiator. Contrary to the submissions of the respondent, the Magistrate was unable to find any statement in the report finding that the claim was not a warranty matter. Even if such a purported statement existed, whether the warranty responds to the relevant defect is a question of law for the Tribunal, not a matter of expert evidence of D&D Radiator Service Centre Pty Ltd. The evidence in the report, however, does demonstrate that the defects in the radiator were likely caused by external conditions in the operating environment. Damage had also been sustained to the radiator core as a result of a plastic fan blade falling apart. There is no evidence explaining the deterioration of the plastic fan blade. [8] Notwithstanding the diagnostic report issued by D&D Radiator Service Centre Pty Ltd, the respondent refused to make payment under the contract for repair services. The applicant thereupon filed an application in the Chinchilla Magistrates Court for the recovery of a minor debt. [9] The Magistrate ordered in favour of the applicant. The Magistrate found that the minor civil debt was owed by the respondent to the applicant. The Magistrate does not appear to have expressed a concluded view regarding the applicability of the warranty, perhaps because of the scarcity of material placed before the Magistrate. Having found in favour of the applicant, the Magistrate appears to have allowed the full claim of the applicant, but removed the administration charge particularised in the invoice and the cost of “rags”. The Magistrate also reduced the amount charged for reinstallation of the radiator and the amount of freight payable to transport the component to D&D Radiator Service Pty Ltd. [10] The transcript provides little explanation for the modifications made by the Magistrate to the amount claimed under the contract particularised in the invoice submitted by the applicant to the respondent. Similarly, there was no evidence before the Court which appeared to justify that the amount claimed by the applicant was inappropriate. [11] The applicant subsequently filed an application to appeal against the decision of the Magistrate, which forms the foundation of this appeal. -- 3 of 8 -- 4 GROUNDS OF APPEAL [12] The applicant has sought leave to appeal on ground that it was successful in the primary proceedings, but its entitlement to damages was illegitimately reduced. The applicant claims that the Magistrate sought to achieve a “fair” outcome, but failed to administer justice according to law. [13] Put more precisely, the applicant appears to submit that the Magistrate committed erred by wrongly applying the law, or finding that the amount owing under the contract for repair services was less than that prescribed in the invoice without supporting evidence. [14] The applicant’s claim may be separated into three separate liquidated sums: 1. The amount payable under the contract for repair services, as particularised in the invoice dated 5 May 2014; 2. The costs of and incidental to the acquisition of a diagnostic report dated 3 February 2015 from D&D Radiator Service Centre Pty Ltd; and 3. The costs of and incidental to the Queensland Civil and Administrative Tribunal minor civil debt recovery proceedings. Claim for Recovery of a Minor Debt [15] The applicant’s originating application claimed the contract price for repair services, amounting to $3,162.45. [16] Although the actions of breach of contract and recovery of a minor debt emanate from the writ of indebitatus assumpsit, they are fundamentally different in nature. To succeed in a claim for recovery of a minor debt, the creditor must establish that: (a) the quantum of the liquidated debt is ascertainable when payment is required; and (b) that the liquidated debt is unconditionally owing by the debtor to the creditor. This demands an higher threshold for liability than an action for breach of contract, which merely requires the establishment of the existence of a valid contract, and that the promisor has failed to comply with one or more terms of the agreement. [17] A claim for the recovery of a minor debt asserts that the debtor is wrongfully detaining a sum of money owing to the creditor. Therefore, the creditor possesses a present interest in an amount of money held by the debtor. Accordingly, the rules governing loss mitigation do not apply where the creditor is seeking to recover a debt owing under a contract, and the creditor is not required to establish that any loss or damage ensued from the failure to make payment under the contract. [18] On the evidence before the Tribunal, the applicant and respondent appear to agree that repair services were delivered. The invoice adduced by the applicant dated 5 May 2014 quantifies the value of the debt owing under the -- 4 of 8 -- 5 contract for repair services. The applicant and respondent also agree that the amount claimed under the invoice has not been satisfied. [19] The applicant has demonstrated that: (a) a valid contract for the delivery of repair services by the applicant to the respondent has been executed; (b) the repair services, as required under the contract, were delivered by the applicant, or its subcontractor, to the respondent; and (c) the amount payable under the contract has been ascertained. This is sufficient to establish an action for the recovery of a debt. Although the applicant is not required to prove that the respondent has not paid the debt, both parties appear to agree that the invoice has not been discharged. [20] The respondent resisted the claim, asserting that a warranty under the agreement responded to the defective workmanship of the applicant. The onus to establish the facts forming the foundation of the warranty claim was retained by the respondent. [21] There is no evidence before the Tribunal that the malfunctioning of the radiator installed within the mechanical excavation equipment was caused by defective repair services delivered by the applicant. Indeed, the applicant has adduced ostensibly reliable evidence from D&D Radiator Service Centre Pty Ltd establishing that the defects within the radiator were likely caused by adverse environmental conditions during operation. Although the respondent asserts that the abovementioned company was prejudiced in its diagnostic assessment, it has adduced no evidence to support this claim. Accordingly, it was open for the Magistrate to find that the warranty did not respond to the claim of the respondent because the malfunctioning of the radiator was caused by operational damage as opposed to defective workmanship. [22] Having found that the applicant was unconditionally entitled to the contract price, the Magistrate proceeded to reduce the amount of monies payable. The Magistrate furnished no reasons for the reduction in the amount of money payable, nor is there any evidence which could support the reduction. [23] A creditor that successfully establishes an action for the recovery of a debt unconditionally owing under a contract is ordinarily entitled to recover the full value of the debt, subject to any counterclaims or the intercession of equity. The Court is not required to assess damages, and may not reduce the amount owing without cogent justification. [24] Courts and tribunals must eschew interfering with voluntary contractual arrangements entered into among commercial parties on the basis of perceived “fairness”. The Courts and Tribunals of Queensland are not courts of morals but courts of law. Therefore, judicial and quasi-judicial decision-makers must administer justice according to law, not in accordance with their idiosyncratic or personal values and beliefs. Arbitrary interventions undermine party autonomy, commercial certainty, and the supremacy of regular law, which prejudices the administration of justice. -- 5 of 8 -- 6 [25] As the applicant has established an action for recovery of a debt unconditionally owing under the contract, the Magistrate erred by incorrectly applying the law, and finding that the amount owing under the contract was less than the amount particularised on the invoice without supporting evidence. [26] Accordingly, leave to appeal is granted, and the appeal is allowed. The decision of the Magistrate dated 20 February 2015 is set aside, and the respondent should be ordered to pay the applicant $3,162.45, being the amount owed under the invoice dated 5 May 2014 for the delivery of repair services by the applicant to the respondent. Costs of and incidental to Acquisition of Diagnostic Report [27] The applicant claims the costs of and incidental to the acquisition of the diagnostic report from D&D Radiator Service Centre Pty Ltd. [28] The applicant and respondent have failed to supply to the Tribunal a written contract for the delivery of repair services. The Tribunal, therefore, is unable to ascertain whether the acquisition of the diagnostic report was within the scope of the contract. [29] The Tribunal notes that in correspondence sent by Mr Lawrence Perkins, Director of the applicant, to Mr Darin Compt, a representative of the respondent, on 15 July 2015, Mr Perkins states that: Send [the radiator] to ETS address below and have a return address please. You get it to us and I will pay courier to and from radiator place and return to you. Radiator will be returned as a fully functioning radiator. [30] Mr Perkins appears to have represented, on behalf of the applicant, that the applicant would incur all costs associated with the transportation and repairs of the radiator. Mr Perkins has not stated that the respondent would be responsible for discharging the costs of freight or any diagnostic report. Accordingly, Mr Perkins cannot claim compensation for transportation and the diagnostic report on any restitutionary or contractual basis. [31] The applicant has not elucidated any legal basis for the recovery of monies expended on the diagnostic report, except insofar as they constitute “costs”. Section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) prescribes that should, except as otherwise provided in that Act, bear their own costs. [32] Section 102(1) of that Act provides that the Tribunal may make an order requiring a party to pay the costs of another party to the proceeding if the Tribunal consider the interests of justice require making the order. However, in minor civil dispute matters, costs may only be awarded as prescribed under the Queensland Civil and Administrative Tribunal Rules 2009 (Qld). -- 6 of 8 -- 7 [33] Rule 84(1) of the Rules provide that the Tribunal may award costs against a party to a proceeding for a minor debt claim only to order the party to pay for: (a) the prescribed fee for filing the application for the claim; (b) a fee charged by a service provider for electronically filing a document; (c) a service fee and travelling allowance at the rate of the prescribed bailiff fees; and (d) a business name or company search fee. [34] Schedule 3 paragraph 1(a) of the Act defines a “minor civil dispute” to include a claim to recover a debt or liquidated demand of money, with or without interest, of up to the prescribed amount. “Prescribed amount” is defined as $25,000.00. Although “minor debt claim” is not defined under the Act, it is defined under the Schedule to the Rules as a minor civil dispute that is a claim within the meaning of the Act, Schedule 3, definition minor civil dispute, paragraph 1(a). [35] As the proceedings related to the recovery of a debt less than $25,000.00, it constituted a “minor debt claim”. The costs of and incidental to the acquisition of the diagnostic report are not within the heads of costs recoverable under Rule 84 of the Queensland Civil and Administrative Tribunal Rules 2009 (Qld). Therefore, the costs of the diagnostic report are not recoverable by the applicant. Costs of the Application [36] The Magistrate ordered costs in favour of the applicant in the original proceedings. Having regard to the strength of the applicant’s claim, the findings of the Magistrate in this respect should not be disturbed. [37] The applicant appears to have applied for the costs of the appeal. The Tribunal finds that the applicant’s claim on appeal was well-supported by the relevant law and facts. The respondent failed to enter an appearance. Having regard to the strength of the applicant’s case and the substantial errors in the primary Magistrate’s decision, the Tribunal is satisfied that it is in the interests of justice that the applicant should receive the costs of filing the application for leave to appeal and the appeal. Orders [38] The Tribunal orders that: 1. Leave to appeal granted. 2. Appeal allowed. 3. The application to set aside the Magistrate’s decision of 20 February 2015 is allowed. 4. The respondent pay the applicant $3,162.45 within 30 days. 5. The respondent pay the applicant the cost of the filing fee for the originating application within 30 days. -- 7 of 8 -- 8 6. The respondent pay the applicant the cost of the filing fee for the application for leave to appeal and appeal within 30 days. -- 8 of 8 --