Berry t/as D&K Constructions v Pinter [2006] QDC 18

DISTRICT COURT OF QUEENSLAND CITATION: Berry t/as D&K Constructions v Pinter [2006] QDC 018 PARTIES: DANIEL BERRY t/as D&K CONSTRUCTIONS Appellant v MARK PINTER Respondent FILE NO/S: BD3824/05; M672/04 DIVISION: PROCEEDING: Appeal ORIGINATING COURT: Magistrates Court, Brisbane DELIVERED ON: 17 February 2006 DELIVERED AT: Brisbane HEARING DATE: 9 February 2006 JUDGE: McGill DCJ ORDER: Appeal dismissed with costs. CATCHWORDS: APPEAL AND NEW TRIAL – Discretion – no reasons given – approach to review of exercise of discretion COSTS – Appeals – absence of reasons for order – proceeding wrongly started in court ordered to be started again in tribunal – plaintiff to pay costs in court Commercial and Consumer Tribunal Act 2003 ss 40, 70, 71, 73 Bowden v ACI Operations Pty Ltd [2003] QCA 293 – cited. Capylgin v Martin Fiebig Homes Pty Ltd [2003] QSC 382 – distinguished. Crystal Dawn Pty Ltd v Redruth Pty Ltd [1998] QCA 373 – applied. Cypressvale Pty Ltd v Retail Shop Lease Tribunal [1996] 2 Qd R 462 – cited. Martin v Rowling [2005] QCA 128 – cited. Perez v Transfield (Qld) Pty Ltd [1979] Qd R 444 – not followed. Pringle v Secretary of State for India (1888) 40 Ch D 288 – cited. Pritchard v Howard Smith and Sons Ltd (1891) 4 QLJ 64 – cited. Tamawood Ltd v Paans [2005] QCA 111 – applied. -- 1 of 9 -- 2 COUNSEL: J. Otto for the appellant B.W.J. Kidston for the respondent SOLICITORS: John-Paul Mould for the appellant James Varitimos for the respondent [1] On 23 January 2004 the appellant sued the respondent in the Magistrates Court claiming $13,037.10 as money payable under a building contract. The respondent defended the claim, and by a defence filed with a notice of intention to defend on 23 February 2004, the defendant alleged that the plaintiff had actually been overpaid, and counterclaimed for the amount of the overpayment. The issue between the parties appeared to turn on the terms of the contract between the parties. [2] The matter went through the usual interlocutory steps, and came on for trial on 24 July 2004 when, following some criticism by the magistrate, leave was given to each of the parties to amend the pleadings, the trial was adjourned, and costs were made costs in the cause. [3] After the adjournment of the trial the pleadings were extensively amended, the claim being converted (on 23 August 2004) to a claim for quantum meruit. The amended defence filed 9 September 2004 disputed in some detail what work was done for which the plaintiff was entitled to charge, and the reasonableness of the rates of charge, and alleged that the claim was barred by section 30 of the Domestic Building Contracts Act 2000. The counterclaim claimed a refund the whole of the amount paid as a result of the provisions of that Act, and also claimed that the work performed was negligent and defective, and that it will cost $16,000 to repair the defects. In an answer to the amended counterclaim filed 8 October 2004 the plaintiff denied that the work was done defectively, and did not admit the quantum of any rectification work. [4] The matter came on for trial again on 23 June 2005, but again was adjourned, this time by consent and, by consent, the plaintiff was ordered to pay the defendant’s costs thrown away fixed at $2,500. On that occasion the magistrate directed that the matter not be listed for trial until both parties advised the registry that this was not a matter within the exclusive jurisdiction of the Commercial and Consumer Tribunal. Once that matter had been raised by the magistrate the parties investigated it, and subsequently the defendant applied for an order that the plaintiff start the proceeding again before the tribunal, and sought costs of the proceeding and the application. That application came on before a magistrate on 29 September 2005. The first order was not resisted, but there was argument about costs. In the event the magistrate made the order sought in the application, and the plaintiff has appealed. [5] Some of the matters raised in the notice of appeal were not pursued. The foreshadowed attempt to lead fresh evidence was not pursued, nor was the ground there had been some erroneous overlap with costs ordered earlier in -- 2 of 9 -- 3 relation to the second adjournment for trial. There was no challenge to the order that the appellant pay the costs of that application. Absence of reasons [6] One difficulty which confronts me is that I can find no record of any reasons for the decision in relation to costs, and from what I was told by the parties, no reasons were given. There is no transcript of the proceedings on that day, or even just of the decision. All the file record says is: “Having heard the application I grant orders as per draft see attached.” [7] The draft order reflected the application. I dare say magistrates are quite busy when they are dealing with applications of this nature, but there is an obligation to give reasons in relation to decisions in contested matters, for a variety of reasons including so that any appellate court considering the decision can understand the reasoning process.1 There is some authority that an absence of reasons does not alter the basis on which the appellate court should act in relation to an appeal against the exercise of a discretion: Perez v Transfield (Qld) Pty Ltd [1979] Qd R 444 at 450 F, per Hoare J with whom the other members of the court agreed. Hence an absence of reasons would not necessarily alter the situation that, in relation to an appeal against the exercise of discretion, it is necessary to show that there was some error of fact or law or a failure to take into account a material consideration or undue weight was given to a particular circumstance.2 [8] On the other hand, in Crystal Dawn Pty Ltd v Redruth Pty Ltd [1998] QCA 373 the court gave an extension of time within which to appeal against a discretionary order imposing a condition on the grant of leave to defend, for which no reasons were given. Muir J with whom other members of the court agreed described the obligation to give reasons as an incident of the judicial process3 and cited a passage from a joint judgment of McPherson and Davies JJA4 where the requirement was said to be an aspect of judicial accountability, a matter which served to distinguish a judicial decision from an arbitrary one. His Honour said that failure to give reasons which ought to be given amounts to appealable error: [15]. Almost immediately thereafter he cited Perez v Transfield (supra) at the page referred to earlier, so the decision cannot be said to have been per incuriam. 1 Beale v GIO of NSW (1997) 48 NSWLR 430 at 441-4; Martin v Rowling [2005] QCA 128 at [3] per McMurdo P. 2 House v R (1936) 55 CLR 499 at 507; see also Australian Coal and Shale Employees Federation v the Commonwealth (1953) 94 CLR 621 at 627. 3 Citing Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378 at 386. 4 In Cypressvale Pty Ltd v Retail Shop Lease Tribunal [1996] 1 Qd R 462 at 483 -- 3 of 9 -- 4 [9] In the event his Honour took the matter into account in granting an extension of time within which to appeal; unfortunately there is no decision of the court on the substantive appeal as the parties resolved the matter and the appeal was dismissed by consent.5 In Bowden v ACI Operations Pty Ltd [2003] QCA 293 Fryberg J with whom the other members of the court agreed said that failure to give reasons which ought to be given amounted to appealable error, for which his Honour cited Crystal Dawn (supra). [10] In my opinion the effect of the decision in Crystal Dawn is to overturn the proposition laid down in Perez v Transfield (supra) that the absence of reasons does not alter the approach of an appellate court to an exercise of discretion. Indeed, in the absence of reasons it would seem to me to be virtually impossible for an appellant effectively to challenge an exercise of discretion on the limited basis referred to earlier. It is true to say that what reasons need to be given depends on the circumstances, and there is a discussion of various circumstances which can be relevant in Cypressvale Pty Ltd v Retail Shop Lease Tribunal [1996] 2 Qd R 462 at 484-5. But the present case does not turn on whether the reasons given were adequate, for there were simply no reasons given at all. In these circumstances, in my opinion, the failure to give reasons must amount to an error of law. [11] In those circumstances, the exercise of the discretion at first instance cannot be afforded the ordinary respect. In my opinion it would be inconsistent with the existence of an obligation to give reasons for decisions, including decisions of a discretionary nature, if in the absence of reasons the appropriate assumption is that the decision is free from error vitiating the discretion, rather than that it was not. Accordingly in the absence of reasons the appropriate approach is for me simply to apply the ordinary approach in relation to an appeal by way of rehearing, that is to say, I have to make up my own mind on the subject on the material before me, but the decision at first instance will be affirmed unless I am persuaded by the appellant that it was wrong.6 Factors relevant to the discretion [12] In the present case there is the consideration that it was the appellant who chose to bring proceedings in the magistrates court, in circumstances where those proceedings were within the exclusive jurisdiction of the Commercial and Consumer Tribunal. On the face of it therefore the futile incurring of costs in the magistrates court was the fault of the appellant. As a general proposition, if a party inappropriately sets in process the machinery of a court against another party, that party is entitled to recover legal costs incurred as a result.7 It is true 5 I have discovered this by consulting the file, Appeal 9868 of 1998. The consent order was made on 17 November 1999, the same day as the order for extension of time was made. 6 Warren v Coombes (1979) 142 CLR 531 at 551; State Rail Authority (NSW) v Earthline Constructions Pty Ltd (1999) 73 ALJR 306 at 327; Allesch v Maunz (2000) 203 CLR 172 at 180; Aldrich v Ross [2001] 2 Qd R 235 at 257. 7 Pringle v Secretary of State for India (1888) 40 Ch D 288; Pritchard v Howard Smith and Sons Ltd (1891) 4 QLJ 64 at 69. -- 4 of 9 -- 5 that the respondent did not itself raise this issue until the proceeding was well advanced, and even then only after prompting from the magistrate, although an absence of jurisdiction of the court is I think not in the same category as a good defence which is only raised late by a defendant, where there may well be a cost penalty. [13] On the other hand, although so far as the magistrates court was concerned the proceeding was at an end, the practical effect of the order made was that the proceeding will become one in the tribunal. It was submitted on behalf of the appellant that the effect of the relevant provisions of the Commercial and Consumer Tribunal Act was that, although the Act spoke of the proceeding being started again in the tribunal, what was started in the tribunal was a continuation of the same proceeding which had been pending in the court. Accordingly ultimately the costs in the magistrates court would be a matter within the discretion of the tribunal under section 71. It was pointed out that “proceeding” was defined in schedule 2 as meaning “a proceeding started by application to the tribunal or removed to the tribunal by order of a court under section 40”. [14] However, section 40(1) provides: “If a proceeding is started in a court and the proceeding could be heard by the tribunal under this Act, the court must order the entity who started the proceeding to start the proceeding again before the tribunal under section 31.” [15] It is true that the section elsewhere uses the word “transfer” or a derivative, in the title of the section and in subsection (3). On the other hand, the order made by the court requires the proceeding to be started again under section 31, and section 31 involves the filing of an application, the same process as if there had been no previous proceeding in the magistrates court.8 Further, subsection (5) provides an extension of the limitation period by the period of time between when the proceeding was started in the court and when the order was made under subsection (1). If the effect of an order under subsection (1) was that an existing proceeding was transferred from a court to the tribunal, there would be no need to provide against the running of the limitation period, because the existing proceeding would be continuing so that for the purposes of the limitation statute the relevant date would be that of commencement in the court. [16] In my opinion overall the effect of section 40 is that a new proceeding is started in the tribunal, rather than the proceeding which was pending in the court becoming a proceeding pending in the tribunal. It is true that some of the language used is consistent with this, but in my opinion the weight of the considerations are in favour of the other interpretation of the section. 8 This may be contrasted with the result of an order under section 85 of the District Court of Queensland Act, where the existing claim or application is simply transferred to the Supreme Court, without having to be filed again. -- 5 of 9 -- 6 Accordingly it is not correct to say that there would not be wasted costs because the existing proceeding is really continuing in the tribunal. [17] On the other hand, to the extent that work has been done in terms of gathering evidence and understanding the respective parties’ cases, and preparing for trial generally, I would expect that most of that work would still be useful in the context of a proceeding before the tribunal. It is true that documentation will have to be done again, but there is more to filing a pleading than simply filling in a form; it is necessary for the solicitor to take instructions as to what the relevant factual matters are, and to consider and formulate the appropriate pleading in response to those instructions. Having to prepare a different document for the tribunal ought not to change the factual basis or the client’s instructions, and it should be a relatively simply matter to modify the existing pleading to put it into the form required by the tribunal. [18] It is true that the tribunal processes are different from court processes, and I think it fair to say that inevitably there will be some wasted costs as a result of this change. But I do not think it follows that all of the costs incurred in relation to the magistrates court proceeding could be fairly described as having been wasted, if the matter proceeds in the tribunal (as presumably it will pursuant to the order). Not all the costs in the magistrates court will have been wasted because the appellant initially commenced the proceeding in the wrong court. [19] In the present case inevitably some costs will have been wasted because the proceeding was commenced in the magistrates court when it should have been commenced in the tribunal. To the extent that costs have been wasted in this way, the appellant should pay them, because it was the appellant who commenced the proceeding in the wrong place. But not all of the costs incurred in the magistrates court will have been wasted in this way. To the extent that costs have been incurred in finding out what the relevant facts are, in gathering evidence in relation to them, and in considering and formulating the legal arguments in support of the respondent’s defence, much of this will be work which will be relevant to the proceeding in the tribunal. [20] One response to the present situation might be to say that the appellant should pay the costs which have been wasted, or thrown away, because the proceeding was started in the wrong place, but not the costs of work still useful to the proceeding in the tribunal. Unfortunately the magistrates court scale is a blunt instrument for dealing with that basic distinction. [21] The costs allowed were those under schedule items 2, 5, 6(e) and 11(a)(i) and (ii). Item 2 would include the cost of preparing, filing and serving the relevant documentation, as well as the cost of finding out what was the defence, and formulating it. The amount claimed for preparation was limited to two-thirds of the scale item, but on the basis that not all of the costs associated with the preparation for trial had already been incurred, rather than on the basis that -- 6 of 9 -- 7 some of them would not have been wasted. The brief to advise on jurisdiction was only concerned with the magistrates court proceeding, but the brief to advise on evidence ought to be relevant in the tribunal. Making and requesting disclosure is difficult; there is no automatic disclosure in the tribunal, although in an appropriate case the tribunal could direct that it occur. Those costs might well have been avoided if the matter had proceeded in the tribunal. [22] Doing the best I can, in my opinion it would be reasonable to attribute half of the costs under items 2 and 5, and the costs associated with the brief to advise on evidence, to matters which would still be relevant to the conduct of the proceeding in the tribunal. That represents the cost of work which would not have to be repeated when the matter proceeds in the tribunal, and therefore work which has not been wasted because the proceeding was started in the court. The balance of the costs, however, do seem to me to be attributable to matters where the work has been wasted.9 [23] In Capylgin v Martin Fiebig Homes Pty Ltd [2003] QSC 382 Moynihan SJA ordered that a proceeding which had been commenced in the Supreme Court be started again before the tribunal. His Honour ordered that the costs of the action, that is the proceeding in the Supreme Court, be costs in the proceeding before the tribunal: [20]. His Honour gave no reasons for that decision on costs, which may not have been contentious. That case was different from the present in that the Supreme Court action had been started at a time when the tribunal did not have exclusive jurisdiction, so it was not a case where there was any question of penalising the plaintiff because the proceeding had been started in the wrong court. Absent that consideration, one would expect the costs of the proceeding in the court to follow the event, and his Honour’s order was designed no doubt to produce that result notwithstanding that the event would be provided not by a decision of the court, but by a decision of the tribunal. To the extent that there were wasted costs in that matter, it was not the fault of either of the parties. There is therefore an important difference between that case and the present, and it is not a matter of resolving the present case simply by following that decision. [24] A further complication arises, however, because the approach to costs in the tribunal is not the same as the approach to costs in a court. That follows from the terms of sections 70 and 71. An authoritative exposition of these provisions was given by the Court of Appeal in Tamawood Ltd v Paans [2005] QCA 111. Keane JA, with whom the other members of the court agreed, said that a finding that the successful party was justified in engaging the services for legal representatives to assist it in what was recognised as complex proceedings, coupled with success in the proceeding, was a sufficient basis to conclude that the interest of justice warranted the exercise of the discretion to award costs in favour of the successful party, at least in the absence of any countervailing consideration: [30]. 9 I calculate this to be $2,273.33. -- 7 of 9 -- 8 [25] His Honour continued at [32]-[33]: “If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves. Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the tribunal…In the absence of countervailing considerations, where a party has reasonably incurred the costs of legal representation, and has been successful before the tribunal, it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring that party to bear the costs of representation which was reasonably necessary to achieve that outcome.” [26] It was pointed out in Tamawood (supra) that the Act encourages parties to represent themselves to save legal costs unless the interests of justice require otherwise: section 73. It may well be that many of the matters in dispute before the tribunal are straightforward ones where the parties do not obtain legal representatives, and that does not impair the proper presentation of their cases, or the efficient operation of the tribunal. In my experience of dealing with appeals from the tribunal, litigants before the tribunal fall into two categories; those who have legal representatives to assist them, and those who attempt to represent themselves because they cannot afford lawyers. It is my observation that people in the latter category are always at a disadvantage, because of the absence of legal assistance, in the preparation and presentation of their cases. It may be, however, that matters which come to the court from the tribunal are unrepresentative of the general run of the work of the tribunal. [27] I do not know whether it will be reasonable for the parties, and in particular the respondent, to engage the services of legal representatives to assist them in the conduct of the proceeding in the tribunal. Certainly both parties were legally represented in the magistrates court, and before me. Overall from the current pleadings it looks to me to be a complex enough case to justify the involvement of legal representatives, but that is not a matter for my judgment, and I do not know what the tribunal would conclude about that. However, there is no reason to assume that the tribunal would not properly apply the approach to costs laid down in Tamawood (supra). [28] If the proceeding had been started in the tribunal, as it ought to have been, the respondent may not have engaged lawyers to assist him. He may have acted on the legislative encouragement in section 73 and defended the proceeding himself. More importantly, if he did engage lawyers he would have done so knowing10 that he was at risk of having to bear the cost of them himself even if 10 For the purposes of this exercise he must be taken to know the law and in particular ss70 and 71, as expounded by the Court of Appeal. Hopefully if he consulted a solicitor he would have received advice about this. -- 8 of 9 -- 9 he won, unless he could achieve a favourable exercise of discretion from the tribunal. That was not a matter he needed to consider with a claim in the court. If part of the costs incurred already are treated as costs incurred in the tribunal, he will have been deprived of the opportunity to elect not to incur legal costs in the tribunal proceeding, because of the risk of not recovering them. Because the magistrate could not control or even predict the outcome of any application to the tribunal for costs if the respondent were successful, the only way to prevent him from suffering this prejudice was to award him the full costs of the proceeding. It follows that the only way to prevent the appellant’s error in commencing the proceeding in the wrong place from prejudicing the respondent was to award him the full costs of the proceeding. [29] In my opinion therefore the order made by the magistrate was not merely one which was rationally open on the facts of this case, it can be seen to be one which was justified by them, as the appropriate response. To put the matter another way, the starting point of any analysis of the discretion as to costs in the court is that the costs should follow the event unless there is good reason to make a different order. In the present case there was no sufficient reason shown to depart from that position, no sufficient reason to deprive the successful11 defendant of his costs. It follows that the appeal must be dismissed, and costs follow the event. 11 So far as the court proceeding was concerned; because of the different costs regime, it was not appropriate to treat the tribunal proceeding as a continuation of the court proceeding. -- 9 of 9 --