A L Builders Pty Ltd v Fatseas & Anor

[2014] QCATA 171

CITATION: A L Builders Pty Ltd v Fatseas & Anor [2014] QCATA 171

PARTIES:	A L Builders Pty Ltd (Applicant/Appellant)
v
Nicholas Fatseas Tricia Fatseas (Respondent)

APPLICATION NUMBER: APL156-14

MATTER TYPE: Appeals

HEARING DATE: On the papers

HEARD AT: Brisbane

DECISION OF: Senior Member Oliver
Member Howe

DELIVERED ON: 9 July 2014

DELIVERED AT: Brisbane

ORDERS MADE: 1.    Appeal dismissed.

CATCHWORDS:

EXERCISE OF DISCRETION – where application to determine a preliminary issue before hearing of the substantive proceeding – where determination of the application involved the exercise of discretion having regard to the circumstances of the case – where application dismissed – whether the tribunal erred in the exercise of discretion

Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 3, 28 and 146

House v R (1936) 55 CLR 499;
Australian Coal and Shale Employees' Federation v. The Commonwealth (1953) 94 CLR 621 at 627;
Rodgers v Rodgers (1964) 114 CLR 608
Reading Australia Pty Ltd v Australia Mutual Providence Society (1999) 217 ALR 495;
Re Cotton Crops Pty Ltd [1988] 1 QD R 482; CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 601

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. The parties to this appeal are involved in a complex building dispute. The dispute relates to building work carried out by the applicant at the respondents’ premises on the Gold Coast.

2. One of the issues at the heart of the dispute is whether the parties entered into a fixed price contract or a costs plus contract. Depending on the finding as to the type of contract that governed the legal relationship between them, certain consequences would flow. However, even if it was determined to be a costs plus contract, consideration would be necessary with respect to compliance with s 55 of the Domestic Building Contracts Act 2000 (Qld).

3. The substantive proceeding had been listed for hearing early this year however, prior to the hearing, the applicant filed an application asking the Tribunal to determine some preliminary issues. They were:

   (a)Whether the contract between the applicant and the respondents was a fixed price contract or a costs plus contract;

   (b)The relevant terms of the contract in so far as they bear upon the rights of the parties as relevant in the proceedings;

   (c)Which of the alleged defects in the house building, the subject of the proceedings, remain in issue as a consequence of any determinations referred to in (a) and (b) above.

4. The application was opposed and on 21 March 2014 the Tribunal made an order dismissing the applicant’s application.

Grounds of Appeal

1. On 4 April 2014 the applicant filed an application for leave to appeal or appeal. The grounds of appeal contend generally, that the learned Member erred in the exercise of his discretion in not ordering a ‘trial’ of the preliminary issues; was wrong and contrary to law and failed to have regard to the following matters:

   (a)The significant differences between a costs plus contract and a fixed price building contract;

   (b)The savings of costs which would be effected if the Tribunal ordered the trial of a preliminary issue;

   (c)The savings of time which would be effected if the Tribunal ordered the trial of a preliminary issue;

   (d)The simplification of the final trial if a preliminary issue were first determined.

2. It is further contended that the learned Tribunal Member failed to have regard to the objects of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) to ensure the matter proceeded expeditiously and whether the question of a costs plus contract or a fixed priced contract could be considered as a discrete issue. Because the appeal involves an error of law, leave to appeal is not necessary[1].

   [1]QCAT Act s 146.

3. It is evident from the reasons that the learned Member was mindful of the objects of the QCAT Act in particular he had regard to s 28(1) of the Act which provides that the conduct of the proceeding is at the discretion of the Member. In paragraph [12] he referred to the objects of the Act indicating that he was mindful that if time could be saved by the determination of the preliminary issue this would have been consistent with those objects.

Reviewing Exercise of Discretion

1. The critical issue on the appeal is whether it can be said that the exercise of the discretion to decide the preliminary issue miscarried in the way contemplated by the High Court in House v R.[2]  In that case the court said:

   The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

   [2](1936) 55 CLR 499.

2. There is great reluctance in appellate jurisdiction in disturbing a discretionary decision made below.  There is a presumption that the discretion has been exercised correctly.  Accordingly the appellate must show the decision was wrong, not simply that the discretion could have been otherwise exercised.  This was explained by Kitto J in Australian Coal and Shale Employees' Federation v. The Commonwealth[3]:

   I shall not repeat the references I made in Lovell v. Lovell (1950) 81 CLR 513, at pp 532-534 to cases of the highest authority which appear to me to establish that the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v. The King (1936) 55 CLR 499, at pp 504, 505.

   [3](1953) 94 CLR 621 at 627; confirmed in Rodgers v Rodgers (1964) 114 CLR 608.

3. With that presumption and guiding principles in mind, one turns to examine the learned Members reasons for refusing the application. As we have already indicated he had regard to s 28 of the QCAT Act which grants a discretion to the Tribunal in how a proceeding is to be conducted, but also imposes an obligation to act fairly and according to the substantial merits of the case. The Tribunal must observe the rules of natural justice even though it is not bound by the formal rules of evidence. He also had regard to s 3 the objects of the legislation, to ensure that matters are dealt with in a way that is accessible, fair, just, economical, informal and quick.

4. In some cases it can be a useful exercise to decide a preliminary issue prior to a substantive hearing. In many cases this is done when there are no contested issues of fact. For example if the preliminary issue involves the construction of a statute, or a contract in a particular way that might be decisive as to the ultimate outcome of a case. These sorts of matters are discussed at length in the case referred to by the learned Member, Reading Australia Pty Ltd v Australia Mutual Providence Society[4]. In paragraph [14] of the reasons extracts of that case are set out which clearly identify those matters that need to be taken into account when considering whether to split a case to decide a preliminary issue or point.

   [4](1999) 217 ALR 495.

5. The learned Member also had regard to Re Cotton Crops Pty Ltd[5] where McPherson J (as he then was) had regard to the utility of deciding a preliminary issue of law or construction because of the potential for costs saving and convenience ‘separately from the trial of the factual issues in the action’.[6] Having referred to both these cases, the learned Member was acutely aware that whether to make an order for a separate determination of the preliminary issue or not, was discretionary and it depended on the particular circumstances of the case.

   [5][1988] 1 QD R 482.

   [6]Reasons at [15].

6. In the applicant’s written submissions, it contends ‘the Tribunal gave no weight to the obligations contained in section 3 of the QCAT Act to do whatever it can to simplify and shorten litigation’. That submission is not supported by the learned Members reasons. As we have indicated he had regard to s 3 and decided in the circumstances that there would be no utility in deciding the preliminary issue because of the significant factual dispute as to whether or not there was a variation from the original fixed price contract to a cost plus contract.

7. It is then contended that the learned Member misunderstood the submission that there would be a need for separate trials. It is submitted that this was an error and all that the applicant was seeking was a determination on a discrete issue as to whether the contract was costs plus or fixed price. Once that determination was made, this would allow the parties to ‘analyse and refine their respective cases accordingly’. The learned Member correctly focused however on the factual dispute about this very issue. There would need to be findings of fact that may involve questions of credibility, which could then impact on the balance of the case particularly with respect to what work was covered by the contract whether fixed or cost plus, and damages for defective or incomplete building work.

8. Here there was no agreed statement of facts and as a consequence there would have been a ‘trial’ on the preliminary issue. It seems to be submitted that the learned Member misunderstood the authorities with respect to deciding a preliminary issue because it is submitted that the authorities show that there ‘may be a trial of a preliminary issue even though it does not result in a final determination of the proceeding provided it will substantially narrow the field of controversy’.[7] Also it may not necessary that it put an end to the litigation.[8]  But these are the very things that the learned Member considered when exercising his discretion.

   [7]CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 601 at 606 per Kirby P.

   [8]Re Cotton Crops Pty Ltd supra.

9. What the applicant has not been able to establish, in terms of House v R and Australian Coal and Shale Employees' Federation v The Commonwealth is where the discretion exercised by the learned Member miscarried. Rather than identify error in the learned Member’s reasoning, the submission simply argues the case afresh. It is not to the point that we might come to a different decision. 

10. As we are unable to identify any error on the part of the learned Member nor is any demonstrated, the appeal is dismissed.