The Trustee for Smith Family Holding Trust t/as JP Smith Recruitment & Hr v Civica Pty Ltd
[2014] QCATA 184
•21 July 2014
| CITATION: | The Trustee for Smith Family Holding Trust t/as JP Smith Recruitment & HR v Civica Pty Ltd [2014] QCATA 184 |
| PARTIES: | The Trustee for Smith Family Holding Trust t/as JP Smith Recruitment & HR (Applicant/Appellant) |
| v | |
| Civica Pty Ltd (Respondent) |
| APPLICATION NUMBER: | APL481-13 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Thomas, President |
| DELIVERED ON: | 21 July 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Leave to appeal granted. 2. Appeal allowed. 3. Respondent to pay appellant $783 ($484 advertising + $201 costs + $98 filing fee) within 28 days of this order. |
| CATCHWORDS: | APPEAL – LEAVE TO APPEAL – MINOR CIVIL DISPUTE – TRADER/TRADER CLAIM – where contract for recruitment services – where standard terms altered – where contract terminated before recruitment complete – whether contract frustrated – whether recruitment provider entitled to part payment – whether grounds for leave to appeal Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 32, s 142(3)(a)(i) Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 |
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
On 21 November 2012, Civica Pty Ltd (“Civica”) engaged The Trustee for Smith Family Holding Trust t/as JP Smith Recruitment & HR (“JP Smith”) to recruit some staff. JP Smith uses a standard form agreement. It contained a clause that allowed JP Smith to charge a minimum fee. When Civica returned the engagement letter, it had deleted clauses 14 and 15 of the standard agreement. Those clauses allowed JP Smith to charge a fee, even if a client terminates the agreement before a staff member is placed.
On 30 November 2012, Civica agreed to pay $440 plus GST for web site advertising. On 31 January 2013, Civica advised JP Smith that it had restructured and no longer required JP Smith’s services. JP Smith rendered an invoice for the advertising and an invoice for its recruitment services. Civica did not pay either invoice, so JP Smith filed a claim in the minor civil disputes jurisdiction of the tribunal. A Magistrate, sitting as a member of the tribunal, dismissed JP Smith’s claim.
JP Smith seeks to appeal that decision on the basis that the learned Magistrate erred in finding that the agreement was frustrated and that the learned Magistrate erred in her interpretation of the clause which allowed JP Smith to charge a minimum fee plus disbursements.
Because this is an appeal from a decision of the tribunal in its minor civil disputes jurisdiction, leave is necessary.[1] Leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.[2]
[1]QCAT Act s 142(3)(a)(i).
[2]Pickering v McArthur [2005] QCA 294 at [3] per Keane JA.
The learned Magistrate found that the contract was frustrated.[3] A contract is frustrated if:
…without default of either party a contractual obligation becomes incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract...[4]
[3]Transcript page 1-4, line 10.
[4]Davis Contractors Ltd v Fareham UDC [1956] AC 696 at 729, adopted by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 357.
Civica’s advice, that it did not want JP Smith’s services did not frustrate the contract, it terminated the contract. The learned Magistrate was in error in that finding.
The real question is whether JP Smith was entitled to charge a consulting fee, in addition to disbursements, in circumstances where Civica had terminated the contract before the introduction of a candidate.[5] JP Smith relies on a clause entitled “Our Fees” that states:
JP Smith has a minimum fee of $3,500 plus GST applicable to all recruitment jobs…Disbursements (psychometric testing, advertising, travel and accommodation when requested/agreed/approved by the client) will be charged in addition to JP Smith consulting fees. The recovery of costs associated with obtaining payment of our Accounts (including legal costs on an indemnity basis) will be added to the amount of any outstanding Account.
[5]Clause 2 also says that the consulting fees will be payable upon the candidate accepting the position, in addition to being introduced to the client.
The learned Magistrate found that this clause only operated if the contract was completed; that is, if JP Smith introduced a candidate, who then accepted the position in the client organisation.
There is justification for that view. The entitlement to payment arises under clause 14. Unless there is a provision allowing additional rights (such as the deleted clause 14), the entitlement contemplated by clause 14 arises on performance of the services i.e. introduction and engagement of a staff member. The deleted clause 14 provided for a scale of part payments if the client terminates the contract before the staff member is engaged. In fact, JP Smith’s initial invoice was based on the clause 14 formula.
The alternative view, that JP Smith was making it clear that once a client signed the contract, whatever happened, the client would have to pay it $3,500 plus GST, can not stand. Imposing such a fee on a client, where no recruitment had in fact occurred (for whatever reason) would be inconsistent with the structure of the progress fee scale in clause 14. Read in the context of clause 2, the Magistrate’s findings; that the right to the minimum fee of $3,500 plus GST would only crystallise on the occasion of a candidate being introduced, and accepting the position, as envisaged by clause 2, is the correct view.
Even where no recruitment had in fact occurred, JP Smith is entitled to charge for disbursements spent in the course of recruiting. Clause 14 sets out this right. It is not correct that JP Smith could not charge for an approved disbursement unless it completed the task, and Civica acknowledged that.[6] JP Smith filed a copy of a tax invoice for advertising the position on a number of job advertisement websites for an amount of $484. Civica never paid this amount; JP Smith should receive this money.
[6]Transcript page 1-9, lines 22 – 32.
Mr Smith, for JP Smith told the learned Magistrate that JP Smith had worked on the recruitment exercise. It had advertised, shortlisted and had arranged final interviews (between JP Smith and potential candidates).[7] Ms Shepard, for Civica, accepted that JP Smith had done work and that it was reasonable to compensate JP Smith for that work.[8] However, Civica had not agreed to the terms that nominated the pay scale, and as no candidate had been introduced (or accepted a position), as clause 2 contemplates, nothing more than approved disbursements was payable.
[7]Transcript page 1-5, lines 30 – 34.
[8]Transcript page 1-7, lines 43 – 47, page 1-8, lines 1 – 2.
JP Smith is entitled to something more: the “Our Fees” clause also allows JP Smith to recover its legal costs on an indemnity basis. JP Smith filed a copy of a tax invoice from Aden Lawyers Pty Ltd. The tax invoice refers to an attached schedule, but the schedule was not attached. Civica should not have to pay for advice about the consequences of the contract being varied, but there is no way of knowing whether Aden Lawyers included this work in its invoice. The Magistrates Court Scale sets the amount for instructions to sue for claims under $751 at $201. I propose to allow this amount for legal fees pursuant to the contract terms.
On determining that the contract had been frustrated, and not awarding for the disbursements or legal costs, the learned Magistrate was in error. Leave to appeal should be granted and the appeal allowed. Civica shall pay JP Smith $783 ($484 advertising + $201 legal costs + $98 filing fee) within 28 days of today’s order.
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