Filippi v Fagimo Pty Ltd

Supreme Court of NSW|2011-12-02|Before: McCallum J

Judgment 1HER HONOUR: These proceedings concern a costs order made against the plaintiff, Mr Kevin Filippi, by the Consumer, Trader and Tenancy Tribunal. The principal issue raised by the proceedings is whether the enforcement of that order is precluded by an earlier deed of settlement and release between Mr Filippi and the party in whose favour the costs were awarded, Fagimo Pty Limited. A further issue raised in the alternative is whether the costs order is liable to be quashed on the grounds of jurisdictional error or denial of procedural fairness. 2Fagimo engaged Mr Filippi to provide building and construction services in respect of the development of a residential strata complex in Wollongong. 3In 2005, legal proceedings arising out of the development were settled as between Fagimo and Mr Filippi on the terms recorded in the deed of settlement and release. In 2008, the homeowners' warranty insurer for the development project brought proceedings against both Mr Filippi and Fagimo for alleged defects in the works. In those proceedings, the tribunal made an order for costs against Mr Filippi in favour of Fagimo. 4Fagimo has had the costs assessed under the Legal Profession Act 2004 and has obtained a certificate of assessment. Fagimo has agreed not to file the certificate in the registry pending the determination of these proceedings. Mr Filippi seeks an order permanently staying the costs assessment process and restraining Fagimo from seeking to recover any costs arising from the development. In the alternative, Mr Filippi seeks an order in the nature of certiorari quashing the order made by the tribunal.

Circumstances in which the claim is brought 5The building contract between Mr Filippi and Fagimo was entered into in April 2000. Fagimo was the registered proprietor of the land and Mr Filippi was retained as the construction manager for the project (exhibit 1 at page 1). An occupation certificate was issued on 20 May 2001. On about 19 June 2001, the strata plan was registered and legal title to the common property of the development vested in the owners' corporation. 6In November 2001, a liquidated claim was brought against Fagimo in the Local Court by a supplier to the development, Mr Wayne Billet (exhibit 1 at page 22). Fagimo joined Mr Filippi as a third party to the proceedings. Both Fagimo and Mr Filippi brought cross-claims against each other concerning alleged delays and non-payments (exhibit 1 at pages 24-41). The proceedings were eventually transferred to the District Court. 7On 6 April 2005, Mr Filippi and Fagimo arrived at a settlement and entered into the deed of settlement and release. The operative clause of the deed provided that the parties "release each other from any present and future claims and costs which arise, or are in any way related to, the development" (exhibit 1 at page 45). It was accepted at the hearing that a word or words are missing from that clause and that it should read "claims and costs which arise from or out of, or are in any way related to, the development". 8The relevant provisions of the deed are as follows: Background: AFagimo & Filippi were parties to a contract dated 4 April 2000 in respect of work to be carried out in relation to the development. BOn or about 8 November 2001 Wayne Billett brought an action against Fagimo in the Local Court proceedings. COn or about 3 February 2002 Fagimo joined Filippi as a third party to the Local Court proceedings. DOn or about 9 May 2002 Filippi served Fagimo with a notice of cross claim in the Local Court proceedings. EThe proceedings between Fagimo and Wayne Billett were resolved by orders made by the Local Court on 15 November 2002. FOn or about 2 July 2002 Fagimo served Filippi with a notice of cross claim in the Local Court proceedings. GOn or about 3 August 2004 Fagimo filed an amended notice of grounds of defence and amended notice of cross claim in the Local Court proceedings. HOn or about 11 October 2004 the Local Court proceedings were transferred to the District Court proceedings and terms of settlement have been filed in respect of those proceedings. IAt the direction of Filippi, Fagimo made payments for work carried out at the development to Filippi & Sons. I [sic]The parties agree to settle all and any claims and costs against each other on the terms of this deed. 1.Definitions & interpretations 1.1 Unless otherwise indicated, these terms mean: claimany action, claim, suit, demand, proceedings, damages or statutory procedure for the recovery of money; costsall loss, damage, costs, contributions and expenses, including legal costs and expenses incurred in bringing, defending or settling any claim; developmentthe residential development of land being lots 133 and 134 in deposited plan 7135 and lot 132 in deposited plan 7135, known as 26 and 28 Fisher Street West Wollongong New South Wales by Fagimo; District Court Proceedingsproceedings number 124 of 2004 in the District Court at Wollongong New South Wales; Local Court Proceedingsproceedings number 1268 of 2001 in the Local Court of New South Wales; partyFagimo, Mr Filippi and Mr Filippi & Sons including their directors, officers, employees, agents, related entities, successors, and permitted assigns; personhas the meaning given by the Acts Interpretation Act 1901 (Cth) at the date of this deed. ... 3.Release 3.1The parties release each other from any present and future claims and costs which arise, or are in any way related to, the development. 4.Bar to proceedings 4.1This deed may be pleaded as a bar to any claim commenced by a party in relation to the development. 4.2This deed may not [be] pleaded as a bar to any claim arising from the non-performance by a party of any obligation under this deed. ... 6.General indemnity 6.1Each party indemnifies the other parties against all loss or costs directly or indirectly suffered by the other parties as a result of a breach of this deed by that party. ... 6.3A party may seek injunctive or other interlocutory relief to prevent a breach of this deed and compel specific performance of any party's obligations under this deed. 9On 22 May 2008, proceedings were commenced in the District Court of New South Wales against Mr Filippi and Fagimo by the homeowners' warranty insurer for the development, Vero Insurance Limited (exhibit 1 at pages 45-49). Vero alleged that Mr Filippi and Fagimo carried out development work in breach of the statutory warranties under the Home Building Act 1989, causing loss and damage to the owners' corporation (losses indemnified by Vero). 10Mr Filippi filed a notice of motion to have those proceedings transferred to the Consumer Trader and Tenancy Tribunal. Fagimo opposed the motion on the grounds that the tribunal did not have jurisdiction in respect of the claim, since it had been lodged outside the limitation period fixed under s18E of the Home Building Act: see s 48K(7) of the Act. The proceedings were transferred to the tribunal (over Fagimo's opposition) on 10 October 2008. 11The presiding member in the tribunal determined three preliminary questions. The first was an issue raised only by Mr Filippi in his defence. He contended that his contract with Fagimo was not a contract to do "residential building work" within the meaning of the Home Building Act and, accordingly, that he was not bound by the statutory warranties implied in such contracts under s 18B of the Act. That argument, if successful, would have defeated Vero's claim against Mr Filippi altogether and left Fagimo alone as defendant to the substantive allegations of breach of warranty raised by Vero. 12The second preliminary question was raised by both Mr Filippi and Fagimo. Both defendants argued that Vero's claim was statute-barred under the Home Building Act. The third preliminary question was Fagimo's argument that there had not been a valid assignment at law and that a purported notice under s 12 of the Conveyancing Act 1919 (NSW) was invalid. 13On 4 January 2010, the member answered the preliminary questions as follows (exhibit 1 at page 111): i. Was the contract between the First and Second Respondents [Mr Filippi and Fagimo] a contract to do residential building work within the meaning of the Home Building Act 1989 s.18B be answered 'Yes'. ii.Is the Applicant [Vero] able to maintain these proceedings having regard to the provisions of the Home Building Act 1989 s.48K(7) be answered 'No'. iii.Is the Applicant able to maintain these proceedings as the assignee of the Owners Corporation SP 65856 be answered 'Not necessary to answer'." 14The result was that the proceedings were dismissed as having been brought outside the statutory limitation period of the tribunal's jurisdiction. Section 48K(7) of the Home Building Act, read together with s 18E (as then in force), limited the jurisdiction of the tribunal in respect of building claims arising from a breach of statutory warranty to seven years from the date of completion. The tribunal member concluded that the date of completion was 20 May 2001, the date on which the occupation certificate for the development was issued. The proceedings were commenced on 22 May 2008, seven years and two days after that date, and thus outside of the statutory limitation period (affidavit of Michael Corban sworn 12 August 2011 at paragraph 16). 15The member then received submissions as to costs. Fagimo sought an order for its costs against Mr Filippi in respect of the additional costs incurred in respect of the first preliminary question (exhibit 1 at page 121, paragraph 4). 16Mr Filippi submitted (among other things) that Fagimo's claim for costs was in breach of clause 3.1 of the deed. 17On 12 March 2010, the member ordered that Mr Filippi pay the costs incurred by Fagimo in relation to the first preliminary question. The reasons for decision make no reference at all to the argument concerning the deed of settlement. The member noted that the effect of his answer to the second question was that the tribunal did not have jurisdiction to hear and determine Vero's application. He further noted that the question whether "the tribunal has jurisdiction to determine the question of costs" was not raised in submissions by any party (exhibit 1 at page 157, paragraph [b].) 18In November 2010, Fagimo commenced the costs assessment process by serving on Mr Filippi a bill of costs and a notice to file objections (affidavit of Ding Pan affirmed 19 July 2011 at paragraph 11). In a letter dated 15 October 2010, the solicitors for Mr Filippi wrote to the solicitors for Fagimo stating, "we are of the view that your client's proposed application for assessment will breach the terms of Deed of Settlement and Release dated 6 April 2005 (the "Deed") and is barred by the Deed... If your client proceeds with the intended application for assessment of costs, our client intends to plead the Deed as a bar to such an application, seek injunctive or other interlocutory relief in a Court of competent jurisdiction against your client to prevent a breach of Clause 3.1 if necessary, and seek costs on the indemnity basis" (exhibit A at page 130). 19Fagimo filed its application for the assessment of costs with the Supreme Court registry on 29 December 2010 (exhibit A at page 92). 20On 9 March 2011, the solicitors for Mr Filippi emailed the costs assessor drawing his attention to the deed and advising that they "have undertaken to commence injunctive proceedings in the Supreme Court in relation to the attempt to seek payment contrary to the Deed urgently" (exhibit A at page 137). 21On 16 May 2011, Mr Filippi was advised that a new costs assessor had been appointed. On 20 May 2011 the new costs assessor sent Mr Filippi a notice requesting further information. Mr Filippi's solicitors responded on 9 June 2011, again drawing attention to the deed. His solicitors noted that they had filed a summons in the Supreme Court seeking injunctive relief. They requested a suspension of the assessment process pending the conclusion of those proceedings (exhibit A at pages 144-146). 22The costs assessor declined to suspend the assessment and Mr Filippi filed objections to the bill of costs on 1 July 2011 (exhibit A at page 147). Certificates of determination for the costs, and for the costs of the costs assessment, were issued on 27 July 2011 and released to the parties on 5 August 2011. Those costs were assessed in the amounts of $21,567.67 and $1,852.25 respectively (Exhibit 1 at pages 160-161). 23A certificate of determination does not become an order of the court until it is filed with the registry of the court by a party: s 368(5) Legal Profession Act 2004. As already noted, Fagimo has agreed not to file the certificates pending the determination of these proceedings (T20.50). 24By summons filed 9 June 2011, Mr Filippi seeks an order permanently restraining Fagimo from seeking to recover, by any means, any costs which arise, or are in any way related to, the development. He also seeks an order that the costs assessment process be permanently stayed. In practical terms, Mr Filippi seeks to restrain Fagimo from filing the certificates of determination with the Supreme Court registry. In the alternative, Mr Filippi seeks an order in the nature of certiorari quashing the tribunal's order that Mr Filippi pay Fagimo's costs in relation to the first preliminary question, and an order in lieu that the parties bear their own costs in relation to that question. He contends that the tribunal denied him natural justice in failing to consider his submissions on the operation of the deed, or else lacked jurisdiction to determine costs in circumstances where it lacked jurisdiction to determine Vero's application. 25Fagimo contends that, properly construed, the deed is limited to the matters the subject of the Local and District Court proceedings. It further says that natural justice was not denied to Mr Filippi and that these proceedings are an abuse of process, since Mr Filippi has not availed himself of the rights of appeal provided for by the Consumer, Trader & Tenancy Tribunal Act 2001. Fagimo further contends that, by reason of the tribunal's decision, Mr Filippi is now estopped from prosecuting the claims in the summons, as any such rights have already "been determined by the Decision and merged with it", or alternatively that the matters asserted by Mr Filippi were so relevant to the subject matter of the tribunal proceedings that they should have been pursued there, such as to give rise to an Anshun estoppel.

Issues 26The issues raised by the parties may be summarised as follows: (1) whether the tribunal had jurisdiction to award costs; (2)whether these proceedings are an abuse of process or whether Mr Filippi is otherwise estopped from bringing them; (3)whether the deed, properly construed, prevents the recovery by Fagimo of the costs of the first preliminary question in the tribunal proceedings; (4)whether the decision of the tribunal entailed jurisdictional error; (5)whether this Court should exercise its jurisdiction to grant relief.

Did the tribunal have jurisdiction to award costs? 27Mr Filippi submitted that the tribunal erred in "assuming that there was jurisdiction to determine costs notwithstanding that there was no jurisdiction in the tribunal at all and did so in the absence of express statutory entitlement" (summons at paragraph 26(iv)). This point was mentioned only in passing at the hearing and does not feature in Mr Filippi's written submissions, nor was it a point made in the submissions on costs to the tribunal member (as noted by the tribunal member in his reasons for decision set out above). Nevertheless, the point now having been raised, it must be addressed. 28I am satisfied that the tribunal did have jurisdiction to award costs of the preliminary hearing. Section 53 of the Consumer, Trader & Tenancy Tribunal Act provides that the tribunal may, in accordance with the regulations, award costs in relation to any proceedings including costs incidental to proceedings. Nothing in the regulations restricts the award of costs in a case such as the present. 29Mr Ashurst SC, who appeared with Mr Dawson for Fagimo, submitted, correctly in my view, that there is no issue as to the tribunal's jurisdiction to determine the jurisdictional fact as to whether or not the proceedings were brought out of time. In those circumstances, and in the absence of any contrary intention evinced by the legislation, there is no reason to conclude that the tribunal lacked power to award costs incidental to that determination. 30Mr Doyle, who appeared for Mr Filippi, submitted that the case was unusual in that the tribunal not only denied jurisdiction to determine Vero's application whilst assuming jurisdiction to award costs, but also went to substantial lengths to consider the claim before coming to that conclusion. 31I do not think that alters the position. Since the jurisdiction of the tribunal was in issue (formulated as the second preliminary question), it may have been more appropriate for the member to determine that issue before hearing the other preliminary questions. Nonetheless, I think it was open to the member to adopt the course he did. I am satisfied that the tribunal had jurisdiction to determine the costs of the entire preliminary hearing.

Are the proceedings an abuse of process or otherwise estopped? 32Fagimo submits that these proceedings are an abuse of process in that they amount to an attempt to re-litigate issues already argued, circumventing the limited statutory remedies available to a party aggrieved by a decision of the tribunal. Fagimo further asserts that Mr Filippi should be estopped from prosecuting the present claim, since his rights have been determined by the tribunal's decision and have merged with it, or alternatively that the claims should have been pursued in the tribunal such that they now give rise to an Anshun estoppel. 33The contention as to Anshun estoppel, made only in the amended notice of defence at 29 and not agitated elsewhere, may be disposed of briefly. The operation of the deed was raised squarely in Mr Filippi's submission in reply on the issue of costs (exhibit A at pp 69-70, paragraphs [48]-[57]). His complaint is that the tribunal did not address it. Accordingly, I do not think this is a case falling within the principles stated in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589. To the extent that this point was intended, rather, to refer to Mr Filippi's failure to pursue avenues of appeal available under the Consumer, Trader & Tenancy Tribunal Act, that issue is addressed separately below. 34Mr Ashurst submitted that Mr Filippi had a number of review options under the Act, which he did not exercise. Under s 49 of the Act, he could have requested the tribunal to provide reasons within 14 days of receiving the notice of decision. Under s 67, he could have appealed to the District Court on a question of law. Under s 68 he could have applied to have the matter reheard by the tribunal on the grounds that the decision was not fair and equitable, or went against the weight of evidence or that significant new evidence had arisen, resulting in a substantial injustice. 35Mr Ashurst submitted that, by the present application, Mr Filippi is seeking to have an appeal or review of the member's decision determined outside of the scope of those processes and after the time for an appeal has expired. He submitted that this constitutes an abuse of process, relying on what was said by Handley JA in Rippon v Chilcotin Pty Limited [2001] NSWCA 142; (2001) 53 NSWLR 198 at [15] and [28]: [15] The accountants were not parties to the action in the Supreme Court, nor were they privies of the vendor, and they cannot claim the benefit of any cause of action estoppel or issue estoppel. See James Hardie & Co Pty Ltd v Barry (2000) 50 NSWLR 357, 362 per Spigelman CJ. However in Reichel v Magrath (1889) 14 App Cas 665 the House of Lords held that a defence which was not barred by res judicata estoppel may nevertheless be struck out as an abuse of process. Lord Halsbury said at 668: "... it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again ... There must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of its procedure ...". ... [28] The present proceedings are an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings. In substance, ignoring the camouflage, the purchasers are attempting to re-litigate the issue of reliance on the 1991 figures which they lost. If they cannot succeed against anyone in respect of the 1991 figures because they did not rely on them, they could hardly succeed in establishing reliance on the earlier figures. 36Mr Ashurst acknowledged that the facts of that case are distinguishable but submitted that the principle remains applicable to the present case. 37Mr Doyle did not accept that Mr Filippi's rights in respect of the deed had been determined by the tribunal's decision. He submitted that, whilst it was possible that the tribunal member simply overlooked addressing the deed, it was more likely that he did not address it because he regarded its construction as a matter beyond the tribunal's jurisdiction (T4). He submitted that was an appropriate course, leaving it open to the parties to take the course Mr Filippi has taken in coming before this Court (T5). 38I think it is unlikely that the absence of any reference to the deed in the tribunal's decision is to be explained on that basis. Had the tribunal formed a considered view that there was no jurisdiction to determine the question of the application of the deed, the member would in all likelihood have said so. In any event, whether or not the absence of any reference to the deed was considered, there may be some force in the position contended for by Mr Doyle on behalf of Mr Filippi. 39It is established that the tribunal has jurisdiction to determine questions of law for the purposes of determining a building claim: Atkinson v Crowley [2011] NSWCA 194 at [23] per Basten JA; Giles JA agreeing at [1]. It may be accepted, by parity of reasoning, that it has jurisdiction to determine questions of law for the purposes of determining an issue as to costs falling within its jurisdiction. 40However, it does not necessarily follow that estoppel attaches to the determination of such a question. Consideration of the extent to which an issue estoppel arises out of the decision of an inferior tribunal requires attention to the precise jurisdiction the body is exercising. Where a tribunal has special jurisdiction to decide a particular class of matter, it may be authorised to decide other, collateral matters so far as is necessary for the exercise of the special jurisdiction conferred. Whether the tribunal has jurisdiction to decide such collateral matters conclusively and for all purposes between the parties, or only provisionally and subject to control by means of prerogative writ, will turn on the terms of the particular statute (or statutes) conferring jurisdiction on the tribunal: Ex parte Amalgamated Engineering Union (Australian Section); Re Jackson (1937) 38 SR (NSW) 13 at 19-20 per Jordan CJ; cited with approval in Miller v University of New South Wales [2003] FCAFC 180; (2003) 200 ALR 565 at [65] per Ryan and Gyles JJ. 41In Re Jackson, it was held at [21] that an issue estoppel did not arise out of a matter upon which it was merely necessary for the tribunal to form an opinion for the purpose of deciding the primary matter which the tribunal was invested with jurisdiction to decide. In the present case, it was necessary for the member to consider the operation of the deed for the purpose of determining the matter within his jurisdiction, namely, the costs of the preliminary questions. However, I do not think the tribunal had jurisdiction to determine the operation of the deed conclusively and for all purposes between the parties. Consideration of the deed was entirely collateral to the determination of a discrete issue falling within the tribunal's jurisdiction. 42Nor do I think the proceedings constitute an abuse of process. In Miller, after considering the remarks of Handley JA in the passage from Rippon v Chilcotin set out above and other relevant authorities, the Full Court of the Federal Court reached the following conclusion (at [81] per Ryan and Gyles JJ; and see [82]-[84]): In our opinion, there is considerable difficulty in finding a proper basis for the concept of staying proceedings as an abuse of process upon the ground of relitigation in the case of proceedings between the same parties which goes beyond the effect of res judicata, issue estoppel and Anshun estoppel (incorporating the English Henderson v Henderson estoppel); (see the illuminating discussion of the broad topic by the learned author of The Doctrine of Res Judicata 3rd ed, Ch 26). Indeed, if the principle is so broad, it is difficult to understand why the various kinds of estoppel are maintained at all. In our view, near enough to an estoppel is not good enough to establish abuse of process between the same parties without some other element being present. There is the danger that persistent or unattractive litigants with awkward cases might be refused access to the courts if there is a broad and imprecise discretion to stay actions which are somewhat like a previous proceeding. 43I do not think there is any issue estoppel in the present case. While the tribunal member had incidental jurisdiction to form an opinion as to the legal effect of the deed for the purposes of determining Fagimo's application for costs, he had no power to, for example, grant an injunction restraining one of the parties to the deed from seeking costs arising from the residential development, as sought by Mr Filippi in this Court; nor did he have the power to determine the parties' rights and obligations under clause 3.1 of the deed conclusively and for all purposes between them. 44It remains to consider whether these proceedings are an abuse of process in light of the statutory avenues for appeal or review available to Mr Filippi under the Consumer, Trader & Tenancy Tribunal Act. It is generally inappropriate for a superior court to hear an application for judicial review or to exercise its discretion to grant prerogative relief when other avenues of appeal are available: Lloyds v Veterinary Surgeons Investigating Committee [1999] NSWCA 68 at [13] per Priestley JA; Mason P and Stein JA agreeing at [1] and [27] respectively. 45It has been observed, however, that this rule "is neither inflexible nor universal. It is simply a sensible principle of restraint, allowing for the efficient and proper use of judicial time and of the remedies involved": Ackroyd v Whitehouse (1985) 2 NSWLR 239 at 248 per Kirby J (cited with approval in Lloyds at [13]). 46The availability of a statutory right of appeal does not, of itself, disqualify a person from having recourse to the supervisory jurisdiction of this Court. The availability of that jurisdiction may be appropriate, for example, in cases where there has been a clear breach of the requirements of procedural fairness: Lindsay v NSW Medical Board [2008] NSWSC 289 at [34] per Hall J. Nevertheless, it remains a question of discretion whether relief otherwise available should be granted in circumstances where avenues to appeal properly open have not been taken. 47Accordingly, it is appropriate to consider the remedies identified by Mr Ashurst. 48Mr Ashurst submitted, first, that Mr Filippi could have sought reasons for the decision under s 49(2) of the Act, which provides: Any party may, within 14 days of receiving notice of the decision, request the tribunal, in the manner prescribed by the regulations, to provide a statement of reasons for its decision. The statement must be provided within 28 days after the request is made. 49I do not think there was any occasion for Mr Filippi to request a statement of reasons in the present case. That entitlement is engaged where notice of a decision is given without any statement of reasons. In the present case, the member adopted the common practice of the tribunal of giving reasons in respect of his reserved decision. An application under s 49(2) would have been inappropriate in that circumstance, amounting in effect to a request for review or reconsideration of the reasons already provided. 50Fagimo relied secondly, and primarily, on sections 67 and 68 of the Act. Section 68 provides for an internal rehearing. Had such an application been made, a different member of the tribunal may have taken a different view of the deed and disposed of the matter in favour of Mr Filippi. However, any such rehearing would have been subject to the same jurisdictional limitations as the first. Indeed, such a determination would have left Fagimo free to seek relief in this Court of the same kind as that now sought by Mr Filippi. Accordingly, I am not satisfied that Mr Filippi's failure to pursue that remedy should preclude the relief sought in the present application. 51Section 67 is in a different category. That section provides a right of appeal to the District Court on a question of law. In an appeal under that section, the District Court would have had jurisdiction to construe the deed and to determine conclusively whether the costs were recoverable between Mr Filippi and Fagimo. An order for injunctive or prerogative relief would in that event have been unnecessary. 52Rule 50.3 of the UCPR provides that an appeal must be commenced by filling a summons within 28 days after the material date, or within such further time as the District Court allows. The member's reasons for decision were provided to the parties on 12 March 2010. Any appeal was accordingly well out of time when these proceedings were commenced on 9 June 2011. The court should be slow to allow a party to circumvent a statutory appeal process in that way. Mr Filippi's failure to pursue an appeal under s 67 of the Act would accordingly be a factor to be taken into account as militating against the discretionary relief sought, if otherwise available.

Does the deed preclude the recovery of the costs ordered by the tribunal? 53Mr Doyle put forward the attractively simple proposition that the deed in this case is unusually plain and means what it says. He submitted that, on the plain words of clause 3.1 (read together with the defined terms used in that clause), Fagimo is precluded from recovering the costs of the tribunal proceedings. By that clause, the parties released each other from any present and future claims and costs which arise out of, or are in any way related to, the development. The proceeding brought by Vero was a claim for the recovery of money which arose out of, and was related to, the development. Fagimo's legal costs were incurred in defending that claim. Mr Doyle accordingly submitted that, in claiming costs in relation to the first preliminary question, in seeking an assessment of those costs and in defending these proceedings, Fagimo has, in each case, breached the deed. 54Fagimo submits, first, that the deed construed on its face does not bar the recovery of costs in the tribunal proceedings and is limited to the matters the subject of the Local and District Court proceedings. Secondly, it submits that the tribunal proceedings were not in the contemplation of the parties at the time they entered into the deed and so, in accordance with the principles governing the construction of deeds of release, cannot be covered by it. Thirdly, Fagimo submits that even if the deed could have been pleaded in bar to the award of costs by the tribunal, it cannot now be used as a ground for prohibiting the filing of the costs assessment process as an order of the court.

Principles applicable to the construction of releases 55The principles governing the construction of releases were summarised by Santow J in Karam v ANZ Banking Group Limited [2001] NSWSC 709 at [406] (cited with approval by Einstein J in Shepherds Producers Co-operative Limited v John Scott Lamont [2009] NSWSC 294 at [11]): (1)In construing a release, here embodied in a letter of variation to the terms of lending, the Court should ascribe to the release the meaning that the release would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time that they signed the document containing the release: ICS v West Bromwich BS [1998] 1 All ER 98 per Lord Hoffman at 114. (2) In order for the Court to give effect to what in an objective sense the contracting parties intended, it is clear that a party may agree to release claims or rights of which it is unaware and of which it could not be aware, provided clear language is used to make plain that that is its intention: see Salkeld v Vernon (1758) 1 Eden 64, 28 ER 608 per Lord Keeper Henley. (3) Consistent with this emphasis on intention, general words in a release are limited to what was specifically in the contemplation of the parties at the time when the release was given: Grant v John Grant and Sons (1954) 91 CLR 112 per Dixon CJ, Fullagar, Kitto and Taylor JJ; Iletrait Pty Limited v McInnes (NSWCA, 17 April 1997, unreported) per Priestley JA with whom Grove AJA and Handley JA agreed). (4) Although there are no special rules of construction, such as a contra proferentem requirement, in the absence of clear language courts have been slow to infer that a party intended to surrender rights and claims of which it was unaware and could not have been aware: BCCL v Ali [2001] 1 All ER961 at 966 per Lord Bingham, (contrast Lord Nicholls in BCCL v Ali (supra) at 971-72 who was of the view that for the purposes of construction a general release is simply a term in the contract). (5) Although each release should be considered against its own matrix of facts, an example of this line of "cautionary principle" (Lord Bingham's phrase) is the frequently cited judgment of the High Court of Australia in Grant v John Grant & Sons Pty Limited (supra), where Dixon CJ, Fullagar, Kitto and Taylor JJ (at 125) referred with approval to the proposition put by Sir Frederick Pollock in his "Principles of Contract" (Stevens: London, 1950) 13th ed at 412, that "in equity a release shall not be construed as applying to something of which the party executing it was ignorant." (6) Despite the fact that, strictly speaking, releases are subject to no special rules of construction, a transaction in which one party agrees in general terms to release another from any claims upon it does have special features: BCCL v Ali at 984 per Lord Hoffman. (7) In such circumstances it may well be appropriate to imply an obligation upon the beneficiary of such a release to disclose the existence of claims of which it actually knows and which it also realises might not be known to the other party: BCCL v Ali at 984 per Lord Hoffman, for such an obligation is consistent with a concern to protect parties from sharp practice, by preventing advantage being taken of the known ignorance of the conceding party; BCCL v Ali per Lord Nicholls at 973. (The Bank made no such disclosure here.) (8) Most recently in this Court in Amaca Pty Limited formerly known as James Hardie & Coy Pty Limited v CSR Limited [2001] NSWSC 324, Bergin J adopted the principles of construction broadly as outlined above, including the "cautionary principle" and taking into account the purpose of the contract and the circumstances in which made. 56The decision of Bergin J (as her Honour then was) in Amaca referred to in the last paragraph of that extract provides a helpful illustration of the proper application of those principles. The release in that case was entered into at the point of dissolution of a partnership between Amaca and CSR, the business of which was the manufacture of asbestos products. The relevant terms of the release were as follows (reproduced at [24] of the judgment): 8. As and from the date of dissolution James Hardie, CSR and Bradford Insulation, by their execution hereof agree that the Partnership will be at an end, that all rights, duties and obligations of all the parties under the Principal Deed or any of them shall then cease and further that subject to Clause 9 hereof James Hardie, CSR and Bradford Insulation jointly and severally release the other parties and either of them from all such actions, causes of action, demands or claims which any of them has had or but for this Deed might have had against the others or either of the others. By way of clarification to this clause and not otherwise, James Hardie, CSR and Bradford Insulation shall as from the date of dissolution not be bound by Clause 2 of Division 4 of the Principal Deed. 9. Notwithstanding clause 8 hereof, James Hardie and CSR as from the date of dissolution will jointly hereby indemnify and agree to keep Bradford Insulation indemnified from and against all actions suits proceedings claims and demands whatsoever made or brought against Bradford Insulation by any third party whether before or after the date of dissolution in respect of or arising out of the use of the products acquired from the partnership and sold by Bradford Insulation provided that: (i) the use of the products out of which any such claim may have arisen has been strictly in accordance with any written technical recommendations made previously by the partnership in that regard; and (ii) Bradford Insulation has on or before the 30th June 1975 given written notice to James Hardie and CSR of any such claim. 57The release was entered into before the nature and extent of the health risks and resulting liabilities associated with asbestos were known. In the proceedings before Bergin J, the release was relied upon by CSR as a bar to Amaca's claim for contribution in respect of an asbestosis claim. Her Honour found that the terms of the release did not include a claim of the type considered in the proceedings and that Amaca was therefore not barred from seeking contribution from CSR. Her Honour held further that, even if the terms of the release included claims of that type, CSR could not rely on the deed in fairness or equity, having regard to what had been in the contemplation of the parties at the time they entered into the deed, and to CSR's conduct after the deed was entered into (at [106]). 58It is helpful to set out a substantial portion of the judgment. Her Honour said: 63 In construing the Release the Court is ascertaining the meaning that the Release would convey to a reasonable person having the background knowledge which would reasonably have been available to the parties at the time they executed the Release. Words are given their natural and ordinary meaning, however the law does not require judges to attribute to parties an intention that they plainly could not have had: Investors Compensation Scheme Ltd v West Bromwich Building Society (1998) 1 All ER 98 per Lord Hoffmann at 114 - 115. 64 James Hardie submitted that there is a special rule relating to general releases and relied upon what Gleeson CJ and Handley JA said in Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 at 29: The rule is that the general words of a release will, in an appropriate case, be read down to conform to the contemplation of the parties at the time the release was executed. 65 In Qantas Airways v Gubbins the respondent's case was that although they executed releases in general terms, they had been "assured" that the releases would not be raised as a defence to the claims before the Court. They claimed that on the faith of that assurance the releases were given. It was in those circumstances, with reference to Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112, that the Chief Justice referred to the "rule" of reading down a release to conform to the contemplation of the parties. 59Her Honour then considered the recent treatment of the relevant authorities by the House of Lords in Bank of Credit and Commerce International SA (in liquidation) v Ali & Ors [2001] 1 All ER 961 and continued: 73 Lord Bingham of Cornhill reviewed the cases to which Mr Taylor referred in his analysis and expressed the view that these authorities justified the proposition that in the absence of clear language, the court will be very slow to infer that a party intended to surrender rights and claims of which he was unaware and could not have been aware:[10] - [17]. I respectfully agree with that view. 74 His Lordship also expressed the view that these authorities provide "not a rule of law but a cautionary principle which should inform the approach" (at [17]) of construction of an instrument containing a release of the kind in that case. Accepting, as must be the case, that authorities are to be read in the context of their peculiar facts, it is, with respect, understandable that his Lordship expressed his shared reluctance with the judges he had quoted, to infer that a party intended to give up something which neither he, nor the other party, knew or could know that he had. ... 76 Lord Nicholls of Birkenhead dealt with the topic of special rules and general releases in the following way at [26]; Further, there is no room today for the application of any special 'rules' of interpretation in the case of general releases. There is no room for any special rules because there is no occasion for them. A general release is a term in a contract. The meaning to be given to the words used in a contract is the meaning which ought reasonably to be ascribed to those words having due regard to the purpose of the contract and the circumstances in which the contract was made. This general principle is as much applicable to a general release as to any other contractual term. After dealing with general releases, the wording of which may cover claims of which the parties were unaware at the time of the execution of the release, his Lordship continued at [28]: This approach, however, should not be pressed too far. It does not mean that once the possibility of further claims has been forseen, a newly emergent claim will always be regarded as caught by a general release, whatever the circumstances in which it arises and whatever its subject matter may be. However widely drawn the language, the circumstances in which the release was given may suggest, and frequently they do suggest, that the parties intended or, more precisely, the parties are reasonably to be taken to have intended, that the release should apply only to claims, known or unknown, relating to a particular subject matter. 77 The matters to which the Court must have regard in the construction of the Release and, if necessary, in determining whether the equitable principle should be applied, to some extent overlap. The first of these matters involves deciding the ordinary meaning of the release, taking into account the terms of the Deed as a whole and by giving the words within it their natural and fair meaning. This is done having regard to their context within the Deed and in the context of the parties relationship and all relevant facts surrounding the transaction so far as was known to the parties at the time the Deed was executed. 78 If the ordinary meaning of the Release includes this claim for contribution, the second matter involves deciding whether CSR, on grounds of fairness and equity, is precluded from relying upon it. This too involves a consideration of the parties relationship and the relevant facts, but in this respect it includes conduct after the Deed was executed. 79 This was not a Deed entered into to settle a dispute. It was to terminate the partnership and the partnership's engagement of the sole distributor. The parties agreed that if any conflict existed between the Deed and the Principal Deed, the Deed was to prevail. ... 89 There is nothing in the surrounding circumstances that suggests that the partners, or either of them, turned their minds to the possibility that one partner only could or might be sued by end users with a potential liability for millions of dollars. There is nothing to suggest that there was any contemplation of the likelihood that one or other of the partners was more likely to be chosen by such end user. 90 There is nothing to suggest that either partner considered giving up, let alone was willing, to give up its entitlement to contribution from the other partner for partnership liabilities to third parties. The fact that the extension of the indemnity to Bradford for twelve months after the date of dissolution was by both partners and not just one of them tends to support this lack of contemplation. This is more so if one were to accept, contrary to James Hardie's submissions, that the indemnity may have included claims for personal injury arising out of the use of products. 91 This circumstance suggests that the parties were approaching their obligations in respect of partnership products jointly rather than leaving liability to attach in a serendipitous fashion to one or other of them, depending upon the end user's choice of defendant. ... 94 Comparison was made with a release containing the expression "whatsoever, either at law or in equity which they.. now have or hath, or which they.. may hereafter have" Lyall v Edwards 6 H &N 337 at 340 to demonstrate a clear intention that future claims were released. In my view such expression would leave the reader of it in less doubt than that in which I find myself in respect of the meaning in the present Release. 95 As I have said earlier the use of the term "whatsoever" in clause 9 and its absence in clause 8 may tend to suggest a more limited intention in respect of the release. There is also the absence in clause 8 of the words "whether before or after the date of dissolution" which are found in clause 9 that tend to support a more limited intention. 96 The granting of the indemnity to Bradford in the Deed also suggests to me that the partners were intending that they would be jointly liable for partnership products rather than releasing each other from such liability, in particular releasing each other in contemplation of the chance that an end user might sue only one of the partners in respect of the liability. 97 In considering the surrounding circumstances on this aspect of the matter I am applying the approach of giving to the Deed the meaning which ought reasonably be ascribed to the words having due regard to the purpose of the contract and the circumstances in which it was made. It is these circumstances and purpose which convince me that the words, although apparently broad enough on one view of them to include the claim in these proceedings, do not in fact include it. 60The parties in the proceedings before me were in dispute as to the effect of her Honour's analysis in that case. Mr Doyle submitted that her Honour had rejected the need for any "special rule" requiring releases (as a class of contract) to be construed in line with the objective contemplation of the parties at the time the release was given. That is perhaps an oversimplification of her Honour's careful analysis. In any event, to the extent that Mr Doyle drew comfort from the distinction between a "rule" and a consideration which merely amounts to "cautionary principle" (as it was put by Lord Bingham of Cornhill), it may have been misplaced. The different taxonomy may not reflect any difference in practical terms. As her Honour's reasoning demonstrates, whether through the application of rules or principled analysis, an objective assessment of the circumstances in which a release was given may indicate that the words of the release, "although apparently broad enough on one view of them to include [a claim], do not in fact include it".

Construction of the deed 61The first point addressed by Mr Ashurst in oral submissions was the argument that the act of filing a certificate of costs assessment in the registry (which is the action Mr Filippi seeks to restrain) does not fall within the definition of either a "claim" or "costs" under the deed and is therefore not an action liable to be restrained under the deed. 62Although characterised as a "construction point", the submission, upon analysis, amounted in substance to a reiteration of Fagimo's submissions as to issue estoppel or abuse of process. Thus it was submitted that, to the extent that the deed may have barred Fagimo from seeking its costs in the tribunal proceedings, Mr Filippi should have enforced that operation of the deed by bringing an appeal to the District Court under s 67 of the Consumer, Trader & Tenancy Tribunal Act. 63The relief sought of restraining the filing of a costs certificate is perhaps an unusual remedy. However, as a matter of the proper construction of the deed, if it precluded Fagimo from recovering its costs against Mr Filippi in the tribunal, I see no reason why it would not also be construed so as to preclude the subsequent filing of a certificate of determination of those same costs. Accordingly, I do not accept that submission. 64The principal proposition put forward on behalf of Fagimo as to the construction of the deed was that, in accordance with the principles summarised above, the deed, although expressed in general terms, should be construed as being limited to its subject matter and the matters known to the parties at the time of its execution. In particular, Mr Ashurst relied upon the decisions of Grant v John Grant and Qantas v Gubbins (referred to in the passages set out above) and the decision of the Court of Appeal in Marincheck v Cabport [2010] NSWCA 334 at [46]-[47] per Macfarlan JA; Handley AJA and Harrison J agreeing at [65] and [66] respectively. 65Separately, Fagimo submitted that the costs order made against Mr Filippi by the tribunal was not included within the release because it arose, not from any substantive claim by Fagimo, but from Mr Filippi's conduct of the legal proceedings brought by Vero. It was submitted that a costs liability arises as a result of a party's conduct in legal proceedings and not from the underlying cause (the development). Support for that submission was sought to be derived from the decisions of the High Court in Re Minister for Immigration; ex parte Lai Qin (1997) 186 CLR 623 (per McHugh J sitting alone) and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. 66Fagimo was acknowledged that, had it attempted to join Mr Filippi to the Vero proceedings by way of cross-claim, the deed may well have operated so as to restrain that course and to restrain the recovery of any costs incurred in bringing such a cross-claim. 67However, it was submitted that the costs incurred in respect of the first preliminary question arose because of the way in which Mr Filippi sought to defend the claim brought against him by Vero. Had the matter pleaded by Mr Filippi (that his contract with Fagimo was not a contract to do "residential building work" within the meaning of the Home Building Act) been determined in his favour, Fagimo would have been left to defend Vero's claim alone. It was therefore necessary for Fagimo, in effect, to defend itself against Mr Filippi's defence. Fagimo submitted that Mr Filippi's potential liability for the costs incurred by Fagimo in doing so was not released by the deed. 68In accordance with the principles stated above, the determination of those contentions ultimately turns upon an objective assessment of the circumstances in which the release was given, including consideration as to what was in the objective contemplation of the parties at that time. 69Mr Ashurst submitted that the parties could not be taken to have contemplated that the deed would cover not only substantive claims as between themselves, or even claims for contribution to third party claims, but also a claim for legal costs that arose only as a result of the conduct of proceedings in which the parties happened to be joined as defendants (T11-12). He submitted (at T15): it could not possibly be said that there is anything in the surrounding circumstances that suggests Fagimo and [Mr] Filippi were turning their minds to the question at the time they entered into this deed of release that one day they might be co-defendants in proceedings and in that future point in time, one of them was going to so conduct themselves in those proceedings that they became liable for a costs order and what they objectively intend was to release one another in anticipation of such an event occurring. 70Mr Doyle submitted on behalf of Mr Filippi the present case is to be distinguished from the "larger cases" such as Grant and Amaca "where there could be no comprehension of the type or size of the claim for which the release is said to exist". He submitted that the bringing of claims by third parties for breaches of statutory warranties would be well be within the contemplation of parties to a release relating to a residential building dispute. Mr Doyle submitted (at T3) that both parties: must be taken to have known that home owners warranty insurance would be required for this development and both the developer and ... Filippi would have known that whichever insurer undertook to write the policy, would have sought recovery in the terms of that policy from those parties who it thought it was able to recover from. 71In my view, there is force in that last contention. Although Fagimo's written submissions suggested otherwise, I understood Mr Ashurst ultimately to accept that the deed would be taken to release the parties from any cross-claims as between them in the proceedings brought by Vero. 72That, however, is not the only issue here. Mr Filippi did not bring any cross-claim against Fagimo in the Vero proceedings, but he raised a question of law which Fagimo was placed in the position of having to defend in its own interest and which it did successfully defend. I do not think that can be characterised as a step in the likely contemplation of the parties at the time of execution of the deed. In accordance with the approach taken by Bergin J in Amaca and by Macfarlan JA in Marincheck, the Court should be slow to infer that Fagimo intended to surrender its entitlement to recover the costs of such an event, which it could not have foreseen at the time of execution of the deed. 73Accordingly I am satisfied that, on its proper construction, the deed does not apply to the costs claimed by Fagimo in the tribunal. 74In the circumstances, it is not necessary to deal with the ambitious argument put on behalf of Fagimo (scarcely touched on and perhaps not intended to be pressed) that, if the deed were to operate as broadly as contended for by Mr Filippi, it would effectively exclude the statutory warranties under the Home Building Act 1989 and so be unlawful.

Jurisdictional error 75Mr Filippi's application to have the decision of the tribunal quashed on the grounds of jurisdictional error was expressly put in the alternative. In his written submissions, Mr Doyle said, "in the unlikely event that the Deed is not found to bar the purported recovery by [Fagimo] of costs in relation to the Development, the Plaintiff relies upon paragraph 26 of the Summons in seeking that the costs order made by [the tribunal] be quashed". 76The premise for the relief sought (as contended in paragraph 26 of the summons) was that the tribunal's failure to deal with Mr Filippi's submissions concerning the deed and the failure to give reasons for not taking those submissions into account amounted to a denial of procedural fairness or jurisdictional error. 77The logic of that premise must be tested. If an opportunity was wrongly denied to Mr Filippi, it was the opportunity to have the tribunal consider (and state its reasons in respect of) his submissions on a question of law, namely, the proper construction of the deed. However, as already noted, relief on that basis is only sought in the event that this Court determines that issue against Mr Filippi (as has occurred). 78If the decision were quashed and the matter remitted to the tribunal on that basis, it would be an error of law (perhaps jurisdictional) for the tribunal to determine Mr Filippi's submissions in respect of the deed other than in accordance with the conclusion that it is no bar to the costs claimed by Fagimo. In that circumstance, it would be absurd to grant the relief sought. 79The inevitable conclusion, in my view, is that the relief sought as against the tribunal on the grounds of an alleged denial of procedural fairness should not be granted. 80For those reasons, the proceedings are dismissed with costs.

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