Taouk v Ho

Supreme Court of NSW|2018-11-14|Before: Johnson J

Judgment

JOHNSON J: By Amended Summons filed in Court on 14 November 2018, the Plaintiff, Joseph Taouk ("Mr Taouk"), appeals to this Court in relation to Local Court civil proceedings involving the Defendant, Yuen Min Ho.
On 12 March 2018, Magistrate Milledge gave judgment in favour of Ms Ho against Edifice Australia Pty Limited ("Edifice") and Mr Taouk in the sum of $81,914.32 inclusive of interest. Judgment was given to Ms Ho against Edifice and Mr Taouk jointly and severally. In addition, her Honour ordered that Edifice and Mr Taouk pay Ms Ho's costs up to 2 October 2017 on the ordinary basis and from 3 October 2017 on an indemnity basis.

Appeal to Supreme Court

By Summons filed on 9 April 2018, Mr Taouk appealed to this Court under s.39 Local Court Act 2007. No appeal has been brought to this Court by Edifice. It is Mr Taouk only who seeks to appeal against the decision of the Local Court made on 12 March 2018.

Scope of Appeal under ss.39-41 Local Court Act 2007

Mr Taouk's grounds of appeal in the Amended Summons each assert that the Local Court made an error of law. Section 39(1) Local Court Act 2007 permits a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of that Court to appeal to the Supreme Court, but only on a question of law.
Section 40(2)(c) Local Court Act 2007 permits a party to proceedings before the Local Court sitting in its General Division, who is dissatisfied with an order as to costs, to appeal to the Supreme Court, but only by leave of that Court. Clearly, if leave to appeal is granted for the purpose of s.40(2)(c), then the appeal itself with respect to an order as to costs is confined to a question of law by operation of s.39(1) Local Court Act 2007.
Mr Taouk bears the onus of demonstrating error on a question of law under s.39(1): Rose v Tunstall [2018] NSWCA 241 at [20].
No ground of appeal is advanced on a mixed question of fact and law, for which leave is required under s.40(1) Local Court Act 2007. There is no appeal to this Court on a question of fact alone.
On an appeal under ss.39-41 Local Court Act 2007, this Court has no authority to engage in a fact-finding process on the merits of the case, even if the appeal involved a mixed question of fact and law (which the present appeal does not): World Avenue Pty Limited v Tasunashima [2013] NSWSC 502 at [29]; Rose v Tunstall at [29]-[32].
In approaching the issues falling for determination on this appeal, it is helpful to keep in mind the following statements of Rothman J (in the context of a s.39 appeal) in Hussain v Shahidulalam [2018] NSWSC 1742 at [85], [87]: "85 The mere fact that a question of law or jurisdiction is involved in the determination of an appeal or is agitated on appeal does not require the conclusion that the ground is 'only on a question of law'. Thus, an appeal on the basis that a determination was made in the absence of evidence on that question, while a decision on a question of law by the appeal court, is nevertheless a question of mixed law and fact: R v R (1989) 18 NSWLR 74; Morris v R (1987) 163 CLR 454; [1987] HCA 50; M v R (1994) 181 CLR 487; [1994] HCA 63. … 87 At least since 1940, it has been accepted that a finding of fact by a tribunal of fact cannot be disturbed, on appeal, if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting the inferences drawn. These are questions of fact: Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 at 82, per Sir Frederick Jordan CJ; see also Ormwave Pty Ltd v Smith [2007] NSWCA 210 at [12]; Haider v JP Morgan Holdings Aust Ltd Trading as JP Morgan Operations Australia Ltd [2007] NSWCA 158; and the classic discussion in Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389; [1996] HCA 36."
A question concerning the application of correct legal principle to the facts of a particular case is a question of mixed fact and law: R v PL (2009) 199 A Crim R 199; [2009] NSWCCA 256 at 205 [26].

Factual Background

As will be seen, the litigation between these parties has a lengthy and chequered history which has involved a hearing in the NSW Civil and Administrative Tribunal ("NCAT") followed by protracted litigation in the Local Court. The course of the litigation in the Local Court on behalf of Mr Taouk and Edifice does not sit comfortably with the statutory duty placed upon parties to civil proceedings to assist the Court to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s.56 Civil Procedure Act 2005.
A Court Book containing a substantial volume of documents was tendered at the hearing of the appeal (Exhibit A).
The following factual narrative is drawn from the material in Exhibit A, all of which was before the Magistrate.
The written submissions of Ms Dolenec and Mr Freeman, counsel for Ms Ho, referred to this narrative, which assists an understanding of the proceedings ultimately determined by her Honour on 12 March 2018. In setting out this narrative, I am not purporting to make findings of fact, but to recite what was largely common ground between the parties. It will be seen, however, that I make observations along the way about findings made later in the judgment for the purpose of determining the grounds of appeal.
At all relevant times, Mr Taouk was the sole director and shareholder and the company secretary of Edifice (Exhibit A, pages 224-227). Edifice was licenced to carry out residential building work.
Ms Ho was the owner of residential land at Strathfield South upon which she required building work to be carried out. Ms Ho entered into an agreement with a different Joseph Taouk who traded as CanBuild Projects ("CanBuild") ("CanBuild's Mr Taouk") to carry out residential work upon Ms Ho's land. CanBuild's Mr Taouk was not licenced to carry out residential building work and was unable to secure home owner's warranty insurance ("HOW") for carrying out residential building work.
Ms Ho alleged that CanBuild's Mr Taouk informed Mr Taouk (a distant relative) of his agreement with Ms Ho and Mr Taouk represented to Ms Ho that Edifice would carry out the work and would secure HOW for such work. It was alleged that Mr Taouk caused Edifice to secure HOW for the carrying out of the work for Ms Ho, and that he procured Edifice's insurer to have a HOW certificate issued directly to Ms Ho naming Edifice as the builder under Edifice's licence.
Ms Ho alleged that, in reliance upon the conduct of and representations made by Mr Taouk regarding HOW, she paid CanBuild's Mr Taouk sums totalling $75,000.00 in respect of work which was said to be both defective and incomplete.
In 2016, Ms Ho commenced proceedings in the Consumer and Commercial Division of NCAT against Edifice, Mr Taouk and CanBuild's Mr Taouk claiming an amount of $75,000.00 plus costs, alleging misrepresentation and misleading and deceptive conduct in breach of the Australian Consumer Law.
On 16 November 2016, Points of Claim were filed on behalf of Ms Ho (Exhibit A, pages 118-123). The claim against Mr Taouk made at NCAT included the allegation that Mr Taouk was the person and instrument of Edifice's engagement and participation in the fraudulent, misleading and deceptive conduct of both Edifice and CanBuild's Mr Taouk, and that Mr Taouk was aware of such conduct. Ms Ho sought damages and/or compensation from Mr Taouk in respect of her loss and damage.
On 5 December 2016, Points of Defence were filed in NCAT by Gardner Ekes, the lawyers acting for Edifice and Mr Taouk. That firm did not act for CanBuild's Mr Taouk.
On 29 November 2016, orders were made by NCAT for the filing and service of each party's evidence and for the matter to be set down for hearing on 12 April 2017. In compliance with NCAT's orders, Ms Ho filed and served all evidence in support of her claim, however no evidence was filed or served by or on behalf of Edifice, Mr Taouk or CanBuild's Mr Taouk.
In correspondence commencing on 1 December 2016, Gardner Ekes made an offer to settle the proceedings on behalf of their clients, Edifice and Mr Taouk. A letter dated 1 December 2016 made an offer to settle the matter (inclusive of interest and costs) in the sum of $50,000.00 (Exhibit A, page 236). The letter stated that the offer was "made without prejudice save as to costs and our client reserves all rights in this matter". As will be seen, I consider that a fair reading of the reasons of NCAT and Magistrate Milledge was that each accepted that this offer was made on behalf of Edifice and Mr Taouk who was, after all, the controlling mind of Edifice as its sole director, shareholder and company secretary. This construction was not only open, but was correct in understanding the correspondence which followed thereafter. It was Mr Taouk who was instructing his solicitors to seek resolution of the matter on behalf of himself and Edifice.
By letter dated 13 December 2016 from Gardner Ekes, the offer made on behalf of Edifice and Mr Taouk was increased to one of $60,000.00 (inclusive of interest and costs) (Exhibit A, page 237).
By letter dated 16 December 2016 directed to Gardner Ekes, Scarfone & Co, the solicitors for Ms Ho, rejected the offer made on 13 December 2016 and indicated a willingness to settle the matter on the basis of $65,000.00 plus costs with their costs being estimated at approximately $8,000.00 inclusive of GST and disbursements (Exhibit A, page 239).
By letter dated 19 December 2016, Gardner Ekes accepted that offer. Given the issues raised at NCAT and before the Local Court and on appeal to this Court, it is appropriate to set out the terms of this letter (Exhibit A, page 241). It should be kept in mind that Gardner Ekes acted only for Edifice and Mr Taouk. The letter stated: "We refer to the above matter your correspondence dated 16 December 2016. We are instructed to advise that our client has accepted your offer of $73,000 in full and final settlement of the above noted matter (inclusive of costs and interest). Our client confirms this amount will be paid on or before 28 February 2016. We will provide a draft deed of settlement and release to your office by close of business Tuesday 20 December 2016. Our client otherwise reserves its rights and should you have any questions in relation to the above please contact the writer."
It was accepted by the parties that there was a typographical error in the letter in that the date for payment of the sum was to be "on or before 28 February 2017", and not "2016".
This was the first item of correspondence which referred to a draft deed of settlement. I am satisfied that both NCAT and the Local Court found that there was an agreement between Edifice, Mr Taouk and Ms Ho to settle the proceedings in the sum of $73,000.00 (inclusive of costs and interest), with that sum to be paid on or before 28 February 2017. None of the correspondence to this point had suggested that a deed of settlement and release was a condition precedent to the settlement itself. Rather, a proper understanding of what was happening was that there was a final and settled agreement with respect to quantum and the date of payment, with a draft deed of settlement to be prepared to record what had already been agreed by way of the offer and acceptance which had occurred. This, in effect, was the finding of NCAT and Magistrate Milledge.
Thereafter, a draft deed of settlement and release was prepared by Gardner Ekes and submitted to Scarfone & Co. In due course, Ms Ho executed the Deed of Settlement and Release ("Deed") which was sent to Gardner Ekes under cover of a letter dated 2 February 2017 (Exhibit A, page 256). It should be noted that the Deed as executed by Ms Ho was expressed to be between Edifice and Mr Taouk (on the one hand) and Ms Ho (on the other hand).
Clause 2.1 of the Deed provided that: "Edifice Australia shall pay to Ms Ho the settlement amount in full and final settlement of Ms Ho's claim."
The Deed said that the sum of $73,000.00 was to be paid via a lump sum on or before 28 February 2017 (Clause 2.2).
Clauses 3.1 and 3.2 of the Deed related to releases and bars to action (Exhibit A, page 282): "3.1 Upon receipt of payment of the Settlement Amount, Ms Ho will release and relinquish any and all claims based upon the same or similar set of facts against Edifice Australia and Mr Taouk. 3.2 Upon receipt of payment of the Settlement Amount, Ms Ho will relinquish any and all claims based upon the same or similar, set of facts, against any parties, including Joseph Taouk trading as Canbuild Projects, whether or not, noted in this deed or a party to this deed."
Clause 10 of the Deed provided for counterparts (Exhibit, page 283): "This Deed may be executed in such counterparts as may be deemed necessary or convenient and all such counterparts taken together shall be deemed to constitute one and the same document."
As noted earlier, Ms Ho executed the Deed in the presence of Mr Scarfone and the executed copy of the Deed was sent to Gardner Ekes on 2 February 2017.
On 3 March 2017, Ms Rothwell, solicitor from Gardner Ekes, telephoned Mr Scarfone and told him that she had the "worst news" - that her "client refuses to pay and wants nothing to do with it" and that he had not signed the Deed (Exhibit A, page 257). I am satisfied that NCAT and Magistrate Milledge proceeded upon the basis that the "client" for this purpose was Mr Taouk, who was clearly speaking for both himself and Edifice. Thereafter, the Deed was not executed by Edifice or Mr Taouk and that remained the position at the time of the decision in the Local Court.
On 23 March 2017, Scarfone & Co wrote to Gardner Ekes expressing the view that "there was a concluded and binding agreement between our respective clients to settle the proceedings once and for all by payments by your clients to ours of $73,000.00 by 28 February 2017 in full settlement" (Exhibit A, page 285). Mr Scarfone stated that the "agreement was further reinforced by the submission of a Deed of Settlement and Release by you". Mr Scarfone continued that "It matters not that your client did not sign the Deed of Settlement and Release" as the "binding agreement had come into existence earlier than that through the correspondence" and that Ms Ho "holds your clients to the terms of the agreement".
An affidavit of Ms Ho sworn 21 March 2017 accompanied Mr Scarfone's letter of 23 March 2017, with the stated intention that it was to be relied upon at the hearing before NCAT on 12 April 2017.
On 12 April 2017, the proceedings came before Senior Member Meadows at NCAT. An application for adjournment was made by the solicitor for Edifice and Mr Taouk which was refused. Thereafter, the substantive application was dismissed. Senior Member Meadows found, on the evidence, that the parties had resolved the application. An order was made that Edifice and Mr Taouk pay Ms Ho's costs of and incidental to the hearing on 12 April 2017 in the gross sum of $4,500.00, with those costs to be paid no later than 26 April 2017. Those costs remain outstanding and were part of the claim made by Ms Ho thereafter in the Local Court.
Given the issues raised in the Local Court and again before this Court, it is appropriate to set out the written reasons provided by Senior Member Meadows on 12 April 2017, which were before the Local Court (Exhibit A, pages 286-287) (emphasis added): "This application was filed on 01-Sep-2016. Following two directions hearings, the matter was listed before Senior Member Goldstein on 29-11-2016. On that date directions were made for the respondents to serve Points of Defence by 05-Dec-2016 and evidence by 12-Dec-2016. The respondents, or some of them, complied with the first of those directions but have served no evidence at all. Based on the annexures to the affidavit of the applicant dated 21 March 2017 and filed on 24 March 2017, I am satisfied that on 19-Dec-2016 the respondents accepted an offer to settle the proceedings on a costs-inclusive basis. The parties then proceeded to negotiate further in relation to a Deed of Settlement and Release. The applicant executed that agreement on or about 02-Feb-2017. The respondents did not execute the agreement. No explanation is provided on behalf of the respondents, and particularly on behalf of Edifice Australia Pty Ltd or Mr Joseph Taouk, a Director of Edifice. At the hearing, in order to distinguish between that Mr Joseph Taouk and Mr Joseph Taouk t/as Canbuild Projects, and without intending any disrespect, I referred to that Mr Joseph Taouk as 'Director Taouk'. I note that Director Taouk was represented today by Ms Rothwell who has acted for Director Taouk and [Edifice] at all relevant times. Director Taouk was also present at the hearing today. Ms Rothwell stated she has no directions [sic - submissions] in relation to the agreement, the failure of the respondents to proceed with the agreement, in relation to the respondents' failure to comply with orders to serve their evidence or in relation to any explanation as to why Director Taouk waited until yesterday to provide an affidavit which, apparently, was meant to support an oral application today for the hearing to be adjourned. No prior application for an adjournment was made by the respondents or any of them. For the oral reasons given today and in the above circumstances, I refused the application for an adjournment. The substantive matter is dismissed on the basis that on all the evidence before me, which is not disputed by the respondents as being genuine correspondence between the parties or on behalf of some of the parties (which it is not agreed), I am satisfied the parties have made a contract settling the proceedings in a particular amount inclusive of costs. There is therefore nothing left for the Tribunal to determine. Given the gross and indeed grievous defaults of the respondents as set out above, in failing to comply with directions, in failing to provide any evidence, in failing to provide any explanation for their current attitude (except as may be inferred from Director Taouk's affidavit dated 11-Apr-2017) and in failing to provide notice to the applicant or to the Tribunal that an adjournment would be sought today, I order the respondents to pay the costs of the applicant of and incidental to their appearance today including her solicitors and her counsel. As discussed and ordered during the hearing, I have ordered costs in a gross amount, as in all the circumstances I am satisfied the applicant would suffer unreasonable prejudice if she was required to commence an assessment application in the Supreme Court, including further delay and expense. I find the amount of 4,500.00 is a reasonable amount in the above circumstances, including preparation of the applicant's affidavit dated 21-Mar-2017."
This Court was informed that the oral reasons referred to by Senior Member Meadows were recorded, but that the recording was "indecipherable" so that no transcript was available to place before the Local Court and this Court (T50, 14 November 2018).
On 15 May 2017, a Statement of Claim was filed in the General Division of the Local Court on behalf of Ms Ho seeking judgment against Edifice and Mr Taouk in the sum of $77,500.00 together with interest and costs. The Statement of Claim alleged that, on or about 19 December 2016, through correspondence between the solicitors for Ms Ho and the solicitors for Edifice and Mr Taouk, the parties agreed to settle Ms Ho's application to NCAT in the amount of $73,000.00 inclusive of costs. The letters of 16 and 19 December 2016 exchanged between the solicitors were included by way of particulars. The Statement of Claim alleged that, on 24 January 2017, Ms Ho agreed with Edifice and Mr Taouk that the settlement amount was to be paid by 28 February 2017. It was alleged that Edifice and Mr Taouk thereafter breached the agreement with Ms Ho by failing and refusing to pay the agreed settlement monies.
Paragraph 7 of the Statement of Claim referred to the determination of Senior Member Meadows at NCAT on 12 April 2017 that Edifice and Mr Taouk had accepted Ms Ho's offer to settle the NCAT proceedings with Senior Member Meadows awarding Ms Ho costs in the sum of $4,500.00. The Statement of Claim alleged as well that Edifice and Mr Taouk had failed to pay the costs awarded by NCAT.
Ms Ho claimed judgment against Edifice and Mr Taouk in the sum of $77,500.00 (the agreed settlement figure of $73,000.00 together with $4,500.00 costs ordered by NCAT) together with interest and costs.
Thereafter, the proceedings moved slowly in the Local Court as Gardner Ekes, the solicitors for Edifice and Mr Taouk, filed various versions of a Defence until the Second Further Amended Defence of Edifice and Mr Taouk was filed in Court on 3 October 2017.
An affidavit of Mr Taouk sworn 23 August 2017 was filed in the Local Court (Exhibit A, pages 152-155). In the course of that affidavit, Mr Taouk said at paragraphs 4-5 (Exhibit A, page 153): "4. My understanding of without prejudice letters is that they allow offers to be made between the parties but are not legally binding. The without prejudice letters were made on the basis that Joseph Taouk trading as Canbuild Projects was going to repay the monies to me if I paid them. 5. In this matter settlement offers were made between the parties but I ultimately refused to sign a Deed of Settlement because I wanted to have my day in court. I say I do not owe Ms Ho any money. I am not going to pay personally for her building works. My lawyers advise me that this is an unjust enrichment to her."
Mr Taouk denied that there was any agreement to settle the proceedings (paragraph 7). He asserted that Ms Ho was suing "in effect on a contract which does not exist" (paragraph 14). It may be taken that this was the approach adopted by Mr Taouk and Edifice in the Local Court proceedings as they proceeded thereafter.
This Court was informed that Magistrate Atkinson made interlocutory orders adverse to Edifice and Mr Taouk, accompanied by an order for costs on an indemnity basis arising from certain pretrial applications. The decision of Magistrate Atkinson is not challenged on this appeal.
The hearing of Ms Ho's claim came before Magistrate Milledge at the Downing Centre Local Court on 12 March 2018. Mr Freeman appeared for Ms Ho and Ms Dolenec appeared for Edifice and Mr Taouk.
The hearing proceeded by way of the provision of a range of documents to her Honour accompanied by submissions concerning the merits of the case. The transcript of the hearing on 12 March 2018 (Exhibit A, pages 71-95) records the submissions made (there being no oral evidence) until the point was reached where her Honour commenced to deliver an ex tempore decision. The ex tempore decision extended over eight pages, culminating in judgment being given in favour of Ms Ho against Edifice and Mr Taouk (Exhibit A, pages 95-103).
Thereafter, Mr Freeman made an application for costs to be paid by Edifice and Mr Taouk on an indemnity basis and, after submissions, her Honour acceded to that application (Exhibit A, pages 103-106).
As mentioned earlier, the present proceedings were commenced by the filing of a Summons in this Court on 9 April 2018.

The Decision of the Local Court Under Appeal

Reference will now be made to parts of her Honour's ex tempore decision delivered at the conclusion of the hearing on 12 March 2018. It is apparent that her Honour formed the view that the history of the litigation, and the issues raised, were such that a prompt decision was appropriate to conclude these civil proceedings: s.56 Civil Procedure Act 2005.
In considering the ex tempore reasons, appropriate allowance should be made for the pressures under which Magistrates are placed by the volume of cases coming before them: Director of Public Prosecutions v Illawarra Cashmart Pty Limited (2006) 67 NSWLR 402; [2006] NSWSC 343 at 407-408 [15]-[18].
It is necessary to read fairly the entirety of her Honour's reasons. The delivery of ex tempore reasons at the conclusion of a hearing has the undoubted advantage that those present in Court can hear immediately the outcome of the case and the orders made. However, a consequence of this approach, which is understandable in a busy court, is that ex tempore reasons may not be as robustly structured as they may otherwise have been and may lack the order and precision of language that can be incorporated into a judgment after the luxury of time for consideration, refinement of expression and polishing: Currie v R [2013] NSWCCA 267 at [50]-[51].
Her Honour referred to certain factual aspects of Ms Ho's claim, before turning to an argument advanced by Ms Dolenec based on s.78 Civil and Administrative Tribunal Act 2013, which states: "78 Recovery of amounts ordered to be paid (1) Recovery of non-penalty amounts For the purposes of the recovery of any amount ordered to be paid by the Tribunal (including costs, but not including a civil or other penalty), the amount is to be certified by a registrar. (2) A certificate given under this section must identify the person liable to pay the certified amount. (3) A certificate of a registrar that: (a) is given under subsection (1), and (b) is filed in the registry of a court having jurisdiction to give judgment for a debt of the same amount as the amount stated in the certificate, operates as such a judgment. (4) Recovery of civil or other penalty amounts A civil or other penalty ordered to be paid by the Tribunal (other than for a contravention of a civil penalty provision of this Act) may be registered as a judgment debt in a court of competent jurisdiction and is enforceable accordingly."
It was argued for Edifice and Mr Taouk that s.78 stood in the way of recovery in the Local Court unless there was compliance with s.78. Her Honour rejected this submission (Exhibit A, page 97).
Her Honour then continued her consideration of the evidence, referring to items of correspondence mentioned earlier in this judgment. During the course of delivering the ex tempore judgment, her Honour adopted a somewhat fluid approach whereby, at times, she would hear further submissions from counsel on different issues before returning to the delivery of reasons.
It is not necessary to refer to any further part of her Honour's reasons, until a point was reached which attracted close attention on appeal in this Court. In reading this part of her Honour's reasons, it is necessary to keep in mind what was said (at [56]-[57] above) concerning the approach to consideration of an ex tempore decision. Her Honour said (Exhibit A, pages 102-103) (emphasis added): "I find that this deed - was it intended to be binding; yes, it was. A deed is not an agreement, a deed is a deed and it is intended for the purpose of the deed for the intention - it is an express intention, to be immediately bound by those terms and this is what the deed is, and of course this deed first came from the defendant. The defendant's express provision at pt 3.1, it says that if they accept the money from Edifice, well, then, if they accept that and the money is paid by a certain date, well, then, Ms Ho is going to relinquish any action against Edifice Australia and Mr Taouk. That was not done so the action against Mr Taouk I find is absolutely alive and well and that the letters that were before Member Meadows at NCAT clearly set out an intention for the parties to enter into negotiations. In fact, when nothing was heard from Ms Ho, Mr Ekes pursued it even more and offered more money and then, of course, got a response. The other thing that says in the deed and again, this is the deed prepared by the defendant under definitions. I suppose this is pretty standard. 'In this deed, unless the context requires another meaning' - no, there was something about the singular meaning and the plural and I just cannot find that. Under the definition it says Ms Ho's claims means 'all claims which Ms Ho has or, but for this deed, might have had against Edifice Australia or Mr Taouk in connection with or arising out of the building works provided by Canbuild Projects'. Then again Mr Taouk is mentioned in that deed so there was one other part of it there that I wanted to mention but I cannot find it in a hurry, but anyway it does not determine the outcome. I MAKE THIS FINDING, THAT MR MEADOWS AT THE TRIBUNAL HAD DISMISSED THE MATTER ON THE BASIS THAT MR TAOUK AND EDIFICE'S SOLICITOR, MR EKES, WAS ENTERING INTO NEGOTIATIONS WITH MS HO, THAT IT WAS AGREED THAT MS HO WOULD ACCEPT THE MONEY FROM EDIFICE IN FULL SATISFACTION OF THE CLAIM AND THAT WHEN THAT WAS DONE THAT WAS GOING TO RELEASE ANY JOINT RESPONSIBILITY OF THE OTHER DEFENDANT, MR TAOUK, THE DIRECTOR, THAT MONEY WAS NOT PAID. I FIND THAT THE CLAIM AGAINST MR TAOUK IS - WE REVERT BACK NOW TO THE TERMS OF SETTLEMENT THAT WERE BEFORE MEMBER MEADOWS AT NCAT AND IT IS APPROPRIATE THAT THIS COURT MAKE ORDERS IN ACCORDANCE WITH THOSE TERMS. I PROPOSE ALSO TO EMBRACE IN THE ORDER THE ISSUE OF THE $4,500 COSTS THAT THE SENIOR TRIBUNAL MEMBER MADE AGAINST THE DEFENDANT ON THAT DAY. THIS IS A MATTER THAT SHOULD HAVE BEEN RESOLVED LONG BEFORE THIS AND I CANNOT SEE THE MERIT IN THE DEFENCE OR THE POSITION THAT THE DEFENDANTS HAVE TAKEN IN RELATION TO SETTLING THIS MATTER. IT SHOULD NEVER HAVE BEEN BEFORE THIS COURT. This is why I ask you how I formally express it. I simply just enter judgment for the plaintiff? FREEMAN: Yes, for the amount claimed in the statement of claim which includes that 4,500. HER HONOUR: That makes it 77,500."
Submissions were then made in support of an indemnity costs order in favour of Ms Ho. Reference should be made to an exchange between Ms Dolenec and her Honour in the course of submissions on the indemnity costs application, as this aspect serves to shed further light upon a feature of her Honour's judgment under challenge on this appeal. In the course of submissions, Ms Dolenec said (Exhibit A, page 105) (emphasis added): "DOLENEC: Your Honour did find that the deed was binding and the only reason the plaintiff succeeded was because the deed was breached. HER HONOUR: No. That's not how I meant to express it. I made reference to the deed because there was this issue of Mr Taouk not being party to the recovery. You said that it was only Edifice. That's right, isn't it? DOLENEC: No. Mr Taouk was always a party to the deed. He just didn't have to pay the money. HER HONOUR: Yes but I also went through the letters and said the client, that Mr Ekes was acting for Joseph Taouk the director and Edifice and that he wasn't clear when he said, 'our client', and I found that he was acting on behalf of both Edifice and Joseph Taouk, the director, in making that offer, and the reason that I used the deed was to show that that was the position from the beginning of the negotiations right to the end. DOLENEC: My note, your Honour, was that you found the deed was a binding agreement but, because the payment was not made, the action before Mr Meadows in relation to Mr Taouk is alive and well. HER HONOUR: Yes. I said that it was binding in as much as it's not an agreement, it was a deed, and the express purpose of the deed was to show the intention of the defendant. DOLENEC: And that wasn't pleaded, the deed but what should of course happen is Ms [Ho] now has her rights alive at large and she can recommence proceedings against Mr Taouk. It would not ordinarily be the case that it would revert to some previous agreement that was subsumed in the orders, but that's as your Honour has found it. HER HONOUR: But I was asked to determine whether the decision of the senior member, Meadows, when he determined that the matter was settled and settled on the terms in the letters, that that's the judgment that I've entered today."
At the conclusion of submissions, her Honour made the following ruling with respect to the claim for indemnity costs (Exhibit A, page 106) (emphasis added): "HER HONOUR: I agree with Mr Freeman that, when looking at the conduct of this matter and the issues raised by the first and second defendants, that I just could not see the merit in the position that they have taken today, particularly on the basis of the letters that were written on their behalf by their solicitor to the plaintiff and all I have done is simply endorse the amount that the tribunal found was going to be the agreed amount between the parties. This is something that should have been resolved before today. I agree with Mr Freeman that indemnity costs should flow from 3 October. I ORDER THE FIRST AND SECOND DEFENDANTS JOINTLY AND SEVERALLY TO BE RESPONSIBLE FOR THE AMOUNT CLAIMED, $77,500, AND ALSO FOR INDEMNITY COSTS. THE FIRST AND SECOND DEFENDANTS TO PAY TO THE PLAINTIFF."

Submissions of the Parties Submissions for Mr Taouk

Written submissions were provided by Ms Dolenec in support of Mr Taouk's appeal and counsel spoke to these submissions. It is not necessary to recite in detail these submissions for the purpose of determining this appeal.
Put shortly, Ms Dolenec submitted that her Honour had erred in finding that (if she did so find) there was an agreement in existence between Ms Ho, Edifice and Mr Taouk before the Deed was executed by Ms Ho. It was submitted that, as a matter of law, the Deed was executed by Ms Ho and that the relevant contract flowed from the Deed even though Edifice and Mr Taouk never executed the document themselves. Reliance was placed upon the decision of the Court of Appeal in Mirzikinian v Tom & Bill Waterhouse Pty Limited [2009] NSWCA 296, in particular at [33]-[34], [43]-[52] and the decision of the Full Court of the Supreme Court of Victoria in Australian and New Zealand Banking Group Limited v Frost Holdings Pty Limited [1989] VR 695 at 700, 702.
It was submitted that her Honour had erred in proceeding upon the basis that an agreement was already in existence by 19 December 2016 arising from the correspondence, and that the true position was that the relevant contract was contained in the Deed. Ms Dolenec submitted that the Magistrate had in fact made a finding to this effect which was correct.
It was then submitted that as the Deed provided for the settlement monies to be paid by Edifice and not Mr Taouk, that the relevant contract was between Ms Ho and Edifice only so that there was no enforceable agreement between Ms Ho and Mr Taouk.
Ms Dolenec submitted that it was not open to the Local Court to give judgment against Mr Taouk upon the basis that NCAT had found that the application had been settled. It was submitted that the only path available to Ms Ho was to seek an order under s.59 Civil and Administrative Tribunal Act 2013, and that the Local Court had no power or jurisdiction to give judgment in the circumstances of this case.
It was submitted that the Magistrate had no power to make an order for payment of the sum of $4,500.00 ordered by NCAT as costs. It was submitted that s.78 Civil and Administrative Tribunal Act 2013 operated to deprive the Local Court of jurisdiction to make that order.
It was submitted that a proper foundation did not exist for the making of the indemnity costs order in the circumstances of this case. Ms Dolenec submitted that Ms Ho had not demonstrated that there was any "special or unusual feature" which would warrant an order for costs on an indemnity basis: connect.com.au Pty Limited v GoConnect Australia Pty Limited (2000) 178 ALR 348; [2000] FCA 1148 at 360 [66]. Counsel pointed to the fact that the Magistrate had herself remarked that the matter was complicated and that her Honour had applied the wrong test so that there was error in law in making the indemnity costs order.
Insofar as Mr Freeman advanced submissions by way of a Notice of Contention filed in this Court on 23 August 2018, Ms Dolenec submitted that none of the grounds contained in the Notice of Contention supported the maintenance of the judgment and orders made in the Local Court against Mr Taouk.
It was submitted that the appeal should be allowed and orders made in favour of Mr Taouk as sought in the Amended Summons. Submissions for Ms Ho
Mr Freeman submitted that her Honour had in fact found that an agreement existed between Ms Ho, Edifice and Mr Taouk arising from the correspondence up to 19 December 2016 and that this was the settlement also found by Senior Member Meadows in NCAT on 12 April 2017. It was submitted that the agreement between those parties was complete as at 19 December 2016, and that introduction of the concept of a Deed thereafter was not something which altered the agreement already reached or gave rise to a later agreement which, in some way, operated to overtake the earlier agreement reached in the correspondence.
Mr Freeman submitted that her Honour had not found that the contract or agreement was contained in the Deed itself, but rather the pre-existing agreement which bound both Edifice and Mr Taouk, as well as Ms Ho. Counsel submitted that the position was not affected because Ms Ho had signed her counterpart of the contract, with that counterpart being delivered to the solicitors for Edifice and Mr Taouk.
If the Court found that the Magistrate had held that the Deed constituted the agreement (which, it was submitted, should not be found), Mr Freeman submitted that the issues raised in the Notice of Contention may have application giving rise to submissions that (Exhibit A, page 8): 1. the Plaintiff was estopped from denying that there was a valid and binding agreement to settle Ms Ho's application to NCAT; 2. in the alternative, her Honour should have found that the Deed executed by Ms Ho was not delivered to the solicitors for Edifice and Mr Taouk unconditionally, but was delivered to them in escrow pending execution of a counterpart Deed by them and the subsequent delivery of the counterpart to Ms Ho; 3. in the alternative, her Honour should have found that there was a mutual mistake on the part of Ms Ho, Edifice and Mr Taouk with regards to the Deed in that it ought to have provided, but did not so provide, that the settlement monies were to be paid by both Edifice and Mr Taouk jointly and severally; 4. in the alternative, her Honour should have found that, if there was an agreement between the parties constituted by the Deed or by delivery of the Deed by Ms Ho, then by refusing to sign the Deed, Mr Taouk repudiated such agreement; 5. in the alternative, her Honour should have found that Mr Taouk, by his conduct in refusing to sign the Deed and by insisting upon having his "day in court", repudiated the Deed and was estopped in relying upon the Deed.
Mr Freeman submitted, however, that the matters contained in the Notice of Contention did not arise in this case because the primary finding made by Senior Member Meadows at NCAT and by Magistrate Milledge - that the agreement between the parties was complete by 19 December 2016 - was correct and that the Deed itself did not operate to alter the position in any way.
Counsel submitted that s.78 Civil and Administrative Tribunal Act 2013 did not operate to prevent Ms Ho from commencing proceedings in the Local Court seeking to recover, amongst other things, the sum of $4,500.00 by way of a costs order in NCAT.
Mr Freeman submitted further that contrary to the submissions made for Mr Taouk, Ms Ho was unable to obtain an order pursuant to s.59 Civil and Administrative Tribunal Act 2013 because s.59(1) only empowered NCAT to make orders to give effect to an agreed settlement if "the terms of the agreed settlement are in writing, signed by or on behalf of the parties and lodged with the Tribunal …".
Counsel submitted that it was both open to and appropriate for Ms Ho to commence proceedings in the Local Court seeking the judgment and orders ultimately obtained against Edifice and Mr Taouk.
With respect to the order for indemnity costs, Mr Freeman submitted that it was open to the Magistrate, in the exercise of discretion, to make an order for costs on an indemnity basis in this case having regard to the history of the litigation. He submitted that there was no overlap between the indemnity costs order made by Magistrate Milledge, and that made on an earlier occasion by Magistrate Atkinson with respect to an interlocutory application.
Mr Freeman submitted that no error had been demonstrated and that the Amended Summons should be dismissed with costs.

Decision

I keep in mind that Mr Taouk claims that the Local Court erred on a question of law in the various respects alleged in the Amended Summons. Mr Taouk does not assert that there was an error on a question of mixed fact and law. The appeal is to be determined by application of the demanding test for error on a question of law with the onus lying on Mr Taouk to demonstrate such error.
The appeal relates only to the reasons and decision of the Local Court. However, given the way the matter was argued in the Local Court and in this Court, reference will be made as well to the decision of Senior Member Meadows at NCAT.
A fair reading of the reasons of Senior Member Meadows at NCAT on 12 April 2017, and Magistrate Milledge in the Local Court on 12 March 2018, indicates that each of them found that settlement of the NCAT proceedings had been concluded by 19 December 2016, when there was an agreement between the parties as to quantum and the date by which the sum was to be paid. The findings of Senior Member Meadows at NCAT was that the settlement was complete as between Ms Ho, Edifice and Mr Taouk by 19 December 2016. As the reasons of Senior Member Meadows make clear, he identified that point in time and then referred to continuing negotiations with respect to a Deed (see [42] above).
I am satisfied that Magistrate Milledge took the same approach in the determination of the proceedings in the Local Court (see [61] above). Her Honour accepted that there was a completed agreement by 19 December 2016 with what followed concerning the Deed being part of the relevant history, but not something which overtook or somehow negatived the agreement already reached between Ms Ho, Mr Taouk and Edifice by way of settlement.
I am not persuaded that anything said in Mirzikinian v Tom & Bill Waterhouse Pty Limited or Australian and New Zealand Banking Group Limited v Frost Holdings Pty Limited supports Mr Taouk's argument that the Deed became the operative contract for the purpose of the settlement. It is necessary to consider the facts of this particular case to understand the conclusions reached in NCAT and the Local Court in this respect. The conclusion reached in each of NCAT and the Local Court was that there was a concluded settlement agreement in the correspondence as at 19 December 2016, and that what occurred thereafter with the Deed did not overtake or replace that agreement. No error is demonstrated in this reasoning, let alone an error on a question of law.
I return to the grounds of appeal contained in the Amended Summons (see [5] above).
Mr Taouk's Ground 1 is misconceived. It asserts (wrongly) that her Honour found that Mr Taouk was liable to pay money to Ms Ho pursuant to the Deed. In fact, her Honour found liability by reference to Mr Taouk being a party to the agreement already reached with Ms Ho and Edifice by 19 December 2016 (see [61] and [62] above). It was open to her Honour to so find and no error on a question of law is demonstrated in that respect.
Mr Taouk's Ground 2 again misconceives what occurred in the Local Court. Her Honour did not make a finding that Mr Taouk, in some way, repudiated the Deed because Edifice did not pay the agreed sum. Rather, her Honour concluded that after the concluded settlement agreement was reached on 19 December 2016, what occurred with the Deed in truth went nowhere, because Mr Taouk and Edifice flatly refused to make payments at all to Ms Ho and that this was the position in March 2018 at the time of the hearing in the Local Court. Once again, the finding made was open to her Honour and no error on a question of law is demonstrated in that respect.
Mr Taouk's Ground 3 is also misconceived in that it does not characterise accurately what was found by Senior Member Meadows in NCAT or Magistrate Milledge in the Local Court. The factual components of this ground are misplaced and certainly no error on a question of law is demonstrated.
Mr Taouk's Ground 4 asserts that her Honour made an error of law in admitting at the hearing of the civil proceedings the reasons of Senior Member Meadows at NCAT. I do not accept this submission.
It is necessary to keep in mind how this issue arose in the Local Court. After indicating an objection to the admissibility of the NCAT reasons, Ms Dolenec said (Exhibit A, page 75): "DOLENEC: Could I just very briefly say what our position is; our position is that you can determine whether there was an agreement between the parties not based on what NCAT said, but based on your construction of the relevant documents, and that'll be the letters you've been taken to and the deed of release that the plaintiff signed."
Soon after, the following submissions were made (Exhibit A, page 75): "DOLENEC: Could I put it this way, the tribunal was entitled to dismiss the proceedings on the basis that the matter had settled but what the tribunal wasn't entitled to do and what it didn't do was construct the terms of the settlement. It just satisfied itself that a settlement had occurred, and in doing that it had regard to both the letters the plaintiff relies on and the deed that my client relies on. The plaintiff says you should ignore the deed and you should just rely on the letters. We say it's the deed that represents the final settlement, even though it wasn't executed by my client. HER HONOUR: I understand it. Mr Freeman, this is much clearer now. FREEMAN: We say that there are a number of things which apply to what my friend has said. Firstly, that, but for the matter being resolved in accordance with those letters, my client would've proceeded to get a final determination by NCAT which then would've been registered as a judgment here. That didn't occur because of the finding of Member Meadows that the matter had been resolved, not by reference to the deed but by reference to the letter."
The Local Court hearing proceeded upon the basis that her Honour would consider whether there was an agreement between the parties by 19 December 2016 by reference to the primary documentary evidence, particularly the correspondence up to that date. Having done so, her Honour was satisfied that Ms Ho had proved such an agreement. The fact that Senior Member Meadows had reached a similar conclusion based on the same evidence was not the basis of the Magistrate's finding.
In these circumstances, her Honour did not make a ruling on the admissibility of the NCAT reasons. It was made clear that the task for the Local Court was to reach its own conclusion on the evidence and this is what occurred.
In these circumstances, the complaint made by Mr Taouk in Ground 4 cannot be sustained. The objection to the NCAT reasons was flagged but, in effect, not argued out by counsel for Mr Taouk. It was not necessary for her Honour to make a ruling on that issue. No error on a question of law is made out in these circumstances.
To the extent that Ground 4 encompasses as well Mr Taouk's argument that the Local Court had no power or jurisdiction to give judgment in favour of Ms Ho in this matter because of s.59 Civil and Administrative Tribunal Act 2013, I reject that submission. Section 59 permits an application to be made to NCAT in the circumstances covered by that section. However, the provision did not operate to exclude Ms Ho from suing in the Local Court to seek judgment upon a similar basis to that concluded by Senior Member Meadows on 12 April 2017. Mr Taouk has not demonstrated that the jurisdiction of the Local Court was ousted by these provisions in the Civil and Administrative Tribunal Act 2013.
Error on a question of law is not established under Ground 4, which ought be rejected.
Mr Taouk's Ground 5 asserts that her Honour erred in law because the Local Court had no power to order that Mr Taouk pay the costs order made by NCAT in the sum of $4,500.00.
I am not persuaded that the sole means of enforcement of such an order was by means of s.78 Civil and Administrative Tribunal Act 2013. Mr Taouk has not demonstrated that the Local Court had no power to include in a civil judgment of that Court a costs order made by NCAT in a closely associated decision.
It was open to Ms Ho to sue in the General Division of the Local Court, seeking judgment in the sum claimed arising from the agreement concluded by 19 December 2016 and the associated costs order made by NCAT: s.30 Local Court Act 2007. Mr Taouk did not seek to rely on s.33 Local Court Act 2007 which had no application to this case.
Mr Taouk has not demonstrated an error on a question of law as asserted in Ground 5.
With respect to Mr Taouk's Ground 6 which asserts error in the making of an order for indemnity costs, it has not been demonstrated that her Honour erred on a question of law in that respect.
The power to order indemnity costs in civil proceedings in this State is found in s.98(1)(c) Civil Procedure Act 2005 and Rules 42.1, 42.4 UCPR.
Costs are to be assessed on the ordinary basis unless the Court orders otherwise: Rule 42.2 UCPR. Departure from the usual practice of costs on the ordinary basis is discretionary. Beyond the need for a sufficient special or unusual feature in the case, no fixed rule can be laid down: Harrison v Schipp [2001] NSWCA 13 at [139].
An order for indemnity costs may be appropriate where the case involves some relevant delinquency on the part of the unsuccessful party: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at 89 [44].
In this context, some "relevant delinquency" does not mean moral delinquency or some ethical shortcoming, but delinquency bearing a relevant relation to the conduct of the case: White Constructions (ACT) Pty Limited (in liquidation) v White and Ors [2004] NSWSC 303 at [10]-[11].
It has been said that it is necessary to demonstrate some delinquency or unreasonableness on the part of the unsuccessful party: Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616. The need for unreasonableness is an underlying feature for an indemnity costs order: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [51], [57].
Self-evidently, to contest and lose litigation does not of itself expose the losing party to an order for costs on an indemnity basis: Chaina v Alvaro Homes Pty Limited [2008] NSWCA 353 at [113].
The power to order costs on an indemnity basis may arise in different circumstances, including the manner in which a litigant has conducted proceedings. It was open to her Honour in this case to conclude that the unreasonableness of the conduct of Mr Taouk and Edifice from December 2016 bore upon the question of costs, including indemnity costs.
Despite the clear agreement reached between Ms Ho, Edifice and Mr Taouk, there was a rejection by Mr Taouk and Edifice of obligations to pay the sum arising from the settlement agreement which was payable by 28 February 2017. Thereafter, the approach of Mr Taouk and Edifice to the Local Court proceedings does not sit comfortably with their obligations under s.56 Civil Procedure Act 2005. It is clear that considerations of this type were central to her Honour's exercise of discretion that costs be awarded on an indemnity basis.
It was open to her Honour to conclude that the conduct of Mr Taouk and Edifice since December 2016, and the arguments advanced in the Local Court on behalf of Edifice and Mr Taouk were sufficiently unmeritorious (and clearly so) as to warrant a response by way of a costs order on an indemnity basis. The fact that the arguments advanced for Mr Taouk and Edifice may have been complex did not make up for their lack of strength and quality, which her Honour was entitled to take into account in exercising the discretion to order costs on an indemnity basis.
I do not consider that the indemnity costs order made by Magistrate Milledge overlapped in any way with the indemnity costs order made by Magistrate Atkinson at an earlier and separate interlocutory hearing. In any event, the Court was informed at the hearing of the appeal that Magistrate Atkinson's order still remains unpaid.
Error on a question of law is not established under Ground 6. I refuse leave under s.40(2)(c) Local Court Act 2007 for Mr Taouk to appeal against this costs order.
Having regard to the conclusions reached on this appeal, it is not necessary to consider the alternative arguments advanced by Mr Freeman by way of the Notice of Contention. I have accepted that the findings of Magistrate Milledge concerning the settlement agreement and its effect were open and disclose no error on a question of law.

Conclusion

Mr Taouk has failed to make good any of his grounds of appeal.
Before concluding this judgment, it should not be overlooked that it was only Mr Taouk who appealed from the judgment and orders made in the Local Court on 12 March 2018. No appeal was brought by Edifice against the judgment and orders. If it was the case that Edifice (Mr Taouk's company) was to comply with the judgment and orders, then it is arguable that there would have been no utility in Mr Taouk bringing this appeal.
It remains the position, however, that despite the fact that Mr Taouk's legal representatives acknowledged that Edifice is liable for the judgment and orders made, there has been no payment whatsoever by Edifice to Ms Ho since the settlement agreement was reached on 19 December 2016 until the present day.
The fact that Mr Taouk has brought this appeal rather confirms the clear impression otherwise available that he has no intention of causing the company of which he is the sole controlling mind to meet its obligations under existing orders of the Court.
I will make an order dismissing the Amended Summons.
Costs should follow the event, and I will order Mr Taouk pay Ms Ho's costs of the proceedings in this Court. If Ms Ho seeks an order for costs on a special basis (other than the ordinary basis), a written submission in support of that application should be made for Ms Ho by 4.00 pm on Monday, 10 December 2018. If application is made by Ms Ho, Mr Taouk will have until 4.00 pm on Wednesday, 12 December 2018 to provide a written submission in response. I will thereafter determine any application for a special costs order on the papers.
I make the following orders: 1. the Amended Summons is dismissed; 2. Mr Taouk is to pay Ms Ho's costs of the proceedings in this Court on the ordinary basis, with leave being granted to Ms Ho to make application for costs on a special basis by way of written submissions to be furnished to my Associate, and served upon the legal representatives for Mr Taouk by 4.00 pm on Monday, 10 December 2018; 3. in the event that Ms Ho makes application for a special costs order, Mr Taouk may respond to the application by written submissions furnished and served by 4.00 pm on Wednesday, 12 December 2018.

Amendments 19 December 2018 - Amendment to representation on coverpage. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 December 2018

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