Advance Earthmovers Pty Ltd v Fubew Pty Ltd

Advance Earthmovers Pty Ltd v Fubew Pty Ltd - [2009] NSWCA 337 - NSWCA 2009 case summary — Zoe

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Judgment 1 TOBIAS JA: I agree with the orders proposed by Young JA for the reasons he has given as well as for the reasons given by Sackville AJA. 2 YOUNG JA: This is an application for leave to appeal from a decision of Delaney DCJ being heard concurrently with the appeal should leave be granted. 3 The basal underlying facts to the present dispute can be simply stated. 4 The applicant is a company whose principal function is as an earthmoving contractor. 5 The respondent, a company controlled by a Ms Dove and another woman, owns a property in the Southern Highlands upon which, at the time when it entered into the contract involved in the present dispute, it was intending to have a residence constructed for its directors. 6 The applicant was contracted by the respondent to do work on its property for preparation of an access road prior to the construction on the site of the proposed residence. 7 The applicant did work towards constructing the access road and rendered invoices to the respondent for about $95,000. 8 The respondent was dissatisfied with the amount charged for the work and did not pay the invoices except for an amount of about $15,000. The dispute seems to be that the estimate for the work was $15,000 and the additional charges were said by the respondent to be for remedial work for which it had no liability to pay. 9 On 25 August 2008, the respondent filed a claim in respect of the alleged over charging with the Consumer, Trader and Tenancy Tribunal ("CTTT") at Moss Vale. 10 There is some doubt in my mind as to whether the CTTT had jurisdiction to determine that claim. This is because the CTTT would only have jurisdiction if what was being done was residential building work, vide Home Building Act 1989, ss 48I-48L. 11 However, counsel for the applicant conceded that the CTTT did indeed have jurisdiction to determine the respondent's claim. 12 On 27 August 2008, the applicant filed a statement of claim in the Wollongong District Court in which it claimed in the alternative: (a) $79,120.53 for breach of contract; (b) $79,120.53 under s 15 of the Building and Construction Industry Security of Payment Act 1999 ("SOPA"); or

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(c) $79,120.53 as a quantum meruit. 13 The statement of claim pleaded, inter alia, that the relevant contract was a construction contract as defined by s 4 of the SOPA, that it had made a payment claim under s 13 of that Act and the respondent had not within 10 days or at all, served any payment schedules as required by s 14(4) of that Act. 14 The applicant filed a motion for summary judgment on 31 October 2008. 15 That motion came on for hearing before his Honour Judge Delaney on 24 November 2008. The respondent did not appear. However, it had sent letters to the Court pointing out its view that there was no jurisdiction in the District Court to hear the matter because proceedings had been commenced in the CTTT two days before the filing of the statement of claim in the District Court. 16 Judge Delaney informed counsel for the applicant of that matter. Counsel informed his Honour that that did not matter because of s 48L(3) of the Home Building Act 1989. That may well have been incorrect and may have misled the judge, though in saying this, I am not impugning the integrity of the barrister who made the submission. 17 His Honour found a verdict for the applicant on the SOPA count. 18 The applicant issued a statutory demand based on the judgment. A motion in the Equity Division of this Court to set aside that statutory demand was successful. 19 The respondent then filed a motion on 29 January 2009 to set aside the judgment and to remove the proceedings to the CTTT. 20 This second motion came on before Judge Delaney on 25 February 2009 and his Honour gave a written judgment on 3 April 2009. He appears to have held that the District Court had no jurisdiction to hear the matter. However, he also said that it would be a denial of natural justice not to set aside the judgment in the circumstances and that it would appear that the respondent had a good defence on the merits based on the interpretation of the Consumer, Trader and Tenancy Tribunal Act 2001 ("CTTT Act"). 21 The basis of the decision appears to be s 22(3) of the CTTT Act which provides: "If, at the time when an application was made to the Tribunal in accordance with this Act, no issue arising under the application was the subject of a dispute in proceedings pending before a court, a court has no jurisdiction to hear or determine such an issue." 22 His Honour then made orders setting aside the judgment, giving leave to the respondent to file a defence within 14 days and made orders for costs. 23 The draft notice of appeal contends that the primary judge was in error in finding that s 22(3) of the CTTT Act applied and that he erred in finding no jurisdiction and in not dismissing the respondent's motion. 24 The orders sought involve vacating the judge's order of 3 April 2009. This would reinstate the summary judgment. 25 Needless to say, the respondent resists this. In addition to other arguments, it says by a proposed notice of contention that the SOPA does not apply in the instant case as this case concerns a residential building work, vide s 7(2)(b) of the SOPA. 26 The applicant needs leave to appeal for at least two reasons:

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(2) The amount involved is less than $100,000. 27 On this application and appeal, Mr M Ashhurst SC and Ms M Dolenec appeared for the applicant and Mr S G Campbell SC and Mr R K Weaver appeared for the respondent. 28 An applicant to set aside a judgment in the District Court ordinarily has to show two matters on the balance of probabilities: (a) some reason for not taking the appropriate action to defend in time; and (b) an arguable defence on the merits. 29 Although his Honour's reasons are not particularly explicit on the matter, it would seem that he considered that the background of the letter to the Court regarding the claim before the CTTT and Ms Dove's evidence of her belief that she had done all that she needed to do, satisfied requirement (a). 30 As to (b), his Honour considered that there was an arguable case on the merits. 31 The complicating factor is that he appeared to find that the District Court had no jurisdiction to hear the matter because of s 22(3) of the CTTT Act. 32 I say "appears", because although his Honour wrote those words, his next following words that the interpretation of the CTTT Act afforded a defence on the merits and his giving leave for the respondent to file a defence, appears to negate this and show that his Honour was merely indicating that the point about no jurisdiction was fairly arguable. 33 There was considerable argument about what his Honour did actually decide. It is a matter of impression from the words used. Whilst my preliminary view was that his Honour did not actually decide the point about jurisdiction, after hearing the full argument, it seems to me that what he said on that issue is too clear to be cut down by his subsequent utterances. 34 In particular, the leave to file a defence might have been to allow for defences which did not fall foul of s 22(3) of the CTTT Act. 35 Mr Ashhurst submits that his Honour's decision cannot be justified. 36 The submission may be summarised by saying that the CTTT alone had jurisdiction to decide whether in the ultimate the respondent must pay the applicant's demand. That was the issue before the CTTT. However, the issue before the District Court was merely whether the applicant was entitled, in the interim, to be paid the amount of its demand in accordance with the SOPA. 37 The submissions pointed out almost ad nauseam that a judgment under the SOPA, whilst an order upon which execution may be levied, is not the final assessment of the underlying cause of action. The statute is aimed at the contractor being in possession of the amount in dispute with a proprietor or head contractor pending the decision on the disputed claim. 38 The key point is what is the meaning of "issue" in s 22(3) of the CTTT Act? 39 The word "issue" derives from the Latin verb "to go" and an issue occurs where two or more people are going meet at a point. 40 "Issue" in litigation means a point in dispute between parties as in the pre-Judicature pleadings where in due course issue was joined by formulating a question to which a jury could answer "Yes" or "No". 41 Now that point is not reached where one party is saying, "Ultimately I do not have to pay the demand" and the other party responds: "That may be so, but you have to pay the demand whilst we await such a final decision". 42 Accordingly, it would seem that the District Court was not dealing with the same issue as in the CTTT and thus was not deprived of jurisdiction because of s 22(3) of the CTTT Act. 43 I should note that, in any event s 22(3) of the CTTT Act merely deprives the District Court of jurisdiction to try the same "issue" as is before the CTTT. It does not operate to deprive the District Court of jurisdiction to decide any other question arising between the parties. 44 However, two further matters must be considered. 45 First, it must be remembered that only one of the three alternate claims raised in the statement of claim was based on the SOPA. The breach of contract claim and the quantum meruit claim may well raise identical issues with the matter that had already been commenced in the CTTT by the respondent. Indeed, this was conceded by Mr Ashhurst with respect to the quantum meruit claim. However, this is irrelevant to the decision as to whether the second claim was barred because of the claim before the CTTT. 46 The second matter needs deeper consideration. 47 There is an awkward fit between the various pieces of legislation that govern the present dispute. Not only are the CTTT Act and the SOPA significant, but so also is the Home Building Act. 48 Section 7(2)(b) of the SOPA provides as follows: "This Act does not apply to …

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(b) a construction contract for the carrying out of residential building work (within the meaning of the Home Building Act 1989) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in." 49 Section 3 of the Home Building Act defines "residential building work" as work involved in the construction, making of alterations, repairing, renovating, decorating or protective treatment of a dwelling. "Dwelling" is defined in such a way as to include the actual house or flat etc plus any swimming pool or spa for use in conjunction with the house or flat etc. 50 Sections 48I and 48K of the Home Building Act confer jurisdiction on the CTTT in respect of building claims. A "building claim" is defined in s 48A of the Home Building Act as a claim arising from building services which means services in connection with residential building work. 51 Thus, the CTTT appears only to have jurisdiction with respect to residential building work. 52 That is why I had doubts as to the CTTT's jurisdiction to hear the present claim as the work carried out for the respondent may not have been residential building work as defined. 53 That doubt can be put aside in the light of Mr Ashhurst's concession. 54 However, the point may still need to be considered as to whether this contract involved residential building work as if it does, then it may be that the SOPA does not apply and thus the claimant's proceedings under the SOPA should fail and there is, thus, a defence on the merits to the claim. 55 On this basis, there would or could be a common issue in both the CTTT and the District Court, the issue being whether the contract was for residential building work or not. 56 Mr Ashhurst submits that this issue does not arise because he has conceded that the CTTT has jurisdiction to hear the proprietor's claim and notwithstanding that fact, the residential building work was not carried out on such part of any premises in which the party for whom the work was so carried out resides or proposes to reside so that s 7(2)(b) of the SOPA does not apply. 57 The key point is that as the respondent is a corporation it cannot reside in a dwelling. 58 There was not much discussion of this point: the statement in the preceding paragraph being thought to be obviously correct. 59 My research shows that it is not so obvious, but I still consider that it is correct. 60 When considering the High Court's grant of jurisdiction under s 75(iv) of the Australian Constitution to hear matters between residents of different States, the High Court has constantly taken the view that a corporation cannot be considered a resident. This view was taken in 1922 in Australasian Temperance and General Mutual Life Assurance Society Ltd v Howe [1922] HCA 50; (1922) 31 CLR 290. The Court divided 3/2 on the issue in an ex parte matter in which Owen Dixon appeared for the unsuccessful plaintiff. In essence, Knox CJ and Gavan Duffy J said that the natural meaning of the word "resident" was to a natural person only and Higgins J agreed basing his view on the fact that there was apposition between the word "resident" and the word "citizen". Isaacs and Starke JJ strongly disagreed. 61 The High Court was invited to overrule that decision in Cox v Journeaux [1934] HCA 72; (1934) 52 CLR 282, but declined the invitation. In Union Steamship Company of New Zealand Ltd v Ferguson [1969] HCA 73; (1969) 119 CLR 191 at 196, Windeyer J applied the decision in the Australasian Temperance case and said, "the defendant, being a corporation, could not be a 'resident' of Victoria". 62 There are, however, a series of cases where it has been decided that a corporation can be a resident for some purposes. 63 In The Cesena Sulphur Company Ltd v Nicholson (1876) LR 1 Ex D 428, Kelly CB and Huddleston B decided that, under the then English Income Tax legislation, the plaintiff companies were residing in the United Kingdom. Huddleston B said at 452: "The use of the word 'residence' is founded upon the habits of a natural man, and is therefore inapplicable to the artificial and legal person whom we call a corporation. But for the purpose of giving effect to the words of the legislature an artificial residence must be assigned to this artificial person, and one formed on the analogy of natural persons." 64 This approach was endorsed by the House of Lords in De Beers Consolidated Mines Ltd v Howe [1906] AC 455. 65 A similar approach was taken in a case involving security for costs against a foreign plaintiff in In re Little Olympian Each Ways Ltd [1995] 1 WLR 560. 66 However, in these and other cases, the judges often express the opinion that assigning a residence to a corporation is a highly artificial action mandated by the statute being considered, see eg per Lord Radcliffe in Unit Construction Co Ltd v Bullock [1960] AC 351 at 368 (another tax case). 67 In the Australasian Temperance case, Isaacs J in his dissenting judgment analysed the tax and service of process cases and other cases where a corporation had been held to be resident. He conceded at 313 that where acts are referred to which are so clearly physical that they are impossible except for a human being then corporations are excluded. "A corporation cannot eat, drink or marry". However, at common law, "person" includes "corporation" and the proper construction of a statute may be that the legislature intends the word "resident" in the case of persons who are corporations to mean, by analogy, the corporation "is here" (p 321). 68 When one looks to the Home Building Act, one can see that the clear indications are that "residence" is used in its natural sense. First, the Act is the Home Building Act. A home is where natural persons eat, drink and sometimes marry. Next the flavour of s 7(2)(b) of the SOPA is that the relevant party must have or intend some personal occupation of the residence. 69 Thus, in my view, residential building work performed for a corporation cannot fall within s 7(2)(b) of the SOPA so as to abrogate the right of a contractor to proceed under s 15(2)(a)(i) in the District Court to obtain summary judgment for the amount claimed. 70 Even though the amount involved is under $100,000, the issues involved and the error below, which operate to negate the advantage which the SOPA clearly confers on the applicant, mean that the Court should grant leave to appeal. 71 It follows that, in my view, the Court should grant leave to appeal and then allow the appeal with the result that the summary judgment must be restored. 72 Of course, the respondent has the right to make a further application to the District Court to set aside the judgment. However, on the material before us, the prospects of success would appear minimal. 73 Accordingly, I propose the following orders:

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The heading, when read with the answer to Question 14 (which referred to an " access road " and identified the property on which the work was undertaken as a " farm "), might be said to have demonstrated that a threshold issue as to the nature of the work performed by Earthmovers was in " existence ". This would require the word " shown " to receive an expansive meaning, perhaps informed by the necessity for the Tribunal to be satisfied that it has jurisdiction to deal with a matter before it. On the other hand, s 22(6) of the CTTT Act , as a matter of construction, might be thought to limit " an issue " for the purposes of s 22(3) to one which appears on the face of the application. 103 As the point was not argued, or indeed adverted to by the parties, I do not think it appropriate to express a final view. It is enough to say for present purposes that it is not self-evident that Fubew's application to the Tribunal "showed" that the issue on which it relied for the purposes of s 22(3) of the CTTT Act was "in existence". Nor is it self-evident that the issue was recorded in the record made by the Tribunal in accordance with the CTTT Act. It is not clear what documents formed part of the record of the Tribunal on the date Fubew made the application (which appears to be the relevant time), other than the application form itself: cf Craig v South Australia [1995] HCA 58; 184 CLR 163, at 180-183, per curiam (dealing with error on the face of the record for the purposes of the writ of certiorari), M Aronson, B Dyer and M Groves, Judicial Review of Administrative Action (4th ed 2009), [4.220]-[4.230]. 104 The second difficulty confronting Fubew is to identify the issue arising under the application to the Tribunal, for the purpose of determining the extent (if any) to which the District Court was deprived of jurisdiction by virtue of s 22(3) of the CTTT Act. In his oral submissions, Mr Campbell identified the issue common to the proceedings in the Tribunal and the District Court to be whether the work performed by Earthmovers was "residential building work". 105 The Tribunal had jurisdiction to hear and determine Fubew's claim, subject to monetary limits, if it was a "building claim" within the meaning of s 48K(1) of the HB Act. The claim answered this description only if (relevantly) it was a claim arising from a supply of services, whether under a contract or not, by Earthmovers "for or in connection with the carrying out of residential building work" (s 48A(1)). The jurisdictional issue that arose (or potentially arose) in the Tribunal proceedings was whether Fubew's claim answered this description. 106 The SOP Act applies to any "construction contract": s 7(1) (see the definition in s 4, [76] above). Section 7(2) provides that the SOP Act does not apply to certain construction contracts, including (s 7(2)(b)): "a construction contract for the carrying out of residential building work (within the meaning of the Home Building Act 1989 ) on such part of any premises as the party for whom the work is carried out resides or proposes to reside in".

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(iii) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in. 112 As Basten JA pointed out in Shorten v David Hurst Constructions Pty Ltd [2008] NSWCA 134; 72 NSWLR 211, at 218 [29], the language of s 7(2)(b) is not precisely grammatical. It was held in that case that the words "such part of the premises" serve to identify the scope of the works that are the subject of the contract: at 222 [53], per Bell JA (with whom Hodgson JA agreed); at 218 [29], per Basten JA. For the exclusion to apply, "the party for whom the work is carried out" must as a matter of fact reside or propose to reside on the premises on which the work is carried out: at 223 [56]. 113 The word "party" is used on five separate occasions in s 7(2) of the SOP Act: once in s 7(2)(b) and four times in s 7(3). Section 7(3) is as follows: "(3) This Act does not apply to a construction contract to the extent to which it contains: (a) provisions under which a party undertakes to carry out construction work , or supply related goods and services, as an employee (within the meaning of the Industrial Relations Act 1996 of the party for whom the work is to be carried out or the related goods and services are to be supplied, or (b) provisions under which a party undertakes to carry out construction work , or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution, or (c) provisions under which a party undertakes : (i) to lend money or to repay money lent, or …" (Emphasis added.) 114 On three occasions, s 7(3) uses the expression "a party undertakes". On each of these occasions, the word "party" clearly means "a party to the construction contract". This conclusion follows from the context: each of the sub-paragraphs refers to "provisions [of the construction contract] under which a party undertakes" to do certain things. On the fourth occasion (s 7(3)(a) the reference is to "the party for whom the work is to be carried out". It is hardly likely that the drafter used the same word in a single sub-paragraph in two different senses. In my view, the fourth reference is also intended to mean a party to the construction contract. 115 Section 7(2)(b) also uses the word "party'. In my opinion, it has the same meaning in s 7(2)(b) as it does in s 7(3). Indeed, the expression "the party for whom the work is carried out" in s 7(2)(b) appears in identical form in s 7(3)(a). It follows that for the exclusion in s 7(2)(b) to apply, a party to the construction contract must reside or propose to reside in the premises on which the residential building work under the construction contract is to be carried out. 116 It is true that elsewhere in the SOP Act the drafter uses "person" to refer to someone who has undertaken construction work under a contract: see s 8(1). However, the lack of uniformity in language used elsewhere in the SOP Act cannot justify a different construction being given to the clear and uniform language in s 7. 117 Fubew was a party to the construction contract with Earthmovers. The directors of Fubew were not parties to the contract. For the reasons given by Young JA, it cannot be said that Fubew, a corporation, resided in or proposed to reside in the premises. It is not to the point that the directors of Fubew resided on the premises. It follows that the exclusion provided for by s 7(2)(b) of the SOP Act does not apply and that Earthmovers, if it is able to meet the requirements of s 15, will be entitled to an order against Fubew for the "claimed amount" under that section.

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