Alliance Project Group Pty Ltd v The Owners - Strata Plan No. 92334 [2019] NSWCATAP 154 | Case summary

Notice of Appeal and grounds of appeal

The Notice of Appeal raised ten grounds of appeal. These are: 1. The Tribunal erred in failing to dismiss the Owners' application pursuant to s 55 of the NCAT Act. 2. The Tribunal erred in its interpretation of s 55 of the NCAT Act by placing too narrow construction on the term "misconceived". 3. The Tribunal erred in the interpretation of s 36 of the NCAT Act by placing too narrow construction on subsection (3). 4. The Tribunal failed to take into account relevant considerations and took into account irrelevant considerations in determining whether to dismiss the Owners' application pursuant to s 55 of the NCAT Act. 5. The Tribunal erred in ordering the transfer of the proceedings pursuant to Sch 4 cl 6(1) of the NCAT Act. 6. The Tribunal failed to take into account relevant considerations and took into account irrelevant considerations in deciding to order the transfer of the proceedings pursuant to Sch 4 cl 6 of the NCAT Act. 7. The Tribunal's discretion miscarried in so far as it ordered the transfer of the proceedings. 8. The Tribunal erred in granting an amendment pursuant to s 53 of the NCAT Act. 9. The Tribunal failed to take into account relevant considerations and took into account irrelevant considerations in deciding to grant the amendment pursuant to s 53 of the NCAT Act. 10. The Tribunal's discretion miscarried in so far as the Tribunal granted an amendment pursuant to s 53 of the NCAT Act.
In the Notice of Appeal, the appellant sought leave to appeal because the decision was not fair and equitable or was against the weight of the evidence. However, both parties accepted at the hearing of this appeal (which occurred on 17 June 2019) that the appeal was against an interlocutory decision for which leave was required on all grounds: see s 80(2)(a) of the NCAT Act. We will return to this issue below, as it is relevant in determining what principles apply to the grant of leave.
The parties filed written submissions and made oral submissions at the hearing of the appeal. We do not propose to set out these submissions in full as it is not necessary.
However, it is necessary to record the final position of the appellant in relation to its claim that the Tribunal erroneously failed to conclude that the proceedings were an abuse of process and should be dismissed.
The appellant said that s 55(1)(b) of the NCAT Act, on its proper construction, gave power to the Tribunal to dismiss proceedings which were an abuse of process. The Owners Corporation accepted this position. The appellant also accepted that the language of s 55(1) gave to the Tribunal a discretion in connection with whether a dismissal should be made under that section. Again, this was not a matter of controversy between the parties in the application for leave to appeal.
Rather, the dispute was whether or not, having regard to the principles applicable to the grant of leave to appeal, leave should be given in the present case and, if so, whether the appeal should be allowed by reason of any relevant error.
In substance, it was the appellant's contention that, on the proper construction of the HB Act, the Tribunal only had jurisdiction to hear a claim by an applicant for a work order if the value of the work to be performed pursuant to that order was not more than $500,000. The appellant contended that this jurisdictional limit was imposed by s 48K(1) of the HB Act which says: The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations).
The appellant says this jurisdictional limit applied even where the only relief sought was a work order (being an order in the nature of specific performance). The Tribunal is permitted to make this form of order under s 48O(1)(c) of the HB Act. It should be noted that the application originally filed only sought a work order. However, in the printed form of application beside the printed words "Order to do work or services as stated below to the approximate value of" found in the form at Section 4 Order Details under the heading Work orders, the Owners Corporation had inserted the amount of $500,000: see Appeal Bundle (AB) Tab 3.
The respondent's position was that this jurisdictional limit only applied where an amount of money was claimed. Otherwise, there were special powers of the Tribunal to make work orders under s 48O(1)(c) of the HB Act "in addition to the power to award damages" which "operates in conjunction with s 48MA" of the HB Act. Further, and in any event, the amount stated in the application as to the value of the works for which an order to perform was sought did not exceed $500,000. In short, the respondent contended that, on its proper construction, the HB Act permitted the Tribunal to make a work order irrespective of the value of the work to be performed, the only "fetter on the Tribunal's jurisdiction [concerning] the 'amount claimed'". In this regard, the respondent said "[i]t is inapt to describe relief in the nature of a rectification order as an 'amount claimed".
Neither party suggested the Tribunal could not transfer the proceedings to a court under Sch 4 cl 6(1) if an application has been filed and the Tribunal determined it lacked jurisdiction. This approach seems consistent with the fact the Tribunal has both a statutory power to determine whether it has jurisdiction about which it can make an ancillary order (see definition of ancillary order in s 4 of the NCAT Act) and the fact the Tribunal has an express power to transfer proceedings in the Consumer and Commercial Division to "a court (in accordance with the rules of that court) that has jurisdiction in the matter" under Sch 4 cl 6.
During oral submissions, the appellant accepted that whether a particular application constituted an abuse of process depended upon its particular facts. When asked by the Appeal Panel what was the test to determine whether an original application was an abuse of process, the appellant accepted a formulation in the following terms: If an application is made in the Tribunal seeking a work order, the applicant for relief must take reasonable steps to enquire into the quantum of the work and that it is less than or equal to $500,000 in order to enliven the jurisdiction of the Tribunal and, if it fails to do so, its application is susceptible to being dismissed as an abuse of process.
The appellant then referred to the various reports that had been prepared and said there was no evidence of such an enquiry being made. Rather, the appellant said the evidence of such enquiries occurred after the application had been lodged.
Consequently, the appellant said that the application should be dismissed.
In relation to the discretion available under s 55(1) of the NCAT Act in respect of dismissing proceedings, the appellant said that the Owners Corporation was not prejudiced as it could commence new proceedings in an appropriate court. In making this submission, it should be noted that the appellant also appears to contend in the proceedings that if there were any defects, they were not major defects.
In relation to the absence of prejudice to the Owners Corporation, we note the proceedings were filed in the Tribunal on 4 December 2017, the occupation certificate upon completion of the original works having apparently been issued on 8 December 2015. That is, the original application was filed three days before the limitation period of two years was due to expire in respect of claims for breach of statutory warranty by a successor in title in respect of defects which are not major defects as defined by the HB Act.
As to the transfer application, the appellant said that the Tribunal failed to have regard to the decision in The Owners - Strata Plan No. 70030 v Decon Australia Pty Ltd [2014] NSWSC 347. The appellant says that there was first required a grant of leave to the Owners Corporation to amend the application to take the claim outside the Tribunal's jurisdiction in order to enliven the transfer provision.
Secondly on this aspect, the appellant contends the Tribunal misdirected itself as to the factual enquiry as to where any amendment should be allowed in the interests of justice and did so despite the Owners calling no evidence on this point and without having regard to the fact no enquiry was made in relation to the total value of the claim prior to the application being filed.

Should leave to appeal be granted

The Tribunal has power to dismiss proceedings under section 55(1) of the NCAT Act. That section provides: The Tribunal may dismiss at any stage any proceedings before it in any of the following circumstances: (a) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) withdraws the application or appeal to which the proceedings relate, (b) if the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance, (c) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) has failed to appear in the proceedings, (d) if the Tribunal considers that there has been a want of prosecution of the proceedings.
There is no express reference to "abuse of process" as a ground for dismissal. However, as we have stated above, both parties accepted s 55 of the NCAT Act may permit dismissal on the grounds of abuse of process.
The appellant seeks leave to appeal against the refusal to dismiss the proceedings on the basis there is an important issue of principle concerning the proper construction of the HB Act. Secondly, the appellant appears to assert it has suffered a relevant injustice for which leave should be granted.
In Champion Homes at [35] the Appeal Panel said: As stated in various decisions of the Tribunal and its predecessor, the Administrative Decisions Tribunal, the principles to be applied are to be derived from the principles applicable to leave applications in courts: see for instance, Johnston v Department of Education and Training (GD) [2007] NSWADTAP 6 and BHM v BHN & Ors [2014] NSWCATAP 26. These principles include the following: (1) It is unnecessary and unwise to lay down rigid rules of practice or exhaustive criteria governing the grant of leave to appeal: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 175; [1981] HCA 39; (2)However, the requirement for leave is a filter restricting access to the appeal process: Coulter v R (1988) 164 CLR 350; [1988] HCA 3 at 359 per Deane and Gaudron JJ; (3) Leave should only be granted where there are substantial reasons to allow an appellate review: Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] 104 FCR 564; (4) Circumstances justifying leave may be an error of principle resulting in substantial injustice: Minogue v Williams [2000] FCA 125. However, these concepts may not be cumulative; (5) There is a difference between the exercise of a discretion concerning a matter of practice and procedure and an exercise of a discretion that determines substantive rights: Adam P Brown per Aickin, Wilson and Brennan JJ at 177 citing with approval Jordan CJ in In re Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318 at 323; (6) Where an interlocutory decision effectively determines the substantive rights of the parties, that may be a significant factor in favour of granting leave to appeal: Eltran Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 195 per Spender J at [14]-[15], referring to Ex parte Bucknell (1936) 56 CLR 221 at 225-6; (7) In connection with a matter of practice and procedure, restraint should be applied in reviewing such decisions, especially if an application for leave is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21], referring to Adam P Brown and in In re Will of FB Gilbert (dec); (8) Leave should not be granted unless a substantial injustice would result and the decision is attended with sufficient doubt to warrant it being reconsidered by the appeal body. What is sufficient is dependent on the particular case: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-9; (9) Lastly, subject to the above, the matters set out in Collins at [84 (1)-(2)] are also relevant to the exercise of a discretion to grant leave.
For present purposes, it can be accepted that leave might be granted if there is an important issue of principle to be resolved, particularly in the context of whether a party may, by reason of the interlocutory decision, suffer a substantial miscarriage of justice.
In our view, leave to appeal should be refused in the present case. Our reasons are as follows.
First, where the consequences of an interlocutory order permits a determination of the real issues in dispute by a court having jurisdiction to determine that dispute, and an interlocutory decision does not otherwise finally resolve any substantive rights, it is difficult to see why leave should be granted. In this regard, the present orders permitting amendment and transfer and the order dismissing the application for summary disposition of the claim do not seem to give rise to circumstances where there has been an "error in principle resulting in substantial injustice". Rather, the prejudice that might arise will be from the dismissal of the claim so as to prevent the Owners Corporation from pursuing remedies referable to defects in the building works that are not major defects due to being time barred in any fresh proceedings.
The Tribunal made appropriate orders to protect the appellant from any prejudice suffered by reason of costs arising from the transfer. Otherwise, the ultimate exercise of the discretion by the Tribunal under s 55(1) is consistent with allowing a final hearing on the merits of all claims, and avoids the possibility that a summary dismissal order will work an injustice on the Owners Corporation.
Secondly, the appellant says that the Tribunal erroneously failed to deal with its submission that the proceedings were an abuse of process and, in effect, that the reasons for decision do not address this contention. We note that the submissions of the appellant at first instance were on the basis that the proceedings were "misconceived" and on the basis that the guiding principle found in s 36 of the NCAT Act had not been met: see AB 2 Tab 16, particularly at para 44 and following. It was in this context that the issue of "abuse" was raised. In this regard, various factual assertions were made by the appellant concerning why the proceedings were an abuse of process.
Having examined the meaning of "misconceived" in the context of various decisions made by this Tribunal and its predecessors, the Tribunal considered the submission made concerning various factual matters, including the failure to obtain quantum evidence prior to the commencement of proceedings. While it did not expressly refer to "abuse" and/or whether proceedings might be dismissed as an abuse of process under s 55(1)(b) of the NCAT Act, it is clear that the Tribunal did consider whether the conduct of the Owners Corporation relevantly constituted circumstances that would support an order for summary dismissal under that sub section.
At [45] of the Tribunal's reasons, the Tribunal said: The failure to obtain quantum evidence until proceedings have been before the Tribunal for some time is likely to lead to delay and increased costs. However, in the present case, where the claim relates to residential building work, where it has been lodged within the relevant limitation period and where there is evidence capable of supporting a cause of action within the Tribunal's jurisdiction, I am not satisfied that the lack of quantum evidence at the time the proceedings were commenced means the proceedings are misconceived. Nor am I satisfied that the commencement of the proceedings can be characterised as a failure to comply with s 36(3) or that the proceedings are otherwise an abuse of process. Any prejudice caused to the Respondents by the Owners' conduct of the proceedings to date can be appropriately dealt with through costs.
Even if it be accepted that the test for abuse arising from a failure to make reasonable enquiries, as formulated above, is a relevant test of abuse, these findings of fact count against the grant of leave. In saying this, we should not be taken as accepting the test which the appellant finally submitted was the appropriate formulation.
Thirdly, we are not satisfied that a case in which the Tribunal has decided by way of interlocutory decision to transfer proceedings to the Supreme Court of New South Wales, is an appropriate case to examine the proper construction of the HB Act and the jurisdictional limits of the Tribunal, particularly where such jurisdiction will not ultimately be exercised by the Tribunal in any event.
Fourthly, we are not satisfied leave should be granted in connection with the challenge to orders made in the transfer application.
The Tribunal was satisfied that the claim which the Owners Corporation wished to pursue was greater than $500,000 and that the Owners Corporation sought to amend its claim accordingly. In this regard, the proposed amendment was to add a new claim for relief, namely damages. There was some evidence of the fact the claim would exceed $1 million in the form of a letter from Mr Riad of Landlay Consulting, an engineer referred to by the Tribunal in its reasons at [21]. The Tribunal noted the appellant did not contest this evidence: reasons at [68].
This fact would justify both granting leave to amend and would form a proper basis to make a transfer order to the Supreme Court.
As to the decision in Decon, it is clear that the Court there was concerned with the denial of procedural fairness and the failure of the Tribunal to hear both applications to transfer and dismiss: Decon at [50]-[54]. It was on this basis the Court quashed the order for dismissal. In short the Court determined both the application to dismiss and the application to transfer must be heard before either were determined: Decon at [66].
In the present case, that is exactly what the Tribunal did.
Otherwise, at [60]-[62] of Decon, the Court said no more than that the proceedings remained in the jurisdiction of the Tribunal until amended, the application recording a claim for $329,005. Absent any amendment, the amount claimed in the application remained unaffected and simply providing an expert opinion that the value of the work about which a claim was made was a greater amount did not alter this position.
In any event, in the present case leave was given to amend the claim. Consequently, we see no relevant error which might justify the grant of leave to appeal.
For these reasons, leave to appeal is refused and the appeal is otherwise dismissed.
Rule 38 applies to this appeal by reason of r 38A. The appellant should pay the respondent's cost of the appeal, such costs to be as agreed or assessed on an ordinary basis.

Alliance Project Group Pty Ltd v The Owners - Strata Plan No. 92334

At a glance

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Judgment (8 paragraphs)

Parties

Cases Cited (12)