Solicitors:
JP Gould Solicitors (Applicant)
Adams Partners Lawyers (Respondents)
File Number(s): AP 16/46382
Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales
Jurisdiction: Consumer and Commercial Division
Date of Decision: 28 September 2016
Before: D Goldstein, Senior Member
File Number(s): HB 13/12266 and HB 14/50779
[2]
reasons for decision
These proceedings relate to an appeal against a decision of the Tribunal made in home building applications HB 13/12266 and HB 14/50779 (original proceedings). In those proceedings the appellant was a builder who carried out residential building work for the respondents.
The original proceedings were heard by the Tribunal in April and August 2015 and separate reasons for decision in each home building application were delivered on 28 September 2016. In those reasons, the appellant was ordered to pay the respondents the sum of $108,774.64 immediately in respect of the respondents' claim (HB 13/12266) and the respondents were ordered to pay the appellant $36,085.37 immediately in respect of the appellant's claim (HB 14/50779). The appellant was also ordered to deliver up to the respondents various certificates in relation to the building work, the subject of the dispute. (original orders). The net effect of the money order was that the appellant was required to pay the respondents a total of $72,689.27.
The appellant has filed an appeal challenging all orders made in the original proceedings. The Notice of Appeal was filed on 20 October 2016. The grounds of the challenge can be summarised as follows:
1. the Tribunal erred in admitting exhibit F into evidence at the hearing and that the appellant expert had been denied an adequate opportunity to respond
2. the Tribunal erred in calculating the contractual date for completion;
3. the Tribunal erred in rejecting the appellant's claim for various extensions of time under the contract.
On appeal, the appellant seeks orders that the respondent pay to it the sum of $76,611.57, that the respondents claim be dismissed and that the respondent pay the appellants cost of the original proceedings.
The matter was listed for call over on 1 November 2016 and for the purpose of determining the appellant's application for a stay of the original orders pending finalisation of its appeal. The appellant's application for stay was also lodged on 20 October 2016. In that application, the appellant repeated the grounds of appeal and said that:
1. should the original orders stand, the respondents will obtain an unjust enrichment; and
2. the appellant will be unable to continue to operate and prosecute its appeal lodged with this application.
[3]
Evidence and submissions
When the application for stay was heard, the appellant identified its evidence in support of the stay as consisting of the stay application, the Notice of Appeal, and the decision in the original proceedings. No evidence in relation to the appellant's financial position was provided.
Mr Darvall of Counsel appeared for the appellant. The respondent was represented by Mr Adams, Solicitor. Each of the parties made oral submissions.
The primary focus of the appellant's submissions was on that part of the decision where the Tribunal concluded the contract had been validly terminated by the respondents. In short, the appellant submitted that the effect of the Tribunal's decision was that:
1. the Tribunal found at [47] of its reasons in the respondents' claim that the letter dated 23 February 2013 sent to the appellant did not operate to terminate the contract; and
2. while the Tribunal found there were other grounds which might have allowed termination based on the principle set out by the High Court in Shepherd v Field and Textiles of Australia Ltd (1931) 45 CLR 359, the Tribunal made no finding that the contract was otherwise validly terminated.
In this regard the appellant referred to [104] - [105] of the decision and said these statements did not amount to a finding that the contract had been validly terminated. The appellant asserted that this finding permeated all other findings as to damages and the Tribunal's conclusions as to the respective entitlements of the parties. Consequently, the appellants submitted that it had strong prospects of success in the appeal.
The appellant also relied on the fact that its building license had been suspended and without a stay it would be unable to carry on business and/or exercise its rights of appeal. In this regard the Appeal Panel was informed that there is in place home warranty insurance, a matter conceded by the respondents. Therefore, if no stay was granted, the appeal would be rendered useless.
In reply, the respondents submitted that the findings of the Tribunal were sufficient and that the Tribunal in fact found the contract had been terminated, albeit on grounds other than expressed in the letter dated 23 February 2013 referred to above. In this regard, the respondents also point to the finding in the decision at [101] that "the owners were entitled to terminate the contract and in that regard the default by the builder, as found, were incapable of remedy".
Accordingly, the respondents submitted that the findings of the Tribunal when read as a whole clearly show the Tribunal concluded the respondents had validly terminated the contract and no error of the type identified by the appellant had been established.
As to why a stay should not otherwise be granted, the respondents relied on a number of matters. First, respondents said that the appellant had not provided any financial information about its capacity to pay the sum ordered by the Tribunal. Secondly, a previous costs order made in favour of the respondents assessed in the sum of $16,941.14 (unpaid costs order) had not been paid despite an order of the Tribunal requiring payment. This costs order was not the subject of challenge on appeal and was made many months earlier. Thirdly, the respondent submitted appellant had applied to wind up itself, although upon discussion it was clear that a "strike off action" was in progress to deregister the appellant, that application having been made on 24 October 2016.
In relation to this last matter, it would seem from the Australian and Insurance Securities Commission documents that the application was an "Application for Voluntary Deregistration of a Company", that is it was instigated by the appellant or its officers or shareholders. Consequently, the respondents submitted that if any order was made to stay the proceedings (which order was opposed) it should be on terms that the amount of $72,689.27 be paid into the Tribunal.
In reply, the appellants submitted that the grounds in the Notice of Appeal were wide enough to include an appeal against the unpaid costs order and, in any event, having regard to the merits of the appellant appeal a stay should be granted.
[4]
Consideration
The principles applicable to the grant of a stay were set out in the decision of Wright J, President of the Tribunal, in Bentram Pty Ltd v Sabbarton [2014] NSWCATAP 37 at [9] where His Honour said:
(1) Generally a successful party is entitled to the benefit of the decision or orders that the party has obtained at first instance, but a stay may be granted where the appellant has demonstrated an appropriate case to warrant the exercise of discretion in its favour - s 43(2) and (3) of the Act, Kalafair Pty Limited v Digitec (Australia) Pty Limited (2002) 55 NSWLR 737 at [28], Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2014] NSWCA 231 at [7].
(2) In practical effect the onus is on an applicant for a stay to make out a case that it is appropriate for the court to make such an order - Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694, Vaughan v Dawson [2008] NSWCA 169 at 16.
(3) The mere lodgment of the notice of appeal is insufficient, of itself, to demonstrate that it is an appropriate case to warrant the granting of a stay - s 43(2) and (3) of the Act, Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694, Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2014] NSWCA 231 at [7].
(4) An order staying the operation of a decision or orders will generally be appropriate where such an order is reasonably necessary to secure the effectiveness of the appeal - s 43(3) of the Act. This is similar to, if not the same as, the considerations applied by the Courts that where there is a risk that an appeal will prove abortive if the appellant succeeds and a stay is not granted or where unless a stay is granted an appeal will be rendered nugatory, the discretion should generally be exercised in favour of granting a stay - Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695.
(5) The Tribunal may also take into account the strength or otherwise of the case of the party seeking the stay. This consideration may be particularly relevant when it is plain that an appeal, which does not require leave, has been lodged without any real prospects of success and simply in the hope of gaining a respite against immediate execution of the decision - Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695.
(6) The Tribunal's power to grant a stay includes a power to make such an order subject to such conditions as the Tribunal specifies - ss 43(3) and 58 of the Act.
(7) In exercising the discretion the Tribunal will also weigh the balance of convenience and the competing rights of the parties and may impose appropriate conditions so as to achieve a result that is fair to all parties - Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694, Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2014] NSWCA 231 at [21] and [22].
(8) Finally, the overriding principle in an application for a stay is to ask what the interests of justice require - New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83] and Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 at [18].
As set out above, the substance of the appellant's submissions in support of the stay is that it has strong prospects of success by reason of the Tribunal's failure to make a finding that the respondent had validly terminated the contract. This requires the Appeal Panel to consider the reasons for decision, particularly [47], [101], [104] and [105].
While it is unnecessary and inappropriate to make any final rulings having regard to the nature of a stay application, when these paragraphs are read as a whole, it could not be said that the appeal will inevitably succeed and therefore a stay should be granted. To the contrary, the reasons taken as a whole suggest that the Tribunal determined the contract had been validly terminated by the respondents and the breaches were such that they could not be remedied: see eg decision at [101]
On the other hand, it is clear from the evidence that orders for costs the Tribunal has previously made have not been paid and that the appellant or its directors or members have applied to deregister the company, a process which is still in progress. The continuation of this process, which remains unexplained by any evidence from the appellant, the absence of any information concerning the financial affairs of the appellant, the fact the application for deregistration was made after the appeal was lodged and the fact that the application only came to light when the respondent replied to the stay application and provided a copy of an ASIC search strongly counts against the submission that the appellant requires a stay so it can continue to operate its business a builder.
Further, the Appeal Panel notes that an application for voluntary deregistration can only be made can only be made in circumstances prescribed by s601AA of the Corporations Act, 2001 (Cwth). This section provides:
Deregistration--voluntary
Who may apply for deregistration
(1) An application to deregister a company may be lodged with ASIC by:
(a) the company; or
(b) a director or member of the company; or
(c) a liquidator of the company.
If the company lodges the application, it must nominate a person to be given notice of the deregistration.
Circumstances in which application can be made
(2) A person may apply only if:
(a) all the members of the company agree to the deregistration; and
(b) the company is not carrying on business; and
(c) the company's assets are worth less than $1,000; and
(d) the company has paid all fees and penalties payable under this Act; and
(e) the company has no outstanding liabilities; and
(f) the company is not a party to any legal proceedings.
In the absence of any explanation by the appellant, it appears that the company has inappropriately applied for deregistration and to stay the present orders pending an appeal fixed for hearing in January 2017 may deprive the respondents any prospect of recovering the amounts in question from the appellant, their only recourse being to a possible insurance claim in circumstances where some of the orders made by the Tribunal may not be orders to which any policy responds.
Accordingly, there is no reason to displace the general position that "a successful party is entitled to the benefit of the decision or orders that the party has obtained at first instance".
It follows that the application for stay should be dismissed. Further, the provisions of rule 38A of the Civil and Administrative Tribunal Rules, 2014 (Rules) apply to these proceedings (because r38 of the Rules applied to the decisions at first instance). Therefore the appellant should pay the respondents costs of the application, such costs to be agreed or as assessed under the relevant Legal Profession legislation.
[5]
Orders
The Appeal Panel makes the following orders:
1. The application for stay is dismissed.
2. The appellant is to pay the respondents' costs of the application for stay as agreed or assessed under the relevant Legal Profession legislation is provided in s 60(4)(b) of the Civil and Administrative Tribunal Act, 2013.
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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Decision last updated: 09 November 2016