Beetson v Charnwood Constructions Pty Ltd

NCAT Consumer and Commercial|2021-10-11|Before: Blake AM

Overview

In these proceedings the first applicant, Nina Beeston (Ms Beeston), and the second applicant, Kenneth Pitman (Mr Pitman) (together referred to as the applicants), are seeking relief under the Home Building Act 1989 (NSW) (HB Act) against the first respondent, Charnwood Constructions Pty Ltd (Charnwood), and under the Australian Consumer Law (NSW) (ACL (NSW)) against the second respondent, The Site Foreman (NSW) Pty Ltd (TSF) (together referred to as the respondents), arising out of alleged defective building work and project management services respectively undertaken at their property at Summer Hill (the property).
The applicants have applied to vacate the hearing fixed for 25 and 26 October 2021 and to transfer the proceedings to the District Court of New South Wales (the District Court and the transfer application respectively). The respondents oppose the transfer application.
I have decided that the transfer application should be dismissed.

The history of the proceedings

On 20 July 2020, the applicants commenced proceedings HB 20/30968 against the first respondent by filing an application in which they claimed a money order of $98,000.00 for a breach of statutory warranty.
On 20 July 2020, the applicants filed their points of claim in which they relevantly alleged: 1. on or about 24 November 2016, they engaged the first respondent under a lump sum residential contract to carry out alterations and renovation to the property for the amount of $488,000.00 (the building contract); 2. the first respondent breached the terms of the building contract, the warranties implied under s 18B of the HB Act, and its duty of care; 3. they suffered loss and damage.

The issues

The following issues arise for determination: 1. whether a hearing in relation to the transfer application should be dispensed with; 2. whether the proceedings should be transferred to the District Court; 3. the costs of the transfer application.

Whether a hearing in relation to costs should be dispensed with

Neither the applicants nor the respondents have made any submission on this issue.
I am satisfied that the issues for determination in relation to the transfer application can be adequately determined in the absence of the parties by considering their evidence and submissions. Accordingly, I have decided pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) to make an order dispensing with a hearing in relation to the transfer application.

Whether the proceedings should be transferred to the District Court

Introduction

Before considering these issues it is appropriate to set out the applicable statutory provisions and the relevant legal principles, and the evidence and submissions of the parties.

NCAT Act

Part 4 Division 1 (ss 35-38) contains provisions dealing with introductory matters relating to the practice and procedure of the Tribunal. Section 36 specifies the guiding principle to be applied to practice and procedure, and relevantly provides: 36 Guiding principle to be applied to practice and procedure (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it - (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal - (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. …
Schedule 4 contains provisions dealing with proceedings in the Consumer and Commercial Division of the Tribunal. Part 5 (cll 5-10) contains special provisions dealing with the practice and procedure of the Tribunal. Clause 6 deals with the transfer of proceedings to courts or to other tribunals, and relevantly provides: 6 Transfer of proceedings to courts or to other tribunals (1) If the parties in any proceedings for the exercise of a Division function so agree, or if the Tribunal of its own motion or on the application of a party so directs, the proceedings are - (a) to be transferred to a court (in accordance with the rules of that court) that has jurisdiction in the matter, and (b) to continue before that court as if the proceedings had been instituted there. …

FT Act

Part 3 Division 2 (ss 27-32) of the Fair Trading Act 1987 (NSW) (FT Act) provides for the application of the Australian Consumer Law (relevantly comprising Schedule 2 to the Competition and Consumer Act 2010 (Cth)) as in force from time to time as a law of New South Wales, its reference as the ACL (NSW), and its inclusion as part of the FT Act.
Part 6A Division 1 (ss 79B-79H) of the FT Act provides for preliminary matters with respect to the jurisdiction of the Tribunal in relation to consumer claims, and relevantly: 1. in s 79D, includes the following definitions of "consumer" and "supplier" for Part 6A: consumer means any of the following persons or bodies to whom or to which a supplier has supplied … services (whether or not under a contract), … - (a) a natural person, … supplier means a person who, in the course of carrying on (or purporting to carry on) a business, supplies goods or services. 1. in s 79E, includes the following definition of "consumer claim": 79E Meaning of "consumer claim" (cf CC Act 1998, s 3A) (1) For the purposes of this Part, a consumer claim means a claim by a consumer, for one or more of the following remedies, that arises from a supply of … services by a supplier to the consumer (whether or not under a contract) … - (a) the payment of a specified sum of money, …
Part 6A Division 2 (ss 79I-79M) of the FT Act contains provisions dealing with applications to and the jurisdiction of the Tribunal, and relevantly provides: 1. in s 79I, that any consumer may apply to the Tribunal for determination of a consumer claim; 2. in s 79J, that the Tribunal has jurisdiction, except as otherwise provided by Division 2, to hear and determine a consumer claim the subject of an application under Division 2; 3. in s 79K(1)(a), that the Tribunal has jurisdiction to hear and determine a consumer claim only if the goods or services to which the claim relates were supplied in New South Wales; 4. in s 79L(1)(a), that the Tribunal does not have jurisdiction to hear and determine a consumer claim if the cause of action giving rise to the claim first accrued more than 3 years before the date on which the claim is lodged.
Part 6A Division 3 (ss 79N-79V) of the FT Act contains provisions dealing with orders of the Tribunal, and relevantly provides: 1. in s 79N(1), that in determining a consumer claim wholly or partly in favour of a claimant, the Tribunal may, subject to Division 3, make any one or more of the following orders that it considers appropriate: (a) an order that requires a respondent to pay to the claimant a specified amount of money, … 1. in s 79S(1) when read with ss 79S(2)(a) and 79S(7), that the Tribunal has no jurisdiction to make, in respect of a particular consumer claim, an order in favour of the claimant if the amount to be paid under or because of the order would exceed $40,000.

ACL (NSW)

Chapter 2 Part 2-1 (ss 18-19) contains provisions dealing with misleading or deceptive conduct. Section 18 relevantly provides: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. …
Chapter 5 Part 5-2 Division 3 (s 236) contains the provision dealing with the remedy of damages. Section 236 relevantly provides: 236 Actions for damages (1) If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3; the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention. …

HB Act

Part 3A contains provisions for resolving building disputes and building claims. Division 1 contains definitions, and relevantly provides: 48A Definitions (1) In this Part - building claim means a claim for - (a) the payment of a specified sum of money, or … that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. … building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services - (a) supplied by the person who contracts to do, or otherwise does, that work, or … goods, services and supply have the same meanings as in Part 6A of the Fair Trading Act 1987.
Division 4 (ss 48K-48MA) contains the provision dealing with the jurisdiction of the Tribunal in relation to building claims. Section 48K relevantly provides: 48K Jurisdiction of Tribunal in relation to building claims (1) 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). …
Schedule 1 contains definitions and other interpretative provisions. Clause 2 contains a definition of "residential building work", and relevantly provides: 2 Definition of "residential building work" (1) In this Act, residential building work means any work involved in, or involved in co-ordinating or supervising any work involved in - (a) the construction of a dwelling, or (b) the making of alterations or additions to a dwelling, or (c) the repairing, renovation, decoration or protective treatment of a dwelling. …
Clause 3 contains a definition of "dwelling", and relevantly provides: 3 Definition of "dwelling" (1) In this Act, dwelling means a building or portion of a building that is designed, constructed or adapted for use as a residence (such as a detached or semi-detached house, transportable house, terrace or town house, duplex, villa-home, strata or company title home unit or residential flat).

The relevant legal principles

In Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd & Ors [2004] NSWSC 765 (Ideal Waterproofing) at [47] Sperling J made the following observations regarding the transfer of proceedings by the predecessor of the Tribunal to a court: "[47] As to that, the parliament has constituted the Tribunal with limited jurisdiction. From time to time, the Tribunal will have to decide whether it has jurisdiction to hear and determine a matter. That is part of its role. The prospect that the Tribunal may be called upon to fulfil that role in a particular matter is not a good reason for transferring a case to the District Court. It is only where there are bona fide claims genuinely requiring determination and which cannot be decided by the Tribunal that a transfer of proceedings is warranted."
In Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib, Mohammad Chahrouk Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib [2014] NSWCATCD 67 (Draybi Bros) at [126] and [128] the Tribunal made the following observations about the transfer of proceedings by the Tribunal to a court: "[126] Section 48K of the HBA provides the Tribunal has jurisdiction to determine building claims, the limit of that jurisdiction being claims not exceeding $500,000. However there are time limits for the lodgement of applications affecting the Tribunal's jurisdiction which do not coincide with general law limitation periods applicable to particular claims. Where, by reason of the limitations in s48K the Tribunal has no jurisdiction to hear a case, the Tribunal may transfer the application to a court which has jurisdiction: see section 23 of the Consumer Trader Tenancy Tribunal Act. Prior to making an order for transfer it is necessary for the Tribunal to consider whether there is an action maintainable in the court so as to make such a transfer appropriate, or whether the application should otherwise be dismissed. … [128] In addition to considering any jurisdictional limits applicable by reason of time limitations, which might justify transfer of the applications to a court, the Tribunal should also be satisfied the claim which is proposed to be transferred is otherwise maintainable at law. If not, then the Tribunal properly exercising its discretion should, in my opinion, dismiss the application rather than transfer the proceedings to a court."
In The Owners - Strata Plan No. 70030 v Decon Australia Pty Ltd [2014] NSWSC 347 (Decon Australia) at [59]-[61] Schmidt J made the following observations regarding the transfer of proceedings by the predecessor of the Tribunal to a court: "[59] The plaintiff's application was made in 2009 by the filing of a printed form entitled "application for an order". There was no question that it fell within the Tribunal's jurisdiction, being for a "building claim" as defined in s 48K of the Home Building Act, for an amount of $329,005. It has never been amended. [60] It follows that, contrary to the case advanced for the plaintiff in these proceedings, unless the claim brought before the Tribunal was amended to increase it beyond the statutory limit of $500,000, the proceedings remained within the Tribunal's jurisdiction. [61] That was not how the plaintiff perceived the legislative scheme. It relied on its new expert's statutory declaration to provide a basis for its transfer application, taking the view that his advice that what was claimed would amount to some $1.8 million, was a sufficient basis to bring the claim beyond the Tribunal's jurisdiction. That is not how the Home Building Act operates. Section 48K confines the Tribunal's jurisdiction under the Act to claims brought to the Tribunal which fall below the specified amount, not the advice on which those claims rest."
In Ralan (Culworth) Pty Ltd v Owners Corporation SP 83405 [2017] NSWCATAP 223 (Appeal Panel Ralan) at [23]-[34] the Appeal Panel made the following observations regarding a late application for the transfer of proceedings by the Tribunal to a court: "[23] The adjournment application, which was heard only 5 days before the allocated hearing date, became a formalised application to transfer only upon service of the expert report. No further explanation by way of a further affidavit was offered as to the date of earlier inspection, why that had not produced a more prompt report and (if necessary) a transfer application at an earlier date or an original filing in another jurisdiction where the report was within the monetary limit, why the OC's expert report was so delayed altogether, why it took a further 3 weeks to be served once the adjournment application was foreshadowed, and why it had grown in that 3 weeks to a definite position greatly in excess (by about $300,000) of the Tribunal's jurisdictional limit. There was no application to amend the OC's claim: cp OC SP 70030 v Decon Australia PL [2014] NSWSC 347 at [60]. [24] In those circumstances it is not surprising that the primary member found at [25] and [38] the following: [25] In my view, the applicant has not conducted the proceedings before the Tribunal in a satisfactory manner. [38] The failure to obtain the quantum evidence in accordance with Tribunal orders remains unsatisfactorily explained. In the absence of both the quantum evidence and a satisfactory explanation for its failure to be provided by 27 July, I consider it unlikely that the Tribunal would have adjourned the hearing, even if such an order had been requested by consent. [25] This conclusion about adjournment was supported by authority: see, eg, O'Neill v T&I Engines PL [2015] NSWCATAP 77 at [20]-[23]. [26] Nevertheless, the primary member at [28]-[29] came to the following conclusion: [28] However, although the applicant has without satisfactory explanation failed to comply with orders made by the Tribunal, its delinquency in this regard is not a sufficient reason to refuse to transfer the proceedings. Expert evidence is now available which supports a claim exceeding the Tribunal's jurisdictional limit. I do not have to be satisfied that the applicant will be awarded the sum specified in [the late expert] report in order to be satisfied that this is the case. In my view, [the late expert] report provides a sufficient basis for an order transferring the proceedings. [29] As noted above, the applicant commenced proceedings on the last day of the statutory warranty period. This means that it cannot withdraw the proceedings in the Tribunal and commence fresh proceedings in the Supreme Court. While I accept that there is prejudice to the respondent, which has complied with Tribunal orders, in now being faced with proceedings in the Supreme Court, I consider that the any [sic] prejudice to the respondent arising from the transfer of the proceedings does not exceed the prejudice that the applicant would suffer if it were unable to pursue a claim for damages in the sum estimated by its expert witness. [27] With great respect we consider that the primary member's exercise of discretion miscarried in this instance so as to constitute an error of law. [28] It is clear from the views expressed at [38] and [28] quoted above that the primary member would have come to a different view if the matter had been treated as an adjournment application for a report served this late that particularised the amount of the claim as under $500,000. That conclusion was strongly supported by the primary member's sensible findings at [25]-[27] about the conduct by the OC of the proceedings and the interlocutory application which are paraphrased in the description already given in these reasons. None of those findings was challenged on appeal by the OC. [29] We respectfully agree with the primary member's views that an adjournment application would have failed for a grossly-late and central expert report within jurisdictional limit, leaving the OC, as the primary member noted in her orders, with the option of no expert evidence or reliance upon the existing expert evidence filed by the developer. [30] The fact that the late report took the amount of the claim over $500,000 was not of itself a reason for permitting a transfer. Rather, transfer (and vacation of the Tribunal hearing date) was a consequence if the grossly-late report was permitted to be relied upon."
In The Owners Strata Plan 83405 v Ralan (Culworth) Pty Limited [2019] NSWSC 578, in which was an application for leave to appeal against the Appeal Panel Ralan was dismissed, at [63], [65] Harrison As J made the following observations: "[63] Section 48K(1) provides that the Tribunal has jurisdiction to hear and determine any building claim brought before it which does not exceed $500,000. At the time the Owners Corporation brought its claim, it stated the value of the claim to be $500,000, within the Tribunal's jurisdiction. To then demonstrate that the Tribunal lacked jurisdiction to hear the claim, the Owners Corporation required leave either to amend its claim or to rely on the Lemon report, which was served out of time. It was the issue of whether to grant leave which the Principal Member determined, and for which the Appeal Panel substituted its own decision. … [65] In the circumstances of this case, the relevant test to be applied in relation to s 48K of the Home Building Act was whether, taking into consideration s 36 of the CAT Act, the Owners Corporation was allowed to amend its claim, and/or have leave to rely on new evidence, which would then exceed the jurisdictional limit of the Tribunal. Given the reasoning of the Appeal Panel set out above, namely at [30], [32] of its decision, it is my view that questions one, four and five are not more than merely arguable."

The evidence of the applicant

In the 16 September 2021 Robinson affidavit Ms Robinson relevantly gives the following evidence: 1. in preparing for the hearing she held discussions with Messrs Jamieson and Hickey who advised that the cost of building materials had materially escalated, that building contractors are generally less available and so more difficult to engage, and it is very unlikely that the rectification works can or will commence before March 2022; 2. she instructed Mr Jamieson to review his opinion of the cost of the rectification works; 3. Mr Jamieson has informed her that his opinion of the cost of the rectification works is $503,479.00 plus GST (or $553,826.90 inclusive of GST); 4. she expresses the opinion based on her rental review of 2 and 3 bedroom houses and units in Summer Hill that the cost of relocation of the applicants during the rectification works is $24,200.00 which will be added to their claim; 5. she concedes that some of the causes of action of the applicants against the second respondent may have accrued more than 3 years prior to the filing of the amended points of claim; 6. she exhibits correspondence with Mr Adam Elgammal (Mr Elgammal), the director of the first respondent, the second respondent and the second respondent's lawyers.
In the 30 September 2021 Robinson affidavit Ms Robinson relevantly gives evidence reviewing the history of the proceedings and exhibiting correspondence with Mr Elgammal, the second respondent and the second respondent's lawyers.

The evidence of the respondent

In the 28 September 2021 Saad affidavit Mr Saad relevantly gives the following evidence: 1. he clarifies evidence given in the 30 August 2021 Saad affidavit; 2. he responds to opinions of Mr Hickey in the 15 September 2021 Hickey report.
In the 28 September 2021 Khoury affidavit Ms Khoury relevantly gives evidence expressing the opinion that the 15 September 2021 Hickey report is evidence in reply, and objecting to it being received into evidence.

The applicants' 15 September 2021 transfer submissions

In the applicants' 15 September 2021 transfer submissions the applicants make the following submissions: 1. the applicants' claim against the respondents is in excess of $570,000; 2. there are limitation issues which have emerged with respect to the claim against the second respondent such that some of the causes of action may have accrued more than 3 years prior to commencing the proceedings as against the second respondent; 3. determination of the claims against the first respondent require a determination of the same factual issues as need to be determined in the claim against the second respondent, and so the claims must be heard together; 4. the applicants' claim against the first respondent exceeds the jurisdictional limit of $500,00 under s 48K(1) of the HB Act; 5. the applicants' claim against the second respondent exceeds the jurisdictional limit of $40,00 under s 79S of the FT Act.

The second respondent's 28 September 2021 transfer submissions

In the second respondent's 28 September 2021 transfer submissions the second respondent makes the following submissions: 1. the transfer application could have been brought much earlier and there has been a significant delay by the applicants in determining what their claims are against the second respondent; 2. the applicants have had ample time to obtain quantum evidence to determine the amount claimed in the proceedings and the proper forum regarding jurisdiction; 3. it objects to the admissibility of the 15 September 2021 Hickey report; 4. the second respondent is now seeking to adduce additional evidence as the applicants now seek a further head of damages of a loss of rent claim not previously claimed in their evidence in chief; 5. based on evidence in the 28 September 2021 Saad affidavit she contends that the second respondent was no longer involved in the project on or around 8 June 2018, and so the applicants' claim against the second respondent is out of time; 6. there is no evidence submitted by the applicants which turns on what was carried out by the second respondent and how the project management agreement is claimed to have been breached; 7. it relies on a clause in the project management agreement providing for a limitation of liability; 8. in applying Sch 4 cl 6 the Tribunal is to have regard to s 36 of the NCAT Act; 9. relies on the relevant legal principles referred to in Ideal Waterproofing, Draybi Bros, Decon Australia, and Appeal Panel Ralan.

The applicants' 30 September 2021 transfer submissions

In the applicants' 30 September 2021 transfer submissions the applicants in substance repeat the applicants' 15 September 2021 transfer submissions.

Consideration

While I accept that the applicants claims against each of the first and second respondent are made bona fide and are maintainable, I nonetheless am not satisfied that the proceedings should be transferred to the District Court for the following reasons: 1. the claim of the applicants against the first respondent, which is a building claim within the meaning of that expression in s 48A of the HB Act when read with the definitions of building services and supply in s 48A and the definition of residential building work and dwelling in Sch 1 cll 2(1) and 3(1) of the HB Act, is currently for an amount within the jurisdiction limit of $500,000 of the Tribunal under s 48K(1) of the HB Act; 2. the applicants have not made any application to amend the application as against the first respondent to claim an amount in excess of $500,000, and to claim the cost of alternative accommodation while the rectification works are carried out as an additional head of damage; 3. the applicants have not made any application to rely on the supplementary report of Mr Jamieson as to the current cost of the rectification works. In fact, the only evidence as to the current cost is the hearsay evidence contained in the 16 September 2021 Robinson affidavit; 4. the evidence of Ms Robinson in the 16 September 2021 Robinson affidavit is inadequate in that she fails to indicate when the conversations with Messrs Hickey and Jamieson took place, and the opinion of Mr Jamieson as to the current cost of the rectification works was sought and obtained; 5. consistent with the reasoning in Decon Australia, it is inappropriate to rely on Mr Jamieson's opinion as to the current cost of the rectification works; 6. while it may be accepted that the Tribunal has jurisdiction under s 79J of the FT Act to determine the proceedings because the applicants are making a consumer claim within the meaning of s 79E of the FT Act if that claim does not exceed the jurisdictional limit of $40,000 under s 79S of the FT Act, the applicants have not explained why the proceedings were commenced against the second respondent for contravention of s 18(1) of the ACL(NSW) when it is clear that they were claiming an amount in excess of $40,000 when it was joined as the second respondent on 23 April 2021, and accordingly the delay in making the transfer application until 15 September 2021.

The costs of the transfer application

In the second respondent's 28 September 2021 transfer submissions the second respondent indicates that it wishes to make a claim for costs.
I propose to deal with the costs of the transfer application by way of written submissions as follows: 1. the second respondent is to file and serve any costs application, including submissions and any evidence in support, within 14 days of the date of the orders in these reasons for decision; 2. the applicants are to file and serve any submissions and evidence in response within 14 days thereafter; 3. the second respondent is to file any submissions in reply within 14 days after receipt of the applicants' submissions and evidence; 4. any submissions are to include submissions on the issue of whether an order should be made pursuant to s 50(2) of the NCAT Act, dispensing with a hearing of the costs application.

Orders

I make the following orders: 1. a hearing is dispensed with in relation to the transfer application; 2. the transfer application is dismissed; 3. the second respondent is to file and serve any costs application, including submissions and any evidence in support, within 14 days of the date of the orders in these reasons for decision; 4. the applicants are to file and serve any submissions and evidence in response within 14 days thereafter; 5. the second respondent is to file any submissions in reply within 14 days after receipt of the applicants' submissions and evidence; 6. any submissions are to include submissions on the issue of whether an order should be made pursuant to s 50(2) of the NCAT Act, dispensing with a hearing of the costs application.

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 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: 15 February 2022

At a glance

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