BKB Constructions Pty Ltd v Sawan

DECISION OF THE TRIBUNAL

1. The Tribunal issued a written decision comprising of 58 pages.
2. At [59] the Tribunal found the owner, rather than the builder, had lawfully terminated the contract by way of accepting the builder's repudiation.
3. In the owner's claim, the Tribunal found that there was a significant amount of defective work in breach of the statutory warranties under s 18B of the HB Act. The Tribunal found that a work order was not the preferred outcome under s 48MA of the HB Act. The Tribunal found that the cost of rectification of defective work was $136,601.71 and awarded the owner damages in that amount. The Tribunal dismissed the owner's claim for damages arising from rent paid by the owner whilst completion of the dwelling was delayed. The Tribunal reserved the issue of costs.
4. The manner in which the Tribunal dealt with the builder's claim is the salient issue in this appeal.
5. The builder's Counsel's submissions dated 23 December 2020 dealing with the builder's claim were economical. They comprised of 4 sentences; with the focus of the submissions on the owner's claim.
6. The builder submitted that its claim was for "outstanding progress payments" which were summarised in paragraphs 12 to 14 of the affidavit of the director of the builder dated 15 January 2020 and that "the builder's claim to be entitled to payment of $86,371.50 was not the subject of serious challenge in the homeowner's evidence at the hearing" (paras [7]-[10] of the builder's written submission dated 23 December 2020).
7. The builder's submissions made no reference to the terms of the contract and why the builder was entitled to payment under the contract. The builder's submissions also made no reference to whether a quantum meruit claim was being made if the builder could not enforce the contract; and the principles applicable to quantum meruit.
8. There was no reference in the builder's written submissions or the owner's written submission to the Tribunal of any issue regarding the builder's claim being time barred under s 48K of the HB Act. The submissions of both parties were silent as to whether or not the builder's claim was within the relevant time period. The transcript of evidence of the hearing demonstrates that the issue was not raised at the hearing.
9. However, at [39]-[40] of the decision, the Tribunal noted that the owner's written submissions had denied the builder's claim on three grounds; being (i) Clause 13.1 of the contract "denied entitlement to an amount exceeding the insured amount at the time of invoice"; (ii) the builder's repudiation disentitled it to payment; and (iii) if the builder was entitled to payment, it should be set off as a final invoice under Clause 13.8 of the contract against the owner's larger defects claim.
10. On whether the Tribunal had jurisdiction to consider the builder's claim, the Tribunal stated at [24] and [42]-[43]: No party raised a limitation objection. In my view, on what is a jurisdictional question, the owner's claim for breach of statutory warranties was brought within time (whatever the character of the defects as major or minor or the state of completion of the work) under HBA s 18E within s 48K (7). The builder's claim raised different issues under HBA s 48K (8) that are dealt with below. I note those issues-that the builder's invoice claim filed 3 June 2019 was more than 3 years after the contract date of 19 February 2015-was first raised by the Tribunal in a communication with the parties on 10 December 2019. … The owner did not raise the limitation issue but, as said earlier, it is required be determined as a matter of jurisdiction even if not raised by a party. I note again that the issue-that the claim of 3 June 2019 was more than three years after contract date of 19 February 2015-was first raised by the Tribunal in a communication with the parties on 10 December 2019. It seems to me that the builder's claim is out of time for the Tribunal's jurisdiction under HBA s 48K (8). However, I have proceeded to determine the issues debated by the parties on the builder's claim, in the event that the claim is found to be within time.
11. The Tribunal discussed the builder's claim that it was owed payment of its final invoice. The Tribunal stated: 1. The builder's claim for its final payment was "misconceived" under Clause 13 of the contract, because it had insisted on payment before it returned to undertake any remediation of the "clear…defective work (with its scope being the matter in dispute between the parties)" (para [59] Tribunal's reasons). 2. Throughout the performance of building work and at the time the contract was terminated by the owner, the builder had taken out insufficient home warranty insurance. The "retroactive" insurance cover issued in March 2019 did not cure the builder's breach. As the builder had not complied with its contractual obligation and its obligation under s 7 (2) (f1) of the HB Act to obtain the appropriate home warranty insurance cover, the builder was "not entitled to enforce contractual rights to payment" by reason of ss 10 and 92 of the HB Act. The Tribunal cited the Appeal Panel decision in Nyunt v North Shore Homes Pty Ltd [2020] NSWCATAP 143 (paras [62]-[63] Tribunal's reasons). 3. The builder had "not sought to establish an entitlement in quantum meruit on either its pleadings or its evidence". In any event, by reason of the inadequate home warranty insurance and "doubtful retroactivity for the insurance it belatedly obtained" the Tribunal would not have found it was just and equitable under s 94 of the HB Act for the builder to be permitted to claim in quantum meruit (para [63] Tribunal's reasons). 4. By reason of its inability to claim the "final invoice" under the terms of the contract or on a quantum meruit basis, the builder's claim for payment would fail "even if within time" and was dismissed (para [64] Tribunal's reasons).
12. The builder filed its appeal on 17 August 2021. The appeal was filed within the relevant limitation period in Reg. 25 of the Civil and Administrative Tribunal Rules 2014 (NSW).
13. The same Solicitors and Counsel who appeared for the parties at first instance in the Tribunal appeared in the Appeal Panel proceedings.

SCOPE AND NATURE OF APPEALS

1. Section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) ('the NCAT Act') sets out the basis upon which appeals from decisions of the Tribunal may be brought. That section states that an appeal may be made as of right on any question of law or with leave of the Appeal Panel on any other grounds (s 80(2) (b) of the NCAT Act).

Question of Law

1. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 ('Prendergast'), without listing exhaustively possible questions of law, the Appeal Panel considered the requirements for establishing an error of law giving rise to an appeal as of right (at [13]).
2. A denial of procedural fairness is an error of law: Prendergast at [13] (4); Italiano v Carbone [2005] NSWCA 177; Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143 at [8]: NCAT Act, ss s 38(2), (5) and (6).
3. Applying an incorrect legal principle is also an error of law: Prendergast at [13] (3).

Leave to appeal

1. Cl.12 of Sch. 4 of the NCAT Act provides that, in an appeal from a decision of the Consumer and Commercial Division of the Tribunal on an error other than an error of law, the Appeal Panel may grant leave to appeal only if satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. The decision of the Tribunal under appeal was not fair and equitable; or 2. The decision of the Tribunal under appeal was against the weight of evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
2. The principles to be applied by the Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban [2014] NSWCATAP 17 ('Collins v Urban') the Appeal Panel conducted a review of the relevant cases at [65]-[79] and concluded at 84 that: Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact-finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
3. Even if an appellant establishes that it may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains discretion whether to grant leave under s 80(2) of the Act. The appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32]. An appeal hearing is not merely an opportunity for a dissatisfied litigant to "run their case again" (Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]).

GROUNDS OF APPEAL

1. The grounds of appeal identified in the Notice of Appeal and the builder's written appeal submissions were: 1. The Tribunal had erred in law by not applying the limitation period in s 48K (3) of the HB Act to the builder's claim. 2. The Tribunal had erred in law by denying procedural fairness to the builder. The Tribunal should have raised with the parties at the hearing that it believed that the builder's claim in the Tribunal was out of time under s 48K (8) of the HB Act. The builder was deprived of the opportunity to make an application that the builder's proceedings be transferred to a Court of competent jurisdiction under Cl. 6 of Sch. 4 of the NCAT Act. 3. The Tribunal erred in law by making a purported "finding" at [62]-[63] that the retrospectively varied Certificate of Home Warranty Insurance obtained by the builder did not provide adequate cover. There was "no evidence and no submissions" on this issue and the Tribunal should have raised the issue with the parties at the hearing. 4. The Tribunal erred in dismissing the builder's claim as opposed to transferring the proceedings 5. The Tribunal erred because the decision was "not fair and equitable" under Cl. 12 Sch. 4 of the NCAT Act because: (a) the builder was not given the opportunity to be heard on an application to transfer the builder's proceedings to a Court; (b) the dismissal of the proceedings is inconsistent with the guiding principle of the Tribunal to facilitate the just, quick, and cheap resolution of the real issues in the proceedings under s 36 of the NCAT Act; and (c) the dismissal of the builder's proceedings "has implications in relation to limitation periods".

Ground 1-The Jurisdiction of the Tribunal Under s 48K of the HB Act

1. Section 48K of the HB Act sets out the jurisdiction of the Tribunal to hear and determine proceedings under the HB Act. Section 48K of the HB Act states as follows: 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). (2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section. (3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made). (4) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that are required under a contract to be supplied to or for the claimant on or by a specified date or within a specified period but which have not been so supplied if the date on which the claim was lodged is more than 3 years after the date on or by which the supply was required under the contract to be made or, if required to be made in instalments, the last date on which the supply was required to be made. (5) The fact that a building claim arises out of a contract that also involves the sale of land does not prevent the Tribunal from hearing that building claim. (6) The Tribunal does not have jurisdiction in respect of a building claim arising out of a building cover contract required to be entered into under this Act if the date on which the claim was lodged is more than 10 years after the date on which the residential building work the subject of the claim was completed. (7) The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E). (8) The Tribunal does not have jurisdiction in respect of a building claim relating to - (a) a contract for the supply of goods or services to which none of subsections (3), (4), (6) and (7) applies, or (b) a collateral contract, if the date on which the claim was lodged is more than 3 years after the date on which the contract was entered into. (9) This section has effect despite clause 5 (Relationship between Tribunal and courts and other bodies in connection with Division functions) of Schedule 4 to the Civil and Administrative Tribunal Act 2013.
2. In its written submissions, the builder asserted that the Tribunal erred because the builder's claim fell within s 48K (3) of the HB Act rather than s 48K (8) of the HB Act.
3. This ground was not pursued in oral submissions at the appeal hearing; and it was conceded that the applicable limitation period for the builder to bring proceedings against the homeowner in the Tribunal was s 48K (8) (a) of the HB Act.
4. It is clear that the limitation period in s 48K (3) does not apply to a builder bringing proceedings against an owner for unpaid monies under contract; or for quantum meruit. In such proceedings, the builder is "the claimant". The owner did not supply any "building goods or services" (as defined in s 48A of the HB Act) "to or for" the builder.
5. Rather, it is the builder who is supplying building goods or services to the owner under the contract; and the owner may (or may not) have an obligation to pay the builder for such building goods or services (under the contract; or if the contract is unenforceable, under principles of quantum meruit). Consequently, s 48K (8) (a) of the HB Act applies to the builder's claim in 'debt recovery' against the homeowner in the Tribunal.
6. The builder's Counsel was correct in submitting to the Appeal Panel that the relevant limitation period for the builder's claim in the Tribunal was 3 years from the date of the contract under s 48K of the HB Act.
7. By reason of Cl. 6 (2) (b) of Sch. 4 of the NCAT Act, the operative date of commencement of proceedings in the Tribunal by the builder was the date they were commenced in the Local Court. As the builder filed proceedings in the Local Court on 3 June 2019 and the date of the contract was 19 February 2015, the builder was well outside the applicable limitation period to commence proceedings in the Tribunal under s 48K (8) (a) of the HB Act.

Ground 2-Denial of Procedural Fairness

1. The substance of this appeal ground is that the Member should have raised s 48K (8) with the parties at the hearing or prior to the making of the decision to give the builder the opportunity to make an application to transfer the builder's proceedings to a Court of competent jurisdiction.
2. The Tribunal does not accept that the builder has been denied procedural fairness.
3. The builder was legally represented throughout the proceedings; and prior to the commencement of proceedings. It is to be expected that a legal representative is aware of applicable legal principles, particularly principles pertaining to an issue as fundamental as whether the party it represents is outside a limitation period to bring proceedings in the Tribunal. The Tribunal has no power under s 41 of the NCAT Act to extend the limitation periods in s 48K of the HB Act (S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190 at [53]; Jandson Pty Ltd v James [2021] NSWCATAP 274 at [118]).
4. The "first duty" of a Court or Tribunal is to satisfy itself it has jurisdiction to hear a proceeding (Federated Engine-Drivers and Fireman's Association of Australasia v Broken Hill Pty Co Limited [1911] HCA 31; (1911) 12 CLR 398 at 415; Zhang v Zemin [2010] NSWCA 255; (2010) NSWLR 513 at [33] 'Zhang v Zemin'). The issue of jurisdiction can be determined at a preliminary hearing or determined at the final hearing. It is for a Court or Tribunal to determine, in the interests of justice, the time at which and the manner in which a jurisdictional issue is to be determined (Bray v F Hoffman-La Roache Ltd [2002] FCA 243; (2002) 118 FCR 1 at [185]-[187]; Khatri v Price [1999] FCA 1289; (1999) 95 FCA 287 at [14]; Civil Air Operations Officers Association of Australia v Airservices Australia [2020] FCA 1665 at [31]; Vicinity Funds RE Ltd & Anor v Commissioner of State Revenue [2021] VSC 200 at [17]).
5. Whether or not proceedings have been brought in the Tribunal within the time limits in s 48K of the HB Act is not a limitation defence that must be raised by a party. Rather, it is a jurisdictional matter (Vero Insurance Ltd v Buckle [2008] NSWSC 73 at [64]-[65]) and parties cannot 'consent' to orders being made that are outside the jurisdiction of the Tribunal (S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190 at [67]). Matters of jurisdiction are not matters that must be raised by a party to the proceedings; but are matters that must be considered and determined by a Court or Tribunal irrespective of whether they have been raised by the parties (Zhang v Zemin at [44]-[45]).
6. In this appeal, the builder is not arguing that the Tribunal should not have considered s 48K (8) (a) of the HB Act. Rather, the substance of this ground of appeal is that the Tribunal should have (i) raised the issue with the parties prior to the determination of the proceedings; and (ii) if it had done so, the builder would have made an application to transfer the builder's proceedings to a Court which would likely have been successful. The builder submits that the failure of the Tribunal to do so is a denial of procedural fairness.
7. We do not accept the builder's submissions on this issue.
8. The first issue is whether the builder was accorded procedural fairness in the sense of having a reasonable opportunity to be heard on the issue of whether the builder's proceedings should be transferred to a Court of competent jurisdiction. The applicable principles were concisely summarised by the Appeal Panel in Kotsakis v Hidajat [2021] NSWCATAP 358 as follows (at [53]-[56]): The Tribunal must observe the rules of natural justice: s 38(2) of the NCAT Act. That subsection expressly states that the Tribunal "is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice." The general law principles of procedural fairness which encompass the natural justice hearing rule are set out in s 38(5) of the NCAT Act, which relevantly provides: "The Tribunal is to take such measures as are reasonably practicable: … (c) to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings." However, the hearing rule, as s 38(5) (c) indicates, is not absolute. The Tribunal is only required to take "reasonably practicable" measures to ensure that a party has a "reasonable opportunity" to be heard. As Gleeson CJ in Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1 said at [37] in respect of procedural fairness: "...Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice." Accordingly, what constitutes a "reasonable opportunity" to be heard will depend on the circumstances of each case. Giles JA put it succinctly in Brennan v New South Wales Land and Housing Corporation [2011] NSWCA 298; (2011) 83 NSWLR 23 at [63]: "...in principle, the requirements of procedural fairness are identified as a matter of law depending upon the institutional setting in which decision-making is to operate, the relevant statutory scheme, the subject matter of the decision and, as part of that analysis, the seriousness of the potential consequences of an adverse decision."
9. In Italiano v Carbone & Ors [2005] NSWCA 177 ('Italiano v Carbone') Basten JA stated at [88]: An opportunity foregone, but reasonably available, does not demonstrate breach of procedural fairness. To demonstrate procedural fairness it is usually necessary to show that a claimant "lost an opportunity to put any information or argument to the decision-maker, or otherwise suffered any detriment", as explained by Gleeson CJ in Re Minister for Immigration, Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at [36]. As the Chief Justice continued at [37]: "A common form of detriment suffered where a decision-maker has failed to take a procedural step is loss of an opportunity to make representations." at [37].
10. The builder clearly had a reasonable opportunity to raise with the Tribunal that the builder's proceedings were out of time under s 48K (8) (a) of the HB Act and apply for a transfer of proceedings.
11. The builder was legally represented throughout the proceedings by the same firm of Solicitors. The builder could have opposed the owner's application to transfer the builder's proceedings from the Local Court to the NCAT on the basis that the builder's claim was within time under s 14 (1) (a) of the Limitation Act 1969 (NSW) as filed in the Local Court, but was outside the jurisdictional time limit in s 48K (8) (a) of the HB Act in the Tribunal. It failed to do so.
12. The builder could also have made an application to transfer the builder's proceedings (and, potentially, the owner's proceedings) to a Court at any point in time during the long period between the registration of the builder's transferred proceedings in NCAT; and the conclusion of the hearing on 20 November 2020. It failed to do so, despite being legally represented (including being represented by Counsel at the hearing).
13. The builder submitted orally at the hearing of the appeal that the builder and the owner were under a "mutual mistake" that the builder's proceedings were within time in the Tribunal because of the correspondence between the builder's Solicitor and the owner's Solicitor prior to the consent transfer of the builder's Local Court proceedings that referred to ss 48K (3) and (4) of the HB Act.
14. We do not accept that submission. It was not the role of the owner's Solicitor to point out to the builder's Solicitor the operation of s 48K (8) (a) of the HB Act. It was a matter for the builder's legal representatives to be aware of the applicable limitation period in the Tribunal under s 48K (8) (a) of the HB Act. Further, there was a clear further opportunity for the builder's Solicitor to turn its mind to this issue when the Tribunal issued its interlocutory orders and reasons dated 10 December 2019 specifically referred to the limitation issue (albeit with a typographical error).
15. The Tribunal was not dealing with an unrepresented party who, to accord procedural fairness, may need to be informed by the bench of the right to seek an adjournment (Italiano v Carbone at [105]; Tiwari v Champion Homes Sales Pty Ltd [2016] NSWCATAP 73 at [21]). Rather, the Tribunal was dealing with a legally represented party who knew, or should have reasonably known, of the limitation issue under s 48K (8) (a) of the HB Act and the right to seek a transfer of the builder's proceedings under Cl. 6 (1) (a) of Sch. 4 of the NCAT Act.
16. The Tribunal was also not dealing with a situation where parties entered into consent work orders and there was a subsequent dispute as to whether the Tribunal had the power to make the orders because of the limitation period in s 18E of the HB Act. That scenario raises different issues to this appeal. This appeal involves legally represented parties who ran their respective cases at a hearing, and the Tribunal made a decision on the application of legal principles to the found facts.
17. The second issue pertaining to procedural fairness is whether the Member had a duty to raise with the parties s 48K (8) (a) of the HB Act and seek submissions prior to making a decision.
18. The builder's submissions refer to Tom v Jenkins [2019] NSWCATAP 74 ('Tom v Jenkins') where the Appeal Panel stated at [29]: The Engineer agrees that the application of s 48K (3) of the Act was not raised as an issue at the hearing. The Appeal Panel agrees with [21] to [24] of the Builder's written submissions for the present appeal. The Builder was denied procedural fairness in not having the opportunity to make submissions as to how s 48K of the Act applied to the Builder's Claim.
19. However, the facts of Tom v Jenkins were entirely different to the facts of this appeal. In Tom v Jenkins, an owner had taken proceedings in the Tribunal against a builder for breach of the statutory warranties under s 18B of the HB Act for reasons that included inadequate piers, footings and slab. The builder commenced separate proceedings against the structural engineer who had designed the piers, footings and slab, alleging that the structural engineer had failed to adequately take into account the soil conditions. The builder's claims against the engineer were in negligence and misleading and deceptive conduct. The builder sought a remedy that the engineer indemnify the builder for any damages awarded to the owner.
20. The owner's claim against the builder and the builder's claim against the engineer were heard together. The owner succeeded against the builder and was awarded damages for the cost of rectification of building defects. The builder failed against the engineer because the Tribunal held that the builder's claim against the engineer was out of time under s 48K (3) of the HB Act.
21. The appeal decision involved the builder's claim against the engineer. The Appeal Panel held at [29] that the builder was denied procedural fairness by not having the opportunity to make submissions at the hearing about the operation of s 48K of the HB Act at the hearing, without any detailed discussion of the relevant principles. The Appeal Panel then went on to determine whether the builder's claim against the engineer was within time under either ss 48K (3) or (7) of the HB Act. The Appeal Panel found that the builder's claim against the engineer was out of time under s 48K (3) of the HB Act; and s 48K (7) of the HB Act did not apply. On this basis, the builder's appeal was dismissed.
22. Tom v Jenkins did not involve consideration of whether a party was denied procedural fairness because it was not given an opportunity to seek to transfer proceedings to a Court of competent jurisdiction. It is also not authority for the proposition that a failure to raise an issue at the hearing by the Tribunal and give parties an opportunity to make submissions automatically constitutes a denial of procedural fairness.
23. Failure to give a party the opportunity to be heard may be a denial of procedural fairness by reason of the authorities we have previously discussed in this decision; and in circumstances such as Cumming v Deadman [2022] NSWCATAP 43 where the Tribunal substantially varied its final orders in a dividing fences dispute after the decision was issued on the basis of a unilateral application by a party without the other party being notified of the variation application or being given an opportunity to respond (and beyond the scope of the 'slip rule' under s 63 of the NCAT Act).
24. However, we do not regard the Tribunal's failure to raise s 48K (8) (a) with the parties; or raise the possibility that the builder may seek to transfer the builder's proceedings to a Court of competent jurisdiction as a denial of procedural fairness. For reasons discussed previously, it was entirely appropriate for the Tribunal to consider s 48K (8) (a) of the HB Act irrespective of whether the issue had been raised. The failure of the builder to make any submissions about this issue, or to make an application to transfer the builder's proceedings to a Court of competent jurisdiction, was an opportunity reasonably available to the builder but which was foregone.
25. Further, even if the builder had made an application to transfer the builder's proceeding to a Court of competent jurisdiction, there are compelling reasons why the application would have been refused in any event if it had been made at the hearing in the Tribunal.
26. Under Cl. 6 of Sch. 4 of the NCAT Act, the Tribunal may transfer proceedings to a Court by the motion of a party or its own motion. In making a decision whether or not to transfer proceedings, there is a wide discretion to take into account any relevant matter (Sanderson Motors Pty Ltd v Kirby [2000] NSWSC 924 at [4)]. The fundamental consideration is whether there is "sufficient cause"; "sound ground"; or "good reason" for the transfer to be made. That permits a wide range of discretionary considerations. Those considerations may be impressionistic and evaluative (Australian Timber Supplies Pty Ltd v Agia [2014] NSWSC 1308 at [2]). Where there is a significant risk the jurisdictional limit will be exceeded; or whether the Tribunal has jurisdiction at all, are important considerations (BOC v MDL [2019] NSWSC 278 at [17-[19]; Hau Shan v Fairfield City Council [2020] NSWSC 681 at [14]; Breecass Pty Ltd v The Owners-Strata Plan No 61419; The Owners-Strata Plan No 61419 v Breecass Pty Ltd [2019] NSWCATCD 23).
27. However, in proceedings where a homeowner seeking damages for the rectification for defective work and the builder asserts that it is owed monies under the contract because the homeowner has not paid the full contract price for the works, the assessment of damages to the homeowner must take into account the amount the homeowner would be liable to pay the builder under the contract for the work performed. The reason for this is to ensure that the homeowner is put into the same position as if the contract had been performed; not a better position (Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 at [5]; Sleiman t/as Perfect Kitchens v Dempsey [2020] NSWCATAP 26 at [79]-[84]).
28. The amount the owner was liable to pay the builder under contract (if any) is relevant to the owner's claim for damages against the builder, and falls within the auspices of the owner's proceedings in Matter HB 19/41921. The amount that the builder claimed it was owed under the contract was significantly less than the amount the owner claimed in damages for the cost of rectification of defects.
29. Taking these principle into account, if the builder had made an application to transfer its proceedings to a Court of competent jurisdiction at the hearing, the Tribunal would have had very strong grounds to refuse the application because: 1. The builder's claim that it was owed monies under the contract would still be taken into account in any assessment of damages to the homeowner. If the builder was not entitled to any further payment under contract there would be no adjustment made in any event; and the builder had not made a claim under quantum meruit. 2. The proceedings had a long procedural history. The builder had consented to the owner's application to transfer the builder's proceedings to the Tribunal. If the proceedings were 'split' at a late stage between the owner's proceeding remaining in the Tribunal and the builder's proceedings being in the Local Court, there would have been clear unfairness to the homeowner by reason of increased cost; delay; and the undesirability of having two sets of proceedings in two different jurisdictions (RCR Resolve FM v Serco Australia [2014] NSWSC 1477 at [20]). If both sets of proceedings were transferred to a Court, there would be the same issues regarding increased cost and delay. A cost order against the builder if the proceedings were transferred may not cure such unfairness. 3. Even if a transfer application had been made by the builder; such an application had been refused; and the owner ultimately obtained a work order rather than an award of damages; then as of the date of the Tribunal's decision (20 July 2021) the builder would still have been well within the time period to take proceedings in the Local Court for breach of contract. Whether the builder would have been able to maintain such proceedings due to principles of res judicata or issue estoppel are not matters necessary to explore. 4. The owner would likely argue that because issues in the builder's proceedings were the subject of a dispute in the owner's Tribunal proceedings, the Court would have no jurisdiction to hear and determine those issues in proceedings by reason of Cl. 5 (3) of Sch. 4 of the NCAT Act.
30. Contrary to the submissions of the builder on appeal, the mere fact that the builder's claim was out of time in the Tribunal under s 48K (8) (a) of the HB Act is not, of itself, a sufficient reason for the Tribunal to have ordered the transfer of the builder's proceedings in Matter HB 19/355528 to a Court of competent jurisdiction.
31. As we have determined that the Tribunal did not deny the builder procedural fairness, it is unnecessary for us to make a finding that it was inevitable any transfer application would have failed (i.e. there could not have been a different result-Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141 at [9]). However, it is sufficient that we have pointed out the manifest difficulties that the builder would have faced if such an application was made.

Ground 3-The 'Findings' Made In Relation to the Certificate of Insurance

1. This ground of appeal was not expounded upon at the appeal hearing in any detail, with oral submissions made referring to the Tribunal's "findings" that the builder had no contractual right to payment for the final invoice (at [58]) and that even if the builder had made a quantum meruit claim it would not have succeeded in such a claim (at [64]).
2. The builder submits that such statements are merely "obiter dicta" because the Tribunal found that it had no jurisdiction in the builder's claim by reason of s 48K (8) (a) of the HB Act. The builder submitted that there was no evidence and no submissions to the effect that the certificate of insurance did not provide requisite cover.
3. We do not accept that there was no evidence at the hearing regarding the circumstances of the 'underinsurance' of the works; nor that it was not an issue raised at the hearing. The owner's written submissions in reply before the Tribunal dated 17 February 2021 clearly state at paras [3]-[7] that: 1. The invoice for "final payment" was invalid because, when it was rendered, it exceeded the insured amount of the Contract (Cl. 13.1 of the contract and s 92 of the HB Act); 2. The builder's repudiation disentitled it to payment. 3. If the invoice was valid, it ought to be set-off against the amount of defective and/or incomplete works (Cl. 13.8 of the contract); 4. The invoice did not contain supporting documentation verifying the cost of materials as required under the contract; nor did the invoices for materials and sub-contractor costs demonstrate a connection to the building works under the contract.
4. The reasons of the Tribunal regarding whether the builder had a contractual right to payment of the final invoice were matters the subject of evidence and submissions at the hearing. The builder clearly had the opportunity to be heard on such matters.
5. The builder submits that the Tribunal's statements about the builder not having a contractual right to payment (or a right to payment on a quantum meruit basis) were merely "obiter dicta".
6. We do not accept this submission in respect of the issue of whether the builder had a contractual right to payment.
7. In our view, when the reasons of the Tribunal are read fairly and in their full context, what the Tribunal did was consider the builder's argument that it was owned monies under the contract not only in the context of the builder's claim against the owner, but also in the context of whether there should be any adjustment of damages for the cost of rectification by reason of monies owed to the builder under the contract. The Tribunal found that the builder had no contractual right to payment (see [63]); and had not made a quantum meruit claim. Accordingly, there was no adjustment of damages in the owner's claim.
8. In our view, they are findings rather than obiter dicta comments. No appeal grounds were advanced by the builder that such findings contained any legal error beyond what was identified in Ground 3 of the appeal.
9. Ground 4- The Tribunal erred in dismissing the builder's claim and should have transferred it to the Local Court
10. This ground has been addressed under ground 2 and is dismissed.

Ground 5-Leave to Appeal

1. The builder's Notice of Appeal and submissions on appeal referred to leave to appeal being granted other than on an error of law because the decision was not fair and equitable.
2. This ground of appeal was not elaborated upon in any detail at the appeal hearing. However, no grounds have been established to grant leave to appeal under Cl. 12 of Sch. 4 of the NCAT Act in accordance with the principles set out in Collins v Urban. The decision of the Tribunal is comprehensive; the reasoning is orthodox; and the findings made by the Tribunal were available to it on the evidence.

CONCLUSION

1. The builder has failed in its appeal grounds. Leave to appeal is refused and the appeal dismissed.

THE ISSUE OF COSTS

1. The costs of the proceedings at first instance were not determined by the Tribunal in the decision of 20 July 2021 and the question of costs at first instance was not raised in this appeal. Consequently, that is not a matter that the Appeal Panel has jurisdiction over (LMA Contractors Limited v Changizi [2017] NSWCATAP 145 at [19]).
2. In respect of the costs of the appeal, our preliminary view (subject to any future costs application by either party for further or other costs orders) is that by reason of Reg. 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) the amount claimed or in dispute in the appeal exceeds $30,000 (Allen v Tricare (Hastings) Pty Ltd [2017] NSWCATAP 25 at [43]-[69]). Accordingly, the "special circumstances" costs provisions of ss 60 (1) and (2) of the NCAT Act do not apply.
3. The owner was the successful party in the appeal. There is nothing to obviously indicate the Appeal Panel should depart from the usual principle that the unsuccessful party pays the costs of the successful party on the ordinary basis (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; Oshlack v Richmond River Council [1998] HCA 11; (1998) 139 CLR 72).
4. We are presently satisfied that the appropriate course of action is to make a costs order in favour of the owner in the appeal; but give both parties the opportunity to make an application for further or other costs orders if one or both choose to do so.

ORDERS 1. Leave to appeal is refused. 2. Appeal dismissed. 3. The appellant is to pay the respondent's costs of proceedings AP 2021/00235644 as agreed or assessed on the basis set out in the legal costs legislation (as defined in s 3A of the Legal Profession Uniform Law Application Act 2014). 4. If either party seeks a further or other costs order of the appeal proceedings than Order 3, they are must notify the Appeal Panel and the other party in writing within 7 days of the date of this decision. 5. If a party seeks a further or other costs order than Order 3 in accordance with Order 4, Order 3 is stayed until further order of the Appeal Panel. If no such application is made the costs order remains in force. 6. If a further or other costs application is made: 1. The costs applicant is to file and serve costs submissions by 21 days from the date of this decision. 2. The costs respondent is to file and serve costs submissions by 35 days from the date of this decision. 3. The costs applicant is to file and serve costs submissions in reply by 42 days from the date of this decision. 4. The costs submissions of both parties are to include reference to whether the costs application can be determined without further oral hearing. 5. The parties have liberty to apply to the Appeal Panel in writing to vary the timetable for costs submissions.

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: 07 April 2022