Buildex Australia Pty Ltd v Soud

Notice of Appeal

1. The Civil and Administrative Tribunal Act 2013 (NSW) (the Act) provides for an appeal against an internally appealable decision to an Appeal Panel as of right on any question of law (s 80 (2)(b)). The notice of appeal filed in AP 15/51534 seeks to identify questions of law. Separate grounds for leave to appeal were no longer pressed at the appeal.
2. Importantly, the central error identified by the appellant is the Tribunal's refusal to grant the adjournment.

Ground one

1. The notice of appeal states that the Tribunal erred on a question of law in refusing to grant the adjournment at the hearing on 24 April 2015 by 1. Misconstruing the scope of the power conferred by cl 9 of the Regulation; and 2. Failing to consider a breach by the Tribunal of procedural rules in refusing, on or about 22 April 2015, an application to transfer the proceedings to the District Court of NSW, on the basis of section 53(4) of the Act.

Ground two

1. The Tribunal erred on a question of law in awarding damages for specified aspects of the work in that it was not open to the Tribunal on the evidence to find that the work was required under the contract between the parties and/or that the work was defective.
2. As set out above, this second ground was settled and the parties agreed that the figure awarded by the Tribunal should be adjusted downward in favour of the builder. This agreement is reflected in order 1 above and this ground of appeal is disposed of.
3. Grounds three, four and five were no longer pressed and withdrawn during the hearing of the appeal by counsel for the builder.

Submissions by the appellant

1. The first ground of appeal is that the Tribunal erred on a question of law in refusing to grant an adjournment because the Tribunal misdirected itself in two material ways.
2. The builder submits that the key finding of the Tribunal concerned the merits of the cl 9 set aside application. In paragraph 18 of the Decision the Senior Member stated that the "success of such an application was far from certain". The Tribunal decided that the merit of the cl 9 application was doubtful, its prospects of success slim and that these concerns as expressed by the Senior Member in her reasons "were determinative in my refusal to vacate the substantive hearing on the basis of the pending cl 9 set aside application".
3. The builder submits that the Tribunal erred by posing the wrong test, by pre-judging the prospects of success of the cl 9 set aside application before it was heard and determined. In doing so the Tribunal applied the wrong principle. The builder acknowledges that the adjournment decision was discretionary and for the appeal to succeed, an error of the kind described in the House v King (1936) 55 CLR 499 must be shown.
4. The builder submits that the Tribunal erred by determining that the clause 9 application was doomed to failure. The builder states that the Tribunal wrongly considered cl 9 and "misapplied the provision".
5. The builder submits that the Tribunal construed cl 9 only to be available for decisions that finally determine proceedings. The Tribunal found that a refusal to transfer proceedings to a court of competent jurisdiction is not a decision "determining proceedings" and therefore any application to set aside such a decision pursuant to cl 9 must be fundamentally misconceived.
6. The builder relies on the decision of Hammond v Ozzy Cheapest Cars Pty Ltd [2015] NSWCATAP 65 at [37] (Hammond). Whilst the builder acknowledges that Hammond is authority for the proposition that cl 9 is only available for orders concluding proceedings, the builder states that the current facts are distinguishable and that the proposition was not directly tested in the decision of Hammond. The builder submits that the provisions of the New South Wales Civil and Administrative Tribunal Act (the NCAT Act) are remedial and beneficial and ought not to be construed too narrowly.
7. This is reinforced by the objects of the Act, particularly s 36, that proceedings must be resolved justly, quickly and cheaply. Hence when construing cl 9 of the NCAT regulation, it is far from clear that the language or the context limits its operation to the situation where proceedings are determined finally. Indeed the language used suggests that any step in proceedings may be amenable to an application to a cl 9 set aside. The Member therefore misdirected herself when she concluded that the cl 9 set aside application had minimal prospect because the original transfer decision was not a decision that "determined" proceedings.
8. Secondly, there was some confusion generated by the builder's use of the words "discontinuance". The initial application by the builder sought to have the homeowners' proceedings transferred to the District Court. It also sought orders that the homeowner's application be "discontinued". The builder, as a respondent, cannot seek an order that the homeowner applicant's claim be "discontinued". The builder concedes that the use of the word "discontinuance" in the set aside application was "inapt" but as the builder was unrepresented and not legally qualified the use of the word was unsurprising. The Tribunal, in assessing the prospects of success of the set aside application, erred by seizing on the use of the word "discontinuance" and therefore misdirected itself.
9. Alternatively, it is submitted that the adjournment decision miscarried because the Tribunal failed to take into account the second argument on the set aside application. The builder sought orders to set aside the refusal to transfer the proceedings on the basis of an "irregularity" pursuant to section 53(4) of the Act.
10. The irregularity was the absence of submissions or a hearing in relation to the transfer application. There is no evidence that the requirements of section 50 of the NCAT Act were met when the Tribunal of its own volition dispensed with a hearing. The irregularity was one which could be cured under s 53 as an alternative path to cl 9. The irregularity was not considered by the Senior Member when she decided not to adjourn the hearing.
11. It is submitted that the failure to adjourn or transfer the proceedings resulted in a denial of procedural fairness. The Tribunal proceeded to hear the homeowner's claim for damages effectively on an ex parte basis, thereby allowing evidence for the homeowner, and rejecting the evidence of the builder. There was substantial material from the builder's former director that had been served months before the hearing contesting the substantive claim for damages advanced by the homeowners.
12. Importantly, no challenge is made to the Tribunal's decision not to admit the evidence of the builder. Mr Zatini, the builder's director, as deponent of the affidavit, was not available for cross examination and the builder concedes that under those circumstances no challenge can lie to the Tribunal's decision not to admit the evidence over objection by the homeowner.

The reply

1. The homeowner's reply was filed on 1 October 2015 in addition to written submissions of that date. The homeowner denies that the builder identified any error of law.
2. In particular the homeowner denies that the refusal to grant an adjournment constitutes an error of law and submits that the Senior Member correctly applied the power granted by s 51 of the Act and that the exercise of her discretionary power to refuse the adjournment was correctly applied.
3. The principles in House v King (supra) are applicable and the builder must demonstrate that the Tribunal acted on a wrong principle, took into account extraneous or irrelevant matters, or misunderstood the evidence in a material or dispositive way. The builder has failed to do so.
4. In response to ground 2 of the notice of appeal, this was disposed of by the parties by consent.

The decision under appeal

1. The Decision appealed from was in fact a written record of an oral decision given at the hearing on 24 April 2015. We were taken to a limited number of paragraphs of the transcript for the purpose of understanding the reasons given by the Senior Member at the hearing.
2. In particular we were taken to the following parts of the transcript: In refusing the adjournment application, I've been particularly [inaudible] of the following: I appreciate that the refusal was only handed down on 22 April 2015, thus leaving Mr Grimes with little time to consider its ramifications. However, in considering whether to adjourn today's proceedings so that the refusal can be revisited under the clause 9 set aside application, I must consider the merits of that set aside application. In so doing, it seems to me on a reading of the words of clause 9(1), the set aside application lacks some merit. Firstly, the refusal was not a decision that in my view determined the proceedings as required under clause 9(1). Further, I cannot see how a set aside application can come within 9(1)(b) when Mr Grimes himself made the application on the papers seeking discontinuance. Mr Grimes sought discontinuance on the respondent's behalf irrespective of the Member's reasons in making the refusal. The member could not have done anything but refuse the application which ultimately was an application by a respondent to discontinue the proceedings.
3. Although that page refers to other reasons which were considered by the Senior Member, the builder submits that the extract set out above describes what was determinative, and encapsulated the Senior Member's view as to the prospects of success of the cl 9 set aside application.

Consideration

1. Ground 1 - Essentially, the application before the Tribunal was an application to adjourn proceedings. The decision to refuse the adjournment is the principal decision appealed against.
2. The purpose of the adjournment application by the builder, on the morning of the hearing, was to delay the homeowner's hearing for damages of the matter to allow a clause 9 set aside application to be heard.
3. If the clause 9 set aside application was successful, it would potentially permit the Tribunal to reconsider the builder's transfer application. The result of a successful transfer to the District Court would have had far reaching implications for the homeowners' case. Instead of being heard and finalised on 24 April 2015, the homeowner's claim would have been delayed for a considerable time, at least many months, until a final judgment in the District Court could be delivered. Not surprisingly, the adjournment application was opposed by the homeowner.
4. The adjournment application by the builder cannot therefore be considered without having regard to the prospects of success of the cl 9 set aside application and the merit of the transfer application.

Did the Tribunal misconstrue the operation of the clause 9 set aside application?

1. The first purported error of law set out in the notice of appeal states that the Tribunal misconstrued the scope of power conferred by cl 9. The operation of cl 9 and its application has been subject of previous decisions and the Appeal Panel finds that the Senior Member did not misdirect herself when she considered the application of cl 9.
2. The Tribunal may set aside decisions pursuant to cl 9 in certain limited circumstances: 9 Additional power to set aside or vary decision determining proceedings (1) In addition to any power that is expressly conferred on the Tribunal by the Act or enabling legislation to set aside or vary its decisions, the Tribunal may order that a decision it has made that determines proceedings be set aside or varied in either of the following circumstances: (a) if all of the parties to the proceedings have consented to the making of the order to set aside or vary the decision, (b) if the decision was made in the absence of a party and the Tribunal is satisfied that the party's absence has resulted in the party's case not being adequately put to the Tribunal. Note: The following provisions of the Act are examples of provisions that expressly confer powers to set aside or vary decisions of the Tribunal: (a) section 45 (3) (which enables the Tribunal to revoke leave granted to a person to represent a party), (b) section 53 (4) (which confers a power on the Tribunal to set aside proceedings and decisions involving procedural irregularities resulting from a failure to comply with provisions of the Act or the procedural rules in relation to the commencement or conduct of proceedings), (c) section 63 (which confers a power on the President or a presiding member to correct obvious errors in decisions of the Tribunal), (d) section 64 (3) (which enables the Tribunal to vary or revoke a non-disclosure order made under section 64), (e) section 73 (3) (which enables the Tribunal to vacate or revoke an order with respect to contempt of the Tribunal).
3. A cl 9 set aside application relevantly permits some types of decisions of the Tribunal to be set aside if the party, against whom the decision was made, was not present at a hearing and the issues between the parties had been determined in the absence of a party. In addition, in considering the set aside application, the decision maker must be satisfied that the absence of the party resulted in the party's case not being adequately put before the Tribunal.
4. The builder submits that cl 9 set aside can apply to decisions that are interlocutory or ancillary in nature and that the refusal to transfer was such a decision. The builder's submission that cl 9 can be used to review interlocutory orders [as distinct from final and determinative orders] must be rejected. Such issues were considered in Hammond. That decision analysed whether a cl 9 decision itself is final or ancillary in nature and the appeal panel in Hammond arrived at a concluded view that a set aside decision is not a final or interlocutory decision, but is properly characterised as an ancillary decision for the purpose of s 80(2)(b) of the Act (see par 40). The appeal panel in Hammond's case did not expressly state whether a decision, which is the subject of a clause 9 set aside application, must be final, ancillary or interlocutory in nature but does state, determinatively that "a set aside decision under clause 9 can only be made (emphasis added), …after there has a been a final determination of the proceedings" (see par 37). The Appeal Panel went on to say that a set aside application under cl 9 can only be made after, and in respect of a decision that determines proceedings (see par 39).
5. The Appeal Panel is not of the view that Hammond is authority for the proposition that a set aside application is available to review decisions other than those that finally determine proceedings. The phrase "that determines the proceedings" is not defined in the Act or the Regulation and should be given its ordinary and natural meaning. The legislature has expressly qualified the term decision with "that determines the proceedings".
6. The principles of statutory construction are well settled. The task of statutory interpretation must begin with a consideration of the text itself. The starting point is to consider the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and legislative purpose: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27, Hayne, Heydon, Crennan, Kiefel JJ, [47].
7. The phrase "that determines the proceedings" has a particular meaning at law. The legal definition of "determine" is to "bring to an end". This is the meaning as put forward by the homeowner and we accept that this is the correct interpretation. This is echoed in the considerations of the Appeal Panel in paragraph 36 of Hammond. Interlocutory refers to those issues or activities that arise before proceedings are finally determined. An ancillary decision includes a decision consequential on a decision determining proceedings. It is clear that a cl 9 set aside application can only be brought following a decision "finally determined proceeding", and we are of the view that there was no miscarriage of the Senior Member's discretion when she considered, in passing, whether the cl 9 application may have been a misconceived application or whether the set aside had any merit.

Was the transfer application meritorious?

1. The builder's application to vacate the substantive hearing date was by necessary implication based on the subject matter of the cl 9 set aside application, the transfer application. In considering the merit of the cl 9 set aside application the Senior Member was obliged to consider the transfer application. This was problematic as there was no evidence before the Tribunal setting out the basis of the related District Court proceedings allowing analysis of whether the defects claim by the homeowner could be considered without concurrently hearing the builder's claim. As the Senior Member stated in the transcript: The other thing is, which I've got to say I think is more important, is whether your client has a genuine claim for $700,000 which should be given the opportunity to be heard in the District Court and I have nothing to support that. I don't know where these figures come from. And you can't tell me. And your client isn't here to tell me.
2. The Tribunal was, on an application for adjournment, required to consider whether any transfer application would have reasonable prospects of success and whether: 1. the related statement of claim was supported by particulars which would permit assessment of the basis for the claim for damages; and 2. the homeowners' case for damages for defective work could reasonably and practically be severed; or 3. it was justifiable that the homeowners' case be transferred at a stage when the builder's statement of claim was tendered on the morning that the homeowner's case was listed for hearing.
3. The Appeal Panel finds that these were reasonable enquiries to make and that the Tribunal did not fall into error when it considered whether the transfer application had merit and could reasonably support the builder's case for adjournment. The Appeal Panel is of the view that the Tribunal below in its decision correctly set out the basis for concluding why the adjournment was refused. No error has been demonstrated and this ground of appeal must fail.

Did the Tribunal's discretion miscarry because the Tribunal failed to consider an irregularity under section 53(4) of the Act.

1. It is not in dispute that the set aside application sought to enliven grounds other than cl 9. An application form permits the applicant to tick a number of boxes setting out the grounds on which a set aside is sought.
2. Clause 9 and s 53 of the Act are distinct and separate provisions each permitting the Tribunal to set aside decisions in differing circumstances.
3. The builder argues that the refusal of the transfer application was marred by procedural unfairness because the parties were not invited to provide written submissions before the transfer application was determined in their absence. It is submitted that the failure by the Tribunal to conduct a hearing of the transfer application constituted an irregularity that could be cured by setting the refusal aside pursuant to s 53(4) of the Act.
4. Section 53 is as follows. 53 Amendments and irregularities (1) The Tribunal may, in any proceedings, make any amendments to any document (for example, an application or appeal) filed in connection with the proceedings that the Tribunal considers to be necessary in the interests of justice. (2) Any such amendment may be made: (a) at any stage of the proceedings, and (b) on such terms as the Tribunal thinks fit, but may only be made after giving notice to the party to whom the amendment relates. (3) If a provision of this Act or the procedural rules is not complied with in relation to the commencement or conduct of proceedings, the failure to comply is to be treated as an irregularity and does not nullify the proceedings or any decision in the proceedings unless the Tribunal determines otherwise. (4) The Tribunal may, however, in dealing with any such irregularity, wholly or partly set aside the proceedings or a decision in the proceedings.
5. The builder submits that the success of the set aside application on grounds of irregularity should have been considered and the failure to do so led the Tribunal, when considering the merit of an adjournment, into error. We believe that this submission is misconceived for the reasons that follow.
6. The homeowner's application for damages was listed for final hearing. The set aside application was listed for a hearing on another day before a differently constituted Tribunal. A transfer application was not made at any time before the Senior Member on the morning of the hearing. The adjournment application was the only application before the Member for consideration.
7. The fact that the builder was bringing an adjournment application, as opposed to a set aside or transfer application, was well ventilated during oral submissions: Klooster: My learned friend has an adjournment application he wants to make. Member: well you've got to tell me what your application is. If you're telling me you want me to review Member Cohen's decision, I can't do it. I'm just sitting here as a Tribunal member to hear this case. There are avenues open for that under the legislation but this is not one of them (page 8). Page 14 Member: …let's not make it more confusing than you already have, Mr Lee. We are dealing now with why you want an adjournment. One of the main reasons as I understand you're putting it to me is, that you have a clause 9 application which should be dealt with, a set aside application. And there is merit, you say in that application. The merit being that there was no call for submissions from any party….
8. The Member then goes on to say at page 16 Well how can I seriously consider adjourning these proceedings so that you can get ready for a transfer application which is what you are asking me and you've got absolutely nothing for [inaudible]…. And all I have before me here and now is a clause 9 application which I've got to say, doesn't seem to be the strongest application before me, and an application that [the hearing] should be adjourned … so that your client can get his act together in the District Court with nothing … to support what's going to be put in the District Court application, not even the courtesy of your client coming here today.
9. It is apparent from the exchange as set out above that the builder relied on the outcome of the set aside application as the single substantive submission in support of an application for adjournment. It is convenient to note that the builder, as respondent, had not filed any expert evidence to oppose the homeowner's substantial claim for damages and had previously not complied with directions to file and serve evidence. In addition, an order had previously been made that the hearing was not to be adjourned unless exceptional circumstances applied. The adjournment application did not necessitate a hearing of the set aside application nor a hearing of a transfer application. It was open to the builder to bring a fresh transfer application but it did not.
10. On that basis it is not necessary for us, in disposing of this appeal, to determine whether the set aside application could have succeeded on the grounds of irregularity because the set aside decision was not the decision appealed against.
11. It is our view that an irregularity may have occurred when the transfer application was determined in chambers without submission from the parties, or without the consent of the parties, to dispose of a hearing on the issue. Section 50 sets out the necessary steps before a hearing can be dispensed with and the procedure was not followed. But the issues before us do not concern an appeal from the Tribunal's refusal to transfer these proceedings. It was open to the builder to appeal against an interlocutory decision of the Tribunal and the builder elected not to do so. What is before us is an appeal from the Senior Member's decision to refuse an adjournment and whether her discretion miscarried. In any event, as we are of the view that the set aside application was misconceived for the reasons previously expressed any irregularity in the determination is of no consequence.
12. While the Member who refused the transfer may have committed an error in the way he determined the transfer application, we are not satisfied that such error led the Senior Member on the morning of the hearing into further error when she refused to consider the set aside application on the grounds of irregularity. She did consider whether it was in the interests of the parties to adjourn the proceedings to explore a potential transfer to the District Court and decided it was not. On that basis she considered the builder's submissions in support of the application, and exercised her discretion. We are not satisfied that an error of law has been established and this ground of appeal must fail.
13. In the circumstances it was apparent that justice could not permit the adjournment so belatedly pressed for by the builder. The interests of the homeowner could not be overlooked. That the builder would be in any different position if the matters were adjourned and or transferred to a court was not apparent. He had led no evidence to explain his claim in the District Court and had not made himself available on the morning of the hearing and so could not be cross-examined as the substance of his case. The obvious inference was that his evidence would not have assisted his adjournment application.

Did the Senior Member misapply her discretion because of the use of the word "discontinuance'.

1. The appellant raises a further submission. It is stated at paragraph 19 of the submission that the builder's inapt characterisation of the transfer application (by calling it a "discontinuance") led the Senior Member to the erroneous assumption that the set aside application was hopeless, and this in turn led her to misapply her discretion in refusing the adjournment.
2. Particular reliance is placed on the transcript of the Decision which was set out at paragraph 31 above and the part relevant to the "discontinuance" is repeated here: In so doing, it seems to me on a reading of the words of clause 9(1), the set aside application lacks some merit. Firstly, the refusal was not a decision that in my view determined the proceedings as required under clause 9(1). Further, I cannot see how a set aside application can come within 9(1)(b) when Mr Grimes himself made the application on the papers seeking discontinuance. Mr Grimes sought discontinuance on the respondent's behalf irrespective of the Member's reasons in making the refusal. The member could not have done anything but refuse the application which ultimately was an application by a respondent to discontinue the proceedings.
3. We do not agree with the applicant's submission. The paragraph needs to be considered in the whole of the context of the reasons for Decision. The inapt use of the word "discontinuance" by a builder who was not legally represented, did not lead the Member astray. It was clear from the remainder of the Senior Members' reasons that the substance of the adjournment application was the builder's transfer application. There was no emphasis placed on the discontinuance. The Senior Member indicated in her written reasons that she directed her mind to the issues relevant to the adjournment. There was no misconception that the builder, as a respondent, was seeking a discontinuance. In summary, on the face of the learned Members' reasons, no arguable error of the type discussed in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ has been established.

In Conclusion

1. For the reasons set out above the Appeal Panel is not satisfied that the Member's discretion miscarried when the adjournment application was refused.

Orders

1. The Appeal Panel makes the following orders:
2. In AP 15/51534: 1. The appeal is upheld for the purpose of making order 2 below and is otherwise dismissed; and 2. By consent of the parties order (1) made on 12 August 2015 is varied in the following terms: 3. Buildex Australia Pty Ltd shall pay to Toolendrie Soud the sum of $267,681.74 on or before 30 April 2016.
3. In AP 15/51590:
4. By consent of the parties the Appeal Panel makes the following orders: 1. The appeal is allowed; and 2. Order (3) made on 12 August 2015 is quashed.

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: 12 April 2016