Solicitors:
Anderson Lawyers (Appellant)
Merewether & Co (Respondent)
File Number(s): AP18/11619
Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal
Jurisdiction: Consumer and Commercial Division
Citation: n/a
Date of Decision: 24 February 2017
Before: F Holles, General Member
File Number(s): HB17/03428
[2]
INTRODUCTION
This is an appeal from the Consumer and Commercial Division concerning a home building matter. The works in dispute involved earth works, concreting and turf laying at new residential premises in Revesby.
The Tribunal, by order dated 24 February 2017 ordered that Mr El Howot pay the sum of $29,000.00 to Mr Moss on account of prepayments where work was not done or materials provided; for plumbing repairs; for top soil paid and not provided; for turf paid and not provided; and for additional concreting.
Mr Moss had approached Mr El Howot for a quotation for the work. Mr Moss by statutory declaration dated 21 July 2017 said that he checked the driver's licence of Mr El Howot and that the name on the licence was Rodney Hawatt. Mr El Howot issued a quotation to Mr Moss dated 9 December 2016 on letterhead of a company called Pro Earthworx Pty Ltd (Pro Earthworx). The letterhead shows an ACN, an ABN and a "demo licence number XXX".
An ASIC search of 22 January 2017 shows that Pro Earthworx was deregistered by ASIC on 14 December 2014 (i.e. about 2 years before the quote was given) and that the sole previous director and shareholder of the company was Mr El Howot. Mr El Howot claims he was unaware of this situation but documents attached to an undated statement of his filed 21 May 2018 (Annexure G) which was in evidence, records that the deregistration was 'ASIC initiated' and we doubt that ASIC could have deregistered this company without any notices to Mr El Howot. He also said (at para 28 of the statement) that he had arranged for the company to be re-registered on 13 September 2017, which was shortly before he received a bankruptcy notice mentioned in greater detail below.
Documents obtained from NSW Fair Trading dated 13 April 2018 (Attachment A of Statement in Reply of Mr Moss dated 23 May 2018) establish that neither Pro Earthworx nor Mr El Howot has held a contractor licence and, more worryingly, that the "demo licence" number quoted on the letterhead of Pro Earthworx had been issued in 1977 to another individual (a builder) and had been cancelled in 1986. Furthermore NSW Fair Trading advised that it did not issue a class of contractor licence in the category of Demolition.
Mr El Howot did not appear at the hearing of the Tribunal below which found in favour of Mr Moss. Mr Moss, having obtained a decision, took steps to enforce his judgment by registering a money order at Bankstown Local Court and then commencing bankruptcy proceedings in the Federal Court.
The bankruptcy notice was filed on 24 October 2017 and apparently served on Mr El Howot on 10 November 2017. Mr El Howot deposed that he first became aware of the bankruptcy proceedings on 6 October 2017 (para 22 of his statement) but did not explain the apparent date discrepancy. Mr El Howot said he then engaged his solicitor to have the bankruptcy notice and Tribunal decision of 27 March 2017 set aside (statement of Mr El Howot para 23).
In addition, Mr El Howot lodged his notice of appeal against the Tribunal decision on 8 March 2018, more than 1 year after the decision below was given. At the same time Mr El Howot lodged an application to set aside or vary the Tribunal decision pursuant to clause 9 of the Civil and Administrative Tribunal Regulation 2013 (CAT Regulation). However, a party may not make an application for an order under clause 9 if an internal appeal has been lodged (CAT Regulation 9(5)(a)). We have therefore considered the notice of appeal only. Insofar as necessary, the application to set aside the decision of the Tribunal is dismissed.
Mr El Howot requested an extension of time to lodge his appeal. Rule 25(4)(c) of the CAT Rules provides that an internal appeal must be lodged within 28 days from the day on which the appellant was notified of the decision to be appealed or given reasons for the decision (whichever is the later) unless an extension is granted under s 41 of the CAT Act.
In a statutory declaration dated 5 March 2018 which was filed with the application to set aside the decision of the Tribunal Mr El Howot said:
"2 I was unaware of these proceedings until I received a Bankruptcy Notice issued on 24 October 2017.
3 Attached to the said Bankruptcy Notice was a "Judgement/ Order" issued by the Bankstown Local Court dated 20 October 2017. I did not know the judgement was based on an award by the NSW Civil and Administrative tribunal until my solicitor was provided with a copy of an Order dated 26 September 2017 which he received from Mr Moss' Lawyer in the Federal Court on 19 February 2018".
This explanation on the face of it seems improbable.
In an undated statement filed in this appeal on 21 May 2018, Mr El Howot said:
22. On 6 October 2017, I first became aware that bankruptcy proceedings were initiated against me personally. At that time, I did not know what the bankruptcy proceedings were in relation to.
23. I contacted my lawyer, who sought to have a creditors petition set aside. By consent, the creditors petition was put over so that judgment could be amended and set aside.
24. After making inquiries from Bankstown Local Court, where judgment had been lodged, I learned on 19 February 2018 that the judgment related to NCAT proceedings that were heard and determined on 24 February 2017 in my absence.
25. I did not have notice of the NCAT proceedings. I understand that correspondence was sent to [address] Belfield, but I was not resident at that address at that time.
It was submitted on behalf of Mr El Howot that he was first notified of the decision of the Tribunal below on 19 February 2018 as stated in paragraph 3 of the abovementioned statutory declaration and was therefore within time to lodge the appeal. Alternatively if the Appeal Panel was against that submission an extension of time was sought. Mr El Howot claimed that he had not received any "process", in this case notice of the NCAT proceedings, because in February 2017 he was estranged from his wife and not living at his last known (home) address, but instead was living "on the NSW North Coast" (para 13 statutory declaration).
Where a hearing is held in the absence of a party, the Tribunal may proceed to hear the proceedings in the absence of the party who has failed to attend the hearing if the Tribunal is satisfied that notice of the hearing was duly served on the party (CAT Rule 35(2)(a).
Mr El Howot proffered no evidence at all to support his claim that he was living away from his home. NCAT process is validly served by posting it to the party's last known residential address (CAT Rule 13(2)(b)(ii)). Mr El Howot did not dispute that the hearing notices were served on his last known residential address, he maintains he was not living at that address at the relevant time.
On the evidence we are not persuaded that Mr El Howot was first notified of the NCAT decision on 19 February 2018. At the latest he knew or should have known about the Tribunal decision shortly after receiving the bankruptcy notice in November 2017 (or finding out about the bankruptcy proceedings in October 2017 as he stated) and instructing his solicitor.
The issue then is whether we should grant an extension of time. Guidance as to relevant considerations was provided by the Appeal Panel in Jackson v NSW Housing Corporation [2014] NSWCATAP 22 at para 22 which was referred to by the representatives of both parties. It was stated in Jackson:
(1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant - Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2], Nanschild v Pratt [2011] NSWCA 85 at [38];
(2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a "vested right" to retain the benefit of that decision - Jackamarra v Krakouer (1998) 195 CLR 516 at [4], Nanschild v Pratt [2011] NSWCA 85 at [39] and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success -Jackamarra at [7];
(3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider:
(a) The length of the delay;
(b) The reason for the delay;
(c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and
(d) The extent of any prejudice suffered by the respondent (to the appeal), - Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61at [55] (per Basten JA) but note also [14], Nanschild v Pratt [2011] NSWCA 85 at [39] to [42]; and
(4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable - Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [14](per Hodgson JA, Ipp JA agreeing at [17]) and Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [58] - [59].
The delay in lodging this appeal has been lengthy and most inadequately explained. Mr El Howot has not convinced us that he only became aware of the Tribunal proceedings and decision below in February 2018. His evidence concerning his absence from the former matrimonial home is unsupported.
The respondent proceeded in accordance with the Tribunal Rules and thereafter took steps to enforce his judgment. It seems to us that to allow the appeal and to restart the whole process again would cause undue prejudice to Mr Moss.
Jackson's case suggests [para [22(4)] that it may be appropriate for the Appeal Panel to go deeper into the prospects and merits of the appeal where the explanation for delay seems inadequate. Where the right of appeal has gone because of the expiration of the appeal period the time for appealing should not be extended unless the proposed appeal has more substantial prospects of success.
The Notice of Appeal contained the grounds which he sought to raise if his application for an extension of time and leave to appeal were successful, which were as follows:
1. The Appellant is not personally liable to the Respondent.
2. At all material times the Respondent entered into a contract with a company namely Pro Earthworx Pty Ltd ACN xxx xxx xxx .
3. At no time did the Appellant in his personal capacity enter into a contract with the Respondent.
4. The Appellant did not provide or was required any time to give any personal or other guarantees to the Respondent or anyone else pursuant to the contract.
5. The Appellant is not personally liable to the Respondent.
6. The Respondent has misled the tribunal.
Mr El Howot's principal submission on the substantive point was that he was not a party to the relevant contract for building works and therefore was not personally liable under that contract. He says that Pro Earthworx was the contracting party. He also argued, faintly, that the contract was not with Mr Moss but with Mr Moss' company. As submitted by Mr Moss this appeared to be a recent invention. None of the previous correspondence had raised the point.
Further Mr El Howot says he was unaware that Pro Earthworx had been deregistered and that Mr Moss' proper remedy would have been to seek the re-registration of that company pursuant to s601AH of the Corporations Act 2001, and then apply to the court to have the contract which was entered into during the period of deregistration ratified by the court.
We are, in the first instance, not persuaded that Mr El Howot was unaware that the company had been deregistered. We find it hard to believe his uncorroborated assertion to this effect. There is no evidence before us that would support the proposition that ASIC can deregister a company without notice to the directors.
His case is not assisted by the evidence from NSW Fair Trading regarding the "company" letterhead with a misleadingly named licence using a long-expired licence number, and in circumstances where the licence had been issued to another person entirely.
Secondly, we do not consider there is merit in Mr El Howot's argument that he is not personally liable under the contract. The Appellant purported to use his deregistered company as the quoting party. The course suggested by counsel for Mr El Howot as the redress for Mr Moss to have taken (i.e. seeking re-registration of the company by ASIC followed by an application to the court to ratify the contract entered into during the period of deregistration) seems unduly cumbersome. We doubt in any event whether this is correct where the contract in question was entered into after the company had been deregistered - in this case 2 years after deregistration.
In White v Baycorp Advantage Business Information Services Ltd (2006) 24 ACLC 969 Justice Campbell said:
115 Approaching the matter purely as one of statutory construction, the effect of section 601AH(5) is that, now, the statute requires everyone to treat Capital Corporate as though it had never been deregistered. However, that does not mean that anything which purported to be done on behalf of Capital Corporate during the period of its deregistration is thereby regarded as valid. If a director had purported to act on behalf of a deregistered company during the period of deregistration, mere reinstatement would not validate his action, because section 601AH(5) provides only a limited measure of retrospectivity, so that the director regains his office only from the time of reinstatement. Similarly, section 601AH(5) provides only a limited measure of retrospectivity concerning title to the property of the company, so that the property revests in it only from the time of reinstatement. Thus, notwithstanding the reinstatement, any contractual power which Capital Corporate had prior to the deregistration is still regarded, even after the deregistration, as having been vested in ASIC during the period of deregistration. If the contractual power was vested in ASIC, Capital Finance could not have had authority to exercise that contractual power.
…
123 In my view, the case now before me differs from those cases in three respects. Any one of those respects is sufficient to conclude that Capital Finance was not acting on behalf of Capital Corporate in issuing the September notices. First, section 601AH(5) imposes limits on the retrospectivity of the resuscitation of the corporation, to which I have earlier referred, which section 574(4) Corporations Law did not have. Second, the issuing of the notices was not an act which purported to be done in the name of Capital Corporate and so is not within the ratio of Tyman's or the Pollnow cases. The third is a consequence of the requirement for a person who enters a contract as agent for an undisclosed principal to have actual authority, at the time of entering the contract, to do so on behalf of the undisclosed principal. That requirement will prevent any contract, which someone claims to have entered as agent for an undisclosed principal, in circumstances where that supposed undisclosed principal is a deregistered corporation at the time the contract is entered, from ever being binding on the corporation, even if the registration of the corporation is reinstated.
In summary it seems to us that Mr El Howot's prospects of success in putting his argument and the merits of it are, in all the circumstances, both very low.
There is no basis for the Appeal Panel to be satisfied that Mr El Howot has provided an adequate explanation for the delay in lodging the appeal. No evidence was provided that Mr El Howot was not residing in the matrimonial home at the relevant time. The lack of material providing an adequate explanation for the delay weighs against an extension of time.
Further, we must consider whether there is any prejudice to the respondent and the delay by Mr Howot and enforcement action already taken by Mr Moss suggest that there would be prejudice.
Further we do not consider it would work any injustice on Mr El Howot to refuse his application for extension of time. Mr Moss' evidence concerning the quality and performance of the work quoted by Mr El Howot is cogent; the demands for excessive prepayment made by Mr El Howot (who lacked a licence and engaged in deceptive conduct regarding a demolition licence) are very damaging; the weakness of Mr El Howot's evidence regarding his knowledge of the NCAT proceedings and enforcement proceedings and the deregistration of his company is patent; and his claim of absence from his last known place of residence, give us no confidence in his acquaintance with the truth.
Accordingly the extension of time requested for lodgement of the appeal is refused. The application to set aside or vary the Tribunal's decision is dismissed for the reason stated earlier. This disposes of the appeal, but for completeness we should say that even if we had granted an extension we would not have upheld the appeal.
The appellant originally sought leave to rely on grounds other than an error of law to found this appeal (see s80(2) CAT Act).
At the hearing the appellant sought leave to amend its notice of appeal to rely on an error of law to found an appeal as of right. That application for leave was not opposed. The alleged error of law was based on 'Wednesbury unreasonableness' [Associated Provincial Picture Houses Ltd. v Wednesbury Corporation [1948] 1 KB 223]. Having regarded the respondent's documentary evidence filed in the Tribunal below and tendered before us; and at the evidence which the appellant says he would have led below which was also tendered (which we have examined, but consider it unnecessary to formally grant leave to rely on); and having examined the appellant's explanation for not attending the hearing below we would have been satisfied that there was no error of law disclosed in the decision below. On the basis of the above material it was quite reasonable for any Tribunal to have come to the decision it did. Nor is the argument that the appellant was not heard below persuasive given the paucity of evidence concerning his place of residence and the number of documents in this litigation process validly served at his last known place of residence.
As to the other non-error of law grounds of appeal, we note that Clause 12 of Schedule 4 of the CAT Act provides for appeals from the Consumer and Commercial Division as follows:
(1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because:
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence, or
(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
This imposes a higher threshold to be considered in an application for leave. This issue was discussed by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at pars. 69-84. In our view, including for the reasons given above concerning whether the appellant has suffered an injustice we consider that the appellant has not suffered any substantial miscarriage of justice and we do not consider it would be in the interests of justice to grant leave.
[3]
Costs
The respondent submitted that the appellant should, if the appeal was held to be unfounded, make an order against the appellant for the costs of the appeal.
The original claim in the Tribunal by Mr Moss was for $29,990.00, and the Tribunal's order was for Mr El Howot to pay Mr Moss $29,000.00.
As this is a home building claim and the amount claimed was less than $30,000.00 (by only $10.00) it is necessary for "special circumstances" to be established before costs can be awarded (sec. 60 CAT Act; CAT Rules 38 and 38A).
The respondent submitted that the appeal overall lacked any merit, and that there was a lack of evidence in virtually every aspect of the appeal. We agree that the appellant's evidence was either absent, or weak, or contradictory and could not be relied on. We also agree that the merits of the appeal were weak. The only real defence advanced was that the proper party to the contract was the deregistered company of Mr El Howot. That company had been deregistered for 2 years prior to the entry into the contract, which was in multiple breach of the Home Building Act 1989, and which appears to have been used as a vehicle of deception.
Mr Moss' solicitor referred to the case of Gaynor v Burns [2015] NSWCATAP 150 which followed Cripps v G & M Dawson [2006] NSWCA 81 to the effect that special circumstances mean "out of the ordinary" but do not rise to the level of "extraordinary" or "exceptional". The appellant's counsel submitted that his client's case was not completely without merit and that he had some arguable points. We find it hard to accept this submission.
Further Mr El Howot put the respondent at a considerable disadvantage by failing to comply with directions to file and serve evidence even though the timetable had been extended, and which were designed to provide the parties with an opportunity to become familiar with the other side's case.
Mr El Howot's written submissions were personally served for the first time on Mr Moss' solicitor 10 minutes before the appeal hearing, and were filed with the Panel at the hearing itself. They originally were directed to be filed on or before 13 April 2018 a date extended to 4 May 2018.
The appellant's statement of evidence is undated but was filed by his solicitor on 21 May 2018. That evidence should also have been lodged and served by 13 April 2018 as extended to 4 May 2018.
The appellant was required to file and serve evidence by 13 April 2018 as extended to 4 May 2018 the sound of recording of the hearing below, if what happened at that hearing was to be relied on and a typed transcript of the relevant parts.
The Tribunal was informed by the appellant's solicitor by letter received 21 May 2018 that the recording was unable to be transcribed, but the sound recording was not filed so we could not check that claim. It was also not supplied to the respondent's solicitor despite a request.
The timetable for the respondent's evidence was extended from 2 May 2018 to 22 May 2018. Its principal bundles of evidence (Exhibits R7 and R8) were filed on time and some additional evidence of Mr Moss' diaries (Exh R11) was received 2 days later than directed, but this was explicable by the appellant's delay in filing and serving its evidence.
The respondent's main submissions were filed well before the original deadline of 2 May 2018 and the respondent's statement in reply was also filed before the extended deadline of 22 May 2018.
If all these factors are taken into account (lack of merit, evidentiary failings, serious breaches of directions made) it is our view that there are special circumstances and therefore we should order the appellant to pay the respondent's costs of the appeal on the ordinary basis.
[4]
Orders
1. The extension of time to lodge the appeal under sec 41 Civil and Administrative Tribunal Act 2013 is refused.
2. The Appeal is dismissed.
3. The Application to set aside or vary the decision of the Tribunal is dismissed.
4. The Appellant to pay the Respondent's cost of the appeal on the ordinary basis.
[5]
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Principal Registrar
[6]
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
[7]
Amendments
23 July 2018 - Included Decision under Appeal details on coversheet
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Decision last updated: 23 July 2018