Elias v McGauley [2019] NSWCATAP 237 | Case summary

NCAT Appeal Panel|2019-07-09

Overview

The appeal in this Consumer and Commercial Division matter was lodged well beyond the time prescribed for commencing an appeal.
The appellants seek an extension of time in which to bring the appeal. They say that they were not aware of the proceedings until the Sheriff sought to execute a writ of execution against property owned by the individual appellant. The writ was issued by the Local Court and was against the individual appellant. However, the Tribunal's order for an amount to be paid as damages, and subsequent certified money order, was only against the appellant company. No order was made by the Tribunal against the individual appellant and, hence, the appeal by the individual appellant was misconceived.
The appellant company sought to pursue its appeal but it was clear that it had been properly served with relevant notices of the proceedings and the Tribunal's determination. These had been posted to the company's principal place of business and registered office as set out in ASIC's records.
The appellant company's main argument was that a sale of the respondents' property after the Tribunal's order undermined the respondents claim that they had suffered loss.
For the reasons set out below, we have decided that an extension of time in which to appeal should be refused. In essence, in circumstances where we regard the explanation for the delay in bringing the appeal as unreasonable, we are not satisfied that the appeal has sufficient prospects of success to warrant the grant of an extension of time.

Factual background

The appeal arises from a residential building dispute. The respondents to the appeal were owners of residential premises located at Abbotsbury NSW. In this decision, they are referred to as 'the homeowners'. The first appellant, Mr Elias, is a director of the second appellant. The second appellant ('Boral') performed residential building works at the premises of the homeowners between December 2016 and April 2017.
The residential building work involved renovation of the area immediately adjacent to an in ground swimming pool, including removal and replacement of pool coping tiles; installation of a retaining wall; installation of lights; and drainage work. There was no written contract between the parties and according to the application filed by the homeowners in the Tribunal they had paid Boral $50,000 for the work.
The homeowners alleged that the work was defective in that it did not comply with the statutory warranties provided for in s 18B of the Home Building Act 1989 (NSW) (the HBA). In July 2018 the homeowners sought the assistance of NSW Fair Trading. On 14 August 2018, NSW Fair Trading wrote to the homeowners that it would not intervene, as Boral was not suitably licensed under the HBA.
In determining this appeal, the Appeal Panel has had access to the original Tribunal file containing copies of orders and directions sent to the parties.
The homeowners then commenced proceedings in the Tribunal seeking damages for the cost of repairing defective work. Those proceedings were filed in the Tribunal on 8 October 2018. The application filed with the Tribunal identified the respondent in the proceedings as "A Boral Stripout & Demolition/Mr Mikhael Elias".
The application filed with the Tribunal did not contain an address for the respondent. The Tribunal Registry wrote to the homeowners pointing out that the address of the respondent must be provided, or the proceedings may be dismissed. The homeowners performed an ASIC company search. The ASIC company search identified Boral's registered office and principal place of business as an address at Merrylands NSW and that Mr Elias was the sole director of Boral. The ASIC search identified Mr Elias's address as an address at Greystanes NSW.
The homeowners provided the relevant addresses to the Tribunal Registry, and the Registry posted all relevant notices and a copy of the application itself to those addresses.
On 14 November 2018, the proceedings were listed for a Group List and Conciliation hearing at the Tribunal. Hearing notices had been sent to the addresses of Boral and Mr Elias, as set out in the ASIC search.
The homeowners appeared at the Group List and Conciliation hearing on 14 November 2018. There was no appearance by Mr Elias or Boral. The Member set the matter down for hearing, with directions regarding the filing and serving of documentary evidence. The Member also made formal orders identifying Boral as the first respondent, and Mr Elias as the second respondent, to the proceedings. For the sake of completeness (if it was necessary to do so), the Member also made an order joining Mr Elias as a party to the proceedings.
The Tribunal Registry sent a copy of the orders and directions made by the Tribunal to the addresses of Boral and Mr Elias, as set out in the ASIC search.
The matter was listed for a special fixture hearing at the Tribunal on 21 January 2019. Prior to that hearing, the Tribunal Registry had sent out hearing notices to the addresses of Boral and Mr Elias, as set out in the ASIC search. The homeowners appeared at the hearing, but there was no appearance by Boral or Mr Elias.
The Member presiding at the hearing on 21 January 2019 made an order for damages in favour of the homeowners for the cost of repairing defective residential building work in the sum of $19,250. The order of the Tribunal was only that Boral pay damages. There was no order made against Mr Elias.
The Tribunal Registry sent a copy of the orders of the Tribunal dated 21 January 2019 to the addresses of Boral and Mr Elias, as set out in the ASIC search.
The homeowners then sought a certified money order from the Tribunal Registry for enforcement in the Local Court, in accordance with s 78 of the Civil and Administrative Tribunal Act 2013 (NSW) ('the NCAT Act'). A certified money order was issued against Boral.
The homeowners then sought to take enforcement proceedings in the Local Court. Despite the certified money order being only against Boral, the Local Court issued a writ for levy of property against both Boral and Mr Elias.
In April 2019, the NSW Office of Sherriff sought to execute the writ against both Boral and Mr Elias. By this stage, Mr Elias was residing at premises in South Wentworthville. According to an affidavit of Mr Elias dated 14 June 2019, the first he knew of the proceedings and the order made was when the Sherriff sought to execute the writ on 8 April 2019. The respondents did not accept that this evidence was correct.
On 1 May 2019 Mr Elias filed a Notice of Appeal in the Appeal Panel, and also sought a stay of the orders of 21 January 2019. On 14 May 2019, the Appeal Panel, by consent, granted the stay application, and also added Boral as an appellant.
At the appeal hearing, Boral relied upon affidavits of Mr Elias dated 14 June 2019 and Ms Catania, Solicitor, dated 19 June 2019. As the information contained in the affidavits was relevant to the application for an extension of time for the appeal, both affidavits were admitted into evidence. Some of the evidence given in Mr Elias's affidavit was disputed or not accepted by the respondents.
With their appeal submissions the homeowners provided a Statutory Declaration from Ms Currie stating, in essence, that they had delivered all necessary documents to the addresses of Boral and Mr Elias, as contained in the ASIC search.

Grounds of appeal

The Notice of Appeal filed on 1 May 2019 on behalf of Mr Elias as the appellant (Boral was added as an appellant by the Tribunal's order dated 14 May 2019) contained statements that "we" were not aware of any proceedings brought against "us" and that they did not have a copy of the orders made by the Tribunal but they needed to act urgently because a writ of execution was in place. In this context, the document does not clearly identify grounds of appeal, in respect of any errors of law; or any other errors for which leave to appeal is required other than that leave to appeal was sought on the basis that the decision was not fair and equitable. It was said that this was because there had been procedural unfairness given that the decision was made without "our' knowledge and without any notification.
An extension of time was sought in the Notice of Appeal In support, it was said that the appellant only became aware of the proceedings when the Local Court sent a Sheriff to the appellant's home address with a Writ for Levy of Property.
No amended grounds of appeal were, subsequently, filed. However, the appellants written submissions filed and served in support of the appeal set out the following two grounds of appeal: 1. In respect of Mr Elias, that he was not a party to the agreement to perform residential building work and he was not served with the homeowner's application. 2. In respect of Boral, that it was not served with a copy of the application and has a "defence on the merits".
When it was pointed out to Mr Yin, Counsel for Mr Elias and Boral, during the hearing of the appeal, that the Tribunal had not made any orders against Mr Elias personally but only against Boral, and only Boral would have standing to appeal, the appeal by Mr Elias was not further pressed.
The written submissions of the appellant also refer to it being "not fair and equitable" for there to have been an award of damages in circumstances where the homeowners sold the property subsequent to the award of damages by the Tribunal. In this regard, Ms Catania's affidavit asserts that the property was sold in March 2019
We regard this submission, including as it was developed at the hearing of the appeal, as raising a fresh evidence ground of appeal for which leave to appeal is required (see further below).The fresh evidence is the sale of the property subsequent to the hearing on 21 January 2019 without the rectification work having been carried out
At the hearing of the appeal, the homeowners confirmed that they had sold the property prior to rectification work being performed and they had moved to the ACT. They said that they had sought to enforce the order for compensation but due to the appellants failure to pay they did not commence the rectification work and that they then moved to Canberra for family reasons as a result of a development after the orders were made.
At the hearing, we also understood Boral to raise as a ground of appeal for which leave to appeal was required that the decision was not fair and equitable because Mr Elias, the sole director of Boral, was not aware of the proceedings.

The limited appeal right

Under s 80 of the NCAT Act, a party may appeal as of right to the Appeal Panel in an internal appeal on any question of law. In respect of any other grounds, in the case of an appeal from the Consumer and Commercial Division of the Tribunal, the appellant must satisfy the Appeal Panel that leave to appeal should be granted under cl 12 sch 4 of the NCAT Act on the basis that: …..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)
The principles regarding whether or not leave to appeal should be granted under cl 12 sch 4 of the NCAT Act were set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at [76]-[84].

Extension of time in which to appeal

Under r 25 (4) (c) of the Civil and Administrative Rules 2014 (NSW) (the NCAT Rules) the time period to file an internal appeal in the circumstances of this matter is 28 days from the date the appellant was "notified" of the decision or given reasons for the decision (whichever is the later).
Although Mr Elias states that he was only notified of the decision by reason of the attendance of the Sherriff at his premises, a copy of the decision was sent by the Tribunal Registry to the addresses of Boral and Mr Elias as set out in the ASIC search. Accordingly, in our view by reason of s 76 (1) of the Interpretation Act 1987 (NSW) the appellants were notified of the decision 7 working days after the letters were posted by the Tribunal Registry, which is clearly more than 28 days prior to 1 May 2019.
Under s 41 of the NCAT Act, the time period to lodge an appeal may be extended.
The principles applicable to extensions of time are set out in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [22]. In that case the Appeal Panel said that the time limit should generally be strictly enforced but that was not to say that exceptions should not be made where the interests of justice so require (at [21]). The Appeal Panel added (at [22]): The considerations that will generally be relevant to the Appeal Panel's consideration of whether to grant an extension of time in which to lodge a Notice of Appeal include: (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) 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) 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].
For reasons that follow, we are not persuaded that an extension of time should be granted. .Firstly, the delay is substantial and the explanation for it is unreasonable given the failure of the appellants to keep the ASIC records as to the principal place of business and registered office of the company up to date, as we examine below.
Secondly, we see no merit in the procedural unfairness arguments and insufficient merit in the fresh evidence point to warrant the grant of an extension of time. We deal with these arguments in more detail below.
As we have already mentioned, the appeal by Mr Elias was withdrawn.
We also understood Mr Yin at the hearing of the appeal to abandon the ground of appeal based upon an alleged failure to properly serve the application on Boral. Such a ground had raised a question of law as to whether the decision should be set aside on the basis of procedural unfairness. In case we are mistaken about whether that ground was pursued, we now address it.
Under r 13 (2) (b) (ii) of the NCAT Rules, a document may be served "on a person or body's address for service; or if there is no address for service, at the person's or body's business or residential address (or the business or residential address last known to the person or body serving the document)". Under r 13 (2) (h) a document may be served on a corporation in any manner which is permitted by law.
Pursuant to s 109X (1) (a) of the Corporations Act 2001 (C'th) (the CA'), for the purposes of any law, a document may be served on a company by posting it to the company's registered office. Section 121 of the CA provides that the registered office of a company is that specified in the application for registration. That address is subject to change pursuant to s s 142 (2) under which any change of address of the registered office must be notified to ASIC by the lodging of a prescribed notice within 28 days of the change of address of the registered office. Under s 146 of the CA, a company must also notify ASIC of any change in address of its principal place of business within 28 days by lodging a notice in the prescribed form, and failure to do so is an offence.
During submissions, Mr Yin for Boral conceded that Mr Elias had not kept ASIC records regarding the registered office and principal place of business addresses of Boral; and his address as a director; up to date. According to Mr Elias, the relevant addresses in the ASIC records became out of date in about June 2018.
In the circumstances that we have referred to in paragraphs 11 and 12 above it is clear that Boral was served with notice of the commencement of these proceedings, and with the application itself, in accordance with r 13 (2) (b) (ii), r 13 (2) (h) and s 109X of the CA. Boral was also served with relevant notices of hearings, in accordance with this rule and section. These documents were served to the last known business address of Boral and upon its then registered office. Accordingly, we see no merit in the ground of appeal based upon procedural unfairness.
For the same reasons, we see no merit in the ground of appeal, for which leave is required, that the decision against Boral was not fair and equitable because Mr Elias was not aware of the proceedings. Even if that was the fact, about which we have made no finding, procedural fairness with respect to the company results from adequate notice to the company through permitted means of service and not from the state of knowledge of the company's sole director. In this case, the claimed lack of knowledge of the proceedings resulted from Mr Elias' failure to correct the ASIC records. In such circumstances, the company can hardly complain that the process that was followed was not fair and equitable.
Boral was also served with notice of the Tribunal's decision, in accordance with this same rule and section (see paragraph 18 above)
With regard to the point arising from the subsequent sale of the property, Mr Yin contended that the subsequent sale, without having incurred the cost of rectification, cured the loss. In this regard, Boral relied upon the New South Wales Court of Appeal decision in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 ('Cordon Investments'), in particular, paragraph 230 of the judgment of Bathurst CJ. Boral contended that given that the property was sold it would appear that the alleged defective works were not affecting the use of the property.
In the paragraph referred to, Bathurst CJ said: The combination of the lack of intention to carry out the rectification work, the transfer of the property from Lesdor to the owners corporation and the absence of any evidence that the defects were affecting the use and occupation of the building or the common property leads, in my opinion, to the conclusion that it would be unreasonable to carry out the work and that damages for the cost of rectification should therefore not be awarded.
Cordon Investments is not authority for the proposition that when assessing damages for defective residential building work no damages are awarded if the homeowner sells the property without rectification having been performed or that a subsequent sale without the rectification being carried out cures the loss
Rather, in Cordon Investments, the NSW Court of Appeal (Bathurst CJ, with Macfarlan JA and Meagher JA agreeing) followed the general principle that the damages for defective building work is the cost of making the work conform with the contract, subject to the qualification that not only must the work be necessary to produce conformity, but must also be a reasonable course to adopt (Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 ('Bellgrove v Eldridge')). The test of unreasonableness is only satisfied in fairly exceptional circumstances (Tabcorp Holdings Pty Ltd v Bowen Investments Pty Limited [2009] HCA 8; (2009) 236 CLR 272).
In Cordon, the sale of the property was just one factor amongst others that led to a conclusion that rectification was an unreasonable course to adopt. In this case, there was no other fresh evidence sought to be relied upon in support of a conclusion that rectification supporting an award of the size ordered by the Tribunal was unreasonable such as evidence that the new purchasers did not intend to rectify or expert evidence that rectification was unwarranted or new evidence that, in truth, the respondents never did intend to rectify.
In these circumstances, we do not think the material about the sale of the property is capable of satisfying the requirements for the grant of leave to appeal on the basis of fresh evidence, namely that the new evidence be "significant" or that Boral may have suffered a substantial miscarriage of justice.
In their submissions the respondents said that they would be prejudiced by the grant of an extension of time. They contended that they agreed the sale price of the property on the premise that they would receive the compensation ordered to be paid by the Tribunal and that the price "may" have been different if they knew the order would be subject of an appeal.
We think that this is too speculative to amount to any real prejudice to the respondents should an extension be granted. In deciding not to grant an extension, we have proceeded on the basis that no particular prejudice to the respondents has been established.

Leave to appeal and the appeal itself

It will be apparent from the above reasons that even if we had granted an extension of time we would not have granted leave to appeal on the basis of fresh evidence or any other ground and we would not have allowed the appeal on the basis of error of law on the ground of alleged procedural unfairness.

Orders

For the above reasons, we order as follows: 1. The stay of order 1 of the Tribunal made on 21 January 2019 is lifted 2. An extension of time in which to bring the appeal is refused 3. The appeal is dismissed.

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: 24 September 2019

(C'th) Home Building Act 1989(NSW)

Civil and Administrative Rules 2014(NSW)

Elias v McGauley

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