Ericon Buidings Pty Limited v The Owners Strata Plan No 96597

reasons for decision

1. This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal.
2. The appellants are the builder and developer of a block of units located at Homebush. The respondent to the appeal, and applicant below, is the owners corporation.

The Tribunal Decision

1. By notice of appeal filed on 23 September 2020, the appellants appeal the orders made by Principal Member Rosser on 16 September 2020. The orders were as follows: The Tribunal notes that the applicant does not consent to proposed orders sent to the Tribunal by the respondent. Rather, the applicant proposes to make an application to transfer the proceedings to the Supreme Court of New South Wales. The following orders are made accordingly: 1. The applicant is to file and serve any transfer application, supported by evidence, and submissions, by 25 September 2020. 2. If the respondent consents to the transfer application, it is to advise the applicant by 29 September 2020 and the parties are to file signed terms of agreement by 6 October 2020. 3. If the respondent does not consent to the transfer application: (a) The respondent is to file and serve evidence and submissions in response to the transfer application by 6 October 2020; and (b) The applicant is to file and serve material in reply by 13 October; (c) The parties are to file an indexed and paginated hard copy supplementary joint bundle (in addition to the joint tender bundle referred to in order 8 made on 1 June 2020) by 16 October 2020. 4. A contested transfer application will be heard and determined in the context of the final hearing which is listed on 19 and 20 October 2020. 5. The parties should be ready to proceed with the final hearing as listed, in the event that the transfer application is refused.

The Relevant Chronology

1. The chronology of relevant events leading to the orders is as follows: 1. On or about 18 November 2019, the owners corporation of strata plan No 965597, the respondent to the appeal, commenced proceedings 19/51680 in the Tribunal against the builder and developer who are the appellants in this Appeal (the builders). The owners corporation was seeking damages and/or a work order in relation to alleged defects in an eight-story residential development at Homebush, completed in 2018. 2. On 22 April 2020 the builders' solicitors wrote to the Registry noting that their instructions were that the quantum of the damages sought by the owners corporation would comfortably exceed $750,000, and that they be would applying for an order to transfer the proceedings to the Supreme Court of New South Wales. 3. On 9 September 2020, the builders' solicitors forwarded to the Registry and to the owners corporation's solicitors, a letter attaching a document headed JUDGMENT ORDERS in the following terms: 1 Judgment for the Applicant in the sum of $500,000. 2 The Respondents to pay the Applicant the sum in order 1 on or before 25 September 2020. 3 The Respondents to pay the Applicant's costs of the proceedings as agreed or assessed. 4 The proceedings are otherwise dismissed. 1. The orders were signed by the builders' solicitor, but not by the owners corporation's solicitor. The builders' solicitor's covering letter stated: 3. The Respondents' consent to judgment as contained in the attached orders is made without admission as to liability for any relief the Applicant seeks in the proceedings 4. Should the orders substantially in the form attached not be entered then the Respondents do not intend by the consent or submission of either this letter or the attached orders to concede on any issue of liability or quantum in the proceedings. 1. On 9 September 2020, after the builders' letter had been received, the owners corporation's solicitors also wrote to the Registry, with a copy to the builders' solicitors stating that the owners corporation did not consent to the judgement order and had not signed it. The letter foreshadowed lodging an application transferring the proceedings to the Supreme Court of NSW, because the rectification cost of the defects exceeded $500,000, (the maximum amount that the Tribunal can award as damages), and because of the availability in the Court, but not in the Tribunal, of relief under the Design and Building Practitioners Act 2020. 2. The letter stated that the builders were in breach of prior orders of the Tribunal in that their evidence was six weeks overdue and that the owners corporation had been awaiting this evidence before lodging its transfer application. 3. The letter also requested that the proceedings be listed for further directions and for the hearing of the transfer application, and that no judgment or order be entered against the respondents. 4. On 16 September 2020, the Principal Member made the orders which we have set out above, in chambers. No further correspondence or submissions had been received from either party between 9 and 16 September 2020.

Documents on Appeal

1. The Appeal Panel received an Appeal Book from the appellants' solicitors containing the documents relevant to the appeal. These included the notice of appeal, an amended notice of appeal and reply, affidavits from the parties' solicitors annexing relevant correspondence together with written submissions from the solicitors or counsel. There were also oral submissions on the day of the hearing. The amended notice of appeal included a further ground that the Principal Member had failed to provide any, or any proper reasons in relation to the orders, but this ground was not pressed at the hearing.

Leave to Appeal

1. In their notice of appeal the appellants did not include an application for leave to appeal. They submitted that the orders made by the Principal Member were an ancillary decision and not an interlocutory decision, and therefore s 80(2)(b) of the NCAT Act entitled the appellants' to appeal the decision as of right on any a point of law. They accepted that leave was required if the orders were an interlocutory decision.
2. An ancillary decision is defined in s 4(1) of the NCAT Act as a decision made by the Tribunal under legislation (other than an interlocutory decision of the Tribunal) that is preliminary to, or consequential on, a decision determining proceedings, including: a) a decision concerning whether the Tribunal has jurisdiction to deal with a matter, and b) a decision determining the awarding of costs in proceedings.
3. An interlocutory decision is also defined in s 4(1) of the NCAT Act and includes decisions concerning: (a) the granting of a stay or adjournment, (d) the extension of time for any matter, (e) any evidential matter, (h) the summary dismissal of proceedings, or (i) any other interlocutory issue before the Tribunal.
4. The appellants submitted that the orders were ancillary because they were a decision preliminary to one which would have determined the proceedings, that is, a decision which they said should have been made by the Principal Member to enter judgment for the owners corporation for $500,000 in the terms of the orders proposed by them.
5. The owners corporation's solicitor appeared to accept that proposition when asked by the Appeal Panel, though he opposed the appeal on other grounds. However, we do not agree that the orders made by the Principal Member amount to an ancillary decision. To establish that there was an ancillary decision, the appellants need to identify a decision determining proceedings to which the Principal Member's orders are a preliminary decision. It is not sufficient for the appellants to refer to a decision that they say should have been made but was not made. That is not a decision of the kind which enlivens the definition. In our view the orders were a conventional set of pre-trial directions and, as such, an interlocutory decision.
6. Thus the appellants require leave to bring this appeal. To grant leave, the Appeal Panel must be satisfied, under cl 12(1) of Schedule 4 of the NCAT Act that they 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 Appellants' Primary Ground of Appeal

1. The appellants' primary ground of appeal was that the Principal Member's orders amounted to a refusal by the Tribunal to grant their request that judgment be entered against them for $500,000 and costs. By so refusing, the Tribunal either exercised a discretion that it did not have, or erred in the exercise of that discretion, and that this constituted an error of law.
2. We find that the decision does not amount to a refusal to grant the appellants' request. The appellants' made submissions that a decision not to make the proposed order was implicit in the Principal Member's directions. While it is not explicit whether the decision to make the proposed orders has been declined or allowed, it is clear from the directions that the issue of the transfer is to be decided at the hearing. The decision to accept or decline the transfer application and the decision to enter the proposed orders are interrelated. It is also apparent that the owners corporation was objecting to the appellants' orders being made on the basis that they were seeking a transfer of the matter. The decision did not shut the appellants out of a hearing on the question of whether judgment should be entered. The directions made by the Principal Member made provision for both parties to exchange submissions for the transfer application to be heard at the hearing scheduled for 19 and 20 October 2020. There was nothing preventing the Appellants' from putting their case in relation to the entering of judgement to the Tribunal at that time.
3. The Principal Member's orders do not constitute a decision rejecting the appellants' offer to consent to judgment in the terms contained in their proposed order. The decision did not disentitle the builder from submitting to the Tribunal at the commencement of the hearing, that judgement should be entered in the terms they were proposing, and the matter should not be transferred. The builder remains entitled to make this submission if and when the proceedings are relisted before the Tribunal in the future.
4. The issue as to whether the proposed orders require consent or whether they must be made and the relevance, if any, as to whether the owners corporation was tardy in lodging its transfer application to the Supreme Court, are also all matters that could have been raised at the hearing and determined by the Tribunal and can be raised at any future hearing.

The Appellants' further grounds of Appeal

1. The appellants' made submissions that the Tribunal's discretion miscarried because the Principal Member refused to make the money order proposed by the builder. The appellants relied on two matters. Firstly, they said that the amount of $500,000 offered in their proposed orders, was the maximum amount recoverable as damages in home building claims in the Tribunal. Secondly, they submitted that the proposed order amounted to a tender. As a consequence, the Principal Member had no discretion to refuse to enter judgment, or, at the least, she erred in the exercise of that discretion. In circumstances where we have found that the Principal Member simply adjourned the decision on whether to transfer the matter and did not make a decision about the proposed orders, these grounds are no longer relevant. In any case, for completeness we have dealt with them.

Can an amount greater than $500,000 be recovered under a work order?

1. The owners corporation had sought a work order in the Tribunal pursuant to s 48O(1)(c)(i) of the Home Building Act 1989 (HBA), in the alternative to its damages claim. It is uncontroversial that s 48K of the HBA provides that the Tribunal has jurisdiction to determine a building claim in which the amount claimed does not exceed $500,000. The issue is whether a work order is a building claim under s 48A of the HBA, and therefore whether the $500,000 cap is applicable also to a work order.
2. The appellants submitted that the expression the amount claimed in s 48K must encompass a work order as well as a damages claim, so that the $500,000 limit applied to both. Otherwise "absurd consequences" would result. Firstly, a claimant could seek a work order in the Tribunal for say, $100 million.
3. Secondly, it was submitted that the power to make a work order is discretionary, and the Tribunal may make an order for damages even where a work order only is sought. Thirdly, if work orders for more than $500,000 were not satisfied, and a renewal application is made, damages can be awarded by the Tribunal, which would again be subject to the $500,000 limit.
4. The appellants' alternative submission was that, on its proper construction, a work order is a building claim under s 48A(b) of the HBA. That sub section provides that a building claim includes: (b) the supply of specified services, and they submit that this subsection is intended to refer to a claim for work to be performed in the nature of a work order.
5. The expression the amount claimed is not found in the definition of building claim in s 48A of the HBA, but only in s 48K and thus these words in s 48K do not assist us in construing that definition.
6. In relation to the second submission, s 48O(1)(c)(i) refers to work orders in the following terms: (c) an order that a party to the proceedings (i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement
7. Section 48O(1)(c)(i) refers to both specified work and specified service, but the definition in s 48A(b) refers only to specified services. Work orders are within the ambit of building claims, s48O(1)(c)(i) and have been adopted in the definition in s 48A(b).

Did the Proposed Orders amount to a tender?

1. The appellants submitted that the proposed orders constituted a valid tender to the owners corporation's claim. If there had been a tender, the Principal Member would have had no discretion, and would have been obliged to make orders in the terms of the proposed orders, thus bringing the proceedings to an end.
2. In Nationwide v Franklins [2001] NSWSC 1120, Barrett J at [8] adopting the words of Meagher JA in Australian Mid - Eastern Club v Yassim [1989] 1 ACSR 399, said: ....tender is an answer to a debt claimed if there is a continued readiness to pay, coupled with an actual payment into Court...
3. The appellants said that the Australian Mid - Eastern decision was also authority for the proposition that a tender is effective even if, as was the case here, it is made without admissions or under protest, as long as it is unconditional. They also submitted that although these authorities involved payments made in answer to debt claims, the principles applied also to damages claims, where the amount tendered was the maximum amount recoverable.
4. The threshold question is what constitutes a tender. In our view a tender requires the proffering of cash or a bank cheque, or where appropriate, a payment into court. It may also be accompanied by an offer of a consent to judgment, as is the case in these proceedings, but that alone is not sufficient to constitute the tender. Barrett J's words in Nationwide, which we have set out above, coupled with a payment into court, supports our conclusion that a payment into court, or a payment directly to the creditor, is a necessary element of the tender.
5. The appellants' counsel referred us to a later decision of Barrett J, Globatel v MCI Worldwide [2002] NSWSC 748, where he affirmed his previous decision in Nationwide, and to a recent decision of the Supreme Court of Victoria, Re HGC Properties Pty Limited [2019] VSC 202. Both decisions also related to payments made in answer to liquidated debt claims, and in each case, there had been a payment made to the creditor or into court.
6. In the current proceedings the owners corporation has not received any payment from the Appellants. The $500,000 could have been paid at the time that the proposed orders were lodged with the Registry. Instead, the proposed orders provided that the payment would be made on or before 25 September 2020. That is not an actual payment. At their highest, all that the proposed orders provided, was a judgment in favour of the owners corporation, which, if not satisfied, would involve the owners corporation having to engage in enforcement proceedings.

COSTS

1. The owners corporation foreshadowed that it would be seeking its costs if the appeal were unsuccessful, and included in its written submissions, arguments in favour of the Appeal Panel making a costs order in its favour. The appellants did not make any submissions on costs.
2. Rule 38(2)(b)of the Civil and Administrative Tribunal Rules 2014 provides that, despite the provisions in s 60 of the NCAT Act (requiring there to be special circumstances before a costs order can be made), the Tribunal may award costs in the absence of special circumstances where what is claimed or in dispute in proceedings before the Consumer and Commercial Division exceeds $30,000. Rule 38A provides that on an appeal from that Division, the same cost provisions apply as in the Tribunal below. We have therefore made provision for the exchange of further submissions in the relation to the owner corporation's cost application.

ORDERS

1. The appropriate orders are: 1. Leave to appeal is refused. 2. The appeal is dismissed. 3. The appellants are to provide to the Appeal Panel and to the respondent, any submissions in response to the respondent's cost submissions dated 6 November 2020, by 17 December 2020. 4. The respondent is to provide to the Appeal Panel and to the appellants, any submissions in reply to appellants' cost submissions, by 24 December 2020. 5. Costs will be determined on the papers, unless either party seeks to be heard in person, in which case they should advise the Registry by 4 January 2021, setting out the reasons why, and the Appeal Panel will advise the parties of its decision on whether there will be a further hearing in person as soon as possible thereafter.

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: 11 December 2020