Flat Glass Industries Ltd v MCS Builders Pty Ltd

Preliminary issue - is the appeal out of time?

1. MCS does not accept that the either the notice of appeal or the amended notice of appeal were filed within time. MCS submits that the amended notice of appeal filed on 11 March 2015 was "well after" the statutory appeal period had expired.
2. This submission is misconceived. The decision appealed from was made on 10 October 2014. The appeal was filed on 28 October 2014. The Appeal Panel gave leave for the appellant to file an amended notice of appeal, which operates from the time the appeal was lodged. This was not a new appeal, although the Appeal Panel accepts the grounds were substantially amended.
3. Appeals in respect of residential proceedings must be lodged within 14 days from the day on which the appellant was notified of the decision or given reasons for the decision (whichever is the later). In any other case (as is the case in this appeal), appeals 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): see r 25(4)(b) of the Civil and Administrative Tribunal Rules 2014. Accordingly the appeal was filed within time.

Grounds of Appeal

1. In the amended notice of appeal, FGI's grounds of appeal, in summary, are as follows. 1. There was no evidence to support the findings of fact below. 2. The decision was not fair and equitable. 3. The decision was against the weight of the evidence.
2. The Civil and Administrative Tribunal Act 2013 (the Act) sets out the basis upon which appeals from decisions of the Consumer and Commercial Division may arise under s 80 of the Act. That section states that an appeal may be made as of right on any question of law or with leave of the Appeal Panel on any other grounds (s 80(2)(b)).
3. Schedule 4, cl 12 of the Act says that an Appeal Panel may grant leave only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: 1. the decision of the Tribunal under appeal was not fair and equitable, or 2. The decision of the Tribunal under appeal was against the weight of evidence, or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
4. In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarized at par [71] and par [79] as follows: [71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . . [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred."
5. The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban an Appeal Panel of the Tribunal conducted a review of the relevant cases at pars [65]-[79] and concluded at par [84]: 84. The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
6. Further, as was explained in Pholi v Wearne [2014] NSWCATAP 78 at par [32]: Even if the appellant establishes that [they] may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel then retains the discretion whether to grant leave under s 80(2) of the Act (see Collins v Urban, supra at [80]-[84]). [The appellant] must demonstrate something more than that the Tribunal was arguably wrong. Leave is ordinarily granted only where the matter involves an issue of principle, questions of public importance, where the injustice is reasonably clear or where the Tribunal has gone about its fact finding process in such an unorthodox manner that it is likely to have produced an unfair result.

New Evidence

1. FGI sought leave to rely on evidence which was not relied on before the Tribunal at first instance. This evidence comprised a statement of a director of FGI explaining why no evidence had been provided to the Tribunal, a statement from a manager of FGI who attended the hearing at first instance and gave evidence and an expert report dated 13 February 2015. The statement from the manager raised issues about the installation of the glass, including the use of polysulphide rather than another sealant and the alleged failure of Suncoast to cover the edges of the glass units with glazing. These matters were raised by the manager in his evidence before the Tribunal.
2. MCS objected to this evidence on the grounds it was evidence that would have reasonably been available at the hearing but FGI chose not to file and serve evidence. FGI should not be now entitled to rely on this new evidence to the potential prejudice of MSC. There was no explanation as to why the evidence was not filed other than that FGI had formed the view there was no need to file and serve evidence when MCS had not, in its view, established a case for liability. In response, FGI contended the only evidence served was the email of Mr Jacobs which did not warrant response.
3. The Appeal Panel refused leave for FGI to rely on this evidence. It did not advance the appeal as pleaded. The evidence from its director was by way of a submission, based on the assertion that there was no evidence before the Tribunal on which the finding could be based, or that there was insufficient evidence to discharge the onus. This was of little value as the question is ultimately one for the Appeal Panel. The evidence of the manager was in similar terms to his evidence before the Tribunal at first instance, which was not accepted by the Tribunal. The question for the Appeal Panel was whether the Tribunal at first instance erred at law and, if not, whether leave to appeal should nonetheless be given because there may have been a substantial miscarriage of justice. This generally directs attention to the matters before the Tribunal at first instance, the conduct of the hearing and the adequacy of reasons.
4. To consider new evidence that MCS did not have the opportunity to address, in particular the expert's report, would not only be procedurally unfair but irrelevant to the grounds raised by FGI in its appeal. New evidence is not relevant unless the new evidence demonstrates, as expressly provided in cl 12(a) and (c), that the decision was not fair and equitable (because, for instance, the party was not allowed an adjournment to adduce the evidence) or it was significant but not reasonably available at the time of the hearing. Neither was contended in this case. The expert's report may be relevant to the merits of the case if the Appeal Panel finds error or gives leave to appeal and decides to rehear the proceedings under s 80(3) of the Act. However, the Appeal Panel determined this would be unfair to MCS and if the appeal succeeded the most appropriate outcome would be to remit the matter back to the Consumer and Commercial Division for reconsideration. The Appeal Panel therefore did not have regard to the expert's report.

No evidence to support the findings of fact below

1. It is convenient to deal with the first ground of appeal, which is also relevant to the second and third ground because FGI relies on the same facts.
2. FGI submitted that the Tribunal's decision on liability was primarily based on the email of Dr Leon Jacobs to MCS of 8 March 2014, and that there was no evidence before the Tribunal that the Tribunal's Procedural Direction 3 Expert Witnesses (Procedural Direction) had been brought to Dr Jacob's attention, or that he had complied with the Code of Conduct (being pars [9] to [21] of Procedural Direction.
3. In particular, FGI submitted that the email did not comply with par [16] of the Procedural Direction. That paragraph states the matters which must be included in an expert report or in an annexure to it; namely the expert's qualifications, the expert's qualifications; the facts, and assumptions of fact, on which the opinions in the report are based; the expert's reasons for each opinion expressed; if applicable, that a particular issue falls outside the expert's field of expertise; any literature or other materials used in support of the opinions; any examinations, tests or other investigations on which the expert has relied, including details of the qualifications of the person who carried them out; and, in the case of a report that is lengthy or complex, a brief summary of the report and an acknowledgement that the expert has read the Experts' Code of Conduct and agrees to be bound by it.
4. Accordingly, as there was no expert evidence before the Tribunal, FGI submitted there was no evidence to support the findings of fact by the Tribunal at first instance, being the liability of FGI as manufacturer.
5. MCS submitted that Dr Jacob was a "glazing engineer", a "specialist in double glazed units", whose expertise was confirmed by witnesses Matthew Morris (FGI's Sales Manager) and Courtney James (a director of Suncoast) during the hearing. The Tribunal was entitled to rely on the email of Dr Jacob and was not bound by the rules of evidence. Furthermore, there was evidence FGI had visited the site, had accepted responsibility for an initial unit of faulty glass and had never raised an issue about the use of polysulphide. There was no error or unfairness in the approach taken by the Tribunal at first instance.

Consideration

1. Page 27 of "the Folder" (referred to by the Tribunal in its reasons and being evidence filed by MCS) was an email from Dr Leon Jacob to MCS dated 8 March 2014. The email states: Hi Mr Jones I do not believe that you should be providing these people with a report on the IG unit failure. The responsibility of the failure lies with the original manufacturer. It is their responsibility to demonstrate that the IG unit they manufactured and supplied is not for purpose and that the cause of the failure is indeed a glazing matter. It is not up to you to demonstrate their manufacture was inadequate. Typically in these matters it is the responsibility of the manufacturer to demonstrate that their IG Unit was fit for purpose and that the failure was the result of inadequate or poor quality installation. I do not see why you should bear the cost of having me write a detailed report especially when it is clear that the failure can be attributed to inadequate manufacturing and not installation. I am sure that they recognise that their product has a quality warranty attached to the product. It is their responsibility to demonstrate that improper installation is the cause of the failure. It is their responsibility to also confirm that all the supplied units are suitable for the intended application.
2. In its reasons, the Tribunal stated that, "principally", it relied on (referred to) "the last paragraph" of Mr Jacobs email at p 27 of the Folder. This, literally, is a reference to the last sentence set out above. It is difficult to see how this could be the basis for the Tribunal's finding of liability. That sentence is simply a statement by Dr Jacobs of the manufacturer's responsibilities. Perhaps the reference to the "the last paragraph" should be understood as referring to the second last paragraph. This paragraph relevantly contains is a statement by Dr Jacob of the manufacturer's responsibilities and concludes that "it is clear that the failure can be attributed to inadequate manufacture not installation".
3. We also note that the statements of Dr Jacob that "[i]t is their [ie the manufacturer's] responsibility to demonstrate that the IG unit they manufactured and supplied is fit for purpose and that the cause of the failure is indeed a glazing matter" and "it is not up to you [ie FGI] to demonstrate that their manufacturing is inadequate", are incorrect.
4. The burden of proof lay with MCS (the applicant in the proceedings below) to prove its claim on the balance of probabilities. MCS commenced proceedings against both Suncoast and FGI (as manufacturer and vendor of the products). Suncoast was later discovered to be deregistered, and therefore did not have any legal existence or capacity to be sued. FGI remained as a respondent. MCS bore the onus of proving its claim. It was not "the responsibility of the manufacturer [FGI] to demonstrate that their IG Unit was fit for purpose". Furthermore, it was not "their [FGI's] responsibility to demonstrate that improper installation [was] the cause of the failure".
5. We have set out above the contents of Dr Jacobs' email. Plainly, it did not comply with the Tribunal's Procedural Direction, and it is not an expert report in the sense that that term is understood. Nor should it be considered to be opinion evidence of a person suitably qualified to offer that opinion.
6. No criticism should be made of Dr Jacobs. The email is a response to an email sent the same day by Craig Jones of MCS to Dr Jacobs. Mr Jones' email states that "[w]e have finally had communications with [FGI]. . . . They have asked for a copy of your report. If you could forward the report to us at your earliest convenience, that would be appreciated". It appears that a report had previously been requested. MCS asks for the report to be provided as soon as possible. Dr Jacobs responds by saying that he does not believe that MCS should be providing a report. In his view "[t]he responsibility of the failure lies with the original manufacturer ... it is clear that the failure can be attributed to inadequate manufacturing and not installation".
7. The Appeal Panel considers that the Tribunal erred in relying on those statements to ground its finding that FGI was responsible for the failed glass panels, and that FGI should pay MCS $40,000. It is apparent from its reasons that the Tribunal accepted the statements set out in the email as a statement of expert opinion, in circumstances where no reasoning process is set out, no assumptions articulated and the Procedural Direction not complied with.
8. As the Appeal Panel stated in Auchettl v Kirk [2015] NSWCATAP 6 at [25], referring to Heydon JA (as his Honour then was), in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305, the prime duty of experts in giving opinion evidence as furnishing the Court (or in this case a Tribunal) with criteria to enable the evaluation of the validity of the expert's conclusions. In Makita Heydon JA at [59] referred to the judgment of Lord President Cooper in Davie v The Lord Provost, Magistrates and Councillors of the City of Edinburgh 1953 SC 34 where the Lord President stated that the role of the expert was: to furnish the Judge or jury with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the Judge or jury to form their own independent judgment by the application of these criteria to the facts proved in evidence. The scientific opinion evidence, if intelligible, convincing and tested, becomes a factor (and often an important factor) for consideration along with the whole other evidence in the case, but the decision is for the Judge or jury. In particular the bare ipse dixit of a scientist, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross-examination nor independently appraised, and the parties have invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert."
9. His Honour noted at [60] that: Davie's case is not to be read as reflecting only a principle peculiar to Scottish law. Before it was decided, in R v Jenkins; ex parte Morrison [1949] VicLawRp 51; [1949] VLR 277 at 303, Fullagar J said that an expert witness must "explain the basis of theory or experience" upon which the conclusions stated are supposed to rest, for, as Sir Owen Dixon said in an extra-judicial address quoted by Fullagar J, "Courts cannot be expected to act upon opinions the basis of which is unexplained".
10. In Makita the trial court was bound by the rules of evidence. The Tribunal is not so bound and can inform itself as it see fits: see s 38(2) of the Act. However, the email of Dr Jacobs does not express any reasoned opinion about the manufacturing of the glass panels. His statement that "[t]he responsibility of the failure lies with the original manufacturer" appears to be precisely the "bare ipse dixit" so criticised by Lord President Cooper.
11. FGI submitted that because the email had no probative value there was no evidence on which the finding could be based and this was an error of law (Australian Broadcasting Tribunal v Bond (1990) 21 ALD 1 and Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390). MCS submitted there was evidence capable of supporting such a finding, which included not only the email but evidence from Suncoast.
12. The finding that the failure of the glass units was a manufacturing flaw rather than an installation error was significant. It was the critical issue in dispute. There was opposing evidence between Suncoast and FGI about the cause of the failure. The Tribunal did not refer to the evidence of Suncoast in the reasons but did refer to the evidence of FGI, which was expressly rejected. While it is not entirely clear from the reasons, it appears that the Tribunal resolved the controversy by placing reliance on the email of Dr Jacobs. In our opinion, the email of Dr Jacobs was an inadequate basis for the Tribunal to find that the failure of the glass panels was a manufacturing flaw. It had no probative value and certainly could not be elevated to the status of 'expert evidence'. Where there is was no evidence capable of supporting a finding, there is an error of law. However, as observed in Fordham v Davies [2014] NSWCATAP 60 at [22] citing the relevant authorities, "once there is some evidence for a finding, any error is one of fact not law". As such, if it could be said there was some evidence to support the finding, by inference being the evidence of Suncoast, it may be argued the finding of the Tribunal was an error of fact rather than law.
13. In our view, the characterisation of the error is not material to our conclusion about the most appropriate outcome in this case. The error of the Tribunal, in accepting the email as the basis to found the liability of FGI is sufficiently significant to warrant allowing the appeal. The error was either an error of law or the decision should be set aside on the basis that FGI may have suffered a substantial miscarriage of justice. FGI relies on both cl 12(a) and (b) of Schedule 4. Where a Tribunal at first instance determines it is satisfied a party has discharged its onus primarily on the basis of material that can have no probative value, such a decision would be "not fair or equitable" (cl 12(a)) because it would have been "unreasonably arrived at" or may have resulted from the Tribunal "having gone about the fact finding process in such an unorthodox manner" that it would be in the interests of justice for it to be reviewed (Collins v Urban at [84]). Alternatively, it may be said the decision was "against the weight of evidence" (cl 12(c)), although in a case where the Tribunal finds the onus is discharged by relying on material with no or little probative value, it is more difficult to characterise the case as one where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach: see Collins v Urban at [77].
14. For the above reasons, we have reached the conclusion that the appeal should be allowed and the matter should be remitted to the Tribunal, for a rehearing. If it is necessary to grant leave to appeal in order to allow the appeal we grant that leave. A directions hearing should be held to deal with issues of the evidence to be relied on at the rehearing.

Costs

1. FGI filed its notice of appeal on 28 October 2014. The grounds of appeal were stated as: That there were never any proceeding before the Tribunal. On commencement of this matter, the applicant named Suncoast as respondent. Suncoast did not exist. On 1 September 2014, the Tribunal ordered Flat Glass Industries Pty Ltd ("FGI") be joined. FGI does not exist.
2. MCS filed a reply to the notice of appeal on 14 November 2014.
3. A directions hearing was held on 23 April 2015. Leave was granted to FGI for the filing of the amended notice of appeal, which had been lodged with the Registry on 11 March 2015. The issue of costs was reserved at the time leave was granted.
4. MCS have sought an order that FGI pay their costs of the appeal. They state in their submissions at par [10] filed 2 April 2015 that: c. The Appellant has now wholly withdrawn its notice of appeal filed 27 [sic - 28] October, 2014 . . . by the filing of its amended Notice of Appeal (filed 11 March, 2015 [dated 12 March, 2015]), which has, in any event, been filed well out of time (with no extension sought). Further, beyond simply amending the Appellant's name from Flat Glass Industries Pty Ltd ("FGIPL") to Flat Glass Industries Ltd ("FGIL"), it seeks to add a co-Appellant, Alternate Glass Supplies Pty Limited ("AGS") and then introduces wholly new grounds of appeal. d. The amended Notice of Appeal was filed only after the Respondent's legal representative, Michael Siderowitz, at the callover before Principal Registrar [sic - Member] Redfern on 26 February, 2015, raised the issue of the description of FGIPL in Notice of appeal filed 27 [sic - 28] October, 2014 and submitted that, as it stood, the appeal was incompetent and ought to be struck out with costs.
5. Costs in this jurisdiction are governed by s 60 of the Act. That section provides that: (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant.
6. Section 60 has been considered in many recent decisions: see for instance CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120; Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48; and Rose Nettis Pty Ltd v Three Tall Trees Pty Ltd [2015] NSWCATAP 51. As the Appeal Panel noted in eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]: The authorities considering the meaning of the expression "special circumstances" were recently reviewed in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]- [31]. From those authorities, it can be seen that "special circumstances" are circumstances that are out of the ordinary, they do not have to be extraordinary or exceptional. Further, the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. Each situation must, of course, be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs.
7. The respondents rely on ss 60(2), (3)(a), (b) and (e) of the Act.
8. We are not persuaded that there is any substance in the submission that the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance (s 60(3)(e). As the Appeal Panel noted in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [37]: As to the submission that the appeal was frivolous or vexatious or otherwise misconceived or lacking in substance, in Attorney General v Wentworth (1988) 14 NSWLR 481 at 491 Roden J stated that proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought; brought for collateral purposes and not for the purpose of having the court adjudicate on the issues to which they give rise, or if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless. That decision has been followed in many cases: see for instance Attorney General v Bhattarcharya [2003] NSWSC 1150 and Attorney General v Betts [2004] NSWSC 901. While those cases are authorities concerning whether or not a litigant should be prevented from commencing proceedings, except with the leave of the court, by reason of habitually and persistently instituting vexatious proceedings, the passage of Roden J referred to provides a useful approach to understanding the concept of proceedings being frivolous or vexatious or otherwise misconceived or lacking in substance.
9. However, we do consider that the appellant has conducted the proceedings in a way that unnecessarily disadvantaged the respondent. It seems to the Appeal Panel that the appellant entirely recast its appeal, after the respondents had already gone to the expense of obtaining advice and then filing its reply to the notice of the appeal. We also note that a further directions hearing was required after FGI foreshadowed and then later filed its amended notice of appeal.
10. The factors set out in s 60 refer, in essence, to disentitling conduct of a party. The short submissions provided by the respondent on this issue persuade us that there are special circumstances warranting an order that the respondents pay the respondents' costs of the proceedings thrown away by the filling of the appellant' amended notice of appeal.

Orders

1. For the above reasons, the Appeal Panel makes the following orders. 1. The appeal is allowed, and the orders made below set aside. 2. Remit the matter to the Consumer and Commercial Division of the Civil and Administrative Tribunal to be determined in accordance with these reasons and otherwise according to law. 3. The appellant is to pay the respondents' costs of the appeal thrown away by the filing of its amended notice of appeal, as agreed or assessed. Principal Registrar

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: 22 July 2015