Florida Kitchens Centre Pty Ltd v Keith

NCAT Appeal Panel|2015-12-10

Solicitors: Cadmus Lawyers, Mr G Elias (Appellant Bradbury Legal, Mr B Hoffman (Respondent) File Number(s): AP 15/65162 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 12 November 2015 Before: M Harrowell, Principal Member File Number(s): HB 14/61674 and HB 15/56943

Background

The appellant, Florida Kitchen Centre Pty Ltd, seeks leave to appeal from an interlocutory decision, being procedural directions made by the Consumer and Commercial Division on 12 November 2015.
The directions related to the preparation for hearing of a building dispute between the respondent to this appeal, Mr John Robert Keith, and Florida Kitchen Centre. Mr Keith is the applicant in proceedings commenced against Florida Kitchen Centre on 19 December 2014 for compensation in the sum of $95,700 for, amongst other things, alleged failure to perform building works, failure to provide home owners warranty insurance and failure to manufacture and deliver works and materials with the required finishing. These proceedings are file no HB 14/61674.
Florida Kitchens Centre also commenced proceedings, by way of cross application. These proceedings are file no HB 15/56943.
The directions made by the Tribunal required Florida Kitchen Centre to provide access to its manufacturing facility for the purposes of Mr Keith's expert inspecting the facility and preparing a report for use in the proceedings.

Grounds of appeal and submissions of the parties

Florida Kitchen Centre contended leave should be given and the orders should be set aside because the Tribunal at first instance made a number of errors of law in making the orders, including taking into account irrelevant considerations, failing to acknowledge access had been already been granted by Florida Kitchen Centre on 17 July 2015 and making orders which amounted to a "commercial prejudice" against Florida Kitchen Centre. It was contended that Principal Member Harrowell should have disqualified himself from conducting the procedural directions and he acted in a "spiteful, vindictive and prejudicial manner against Florida Kitchen Centre by making unnecessary unrelated and irrelevant orders beyond the pleadings and points of claim". It was further contended that the Tribunal failed to give sufficient weight to submissions made by Florida Kitchen Centre and failed to provide reasons for its interlocutory orders. The orders made in relation to the manufacturing facility were said to be irrelevant to the matters pleaded and therefore amounted to a fishing expedition.
In oral submissions, Counsel for Florida Kitchen Centre expanded on these contentions and submitted that the principal reasons why leave should be given and the orders set aside were because, firstly, inspection of the manufacturing facility by the expert was not relevant to any issue in dispute between the parties, secondly, there was an inconvenience and cost to Florida Kitchen Centre in providing access before Christmas and, thirdly, the manufacturing facility would give the expert and Mr Keith access to trade secrets about the special finish applied by Florida Kitchen Centre to its kitchens.
In summary, Mr Keith submitted that the issue the subject of the application for leave had already been determined by the Appeal Panel on 9 November 2015 and this dispute had been the subject of multiple orders by the Consumer and Commercial Division and the Appeal Panel. The current appeal was therefore an abuse of process and should be dismissed (referring to Bakarich v Commonwealth Bank of Australia (No 2) [2012] NSWCA 390). Even if the appeal was not an abuse of process, there was no basis for leave to be granted and the appeal should be dismissed.

Relevant legal principles

The Tribunal has broad discretion under s 38 of the Act to determine its own procedure and in so doing the Tribunal must seek to give effect to the "guiding principle" (s 36(2) of the Act). The "guiding principle", which is set out in s 36(1), is to "facilitate the just, quick and cheap resolution of the real issues in dispute in the proceedings". Relevantly, s 36(4) provides: In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.
In furtherance of these principles, each Division of the Tribunal uses case management procedures to manage its workload through identifying the issues in dispute, making directions about the conduct of the hearing and, from time to time, making directions that parties do certain things. Parties to proceedings are under a duty to co-operate with the Tribunal to give effect to the guiding principle and to participate in the processes of the Tribunal and comply with directions and orders made by the Tribunal (s 36(3)).
In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel summarised the general principles for when leave to appeal should be granted under s 80(2) at [84]. Ordinarily it is appropriate to grant leave to appeal only in matters that involve issues of principle, questions of public importance or matters of administration or policy which might have general application, an injustice which is reasonably clear, a factual error that was unreasonably arrived at and clearly mistaken; or that the Tribunal went about its fact finding process in such an unorthodox manner that it produced an unfair result.
Relevantly, the Appeal Panel, citing BHP Billiton Ltd v Dunning [2013] NSWCA 421, observed that in applications for leave relating to a question of practice and procedure, the application is "to be approached with restraint" by an appellate jurisdiction "especially if the application is made during the course of the hearing". In BHP Billiton v Dunning, Young AJA stated at [68] that the Court "must be watchful to ensure that its jurisdiction to review is not made the instrument of delay".
The Appeal Panel adopted this approach in Kitchen Centre Pty Ltd v Keith (supra), stating at [26] to [28] as follows: 26 …. The principles in relation to granting leave have been summarised by the Tribunal on several occasions including in Commissioner of Police v Fine and Independent Liquor and Gaming Authority [2014] NCATAP 24 at [17] to [22]. The general principles are that an applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at, but more specifically, in relation to issues of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of the hearing. That is the situation in these proceedings. 27 The proceedings are ongoing and the matter is listed for hearing on 25 November 2015. Leave to appeal against interlocutory decisions, especially in the nature of directions for parties to prepare the matter for hearing, is reserved for cases with special features warranting appellate review. 28 The courts have made it clear that where the statute, in this case the Civil and Administrative Tribunal Act, imposes a leave requirement, such appeals are not to be brought as a matter of routine. While it is unnecessary and unwise to lay down rigid and exhaustive criteria, there is a general requirement that there be an error of principle and a risk of substantial injustice if leave were not granted.
Leave to appeal was refused by the Appeal Panel because Florida Kitchen Centre the Appeal Panel was not satisfied that there was any error of principle or a risk of substantial injustice (see [29] to [32]).

Consideration

Florida Kitchen Centre's grounds of appeal allege apprehended bias and vindictiveness by the Principal Member Harrowell who was said to have taken "an unexplained personal interest in the matter". The grounds do not point to any matters of substance, other than unsupported allegations that the Principal Member made the directions for access in retaliation for the application by Florida Kitchen Centre for him to disqualify himself at the directions hearing of 2 November 2015.
This claim is a serious one that was not substantiated by any material provided by Florida Kitchen Centre in support of the application for leave to appeal. Relevantly, this assertion was not supported by the objective facts.
Mr Keith had commenced his proceedings in December 2014. As noted by the Appeal Panel in Kitchen Centre Pty Ltd v Keith at [25] directions made by Principal Member Harrowell on 28 September 2015 were made in the context of the case management of a matter which had a "considerable history". This history resulted in the Tribunal making orders against Florida Kitchen Centre on 7 August 2015 for the payment of $95,700. While the Appeal Panel set aside this order because it was beyond power, it is apparent that there was significant dispute between the parties about procedural directions. The Appeal Panel also noted at [25] that these directions were "but one of the numerous sets of directions made in the proceedings".
Given the history of the matter, it is unsurprising that the Principal Member of the Consumer and Commercial Division continued to case manage these proceedings. The directions made on 2 November 2015, as varied by the directions on 12 November 2015, provided detailed directions about the date and time for inspection of the manufacturing facility of Florida Kitchen Centre. The period for the inspection was restricted to a three hour period from 3pm. There was also provision made for occupational health and safety issues.
Florida Kitchen Centre also complained that Principal Member Harrowell did not provide reasons for the directions and that he failed to properly take into account that the manufacturing facility was irrelevant to the issues in dispute between the parties as disclosed by the pleadings.
As noted in Jansen Laundry Systems Australia Pty Ltd v Raskopoulos [2015] NSWCA 352 at [17]: The extent of the duty to give reasons depends on the nature of the particular decision, the circumstances in which it is made and the purpose that the statement of reasons is intended to serve. In many procedural applications, there is no need for the court to provide any or detailed reasons. Here, when the relevant orders were announced on 6 and 8 May 2015, there were no reasons provided, that was obvious, and there was no request that they be provided. If a party is considering a challenge to interlocutory orders made in pre-trial directions or in the course of a trial, and it is apparent that the primary judge does not propose to give reasons, a request for reasons should be made at the time or as soon as possible thereafter. In this case the absence of reasons for the orders made, in circumstances where there is no obvious error in the exercise of the relevant discretion and no real utility in the pursuit of the proposed appeal, has not resulted in any substantial injustice to the applicants.
Principal Member Harrowell provided reasons for the directions made on 28 September 2015. In his reasons, Principal Member Harrowell set out the basis for the directions made. The reasons are lengthy, being 66 paragraphs, and set out in some detail why inspection of the manufacturing facility of Florida Kitchen Centre was considered by Mr Keith to be relevant to the issues in dispute. Relevantly, it was noted at [43] that "the incapacity of the respondent to manufacture high quality cabinetry work may amount to a breach of contract". Principal Member Harrowell identified the issues in dispute at [44] and explained how expert evidence may assist the Tribunal and the parties at [45] to [50]. The orders made on 12 November 2015 were simply a variation of the orders made on 2 November 2015, which in turn were a refinement of the orders made on 28 September 2015. The orders of 28 September 2915 required the parties to meet at the manufacturing facility to inspect the works, materials and manufacturing facility and prepare an agreed joint report. The orders made on 12 November 2015 abandoned the notion of an agreed joint report and provided specific directions about the date and time for the inspection.
Having regard to these lengthy reasons in respect of the previous similar orders for inspection, the failure of Principal Member Harrowell to provide reasons for the directions made on 12 November 2015, particularly when there was no request, discloses no error or risk of substantial injustice. Florida Kitchen Centre well knew why the orders were made. It appealed those directions and its application for leave, and appeal, was dismissed. Florida Kitchen Centre may dispute the relevance of the manufacturing facility to the claim but it was nonetheless an issue raised by Mr Keith that Principal Member Harrowell considered could be argued at the final hearing. Accordingly, the complaint about reasons and the contention that the directions made are not relevant to any issue in dispute between the parties, are not made out.
As noted by the Appeal Panel in Kitchen Centre Pty Ltd v Keith at [29] and [31] if Florida Kitchen Centre wishes to argue that particular expert evidence is not relevant, this can be addressed at the final hearing. If the Tribunal relies on this evidence in making final orders, any error may be remedied by Florida Kitchen Centre appealing the final orders.
Florida Kitchen Centre was unable to point to any irreversible prejudice or damage or risk of substantial injustice to warrant reviewing the procedural directions made by the Tribunal at first instance. It was contended by Florida Kitchen Centre that there was cost and inconvenience in complying with the access orders. However, the orders provided for inspection to take place near the end of the day for a limited period and allowed the expert to undertake access and inspection in an area designated for this purpose. There was no evidence provided to establish that the access would unduly interfere with the manufacturing process. In any event, if it is subsequently established that any expert evidence was irrelevant or a waste of time, this can be remedied by a costs order in favour of Florida Kitchen Centre. It is inefficient for the Appeal Panel, or indeed the Tribunal when making directions, to adjudicate on what may be the critical issues in dispute between the parties that are best left to final hearing.
It was also contended that giving Mr Keith, or his expert, access to the manufacturing facility would prejudice trade secrets of Florida Kitchen Centre. Even though the issue of access has been the subject of dispute since at least 28 September 2015, this issue has not been previously raised, a fact conceded by Counsel for Florida Kitchen Centre during the hearing of the leave application. There was no material provided as to how access would disclose the alleged trade secrets. Mr Keith is not a competitor of Florida Kitchen Centre and any expert would be subject to implied undertakings restricting use of the information obtained for the sole purpose of providing an expert report. If this had been a serious consideration for Florida Kitchen Centre, one would have thought that its legal representatives would have raised the issue earlier and proposed confidentiality undertakings, which the Tribunal may well have accepted. Relevantly, this was not a matter argued before the Appeal Panel in Kitchen Centre Pty Ltd v Keith. This ground was therefore rejected.
In summary, the Appeal Panel refused leave to appeal because the directions made on 12 November 2015 were procedural directions for the purposes of preparing the proceedings for hearing. It is not consistent with the guiding principle of the Act to grant leave to appeal against case management directions unless there are special circumstances warranting leave. There were no such circumstances established by Florida Kitchen Centre in this case. If the issues raised about the manufacturing facility are ultimately not relevant to the issues in dispute, this can be raised at the final hearing or in any appeal.

Costs

Mr Keith submitted that Florida Kitchen Centre should be ordered to pay the costs of the appeal because the application was an abuse of process, the issue already having been determined by the Appeal Panel on 9 November 2015. While the previous Appeal Panel did not make an order for costs, it warned at [35] that the Appeal Panel may take a different view on costs if Florida Kitchen Centre continued to fail to comply with directions of the Tribunal. The application for leave had no tenable basis and was vexatious and lacking in substance. Mr Keith had incurred significant costs in responding to the appeal in circumstances where Florida Kitchen Centre lodged its application for leave and an urgent stay on the last business day before inspection was due to take place. This was designed to delay inspection, which it did.
Florida Kitchen Centre submitted there should be no order as to costs. In brief, Florida Kitchen Centre contended that the access order dealt with in the previous appeal was different from the order made on 12 November 2015. The current appeal was lodged to protect its business interests and the confidentiality of its business operations.
Costs in this jurisdiction are governed by s 60 of the Act. This section provides that: 60 Costs (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.
Section 60 has been considered by the Appeal Panel in a number of cases: see, for instance, CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 and Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120. 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.
Taking into account the matters referred to in s 60(3), the submissions of the parties and the matters previously raised by the Appeal Panel in Kitchen Centre Pty Ltd v Keith I am satisfied that there are "special circumstances" warranting the displacement of the usual order that each party is to pay their own costs for the following reasons: 1. Florida Kitchen Centre conducted the appeal in a way that unnecessarily disadvantaged Mr Keith (see s 60(3)(a)). The appeal, and urgent stay application, were not lodged until the Friday before the directions were due to be executed. While it is true Florida Kitchen Centre had 28 days in which to lodge the appeal, there was no explanation as to why the appeal could not have been lodged in a timely fashion. The delay of several weeks in lodging the appeal and applying for a stay created unnecessary urgency. 2. Despite requesting an urgent stay, the legal representative for Florida Kitchen Centre was not available to participate in the urgent hearing. Mr Keith was represented his lawyer who attended the hearing in person. To delay in lodging an appeal until the 11th hour, request an ex parte stay and then to fail to be available when the matter was urgently listed for hearing, not only unduly prejudiced Mr Keith but inconvenienced the Appeal Panel. This is particularly relevant given that the urgency was created by the conduct of Florida kitchen Centre, or its legal representatives. 3. Even though there was a delay in lodging the appeal, Florida Kitchen Centre did not provide any material to support the very serious contentions that were made, other than written submissions asserting matters that were ultimately not substantiated. 4. The application for leave to appeal was made against directions which were in similar terms to the directions made by the Tribunal on 28 September 2015. This appeal was dismissed on 9 November 2015 and ex tempore reasons were provided to Florida Kitchen Centre on the day of the appeal hearing. The submission that the orders made on 12 November 2015 were different from the orders made on 28 September 2015 is incorrect. Examination of the various orders reveals that there is little difference of substance. Both directions provided for inspection of the manufacturing facility of Florida Kitchen Centre. The only new issue alleged was the commercial sensitivity of the facility. It is unclear why this was not raised in the previous appeal or why this issue could not otherwise be addressed by confidentiality undertakings. Moreover, it was not apparent that there were any efforts made by Florida Kitchen Centre, or its legal representatives, to resolve such disputes. As such, the appeal was weak, raised substantially the same issues that had been raised in Kitchen Centre Pty Ltd v Keith only a month earlier and was lacking in substance (see s 60(3)(c) and (e)). 5. The delay in lodging the appeal caused the inspection date set by the Tribunal to be further delayed, which no doubt has incurred further costs and delay to Mr Keith in pursuing his claim (see s60(3)(a) and (g)). It is also relevant that the Appeal Panel warned Florida Kitchen Centre about future non-compliance and observed that the second appeal was a "weak one" at [34] (see s 60(3)(g)).

Conclusion and orders made

On 10 December 2015, the Appeal Panel: 1. Refused leave to appeal; and 2. Dismissed the appeal.
Having regard to the foregoing matters, the Appeal Panel makes an order for costs against Florida Kitchen Centre in favour of Mr Keith, as agreed or assessed in accordance with s 60(4)(b) of the Act.

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: 08 March 2016

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