Gunn & Anor v Steain & Ors

PARTIES : Eric Steain (First Defendant)

E Steain Investments Pty Limiyted (Second Defendant)

Consumer Trader & Tenancy Tribunal of New South Wales (Third Defendant) FILE NUMBER(S) : SC 30011/2003 Ms M Dolenec (Plaintiffs) COUNSEL : Mr W S Veitch (First & Second Defendant) Ms C Turnbull Turnbull Bowles Lawyers (Plaintiffs)

SOLICITORS : Ms My-Linh Nguye Forshaws Neil (First & Second Defendants)

Submitting Appearance (Third Defendant)

LOWER COURT CTTT JURISDICTION : LOWER COURT HB 01/75749 FILE NUMBER(S) : LOWER COURT Tribunal Member Christine Paull JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30011/2003 - PATRICK GUNN & ANOR v ERIC STEAIN & ORS

JUDGMENT (Appeal decision of CTTT - preliminary issue - costs) 1 MASTER: By amended summons filed 29 April 2003, the plaintiffs seek orders in the nature of certiorari quashing the decisions of the third defendant made on 6 January 2003 and 14 April 2003; and an order in the nature of mandamus that the third defendant hear and determine the plaintiffs' claim. A declaration that the third defendant has jurisdiction to hear the plaintiffs' claim; a declaration that the plaintiffs' claim was lodged within three years of the date on which the supply of building goods or services the subject of the claim was made by the first and/or second defendant; a declaration, in substitution of the third defendant's decision dated 6 January 2003, that there was a contract between the plaintiffs and the first defendant; a declaration, in substitution of the third defendant's decision dated 6 January 2003, that there was a contract between the plaintiff and the first defendant; a declaration, in substitution of the third defendant's decision dated 14 April 2003, that firstly, if the third defendant has no jurisdiction to hear and determine the claim, it has no jurisdiction to make any order with respect to costs; and secondly, the first and/or second defendants were estopped from asserting that there was no jurisdiction for the third defendant to hear the claim, or alternatively have waived any right to assert that the third defendant lacked jurisdiction, or in the alternative, an order in substitution of the third defendant's orders dated 14 April 2003 that firstly, each party pay its own costs of the proceedings in the Tribunal; or secondly, the first and/or second defendant pay the plaintiffs' costs of the proceedings below. 2 The plaintiffs relied on the affidavit of Patrick Gunn sworn 17 March 2003. The third defendant filed a submitting appearance. The first plaintiff is Patrick Gunn. The second plaintiff is Lesley White. The first defendant is Eric Steain. The second defendant is E Steain Investments Pty Limited the Third defendant is the Consumer Trader and Tenancy Tribunal of New South Wales (CTTT). The List Judge referred this matter to a Master for hearing. 3 Section 65(3)(b) Consumer, Trader and Tenancy Tribunal Act 2001 (the Act) provides that relief can be granted by way of a judgment or order in the nature of prohibition, mandamus, certiorari, and a declaratory judgment or an injunction if in relation to the hearing or declaration of the matter, a party had been denied procedural fairness. 4 Section 67 of the Act allows for an appeal to be made to this court on a question of law. An appeal may only be made with leave of the court. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal. The onus lies on the plaintiff to demonstrate that there has been an error of law. Section 67(3) of the Act provides that after deciding the question of the subject of an appeal the court may, unless it affirms the decision of the Tribunal on the question that should have been made by the Tribunal, remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal.

Grounds of appeal 5 On 14 and 15 October 2002, proceedings No HB 01/75749 were heard in the CTTT. On 6 January 2003, Tribunal Member Christine Paull dismissed the plaintiffs' claim on the grounds that the Tribunal had no jurisdiction to hear and determine the claim (the first decision). On 14 April 2003, Tribunal Member Paull made an order that the plaintiffs pay the costs of the first defendant (the second decision). The plaintiffs' counsel helpfully has refined and set out the grounds of appeal in her submissions. The first decision involves a jurisdictional issue. The second decision relates to costs. I shall refer to them in sequential order. 6 The plaintiffs submitted that the decision dated 6 January 2003 should be quashed on the basis that the Tribunal Member erred in her findings on jurisdiction and the plaintiffs were denied procedural fairness as the limitation issue was only raised by the defendants at the conclusion of the hearing. As the applicants are the plaintiffs in these proceedings, I shall for convenience refer to them as the applicants in this judgment. 7 On 29 May 2000, the applicants filed an application in the Tribunal seeking the sum of $45,937.00, for the costs of repairing defective plumbing works performed by the first defendant. The defective work was not discovered until the pool was completed and commissioned in October 2000. 8 The applicants submitted that it was not until the conclusion of the two day hearing on the merits of the case, that the defendants raised the issue that the Tribunal did not have jurisdiction to determine the claim because the claim was lodged more than three years after the supply of building goods or services and this constituted a denial of natural justice. 9 Mr Steain (the first defendant) is the director of a company which carries out a pool cleaning and pool repair business. Before the Tribunal Member it was common ground that the applicants and first defendant had a longstanding friendship. In 1994, Mr Gunn and Ms White were intending to build a pool. In 1994, an agreement was made which involved Mr Steain recommending particular trades persons to carry out various work in relation to the construction of the pool and his company purchasing some building materials on the applicants' behalf. It was also agreed that Mr Steain personally perform the plumbing work. Between 1997 to sometime in 2000, the pool work slowed down considerably. In 2000, Mr Steain returned and made arrangements for the pebblecreting to be undertaken. The pool was completed in October 2000. Mr Steain did not receive any payment and there is no written contract nor insurance provided in relation to the pool as required by the Home Building Act (HBA) (J p 3). 10 The relevant provisions of the HBA were those contained in the now repealed sections 89A-C. For all practical purposes, the current definitions of a building claim, residential building work and building goods and services are similar, if not identical to the provisions they replace. 11 In particular, s 48A of the HBA provides: "Definitions (1) In this Part: "building claim" means a claim for: (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services, whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. "building dispute" means a dispute about building goods or services that may be the subject of a building claim, "building goods or services" mean goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services: (a) supplied by the person who contracts to do that work, or (b) supplied in such circumstances as may be prescribed to the person who contracts to do that work. (2) …" 12 Also in s 3(1) of the HBA "residential building work" is defined as meaning: "any work involved in, or involved in co-ordinating or supervising any work involved in: (a) the construction of a dwelling, or (b) the making of alterations or additions to a dwelling, or (c) the repairing, renovation, decoration or protective treatment of a dwelling. It includes work declared by the regulations to be roof plumbing work or specialist work done in connection with a dwelling and work concerned in installing a prescribed fixture or apparatus in a dwelling (or in adding to, altering or repairing any such installation). It does not include work that is declared by the regulations to be excluded from this definition." 13 "Residential building work" has been defined as building work in pursuance of physical construction or alteration of a dwelling. The work must be involved in co-ordinating or supervising any work in the construction of a dwelling- see Woolfe v Sussman [2001] NSWSC 702 and Collings Homes Pty Limited v Head [2002] NSWSC 1219. 14 The definition of owner-builder is contained in s 3 of the HBA which states: " owner-builder means a person who does owner-builder work (within the meaning of Part 6) and who is issued an owner-builder permit for that work." 15 The applicants submitted that they did not fall within the definition as they had not been issued with an owner-builder permit. Thus according to the applicants, regulation 8(f) of the Home Building Regulation 1997 does not apply so that the supervisory work carried out by the defendant on the pool was not in fact exempt from the HBA. A person supervising owner-builder work for no reward or other consideration is declared to be excluded from the definition of residential building work pursuant to Reg(8)(1)(f)(ii). 16 In this regard, the Tribunal Member said: "Coming to this finding I am not convinced that anything turns on the fact that the applicants did not have owner-builder permits and that definition of "owner-builder" in s3 refers to someone "who is issued an owner-builder permit for that work". I take this qualification to be a deeming provision and not a pre-requisite to what constitutes an owner-builder.To do otherwise would lead to an absurd result whereby people, could elect not to obtain such a permit so as to avoid the legislative requirements as to insurance, education and the disclosure provisions in sale contracts (ss 31(2)(d) 95, 95(2A) of the HB Act)." 17 The Tribunal Member's finding that the applicants' were owner-builders accords with the legislative spirit of the HBA. In Minister Fay Lo Po's second reading speech to Parliament on 30 October 1996 regarding amendments, of which the definition of "owner builder" was a part, she emphasised at 5541-2 the importance of the requirement for insurance, particularly with respect to owner builders. Part of the reason for this was to provide protection for subsequent purchasers. 18 As the Tribunal Member said, to interpret the definition of owner builder in s3 as a pre-requisite to what constitutes an owner builder would potentially result in persons electing not to obtain permits so as to avoid legislative requirements in the HBA as to insurance (s 95) and also education (s 31(2)(d)), and disclosure provisions in sale contracts (s 95 (2A)). Such an interpretation would frustrate the purpose of the legislation. Where there is ambiguity surrounding Parliamentary intention in a statute, a court should prefer the construction which appears to achieve the legislative purpose rather than one that appears to defeat or frustrate that purpose: New South Wales v Macquarie Bank Ltd (1992) 30 NSWLR 307, Kirby P at 319. 19 In relation to the jurisdictional issue, the application was lodged on 21 May 2001. Thus, the building claim had to arise after 21 May 1998. Section 48K(3) of the HBA provides: "(3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made)." 20 The plaintiff submitted that even if the Plaintiffs were deemed to be owner-builders, the Tribunal found that Mr Steain performed physical and supervisory work. Further as Clause 8(1)(f) applies to 'supervision only' the work could not be excluded from the definition of residential building work. The plaintiff further submitted that the Tribunal erred in finding that the work was of a supervisory or a physical nature only and that the findings of the work performed (at page 5 of the decision) are also characterised as 'co-ordination' of "residential building work". 21 The Tribunal Member concluded: "From the above I conclude that Mr Steain's role under the agreement was two fold. One was to actually do specific building work. The other was to play a role in the overseeing and direction of the construction of the pool by recommending contractors, obtaining quotes, making payments on the applicants behalf, making assessments of and ordering the materials required, being present when some of the contractors were doing their work and I am satisfied, having some input in overseeing the work done by the contractors on those occasions. Viewed within the context of the HB Act, in particular the definition of "residential building work" in s 8 of that Act, I would characterise Mr Steain's role as to physically construct some components of the pool work and to supervise other parts of that work." (J p 8) 22 And at 17: "The evidence of the applicants and Mr Steain was that he returned to the site to oversee the completion of the pool. This ranged from organising the pebblecreting to what Mr Gunn has described as turning "on the system that expelled water from the jets in the side of the pool" (see Mr Gunn's statement at paragraph 20). These are services which in my view can be classified as the "supervising " of "owner-builder work for no reward or other consideration" which is exempt under clause 8 (f) of the HB Regulation.

Even if this was not the case, Mr Steain did this work in 2000 after some 1½ to 2 years absence from the site. Once again, it is my view that this work does not have a sufficient nexus to the physical building services (i.e the plumbing work, laying the waterline tiles and installing the filtration system) Mr Steain supplied to the applicants in 1995-1997 under the agreement, so as to constitute the last date of "supply" of those services, from which the 3 year statutory limitation is to run." 23 These findings were helpfully summarised at the end of the Tribunal Member's judgment. Thus the Tribunal Member held that there were two distinct components of work performed in two periods of time. Initially Mr Steain carried out physical work, obtaining quotes and he oversaw work done by contractors and the like. During the second period of work, namely in 2000, the work carried out by Mr Steain was held to be of a supervisory nature. As it was for no reward, the second period of work was exempt from falling within the definition of residential building work. On the facts as found by the Tribunal Member, she was entitled to come to the conclusions that she did in relation to the last day of supply and also that the second period of work was supervisory in nature. There is no error of law. 24 In relation to a denial of procedural fairness, the applicants submitted they were not given an opportunity to call further evidence on the limitation point. It may not have been possible for the defendant to make the submission that work was performed well outside the three-year period referred to in s 48K(3), until all the evidence of the witnesses had been adduced. When this jurisdictional issue arose, the parties were given the opportunity to make written submissions. They adopted this course and neither party requested that Tribunal Member re-open the case so that they could have the opportunity to put on further evidence. In these circumstances there has been no denial of natural justice.

Costs 25 On 14 April 2003, the Tribunal Member ordered that Lesley White and Patrick Gunn were to pay the costs of Eric Steain as agreed or assessed. The applicants submitted that the decision should be quashed and sought an order in the nature of certiorari, or that it be set aside on the basis that, if the Tribunal had jurisdiction to award costs, it erred in applying the principles relevant to the power to award costs, or alternatively, erred in the exercise of its discretion to award costs. 26 The plaintiffs raised the same issues that were considered in Wolinski v HIA Insurance [2003] NSWSC 475 at paragraphs 27 to 46. My decision was delivered after the Tribunal Member's decision in this case. She reached the same conclusion as I did. There is nothing in the applicant's submission that leads me to reconsider that decision. The Tribunal Member was entitled to award costs. 27 The Tribunal Member ordered costs in accordance with the well established principle that costs follow the event. There is no reason for this Court to interfere with such an order. 28 There has been no error of law, nor has there been a denial of procedural fairness. The appeal is dismissed. The amended summons filed 29 April 2001 is dismissed. 29 Costs are discretionary. Normally costs follow the event. The plaintiffs are to pay the defendants' costs as agreed or assessed. 30 The Court orders:

(2) The amended summons filed 29 April 2003 is dismissed.

(3) The plaintiffs are to pay the defendants' costs as agreed or assessed. **********

Last Modified: 12/02/2003 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.