Hanson v Metricon Homes Pty Ltd

Availability of appeal

1. An internal appeal may be brought as of right on a question of law or, with the leave of the Appeal Panel, on other grounds: s 80(2)(b) NCAT Act. As the appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of cl 12(1) of Sch 4 to the NCAT Act leave to appeal may only be granted under s 80(2)(b) if the Appeal Panel is satisfied 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).
2. In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarised at [71] and [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.
3. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).

The Appeal

1. The Notice of Appeal was lodged within the time specified by rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014.
2. The Notice of Appeal identified as the ground of appeal that the Tribunal erred in law in failing to explain the procedure about asking for an adjournment; failing to accord procedural fairness; and failing to ensure that the Owners had a reasonable opportunity to be heard or otherwise have their submissions considered.
3. The Owners sought leave to appeal on the grounds that: 1. The decision was not fair and equitable as their legal representative withdrew at the outset of the hearing and they were not given a reasonable opportunity to ask for an adjournment or to arrange for another lawyer to represent them; and 2. The decision was against the weight of evidence in that the Tribunal failed to consider the evidence filed on their behalf.
4. In written submissions provided on 18 February 2019, after the date specified in directions made at the appeal callover, the grounds of appeal were amended. Those submissions were prepared by counsel, who stated he had only been engaged on 8 February 2019. The amended grounds of appeal are: 1. The Owners were denied procedural fairness in that they were not given an adjournment, nor given a reasonable opportunity to present their case, because: 1. One of the Owners was being treated for cancer placing the Owners under extreme duress at the time of preparing for and attending the hearing, and 2. The Member allowed the Owners' solicitor to withdraw on the morning of the first day of the hearing without considering any evidence of, or calling for any reasons for, the solicitor's basis for doing so, and on the assumption that the Owners had not paid their legal bills, in circumstances where: 1. The Owners had paid their legal bills, 2. There was no valid reason for the solicitor to withdraw, and 3. The Owners had no reasonable warning nor confirmation of their solicitor's intention to withdraw prior to that morning; and 1. The report of the joint expert was only issued on the afternoon of the Thursday before the Monday first hearing day, 2. leaving the Owners completely unprepared to present their case. 1. The Member erred in finding there was no assertion that Metricon was not entitled to payment of the amount claimed for stage 06 completion and variations, as the Owners were asserting there was work within the scope of work under the contract which was incomplete, which should have been considered in his determination in reducing the amount so owing under the contract, being: 1. Incomplete painting of the house; 2. Incomplete stormwater system; 3. Missing timber stripping of the island bench in the kitchen; 4. Incomplete plasterwork; 5. Incomplete installation of smoke detectors; 6. Missing door handles on the stacker doors to the patio; 7. Incomplete fixings and missing handles for the stacker doors to the patio; and 8. Missing retaining wall on the southern side of the building.
5. The Owners appeal as of right in relation to (1) above, and seek leave to appeal in relation to (2).
6. Metricon's Reply to Appeal filed 13 December 2018 addressed the grounds identified in the Notice of Appeal filed on 21 November 2018. Metricon disputes the Owners' contentions that the Member erred in law by failing to explain the procedure about requesting an adjournment or failing to accord procedural fairness. First, the Member informed the Owners that unless they could demonstrate exceptional circumstances warranting an adjournment the hearing would proceed and the Owners did not demonstrate exceptional circumstances. Secondly, the Owners should not have been granted an adjournment of the hearing of Metricon's claim as all the evidence relevant to that claim had been with the Owners or their solicitor since January 2018, and no new evidence relevant to Metricon's claim was served by either party after the adjournment on 14 February 2018. Further, the only issue for determination in Metricon's claim was whether Metricon was entitled to payment of the final progress claim, and the Member afforded the Owners ample opportunity during the hearing to make submissions on that claim.
7. In reply to the grounds on which leave to appeal was sought, Metricon opposed leave being granted. Metricon contended that whereas the only basis on which the Owners contended the decision was not fair and reasonable was that their legal representative withdrew, they had not put forward any reason why they were not liable to pay the amount outstanding plus interest. Metricon disputes that the decision was against the weight of the evidence, and contends that the Member correctly determined that Metricon was entitled to payment of the final progress claim, and in any event the Member did have regard to the evidence in relation to the alleged building defects and structural engineering issues for the purposes of dealing with the Owners' claim.
8. The Appeal Panel had available an agreed bundle of documents in four volumes, including a transcript of the hearing on 12 and 13 November 2018.
9. The Owners provided Amended Appeal Submissions on 18 February 2019. Metricon provided written submissions, responding to the Amended Appeal Submissions, on 18 February 2019.

Application to adjourn the appeal hearing

1. In their written Amended Appeal Submissions filed on 18 February 2019 the Owners applied pursuant to s 51 of the NCAT Act for the hearing of the appeal to be adjourned until after determination of the Cross Claim (HB 18/49637), on the basis that: 1. There is a duplication of the issues and evidence between the appeal and the Cross Claim; 2. There is an appreciable risk that the Cross claim may also be appealed; 3. And as a result of both, there may be different determinations on the same issues by the Tribunal; and 4. It will be more cost and time effective for the Tribunal to deal with the matters considered by the appeal after the determination of the Cross claim.
2. In oral submissions at the appeal hearing the Owners' representative submitted that the defence to Metricon's claim included incomplete works. The case was poorly prepared because of the illness of one of the Owners, and the solicitor withdrew on the morning of the hearing. The joint expert report on building defects was provided only one business day before the hearing. The Owners do not have the funds to pay the amount ordered and also maintain their Cross Claim.
3. Metricon opposed the adjournment, submitting that there is no duplication of issues as the principal claim by Metricon is for the contractual sum due on completion. The claim as to incomplete works is recent, and the Owners' claim has been only about the defects.
4. The Appeal Panel refused the application to adjourn the hearing, stating that reasons would be provided later. The following are those reasons.
5. The Tribunal's power to adjourn proceedings is conferred by s 51 of the NCAT Act. The principles applicable to applications for adjournment were discussed by the Appeal Panel in Armee v Brealey [2017] NSWCATAP 141, where the Appeal Panel said: 121.The Tribunal has the power to adjourn proceedings under s 51 of the Act. The power to adjourn is to be exercised according to the principles set out by the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management Pty Ltd [2013] HCA 46; (2013) 250 CLR 303, French CJ, Kiefel, Bell, Gageler and Keane JJ at 321 [51] (see O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77 at [21]). Procedural fairness may be denied if a decision maker fails to adjourn proceedings where such a failure has the effect of depriving a person of adequately presenting the person's case: see Grozdanov v N&T Buildings Pty Ltd [2015] NSWCATAP 107 at [51]; Tiwari v Champion Homes Sales Pty Ltd [2016] NSWCATAP 73 at [21]-[22]. … 125.In O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77 at [22], the Appeal Panel identified the following principles governing applications for an adjournment: (1)matters should almost always proceed on the date fixed for hearing, for the reasons enunciated above, (2)an application for an adjournment should be seen as the exceptional rather than the ordinary course; (3)where the adjournment is caused, at least in part, by the delay of the party seeking the adjournment, or non compliance by that party with an extant order of the Tribunal, adequate explanation is called for, and its absence weighs heavily, and sometimes decisively against the grant of an adjournment.
6. The power to adjourn a hearing, as with all exercises of power under the NCAT Act or the procedural rules, must be exercised so as to seek to give effect to the guiding principle in s 36(1) of the NCAT Act, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
7. In Mesiha v Murrell [2017] NSWCATAP 1, the Appeal Panel summarised the statutory obligations of the Tribunal in the following terms: 36. Section 36(1) of the NCAT Act requires the Tribunal to give effect to the guiding principle which is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". The Tribunal is required to exercise the powers given to it in order to give effect to this principle: S36(2). The parties are under a duty to cooperate with the Tribunal to give effect to this principle "and, for that purpose, to participate in the processes of the Tribunal and comply with directions and orders of the Tribunal": S36(3). In doing so 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 costs to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings": s36(5). 37. Section 38 of the NCAT Act provides that: (1) while the Tribunal is not bound by the rules of evidence, it is to observe the rules of natural justice: s38(2); (2) the Tribunal is to act with as little formality as the circumstances of the case admit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: s38(4); (3) the Tribunal is to take such measures as are reasonably practicable to ensure that the parties to the proceedings: (a) understand the nature of the proceedings: s38(5)(a); (b) have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: s38(5)(c). 38.These requirements make clear that in giving effect to the guiding principle the Tribunal is to have regard to the interests of both parties as well as issues of proportionality which include issues of cost and the impact upon the Tribunal in meeting its obligations in respect of other applications which it is required to determine.
8. As noted by the Appeal Panel in O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77 at [20], referring to the decision of the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46, Speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. The achievement of a just but timely and cost-effective resolution of a dispute has effects not only upon the parties to the dispute but upon the court and other litigants.
9. The Owners' position is that they do not have the funds to pay the amount ordered in HB 16/55283 and also maintain their Cross Claim. It may be that if in the Cross Claim the Owners are able to establish liability on Metricon's part for defective or incomplete works or delay damages, or on some other basis foreshadowed in their application, they may be able to set off any such amount against the amount owing to Metricon. There is no indication as to how long it may take for the Owners' Cross Claim to be determined in the Consumer and Commercial Division. If the interlocutory phase of that matter is as protracted as it was in HB 16/55293 and HB 17/06192, and depending on whether the Owners obtain legal advice and assistance in progressing that claim, the possibility is that that may take some months.
10. The Owners had the opportunity to press their claim against Metricon for defective or incomplete works and delay damages, but withdrew that application. The length of time it would take for them to assert those, and other claims, in the fresh proceedings is likely to be extensive. In addition to asserting an entitlement to compensation in an amount significantly above the Tribunal's jurisdictional limit in s 48K(1) of the Home Building Act, the Owners' claim in the Cross Claim HB 18/49637 extends well beyond the issues of defective or incomplete work and delay the subject of their application in HB 17/06192, raising a number of contentions both within and outside the Tribunal's jurisdiction. Those factors point against adjourning the hearing of this appeal while that process continues.
11. A significant factor in favour of adjourning the hearing and determination of the appeal would be whether the issues raised in the appeal are so closely connected with the issues raised in the Owners' Cross Claim that it would be both a duplication of evidence and argument, and give rise to the possibility of divergent outcomes. That risk is not apparent when the two claims are considered. Metricon's claim in HB 16/55283 was, as submitted by its representative, based on contractual obligations to pay the final progress payment on practical completion, together with any interest accruing in accordance with the terms of the contract. It is clear from the interlocutory history in the Consumer and Commercial Division that the view was taken that once the Owners lodged their application in HB 17/06192 it was preferable for both matters to proceed together. However, given the likelihood of a further extended delay in progressing the hearing and determination of HB 18/49637, the Appeal Panel concludes that it is not appropriate that the resolution of the appeal against the orders in HB 16/55283 be further delayed.

Whether there was a denial of procedural fairness

1. The following summary of the course of the hearing on 12 and 13 November 2018 is based on the transcript provided by the parties, with page references to that transcript as "T…".
2. At the commencement of the hearing Mr Mortenson, the solicitor appearing for the Owners, requested leave to withdraw, and that leave was granted. The Member asked the Owners, both of whom were present, whether they would be undertaking carriage of their case, and Mr Hanson said they had no other option. In response to a question whether they were in a position to proceed, both said "Not really" (T3). The Member noted the length of time since the matters had been lodged, and the number of adjournments in both HB 16/55283 and HB 17/06192. He stated that the Tribunal had an obligation to have the proceedings heard, and that unless there was some extraordinary circumstance why the matter should not go ahead he was minded to order it should go ahead rather than adjourning it and pushing it further into the future. Mr Hanson said they understood that; the joint report had been received very late; and that was the basis of Mr Mortensen stepping down, because he had not had time to prepare (T4). The Member responded that it was a simple report, the expert had reached a conclusion that there was some defective work and what it would cost to fix. Mrs Hanson said the expert had left a big component out of the report (T4).
3. During the morning of the first day, the Member: 1. Obtained an overview from Metricon's representative as to the nature of its case. That case was that taking into account extensions of time and rain delay the time under the contract ran until 22 September 2016, and that practical completion was effectively achieved on 9 November 2016. The house was complete, and what work was not done was because Metricon was effectively locked out of the site. The purported termination of the contract by the Owners (through their then lawyer) on 9 November 2016 was ineffective (T5-8); 2. Discussed with the Owners the limited nature of their case, being essentially the claim for defects costed by Mr Zakos at $28,000, the delay claim which at $30 per day liquidated damages even in the range of 33 days (as contended by Metricon) to 45 days (as contended by the Owners) would not be large, and the cost of levelling the slab at around $1,000 (T10-14); 3. Considered and discussed with the parties whether the preferable course was to hear Metricon's case and then allow the Owners' case to proceed later, on the basis that interest was accruing on Metricon's claim (T15-16); 4. Explained Tribunal procedure, including relating to expert evidence and conclaves, and the Scott schedule (T 10-11, 21-23, 28); and 5. Adjourned shortly after 10.00am for approximately one hour to enable the Owners to discuss the evidence with their expert Mr Barry and review the Zakos report, and discuss the delay claim with Metricon's solicitor, stating that it appeared that the defects claim had been dealt with by the experts (T33).
4. After the adjournment the Member stated that he would start with Metricon's case, and then decide what to do with the Owners' case (T33). The Member identified the relevant documentary evidence including service by Metricon of notices and the contractual provisions, and the affidavit evidence of the Owners.
5. Shortly before 11.20am the Member stated that he had decided not to postpone the Owners' case as it had been case managed, and dealt with in two experts' reports, one being the joint report from the engineers and the other by Mr Zakos. He stated that he was satisfied it was appropriate in accordance with s 36 of the NCAT Act to proceed: the cases had been going for some time, and there were a number of expert reports, which made it appropriate to proceed notwithstanding that the Owners did not have representation, noting that they had legal representation as late as the Friday before (T42).
6. The structural engineers Mr Brown and Mr Barry then gave concurrent expert evidence (T42- 47), and the Member adjourned again to allow the Owners to read the reports before they questioned those experts (T48). Each itemised defect was discussed. The Owners questioned the experts (T49-76).
7. The questions continued after resumption of the hearing at 2.03pm. Once item 7 was discussed Mr Hanson stated that they asked to withdraw the Owners' claim "because we're grossly unprepared". Mr Hanson stated (T79): Our representation has left us this morning, as you know, and we feel we've been very disadvantaged in this situation because we have not got the knowledge, have not got the grounds to present our best case and get a fair hearing.
8. The Member raised the issue of time limitation, stating (T80): I'm just bringing to your attention I don't want to see you in a position where you withdraw today and in effect you bring a claim next week or next month thinking that you'll get your case to hearing in 2019 with proper representation only to find that you're out of time under the Home Building Act.
9. The Owners stated that they had discussed the issue with their solicitor who withdrew (T 81), who thought they had time. The Member discussed the timing of practical completion and the date the owners terminated the contract (T 82) and referred to s 18E of the Home Building Act. The Member stated that he would leave them to think about the decision overnight, proceed with the Owners' case, and if that was withdrawn he would deal only with Metricon's claim (T 83). The evidence of the structural engineers concluded at 2.37pm.
10. The Member admitted the report of Mr Zakos, tendered by Metricon, over the objection of the Owners (T89). He gave oral reasons for doing so (T89-92), referring to the agreement of the parties at the directions hearing on 11 April 2018 (at which the Owners were legally represented) that Mr Zakos be appointed as the independent building defects expert. The Member noted that the parties agreed to be bound by the determination of the independent building expert; the comprehensive scope of the report; and referred to ss 36 and 38 of the NCAT Act on the guiding principle of the Tribunal and the ability of the Tribunal to determine its own procedure.
11. The Member then turned to the costing of the engineering defects (T92), and the Owners' liquidated damages claim, clarifying in discussion with the Owners the date on which Metricon was required by cl 8.1 of the contract to commence building works (T 100) and the relevant provisions in the contract. The Member noted that Metricon conceded 33 days, and asked the Owners to clarify their position on the number of days on the following morning (T 105). The Member concluded the day's hearing having noted that the engineering experts were still working on the costing of some of the defects, at 3.22pm.
12. At the commencement of the second day of hearing Mr Hanson stated that after getting some fairly basic advice and doing some of their own homework they had decided to withdraw their application (T109). The Member confirmed that the evidence on Metricon's claim was closed, and reserved his decision on that claim.

Appellants' submissions

1. The Owners submit that the response to the Member's question whether they were in a position to proceed after their solicitor withdrew (T3) was an application for an adjournment, which was refused by the Member shortly before 11.20am when he said he would proceed with the Owners' case (T42). The Owners did not press the contention that the Member should have stopped the solicitor from withdrawing, and submitted that the denial of procedural fairness was in not adjourning the hearing of the Owners' case and not allowing them more time. The Owners submit that the Member did not in his reasons for proceeding with the Owners' case refer to the late provision of the Zakos report, which had been due on 15 October 2018.

Metricon's submissions

1. Metricon submits that the Owners' claim was for defects and that was dealt with in the joint engineers' report and by Mr Zakos. The Member gave the Owners time to consider their decision to withdraw their claim and get advice. Metricon's case was a contract case, there was no prejudice in that claim proceeding, and so no denial of procedural fairness. At its highest the only relevance of the Owners' unpreparedness was as to the defects claim, and competent lawyers had been engaged.

Discussion and findings

1. The transcript confirms that while there was no express request for an adjournment, the Owners made it clear to the Member that they would have difficulty proceeding in the absence of their lawyer. Treating their comment (T 3) that they were "not really" in a position to proceed as an application for an adjournment, and the decision of the Member shortly before 11.20am (T 42) to proceed with the Owners' case, including hearing evidence from the structural engineers, as a refusal of such an application, the relevant factors in explaining why that refusal was not a denial of procedural fairness are as follows.
2. Based on the transcript, the Member approached the situation mindful of the need to have the matters proceed if possible, given the extended delay, and the fact that interest was continuing to accrue on Metricon's claim. The discussion with the parties, including the oral reasons given for deciding to continue with the hearing of the Owners' case, show that the Member had regard to the procedural history of the matters, the issues that needed to be determined in both applications, and the obligations imposed under s 36 of the NCAT Act. The Owners had conceded during the hearing that given that there had been almost two years, there had been adequate time for them to be organised to present their case (T15).
3. Further, the Member made his decision to proceed having obtained a comprehensive overview of both Metricon's case and the Owners' case, and having identified the evidence available. The Member's decision not to adjourn and to proceed with the Owners' claim required that he balance the competing interests identified in Armee v Brealey and Mesiha v Murrell. The transcript shows that he was aware that the Owners were at a disadvantage in the absence of legal representation, and in accordance with the obligations imposed on him under s 38(5) of the NCAT Act, had explained the issues. By 12 November 2018, the matters had been with the Tribunal for nearly 2 years; the Owners had had legal representation since September 2017; and as the Member stated in his reasons, there were a number of expert reports dealing with the Owners' case. In circumstances where there was no reason to expect that the Owners had not had an opportunity to put on all the evidence and arguments that needed to be put, there was no denial of procedural fairness in the decision to proceed with the hearing.

Whether leave to appeal should be granted

1. The Owners seek leave to appeal on the ground that the Member erred in finding that there was no assertion that the builder was not entitled to payment of the amount claimed for stage 06 Completion and variations, as the Owners were asserting that there was work within the scope of the contract which was incomplete, which should have been considered in reducing the amount owing under the contract.
2. The Owners submit that the provisions of the contract, in particular clauses 15.3 and 15.5, were that the builder had to complete all the work to be entitled to payment. The Owners assert that they had to do work the builder was required to do. There was substantial work to be done, in particular on the slab and stormwater. In directions made on 12 October 2018 the Owners were directed that to the extent that the Owners did not rely on the Zakos report, they were to ensure that their expert witness was present at the hearing on 12 November 2018; the Owners understood that to mean that they would have an opportunity to have further time to meet anything missing in the expert reports. The Owners submit that the Member did not consider the issue with the slab, and there was an attempt to have Mr Cavallo calculate the cost of rectification of the slab on the day.
3. Metricon submits that the evidence was that the slab was complete, but there was unevenness in the floor. That issue was addressed in the structural engineers' joint report. There was no issue raised in the expert reports about the stormwater, and Mr Cavallo did not raise it.

Discussion and findings

1. As noted above, under cl 12(1) of Sch 1 to the NCAT Act, leave to appeal may be granted under s 80(2)(b) if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because, relevantly, the decision of the Tribunal under appeal was against the weight of evidence.
2. Based on the transcript, in the discussions on the morning of the first day of the hearing the Member had identified the relevant expert reports, including the individual and joint reports of Mr Cavallo and Mr Winton, the report of Mr Zakos, and the joint report of the structural engineers addressing the issues with the slab. That material is before the Appeal Panel. There was no request by the Owners for an opportunity to obtain further evidence. The primary contention at the hearing of the appeal related to the slab. That had been the subject of the joint report by Mr Barry and Mr Brown, and oral evidence, including questioning by the Owners, was given at the hearing on those issues.
3. The Member did not reserve his decision, and provided brief written reasons with the orders on 13 November 2018. In those reasons the Member identified the evidence, provided in the two volumes of documents titled Joint Tender Bundle Volume 1 Parts 1 and 2 (exhibit A). The Owners' documents were filed on 8 November 2018, were not tendered, and were in any event documents in exhibit A.
4. In his reasons the Member referred to the relevant provisions of the contract, including provisions for payment of the contract price by progress payments in specified stages; the obligation on the Owners to pay a progress claim (cl 15.5); and the provision for payment of interest (cl 16). The Member referred to the Owners' defence to Metricon's claim: 12. The owners defence to the builder's claim is a basic document of 11 paragraphs. They assert that the build is incomplete, among other things. However there is no assertion that the builder is not entitled to payment of the amount claimed for variations or the amount claimed for stage 06 completion.
5. The Member stated his conclusion as follows: 11. The interest claimed by the builder of $39,326.59 is calculated from 6 December 2016 to 12 November 2018, a period of 717 days. The owners have not produced an alternative calculation of interest. I accept the builder's calculation. 12. The owners defence to the builder's claim is a basic document of 11 paragraphs. They assert that the build is incomplete, among other things. However there is no assertion that the builder is not entitled to payment of the amount claimed for variations or the amount claimed for stage 06 completion. 13. I find that by reason of clause 15.5 of the contract that the owners were obliged to pay the builder's invoice of 10 November 2016 sent on 29 November by 6 December 2016 and that they failed to make the required payment by that date. In addition I find that the amount claimed by the builder $169,431.15, became a debt due by the owners to the builder by reason of the operation of clause 26.6(a) of the contract as pointed out to the owners by the builder's solicitors on 7 December 2016. 14. For the reasons provided I will make an order in favour of the builder in the sum of $208,757.74.
6. While the reasons of the Member are succinct, they demonstrate that the Member had regard to the elements of the Owners' defence to Metricon's claim. At the time he came to determine Metricon's claim, the Owners had withdrawn theirs, and he therefore did not need to go into detail on the elements of, or make findings in relation to, that claim. His conclusion that Metricon was entitled to succeed on its contractual claim could not be said to have been reached in circumstances where the evidence in its totality pointed so strongly against that conclusion that the Owners may have been deprived of a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved. Leave to appeal should not be granted.

Stay of the orders in HB 16/55283

1. For the reasons above, no error of law has been established, and leave to appeal on other grounds should not be granted. As a consequence, leave to appeal is refused and the appeal is dismissed.
2. The Owners seek a further stay of the orders in HB 16/55283, until further order or until matter HB 18/49637 is determined, for the following reasons: 1. The decision in HB 16/55283 and in the Owners' Cross Claim are closely related, being matters arising out of the same contract and facts and circumstances and with the same parties; 2. The Cross Claim should operate as a set-off against Metricon's claim, and may be a larger amount than that decision; 3. The Owners cannot afford to pay the amount ordered in HB 16/55283 without the amount of the Cross claim as a set-off, causing the Owners hardship; 4. The Owners may be unable to continue with the Cross Claim if they are required to pay the amount ordered without a set-off, causing the Owners extreme prejudice; and 5. There is little or no prejudice to Metricon if they are required to wait, rather than repaying the amount of the Cross Claim at a later date.
3. The Owners submit that the power for such a stay is conferred by s 38 of the NCAT Act, relying on Evers v Firth (1986) 10 NSWLR 22 and J A Briscoe v Jamdau Investments Pty Ltd (in liq) [2014] NSWCATCD 24. The Owners submit that they did not create their own problem by withdrawing HB 17/6192, as that was because of the lateness of the Zakos report.
4. Metricon opposes a further stay, submitting that the orders which can be made by the Appeal Panel are those in s 81 of the NCAT Act; and that once the appeal is determined the Appeal Panel is functus officio, and if the appeal is dismissed there is no power to stay the orders made on 13 November 2018. Metricon submits that the Owners elected to withdraw their claim, and that the new claim, if it proceeds in the Tribunal or elsewhere, is a separate matter which should not impede Metricon enforcing the orders. Metricon is entitled to the benefit of the orders made in its favour (relying on Bentran Pty Ltd v Sabbarton [2014] NSWCATAP 37). Even if there is power to grant the stay, it would not be appropriate to do so, as once the Appeal Panel has concluded its determination it cannot deal further with the matter. Metricon submits that when the Owners withdrew they lost the benefit of having a set off by running both matters in tandem. At its highest the Owners might recover between $30,000- $50,000.

Discussion and findings

1. The Tribunal has power under s 43(3) of the NCAT Act to grant a stay of a decision to which a pending general application or appeal relates as it considers appropriate to secure the effectiveness of the determination of the application or appeal. That is the power exercised in this appeal first on 22 January 2019 and then by extending that stay at the hearing of the appeal. That power is not available once this appeal is finalised by dismissal of the appeal.
2. Section 38(1) of the NCAT Act provides: 38 Procedure of Tribunal generally (1)The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision. 1. ….
3. In Evers v Firth (1986) 10 NSWLR 22, the Court of Appeal confirmed that the Supreme Court "…has an inherent jurisdiction to grant a stay, whether permanent or temporary, whenever this is necessary to prevent injustice" (at 26, per Samuels JA). The Tribunal has no such inherent power. While s 38(1) of the NCAT Act confers power on the Tribunal to "determine its own procedure", that does not, in the Appeal Panel's view, confer a power analogous to that exercisable by the Supreme Court in its inherent jurisdiction.
4. The decision in JA Briscoe v Jamdau Investments Pty Ltd (in liq) [2014] NSWCATCD 24 is authority for the proposition that s 38 would confer power on the Tribunal to adjourn, or stay, proceedings where there are pending proceedings on the same issues in a court. In that decision, a homeowner had lodged an application to set aside orders in proceedings initiated by a builder for recovery of unpaid monies under a home building contract, on the basis that she did not have notice of the hearing in which those orders were made. There were at the same time proceedings pending in the Supreme Court for orders in the nature of certiorari to quash the decision. The Tribunal was satisfied that while different remedies were sought there were common issues of fact and law to be determined in both proceedings; and that the application in the Supreme Court would finally resolve the dispute, whether that application was successful or not. The Tribunal concluded: 14. Where a superior court has proceedings before it which were commenced at a time earlier than the application made to the Tribunal, in my opinion it is inappropriate for the Tribunal to proceed to determine the application to set aside where the issues of fact and law the Tribunal is asked to determine are issues of fact and law which the Supreme Court is required to determine. …
5. That is not the situation here. While the parties to both HB 16/55283 and HB 18/49637 are the same, and the dispute concerns residential building work carried out by Metricon, the issues in the claims are not the same. Moreover, the proceedings in the Tribunal to have the original orders set aside were pending, and not, as is the case with this appeal, finalised.
6. The Appeal Panel accepts the submission of Metricon that on dismissal of the appeal from the decision in HB 16/55283, there is no power to grant or continue a stay of the orders made in HB 16/55283. Even if s 38(1) of the NCAT Act did confer power on the Appeal Panel to stay the operation of an order made in proceedings from which an appeal has been dismissed, it would not be appropriate to do so in this case, for the following reasons. The evidence before the Member would support an order in favour of the Owners in their claim in the order of $30,000-$40,000, depending on the calculation for the rectification of the concrete slab. That amount, if ordered as a set-off for the amount found due to Metricon, would still have required a substantial payment by the Owners to Metricon. It is entirely speculative to consider what the Owners might hope to recover if their Cross Claim proceeds, or to determine how long any interlocutory processes may take before that claim is determined. In the meantime, Metricon is deprived of the benefit of the orders it obtained at first instance. As discussed in Bentran Pty Ltd v Sabbarton, those are important factors in assessing a stay application. The onus is on the Owners to make out the case for a stay, and in that regard it is relevant that they find themselves in this position having chosen to withdraw their claim in HB 17/06192 rather than proceed. The Owners had time to consider that course of action, the Member having urged them to obtain advice overnight before making the decision, and they confirmed on the morning of the second day that they had obtained some advice (T 109).

Orders

1. The orders of the Appeal Panel are:
2. Leave to appeal refused.
3. Appeal dismissed.
4. The stay of the operation of the orders in HB 16/55283 made on 13 November 2018 and extended on 25 February 2019 is lifted.
5. If either party seeks an order for costs of the appeal, the following directions apply: (1) Any application for costs of the appeal must be provided to the Tribunal and the other party within 14 days of the date of this order; (2)The party against whom an order for costs is sought is to provide to the Tribunal and the other party within 14 days of the application for costs any response to that application; (3)The party seeking costs is to provide to the Tribunal and the other party any submissions in reply within 14 days after the date of the response to the costs application; (4) The parties are to include in their submissions whether they consent to the determination of any costs application on the basis of the written submissions, without the need for a hearing; and (5) Subject to considering any submissions from the parties, the Tribunal will dispense with a hearing and determine any costs application on the basis of the documents provided to the Tribunal.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. 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: 31 May 2019