Ideal Waterproofing Pty Ltd v Buildcorp Australia Pty Ltd & Ors

LOWER COURT Consumer Trader and Tenancy Tribunal of NSW JURISDICTION : LOWER COURT HB01/82056 FILE NUMBER(S) : LOWER COURT Mr R Connolly JUDICIAL OFFICER :

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Administrative Law List

30060/03 Ideal Waterproofing Pty Ltd v Builcorp Australia Pty Ltd & Ors

Proceedings in the Tribunal 2 Proceedings were commenced in the Consumer, Trader and Tenancy Tribunal by Ideal Waterproofing Pty Ltd (hereafter "Ideal") against Buildcorp Australia Pty Ltd (hereafter "Buildcorp") and Zurich Australasian Insurance Ltd (hereafter "Zurich"). Building work had been carried out by Ideal as a sub-contractor to Buildcorp. Buildcorp asserted that the work was defective and had caused damage to the building. Zurich, by payment to Buildcorp, indemnified Buildcorp against the damage. 3 Ideal claimed from Buildcorp its account or the balance of its account for work done in the sum of $1,047.00. Ideal also claimed as against Buildcorp and Zurich that it was not liable to either of them to make any payment in respect of the asserted damage to the building. 4 Buildcorp and Zurich each responded to Ideal's claim with a cross-claim for $100,000 in respect of the asserted damage to the building. 5 Buildcorp and Zurich applied for an order removing Zurich as a party. The application was dismissed. 6 Ideal filed a notice of motion seeking some 10 orders. Upon hearing that application, the Tribunal ordered that the proceedings be referred to the Supreme Court for decision as to whether the Tribunal had jurisdiction to make the orders sought. Subsequently, the Tribunal revoked the referral order and dismissed Ideal's application for orders. 7 Buildcorp and Zurich then filed a notice of motion for an order transferring the proceedings to the District Court. 8 Before that motion was heard, Ideal filed a notice of motion seeking four orders as follows: 1. All the owners and occupiers of residential buildings constructed between 1990 - 2003 with Buildcorp Australia Pty Limited, Buildcorp NSW Pty Limited and Buildcorp N.S.W. Pty Limited be joined to the proceedings. In the alternative that the Director General of the Department of Fair Trading has negligently failed to keep an up to date and or accurate register of license holders. 2. Zurich Australia Insurance not be permitted subrogation since payment to Buildcorp was gratuitous: [authority]. That the Tribunal consider its powers under section 89C(1)(b) of the Home Building Act 1989 (HBA) and make the appropriate Order. 3. That Zurich Australian Insurance not be permitted to recover in this jurisdiction pursuant to a Combined Contract Works & Third Party Liability Insurance policy since the Tribunal has no jurisdiction to hear such a claim, since the policy in question is inter alia not collateral to these residential works. 4. That Buildcorp Australia Pty Limited set out the just and equitable basis of its application against Ideal Waterproofing Pty Limited pursuant to s. 94 (1A) of the HBA. 9 The reference in the fourth claimed order was to the Home Building Act 1989. Section 92(2) provides as follows. 92(2) Except as provided by section 94(1A), a person must not demand or receive a payment under a contract for residential building work (whether as a deposit or other payment and whether or not work under the contract has commenced) from any other party to the contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name of the person who contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract.

Section 94 of the Act provides, so far as is material as follows. 94(1) If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the uninsured work ), the contractor who did the work: (a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and (b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit). (1A) Despite section 92(2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis. 10 The notice of motion filed by Buildcorp and Zurich for transfer to the District Court and the notice of motion by Ideal for four further orders came on for hearing before the Tribunal on 10 June 2003. It was agreed that the Tribunal should hear the transfer application first. The Tribunal made the order sought, transferring the proceedings to the District Court. In the result, Ideal's application for further orders was not heard and determined. 11 The orders made by the Tribunal on 10 June 2003 were as follows. 1. That the claim and cross-claim in this matter be transferred to the District Court of NSW pursuant to section 23 of the Consumer, Trader & Tenancy Tribunal Act 2002. 2. That each party bear their own costs of the motions listed and heard today, 10 June 2003. 3. That costs in the proceedings apart from the costs of and incidental to today's motions be reserved. 4. That the respondents file and serve within 42 days of today's date any application(s) they propose should be heard and determined with this application (claim and cross-claim). 12 I will record so much of the Tribunal's reasons for decision as are presently material. In those reasons, Ideal is referred to as "the Applicants", Buildcorp is referred to as "the First Respondent" and Zurich is referred to as "the Second Respondent".

The Tribunal prefers the position put by the Respondents in respect of its (the Tribunal's) lack of jurisdiction to entertain the totality of the Respondents' Cross Claim.

The Authorities referred to in respect of what is a 'building claim' and what may constitute "building goods and services" i.e. Collins Homes v Head & Ors [2002] NSWSC 1219 (20 December 2002) and Woolfe v Sussman t/as Sussman Construction Consulting Services & Anors [2001] NSWSC 702 (18 July 2001), are sufficient to satisfy the Tribunal that the majority of aspects contained in the Respondents' cross claim do not come within the jurisdiction of this Tribunal. In this respect the Tribunal also notes the decision of Master Harrison in Wollinski v HIA Insurance [2003] NSWSC 475 (2 June 2003).

The Tribunal profers the Respondents' submission as set out at the bottom of page 4 of their written submissions which is in these terms: "In the present case the only portion of the matter which may fall into this definition [ building claim ] is the claim by the Applicant concerning unpaid retentions and the First Respondent's cross claim against the Applicant regarding the recovery of monies expended on rectification."

In the circumstances some $86,000.00 of a $102,000.00 claim/cross claim would be excised from the jurisdiction of this Tribunal. 13 The figures of $86,000 and $102,000 referable to the cross-claim, which was for $100,000, need not be elucidated here. 14 It is apparent from what I have quoted so far from the Tribunal's reasons for decision that Buildcorp and Zurich conceded that the Tribunal had jurisdiction to determine Buildcorp's cross-claim but contended that the Tribunal did not have jurisdiction to determine Zurich's cross-claim. The Tribunal accepted that submission. 15 The reasons for decision went on as follows.

In these circumstances the costs to the parties to maintain two sets of proceedings in respect of matters where the evidence is largely common to both; be precluded (the Respondents) from mounting an arguable defence; arguably be denied the opportunity of raising any defence in another place or face severe problems in convincing another Court that res judicata and/or issue of estoppel did not arise, could not be seen to be equitable and fair nor be seen as the proper administration of justice. 16 It is apparent from that passage that the Tribunal thought it would be unsatisfactory to have Buildcorp's cross-claim heard in the Tribunal and Zurich's cross-claim heard elsewhere when both claims involved largely the same evidence. Other possible complications were mentioned. 17 The reasons go on as follows. The Tribunal notes Motion 3 on the Applicant's Notice of Motion appears to wholly concede the proposition in respect of jurisdiction in so far as it related to the cross claim and the Second Respondent. 18 This was a reference to Order 3 sought in Ideal's notice of motion (quoted above) by which Ideal asserted that the Tribunal had no jurisdiction to decide Zurich's cross-claim. 19 The Tribunal's reasons go on as follows. The Tribunal has considered carefully the learned submissions of the Applicant and agrees they are with merit. The Tribunal however once again (as it did in respect of the Motion heard 24 June 2002), is not minded to determine substantive matters of fact at an interlocutory stage in proceedings. To make final findings of fact for example in respect of licences; the existence of otherwise of Home Owners' Warranty Insurance; the named beneficiaries to the insurance policy produced under Summons, would at this stage of proceedings be premature. The appropriate means by which these matters can all be expeditiously resolved is to put all matters before a Court of competent jurisdiction. 20 This was a reference to Orders 1 and 4 claimed in Ideal's notice of motion (quoted above). The burden of the passage was that the claim for Orders 1 and 4 in Ideal's notice of motion was better decided in the District Court where there would be no question about the court's jurisdiction. 21 The Tribunal's reasons for decision continue as follows. The Tribunal notes the decision of Member Forbes in Dickinson v D B Mahaffey & Associates Pty Ltd NSW CTTT 123 (31 January 2003), and adopts the learned member's comments as produced below: "……that if the Tribunal proceedings are not transferred to the District Court, there will be a substantial duplication of proceedings. This will cause additional cost and inconvenience to the parties and their respective witnesses. It would be more expedient, efficient and effective if the dispute was heard once, by the one Court or Tribunal." 22 This was an amplification of the Tribunal's reasons for transferring the proceedings to the District Court because of Zurich's cross-claim. 23 In relation to costs, the Tribunal concluded its reasons for decision as follows. The Tribunal is satisfied that each party should bear its own costs in respect of the Motion determined today. This matter has been before the Tribunal since late 2001. The Respondents have had sufficient time prior to May 2003 to move for its removal to another place. That the Respondents have been successful in that Motion today does not in the Tribunal's view necessarily entitle them to the costs of the Motion which arguably could/should have been made some considerable time ago. 24 It is apparent that the main reason for making the order transferring the proceedings to the District Court was want of jurisdiction to determine the question of whether Zurich was entitled to recover, from Ideal, reimbursement for the payment it had made to Buildcorp indemnifying that company against the damage allegedly resulting from defective work by Ideal. That issue was raised initially by Ideal's claim for an order that it was not so liable. It was raised again - in a more substantive way - by Zurich in its cross-claim against Ideal. 25 Ideal's claim for an order that it was not liable to reimburse Zurich was unnecessary. It was plain beyond question that Zurich could have no such cause of action against Ideal in its own name. Ideal's claim against Zurich rapidly became academic however. It was overtaken by Zurich's cross-claim which raised the selfsame issue. But Zurich's cross-claim against Ideal, being a claim in its own name, could not possibly succeed.

Appeal 26 By summons filed in this court, Ideal seeks an order that the Tribunal's orders of 10 June 2003 be set aside. 27 Section 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (the "CTTT Act") provides, so far as is material, as follows. 67 Appeal against decision of Tribunal with respect to matter of law (1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the Supreme Court against the decision.

(3) After deciding the question the subject of such an appeal, the Supreme Court may, unless it affirms the decision of the Tribunal on the question: (a) make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or (b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal. 28 In Smith & Anor v Collings Homes Pty Ltd & Anor [2004] NSWCA 75, Mason P considered that (at [23]), This provision does not state that the appellate jurisdiction is engaged merely because the appeal involves a question of law or an assertion of error of law on the Tribunal's part. It seems to me that it is much narrower, although it is ultimately unnecessary to express concluded views on the matter. 29 Although he acknowledged that there was "some uncertainty" about this (at [24]), Mason P went on to say (at [25]), Apart from the very language of the sub-section, it is to be observed that the very presence of s 65, which provides for judicial review if there is excess of jurisdiction or denial of procedural fairness, provides additional support for a narrower, literal reading of s 67. 30 It was not necessary, in the circumstances of that case, for Mason P to elaborate on the precise scope of this "narrower, literal reading" of s67. 31 In an earlier judgment of the Supreme Court, Custom Credit Corporation (in Liq) v Commercial Tribunal of NSW [1999] NSWC 1021, Greg James J discussed s20(5) of the Commercial Tribunal Act 1984, which spoke in the same terms as s67(1) of the Tribunal deciding "a question with respect to a matter of law". At [89] he cited the remarks of Carruthers J in Canham & Ors v Australian Guarantee Corporation Limited & Anor (1990) ASC ¶55-984 (at 58,923), It is, I think, appropriate that I express my views upon the meaning of the phrase "a question with respect to a matter of law". Despite arguments both by the plaintiffs and AGC to the contrary, it is my view the draftsman intended this phrase to encompass nothing more than a pure question of law. 32 Greg James J then went on to say (at [94]): [94] The language employed in s.20(5) is in marked contrast to familiar provisions conferring a right of appeal on law and particularly having regard to that contrast, I am not satisfied that there is provided some form of generalised administrative review by this court of the ultimate decision in some general context of examining the legal principles applied expressly or implicitly. I consider it will at least be necessary for a party to avail itself of the appeal right afforded by s.20(5) to articulate a precise question relating to a matter of law, to show how the decision of it, whether express or implicit, was integral to the conclusion and why that decision was wrong . … … [108] … Given that the decision may be implicit rather than express and isolated … nonetheless any error of this kind must be capable of being clearly identified as a legal error for the reasons I have given. [Emphasis added for later reference] 33 Mason P, in Smith, cited this decision without relevant comment. 34 In the present case, the Tribunal implicitly decided questions of law and did so erroneously. 35 First, in taking the Zurich cross-claim into account as a reason for transferring the proceedings, the Tribunal implicitly decided that the cross-claim had at least an arguable basis in law. Otherwise, there was no point in making a transfer order to enable it to be dealt with. Counsel for Zurich in the appeal could say nothing justifying the claim. It had no arguable basis in law. 36 Ideal's notice of motion for orders which came before the Tribunal on the same day provided the second reason for the transfer order. 37 Order 1 in the notice of motion would have secured the joinder of all members of the class of persons mentioned in the order as respondents to Ideal's claim for $1,047. On the hearing of the appeal, Ideal's solicitor said that would have involved thousands of individuals. There could be no cause of action against such persons as respondents to Ideal's claim. Ideal's solicitor could say nothing to support the making of such an order. The claim was bizarre. By taking the claim for that order into account as a claim requiring determination on its merits, the Tribunal implicitly decided that the claim for the order had at least an arguable basis in law. It did not. 38 Order 2 in the notice of motion challenged Zurich's entitlement to sue in the name of Buildcorp. Ideal had no standing to take that point. It was wrong anyway: Zurich, having paid Buildcorp out, was entitled to subrogation to Buildcorp's rights whether liable under the policy or not. Ideal's solicitor conceded as much on the hearing of the appeal. 39 By taking the claim for that order into account as a claim requiring determination on its merits, the Tribunal implicitly decided that the claim for the order was at least arguable. It was not. 40 Order 3 related to Zurich's cross-claim. It required determination only if Zurich's cross-claim was given credence. By taking the claim for order 3 into account, the Tribunal again implicitly decided that the cross-claim had at least an arguable basis in law, which it did not. 41 Order 4 was framed as a direction for particulars. Such a direction would only have been given if there was an issue to be tried in relation to which particulars were required. By taking the claim for this order into account, the Tribunal implicitly decided that there was an issue to be tried which had a basis in law. There was not for the following reasons. 42 Buildcorp's claim was not a claim for payment under a contract for residential building work within the meaning of s92 of the Home Building Act 1989. It was a claim for damages for allegedly defective work. If the construction of s92 contended for by Ideal's solicitor were correct, a householder could not claim damages against a builder for defective work unless the householder had insurance in the prescribed form. Section 94(1A) puts the matter beyond argument: the distinction between contract price and quantum meruit is irrelevant to a claim for damages for defective work. 43 Furthermore, it is apparent that, if the claim for Order 4 was well-founded, the order could as readily have been made by the Tribunal as by the District Court. No jurisdictional problem arose in relation to the claim for this order. 44 The appeal against the order transferring the proceedings to the District Court should accordingly be allowed. 45 Pursuant to s67(3)(a) of the CTTT Act, this court has power to substitute such order in relation to the proceedings in the Tribunal as, in its opinion, should have been made. The reasons provided by the Tribunal for transferring the proceedings to the District Court were wrong. All of the claims which it held it did not or might not have jurisdiction to decide were doomed to fail. Transferring the proceedings to the District Court so that such claims could be heard and determined served no purpose beyond a determination by the Tribunal that it had no jurisdiction to determine them. 46 The only reason which counsel for Zurich and Buildcorp could advance, on the hearing of the appeal, to justify the transfer order was the perceived prospect that Ideal would continue to disrupt the proceedings in the Tribunal by raising issues which the Tribunal had no jurisdiction to decide. 47 As to that, the parliament has constituted the Tribunal with limited jurisdiction. From time to time, the Tribunal will have to decide whether it has jurisdiction to hear and determine a matter. That is part of its role. The prospect that the Tribunal may be called upon to fulfil that role in a particular matter is not a good reason for transferring a case to the District Court. It is only where there are bona fide claims genuinely requiring determination and which cannot be decided by the Tribunal that a transfer of proceedings is warranted. 48 Having regard to these considerations, there should be a substituted order that the transfer application be dismissed.

Prerogative relief 49 There is an alternative approach available pursuant to the summons. Section 65 of the CTTT Act provides as follows so far as is material. 65 Review by prerogative writ etc generally excluded (1) Except as provided by this section, a court has no jurisdiction to grant relief or a remedy by way of: (a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or (b) a declaratory judgment or order, or (c) an injunction, in respect of any matter that has been heard and determined (or is to be heard or determined) by the Tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such a matter. (3) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the Tribunal has made an order if the ground on which the relief or remedy is sought is that: (a) the Tribunal had no jurisdiction to make the order, or (b) in relation to the hearing or determination of the matter, a party had been denied procedural fairness. 50 In Estate and Trust Agencies (1927) Ltd v Singapore Improvement Trust [1937] AC 898, Lord Maugham, delivering the judgment of the Court, said (at 917), To sum up this part of the case, their Lordships have come to the conclusion that the "grounds" on which the respondents made the declaration, as explained by the affidavit of their chairman, were grounds which did not justify the declaration. In other words, the respondents were applying a wrong and inadmissible test in making the declaration and in deciding to submit it to the Governor in Council. They were therefore acting beyond their powers , and the declaration is not enforceable. [Emphasis added] 51 This principle was applied in Anisminic Ltd v Foreign Compensation Commission & Anor [1969] 2 AC 147, where Lord Wilberforce said (at 210), A tribunal may quite properly validly enter upon its task and in the course of carrying it out may make a decision which is invalid - not merely erroneous. 52 In Craig v South Australia (1995) 184 CLR 168, the Court noted (at 179), If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it. [Footnote omitted.] 53 In the present case, the Tribunal erred in taking into account the Zurich cross-claim and Ideal's claim for orders as reasons for the transfer order. Those claims were so patently without efficacy that they were an irrelevant consideration. The exception provided for in s65(3)(a) is accordingly made out. The privative effect of s65(1) is avoided. 54 This court has power to grant prerogative relief. Should it do so? The taking into account of irrelevant considerations is a sufficient ground. Additionally, the decision to transfer was a decision which no reasonable tribunal could make in the circumstances of the case. I recognise the restraint to be exercised when reviewing a discretionary decision on a matter of procedure. This decision was so wrong, however, and so inimical to the maintenance of the Tribunal's role that the transfer order should not be allowed to stand. 55 The appropriate order by way of prerogative relief would be to quash the order and remit the matter to the Tribunal to make such order as is required by law. That could only be an order dismissing the application for the order.

Result 56 The end result of granting prerogative relief would be the same as deciding the matter as an appeal under s67. The result under s67 is more direct and is, therefore, to be preferred.

Costs 57 The appeal has been brought against all of the orders made on 10 June 2003. These include an order that each party bear its own costs of what are described as "the motions listed and heard today, 10 June 2003"; and an order that costs in the proceedings, apart from the costs of and incidental to those motions, be reserved. 58 As to the reference to motions listed and heard on 10 June 2003, it is the fact that two motions were listed, being the application for transfer and Ideal's application for further orders. The first of these was heard and determined. The second was not. However, I apprehend that Ideal will not now proceed with that application. 59 At the conclusion of the hearing before me, I invited submissions as to costs on an assumption that the appeal would be allowed. The solicitor for Ideal submitted that each party should bear its own costs. Counsel for Buildcorp and Zurich submitted that Ideal should pay his clients' costs of the summons and in the Tribunal as from 24 June 2002, being the date on which the Tribunal made its order (later revoked) referring the case to the Supreme Court. That was a bold application having regard to the result of the proceedings in this court. 60 A good deal of what has been done in relation to these proceedings on behalf of the respective parties has been misjudged and mismanaged. Ideal's initial application for an order declaring it had no liability to Zurich served no purpose. Zurich's cross-claim was misconceived and hopeless. Ideal's earlier application for orders which was dismissed by the Tribunal was redolent with misconception. Zurich's cross-claim was relied upon as a reason for transferring the proceedings to the District Court notwithstanding that the claim was unsupportable, as counsel properly conceded at the hearing before me. The application for further orders made by Ideal was utterly without merit. 61 In these circumstances, I would not disturb the Tribunal's order that the parties bear their own costs of the motions which were before the Tribunal on 10 June 2003. Nor would I disturb the Tribunal's order reserving costs of the proceedings otherwise incurred, for later consideration having regard to the outcome of the proceedings as a whole. 62 So far as concerns the costs of the proceedings in this court, it is apparent that both sides have contributed to a state of affairs culminating in the order transferring the proceedings to the District Court. In particular, Buildcorp and Zurich contributed to the Tribunal's erroneous decision to transfer the proceedings to the District Court by relying on an asserted need for determination of Zurich's cross-claim when it ought to have been apparent that the claim could not possibly succeed there (or anywhere). That alone, it seems to me, disqualifies Buildcorp and Zurich from recovering an order for the costs of the proceedings in this court irrespective of other considerations. 63 The appropriate order is that proposed by Ideal's solicitor, namely, that each party should pay its own costs of the proceedings in this court. 64 I make the following orders.

(2) Order 1 of the Consumer, Trader and Tenancy Tribunal made on 10 June 2003 set aside;

(3) The application to transfer the proceedings in the Tribunal to the District Court be dismissed;

(4) Each party to bear its own costs of the proceedings in this court. -o0o-

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