KALOKERINOS & ANOR v HIA INSURANCE SERVICES P/L & ANOR - [2004] NSWCA 312 - NSWCA 2004 case summary — Zoe

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KALOKERINOS & ANOR v HIA INSURANCE SERVICES P/L & ANOR

[2004] NSWCA 312

Court of Appeal (NSW)|2004-12-10|Before: Santow JA, Bryson JA, Services P

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Source facts

Court

Court of Appeal (NSW)

Decision date

2004-12-10

Before

Santow JA, Bryson JA, Services P

Source

Original judgment source is linked above.

Judgment (55 paragraphs)

[1]

CITATION : KALOKERINOS & ANOR v HIA INSURANCE SERVICES P/L & ANOR [2004] NSWCA 312 HEARING DATE(S) : 06/09/2004 JUDGMENT DATE : 10 December 2004

[2]

JUDGMENT OF : Santow JA at 1; Bryson JA at 2 DECISION : Appeal struck out as incompetent: detailed orders at [70]

[3]

CATCHWORDS : APPEAL - from Consumer Trader and Tenancy Tribunal - CTTTAct s.67 - question with respect to a matter of law - appeal to Common Law Division - purported further appeal to Court of Appeal - numerous supposed grunds of appeal were not questions with respect to a matter of law within s.67 - acceptance by builder of repudiation was not enforcement of building contact within Home Building Act s.10 - consideration of circumstances in which an issue is a question with respect to a matter of law and references in case law - express advertence to the matter of law is not necessarily required - appeal struck out as incompetent. Commercial Tribunal Act 1984 Compensation Court Act 1984 Consumer, Trader and Tenancy Tribunal Act 2001 Dust Diseases Tribunal Act 1989 Fair Trading Tribunal Act 1998 LEGISLATION CITED : Fair Trading Tribunal Regulation 1999 Home Building Act 1989 Home Building Regulation 2004 Income Tax Assessment Act 1936 Residential Tribunal Act 1998 Supreme Court Act 1970 Supreme Court Rules 1970 AJ Bignell v. SG Edenden [2004] NSWSC 27 Amaca Pty Ltd v. The State of New South Wales [2004] NSWCA 124 Canham v. Australian Guarantee Corporation Limited (1990) 20 ALD 361 Custom Credit Corporation Ltd v Commercial Tribunal of New South Wales (1993) 32 NSWLR 489 Faraday v. Residential Tribunal [2002] NSWSC 126 General Steel Industry Inc v. Commissioner of Railways (NSW) (1964) 112 CLR 125 CASES CITED : Ideal Waterproofing Pty Ltd v. BuildCorp Australia Pty Limited [2004] NSWSC 765 Janos Hoey v. Consumer Trader and Tenancy Tribunal [2002] NSWSC 1023 Krew v. Commissioner of Taxation (1971) 45 ALJR 324 New South Wales Land and Housing Corporation v. Stannard [2000] 50 NSWLR 89 Rouvinetis v. Residential Tribunal [2002] NSWSC 1007 Smith v Collings Homes Pty Ltd [2004] NSWCA 75 Sullivan v. Waltons Credit Limited (1990) ASC 56-023 Vetter v. Lake Macquarie City Council (2001) 202 CLR 439 Leo Kalokerinos and Marcia Bounds - Respondents/Appellants PARTIES : HIA Insurance Services Pty Limited - Applicant/First Respondent The Consumer Trader & Tenancy Tribunal (NSW) - Applicant/Second Respondent FILE NUMBER(S) : CA 41119 of 2003 COUNSEL : M S Jacobs QC - Appellants D F Rofe QC - First Respondent McLaughlin & Riordan - Appellants SOLICITORS : McLachlan Chilton - First Respondent Crown Solicitor - Second Respondent

[7]

FRIDAY 10 DECEMBER 2004 KALOKERINOS & ANOR v HIA INSURANCE SERVICES PTY LIMITED & ANOR Judgment 1 SANTOW JA: I agree with Bryson JA. 2 BRYSON JA: These reasons relate to the first respondent's Amended Notice of Motion filed on 4 May 2004 claiming an order that the appellants' Notice of Appeal with appointment filed on 3 March 2004 and Supplementary Notice of Appeal filed on 31 March 2004 be struck out with costs pursuant to Pt.51 r.25(1) of the Supreme Court Rules 1970 on the ground that each Notice is incompetent. The appellants rely on the Supplementary Notice of Appeal, not on the Notice of Appeal with Appointment earlier filed, and it is not disputed that they are entitled to do so. 3 Doctor Kalokerinos and Ms Bounds, who are the appellants, brought an application in the Fair Trading Tribunal, Home Building Division, against a builder named Baltimore Constructions Pty Limited which later passed into administration and was deemed to be insolvent. On 25 June 2001 the appellants brought another application against HIA Insurance Services Pty Ltd (the insurer), the first respondent. These applications arose out of an agreement for building and constructing a home for the appellants. While the application was pending the Fair Trading Tribunal was replaced by the Consumer, Trader and Tenancy Tribunal (CTTT), Home Building Division and the application against the insurer continued there, and was heard and determined by Ms Christine Paull, a Member in turn of both those Tribunals. On 25 July 2002 the Tribunal Member published Reasons for Decision to dismiss the application and made a costs order against the appellants. 4 The appellants appealed by Summons, now Further Amended Summons filed on 24 June 2003, to the Supreme Court. The matter came before the Administrative Law List of the Common Law Division where the List Judge referred it to a Master for hearing. The appeal was heard by Master Harrison on 24 June and 4 November 2003. The learned Master gave judgment on 4 November 2003, and ordered that the appeal be dismissed; and made related orders including remittal to the Tribunal Member for determination of costs of the application, and an order for costs of the appeal. The last day of the time to appeal from the Master's decision was Monday 1 December 2003; on 2 December 2003 the appellants filed Notice of Appeal without Appointment, on 3 March 2004 they filed a Notice of Appeal with Appointment for 22 April 2004, and on 31 March 2004 they filed a Supplementary Notice of Appeal. On 23 April 2004 the first respondent filed a Notice of Motion, now the Amended Notice of Motion of 4 May 2004, for an order that the appeal be struck out. The Amended Notice of Motion was heard on 6 September 2004. 5 I distinguish the contention that an appeal is incompetent because the grounds of appeal put forward are outside the limitations on the right of appeal conferred by legislation from a claim for summary disposal on the principles associated with General Steel Industry Inc v. Commissioner of Railways (NSW) (1964) 112 CLR 125, that is that an appeal should be summarily dismissed because there are overwhelming reasons why the matters sought to be argued cannot succeed. The terms of the Notice of Motion mean that if the first respondent's Notice is to succeed, it must succeed on the first basis. 6 The right of appeal from the Tribunal to the Supreme Court was conferred by s.67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (CTTT Act). I set out the first three subsections of s.67: 67 Appeal against decision of Tribunal with respect to matter of law

[20]

It is the Applicants' case that the contract was for a fixed price of $350,000 or alternatively, a cost plus contract with a limit of $350,000. The terms of the contract are defined by the documents marked 5, 6 and 7 at Exhibit A1, the Council plans, the understanding between the parties that the work was to be done for no more than $350,000 and the statutory terms implied into the contract under the [ Home Building Act 1989]. 12 The building work started in the week of 16 August 1999, and as work progressed the appellants paid several progress payments. They claimed that they only became aware around 9 November 1999, when they received progress claim 4, that the cost of building works had exceeded $350,000. They paid progress claims 4 and 5, and they also paid other cash payments to the builder, suppliers and subcontractors and by December 1999 they had paid $462,200. On 24 January 2000 the appellants received progress claim 6 for $90,000. They paid $15,000. There was a meeting on the site on 29 January 2000. There was no resolution, and the builder left the site and did no further work. A further meeting did not achieve resolution and the builder stated on 29 February 2000 that the public liability insurance cover had expired. 13 In the Fair Trading Tribunal the appellants claimed as damages the money they paid in excess of $350,000 which they said was an agreed limit to the builder's charges, and they made several other claims. Some rectification work was done at the insurer's expense under consent orders on 28 March 2002. The amount which the appellants could claim against the insurer was limited to $200,000, less the value of that rectification work. The case of the insurer was that there was no agreement for a fixed price nor a cost limit of $350,000. The Tribunal Member said: There are two broad issues I must determine. Firstly, whether the parties entered into a fixed price or cost plus contract. Secondly, whether the Applicants have suffered "loss" or "damage" within the categories provided for under the relevant insurance policy. There are also some associated issues relating to the HBA.

[30]

22 Agreed Issue 6 was as follows: Was the builder in breach of the [ Home Building Act 1989] and if so what is the effect of this? 23 To deal with Agreed Issue 6 the Member considered sections 6, 7 and 10 of the Home Building Act 1989. Section 10 of the Act in the form which it took at the relevant time for the present purposes was as follows. 10 Enforceability of contracts and other rights (1) A contract to which the requirements of section 7 apply that is not in writing or that does not have a sufficient description of the work to which it relates is not enforceable by the holder of the licence against any other party to the contract. (2) Subsection (1) does not apply to a contract entered into in the circumstances described in section 6(2). (3) A person who contracts to do work in contravention of this Division or who contracts to do work under a contract that does not comply with this Division: (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, but (b) is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person. (4) This section does not affect the liability of the person for an offence against a provision of or made under this or any other Act. 24 The reference to s.6 has no present relevance. Section 7 prescribes that the contract must contain a number of matters including "2(c) A sufficient description of the work to which the contract relates." 25 The Member discussed the possible effects of breach of s.7 and the operation of s.10 and expressed views on them. Among other things she said "… I have formed a view that subs.10(3) of the Act does not extend so far to prevent a builder from bringing a quantum meruit claim." However there was no quantum meruit claim by the builder under adjudication. The Member expressed several other views on this question. However none of these views appears to have led to any order or to have been necessary for the Member's decision. 26 The Member also dealt with Agreed Issues 7, 8 and 9, which do not appear to have any continuing significance.

[31]

27 In a judgment published on 4 November 2003 Master Harrison addressed the grounds of the appeal to the Common Law Division at length. There were conclusions to the following effects: findings relating to there being no contractual term fixing the price at $350,000 were findings of fact; as the builder did not institute proceedings for breach of contract and was not entitled to do so, the impacts of s.7 and s.10 of the Home Building Act 1989 on the builder's rights were something which it was not necessary for the Tribunal Member to canvass. The Master dealt with the sixth ground of appeal before her which stated: [8] …Sixthly, the Member misdirected herself as to the operation and effect of s.10 of the Act by holding that the builder was entitled to enforce the remedy of termination of the contract notwithstanding the admitted failure by the builder to have complied with s.7 of the Act. 28 The Master said: [19]. In relation to appeal ground 6, the Tribunal Member did not determine that the builder was entitled to enforce the remedy of termination, but rather she stated that she did not find that the builder wrongfully refused to continue with and rectify the work [para 68]. The Tribunal Member held that it was the applicants who repudiated the contract and the builder was entitled to accept it [para 69]. 29 The Master dealt with a number of other matters which were not debated in the proceedings before the Court of Appeal. 30 The appellants appeal against two parts of the decision of the Master. The first (passage A) relates to the cost of alternative accommodation, to be understood by referring first to the treatment by the Tribunal Member in paras 98 to 101 of her Reasons for Decision, which I referred to earlier. 31 The Master at paras [25] - [27] of her judgment said: [25]. The parties agreed that [sic] by consent that the builder was liable to the applicants for items of defective building which were identified. A copy of the consent orders is annexed to the judgment. The respondent submitted that accommodation was only sought from the date when the works were due to be completed. However, in the points of claim at paragraph 23(a) to (c) reference is made to the damages sought for the cost of rectification of defective works. [26]. In relation to the accommodation the Tribunal Member stated [in] paragraphs 98 to 101 of her reasons:

[32]

[and those paragraphs appear at para 17 of my judgment] [27]. The finding that the applicants had not suffered loss or damage was open to the Tribunal Member on the facts as she found them. It was also open to the Tribunal Member to find that the evidence in relation to alternative accommodation costs was less than satisfactory. There is no error of law. 32 Ground 3 of the Supplementary Notice of Appeal appears to set out the basis of the challenge to this part of the Master's decision, but goes considerably further than could possibly be justified, having regard to the issues before the Tribunal Member and the Master. The grounds in para 3(d) are difficult to follow, but were explained by the appellants' counsel as being to the effect that it was wrong to set off claims for loss or damage by the appellants against the builder and hence against the insurer in relation to unpaid progress claims rendered by the builder because to do so was to enforce the building contract in breach of subs.10(1) and (3) of the Home Building Act 1989. It was said that to accept a repudiation was a remedy and that by subs.(3) the builder was forbidden to enforce the contract by accepting a repudiation. There is no sign in the Tribunal Member's reasons that she adjudicated this question, and the terms of the Agreed Issues, referred to in the Member's reasons show that she was not asked to adjudicate that question. 33 Although it is not necessary for me to act on this basis, I would not think that bringing an entitlement of the builder into consideration when determining the appellant's loss or damage for the purpose of the insurance claim would be in breach of subs.10(1) and its provision to the effect that the building contract is not enforceable by the licensee, meaning the builder; nothing in these events could constitute enforcement by the builder. For similar reasons I do not see subs.(3) as operating. 34 A provision in legislation that a contract is not enforceable is not a provision that rights do not arise under it, and does not prevent establishment of and decision by reference to those rights, if they are relevant in some other context than enforcement of the contract by a person whose right to enforce the contract is forbidden. There is no provision to the effect that the contract is void; and the contract continues to exist and to have whatever effects its provision produce on the rights of other parties than the licensee referred to in s.10. 35 The appellants' contention in relation to Ground 3 could not possibly succeed for reasons both of form and of substance. As a matter of substance, acceptance of repudiation and termination of the building contract is not a measure of enforcement by the builder within the meaning of s.10; the builder did not engage any public authority, or any arbitration machinery or any contractual machinery, to enforce the contract so as to compel the appellants to comply with the contract, or to do anything. The actions which the builder took cannot fall within the concept of enforcement in any way; s.10 does not interfere with the working out of rights under the contract at any point except at a point of enforcement. So far as appears the builder had never taken any kind of enforcement proceedings or any other step of enforcement. But more importantly, the prohibition in s.10 is directed only at the builder, and has no operation against the insurer, while the rights of the appellants and the rights of the insurer in respect of the insurance must turn upon establishment of the rights of the appellants and of the builder under the building contract; what those rights were can be established without any measure of enforcement.

[36]

39 Limited rights of appeal are sometimes conferred in legislation which refers to "a point of law" or "a question of law." The words of subs.67(1) are not in one of these familiar forms, and raise for consideration the possibility that when the legislation refers to the Tribunal "[deciding] a question with respect to a matter of law," the subsection might be intended to refer to deciding a question which is in some way wider than or different to simply deciding the matter of law, such as a question of the kind referred to (not at all clearly) as a question of mixed fact and law, in which decision is required on the application of a legal test or a standard to the facts under consideration; the facts as well as the law must be decided, in the process of deciding what result is produced by their interaction. 40 The terms of subs.67(1) and particularly the words "with respect to" in their context seem to me to be capable of bearing a meaning in which the decision which may be appealed against is a decision specific to a matter of law. However they also seem to be capable of or at least to raise for consideration whether they bear another meaning in which the decision is one in which a question of law is involved, but the decision is or may be a decision on some wider matter than the question of law itself. In the first reading the words "a question with respect to" make the relation between the decision and the question of law specific; in the second reading the longer expression including these words is employed to indicate some penumbrum of meaning wider than the question of law itself. 41 The limitation of the subject matter of appeal is recognised in the opening words of subs.(3) - "After deciding the question the subject of such an appeal …"; and subs.(3) goes on to state what the Court may then do - affirm the decision of the Tribunal on the question, make such order as should have been made or to remit its decision on the question to the Tribunal and order a rehearing. In my opinion s.67 makes a careful delimitation of what the Supreme Court may do. The Supreme Court may only deal with a decision on a question with respect to a matter of law which is appealed against, and subs.67(3)(a) does not have the effect of making an appeal against such a decision a gateway into a wider review and correction of the proceedings in the Tribunal. In careful language s.67 authorises the Supreme Court to decide the question the subject of the appeal; it does not seem to me to be consistent with the provisions of s.67 overall and the careful language which it uses in delimiting and conferring power to interpret subs. 67(3)(a) as by implication greatly widening what may be the subject of an appeal. Subsection 67(3) speaks of what the Supreme Court may do after deciding the question the subject of an appeal, and confers no authority to go on to decide any other question.

[43]

49 In New South Wales Land and Housing Corporation v. Stannard [2000] 50 NSWLR 89 Davies AJ dealt with an appeal under s.62 of the Residential Tribunal Act 1998. Subsection 62(2) which conferred a right of appeal in similar (but not identical) terms to subs.67 of the CTTT Act. When referring to subs.62(2) Davies AJ said at [90] "The appeal is limited to a question of law". The same view of s.62 was taken by Dunford J in Faraday v. Residential Tribunal [2002] NSWSC 126 and by Foster AJ in Rouvinetis v. Residential Tribunal [2002] NSWSC 1007. 50 In Janos Hoey v. Consumer Trader and Tenancy Tribunal [2002] NSWSC 1023 Master Malpass was of the view that the issue raised in the appeal under subs.67(1) of the CTTT Act was: 18. The plaintiff bears the onus of satisfying the Court that there has been an error of law justifying the disturbing of the decision. 51 In Smith v Collings Homes Pty Ltd [2004] NSWCA 75, an appeal from the CTTT under s.67 was heard by Master Malpass and there was a further appeal to the Court of Appeal. Mason P said of s.67: 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. 24 In his reasons Master Malpass adverted to an earlier decision of his own, which acknowledged some uncertainty about the matter. Reference should also be made to Custom Credit Corporation Limited v The Commercial Tribunal of New South Wales (1993) 32 NSWLR 489, and Custom Credit Corporation Limited in Liquidation v The Commercial Tribunal of NSW, [1999] NSWSC 1021, James J, unreported 13 October 1999. 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. 52 In the same appeal, Handley JA said: 60 … I agree with the reasons of the President and the orders he has proposed. I will only add some brief remarks about the scope of s67(1) of the CTTT Act . This provides for a more restricted right of appeal on the question of law for the Supreme Court than is ordinarily provided for in the State statutes. It is arguable that the right of appeal extends to legal decisions where such a decision was necessarily made by the Tribunal but is not apparent on the face of its decision. 61 It does seem clear, on any view, that the section prevents a new point of law being taken for the first time on appeal. It is not necessary for this Court to extend the right of appeal under section 67(1) in this case. I say nothing further on this section. 53 These dicta do not support a broad view of what subs.67(1) authorises. 54 In AJ Bignell v. SG Edenden [2004] NSWSC 27, Shaw J said at [10]: [10] Section 67 of the Consumer, Trader & Tenancy Tribunal Act 2001 confines an appeal to this Court to a decision of a question with respect to a matter of law. The onus is on the plaintiff to establish the existence of this error: Janos Hoey v Consumer Trader & Tenancy Tribunal & Anor [2002] NSWSC 1023 at [18]. 55 In Ideal Waterproofing Pty Ltd v. BuildCorp Australia Pty Limited [2004] NSWSC 765 at [27 to 33] Sperling J considered the operation of s.67, and disposed of the proceedings at [34] on the basis that "In the present case, the Tribunal implicitly decided questions of law and did so erroneously." Sperling J was not required to express his view on whether any wider ground of appeal was available. 56 On the occasions known to me where Judges of the Supreme Court and the Court of Appeal have made observations on subs.67(1) they have consistently treated the right of appeal as confined to a question of law, and have not treated the words of the subsection as giving any wider right of appeal. 57 The CTTT Act establishes the Tribunal to take the place of the Residential Tribunal and the Fair Trading Tribunal. Subsection 67(1) confers a right of appeal in similar terms to subs.62(2) of the Residential Tribunal Act 1998, but in somewhat different terms to subs.61(1) of the Fair Trading Tribunal Act 1998, which created a right of appeal to the Supreme Court on a question of law. Appeals from the Fair Trading Tribunal were further limited by cl.18 of the Fair Trading Tribunal Regulation 1999. On 19 September 2001, in his Second Reading Speech on the Bill for the CTTT Act the Minister for Fair Trading Mr Watkins said: Under the existing Tribunal's legislation, appeals may be made on matters of law from decisions of the Residential Tribunal, but in the case of the Fair Trading Tribunal in some instances there is no right of appeal. In some cases, matters involving amounts of money of $25,000 or less could be reheard by the Tribunal, but Supreme Court appeals were not available. These differences are removed by this Bill and all decisions of the Consumer Trader and Tenancy Tribunal will be appealable to the Supreme Court on matters of law.

[48]

63 Counsel for the appellants contended that the effect of s.10 was that where the builder had to comply with s.7 of the Home Building Act 1989, the builder could not enforce the provisions of the contract; and that this had the consequence that the contractual rights of the appellants in relation to the builder, and their loss and damage in relation to their claim on the Insurance Policy could not and should not be determined on the footing that the builder was entitled to terminate or that the builder did terminate the building contract for repudiation by the appellants. This contention could not succeed for reasons which I expressed earlier. Yet more importantly, this contention, although advanced in the submissions, does not reflect anything found in the Supplementary Notice of Appeal or anything found in the Tribunal Member's decision which can be referred to as deciding a question with respect to a matter of law. 64 Counsel for the appellants outlined reasons upon which he contended that it might be thought that the finding that there was no agreement capping the amount of expenditure might appear to other persons deciding the facts to be unreasonable. In relation to the issues raised by the Notice of Motion, whether other deciding facts would come to a different view to that reached by the Tribunal Member is not a relevant consideration. Counsel contended that if there was an appeal against a decision on a question with respect to a matter of law, then every other appeal ground might be argued. For the reasons I have given earlier, I do not accept this contention. 65 It was then contended that it was necessary for the Tribunal Member to construe ss.7, 10, 92 and 94 of the Home Building Act 1989 and r.43 of the Home Building Regulation 2004, and for this reason the decision relating to the appellants not having incurred any damages was a decision with respect to a matter of law. 66 Notwithstanding the review of other issues made by the Tribunal Member, the decision on damages was equally based on the last consideration mentioned in her Reasons, that is a finding of fact to the effect that it was not accepted that expenditure for alternative accommodation had been incurred. This finding and this ground for the conclusion are not open to appeal, and a claim to appeal against a decision establishing alternative grounds for the outcome is only nominally and not in reality an appeal. Success on that point could not influence the outcome. 67 The appellant's counsel contended with respect to costs that it was a consideration adverse to the award of costs to the first respondent in the event of its success in the Notice of Motion that it had not entirely complied with Pt.51 r25. It was contended that although the Notice of Motion was filed within the time prescribed by that rule, it was not served until 27 April 2004 which was the day after the period available for filing and serving such a Notice of Motion. No practical prejudice or other consequence of this element of lateness was referred to and I do not believe that there could be any. It should be recalled that the appellants' Notice of Appeal was filed a day out of the time prescribed by the Supreme Court Rules 1970, and that thereafter the appellants took over four months to file the Supplementary Notice of Appeal setting out the grounds actually relied on; in this context a day's lateness on the part of the respondents has no significance. The late service of the Notice of Motion is not a significant element among the considerations affecting any discretionary decision as to costs and in my view the appropriate response is that the Court of Appeal should of its own motion extend the time available for service of the Notice of Motion by one day.