Manbead Pty Ltd v The Owners - Strata Plan; No 87635

The Appeal Panel's decision

1. The Appeal Panel set out the principles that govern an application for an extension of time to appeal as stated in an earlier decision of the Appeal Panel in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [22]. In short, those principles require the Appeal Panel to consider the length of the delay, the reason for the delay, the applicant's prospects of success and the extent of any prejudice that might be suffered by the respondent.
2. As to those matters, the Appeal Panel noted that the explanation given for the delay did not explain it (at [14]). It was accepted that the Owners Corporation had not submitted it would suffer prejudice (at [15]). The principal basis for refusing the extension of time sought was the Appeal Panel's consideration of the proposed grounds of appeal, as to which it concluded that the appeal had "very poor prospects of success" (at [40]).

Grounds of appeal

1. In its amended summons filed 5 April 2017, Manbead specifies three grounds of appeal, as follows: 1. The Appeal Panel erred in finding that the claim for defects made by the Owners Corporation and the six individual lot owners was a divisible one and therefore did not exceed the jurisdiction of the Tribunal under s 48K(1) of the Home Building Act 1989 (NSW) of $500,000. The Tribunal should have found that notwithstanding the six Applications of the lot owners, the Owners Corporation was the proper Applicant and that there was truly one claim. 2. The Appeal Panel erred by its failure to have regard to the contents of the Scott Schedule in evidence in determining that the claim was in respect of common property which exceeded the jurisdiction of the Tribunal. 3. The Appeal Panel erred by informing the exercise of its discretion to extend time to bring the Appeal by having regard to the errors described in paragraphs 1 and 2 above.
2. The burden of the argument sought to be made in support of those grounds is that the Tribunal had no authority to make the work order against Mr D'Amico (order 2 of the consent orders made by Member Harrowell on 28 May 2015) because the claim was indivisible and the jurisdiction of the Tribunal is limited to $500,000.
3. In his careful written submissions, Mr Dawson, who appears for Manbead, analysed the authorities which establish the principle that the consent of the parties cannot invest a court or tribunal with jurisdiction or power. That principle is well established and is not disputed by the defendants to the appeal.
4. The Appeal Panel considered Manbead's contention that the consent orders were ultra vires in that they were made in respect of an indivisible claim that exceeded the jurisdictional limit of the Tribunal. The relevant limit is contained in s 48K(1) of the Home Building Act 1989 (NSW), which provides: The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations).
5. The Appeal Panel noted Manbead's submission that the fact that the jurisdictional limit was exceeded by the consent orders was revealed by the fact that the costings listed in the (later prepared) Scott Schedule were in the sum of $568,000. The Appeal Panel said (at [20]): "The flaw in this submission is that the original claim was made on behalf of the Owners Corporation and six individual lot owners. The order made on 28 May 2015 applies to all six applications…"
6. The reference to "six individual lot owners" requires some clarification. It is correct that there were six lots. The Owners Corporation's claim was rightly viewed as being brought on behalf of all six owners. However, only five owners had filed separate claims.
7. In order to understand Manbead's proposed grounds of appeal, it is necessary to explain the claim made in the renewal proceedings. The applicants sought an order that Manbead pay a total amount in the order of $568,000. That sum was particularised as being made up of six separate amounts, referable to each of the six units, ranging between about $87,000 and $95,000. Those individual amounts in turn were made up in each case of a smaller individual amount referable to the unit (ranging between about $23,000 and $33,000) together with one sixth of certain common costs (remedial works to common property, "preliminaries", contingency, site supervision, builder margin and GST). The sum of the common costs did not exceed $500,000 and none of the individual amounts exceeded $500,000. However, as explained further below, Manbead contends that the amounts ostensibly attributed to individual units in fact relate to the common property and accordingly that the whole claim, perhaps with insignificant exceptions, is an indivisible claim that can only be maintained by the Owners Corporation (not the individual lot owners).
8. The Appeal Panel reasoned (at [22] to [32]) that the jurisdictional limit was not exceeded because none of the individual amounts making up the total (even including the allowance of one sixth of the common costs) exceeded the jurisdictional limit.
9. At [33] of the judgment, the Appeal Panel said: At the hearing counsel for the developer sought to avoid the conclusion to be drawn from the Scott Schedule that he relied on and the content of the Renewal Application, by submitting that all the Scott Schedule items, or the majority of them, related to common property taking the claim for common property above the monetary limit. There was no evidence in [the individual proceedings] to which we were referred to support this submission. Moreover, the developer did not seek leave to adduce fresh evidence to support its submission. We do not consider it appropriate to entertain submissions on each and every Scott Schedule item to ascertain whether there was any substance to counsel's submissions since the developer did not embark upon that exercise in the proceedings before the Consumer and Commercial Division.
10. On the strength of that analysis, the Appeal Panel concluded that the prospects of success of the appeal were "weak" (at [38]) or "very poor" (at [40]).

Consideration of the proposed grounds of appeal

1. The first proposed ground of appeal raises the issue of the alleged indivisibility of a claim for defects. Manbead's submission, in summary, is that the Appeal Panel's decision assumed that the several claims brought in the Tribunal were each properly maintainable whereas a series of decisions of the Court of Appeal contradicts that premise.
2. It is clear enough from the authorities relied upon by Manbead that the Owners Corporation has standing to bring a claim for damage to common property and is probably the proper plaintiff in such a claim. The issue of standing was settled by the decision of the Court of Appeal in The Owners - Strata Plan No 43551 v Walter Construction Group Limited [2004] NSWCA 429 at [49] per Spigelman CJ; Ipp and McColl JJA agreeing at [53] and [54]; applied in Vero Insurance Ltd v Owners of Strata Plan No 69352 [2011] NSWCA 138 at [60]-[61] per Sackville AJA; Allsop P and Basten JA agreeing at [1] and [2].
3. However, it is less clear whether those authorities establish that such a claim is "indivisible" in the sense contended by Manbead in the present case.
4. Manbead submitted that the decision of the Court of Appeal in Honeywood v Munnings [2006] NSWCA 215 establishes that a claim for breach of the statutory warranties is a single, indivisible claim for damages. As submitted by Mr George on behalf of the Owners Corporation, I think that decision can be put to one side. The decision turned on the notion of a composite breach rather than an indivisible claim. In a discussion of a qualification to the principle of res judicata, the Court said at [16] (per Handley JA; Giles JA and Hislop J agreeing at [43] and [44]): "This qualification does not apply here because all defects due to poor workmanship and the use of poor materials at different times during construction formed part of one composite breach of contract when the builder delivered possession of a poorly constructed house". The decision was concerned with the issue whether the same claimant could litigate a second claim (after identifying further defects). I do not think it determines the issue whether different parties can bring separate claims for the same composite breach.
5. Manbead further submitted that the decision in Vero holds that, in a claim against a home owners warranty insurer for damage to common property, "there is only one claim and not multiple claims for individual lot owners". But that was a case in which there was in fact only one claim. The issue was whether multiple excesses were payable on the policy; the insurer sought to deduct an excess for each of the 102 lot owners on whose behalf a single claim had been made by the Owners Corporation. The Court expressly declined to decide "whether or not an individual lot proprietor could make a claim under the Policy in respect of the common property": at [73].
6. Manbead emphasised that lot owners own only the cubic space between the boundaries depicted on the plan of the relevant strata scheme and do not have any legal title to the common property, citing The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272. Mr Dawson submitted that an examination of the Scott Schedule reveals that the claims in the present case were in respect of damage to common property and not individual lots.
7. The Appeal Panel's refusal to consider the Scott Schedule forms the basis of the second proposed ground of appeal. In the proceedings before the Appeal Panel, Mr Dawson endeavoured to take the members of the panel through the Scott Schedule with a view to making good the contention that by far the greater part of the claim related to common property rather than the individual lot property. Mr Dawson submitted in the present application that, in effect, the Appeal Panel stopped that course. There is some support for that contention in the transcript. The explanation appears to be that, as recorded in the judgment at [33], the Appeal Panel took the view that it was not appropriate to entertain submissions as to each and every Scott Schedule item "since the developer did not embark upon that exercise in the proceedings before the Consumer and Commercial Division".
8. In the present application, the Owners Corporation submitted that, even on a rough analysis, it can be seen that there is enough in the claims by the individual lot owners to take the Owners Corporation claim below the jurisdictional limit of $500,000. I do not think it is necessary or appropriate on the present application to resolve the parties competing contentions as to the content of the Scott Schedule. I am not persuaded that the Appeal Panel was required to undertake that task.
9. The Appeal Panel focussed, appropriately, on the position as at the date the consent orders were entered, noting (in the passage of the judgment set out above) that there had been no suggestion at that time that any of the six individual claims resolved by those orders exceeded the jurisdictional limit. I understand the Appeal Panel to have been concluding that, even if the whole of the amount claimed in the Scott Schedule was attributable to common property, it was not established that the consent orders exceeded the Tribunal's jurisdiction. The costings in the Scott Schedule were estimated after the consent orders were made. The consent orders contemplated that Mr D'Amico would undertake the work.
10. The premise of Manbead's argument is that the costings in the Scott Schedule crystallise the quantum of the claim at the earlier point in time when the work order was made. I do not think that is correct. It is by no means certain, still less an empirical fact (as contended by Manbead) that those costings reflect the quantum of the claim as at the date of the consent orders. If there is substance in the contention that the Scott Schedule represents a claim in excess of the jurisdictional limit, that is an issue that can be addressed in the renewal proceedings.
11. For those reasons, I am not persuaded that the appeal enjoys sufficient prospects of success to warrant granting leave to appeal.
12. I make the following orders: 1. The application for leave to appeal is dismissed. 2. The plaintiff is to pay the defendant's costs.

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: 28 November 2017