Nefiko Pty Ltd v Statewide Form Pty Ltd

The issues 27Nefiko submits that the Adjudicator's determination should be set aside for 3 reasons. First, it submits that the Adjudicator had no jurisdiction to determine the issue of who the parties to the contract were and fell into error in doing so. Second, it submits that there was no contract between Nefiko and Statewide Form. Rather, the contract was between Ms Cheong and Mr Farah. Third, it appears that Nefiko still relies on its contention that the Adjudicator denied it natural justice, although that contention is not pleaded in its Amended Technology and Construction List Statement and was not the subject of specific submissions by Mr Glissan QC, who appeared for Nefiko.

Submissions concerning jurisdiction 28It is convenient to take the first 2 submissions together. 29Section 7 of the Act relevantly provides: Application of Act (1) Subject to this section, this Act applies to any construction contract, whether written or oral, or partly written and partly oral, and so applies even if the contract is expressed to be governed by the law of a jurisdiction other than New South Wales. (2) This Act does not apply to: (a) ..., or (b) a construction contract for the carrying out of residential building work (within the meaning of the Home Building Act 1989) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in, or ... 30The parties accept that the existence of a construction contract that falls within s 7(2)(b) is a "jurisdictional fact" - that is, a fact on which the jurisdiction of the Adjudicator to make a determination depended. The primary submission of Mr Glissan was that that meant that the Adjudicator could not determine that fact and that the Adjudicator fell into error by doing so. For that proposition, he relied on the decision of the Court of Appeal in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393. However, Mr Glissan's submission confuses the determination of the relevant question and a decision in relation to it. The distinction was explained in the following terms by Dixon J in R v Hickman; Ex parte Fox and Clinton [1945] HCA 53; (1945) 70 CLR 598 at 618 in relation to the jurisdiction of a statutory board established to settle disputes in the "coal mining industry": [I]t is plain that the ... Regulations do not mean to give to the ... Board any power whatever to determine the ambit of the expression "coal mining industry'' or the extent of their own jurisdiction as governed by that expression. ... I do not mean to say that the Board may not, for the purpose of determining its own action, "decide'' in the sense of forming an opinion upon the meaning and application of the words "coal mining industry''. It must make up its mind whether this or that particular function on the borders of the coal mining industry does or does not fall within the conception. But it is not able to make a decision binding on the parties within the meaning of reg 9, because that is the very matter which governs the extent of the operation of reg 9, among other regulations. 31The same point was made by Brennan J in Re Adams and Tax Agents' Board (1976) 12 ALR 239 at 242: An administrative body cannot therefore lawfully exercise authority merely because it is of the opinion that it has the authority. Its opinion is not the charter of its powers and discretions. It derives its powers and discretions from and in accordance with the law. It is the court's judgment and not the administrative body's opinion which defines the extent of ... its statutory authority. ... An administrative body with limited authority is bound, of course, to observe those limits. Although it cannot judicially pronounce upon the limits, its duty not to exceed the authority conferred by law upon it implies a competence to consider the legal limits of that authority, in order that it may appropriately mould its conduct. In discharging its duty, the administrative body will, as part of its function, form an opinion as to the limits of its own authority. The function of forming such an opinion for the purpose of moulding its conduct is not denied to it merely because the opinion produces no legal effect. 32These principles have been applied to the determination of the question whether there is a construction contract for the purpose of s 7(1) of the Act: see Fifty Property Investments Pty Ltd v O'Mara [2006] NSWSC 428 at [18]ff per Brereton J. 33It follows that Mr Glissan's primary contention must be rejected. 34In determining whether a primary decision-maker (in this case, the Adjudicator) has made an error concerning a jurisdictional fact, it is for the court to determine the relevant fact on the material before it and not on the evidence before the primary decision-maker: see Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; (2004) 61 NSWLR 707 at [88] and [105] per Spigelman CJ; IWD No 2 Pty Ltd v Level Orange Pty Ltd [2012] NSWSC 1439 at [9] per Stevenson J; Fifty Property Investments at [21]. The weight that the court gives to the findings of the primary decision-maker varies with the circumstances. As Brereton J explained in Fifty Property Investments at [22]: The extent to which the reviewing court gives weight to the view of the facts taken by the decision maker in determining whether a jurisdictional fact exists varies with the circumstances [R v Blakeley, 92-93; Sankey v Whitlam [1977] 1 NSWLR 333 at 347; R v Ludeke; R v Williams, Ex parte Australian Building Construction Employees' and Builders' Labourers' Federation (1982) 153 CLR 402 at 411], relevant factors including the field in which the tribunal operates, the criteria for appointment of its members, the materials upon which it acts in the exercise of its functions, and the extent to which its decisions are supported by disclosed processes of reasoning [Minister of Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 (Gummow J)]. The principle that weight may be given to the tribunal's view of the relevant jurisdictional fact applies more where the tribunal's expertise especially equips it to provide an answer, and less where the jurisdictional fact is an expression which is a matter of ordinary usage [R v Williams, Ex parte Australian Building Construction Employees' and Builders' Labourers' Federation Queensland v Wyvill]. 35In the present case, the fact on which the Adjudicator's jurisdiction was said to depend was who the parties to the contract were. The Court is in a better position than the Adjudicator to determine that fact. 36Mr Glissan's alternative submission was that the Court ought to find that Ms Cheong and not Nefiko was a party to the contract. In the Amended Technology and Construction List Statement, it is also pleaded that Mr Farah rather than Statewide Form was a party to the contract, although Mr Glissan did not make oral submissions in support of that contention. 37In my opinion, it is appropriate to take into account subsequent conduct in determining who the parties to the contract were. I say that for 2 reasons. 38First, although at an appellate level it might still be arguable that the court should not take into account subsequent events in determining the existence of a contract as well as its interpretation, I do not think that that argument is available at first instance. There are strong and persuasive statements at the appellate level that a court can take into account subsequent events for the purposes of determining whether a contract has come into existence and the parties to it: see, for example, Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25] per Heydon JA, citing Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 668, 669 and 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 at 9149 and 9154-6; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251 at 9255. See also Tomko v Palasty [2007] NSWCA 258 at [68] per Einstein J (Mason P agreeing); Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262 at [31]. In my opinion, those statements should be followed. 39Secondly, the question whether Nefiko was a party to the contract depends largely on the question whether particular events occurred on or about 2 December 2013 - in particular, whether Ms Cheong spoke the words attributed to her by Mr Farah. In my opinion, it is appropriate for the Court to take into account subsequent events in determining the likelihood of a particular event occurring at a prior time. 40Mr Glissan submits that a number of matters support Nefiko's contention that Ms Cheong was the contracting party. Of greatest significance is the fact that Ms Cheong was the owner of the property on which the work was to be carried out, and the likelihood is that Mr Farah knew that. Secondly, he relies on the fact that the deposit was paid in cash and the receipt that was given by Mr Farah for that amount acknowledged that the sum had been paid by Ms Cheong. Third, he pointed to the scope of works prepared by Mr Elcham, which contemplated that it would be accepted by Ms Cheong as the contracting party. Fourth, he relied on Ms A Wong's email dated 17 December 2013, which referred to "our original agreement between Janette and Billy and Robert". Fifth, he relied on the fact that Mr Farah, in his affidavit evidence, suggests that Ms Cheong spoke as if she was the contracting party. So, for example, she is said to have said words to the effect of "I want some further work done". Sixth, Mr Glissan relied on the conversation between Ms V Wong and the solicitor for Statewide Form on 6 February 2014 in which Ms V Wong asserted that the invoice should be addressed to Ms Cheong. In the alternative, Mr Glissan submitted that it was open to the Court to find that Ms Cheong was the contracting party but that she had nominated Nefiko as the entity that would pay Statewide Form's accounts. 41Mr Macauley, who appeared for Statewide Form, relied on a number of matters in support of the submission that Nefiko was the contracting party. First, Ms Cheong gave Mr Farah her Nefiko business card. Second, Ms A Wong, who was a director of Nefiko, gave Mr Farah instructions. She did so from a Nefiko email address. When she gave instructions, she often used the first person plural pronoun, "we", rather than referring to Ms Cheong, which suggested that she was speaking on behalf of Nefiko. Third, Statewide Form addressed its account to Nefiko, and the first time anyone suggested that Nefiko was not the contracting party was when Ms V Wong rang Statewide Form's solicitors in February 2014 in response to Statewide Form's letter of demand. 42In my opinion, much of this evidence is equivocal. The arrangement was obviously a very informal one. English was not the first language of any of the principal witnesses. In those circumstances, little can be inferred from the precise way in which the parties expressed themselves on particular occasions. Ms A Wong lived at the house. She is Ms Cheong's sister. She gave evidence that the only email account she had was a Nefiko email account. Consequently, little can be inferred from the fact that she used that email account or that she used the expression "we". Similarly, little can be inferred from the fact that Ms Cheong said that she (rather than Nefiko) wanted particular work done, or that Mr Farah acknowledged receipt of money from Ms Cheong. The receipt was prepared by Ms A Wong and, at an informal level, it was natural to say that Mr Farah acknowledged receipt of money from Ms Cheong. Although it is true that Ms A Wong paid the deposit in cash, I do not think that demonstrates that the source of the deposit was Ms Cheong rather than Nefiko. Nothing can be inferred from the scope of works prepared by Mr Elcham, since he was not present when the agreement was reached. 43The critical question is whether Ms Cheong told Mr Farah to bill Nefiko for the work that he was to do or whether she said that she should be billed personally. If the objective intention of the parties was that Nefiko would pay for the work, then it seems to me that the objective intention was that it was a party to the contract, not Ms Cheong. 44The fact that Nefiko had no interest in the property suggests that it was not the contracting party. But that is not decisive in the circumstances of this case. The shares in Nefiko were wholly owned by Ms Cheong and Ms A Wong. Although the property was owned by Ms Cheong, she and Ms A Wong are sisters and both live at the property. It would not be surprising that they did not always distinguish between Nefiko and their own interests and there could well be reasons why they would choose to have Statewide Form's accounts paid by Nefiko rather than Ms Cheong personally. 45In my opinion, of greater significance is the fact that Mr Farah addressed the original account to Nefiko. Mr Farah did not come across as a sophisticated person. It was not put to him that, at the time he arranged for the account to be sent to Nefiko, he understood the significance of Nefiko being the contracting party rather than Ms Cheong - in particular, that the Act would not apply in the latter case - and, in my opinion, the likelihood is that he did not. On the other hand, it was natural for a person in his position to ask what work he was required to do and who was going to pay for it. Ms Cheong denies that she gave Mr Farah her Nefiko business card. However, I do not accept that evidence. It is clear that Mr Farah had that business card; and, in my opinion, the likelihood is that she gave him her business card so that he would know to whom to send his accounts. It is relevant that Ms Cheong denied that she gave Mr Farah her business card. That denial suggests that she could offer no explanation for giving it to Mr Farah other than the explanation given by Mr Farah. More significantly, when the time came to send an account for the work that had been done, Mr Farah asked Mr Elcham to address the account to Nefiko. The likelihood is that he would only have done so if that were what Ms Cheong had asked him to do. He had no other reason for doing so, and the person or entity that was going to pay his bills is something that would have been of importance to him. As I have said, if what the parties intended was that Nefiko would be responsible for paying the work, then what they must have intended was that Nefiko was the contracting party. 46It is true that Ms V Wong disputed that Nefiko was the contracting party on 6 February 2014. However, no explanation was given for why she, or one of her sisters, did not raise that issue at the time the invoice was sent. One possible explanation for why the issue was not raised before 6 February 2014 was that Ms Cheong by that stage had obtained legal advice on the demand and understood the significance of who the contracting party was for the application of the Act. In view of that possibility, and the delay in raising the issue, I do not think that substantial weight can be attached to Ms V Wong's telephone call to the solicitor for Statewide Form. 47Mr Glissan's alternative submission appears to be that s 7(2)(b) of the Act draws a distinction between the parties to the contract and the "party for whom the work is carried out". The submission appears to be that the work was carried out for Ms Cheong because it was carried out on her house even if the agreement was that Nefiko would pay for it. 48I do not accept that submission. In my opinion, the reference in s 7(2)(b) to the "party for whom the work is carried out" is intended to be a reference to the party to the contract who meets the relevant description. In other words the words, "party for whom the work is carried out" is the description used to identify the contracting party who is not the party who carries out the work. On the conclusion I have reached, that was Nefiko, since that was the entity that the parties intended would be responsible for paying for the work. 49It is not entirely clear that the question of who contracted to do the work is a jurisdictional fact. There was unquestionably a construction contract within the meaning of the Act; and it is not clear why, in that case, the Adjudicator did not have jurisdiction to determine who the parties to that contract were, except to the extent that determination of that question raised the jurisdictional fact raised by s 7(2)(b). However, even if it is a jurisdictional fact, in my opinion, the contracting party was Statewide Form. Mr Glissan did not advance any argument for why it was Mr Farah personally. Even if Mr Farah did not refer to Statewide Form at the time he agreed to do the work, it is clear from everything that happened subsequently that he was contracting, if not for a disclosed principal, then an undisclosed one - namely, Statewide Form. Nefiko admitted that Statewide Form was the contracting party during the course of the adjudication proceedings. In my opinion, that is compelling evidence that Statewide Form was the contracting party.

Natural justice 50The argument that the Adjudicator denied Nefiko natural justice by refusing to consider the submission its lawyers made on 6 March 2014 was raised at the interlocutory hearing. Again, Mr Glissan did not make any submissions for why the conclusions reached in relation to that application were wrong. Section 22(2) of the Act sets out the only matters the Adjudicator could have regard to in making his determination. The letter dated 6 March 2014 was not one of them. Despite that, the Adjudicator did consider the issue whether Nefiko or Ms Cheong was a party to the contract. Accordingly, there was no denial of natural justice.

Orders 51The orders of the Court are that the proceedings be dismissed with costs.

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