Nutek Constructions Pty Ltd v Slotwinski

Notice of Motion

1. On 24 November 2020, the Owner filed a Notice of Motion without the benefit of legal assistance seeking the following orders: "1. Deny plaintiff's request for leave to appeal. 2. In the alternative, grant the Defendant leave to request security of costs to the value of $37,098.50 before remitting the proceedings to the Appeal Panel for further determination."
2. The Notice of Motion was heard on 10 March 2021. This judgment deals with that Notice of Motion.

General Background

1. It is necessary to set out some background in order to understand the present dispute.
2. On 1 July 2015, Nutek and the Owner entered into a standard Residential Building Contract (the "Nutek Contract") for the construction of three residential units on a site in Balgowlah in Sydney. The Nutek Contract stated that it was for the fixed sum of $1.65M inclusive of GST. The due date for practical completion of the Works was 56 weeks after 1 July 2015.
3. After construction commenced, various disputes arose between the parties. Nutek repudiated the Nutek Contract, the Owner accepted that repudiation and terminated the contract. At the date of termination, the Nutek Contract was partially (about 25%) complete.
4. In 2016 and 2017, Nutek commenced two sets of proceedings in NCAT. They were heard together. Putting it generally, Nutek was seeking payment for work it had done on a quantum meruit basis, and for which it had not been paid.
5. Subsequently, the Owner commenced proceedings against Nutek and others in the Supreme Court of NSW, claiming damages for, amongst other things, the cost to complete the building and allegedly defective construction work. The claimed damages exceeded the jurisdictional limit of NCAT, namely $500,000, for such claims.
6. The two matters commenced by Nutek were heard together by a single member of NCAT in August and November 2017. Reasons were delivered on 2 May 2018. An order was made that the Owner pay Nutek the sum of $36,500.
7. Both parties appealed from that decision. The appeals were decided by the Appeal Panel on 28 June 2019: Slotwinski v Nutek Constructions Pty Ltd; Nutek Constructions Pty Ltd v Slotwinski [2019] NSWCATAP 158.
8. The Appeal Panel set aside the orders made by the Tribunal Member and remitted the proceedings to NCAT for further determination of Nutek's quantum meruit claim and the Owner's defence by way of a set off. The rehearing took place before another single member of NCAT, Mr G Blake SC.
9. On 13 November 2019, the Tribunal Member determined that the Owner should pay Nutek the sum of $55,558.
10. That sum was the balance remaining after a calculation made by the Tribunal Member of work carried out by Nutek on the development, which had not been paid for, and damages owed by Nutek to the Owner.
11. In the course of his decision, the Tribunal Member found that the contract price was $1.65 million inclusive of GST. At [47] of his decision, he noted Nutek's contentions to him with respect to the method of calculation of damages. He said: "47. The builder contended that the additional cost to complete the building works is … calculated by adding … the contract price under the Cutting Edge Contract … to the total of amounts paid to the builder … and deducting $1.65 million (being the contract price under the Nutek Contract)."
12. The Tribunal Member accepted that methodology of calculation of damages and applied it to arrive at the monetary result set out in [13].
13. The Owner appealed against that decision. The second Appeal Panel decided that Nutek's claim for quantum meruit was less than the Owner's set‑off entitlement. Accordingly, it allowed the appeal and dismissed the proceedings: Slotwinski v Nutek Constructions Pty Ltd [2020] NSWCATAP 216
14. It will be necessary to return to some parts of the second Appeal Panel decision in due course.
15. It is in respect of this judgment that the Summons has been filed asserting errors of law on the part of the second Appeal Panel.

Notice of Motion - Summary Dismissal

1. Although inarticulately expressed, both parties approached their submissions with respect to this ground on the basis that the Owner was seeking to have Nutek's Summons summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (the "UCPR"), or perhaps in accordance with the inherent jurisdiction of this Court. It does not matter which of these bases is relied upon as the legal test is the same.
2. Gleeson JA, in Pi v Zhou [2016] NSWCA 24, described the test which a court being asked to exercise its power of summary dismissal is required to consider. He said: "9. It may be accepted that the power to order summary dismissal is one that should be exercised with great care and not unless it was clear that there is no real question to be tried. The test to be applied has been variously expressed, including: 'So obviously untenable that it cannot possibly succeed'; and 'manifestly groundless'."
3. The underlying point is that there must be a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial or a hearing in the ordinary way: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552; Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 at [46]; Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 at [24]-[25] (French CJ and Gummow J).
4. Shortly put, there are limited circumstances within which this Court ought exercise its power under r 13.4 of the UCPR. The circumstances must be very clear and, in the exercise of that power, the Court must proceed cautiously.

Ground 1

1. The first ground of the Summons (paragraph 8), alleges an error of law on the basis that there is no evidence to support a number of identified factual findings.
2. An appellant pursuant to s 83 of the CAT Act is only able to seek leave to appeal on a question of law. An appeal brought to this Court pursuant to this section is not a general review of the entire judgment pronounced by the Appeal Panel of NCAT, nor is it a rehearing of the fact-finding process in the judgment of the Appeal Panel.
3. It is clear that a wrong finding of fact does not amount to an error of law: Waterford v The Commonwealth [1987] HCA 25; (1987) 163 CLR 54 per Brennan J; Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at [83]-[89]. Even an erroneous finding of fact, including the drawing of an inference or the erroneous failure to find a fact or failure to draw an inference, which is perverse in the sense that it is contrary to the overwhelming weight of the evidence, is not an error of law: Azzopardi v Tasman QEB (1985) 4 NSWLR 139 at 155 per Glass JA.
4. However, where there is no evidence to support a factual finding, that is a question of law not a question of fact: Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 at [91] per Hayne, Heydon, Crennan and Kiefel JJ.
5. Nutek will need to establish at the hearing of the Summons, by reference to all of the material that was put in evidence before the single Tribunal Member, Mr G Blake SC, and which found its way into the material before the Appeal Panel, that there was no evidence to establish any of the findings to which attention is drawn in the first ground of appeal in the Summons. As well, the appellant will need to show that the findings are as set out and, ultimately, the errors of fact-finding, on the basis that there was no evidence to support the findings of fact, were material to the decision made by the Appeal Panel.
6. It is not at all clear from the way in which material has been put before this Court on this Motion, that this Court has all of the material by way of evidence put before the single Tribunal member and the Appeal Panel, nor is it at all clear that there was some evidence available to the Appeal Panel upon which it was entitled to base its findings.
7. A distinction needs to be drawn between material adduced in the affidavits of the Owner on this Motion identifying matters of fact. Whilst I accept that on the hearing of this Motion, the Owner has pointed to facts which may have supported the findings of the Appeal Panel, she has failed to prove that those sources of fact were in evidence in any of the proceedings in NCAT, or available to the second Appeal Panel.
8. I am unable to accept that the question of whether there was evidence to support the findings of the Appeal Panel is so clear that the Court, in the application of the authorities, would be entitled to summarily dismiss this ground.

Ground 2

1. The second ground of appeal set out in the Summons suggests an error of law by the Appeal Panel in the construction of a clause of the Nutek Contract. This ground of appeal seeks to argue that the contract price for the Nutek Contract was not $1.65M but was in fact $2.019M.
2. Although some questions surrounding the construction of a contract may be regarded as questions of law, a determination that the contract price was $1.65M and not $2.019M, is a question of fact, and not a question of law. On that basis, the Owner would be entitled to a summary dismissal of this ground in that part of the Summons.
3. However, there is another reason which is sufficient to justify summary dismissal of this part of the claim. That is because, as is apparent from the various decisions of the Tribunal at first instance and on appeal, Nutek at all times contended in the hearings at NCAT that the contract price was $1.65M (inclusive of GST).
4. I have earlier, at [15], set out one part of the reasons of Mr Blake SC, the Tribunal Member, which recorded Nutek's submissions to him that the proper sum to be taken into account when calculating damages was $1.65M as the Nutek Contract price.
5. Mr Blake SC, the Tribunal Member, accepted that submission as to the methodology of calculation. He also accepted that submission when he made a finding at [5] that: "On 1 July 2015, the owner and builder entered into a contract in the standard form Residential Building Contract for Renovations and Additions …for a contract price of $1,650,000 inclusive of GST."
6. Nutek maintained that submission before the Appeal Panel. At [77] the Appeal Panel noted that Nutek: "… submitted that the appropriate calculation was to add the Cutting Edge Contract sum ($1,398,600) to the total of the amounts paid to or on behalf of [Nutek] ($437,887) and then deduct the Nutek contract sum ($1,065,000) leaving a balance owing to the appellant of $186,487."
7. The Appeal Panel noted that the Tribunal Member had accepted that methodology. It then went on, on the basis of the submission before it from Nutek, to find what the correct calculation of the Owner's damages was.
8. The Appeal Panel did note that there was a minor adjustment to the $1.65M contract price because both parties and the Tribunal Member had overlooked an agreed variation of the sum of $13,000 for additional ground works needed to reinforce the foundations. Thus, it concluded that the proper Nutek Contract price was $1.663M. Nothing turns on this Motion, or on the appeal by Nutek, on the question of whether or not the contract price was $1.663M or $1.65M.
9. The essential point is that at all times Nutek contended before the single Tribunal Member and before the Appeal Panel, that the contract price was $1.65M. That was the finding of the Tribunal member and the Appeal Panel. It was also based on the written document, being the Nutek contract, which was before both the Tribunal member and then the Appeal Panel. The contract itself plainly says that its price is $1.65M (inclusive of GST).
10. In other words, the facts before the Tribunal Member and the Appeal Panel supported the conclusion to which the Appeal Panel came. The Appeal Panel found the facts in accordance with the submissions made to it by Nutek. The finding of the contract price was one of fact.
11. It is now not open to Nutek to move this Court, by way of the assertion of an error of law, to suggest that the Nutek Contract price was not that which it contended it was, and that which it asked NCAT to act upon, but rather some entirely different value - being $2.019M.
12. This second ground of appeal, as contained in paragraph 9 of the Summons, is manifestly hopeless. It cannot succeed and the Owner is entitled to have it summarily dismissed.

Ground 3

1. The third ground of appeal raises a question as to whether the Appeal Panel erred in its construction of the Nutek Contract with respect to whether the installation of a lift in the course of the building work was either within the Nutek Contract or else was an item excluded from it. In that respect, it is contended in paragraph 10(b) of the Summons that there was failure on the part of the Appeal Panel: "… to give proper effect to Schedule 3 and Attachments 1 and 3 of the Nutek contract to the effect that the Nutek Contract excluded the Further Works and excluded the lift."
2. Although, the Owner has, in the course of the hearing of this Motion, made submissions to this Court as to how that ground of appeal cannot be made out, it is not at all clear to me what material was in evidence before the Tribunal member or the Appeal Panel, nor is it at all clear what is meant by the reference to various documents forming part of the contract and whether particular items were or were not included in the contract.
3. I am prepared to accept that there is an argument that this is a question of law as to what was or was not a part of the contract and which must be determined by application of various provisions of the contract.
4. The subject matter is not so clear, in my assessment, as would permit the Court to summarily dismiss this ground of appeal, no matter how unpersuasive it appears.

Notice of Motion - Security for Costs

1. The second contention in the Notice of Motion is that Nutek should be ordered to pay security for costs for the Owner.
2. Any application for security for costs of this appeal are subject to the provisions of r 50.8 of the UCPR which requires there to be special circumstances before a Court orders security for costs. The rule says: "50.8 Security for costs (1) In special circumstances, the court may order that such security as the court thinks fit be given of the costs of an appeal to the court. (2) Subject to sub rule (1), no security for the costs of an appeal to the court is to be required. … ."
3. The Owner relies upon an affidavit of Mr Thomas Howard, solicitor, to establish a reasonable estimate of costs associated with a lawyer appearing for the Owner in the current proceedings in this Court. Mr Howard, in an affidavit which was put before the Court, expressed the view that the Owner's estimated total legal costs of responding to the present appeal would be $48,190 including GST. Those calculations were made on the basis of Mr Howard's usual hourly rate and the hourly rate of an appropriately qualified junior counsel.
4. Mr George Hayek, the solicitor for Nutek, also provided evidence to the Court by way of affidavit on the quantum of costs likely to be incurred in responding to the appeal. Mr Hayek accepted that the hourly rates proposed by Mr Howard were reasonable, however, after making some adjustments to the various allowances made by Mr Howard, he concluded that the actual costs likely to be incurred by a lawyer representing the Owner would total $37,950. He then contended that it would be unlikely that, on an assessment, the entirety of those costs would be recovered but, rather, that the Owner would be likely to obtain no more than 70% of her actual costs. He accepted that a sum not exceeding $26,565 inclusive of GST would be an appropriate sum by way of security for costs.
5. In my view, just dealing with these competing considerations, once it is accepted that the hourly rates being charged are as set out in Mr Howard's opinion, there is no basis for a reduction in properly awarded party/party costs, unless it can be said that the number of hours spent were in some way excessive. To that extent, the differences between Mr Howard and Mr Hayek are largely to be found in the number of hours that counsel would be required to spend in preparation for, and in, any appearance. There was a marginal but insignificant difference in the number of hours a solicitor would be required to spend. Mr Howard expressed the view that 60 hours would be necessary for counsel, Mr Hayek expressed the view that 38 hours would be necessary for counsel.
6. Like all of these matters at this stage, it is a matter of impression. Having carefully considered the evidence given by each of these solicitors, in my view counsel is likely to require 50 hours in preparation of the matter.
7. Accordingly, the total appropriate figure, including both solicitor and counsel, for an award of security for costs would be $34,000.
8. Mr Hayek submitted that it was not open to the Court to make an order for security for costs when no lawyer has been retained to appear for the Owner and to resist the appeal.
9. Mr Howard has expressed his estimate on the basis that he would be retained to appear in the appeal, but his affidavit does not suggest that he has been so retained.
10. At the moment the Owner appears for herself - there is no solicitor on the record. And in the affidavit material filed in these proceedings, there is no mention of any intention on the part of the Owner to retain lawyers to appear for her in responding to this appeal.
11. It is clear that the Owner appeared for herself in the proceedings before the Appeal Panel, as did Nutek by its principal - being the proceedings from which this appeal is being brought.
12. I am unable to infer that, such is the difficulty of the issues being raised by this appeal, it would not be open to the Owner to decide to appear and conduct this appeal by herself. In those circumstances, there is no entitlement to security for costs.
13. In light of this conclusion, which has the consequence that the Court could not properly make an order for security for costs, it is better that I refrain from considering whether the Owner has demonstrated special circumstances such as would otherwise permit the Court to make an order for security for costs.

Conclusion

1. In conclusion, I have found that the Owner has been partially successful on this Motion and that Nutek has also been partially successful, having resisted some of the orders sought.
2. My conclusion is that the second ground of appeal, which is to be found in paragraph 9 of the Summons, is unarguably hopeless and should be summarily dismissed.
3. I have concluded that I am unable to summarily dismiss the other two grounds of appeal, weak though they appear to be.
4. I have concluded that the Owner has shown what a reasonable sum for security for costs would be, but she has not demonstrated that she has engaged lawyers to act for her on this appeal or else is likely to engage such lawyers, and therefore that any order for security for costs may be appropriate.
5. On this basis, that part of the Motion seeking security for costs must be dismissed.

Orders

1. I make the following orders: 1. Summarily dismiss paragraph 9 of the Summons filed 17 November 2020. 2. Otherwise dismiss the Notice of Motion filed by the defendant on 24 November 2020. 3. Order that the costs of the Notice of Motion be costs in the cause.

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: 25 March 2021