Pool and Spa Builders Pty Ltd v Nicole McCarthy and Andrew McCarthy

NCAT Appeal Panel|2014-12-16

Introduction 1In this matter the appellant seeks to appeal against a decision of a member sitting in the Consumer and Commercial Division of the Tribunal (the Tribunal). The respondents had alleged that the work done by the appellant in the construction of a swimming pool was not carried out in a proper and workmanlike manner and was in breach the warranties contained in the Home Building Act 1989. After a hearing on 1 May 2014, at which the appellant did not appear, the Tribunal ordered the appellant to pay the respondents the sum of $14,374.80 compensation, being the cost of rectification of the swimming pool. 2The appellant seeks orders from the Appeal Panel setting aside the Tribunal's order and that the proceedings be returned to the Tribunal for re-hearing. 3Subject to a question of law we discuss later in these reasons. This is a matter in which the appellant requires leave to appeal. For the reasons below, we consider that leave to appeal should be refused, and that the appeal otherwise be dismissed.

Leave to appeal - principles to be applied 4The Civil and Administrative Tribunal Act 2013 (the Act) sets out the basis upon which appeals from decisions of the Consumer and Commercial Division of the Tribunal can be made. Under s80 of the Act an appeal may be made as of right on any question of law (s80(2)(a)), or with leave of the Appeal Panel on any other grounds (s80(2)(b)). 5In the Notice of Appeal the appellant does not claim that the Tribunal made an error of law. 6The appellant states that the grounds of appeal include that the decision was not fair and equitable. This appears to be a reference to clause 12(a) of Schedule 4 of the Act. Schedule 4, clause 12 of the Act provides that an Appeal Panel may grant leave only if satisfied the appellant may have suffered a substantial miscarriage of justice because: (a)the decision of the Tribunal was not fair and equitable; or (b)the decision of the Tribunal was against the weight of evidence; or (c)significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 7The expression "substantial miscarriage of justice" was considered by an Appeal Panel of the Tribunal in Collins v Urban [2014] NSWCATAP 17, and summarized at [71] and [79] as follows: [71]. . . [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred. . . . [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred." 8The general principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted were also set out in Collins v Urban, at [84]: The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2)Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed. 9Even if an appellant establishes that they may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave under s 80(2) of the Act: Pholi v Wearne [2014] NSWCATAP 78 at [31]. Procedural history 10The appellant constructed the swimming pool the subject of the dispute in 2007. In 2012 the respondents commenced proceedings against the appellant. Prior to the commencement of the proceedings Blue Haven Pools and Spas Central and North Coast Pty Ltd (Blue Haven) acquired a franchise from the appellant to conduct the business previously conducted by the respondent on the Central and North Coasts of NSW. It was a condition of the franchise acquisition by Blue Haven that it would carry out any warranty work arising out of contracts that had previously been completed by the appellant in the warranty area. 11A directions hearings was held on 2 September 2013, and the appellant directed to file its documents on or before 28 October 2014. On 8 November 2013 Coyne Legal Solicitors advised the Tribunal that it represented the appellant. On 8 November 2013 the appellant sought an extension of time for the appellant to comply with previous orders for the filing of evidence, and also sought to vacate the hearing date of 27 November 2013. Directions were made vacating the hearing date, and directing the appellant to file its documents on or before 6 December 2013. 12No documents were filed by the appellant as directed. However, an expert's report obtained by the appellant had been served on the respondent (ie the applicant below). 13The hearing was held on 1 May 2014. There was no appearance at the hearing by the respondent. Mr Dennis Nolan appeared, and informed the Tribunal that his company, Blue Haven, had purchased the business of the respondent and was liable for any warranty claims against the respondent. However, as Mr Nolan had no authority to represent the appellant, he was excused from the hearing, and the matter proceeded in the absence of the respondent. The Tribunal ordered the respondent to pay the applicant $14,374.80. It should be noted that the appellant acknowledges that Mr Nolan expressly stated he did not represent the respondent (now the appellant). 14Shortly afterwards the appellant sought a stay of that order. On 24 June 2014 the Appeal Panel dismissed that application and made directions for the filing of evidence in support of the application for leave to appeal and the appeal.

Appellant's Evidence on Appeal 15The appellant has filed a statement of Mr Glenn Coyne dated 10 July 2014 and a statement of Mr Nolan dated 9 July 2014. 16Mr Coyne is the principal solicitor of Coyne Legal. He states that after the commencement of the proceedings in November 2012 he was instructed by the appellant that Blue Haven and Mr Nolan would "conduct the proceedings, attend to any warranty issues and negotiate with the [respondents] pursuant to the franchise agreement between the appellant and Blue Haven". He says that from November 2012 all instructions were received from Mr Nolan. 17Attached to his statement is a copy of a report of Civil & Structural Engineering Design Services Pty Ltd dated 14 November 2013 (the Civil & Structural Report). That report, which is addressed to "The Manager" of Blue Haven, was served on the respondent's solicitors on 22 November 2013. Also attached to his statement were copies of correspondence evidencing settlement discussions between the respondents and Blue Haven. 18In the circumstances Mr Coyne submits that the appellant and the appellant's solicitors were all times aware of the involvement of Mr Nolan and Blue Haven in the conduct of the proceedings and in the negotiations leading up to the hearing on 1 May 2014. 19Mr Nolan states that he is the sole director of Blue Haven. He says that on August 2011 he and Blue Haven entered into a franchise agreement with the appellant for the acquisition of the pool and spa business which had previously been conducted by the appellant on the Central and North coasts of New South Wales. He says that pursuant to that franchise agreement he undertook to meet all warranty claims the appellant rising other contracts which had been completed by it in the Central North coast areas of prior to the franchise agreement being entered into. 20Following the commencement of proceedings he was contacted by a director of the appellant and requested to deal with the proceedings pursuant to the terms the franchise agreement. He says that following this discussion he was "solely involved" on behalf of Blue Haven in dealing with the respondents claim. He attended a site inspection in July 2013, and then commissioned a report from an engineer in respect of the pool and defects. He made offers through his solicitor to carry out some works as a means of settling the claim, but these negotiations broke down on 28 or 29 April 2014. 21He then decided to attend the hearing on 1 May 2014 himself. He says that he understood that the only matters in dispute with a cause of the defects in the pool and the responsibility for and cost of any rectification works. He says those issues were covered by his expert's report. 22He notes that when asked by Tribunal whether he was in officer of the appellant he answered no, and stated that he did not hold an authority from it to appear at the hearing on its behalf. He says he did not appreciate that if he had been able to produce an authority that he could represent the appellant. He says he did not seek legal advice in relation to the question of authority when the member adjourned the proceedings as he understood that without some written authority with him at the hearing he could not represent the respondent. 23He also says he was not given the opportunity to state to the Tribunal his involvement in the proceedings from November 2012 and that he had responsibility under the franchise agreement to deal with the warranty issues.

Appellant's Submissions 24In its Notice of Appeal the appellant states its grounds of appeal as including, but not being limited to, "the decision was not fair and equitable". In its submissions of 14 July 2014 the appellant also submits that leave should be granted on the basis of evidence being available that was not previously available at the time of the hearing.

Decision was not fair and reasonable 25The appellant submits that Mr Nolan was "excluded" from the hearing and the issues between the parties were determined by the Tribunal in the absence of the appellant on the basis that Mr Nolan had no authority to represent it. The appellant submits that Mr Nolan had both actual and ostensible authority to represent it. The actual authority is said to arise from the fact that Blue Haven was "specifically authorised and, in fact, obliged to carry out all warranty work". The ostensible authority arose from the fact he negotiated with the respondents, attended a site meeting, commissioned a report and served that report on the respondent's solicitors, and made a number of offers to settle the proceedings in the name of Blue Haven. 26The appellant submits that Mr Nolan was not given the opportunity to fully explain his involvement and had he been permitted to do so it would have been clear to the Tribunal that he had both actual and ostensible authority to act for the appellant. The appellant submits it was unfair of the Tribunal to dismiss him from the proceedings and to deal with the matter in the absence of any representation on the part of the respondent. 27In the circumstances the appellant submits that Mr Nolan's confusion and misunderstanding on the question of authority and representation led to his decision which was not fair and equitable in the circumstances.

Evidence now available not previously available. 28The appellant also submits that evidence is now available that was not previously available of the hearing (see clause 12(c) of Schedule 4 of the Act), namely the Civil & Structural Report. The appellant acknowledges that Mr Nolan had the report with him at the hearing, but submits that that report was not "technically" available at the hearing as his lack of authority precluded the report from being tendered in evidence.

Respondent's submissions 29The respondent's in their Reply state that the appellant failed to particularise its grounds of appeal or how it has suffered a substantial miscarriage of justice. 30In its submissions filed 29 October 2014 the respondents submit that, in summary, the Tribunal was entitled to rely the repeated submissions of Mr Nolan that he was not authorised to appear at the hearing on behalf of the appellant. The respondents submit the Tribunal was entitled to rely upon those submissions given that : (a)no correspondence had been filed with the Tribunal or served on the respondents detailing Mr Nolan's or Blue Haven's interest in the proceedings; (b)contrary to the appellant's submissions Mr Nolan was afforded the opportunity to explain his position in relation to the appellant to the Tribunal, and did so; (c)following that explanation the Tribunal adjourned the proceedings to enable Mr Nolan to consider his position and consult his legal representative; (d)following the adjournment Mr Nolan maintained that he understood that he required authority in order to represent the appellant and maintained that he did not have that authority and that he did not represent the appellant. 31The respondents submit that despite being legally represented and fully aware of the substance and nature of the dispute the appellant failed to ensure that either their legal representative or an authorised officer or other representative attended for the purposes of the hearing. Accordingly the Tribunal was entitled to proceed with the hearing in the absence of a representative of the appellant. 32The respondents submit that it would be manifestly unjust and cause unreasonable hardship on the respondent in the form of further delay and costs if the decision of the Tribunal was set aside, particularly given the vacating of the prior hearing date on 27 November 2013 which was brought about by the unreasonable or delinquent conduct of the appellant. 33As to the issue of evidence now being available which was not available at the time of the hearing, the respondents submit that it was in fact available before the hearing, but that the appellant chose not to file the report with the Tribunal in accordance with directions made.

Consideration and decision 34As we noted above, leave is ordinarily granted only where the matter involves an issue of principle, questions of public importance, where the injustice is reasonably clear or where the Tribunal has gone about its fact finding process in such an unorthodox manner that it is likely to have produced an unfair result. 35Here the appellant does not submit that the Tribunal has gone about its fact-finding process in an unorthodox manner, or that a question of public importance or principal has been raised. The appellant submits that it may have suffered a substantial miscarriage of justice because the Tribunal's proceeded in the absence of a representative of the appellant, and because evidence is now available that was not previously available of the hearing. 36This latter submission can be readily disposed of, as it has no substance. The report that the appellant submits was not "technically" available was clearly available at the time of the hearing; it had been served on the respondents. The appellant says that the report was not filed with the Tribunal by the date of the hearing "largely due to the belief on the part of the [appellant] that the matter would be settled and that the hearingwould not proceed".. In this respect we accept the respondents' submission that this is an irrelevant consideration, and that settlement negotiations between parties prior to a hearing is a common practice and does not remove a party's responsibility to act in accordance with the Tribunal's directions for the filing of evidence. 37As to the first reason, that is the Tribunal proceeding in the absence of the appellant, at all times the appellant was the only respondent to the proceedings. On 8 November 2013 it informed the Registry that it was represented by Coyne Legal. It is clear from the extract of the transcript of the hearing provided to the Appeal Panel that when Mr Nolan appeared at the hearing he was given every opportunity to be heard and the Tribunal took an adjournment to allow him to seek instructions on the question of whether or not he represented the appellant. The two separate partial transcripts provided by both the appellant and the respondents disclose that Mr Nolan clearly stated that he did not represent the appellant. There is no evidence in the transcript, contrary to the appellant's submission, that Mr Nolan was confused. 38We noted above that Mr Nolan stated that he was not given the opportunity to state to the member his involvement in the proceedings from November 2012 and that he had responsibility under the franchise agreement to deal with the warranty issues. The appellant relies on that statement in support of its application. However, Mr Nolan's assertions must be rejected. The partial transcript of the hearing relied on by the appellant clearly records Mr Nolan stating that he was the owner Blue Haven, and that when he bought the business three years before he accepted all warranties; see too paragraph 1(s) of the appellant's submissions where the appellant states that Mr Nolan explained to the Tribunal that his company had taken over the warranty work for the appellant when he purchased its business on the Central and North Coasts. 39We noted above leave to appeal may be granted if the appellant demonstrates that a "substantial miscarriage of justice" may have been suffered, which deprived the appellant of a chance that was fairly open to it of achieving a better outcome than occurred. In order to show that a party has been deprived of that chance it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. The appellant has failed to do this, that is to say it has not explained how the result would have differed. Having sighted the Civil & Structural Report on which the appellant proposed to rely, it does not seem to us that there was any disagreement about the need for rectification works. But the Civil & Structural Report does not appear to address the opinion of the expert for the respondent (below) namely that the defects were caused by the respondents failure to install expansion joints. 40For the reasons given above we do not consider that the appellant suffered a substantial miscarriage of justice because the reason of the Tribunal was not fair and equitable, or for any other reason should be granted leave to appeal. The decision made by the Tribunal to proceed in the absence of the appellant was plainly open to it given the statements of Mr Nolan that he did not appear for the respondent, even after the Tribunal adjourned so as to allow him to seek legal advice, in circumstances where the Tribunal had been informed by Coyne Legal on 8 November 2013 that it represented the appellant.

A question of law 41We have considered whether the appellant's submissions reveal whether a question of law constitutes a further basis for the appeal on the basis that the appellant was denied procedural fairness by the decision to proceed with the hearing at first instance in the absence of a representative of the appellant. 42It is well understood that a denial of procedural fairness constitutes an error of law: see Holley v Evatt [2014] NSWCATA 72 at [17] and [23]. It is also well understood that a party is entitled to be heard and a denial of a right to be heard may constitute a failure to provide procedural fairness. 43Here, the appellants submissions do not support a finding that there has been a failure to provide procedural fairness. The member excused Mr Nolan from the hearing on the basis that he said he did not represent the appellant. Mr Nolan may have thought he needed to produce written evidence of his authority to represent the appellant. Any such misunderstanding was not contended to have been caused by anything said or not said by the Member. Indeed the Member gave Mr Nolan an adjournment to get legal advice which he failed to do. 44Any misunderstanding on Mr Nolans behalf was not caused by a failure to afford procedural fairness. A decision to give the appellant a further chance to be heard would be inconsistent with the Tribunal's obligation set out in s36 to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 45The Appeal Panel finds that there has not been any error of law.

Orders 46The Appeal Panel makes the following orders: (1)Application for leave to appeal is dismissed. (2)The appeal is otherwise dismissed. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 16 December 2014

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