The Owners - Strata Plan No. 80412 v Vickery

Notice of Appeal and history of appeal proceedings

1. The appellant filed a notice of appeal on 22 November 2018. The appeal was filed in time.
2. The appeal was listed for call over on 6 December 2018 and heard on 14 March 2019.
3. The grounds of appeal were as follows: 1. The Tribunal erred in law in finding it had jurisdiction to hear and determine the proceedings. The Tribunal should have found it did not have jurisdiction because of s 106(6) of the Management Act as the respondent was aware of the loss more than two years prior to the commencement of the proceedings. 2. The Tribunal erred in law in concluding it had jurisdiction to order damages under s 232 of the Management Act for a contravention of s 106(5) of the Management Act. 3. The Tribunal erred in not concluding the respondent was estopped from bringing and maintaining a claim for contravention of s 106(5) and should have found that the respondent's "justiciable causes" merge with the consent orders and "did not have a separate existence capable of sustaining a contravention of s 106(5). 4. The Tribunal erred in denying procedural fairness in that, having made a preliminary finding that the time limit in s 106(6) could not be extended under s 41 of the NCAT Act, the Tribunal should have provided a further opportunity to be heard in circumstances where the Tribunal no longer maintain the preliminary finding. 5. The Tribunal failed to provide adequate reasons.
4. In accordance with the directions for hearing of this appeal, the parties filed written submissions. At the hearing of the appeal the parties were represented by counsel. Mr Feller SC appeared for the appellant and Mr Jenkins appeared for the respondent.
5. Mr Feller SC handed up a document entitled "Issues for Determination". It is unnecessary to set out the document in detail. However, it appears that Grounds 4 and 5 are not pressed, save that the appellant contends the respondent was aware of any reasonably foreseeable loss more than two years before the commencement of the proceedings.

Consideration

1. Both parties agree that the present appeal is from an interlocutory decision. Consequently, leave is required, even on a question of law: see s 80(2)(b) of the NCAT Act. The parties also agree on the principles that are applicable to the grant of leave, as set out in cases such as Champion Homes Pty Ltd v Guirgis [2018] NSWCATAP 54 at [35].

Appellant's submissions

1. The appellant submitted that leave should be granted. Its reasons were as follows.
2. First, the appellant said Shum was wrongly decided by the Appeal Panel. In this regard the appellant submitted: 1. On its proper construction, the Management Act does not permit the Tribunal to make an order under s 232 in respect of a claim for damages under s 106(5). This is because a claim for damages under the latter section is not "about" the exercise or failure to exercise functions by the owners corporation. 2. The reliance by the Appeal Panel in Shum on the decision of Rothman J in The Owners - Strata Plan No. 37762 v Dinh Phoung Dung Pham [2006] NSWSC 1287 was misplaced and if the Legislature had intended the Tribunal to have a power to award damages it would have done so expressly. In short, the appellant says that "Shum casts the relational effect [of the word "about"] too widely". 3. An entitlement to claim damages is "premised on the existence of a breach of duty", whereas the Tribunal's powers under s 232(a) and (e) are "about the owners corporation's failure to exercise its function under the [Management Act which] is resolved by an order of the Tribunal requiring it to comply in futuro but not an order that you pay damages for its failure to comply in the past, since the order for damages does not enforce compliance". 4. The Appeal Panel in Shum erroneously considered the obligations of an owners corporation as analogous to covenants imposed in a lease to repair and maintain and/or statutory duties imposed under workplace safety legislation in concluding there was a continuing obligation on an owners corporation under s 106(1) which might give rise to multiple breaches of duty imposed by that section.
3. In addition, the appellant made oral submissions to the effect that claims for damages could be extremely large and a determination of those claims could involve difficult legal issues including causation, foreseeability and mitigation. The Legislature should only be taken to have conferred unlimited jurisdiction by the clearest of language.
4. Secondly, the appellant submitted that, by reason of the consent orders, there was an issue estoppel or a res judicata and that the introduction of s 106(5) added a remedy of damages and did not create a new cause of action. Reference was made to well-known cases on the principles of res judicata including Blair v Curran [1939] 62 CLR 464 and Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502, the latter case dealing with the application of such principles to consent orders.
5. Thirdly, the appellant submitted, the right of action under s 106(5) of the Management Act was barred by s 106(6) because the claim was brought "more than 2 years after [the respondent] first [became] aware of the loss".
6. Fourthly, these matters would, if resolved favourably to the appellant, be dispositive of the proceedings.
7. As to the exercise a discretion to grant leave, in oral submissions the appellant said: 1. the issue concerning jurisdiction of the Tribunal raised was one of general importance. 2. While it was unlikely the Appeal Panel would overturn the decision in Shum, there was available to the appellant the opportunity to seek leave to appeal to the Supreme Court of New South Wales if the present Appeal Panel chose to affirm the decision in Shum. 3. There was no superior court decision in relation to the issues decided in Shum.
8. In seeking to challenge the decision in Shum in the application for leave to appeal, the appellant's counsel accepted that such a ground was not advanced when the application for summary dismissal was dealt with by the Tribunal at first instance. However, the appellant said there was nothing that prevented the Appeal Panel from now dealing with that issue and that any appeal to challenge the decision in Shum should occur sooner rather than later. In this regard, the Appeal Panel could limit the grant of leave to appeal an interlocutory decision to this aspect only.
9. Further, Counsel for the appellant accepted that the issue of granting leave was a fine balancing act.

Respondent's submissions

1. In reply, the respondent conceded that the issue concerning the correctness of the decision in Shum was of importance.
2. However, the respondent said the issue had not been raised as a point below, with the Tribunal proceeding on the basis that Shum was correctly decided. Further, that the matters raised by the appellant did not demonstrate any compelling reason why that decision should be overturned. To the contrary, the respondent says Shum was correctly decided.
3. In relation to damages, causation and limitation issues, the respondent submitted a resolution of these issues require a hearing of the evidence and a determination of relevant facts.
4. The Application was a summary dismissal application. It failed. There is no reason why the respondent's original application should not proceed to a final hearing.
5. As to the issues of res judicata and issue estoppel, the proceedings brought by the respondent were not to enforce consent orders. The claim was for damages arising from a cause of action created by the introduction of s 106(5) of the Management Act on 30 November 2015.
6. In short, the respondent's claim should proceed to a hearing on its merits.

Decision

1. The application for leave to appeal concerns a summary dismissal application.
2. Section 55(1)(b) of the NCAT Act provides: (1) The Tribunal may dismiss at any stage any proceeding before it in any of the following circumstances: … (b) if the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance.
3. The principles to be applied in summary dismissal applications are set out by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. There, the Chief Justice said: It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff would not to be denied access to the customary trial which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as is this case, to exercise its power for summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". At times that test has been put as high as saying that the case might be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument": "so to speak apparent at a glance".
4. These considerations are relevant to dismissal applications under s 55(1)(b) of the NCAT Act, even in the absence of pleadings, the language used in the NCAT Act being in similar terms to that found in the Civil Procedure Act, 2015 and earlier legislation on which decisions such as General Steel are based.
5. In the absence of a challenge to Shum, it is self-evident that the Tribunal was correct to dismiss the Application having regard to the grounds raised in the application it was asked to decide.
6. Our reasons are as follows.
7. There is no dispute that a right of action was created by s 106(5) following the commencement of the Management Act on 30 November 2016. The issues originally raised in the Application before the Tribunal were whether the action was barred by reason of an issue estoppel, res judicata or because the breach of duty and any damage suffered occurred before the commencement of the Management Act or the claim was brought out of time having regard to s 106(6).
8. Insofar as there was a cause of action created by the Management Act which could be pursued in respect of a breach of duty occurring after 30 November 2016, it is difficult to see how res judicata principles could operate. This is because the consent orders were orders to repair the common property and the present action is a claim for damages.
9. As to issue estoppel, in part it is necessary to identify what is the particular issue said to have been resolved by the consent orders and whether, as a matter of fact, the same issue is sought to be reagitated in the claim for damages. This depends on whether the appellant complied with the consent orders and/or whether the current complaint is based on subsequent conduct of the appellant and/or subsequent breaches of duty. Such matters cannot be resolved without a hearing on the merits and findings being made about relevant facts.
10. Similarly, the limitation questions raised by the appellant will depend on the facts as finally found by the Tribunal at a hearing on the merits.
11. As the Tribunal made clear, these matters of fact have not yet been decided. This was the substantive reason the Tribunal dismissed the Application.
12. In Wardley Australia Ltd v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, the plurality said at [31]: We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and the circumstances in which it was sustained to justify a confident answer to the question.
13. Such statements by the High Court strongly count against the grant of leave to appeal these issues. In this case the preferable course is to allow the original proceedings to be heard and determined on the merits and any rights of appeal to be pursued thereafter.
14. It was not submitted in the application for leave to appeal that the "interlocutory decision effectively determines the substantive rights of the parties". Further, as there is no clear injustice arising from the decision made, the Tribunal should proceed to hearing the case on its merits so that relevant factual findings can be made.
15. Consequently, we are not satisfied that leave to appeal should be granted in respect of questions concerning res judicata, issue estoppel, whether there was a relevant breach entitling the respondent to bring a claim for damages or any limitation defence.
16. In relation to the challenge to the correctness of the decision in Shum, we are also not satisfied leave to appeal should be granted.
17. Our reasons are as follows.
18. First, the Tribunal was not asked to decide this issue in the Application. That is, the jurisdictional point was not taken in the original Application. The appellant did not suggest otherwise.
19. As a statutory body invested with jurisdiction to hear particular disputes, it may be necessary for the Tribunal to determine jurisdiction if and when that issue is raised as part of the final hearing of the proceedings at first instance. However, in the present circumstances, it is inappropriate for the Appeal Panel to grant leave and permit this issue to be raised for the first time in an application for leave to appeal an interlocutory decision.
20. Second, the appellant's Counsel said that the issue of whether leave should be granted was "finely balanced".
21. In part, this concession appears to have been made on the basis that the appellant was unable to point to any clear error in the reasoning of Shum. Rather, as outlined above, the appellant's submissions are to the effect that the view taken in Shum of the jurisdiction granted under s 232 was too expansive, that grants in specific sections of the Management Act count against the interpretation adopted in Shum and that s 232 was limited to regulating conduct in futuro.
22. In addition, the appellant said that the Legislature could not have intended to give the Tribunal "unlimited jurisdiction". However, this submission was made against a background of the appellant not disputing the Tribunal has unlimited jurisdiction to make orders in connection with repair of the common property. It was also made against a background of other enabling legislation which confers jurisdiction on the Tribunal permitting the Tribunal to make orders for many hundreds of thousands of dollars, for example under the Home Building Act, 1989 (NSW) and the Retail Leases Act, 1994 (NSW).
23. These matters would tend to suggest there is no clear and obvious error that would warrant a reconsideration of Shum by this Appeal Panel in the context of a challenge to an interlocutory decision concerning an application in which the relevant point was not taken.
24. Another factor which suggests that there is no clear and obvious error in Shum is the Tribunal's power to make orders which have a direct financial consequence including: 1. a power to impose levies on lot owners for the purpose of funding such work; 2. provisions allowing awards for compensation under the Management Act. For example, against an original owner, even if who is no longer involved in a strata scheme, where unit entitlements are allocated unreasonably.
25. Third, the appellant submitted that there had been no determination by a superior court on the topic of whether jurisdiction was conferred upon the Tribunal to deal with claims under s 106(5) of the Management Act. As far as we are aware, this is a correct statement.
26. However, the NCAT Act makes clear that the Tribunal has authority to determine issues of jurisdiction: see eg the power to make ancillary decisions which include decisions on jurisdiction: ss 29(2) and 32(2)(b) and definition (a) of "ancillary decision" in s 4(1) of the NCAT Act.
27. The effect of the appellant's submission is that the Appeal Panel should give leave to appeal an interlocutory decision so as to permit a party who disagrees with that earlier decision of the Appeal Panel to thereafter exercise a right to seek leave to appeal to a superior court. Further, the Appeal Panel should do so in circumstances where there has been no determination of the substantive proceedings and where the issue sought to be agitated was not raised in decision for which leave to appeal is sought.
28. In this way, the appellant submits, the proceedings might be truncated and costs saved if a superior court overturns the decision in Shum.
29. In our view that is not a proper basis for the grant of leave.
30. Rather, to grant leave, we should be satisfied there is a substantial injustice that needs to be corrected by the Appeal Panel or that there is some other substantial reason to allow appellate review by the Appeal Panel at this interlocutory stage. In this regard we need to be satisfied there is a clear error of law and action should be taken to correct such error.
31. Otherwise, the obligation of the Appeal Panel and that of the Tribunal at first instance is to comply with the guiding principle, namely to facilitate the just, quick and cheap resolution of the real issues in dispute: s 36(1) NCAT Act.
32. As stated above, the appellant's submissions as to why Shum was wrongly decided do not demonstrate any clear error. The submissions, to some extent, depend upon an assumption that the Legislature could not have intended to give this Tribunal unlimited jurisdiction and/or to be able to award damages in circumstances where there are counter indicators in the text of the legislation.
33. Accordingly, we do not accept the appellant has demonstrated any clear error in the decision of Shum which needs to be corrected by appellate intervention of the Appeal Panel at this stage of the proceedings, particularly in the context of the decision being challenged in the leave application.
34. Consequently, leave to appeal is refused.
35. In doing so, we offer no view as to the ultimate issue raised by the appellant, namely whether Shum was correctly decided. This may be a matter the subject of future challenge in the proceedings at first instance and/or in any subsequent appeal.
36. At this point, we should finally deal with that part of the Notice of Appeal the application under s 54 of the NCAT Act to refer a question of law to the Supreme Court of New South Wales.
37. While the Notice of Appeal sought an order under s 54 and the appellant stated in paragraph 2.2(a) of its submissions that they were made "in support of an order that the appeal panel referred to the questions of law arising in the proceedings to the Supreme Court", no written submissions were made as to why a discretion should be exercised in s 54 in the present case. No oral submissions were made in respect of this discretion either, other than in the context of seeking leave to appeal.
38. Rather, the submissions made related to the interpretation of relevant legislation and the other matters which we have referred to above. Further, the statement of issues handed up at the commencement of the hearing did not include an issue concerning whether the Appeal Panel should exercise a discretion to refer questions of law to the Supreme Court.
39. Be that as it may, we will consider the submissions on leave to appeal as they are relevant to exercising a discretion in favour of referral.
40. In Independent Liquor and Gaming Authority v Auld [2018] NSWCATAP 68 the Appeal Panel considered the circumstances in which referral of a question of law might be appropriate.
41. In the present case, there is no decision of a superior court determining the jurisdiction of the Tribunal to make an award for compensation under s 106(5) of which we are aware. That may be a relevant factor in favour of referring a question to the Supreme Court,
42. However there are a number of factors against reference. They are: 1. the issue of jurisdiction was not raised in the Application when heard at first instance; 2. no obvious error has been demonstrated; 3. the other issues for which a reference is sought are fact dependent and a hearing to resolve those matters has not yet occurred; 4. the Tribunal has not yet determined that the respondent has a valid claim or that he is entitled to damages. It has simply determined the claim should not be summarily dismissed. 5. any rights of appeal concerning the decision in Shum have not been lost. 6. allowing the case to proceed will enable any appellate body to determine all issues in the event either party wishes to challenge the ultimate outcome of these proceedings.
43. Lastly, knowing of the decision in Shum, the appellant has chosen to participate in the proceedings and defend the claim. This is despite having separate rights to seek declaratory relief or other orders in the nature of a prerogative writ.
44. In these circumstances, the just, quick and cheap resolution of all the real issues in dispute favours counts against referral, any appellate rights to be exercised at an appropriate time following a final hearing at first instance.
45. Finally, we note that both parties informed the Appeal Panel that the claim for damages totalled just over $100,000 and included a claim for rent of $84,000 as well as damage to property said to be caused by water ingress. No doubt considerable money will be spent in litigating these matters, with both parties incurring substantial costs. Issues will include factual questions, as well as issues of statutory construction concerning s 106(6) and its operation. This dispute is continuing in circumstances where we are told the defects in the building have now been rectified.
46. Both parties are, apparently, represented by legal practitioners in the proceedings at first instance as well as in the present application. No doubt substantial funds have already been spent, including in this application for leave to appeal. Rather than spending further substantial sums on future litigation costs, some thought should be given by the parties resolving this dispute by negotiation or conciliation. In this regard, the Tribunal could make a conciliator available to assist the parties if appropriate.
47. In the meantime, the proceedings should be fixed for hearing at the earliest possible time to allow these disputes, which appear to have their genesis in problems first identified in the building in 2013, to be finally resolved.

Orders

1. The Appeal Panel makes the following orders: 1. The application for leave to appeal is dismissed. 2. The application to refer questions of law to the Supreme Court of New South Wales pursuant to s 54 of the NCAT Act is refused. 3. Any application for costs is to be made within four days from the date of these orders, supported by written submissions (not more than four pages) and relevant evidence (cost application). 4. Any submissions in response to the cost application (not more than four pages) and evidence is to be filed for days thereafter. 5. Any submissions in reply (not more than two pages) are to be filed by the applicant for costs within four days thereafter. 6. Submissions must include submissions about whether an order can be made dispensing with a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act, 2013.

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: 28 March 2019