Tran v Buildarch Pty Ltd [2022] NSWCATCD 214 | Case summary

Consideration

What was said in BKB, at [76]-[80], was as follows: 76. Under Cl. 6 of Sch. 4 of the NCAT Act, the Tribunal may transfer proceedings to a Court by the motion of a party or its own motion. In making a decision whether or not to transfer proceedings, there is a wide discretion to take into account any relevant matter (Sanderson Motors Pty Ltd v Kirby [2000] NSWSC 924 at [4)]. The fundamental consideration is whether there is "sufficient cause"; "sound ground"; or "good reason" for the transfer to be made. That permits a wide range of discretionary considerations. Those considerations may be impressionistic and evaluative (Australian Timber Supplies Pty Ltd v Agia [2014] NSWSC 1308 at [2]). Where there is a significant risk the jurisdictional limit will be exceeded; or whether the Tribunal has jurisdiction at all, are important considerations (BOC v MDL [2019] NSWSC 278 at [17-[19]; Hau Shan v Fairfield City Council [2020] NSWSC 681 at [14]; Breecass Pty Ltd v The Owners - Strata Plan No 61419; The Owners - Strata Plan No 61419 v Breecass Pty Ltd [2019] NSWCATCD 23). 77. However, in proceedings where a homeowner seeking damages for the rectification for defective work and the builder asserts that it is owed monies under the contract because the homeowner has not paid the full contract price for the works, the assessment of damages to the homeowner must take into account the amount the homeowner would be liable to pay the builder under the contract for the work performed. The reason for this is to ensure that the homeowner is put into the same position as if the contract had been performed; not a better position (Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CR 613 at [5]; Sleiman t/as Perfect Kitchens v Dempsey [2020] NSWCATAP 26 at [79]-[84]). 78 The amount the owner was liable to pay the builder under contract (if any) is relevant to the owner's claim for damages against the builder, and falls within the auspices of the owner's proceedings in Matter HB 19/41921. The amount that the builder claimed it was owed under the contract was significantly less than the amount the owner claimed in damages for the cost of rectification of defects. 79 Taking these principle[s] into account, if the builder had made an application to transfer its proceedings to a Court of competent jurisdiction at the hearing, the Tribunal would have had very strong grounds to refuse the application because: 1. The builder's claim that it was owed monies under the contract would still be taken into account in any assessment of damages to the homeowner. If the builder was not entitled to any further payment under contract there would be no adjustment made in any event; and the builder had not made a claim under quantum meruit. 2. The proceedings had a long procedural history. The builder had consented to the owner's application to transfer the builder's proceedings to the Tribunal. If the proceedings were 'split' at a late stage between the owner's proceeding remaining in the Tribunal and the builder's proceedings being in the Local Court, there would have been clear unfairness to the homeowner by reason of increased cost; delay; and the undesirability of having two sets of proceedings in two different jurisdictions (RCR Resolve FM v Serco Australia [2014] NSWSC 1477 at [20]). If both sets of proceedings were transferred to a Court, there would be the same issues regarding increased cost and delay. A cost order against the builder if the proceedings were transferred may not cure such unfairness. 3. Even if a transfer application had been made by the builder; such an application had been refused; and the owner ultimately obtained a work order rather than an award of damages; then as of the date of the Tribunal's decision (20 July 2021) the builder would still have been well within the time period to take proceedings in the Local Court for breach of contract. Whether the builder would have been able to maintain such proceedings due to principles of res judicata or issue estoppel are not matters necessary to explore. 4. The owner would likely argue that because issues in the builder's proceedings were the subject of a dispute in the owner's Tribunal proceedings, the Court would have no jurisdiction to hear and determine those issues in proceedings by reason of Cl. 5 (3) of Sch. 4 of the NCAT Act. 80 Contrary to the submissions of the builder on appeal, the mere fact that the builder's claim was out of time in the Tribunal under s 48K (8) (a) of the HB Act is not, of itself, a sufficient reason for the Tribunal to have ordered the transfer of the builder's proceedings in Matter HB 19/355528 to a Court of competent jurisdiction.
Here, likewise, the fact that the builder's claim is out of time does not necessarily mean that there should be a transfer of these proceedings to the District Court. As was noted at [76] in BKB, the Tribunal has a discretion as to whether such an order should be made. The Tribunal having no jurisdiction to consider the builder's claim, by reason of s 48K(8) of the HB Act, is a significant consideration but not the only consideration.
From the cross claim, the builder's claims comprise: 1. a claim for the unpaid balance of the contract price, 2. a claim for variations and improvements, 3. a claim that the owners repudiated the contract, 4. an alternative claim that the owners are precluded from relying on any breach of the contract by the builder as they were in breach of it, and 5. in the final paragraph, under a heading "Unjust Enrichment", alleged: Further, and in the alternative, by virtue of the matters pleaded above, the Cross-Defendants have ben unjustly enriched, to the detriment of the [builder], and the [builder] claims damages.
The Tribunal notes that (1) there is no allegation that the builder accepted the alleged repudiation and terminated the contract, (2) there is nothing to indicate the basis of the claim for unjust enrichment, which may be intended to convey a quantum meruit claim because variations were not documented, and (3) there are no particulars of the damages claimed.
Having considered the history of these proceedings, and the affidavit of Ms Steinfelder, the Tribunal makes the following findings of fact in relation to the application to transfer: 1. The proceedings were commenced by the owners on 12 April 2022, and they filed a statement on 2 May 2022 which was prior to the first directions hearing. 2. The question of a cross-application by the builder was raised on 5 May 2022. There was nothing to stop the builder from formulating its claim at any time thereafter. 3. A notice of hearing dated 30 June 2022 advised the parties that the proceedings had been allocated a hearing, on 2 and 3 November 2022. 4. The owners filed Points of Claim on 4 July 2022 and the owners' evidence (minus the report from their valuer) was filed on 18 July 2022. However, those matters did not prevent the builder from formulating its claim prior to those dates. 5. No application to transfer the proceedings was made until 18 October 2022. On 19 October 2022 it was indicated that any such application would be considered at the hearing. 6. No indication of the nature of the builder's claim was provided until Points of Cross Claim were served on 14 October 2022 and were not received by the Tribunal until 24 October 2022, just over one week prior to the hearing. 7. The builder's affidavit evidence was not served until 19 October and was not received by the Tribunal until 25 October 2022. 8. No application was made for a further extension of time for the provision of the builder's evidence and no application for adjournment was lodged prior to the hearing.
It is convenient to respond to the nine reasons why the builder submitted that an order for the proceedings to be transferred to the District Court using the same paragraph references: 1. Prejudice to a party goes beyond financial considerations. 2. There was undue delay on the part of the builder, given that need for a transfer should have been considered on and from 5 May 2022. 3. The builder is not prevented from pursing its claims, some of which may be pursued in this hearing. 4. The delay of the owners in lodging their Points of Claim and evidence did not prevent the builder from formulating its claim and, even if that was the case, it was not until three months after the owners' evidence was received by the Tribunal that the Tribunal received the cross claim. 5. The owners would have had an opportunity to provide evidence in response to the builder's evidence had it not been served two weeks prior to the hearing. 6. There was more than six months during which the question of a single expert could and should have been raised by the builder, bearing in mind the duty imposed by s 36(4) of the NCAT Act. 7. There is no mention of restitution in the cross claim and it is difficult to see how there will be a possibility for there to be inconsistent findings when there will be an opportunity for questions of repudiation and termination to be ventilated and determined in the course of consideration the owners' claim and any such findings would, by reason of issue estoppel, resolve the question of liability not only for the owners' claim but also for the builder's claim. 8. There is no mention of either quantum meruit or restitution in the cross claim and any additional time and cost will be the result of the conduct of the builder. 9. Adjournment is no longer considered to be an issue that can be said to be addressed by an order for costs. There is ample authority that case management considerations are relevant. The Tribunal can and should make use of the time allocated for these proceedings since 30 June 2022.
The reasons why the Tribunal considers the builder's application for transfer should be rejected may be summarised as follows.
First, the nature and extent of the builder's delay was such that, even if the Tribunal had jurisdiction to consider the builder's claim, that delay would have been such as to entitle the Tribunal to hear the builder's claim at later date instead of at the same time as the owners' claim.
Secondly, as indicated by the decision in Bellgrove v Eldridge [1954] HCA 36, there are claims being made by the builder that can be considered when assessing any amount payable by the builder to the owners in order to put the owners in the same position as if the contract had run a full and normal course, said to be a fundamental principle by the High Court in Haines v Bendall [1991] HCA 15 at [1].
Further, the issues of repudiation and termination can be contested during the hearing of the owners' claim and any findings on those liability issues will govern the builder's claim by reason of issue estoppel, the classic formulation of which is that of Dixon J (as he then was) in Blair v Curran [1939] HCA 23, 62 CLR 464 at 531-533. As a result, it may be expected that the liability aspect of the issues of repudiation and termination will be addressed in these proceedings. If the owners are successful, then the builder will not be entitled to damages. If the builder is successful, then any proceedings he may need to bring in the District Court would only need to agitate quantum because of a prior determination of liability.
To the extent that the builder's claims cannot be considered during the Tribunal's hearing, they can be considered subsequently in any District Court proceedings. While separate hearings can be said to be sub-optimal, that is the result of delay on the part of the builder. In short, the Tribunal is not satisfied that the builder's claim will be prejudiced by a refusal to transfer these proceedings to the District Court.
Thirdly, as there is no cross-application by the builder, this application is more accurately described as an application by the builder to transfer the owners' claim to the District Court.
Fourthly, once there is no prejudice to the builder, the application becomes akin to an application for an adjournment, save that the delay in finalising these proceedings, if they were transferred to the District Court, is likely to be even longer than the delay which arises when an application which remains in the Tribunal is adjourned.
The relevant common law principles relating to adjournments were considered by the High Court in AoN Risk Services v Australian National University [2009] HCA 27, which is authority for the following propositions: 1. (1) Applications for adjournment should not be considered solely by reference to whether any prejudice can be compensated by costs. [4] 2. (2) Public interest in the efficient use of court resources is a relevant consideration in the exercise of discretions to adjourn. [27] 3. (3) The impact on other pending cases is a relevant consideration since the resolution of disputes serves the public as a while, not merely the parties to the proceedings. [113]
More recently, the High Court confirmed that case management principles, which aim to minimise delay and expense, including the effect of an adjournment on the Tribunal and other litigants, are relevant considerations: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46 at [51].
Similarly, in AHB v NSW Trustee and Guardian [2014] NSWCA 40, at [6] it was said: "This matter was fixed for hearing some considerable time ago and its presence in the List has prevented other matters being listed for hearing. The Court will not permit its List to be disrupted in this way without good reason."
When considering an adjournment application, there is a need to exercise the discretion judicially: Ghazal v Masterton Homes Pty Ltd [2018] NSWCATAP 227 at [54] which paragraph also confirms that there are numerous Appeal Panel decisions which confirm that: 1. matters should almost always proceed on the date fixed for hearing, 2. an application for adjournment should be an exception and not the ordinary course. 3. where the party seeking the adjournment has not complied with an order of the Tribunal, adequate explanation is called for and its absence weighs heavily against granting the adjournment, and 4. the effect of any adjournment on the opposing party must be considered.
In this case, the builder's delay has not been adequately explained and granting an adjournment on the basis that to do so would enable a party to respond to the provision of evidence to close to the hearing would render that a tactic which could successfully be used to derail many hearings.
The realty is that this Division of the Tribunal receives more than 50,000 applications each year, the vast majority of which are residential tenancy claims, many of which have a measure of urgency, and hearing dates are allocated well in advance with the result that every time a case with an allocation of one or two or three days is adjourned, there are many parties who would have gladly used the hearing time that is wasted.
In short , it is not just legal costs that are thrown away when an application is adjourned and the practical effect of the obligation imposed by s 36(4) of the NCAT Act is that lawyers should shift their thinking away from the idea that costs are a sufficient cure, to a realisation that the hearing time of the Tribunal is a scarce resource which is why it is important for there to be compliance with directions and for the Tribunal to be notified promptly if there is any valid reason why a party is unable to comply with any such directions.
The suggestion that there were "difficulties in logistically in providing the collated physical documentation before Mr Lam" is insufficient to explain the time taken to provide his evidence.
The reported decisions referred to in the owners' submissions establish that the strain which litigants imposes on litigants is also a relevant consideration.
If the builder's claim were within the Tribunal's jurisdiction, this would not be a case that would warrant granting an adjournment. Indeed, the Tribunal could have taken the view that the service of the builder's evidence was so close to the hearing that it should be excluded.
As counsel for the owners indicated that he could deal with the annexures to Mr Lam's affidavit but not the body of that affidavit, the Tribunal considered the preferable course was to allow the builder to rely on both that affidavit and the annexures to it, and to provide such time as counsel for the owners may reasonably require to be ready to deal with that late affidavit, even if that meant deferring the second hearing day or adding a third hearing day, with the assistance of the registry to ensure as little delay as possible.
In these circumstances, after indicating its decision and that reasons would be provided later, the Tribunal adjourned to provide an opportunity for counsel to have discussions wit a view to eliminating or narrowing issues and those discussions resulted in a way of conducting the hearing in a manner that should enable it to be finished with the two days allocated.

Tran v Buildarch Pty Ltd

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Judgment (11 paragraphs)

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Legislation Cited (2)

Cases Cited (18)