TRU-STEAM BOILERS & SERVICE PTY LTD v RUSSELL'S CHAFF & GRAIN MILLING COMPANY PTY LTD

NCAT Appeal Panel|2014-11-13|Before: Member J

INTRODUCTION 1The Respondent to the Appeal bought a boiler from the Appellant in 2008 for use in the Respondent's grain processing plant. 2In 2011 it was discovered that the outer shell of the boiler had begun to fracture. When repairs were attempted it was found that the thickness of the metal of the external wall of the boiler was only 2mm, whereas according to the specifications by the Korean manufacturer, the thickness should have been 6.6mm. 3Welding patches to the fractures was very difficult because the metal was so thin. 4A boiler inspector inspected the boiler and found that the internal diameter of the main water pipes for cooling was too small. 5The Respondent decommissioned the boiler. After it was decommissioned, it was discovered that the boiler contained chrysotile asbestos. 6Since 31 December 2003 there has been an Australian wide ban on the importation, manufacture and use of all forms of asbestos and products containing asbestos. Section 50 of the Customs Act 1901 provides for prohibition of importation of goods into Australia by regulation. By regulation 4C(3) of the Customs (Prohibited Imports) Regulations 1956 (as amended) importation to Australia of chrysotile asbestos is prohibited. That is subject to listed exceptions, but there is no suggestion that any might apply in this case. The Appellant does not contest the findings that the boiler contained chrysotile asbestos and that because of the boiler containing chrysotile asbestos, its importation into Australia and sale in Australia were prohibited. 7On 17 January 2014 the Respondent commenced proceedings in the Tribunal against the Appellant in respect of the boiler making claims under the Consumer Claims Act 1998 for compensation and other orders. There is no suggestion that the application was not served on the Respondent. 8The Appellant has not put in evidence various relevant parts of the Tribunal file in the proceedings, but presumably, as is the Division's usual practice, the parties were each notified of the listing on 3 March by a letter sent to them by post by the Registrar of the Division. In accordance with the Division's usual practice, the letter would have been headed "Conciliation and Hearing (Group List)" and it would have included a notice that if a party failed to attend, the Tribunal may decide the matter in that party's absence and the decision would be binding on that party. 9Mr Horak's evidence is that he as sole director of the Appellant appeared for the Appellant on 3 March. The Appellant apparently received that notice of the listing. 10The Appellant in its submissions asserted, and the Respondent did not deny, that its director, Ms A Russell attended on 3 March with Mr Bell. It appears that throughout the Respondent has been represented by Ms Russell, as its agent. 11The only order made by the Tribunal on 3 March 2014 was: "1 By consent on 3 March 2014 the hearing was adjourned to a date to be fixed by the Registrar." 12That order was confirmed by a letter of 3 March to each of the parties sent by the Tribunal that day (or the next working day) by post and the letter also stated: "A separate written notice of the new hearing date will be sent to you in the near future." 13As per the usual practice of the Division the parties would have been notified more than a month before 23 June 2014 of the listing of the proceedings on that date by a letter headed "Conciliation and Hearing", and the letter would have included a warning that if a party failed to attend, the Tribunal may decide the matter in that party's absence and the decision would be binding on the absent party. 14There is no submission that any of the letters sent to the Appellant by the Tribunal was not addressed to the correct address of the Appellant or was returned to the Tribunal. 15On 23 June 2014 Ms Russell attended before the Tribunal for the hearing. There was no attendance by or on behalf of the Appellant. The Tribunal had general jurisdiction over the matter (per para 29(1)(a) of the Act) and under rule 26 of the Civil and Administrative Tribunal Rules 2014, which commenced in February 2014, the Appellant can file a Reply in the prescribed form disputing the Application, but no form has been prescribed. Neither party had filed any evidence, but the Applicant in the Application had evidence available at the hearing. 16In the absence of any appearance for the appellant or any explanation for the non-appearance, the Tribunal member then proceeded with the hearing of the Application.

ORDERS AND REASONS OF THE TRIBUNAL 17The Orders were made on 23 June 2014. The Reasons were not signed by the Tribunal Member until 3 July 2014 and presumably were then posted to each of the parties. 18The Tribunal made the following Orders on 23 June 2014: 1 Tru-Steam Boilers & Service Pty Ltd, Unit 3, 53-55 Governor Macquarie Drive, chipping Norton, NSW, 2170, Australia, is to pay Russell's Chaff & Grain Milling Company Pty Ltd, PO Box 39, Mudgee, NSW, 2850, Australia, the sum of $24,000.00 immediately. ($24,000.00 Replacement boiler price.) 2 The Tribunal declares that the sum of $5,932.30 is not due and owing by Russell's Chaff & Grain Milling Company Pty Ltd, PO Box 39, Mudgee, NSW, 2850, Australia to Tru-Steam Boilers & Service Pty Ltd, Unit 3, 53-55 Governor Macquarie Drive, Chipping Norton, NSW, 2170, Australia In respect of:

Service charges for work that could not be effected in a proper and tradesmanlike manner. 3 The Tribunal orders that the respondent(s) Tru-Steam Boilers & Service Pty Ltd, Unit 3, 53-55 Governor Macquarie Drive, Chipping Norton, NSW, 2170, Australia, is to cause the undertaking of the following work in a proper and workmanlike manner; Details of Work order: Remove the boiler from the applicants' premises within two weeks of the relevant authorities giving consent. 19Under a subsequent heading "Reasons for Decision", the Tribunal gave the following reasons for the decision: "The applicant purchased a true steam boiler from the respondent on 6 February 2008. The boiler is used in the applicants' grain processing plant. The applicant was proposing to expand its operation and provided a specification of the power of the boiler needed. The engaged the respondent on the basis of previous business relations. There were a number of problems with the unit. In particular in 2011 it was discovered that the outer shell began to fracture and it required patching with such patches being welded. The thickness of the metal was 2 mm but according to the manufacturer's report the metal was to be 6.6 mm. The tradesmen on the day were said to have complained that the metal was so thin it was extremely difficult to weld. Three visits were made in all and the boiler metal continues to crack. Water in boilers requires chemicals to be added to minimise the build-up of material in the pipes in the boiler. The applicant claims to have complied with the instruction of the chemical supplier in this regard. The applicant has a similar boiler and these chemicals were used without adverse effect. A boiler inspector attended the site for a routine inspection and noted that the main water tubes were small in diameter which would have contributed to blockages. In order to continue production the applicant decommissioned the boiler and purchased another boiler that is functioning satisfactorily. On decommissioning a white "stringy" material was found around the edge of the main manhole. It tested (sic) by LabPoint Pty Ltd and they found the presence of chrysotile asbestos. Reports from LabPoint Ply Ltd and Nalco, (the chemical supplier) were tendered. In addition the applicant tendered a copy of a document under the heading of the Australian Customs and Border Protection Service that stated among other things, "an Australia-wide ban on the importation, manufacture and use of all forms of asbestos and asbestos containing products took effect from 31 December 2003." Section 7 of the Consumer Claims Act provides; 7 Jurisdiction in respect of consumer claims (1) General The Tribunal has jurisdiction to hear and determine any consumer claim brought before it under this Part, whether or not the matter to which the claim relates arose before or after the commencement of this Part, except as otherwise provided by this section. (2) Supply or agreement made, or supply intended to be made, in New South Wales The Tribunal has jurisdiction to hear and determine a consumer claim only if: (a) the goods or services to which the claim relates were supplied in New South Wales, or (b) a contract or other agreement to which the claim relates contemplated that the goods or services would be supplied in New South Wales (Whether or not they were so supplied), or (c) a contract or other agreement to which the claim relates was made in New South Wales (whether or not the goods or services were supplied in New South Wales). (3) The Tribunal has such jurisdiction whether or not: (a) a contract or other agreement to which the claim relates confers jurisdiction on any other court or tribunal (whether in New South Wales or elsewhere), or (b) the rules of private international law require a law other than the law of New South Wales to be applied to the hearing or determination of the claim. (4) Limitation periods The Tribunal does not have jurisdiction to hear and determine a consumer claim if any of the following apply: (a) the cause of action giving rise to the claim first accrued more than 3 years before the date on which the claim is lodged, (b) the goods or services to which the claim relates were supplied (or, if made in instalments, were last supplied) to the claimant more than 10 years before the date on which the claim is lodged. (4A) Nothing in this section affects any period of limitation under the Limitation Act 1969. (5) Claim relating to solicitor's or barrister's costs A matter arising in relation to the fairness or reasonableness of the costs charged by a barrister or solicitor for an item of business transacted by the barrister or solicitor is not within the jurisdiction of the Tribunal if the costs can be the subject of a costs assessment under Part 3.2 of the Legal Profession Act 2004. This application was lodged on 17 January 2014. The applicant became aware of the problem with the external wall thickness of the boiler in 2011. It was at that time the applicant became aware of the defect in the boiler and as the application was lodged within three years of becoming aware of such defect the Tribunal has jurisdiction to hear and determine the application. It is noted that other defects have become apparent since the application was lodged. The applicant relied on the respondent to provide it with a reliable boiler that met design standards and would have a life expectancy of more of up to thirty years. The boiler as supplied does not meet that requirement. The external metal thickness is too thin and the internal pipe diameter is too small and would thus reduce the life of the boiler. The applicant therefore has experienced a major failure of the boiler supplied and is entitled to a refund. The Tribunal determination of the Tribunal is based on the external metal thickness and pipe diameter and not the presence of asbestos in the boiler as this is matter that arose after the application was lodged."

NOTICE OF THE ORDERS AND REASONS 20It appears from the evidence that the Orders and Reasons were sent by the Tribunal to each of the parties on 3 July 2014 or the next working day. 21The evidence of Mr Horak is that the Appellant received the Orders and Reasons on 10 July 2014.

SETTING ASIDE PROVISIONS 22Section 53 of the Civil and Administrative Tribunal Act, 2013 ("the Act") provides: (1) The Tribunal may, in any proceedings, make any amendments to any document (for example, an application or appeal) filed in connection with the proceedings that the Tribunal considers to be necessary in the interests of justice. (2) Any such amendment may be made: (a) at any stage of the proceedings, and (b) on such terms as the Tribunal thinks fit, but may only be made after giving notice to the party to whom the amendment relates. (3) If a provision of this Act or the procedural rules is not complied with in relation to the commencement or conduct of proceedings, the failure to comply is to be treated as an irregularity and does not nullify the proceedings or any decision in the proceedings unless the Tribunal determines otherwise. (4) The Tribunal may, however, in dealing with any such irregularity, wholly or partly set aside the proceedings or a decision in the proceedings. 23Regulation 9 of the Civil and Administrative Tribunal Regulation, 2013 provides: 9 Additional power to set aside or vary decision determining proceedings (1) In addition to any power that is expressly conferred on the Tribunal by the Act or enabling legislation to set aside or vary its decisions, the Tribunal may order that a decision it has made that determines proceedings be set aside or varied in either of the following circumstances: (a) if all of the parties to the proceedings have consented to the making of the order to set aside or vary the decision, (b) if the decision was made in the absence of a party and the Tribunal is satisfied that the party's absence has resulted in the party's case not being adequately put to the Tribunal. Note. The following provisions of the Act are examples of provisions that expressly confer powers to set aside or vary decisions of the Tribunal: (a) section 45 (3) (which enables the Tribunal to revoke leave granted to a person to represent a party), (b) section 53 (4) (which confers a power on the Tribunal to set aside proceedings and decisions involving procedural irregularities resulting from a failure to comply with provisions of the Act or the procedural rules in relation to the commencement or conduct of proceedings), (c) section 63 (which confers a power on the President or a presiding member to correct obvious errors in decisions of the Tribunal), (d) section 64 (3) (which enables the Tribunal to vary or revoke a non-disclosure order made under section 64), (e) section 73 (3) (which enables the Tribunal to vacate or revoke an order with respect to contempt of the Tribunal). (2) The Tribunal may make an order under this clause of its own motion or on the application of a party. (3) Unless the Tribunal grants an extension under section 41 of the Act, an application for an order under this clause must be made within 7 days after the decision concerned was made. (4) Except where the parties have consented to the making of the order, the Tribunal may not make an order under this clause unless the Tribunal has first: (a) afforded the parties an opportunity to make submissions about the proposed order, and (b) taken any such submissions into account. (5) A party may not make an application for an order under this clause to set aside or vary a decision of the Tribunal if: (a) an internal appeal or appeal to a court against the decision has been lodged or determined, or (b) an application for a judicial review of the decision has been made or determined. (6) A party may not, without the leave of the Tribunal, make an application for an order under this clause to set aside or vary a decision of the Tribunal if the party has previously made an application under this clause to have the decision set aside or varied. (7) If the Tribunal sets aside a decision under this clause, it may also set aside any orders that it made consequent on the decision that has been set aside. Note. An example of such a consequent order may be an order for costs in the proceedings. (8) Proceedings for the purposes of this clause are prescribed for the purposes of section 50 (1) (d) of the Act. Note. A hearing is not required for proceedings that are prescribed for the purposes of section 50 (1) (d) of the Act. (9) This clause does not limit any power of the Tribunal to set aside, revoke or vary its interlocutory decisions or any other decisions that do not operate to determine proceedings.

THE FIRST SETTING ASIDE APPLICATION 24The Appellant had legal advice and representation from at least 18 July 2014 when Mr Horak swore the statutory declaration in support of this Application. 25That statutory declaration shows that the Appellant was relying upon the following grounds:

The Appellant had not received any notice of the listing of the matter on 23 June 2014;
At the Directions Hearing the other party had indicated that the boiler pipes would be sent away and tested and the Tribunal Member said: "I will note this and a copy of the report should be sent to Tru-Steam", but no copy of the report was provided to the Appellant. 26There is no suggestion that the Appellant was alleging a failure by the Tribunal to comply with a provision of the Act or Rules. It appears therefore that the appellant did not rely upon section 53. 27It appears the first setting aside application was made under Regulation 9, relying on the grounds set out in Mr Horak's statutory declaration. It was heard and dismissed on 6 August 2014. The reasons are not in evidence. There has been no appeal against that decision.

THE SECOND SETTING ASIDE APPLICATION 28With the benefit of legal advice and representation the Appellant lodged a second setting aside application in August 2014. Statutory declarations were made on 14 and 15 August by witnesses for the Appellant in support of that Application. The setting aside Application was not put in evidence, but clause 9(6) of the Civil and Administrative Tribunal Regulation, 2014 provides; (6) A party may not, without the leave of the Tribunal, make an application for an order under this clause to set aside or vary a decision of the Tribunal if the party has previously made an application under this clause to have the decision set aside or varied. 29The second setting aside application was heard on 19 July 2014 and refused and dismissed. 30The Appellant has not placed the reasons for the decision in evidence, but so far as we are aware, there was no leave granted and the dismissal was probably under clause 9(6) of the Regulation. 31The Notice of Appeal to this appeal panel was filed on 20 August 2014. It is an appeal against the decision of 23 June 2014 and also the decision of 19 July 2014 dismissing the second setting aside application. 32At this hearing the Appellant withdrew the Appeal against the refusal of the second setting aside application.

THE SURVIVING APPEAL 33The surviving Appeal is against the decision of 23 June 2014. The grounds in the Notice of Appeal are: "1. The Applicant was not aware of the hearing date on 23 June 2013 and was unable to put forth its evidence in opposition to the Respondent's claim." 34We have allowed the Appellant to add at the hearing the additional grounds set out in the Appellant's solicitor's letter to the Tribunal of 11 September 2014, which are: "2. That there was no evidence or no probative evidence to support the Tribunal's findings made on 23 June 2014 in proceedings GEN 14/03976; and 3. The Tribunal failed to take into account the failure of the Respondent to produce the third party evidence report in relation to the pipes of the steam boiler as referred to in the Directions hearing on 3 March 2014."

SECTION 80 OF THE ACT 35Section 80 provides: (1) An appeal against an internally appealable decision may be made to an Appeal Panel by a party to the proceedings in which the decision is made. Note. Internal appeals are required to be heard by the Tribunal constituted as an Appeal Panel. See section 27 (1). (2) Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance-with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance-as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds. (3) The Appeal Panel may: (a) decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and (b) permit such fresh evidence, or evidence in addition to or in substitution for the evidence received by the Tribunal at first instance, to be given in the new hearing as it considers appropriate in the circumstances. 36The first ground is in effect an argument that the Tribunal erred by assuming that the Appellant had notice of the hearing on 23 June 2014 and raises an issue of procedural fairness. 37The second ground is an argument that there was no evidence to support findings of the Tribunal. 38The third ground is an argument that the Tribunal erred by failing to take into account the absence of relevant evidence. 39Accordingly, under para 80(2)(b) the panel has treated each of the grounds as questions of law and leave to make the appeal is not required.

LIMITATION PERIOD FOR APPEAL 40This Panel has jurisdiction to entertain internal appeals under s.32 of the Act. 41Under para 25(4)(c) of the Civil and Administrative Tribunal Rules, 2014 for an internal appeal such as this matter, the appeal is required to be filed with the Tribunal "within 28 days from day on which the Appellant was notified of the decision to be appealed or given Reasons for the decision (whichever is the later)". 42The Appellant was given the Reasons and the decision on 10 July 2014. Accordingly, the appeal period expired on 7 August 2014. The Appeal was filed 13 days after the appeal period expired.

LEAVE TO APPEAL OUT OF TIME 43Section 41 of the Act allows the Tribunal to extend the time for filing an appeal "of its own motion or on application by any person". 44The test of whether such a power should be exercised to extend the statutory time limit is whether there is "proof that strict compliance with the rules will work an injustice upon the Applicant .." (per McHugh J in Gallo v Dawson [1990] HCA 30). The onus is on the Appellant to show that if the time for filing of the appeal is not extended by 13 days, there will be an injustice to the Appellant. 45An extensive discussion of the law in this area and the matters a court or tribunal should take into account when considering such an application is set out in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22(19 May 2014) at paras 18 - 22. 46In this matter in considering whether there would be an injustice if the time is not extended by 13 days as requested, the relevant considerations include: (a) length of the delay, (b) the reason for the delay, (c) the fact that the Appellant has had legal advice and representation since at least 18 July, (d) the prejudice to the Respondent if leave is granted, and (e) the Appellant's prospects of success in the appeal.

CONSIDERATION OF WHETHER THE TIME FOR APPEAL SHOULD BE EXTENDED (a)The length of the delay 47The delay was 13 days beyond the prescribed period of 28 days. It is a substantial delay. The Appellant knew of the orders and reasons on 10 July and did not file the Notice of Appeal till 41 days later. (b) The reason(s) for the delay 48The Applicant has offered no explanation for the delay. (c) The fact that the Appellant has had legal advice and representation since at least 18 July 2014. 49The evidence includes a statutory declaration of Mr Horak made on 18 July 2014, presumably in support of the first setting aside application. That document was witnessed by the solicitor for the company on 18 July. The Appellant has not disclosed when legal advice or representation was first obtained, but it was obviously on or before 18 July 2014. That was 8 days after the Appellant received the orders and reasons appealed against. There is no explanation of that delay. 50The first setting aside application was heard and dismissed on 6 August 2014, 27 days after the Appellant received the orders and reasons and one day before the appeal period expired. There is no explanation as to why the delay occurred with that application. 51When the second setting aside application was filed on about 18 August 2014, the appeal period had already expired on 7 August 2014. Then the Notice of Appeal was filed on 20 August. 52The Appellant has not provided evidence of the reasons for the delays or of the legal advice that the Appellant received from its solicitors, as regards appeal rights and the period for an appeal. (d) The prejudice to the Respondent if leave is granted. 53The Respondent has, by its agent, Ms A Russell , attended the Tribunal now for 3 hearings. It has been successful in each. It has also attended a directions hearing for each of the original application and the appeal. The Respondent's business is located at Mudgee and Ms Russell resides there. If leave were granted to the filing of the appeal out of time, there may need to be a further hearing. 54We are not informed as to where the original directions hearing, and the hearings of the setting aside application were held. But the evidence discloses that the directions hearing for the appeal was at Sydney and the hearing before us was at Sydney. These attendances by Ms Russell (and any other witnesses for the Respondent) would involve significant expense and inconvenience for the Respondent. 55The history of the proceedings has involved considerable delay, expense and inconvenience for the Respondent, none of which were attributable to conduct of the Respondent. If leave is granted for the appeal to be filed out of time, that is likely to result in a rehearing with further delay in resolving the issues, and considerable further expense and inconvenience to the Respondent. (e) The Appellant's prospects of success in the appeal. 56It is clear on the evidence that because the Appellant did not receive notice of the hearing, it lost the opportunity to file evidence for the hearing and to attend and put its evidence and submissions before the Court. 57The other 2 grounds of the appeal are: "2. That there was no evidence or no probative evidence to support the Tribunal's findings made on 23 June 2014 in proceedings GEN 14/03976; and 3. The Tribunal failed to take into account the failure of the Respondent to produce the third party evidence report in relation to the pipes of the steam boiler as referred to in the Directions hearing on 3 March 2014." 58Ground 2 was not shown to have any merit. The Appellant did not, despite invitations from the panel to provide any additional evidence, put into evidence the evidence that was before the Tribunal. The Tribunal member in his reasons made the orders based upon his findings that the thickness of the outer shell of the boiler was 2mm instead of 6.6mm specified in the manufacturer's specifications and the internal diameter of the main water pipes was too small. On the face of it the reasons indicate that there was evidence to support those findings. The Appellant has not provided the Panel with evidence capable of displacing that finding. 59Ground 3 is also not shown to have merit. The Tribunal Member expressly relied upon evidence of an inspection by a boiler inspector who noted that the main water tubes were small in diameter and would have contributed to blockages. There is no suggestion that this expert evidence was not correct. The Appellant does not say there is any evidence to contradict this opinion, only that the Tribunal failed to provide a copy to the Appellant before the hearing. Ground 3 is not a ground which, if proved, would of itself, or with success on grounds 1 or 2 , justify the appeal being allowed. 60There is another issue that is important. Although he did not rely directly upon it, the Tribunal Member found that the boiler contained chrysotile asbestos and the boiler's importation into Australia and its use in Australia have been prohibited by law since 2003. The Respondent offered evidence on these issues at the hearing on 23 June 2014 and clearly intends to rely on them in any appeal or rehearing. The Appellant does not dispute these findings of the Tribunal Member. 61The Panel is not persuaded that on a hearing of the appeal or a rehearing the appellant has prospects of obtaining a more favourable result than the orders of 23 June 2014. CONCLUSIONS - LEAVE TO APPEAL OUT OF TIME 62The Appeal Panel has concluded that the granting of leave to appeal out of time is not necessary to avoid injustice to the Appellant because: the appeal does not have prospects of success; there have been extensive delays by the Appellant; the Appellant has not explained those delays; the 2 unsuccessful setting aside applications and the consequent delays, inconveniences and expense occasioned to the Respondent from those and the hearing before this panel; the applicant has not disclosed what advice it received about the period for an appeal from its legal representatives, if any; The delays, inconvenience and expense already occasioned to the Respondent and the likely further adverse consequences for the Respondent if the time fr the appeal is extended; and the Appellant has delayed and failed to file the appeal in time, notwithstanding that the Appellant has had the benefit of legal advice and representation since at least 18 July 2014. ORDERS 63 The orders of the Appeal Panel therefore are:

The appeal against the orders of the Consumer and Commercial Division of 19 July 2014 is withdrawn and dismissed.
The application for an order to extend the time to appeal the decision of the Consumer and Commercial Division of 23 June 2014 is refused and dismissed.
The Notice of Appeal filed 20 August 2014 to appeal the decision of the Consumer and Commercial Division of 23 June 2014 is dismissed as out of time. 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: 13 November 2014

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