Zahan and Jubly v Aly Pty Ltd

The Proceedings

1. Mr Hammoud did not appeal that decision but the next day commenced a third application HB 22/54066 which is the subject of this appeal. As in the earlier Proceedings, Mr Hammoud again named himself as the applicant and Mr Zahan as the respondent.
2. The Application in HB 22/54066 contained the following details of the dispute: It was a new building site, a house and a granny flat behind it. I did his house and he didn't pay the last payment also he didn't pay the variations that he asked me to do. and under Order/s Sought: An order that he pay me the amount of $8,610 This was the same claim that Mr Hammoud had brought against Mr Zahan in the earlier Proceedings.
3. A first conciliation hearing was scheduled for 9 January 2023, but Mr Zahan did not appear. At that hearing the Member (not the same Member who had heard the earlier Proceedings), noted that the parties may not have been correctly named and directed Mr Hammoud to supply Australian Securities and Investments Commission (ASIC) and property searches.
4. On 16 January 2023 Mr Hammoud provided an ASIC search which identified that the ABN listed on the Quotation was registered in the name of Aly Pty Ltd. Mr Hammoud also provided a property search which revealed that the respondents' premises were owned jointly by "Zahan and Jubly". At a second conciliation conference on 30 January 2023, Aly Pty Ltd was substituted as the applicant in the place of Mr Hammoud, and the respondent's name as amended to Zahan Jubly. The proceedings were set down for hearing on 2 May 2023.
5. During the hearing on 2 May 2023 it became apparent that the amendment made to the respondent's name on 30 January 2023, was not accurate as the property search in fact revealed that the premises were jointly owned by Ms Jubly and Mr Zahan. Thus, as is recorded at [60] in the Decision, a further and final amendment to the identity of the parties was made by joining them both as respondents.
6. The hearing did not conclude on 2 May 2023 and was adjourned, part heard until 1 August 2023. After a further 3 hour hearing on that day, the Member reserved her decision.

The Decision

1. The Decision was published on 20 October 2023. The Member rejected the first element of the applicant's claim for payment of the "final instalment" of the moneys said to be owing for the works referred to in the Quotation. The Member held that the applicant had not established that the works were complete and defect free: at [122]-[124] of the Decision.
2. The second part of the claim was for payment for 22 variations which Mr Hammoud said he had agreed verbally with Mr Zahan. The Member allowed $3,760 for 12 of these items as a quantum meruit claim and rejected the balance: at [133] of the Decision. She also dismissed the contract claim for same reasons that it had been rejected in the earlier Proceedings.
3. The Member also made the following findings at [72]-[80]: Estoppel/res judicata/abuse of process 72 The causes of action in contract and quantum meruit being agitated by the applicant in these proceedings are not new causes of action. The Second Proceedings were initially brought in contract and then amended on 16 August 2022 to include quantum meruit after quantum meruit was raised by the Tribunal as the relevant cause of action following the 12 August 2022 hearing. The parties were given the opportunity to make written submissions and be heard on 5 December 2022, but failed to comply with Tribunal directions. 73 Attempts at re-litigating matters that have already been determined are considered an abuse of process and cannot be raised again. 74 The action for breach of contract would appear to have been determined on 12 August 2022 (order 2) when the Member stated: "the applicant cannot enforce the contract." This was reiterated on 5 December 2022 at the paragraph of the Member's Reasons where she stated: "The initial hearing was set for 12 August 2022. On this occasion the Tribunal found that the applicant had failed to establish his claim under breach of contract, as he failed to provide evidence that he had complied with the relevant legislation, being ss 7 and 7AAA of the HBA. 75 In my view, a claim in contract cannot now be re-agitated. 76 As to the claim in quantum meruit, if the intention of the Member was to make a finding as to the substantive merits of Mr Hammoud's claim in quantum meruit in the second Proceedings, then Mr Hammoud is prevented from reagitating that claim before me. The Member made a finding that Mr Hammoud led no new evidence and the assumption presumably made by the Member was that there was no evidence to support the merits of his application. On that basis, in my view, the Member determined the matter on a substantive basis. Consequently there is an estoppel upon which the respondents are entitled to rely in these subsequent proceedings before me, which means that the applicant is prevented from re-agitating his claim. 77 If I am wrong and the Member dismissed the application in quantum meruit on 5 December on a procedural basis only, then there is no estoppel upon which the respondents are entitled to rely and the applicant is entitled to ''start again", as it were. However, in many instances, as will be apparent in these Reasons below, this may be a moot point, given there has been minimal additional evidence filed by the applicant in these proceedings to enable him to discharge his onus of proving all his claims in meruit, both as to the quoted works and the variations. 78 However, these third proceedings involve different parties. The applicant in these proceedings is a different legal person to the individual applicant in the second proceedings. There is also an additional respondent/homeowner who was not a party to the Second Proceedings. Given the parties in these proceedings are not the same as those in the Second Proceedings, the defence of estoppel and res judicata do not strictly apply and the applicant can pursue his claims in these proceedings in contract and, alternatively, quantum meruit, in the name of the corporate applicant. 79 However, there is a point in time that the applicant, by continuing to re-litigate matters without complying with Tribunal directions, engages in an abuse of process. 80 In my view, the applicant has engaged in such an abuse of process and but for the different parties before me, would be estopped from bringing this third action.
4. At [64]-[70] in the Decision, the Member also recorded that on 2 August 2023 Mr Hammoud had requested from the Registry a copy of the sound recording of the 12 August 2022 hearing in the earlier Proceedings. When Mr Hammoud was provided with a USB stick containing that recording, he requested that it be included in his evidence. He said that the recording included admissions apparently made by Mr Zahan. He did not produce a transcript highlighting the relevant passages on which he wished to rely. The Member did not accept the sound recording evidence. It was also not apparent that a copy of the sound recording had been provided to Mr Zahan.
5. The Member said at [69] and [70] that: 69 The applicant has been given ample opportunity to obtain a transcript prior to 1 August 2023 and chose not to do so, in circumstances where he has received legal advice. The applicant cannot now seek to improve its case by filing evidence after a hearing has concluded. 70 In my view, the applicant has acted in a way that has disadvantaged the respondents and has disregarded Tribunal directions. He has breached the duty in s 36(3) to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal.

The Appeal

1. The appellants lodged their Notice of Appeal on 31 October 2023. They submitted that the majority of the variations were not variations and that an inspection report showed that that "a lot of things are not done or partially done". They filed a bundle of documents in support of their contentions. The respondent also filed a bundle of documents.
2. The appeal was heard on 12 February 2014. Mr Zahan represented himself and his wife and he made oral submissions in support of his case. Neither Mr Hammoud, nor anyone else appeared on behalf of Aly Pty Ltd.
3. At the commencement of the hearing, the Appeal Panel informed Mr Zahan that in addition to the matters that he had raised in his Notice of Appeal, the findings made at [72]-[80] in the Decision may raise a question, or questions of law. In that event, although the parties did not refer to these issues in their submissions, the Appeal Panel was bound to consider them. We said that we would invite the parties to make submissions before preparing our Reasons.
4. On 13 February 2024 the Registry wrote to the parties in the following terms: 1.The parties are referred to paragraphs [41] [76] [77] [78] [79] and [80] of the published written reasons for decision dated 20 October 2023. The Appeal Panel makes the following direction. 2. The parties are to address whether: 1 the decision of 5 December 2022 in proceedings HB 22/226909 dismissing the applicant's quantum meruit claim was a finding based on the substantive merits of the claim or a finding made on a procedural basis only; 2 the finding that the applicant (Aly Pty Limited) has engaged in an abuse of process should have resulted in a dismissal of the application; and 3 the finding at [78] that a change in applicant allows the issues to be litigated for the third time, or whether the issue of res judicata arises.
5. The appellants were directed to provide their submission within seven days, and the respondent to provide his or its submission within a further seven days. The appellants were then directed to submit a submission in reply seven days after the receipt of the respondent's submission. Submissions were received from the appellants and the respondent in accordance with this timetable. The appellants did not file a submission in reply.

Scope and Nature of Internal Appeals

1. Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), provides that an appeal from a decision of the Tribunal at first instance may be made as of right on a question of law, or with the leave of the Appeal Panel on any other grounds.
2. Clause 12(1) (a) and (b) in Schedule 4 of the NCAT Act provides that, amongst other grounds, the Appeal Panel may grant leave under s 80(2)(b) if it is satisfied that an appellant may have suffered a substantial miscarriage of justice because - 1. the decision of the Tribunal under appeal was not fair and equitable, or 2. the decision of the Tribunal under appeal was against the weight of evidence.
3. Although neither the Notice of Appeal nor the appellants' submissions used those words, the substance of the appellants' contention was that the Decision was not fair and equitable and was made against the weight of the evidence. These are matters which require us to grant leave for the appeal to succeed.
4. In relation to questions of law, the Appeal Panel in John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13], without listing exclusively possible questions of law, said that they included but were not limited to whether the Tribunal had applied a wrong principle of law. We propose to treat the questions referred to the parties on 13 February 2024 as matters raising questions of law for which leave is not required.

The Appellants' Submission on the Questions of Law

1. The appellants submitted that the dismissal of the quantum merit claim in the earlier Proceedings was a finding based on the substantive merits of the claim, and agreed with the Member's finding that Mr Hammoud had filed minimal additional evidence in relation to his quantum meruit claim in the Proceedings.
2. They also said that Mr Hammoud had intentionally substituted Aly Pty Ltd and that the applicant had "cunningly" added Ms Jubly as an additional respondent when she did not "have any relevance to the matter at all". For these reasons the Proceedings should be dismissed as an abuse of process and "because the issue of res judicata arises".

The Respondent's Submission on the Questions of Law

1. Mr Hammoud said that the Decision in the Proceedings should "prevail". He said that he had been overseas for two months after the August 2022 hearing and did not have time to prepare adequately for the adjourned December 2022 hearing. He had written to the Tribunal apologising for his failure to comply with the Tribunal's directions.
2. In relation to the change in the parties to the Proceedings, he said: 4. As for paragraph 79 technically you might call it as an abuse of process on both sides the appellant failed to give details about the second owner of the property, also I had to correct and renew the business name ALY Electrical which was under entity ALY PTY LTD. 5. As for paragraph 80, it was not intended to be an abuse of process rather it was a technical mistake, but again I rely on decision at paragraph 133 that services was delivered as per contract.

Was the 5 December 2022 decision a final decision?

1. The issue is whether the Tribunal's dismissal of the quantum meruit claim on 5 December 2022 in the earlier Proceedings "determine(d) the matter on a substantive basis'', to adopt the Member's language in the Decision, or was it a decision made on "a procedural basis only". This is a critical distinction as the res judicata defence, which we discuss below, will only be applicable where the antecedent decision was a final decision.
2. At [76], the Member said that the decision was a determination of the issue on a substantive basis, though in [77] she then considered the alternative position.
3. In our opinion the issue was determined on a substantive basis. Proceedings HB 22/26909 were set down for hearing on 12 August 2022 and, as is recorded at [33] in the Decision, there was a two hour contested hearing on that day, limited at that time to the applicant's contract claim.
4. Having informed the parties that the contract relied upon by the applicant was unenforceable, the Member directed that they file and serve evidence and submissions in relation to an alternative quantum meruit claim and listed the proceedings for a further 3 hour hearing on 5 December 2022.
5. The parties attended the hearing on 5 December 2022. The Member referred to the hearing as a final hearing. In the last paragraph under "3 Background" in her Reasons dismissing the claim, she said: At the final hearing on 5 December where a three-hour hearing time was set, the applicant submitted that he had not provided any further documents by 29 August 2022, as per the orders made on 16 August 2022 after the hearing. questioned further, the applicant submitted that he had made only one further submission, received 29 November 2022, and that this has consisted of 6 pages reiterating his previous submissions. None of the pages received on 29 November 2022 addressed the issues raised in the orders made on 16 August 2022. At the hearing the respondent confirmed that he had made only one submission since the orders made 16 August 2022, received by the Tribunal on 25 November 2022. Questioned by the tribunal, the respondent confirmed that the majority of the documents that had previously been submitted (previous submission dated 11 July 2022), and that he had added only pages 43 to 48 inclusive. These documents were not considered as the applicant had failed to establish a prima facie case. The Tribunal finds that the applicant failed to comply with orders made by it on 16 August 2022. As such the tribunal finds that the applicant failed to establish his claim for quantum meruit prima facie, and as such the claim is dismissed.
6. She then made the two orders set out at [41] in the Decision. As we understand these orders, the first order, that the Tribunal was not satisfied that the grounds to make the orders had been established, applied to both the contract claim and the quantum meruit claim, and the second order, that the applicant had failed to comply with Tribunal's prior orders, provided an additional basis for dismissing the quantum meruit claim. In our view, both orders were made on a final basis.
7. The alternative proposition, that the quantum meruit claim may have been dismissed "on a procedural basis only", cannot be correct. If that were the Member's intention, when relisting that matter for the further hearing, she would have been obliged to have informed the parties that she was not proposing to make a finding on that aspect of the claim on 5 December 2023, and presumably, that they would have the opportunity to adduce additional evidence and make further submissions. She did not make any direction or order to that effect.

Res Judicata

1. [72]-[80] in the Decision under appeal are preceded by the heading Estoppel/res judicata/abuse of process. The Member appears to have treated the principles of estoppel and res judicata as being interchangeable, or at least that both were available as a defence in the Proceedings: see [76], [78], [80]. However, they are different principles. Estoppel, or issue estoppel precludes a party from challenging a finding of fact determined in previous proceedings between the parties - for example a finding that a contract was entered into on a particular date. That is not the issue in the Proceedings.
2. Res judicata or res judicata estoppel, on the other hand, arises when a judicial tribunal has delivered a judgment which is, in its nature, final and conclusive. In any subsequent proceedings between the same parties, if the same issues arise for consideration, the defence of res judicata can be raised, so that these issues cannot be relitigated.
3. The Member determined at [78] that there was no res judicata because although the claims were identical, the parties in the Proceedings were not the same as the parties in the earlier Proceedings. Aly Pty Ltd had been substituted as the applicant and Ms Jubly had been added as a respondent.
4. As a matter of matter of general principle, if the parties are not the same in both proceedings, there will be no res judicata. However there is an important qualification. The common law recognises that a "party" to previous proceedings includes a person or entity who was a privy of that party. A privy includes a person or entity with an interest, legal or beneficial, in the previous subject matter: Carl Zeiss Stiftung v Rayner and Keeler Ltd (No 2) [1967] 1 AC 853 at 909-910.
5. In K R Handley, Spencer Bower and Handley: Res Judicata (5th ed, 2019, LexisNexis), at [9.42]-[9.45], the authors have identified a number of judicial decisions where the concept of privy in interest has been considered. The High Court in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28, considered the issue. The Court held, (reversing the decision of the New South Wales Court of Appeal), that there was no privity of interest between an employee and the Fair Work Ombudsman in relation to enforcement action taken by the Ombudsman against his employer. Thus the employee was not prevented from bringing his own action against his employer.
6. In coming to this conclusion, the plurality, at [44]-[46], said that the Ombudsman was not acting under, or through or on behalf of the employee and was therefore not representing the employee's legal interests. The employee did not have the opportunity to exercise control over the presentation of evidence or the making of arguments in the earlier proceedings.
7. This situation may be contrasted with the scenario considered recently by the Hong Kong Court of First Instance, a common law jurisdiction, in Lo Kai Shui V HSBC International Trustee Ltd [2021] HKCU 2551; [2021] HKCFI 1539.
8. The relevant facts were that Madam Lo had brought a claim against HSBC Trustee alleging breach of trust. The claim was unsuccessful. Soon thereafter her son, Mr Lu, who was also a beneficiary of the trust, commenced what were described as "highly similar claims" against the trustee.
9. In determining whether Madam Lo's proceedings prevented Mr Lu from pursing his claim, the Court considered amongst other matters, whether Mr Lu was a privy of Madam Lo. At [75]-[109] the Court answered that question in the affirmative. Tomlinson was not cited, but the Hong Kong Court's approach to the issue was similar to reasoning of the plurality in Tomlinson, although, given the different nature of the relationship of the parties, the decision was the opposite of that reached in Tomlinson. The Court held that: 1. Mr Lu had the same and parallel interest in the relevant subject matter of Madam Lo's prior action as she had; 2. Mr Lu was closely involved in the preparation and conduct of Madam Lo's action and was in substance and reality a co-plaintiff; and 3. It was fair and just to bind Mr Lu to the outcome of Madam Lo's action.
10. The relationship between Mr Hammoud and Aly Pty Ltd is in many respects similar to the relationship between Madam Lo and Mr Lu in the Hong Kong proceedings. Mr Hammoud is the sole shareholder and director of the company. He is the only person who has been involved in the preparation and conduct of either proceedings as the applicant. Mr Hammoud and Aly Pty Ltd have the same interest in the subject matter of both proceedings.
11. In the Reply to Appeal, the respondent is described as "Ali Hammoud/Aly Pty Ltd", and Mr Hammoud has signed the pleading "Ali Hammoud", although the company is the respondent to the appeal. For all relevant purposes, it appears that Aly Pty Ltd is Mr Hammoud's "alter ego" and their interests in both proceedings are identical.
12. In the circumstances it is our view that Aly Pty Ltd is, in substance, the privy of Mr Hammoud, and the substitution of Aly Pty Ltd in the place of Mr Hammoud, does not displace the res judicata defence.
13. In relation to Ms Jubly, she is a joint owner of their premises, and thus she appears to be a person with a legal and beneficial interest in the outcome of both proceedings. In our view she is a privy of Mr Zahan.
14. We also agree with Mr Zahan's submission that Ms Jubly has no substantive relevance to the claims. The Member found at [8] that Mr Zahan alone engaged Mr Hammoud to carry out the relevant electrical works. There was no evidence that Ms Jubly was involved in the making of the contract or its performance, so that the claim in contract against her could not have succeeded even if it were able to be enforced by Mr Hammoud. That is also the case with regard to the quantum meruit claim.
15. Thus the joinder of Ms Jubly as an additional respondent also does not displace the res judicata defence.
16. As the other constituent elements of res judicata are established, we would allow the appeal on this ground and set aside the orders made by the Member in HB 22/54066.

Which Entity was the Proper Applicant in the Proceedings

1. We also have some doubts as to whether Aly Pty Ltd was in fact the proper applicant in the Proceedings. The Quotation was headed: Aly Electrical pty ltd Licence Number: 305821c Aly_ electrical @outlook.com ABN: 49618572777
2. The Member noted at [50] that Aly Electrical Pty Ltd was not listed on the ASIC Register, and that the ABN referred on the Quotation belonged to Aly Pty Ltd. She then made the direction that Aly Pty Ltd be substituted as the applicant. However at [5], she also noted that the contractor licence number on the Quotation was held by Mr Hammoud personally and not by the company.
3. Sections 7(6) and (7) of the HB Act state that: 7 Form of contracts (other than small jobs) … (6) A contract must not include in the contract the name of any person other than the holder of a contractor licence as, or so it might be reasonably mistaken to be, the holder's name. (7) This section does not prevent the holder of a contractor licence with a business name registered under the Business Names Registration Act 2011 from also referring in such a contract to the business name. …
4. Aly Electrical appears to have been registered as a business name at the time the Quotation was provided though, as Mr Hammoud noted in his submission, it subsequently lapsed. These matters raise the possibility that Mr Hammoud may have intended to contract in his personal capacity rather than in the name of his company, so as to ensure that he did not infringe these provisions in the HB Act. In any event we do not need to finally decide this issue in view of our findings in relation to the res judicata defence

Abuse of Process

1. We do not need to determine this issue. However, we make the following observations. At [79] the Member noted that there was a point in time that the applicant, by continuing to re-litigate matters without complying with Tribunal directions, engaged in an abuse of process. And at [80] she said that the applicant had engaged in an abuse of process which would have created an "estoppel, "but for the different parties" before her.
2. Abuse of process is an inherently broader and more flexible principle than res judicata. It may arise in many different situations, including, but not limited to circumstances where there is re-litigation of an earlier decision. It may prevent the making of a subsequent claim even where the elements of res judicata are not satisfied - for example where there are different parties to the re-litigated proceedings: Tomlinson at [26].
3. The issue recently arose for consideration by the Court of Appeal for England and Wales in Allsop v Banner Jones Ltd [2021] EWCA Civ 7. In the first proceedings, after a husband and wife had separated, the wife obtained a Financial Remedies Order. The husband was unhappy with this outcome, and having been refused leave to appeal, sued his solicitors alleging professional negligence. These subsequent proceedings included many of the claims that had been unsuccessful in the Financial Remedies Order proceedings. The husband's solicitors, amongst other matters, contended that the proceedings against them constituted an abuse of process.
4. The Court of Appeal held that re-litigation of an anterior civil decision is not prima facie abusive, and that each case must be considered separately on its own facts. Where the parties are different, the claim is best framed as an impermissible collateral attack on the earlier proceedings. At [44] after a very detailed examination of the earlier authorities, the Court said that these authorities established that subsequent proceedings not involving the same parties would only constitute an abuse of process where: 1. it would be manifestly unfair to a party in the earlier proceedings to have the same issues re litigated; or 2. to permit such re litigation would bring the administration of justice into disrepute.
5. In our view it is doubtful that an abuse of process claim could be made out against Mr Hammoud. He did not commence the Proceedings in the name of Aly Pty Ltd to avoid a res judicata finding. In fact he filed the Application in HB 22/54066 initially in his own name, and Aly Pty Ltd was only substituted after the Member had made a direction to that effect.
6. Similarly the joinder of Ms Jubly was at the Tribunal's direction, and there is no evidence that Mr Hammoud took this step "cunningly" to get around the decision in the earlier Proceedings, as Mr Zahan had suggested in his recent submission.
7. We also do not believe that Mr Hammoud's failure to comply with the Tribunal's prior directions constituted an abuse, or at least contributed to the abuse. In his Application initiating the Proceedings he said: (the prior proceedings) had been dismissed for lack of evidence which I wasn't sure what to provide more than I did provide before.
8. This suggests that it was his failure to comprehend the Tribunal's processes that brought about this situation. These factors, and also perhaps his absence overseas during the relevant period, may also have contributed to his failure to provide a highlighted transcript of the prior proceedings. This is not to say that these matters provide a justification or excuse for Mr Hammoud's actions or inactions, but they suggest a lack of deliberate conduct on his part. We would not categorise this conduct as an abuse of process.

The Quantum Meruit Claim

1. The appellants raised an appeal ground which is described as "most of the variations are not variations" which raises issues of fact for which the leave of the Appeal Panel is required. In light of our decision above that the constituent elements of res judicata are established it is not necessary for us to decide whether we would have granted leave to appeal on this ground.
2. The application is dismissed because having considered the material before it. The Tribunal is not satisfied (at the civil standard of proof) that the grounds required to make the orders sought have been established.
3. The Tribunal finds that Mr Hammoud failed to comply with orders made by it on 16 August 2022. As such the Tribunal finds the applicant failed to establish his claim in quantum meruit prima facie, and as such the claim is dismissed.

Orders

1. The Appeal Panel's orders are: 1. Appeal allowed. 2. Set aside order 1 made by the Tribunal on 20 October 2023 in proceedings HB 22/54066 and in substitution order that those proceedings be dismissed.

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: 08 April 2024