Supreme Court New South Wales

• Medium Neutral Citation: The Owners - Strata Plan No. 70030 v Decon Australia Pty Ltd [2014] NSWSC 347
• Hearing dates: 12 December 2013
• Decision date: 28 March 2014
• Jurisdiction: Common Law
• Before: Schmidt J

Decision

The Tribunal's orders of 10 February and 30 April 2013 be quashed and the proceedings be remitted to the NSW Civil and Administrative Tribunal to be dealt with according to Schedule 1, Clause 8 of the Civil and Administrative Tribunal Act 2013 (NSW).

All exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined.

• Catchwords: ADMINISTRATIVE LAW - judicial review - construction of Home Building Act 1989, s 48K - jurisdiction of Consumer, Trader and Tenancy Tribunal - whether plaintiff was denied procedural fairness - whether Tribunal had jurisdiction to deal with claim for an amount exceeding $500,000 - whether Tribunal fell into jurisdictional error in dismissing proceedings without considering challenge to its jurisdiction or the plaintiff's application for transfer of proceedings to Supreme Court - jurisdictional error established - whether discretion to refuse relied should be exercised
• Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW); Civil Procedure Act 2005 (NSW); Consumer, Trader and Tenancy Tribunal Act 2001 (NSW); Home Building Act 1989 (NSW); Strata Schemes Management Act 1996 (NSW); Supreme Court Act 1970 (NSW); Uniform Civil Procedure Rules 2005 (NSW)
• Cases Cited: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175; Bailey & Anor v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293; Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163; Italiano v Carbone & Ors [2005] NSWCCA 177; Kirk v Industrial Relations Commission; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales (Inspector Childs) [2010] HCA 1; 239 CLR 531
• Category: Principal judgment
• Parties: The Owners - Strata Plan No. 70030 (Plaintiff); Decon Australia Pty Ltd ACN 078 021 333 (First Defendant); Eissa Soliman Tadros (Second Defendant); Afaf Aziz (Third Defendant); Shawki Hanna Gad (Fourth Defendant); Lily Aziz Gad (Fifth Defendant)
• Representation: Counsel: Mr M Einfeld QC with Mr I George (Plaintiff); Mr R Notley (First Defendant); Mr T Davie (Second to Fifth Defendants); Solicitors: Buckner Jones (Plaintiff); Uther Webster & Evans (First Defendant); Peter Merity Solicitor Pty Ltd (Second to Fifth Defendants)
• File Number(s): 2013/00084320
• Publication restriction: None

Judgment

1 The plaintiff is an owners corporation established under the Strata Schemes Management Act 1996 (NSW) as the owner of the common property of a home unit development at Narrabeen. It challenges the jurisdiction of the Consumer, Trader and Tenancy Tribunal of New South Wales to make an order striking out proceedings it had brought in 2009 under s 48K of the Home Building Act 1989 (NSW), concerning alleged defective building work. It asks that the Tribunal's orders be quashed and that the proceedings be remitted to the Tribunal for determination of an application it had made prior to the strike out, for an order transferring its claim to this Court.

2 The transfer application was not decided, even though it was made before the Tribunal, acting of its own motion, raised the question of strike out and despite the hearing before the Tribunal on 18 February 2013 being listed for, and commencing on, the basis that both the transfer application and the strike out application then pursued by the defendants by motion, would both be heard and determined.

3 Instead, having decided, over the plaintiff's objection, first to hear the parties on the question of whether the application should be struck out, Senior Member Smith adjourned after hearing the parties on that application. On resumption he announced that the proceedings would be struck out. Reasons for that decision were later given on 22 February 2013, but they do not explain why Senior Member Smith considered that he had jurisdiction to deal with that application or why the transfer application was not dealt with.

4 The plaintiff's amended summons sought a declaration that the Tribunal had no jurisdiction to make the strike out order or an order that the plaintiff pay the defendants' costs on an indemnity basis on the ground that the claim before the Tribunal as at 18 February 2013 was for an amount beyond its jurisdictional limit of $500,000. In the result it lacked jurisdiction to determine any matter other than application for referral to the Supreme Court and erred in dismissing the proceedings, lacking the jurisdiction to do so.

The issues

5 There was no question as to this Court's powers to grant the relief sought under s 69 of the Supreme Court Act 1970 (NSW). Section 65 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) is also relevant. It provided:

"65 Review by prerogative writ etc generally excluded

(1) Except as provided by this section, a court has no jurisdiction to grant relief or a remedy by way of:

(a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or

(b) a declaratory judgment or order, or

(c) an injunction,

in respect of any matter that has been heard and determined (or is to be heard or determined) by the Tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such a matter.

(2) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the jurisdiction of the Tribunal to determine the matter was disputed if the ground on which the relief or remedy is sought is that:

(a) the Tribunal gave an erroneous ruling as to its jurisdiction, or

(b) the Tribunal erred in refusing or failing to give a ruling as to its jurisdiction when its jurisdiction was disputed.

(3) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the Tribunal has made an order if the ground on which the relief or remedy is sought is that:

(a) the Tribunal had no jurisdiction to make the order, or

(b) in relation to the hearing or determination of the matter, a party had been denied procedural fairness."

6 The plaintiff's case was that the Tribunal had erred in refusing or failing to determine whether it lacked jurisdiction to deal with its claim and in failing to determine that it had no jurisdiction to make the order dismissing the proceedings. It had also been denied procedural fairness at the hearing, its transfer application not having been heard or determined before its claim was dismissed.

7 The defendants' position was that there had been no jurisdictional error; that the Tribunal had the power to dismiss the proceedings for sufficient reason under s 25(5)(i) of the Consumer, Trader and Tenancy Tribunal Act; that there was no error in the conclusion Senior Member Smith had reached in the circumstances; and that there was no denial of procedural fairness, which in any event, the plaintiff was not entitled to rely on. The only application before the Tribunal was one within its statutory jurisdiction. The plaintiff had made no application for leave to amend its application and, accordingly, in the circumstances there was no jurisdictional error in hearing and determining the question of dismissal, before the transfer application was dealt with.

8 The plaintiff contended that its amended summons raised jurisdictional error, which in the circumstances was sufficient to encompass the denial of procedural fairness which had resulted in the orders the subject of the appeal. The procedural fairness point had been dealt with in the parties' written submissions, without any deficiency in the summons being identified. In the result, if the lack of specific pleading were perceived to be an obstacle, leave to rely on that ground would be pressed and granted, given that no prejudice had been suffered by the lack of specific pleading of that ground.

9 In issue was thus whether the Senior Member Smith had erred in dismissing the plaintiff's claim without determining its transfer application and giving a ruling as to its jurisdiction, when its jurisdiction was in dispute; whether the Tribunal had jurisdiction; whether the plaintiff could rely on the procedural fairness point which had been addressed; and if it could, whether there had been any procedural unfairness.

Can the plaintiff rely on the procedural fairness point?

10 The amended summons does not expressly plead the procedural fairness point which the parties addressed in their written submissions and at the hearing. Rule 59.4 of the Uniform Civil Procedure Rules 2005 (NSW) requires in judicial review proceedings that the summons state with specificity, the grounds on which the relief is sought.

11 In the circumstances which have arisen the defendants were, however, neither surprised nor prejudiced by the point taken. If leave to amend the summons is necessary, it must be granted.

12 The matter is governed by the provisions of the Civil Procedure Act 2005 (NSW), which by s 56 requires the just, quick and cheap resolution of the real issues in the proceedings. Section 64 permits the amendment of pleadings at any stage, providing:

"(2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings."

13 Section 58 requires the Court to act in accordance with the dictates of justice and provides in s 58(2)(b) that that it may have regard to:

'(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,

(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,

(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,

(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),

(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,

(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,

(vii) such other matters as the court considers relevant in the circumstances of the case."

14 In this case justice demands that leave to rely on the denial of procedural fairness point be given. No prejudice will result. The point arises from the same facts over which the parties otherwise joined issue and has been addressed.

15 This is a situation of the kind discussed in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 at [82] - [83]:

"[82] The need for amendment will often arise because of some error or mistake having been made in the drafting of the existing pleading or in a judgment about what is to be pleaded in it. But it is not the existence of such a mistake that founds the grant of leave under rules such as r 501(a), although it may be relevant to show that the application is bona fide [See Tildesley v Harper (1878) 10 Ch D 393 at 396-397 per Bramwell LJ]. What needs to be shown for leave to amend to be given, as the cases referred to above illustrate, is that the controversy or issue was in existence prior to the application for amendment being made. It is only then that it is necessary for the court to allow it properly to be raised to enable a determination upon it.

[83] The existence of a controversy may be seen in the way in which the matter had already been pleaded, albeit inferentially, in Tildesley v Harper and Dwyer v O'Mullen; or where the issue is raised by another party in the same proceedings but in respect of which the party applying was inextricably involved, as in Cropper v Smith. It may be present in the nature of the bargain struck, as in O'Keefe v Williams. A consideration of these cases does not suggest that an unduly narrow approach should be taken to what are the real issues in controversy, although they are not, or are not sufficiently, expressed in the pleading."

16 Here, there was unquestionably a real issue as to procedural fairness, given the conduct of the hearing in the Tribunal, which the parties recognised and addressed in their submissions, even though it was not specifically pleaded as a ground. In the result justice demands that the plaintiff be permitted to rely on that point.

Was there procedural unfairness?

The proceedings in the Tribunal

17 It was common ground that the proceedings had a most unsatisfactory procedural history. They were commenced in August 2009. Section 12 of the Consumer, Trader and Tenancy Tribunal Act empowered the Chairperson of the Tribunal to give procedural directions for particular classes of proceedings. The directions which applied to this application required the plaintiff to file a points of claim document, which, amongst other things, required a brief summary of the claim to be given, stating the orders sought and the reasons for seeking them.

18 The plaintiff filed its points of claim document late, in November 2009. There were ongoing problems with its pursuit of the application. In 2012 the matter was listed for hearing on 18 February 2013.

19 On 7 February 2013, the plaintiff notified the Registrar of the Tribunal that its expert building consultant had retired and that a new expert had been retained, who had advised it that its total claim, properly calculated, exceeded $1.8 million; that this exceeded the Tribunal's jurisdictional limit under the Home Building Act; that the Tribunal no longer had jurisdiction to deal with the application; and that the proceedings should be vacated and transferred to the Supreme Court. No application was made for either its originating application or its points of claim document to be amended to reflect this increased sum.

20 The transfer application was opposed. The Tribunal raised, and the defendants later made an application by motion, that the proceedings be dismissed. Both were listed for hearing on 18 February. The proceedings were dismissed that day, for reasons given by Senior Member Smith on 22 February 2013, without the transfer application being heard or determined or the jurisdictional point addressed.

21 The hearing of the two applications was governed by the provisions of s 28, s 29 and s 32 of Consumer, Trader and Tenancy Tribunal Act which provided:

"28 Procedure of Tribunal generally

(1) The Tribunal may, subject to this Act, determine its own procedure.

(2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of procedural fairness.

(3) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.

(4) The Tribunal is to take such measures as are reasonably practicable to ensure that the parties in any proceedings understand:

(a) the nature of the assertions made in the proceedings and the legal implications of those assertions, and

(b) the procedure of the Tribunal and any decision or ruling made by the Tribunal that relates to the proceedings.

(5) The Tribunal:

(a) is to act as expeditiously as is practicable, and

(b) is to ensure, as far as practicable, that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings, and

(c) may require evidence or argument to be presented in writing and decide on the matters on which it will hear oral evidence or argument, and

(d) in the case of a hearing-may require the presentation of the respective cases of the parties in proceedings to be limited to the periods of time that it determines are reasonably necessary for the fair and adequate presentation of the cases, and

(e) may require a document to be served outside the State, and

(f) may adjourn proceedings to any time and place (including for the purpose of enabling the parties to negotiate a settlement), and

(g) may dismiss any proceedings if the applicant fails to attend a hearing, and

(h) must, if requested by the applicant, allow the applicant to withdraw the application, and

(i) may dismiss any proceedings if it considers the proceedings to be frivolous or vexatious or for any other reason that appears to it sufficient, and

(j) may order that any proceedings are to be stayed.

(6) The Registrar or Deputy Registrar is to give any party in proceedings that have been stayed under subsection (5) (j), and who was not present or represented when the proceedings were stayed, notice that the proceedings have been stayed.

(7) Subsection (5) (g) and (i) does not apply in relation to proceedings arising under the Strata Schemes Management Act 1996 or the Community Land Management Act 1989.

(8) Subsection (5) (h) does not apply in relation to proceedings on a building claim arising under Part 3A of the Home Building Act 1989.

Note. The withdrawal of building claims is dealt with in section 48I of that Act."

29 Procedural directions by members

(1) A member may, in any proceedings, give procedural directions in relation to the proceedings.

(2) In the event of an inconsistency between any procedural direction given by a member under this section and any procedural direction given by the Chairperson under section 12, the procedural direction given by the Chairperson is to prevail.

(3) Procedural directions under this section may be given by any member (whether or not the member is hearing the matter to which the proceedings relate).

(4) Without limiting the grounds on which a member may give procedural directions, such directions may be given that, in the opinion of the member, will enable costs to be reduced and will help to achieve a prompt hearing of the matters in issue between the parties in the proceedings.

(5) The powers conferred by this section extend to enabling a member, if it appears just and expedient to do so, to direct that several matters that are in some manner associated are to be heard and determined together.

(6) The functions of a member under this section may be delegated to the Registrar.

32 Amendments and irregularities

(1) The Tribunal may, in any proceedings, make any amendments to any document (for example, an application) 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 notifying the party to whom the amendment relates.

(3) If a provision of this Act or the regulations 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 otherwise determines.

(4) The Tribunal may, however, in dealing with any such irregularity, wholly or partly set aside the proceedings or a decision in the proceedings."

22 The power to transfer proceedings to this Court arose under s 23(1), which provided:

"23 Transfer of proceedings to courts or to other tribunals

(1) If the parties in any Tribunal proceedings so agree, or if the Tribunal of its own motion or on the application of a party so directs, the proceedings are:

(a) to be transferred to a court (in accordance with the rules of that court) that has jurisdiction in the matter, and

(b) to continue before that court as if they had been instituted there."

The course of the proceedings on 18 February 2013

23 The hearing of the two applications commenced before Member Harrowell, who made consent orders in relation to certain claims which were not pressed by the other parties. He raised with the parties some procedural matters and potential difficulties and the desirability of an agreed resolution being arrived at, given those difficulties and the potential consequence of the matter being struck out. He also disclosed a friendship with the plaintiff's counsel, Mr George.

24 The proceedings then adjourned and settlement discussions were pursued unsuccessfully. On resumption, one of the defendants raised an objection to Member Harrowell and he recused himself, after dealing with various other procedural matters. He enquired whether there would be any objection to Senior Member Smith hearing the matter, given that he and the plaintiff's counsel, Mr George, had sat together on the Tribunal for a number of years. There was no objection and the parties were advised that he was also available to hear the matter on the following days, if it was neither transferred nor struck out.

25 The proceedings before Senior Member Smith commenced with the Member noting that there were two issues for hearing: the strike out initiated by Member Harrowell and pressed by the defendants and the plaintiff's application to have the proceedings transferred to this Court. He was advised that a motion and supporting affidavit had been filed by some defendants, who sought a strike out order.

26 Senior Member Smith observed:

"I take the point and, thank you, that was my understanding of what the application entailed. The way I propose to deal with this - it seems to me that, if the matter is struck out, then the issue of jurisdiction doesn't arise. If the matter is not struck out, then the issue of jurisdiction does arise. It would be, I think, putting the cart before the horse to determine the jurisdiction issue in advance of the strike out application. If the matter was transferred without having determined the strike out application, I would effectively be transferring the strike out application to the Supreme Court, which I think would be entirely inappropriate.

I propose, therefore, to deal with the strike out application. Well, I'll deal with them concurrently, but what I propose to do is for Mr Davie and Mr Antoun to make their submissions in relation to the strike out application. Mr George, I'll ask you in due course to respond to those submissions and to then put forward your submissions in terms of the transfer. And then I will hear from the respondents' representatives in relation to the transfer issue.

I hope then to be in a position to make a decision on the two applications. I would think that the issue of costs simply can't arise until such time as a decision is made about these two matters and that will probably mean that you will need another go at the costs issue at a later time, either today or on another occasion or by written submissions, whatever we do in that regard. So we're clear on--"

27 Mr George objected to the course proposed, submitting that the application for transfer for want of jurisdiction had to be determined first. The defendants pressed to have the strike out heard first, there having been "no attempt to amend the application in any way, although the applicants have been repeatedly requested and directed to make such an amendment by amending the Scott's Schedule".

28 Senior Member Smith determined:

"Okay. Look, I will deal with it in the way that I intimated. Mr George, I think that, in a sense, the application to strike out and, indeed, a costs application are procedural in nature and so, if I was to transfer the matter to the Supreme Court, then I would take the view that the Tribunal then has nothing to deal with and could not deal with a strike out application, nor could it deal with a costs application once an order is made to transfer it. However... [a]nd perhaps we just don't need to muddy the waters by talking about the costs issue, but I think that's the point, that I couldn't (as said) deal with the strike out application and I think that the Supreme Court rightly would be somewhat perturbed by being faced with the strike out application under section 30 of the CTTT Act should it land on its desk. So, for that reason, I think we should deal with it in the way that I've proposed. I think it's only a semantic thing anyway. Both issues needs [sic] to be heard ..."

29 The parties then addressed the strike out application. For the plaintiffs, it was submitted that there was no evidence of any deliberate failures on its part, but rather, evidence that they were endeavouring to put on evidence in the face of their expert's ill health and eventual retirement, without notice, due to his health. A new expert, Mr Phillips, had been engaged and the Tribunal's directions had been complied with as far as possible in the circumstances. Mr Phillips' statutory declaration, working documents and a summary by which he had calculated that the claim amounted to some $1.8 million, had been served.

30 On questioning by the Member, it was confirmed that if the matter were not struck out or transferred, the evidence of the original expert could not be relied on and Mr Phillips' documents would have to be finalised. It was accepted that his Scott Schedule could not be relied on in its present form, because it used abbreviations which had not been explained.

31 Having heard the parties, Senior Member Smith announced:

"Okay. In terms of the transfer application, I'm going to just adjourn for a little while and think about what everybody has told me, because it seems to me that, if it is to be struck out - and there is a chance that it will be then... there will be no point in hearing any further submissions on the transfer, but I'm happy to hear you Mr George."

32 Mr George then made further submissions as to the consequences of a strike out, given the limitation period and the question of costs and disadvantage.

33 Before adjourning, Senior Member Smith again raised the question of settlement. On resumption, he was advised that an offer had been made to the plaintiff, but that instructions could not be obtained by the plaintiff that day. He then announced:

"Then is there any difficulty with me going ahead and making a decision in this matter in light of that issue? Okay. Well, then, I have to say that, pursuant to s 30 of the Consumer, Trader and Tenancy Tribunal Act, this application is dismissed. That leads me to the next question and that is, Mr Davie, are you now in a position to tell me what you want to do in relation to the Gad and Tadros applications?"

Senior Member Smith's reasons

34 In the reasons given some days later, Senior Member Smith outlined the extensive procedural history of the matter, which included nine applications filed by lot owners against the defendants in 2009, which were directed to proceed together with the plaintiff's application.

35 He noted that the plaintiff had repeatedly failed to provide a Scott Schedule identifying the extent of its claims, as it had been directed to do. A conclave of the parties' expert witnesses had been conducted in the presence of a Tribunal member in September 2010, utilising a Scott Schedule prepared by the defendants' expert.

36 Despite further repeated directions, the plaintiff still had not provided a proper Scott Schedule, so that the defendants could know what items were being pressed. In December 2010, the matter was adjourned for hearing of a strike out application. That application was refused in April 2011.

37 A number of direction hearings ensued, with the result advice given by the plaintiff's solicitor in March 2012 that he was still consulting with counsel and the plaintiff's expert, to settle the Scott Schedule. Further extensions were granted over the defendants' objections. In August 2012, the Tribunal was advised that the plaintiff's expert was no longer retained and further directions in relation to the provision of a Scott Schedule were made. The defendants foreshadowed a further strike out application, in the event that the directions were not complied with.

38 In September, the plaintiff advised that a new expert had been retained and an extension of time to provide the amended Scott Schedule was sought. On 12 December, the matter was listed for hearing in February 2013.

39 On 7 February, advice was given by the plaintiff of the increased claim. On 8 February, the Tribunal fixed a directions hearing on 14 February, the plaintiff's solicitor being directed to provide an affidavit explaining why earlier directions had not been complied with, a revised Scott Schedule and the expert's report.

40 On 14 February, the plaintiff's solicitor was again directed to provide an affidavit and a revised Scott Schedule by 15 February. That day, further time was given until 18 February, when two issues were listed for hearing:

Whether the claim was in fact in excess of the Tribunal's jurisdictional limit and should be transferred to the Supreme Court, and

Whether the application should be dismissed in its entirety pursuant to the provisions of the Consumer, Trader and Tenancy Tribunal Act 2001, s 30.

41 Senior Member Smith observed:

"[20] It was determined to deal with the second issue first because, in the event that the application was struck out, there was no need to consider the application to transfer the proceedings."

42 That observation was challenged in these proceedings as accurately reflecting what had transpired at the hearing.

43 Senior Member Smith noted the parties' submissions, which on the defendants' part relied on the procedural history of the matter, from which they submitted that it should be inferred that the plaintiff's failures to comply with the Tribunal's earlier directions had been deliberate.

44 The plaintiff denied that such an inference could be drawn from the overwork, negligence or incompetence of its solicitor. It conceded that if the matter was to proceed, either before the Tribunal or this Court, the evidence of its former expert could not be relied on and that the statutory declaration and Scott Schedule provided by its new expert on 14 February, was not in admissible form. It submitted that if the application was struck out, it would be statute barred from pursuing its claim and that any disadvantage which the defendants had suffered should be addressed by a costs order.

45 Senior Member Smith then returned to the facts, observing that the explanation advanced for the plaintiff's failures to comply with directions had been vague. After referring to s 30 of the Act, which empowered the Tribunal to dismiss or strike out proceedings if a plaintiff conducted the proceedings in such a way as to unreasonably disadvantage another party, Senior Member Smith observed that the plaintiff had conducted the proceedings in such a way that unreasonably disadvantaged the defendants. He found that reflected the undisputed facts.

46 Senior Member Smith then turned to consider the requirements of s 30(3). He noted that the plaintiff had been represented by a solicitor, who appeared in the Tribunal and was familiar with its procedures and that there was no suggestion that the plaintiff had been under any disadvantage. He found that on balance the only conclusion he could draw was that the plaintiff's solicitor had acted deliberately. The suggestion that the inference should be drawn that his failures were the result of incompetence, negligence or overwork was rejected as conjecture.

47 Senior Member Smith then noted the consequences of the dismissal whether the application was for $329,000 as originally claimed or for $1,890,000 as now alleged. He weighed that consideration against the Tribunal's statutory obligation under s 28 to act as expeditiously as practicable. He considered that the principles discussed in Aon Risk in relation to costs orders in relation to adjournment of trials to be relevant to the proposal that a costs order should be made against the plaintiff.

48 He concluded that despite the consequence for the plaintiff, the claim should be dismissed. He also referred his decision to the Chairperson of the Tribunal, for consideration as to what, if any, actions should be taken against the plaintiff's solicitor.

49 It was the plaintiff's case that in so dismissing the proceedings, Senior Member Smith had wrongly failed to hear and determine the transfer application and that he had no jurisdiction in the circumstances, to make the order dismissing the proceedings.

A denial of procedural fairness is established

50 Both the dismissal application and the transfer application were listed for hearing. Over the plaintiff's objections, the hearing proceeded on the basis that both applications would be heard and determined, with the parties' submissions on the dismissal application being heard first. The Tribunal's jurisdiction was in issue. It exercised the power to dismiss the proceedings without hearing the parties on the transfer application, which the plaintiff pressed on the basis that the Tribunal no longer had jurisdiction to deal with its claim and without giving reasons for its refusal of the transfer application.

51 This involved an obvious departure from what was required of the Tribunal under this statutory scheme, which required it to act according to equity, good conscience and the substantial merits of the case (s 28). In the circumstances which had arisen, that required it to consider and resolve whether it had the jurisdiction which it purported to exercise, to dismiss the proceedings.

52 Given the course pursued at the hearing, there can be no question as to the denial of procedural fairness involved in the refusal to hear and determine the transfer application, before the matter was dismissed. The result was that the transfer application was dismissed, without the jurisdictional challenge being resolved, the parties heard on the transfer application, or reasons given for its refusal.

53 In so proceeding the Tribunal either misapprehended or disregarded the obligations imposed upon it as to how its powers and functions were to be exercised.

54 In these proceedings it has been established that the Tribunal had power to dismiss the proceedings before it, but that it had jurisdiction was a question which the Tribunal had to resolve for itself. Procedural fairness required that power not to be exercised without the competing transfer application also being heard and determined.

Did the Tribunal have jurisdiction to strike out the proceedings?

55 The Tribunal's jurisdiction depended on s 48K of the Home Building Act which provided:

"48K Jurisdiction of Tribunal in relation to building claims

(1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations).

(2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section.

(3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made).

(4) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that are required under a contract to be supplied to or for the claimant on or by a specified date or within a specified period but which have not been so supplied if the date on which the claim was lodged is more than 3 years after the date on or by which the supply was required under the contract to be made or, if required to be made in instalments, the last date on which the supply was required to be made.

(5) The fact that a building claim arises out of a contract that also involves the sale of land does not prevent the Tribunal from hearing that building claim.

(6) The Tribunal does not have jurisdiction in respect of a building claim arising out of a contract of insurance required to be entered into under this Act if the date on which the claim was lodged is more than 10 years after the date on which the residential building work the subject of the claim was completed.

(7) The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E).

(8) The Tribunal does not have jurisdiction in respect of a building claim relating to:

(a) a contract for the supply of goods or services to which none of subsections (3), (4), (6) and (7) applies, or

(b) a collateral contract,

if the date on which the claim was lodged is more than 3 years after the date on which the contract was entered into.

(9) This section has effect despite section 22 of the Consumer, Trader and Tenancy Tribunal Act 2001."

56 A building claim is defined in s 48A as a claim for:

'(a) the payment of a specified sum of money, or

(b) the supply of specified services, or

(c) relief from payment of a specified sum of money, or

(d) the delivery, return or replacement of specified goods or goods of a specified description, or

(e) a combination of two or more of the remedies referred to in paragraphs (a)-(d),

(f) that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim."

57 Section 48I permits such claims to be brought to the Tribunal on application and also makes provision for their withdrawal.

58 The making of an application to the Tribunal was governed by s 24 of the Consumer, Trader and Tenancy Tribunal Act, which required an application to be made in writing, in accordance with the Regulations. In cases brought under s 48K of the Home Building Act it was the application which commences the proceedings on which the Tribunal's jurisdiction rested. That section empowers the Tribunal to deal with "any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000".

59 The plaintiff's application was made in 2009 by the filing of a printed form entitled "application for an order". There was no question that it fell within the Tribunal's jurisdiction, being for a "building claim" as defined in s 48K of the Home Building Act, for an amount of $329,005. It has never been amended.

60 It follows that, contrary to the case advanced for the plaintiff in these proceedings, unless the claim brought before the Tribunal was amended to increase it beyond the statutory limit of $500,000, the proceedings remained within the Tribunal's jurisdiction.

61 That was not how the plaintiff perceived the legislative scheme. It relied on its new expert's statutory declaration to provide a basis for its transfer application, taking the view that his advice that what was clamed would amount to some $1.8 million, was a sufficient basis to bring the claim beyond the Tribunal's jurisdiction. That is not how the Home Building Act operates. Section 48K confines the Tribunal's jurisdiction under the Act to claims brought to the Tribunal which fall below the specified amount, not the advice on which those claims rest.

Did the Tribunal fall into jurisdictional error?

62 In 2012 the plaintiff was advised by a new expert engaged after the retirement of its former expert, that the cost of the building works the subject of the proceedings was some $1.8 million, an amount which the Tribunal had no jurisdiction to award. It then considered that the Tribunal no longer had jurisdiction to deal with its claim and so approached the Tribunal seeking an order that the proceedings be transferred to this Court. The defendants opposed that application and sought to have the proceedings struck out, given their conduct to that point.

63 The Tribunal had jurisdiction to decide for itself if the statutory conditions necessary for it to hear and determine a dispute have been satisfied (see Bailey & Anor v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293 at [55]). Its jurisdiction was in issue between the parties and that had to be resolved, before the power to dismiss was exercised. In the circumstances justice, or in the statutory language, equity and good conscience, required that the issue as to its jurisdiction be heard and determined.

64 Transfer of the proceedings to this Court would have resulted in the proceedings effectively starting again, as the defendants complained. The Tribunal had power to dismiss proceedings under s 28(5)(i) of the Act upon sufficient reason being established. Such reasons may include findings under s 30 that the proceedings have been conducted so as to unreasonably disadvantage another party. That power may, however, only be exercised in relation to a claim which is within the Tribunal's jurisdiction.

65 Had the Tribunal determined that it had jurisdiction over the matter, it had to consider what the substantial merits of the case required, given the competing applications which the parties were pursuing. If what was demanded in the circumstances which had arisen was that the application be transferred to this Court, the transfer application would have been allowed. Had justice demanded that it be refused, the transfer application would have been dismissed.

66 Justice demanded Senior Member Smith not depart from the course on which he first embarked, hearing the parties on both applications, before determining either of them.

67 The Tribunal had received the plaintiff's application that the proceedings be transferred to this Court. It was made after the plaintiff was advised by its new expert that the amount of its claim was in reality some $1.8 million, which exceeded the Tribunal's jurisdictional limit. That application was made by written advice given to the Registrar. It was opposed and listed for contested hearing, without the plaintiff being required to formalise the application by filing a motion. The dismissal application had been raised by the Tribunal and was pursued by the defendants, who formalised the application by filing a motion. All parties were entitled to be heard on both applications, before either was determined.

68 The plaintiff had not sought the Tribunal's leave to amend its application. That was a point on which the defendants proposed to rely to oppose the transfer application. Had the transfer application been heard, leave to amend the application could have been sought by the plaintiff and granted by the Tribunal under s 32, if it were considered "necessary in the interests of justice" for such leave to be given.

69 As the defendants submitted, the point was not unimportant in this statutory scheme. As discussed by Einstein J in Italiano v Carbone & Ors [2005] NSWCCA 177 at [146] - [147] the procedures before this Tribunal permitted a considerable degree of informality, but the application on which the proceedings were brought was central to the proceedings, going to the record and the fundamental requirement that each party be aware of the case made against them. As Einstein J also observed in Italiano v Carbone at [147], however, the plaintiff had to be given "appropriate notice" of the point being taken against it in relation to the necessity for an application for leave to amend the claim, if its transfer application was to be entertained, as well as an opportunity to respond to it. The obvious response would have been to make an amendment application.

70 Once a claim was before the Tribunal it could be withdrawn without leave (s 28(5)(h)) or amended on terms the Tribunal thought fit (s 32)). Had the limitation period not expired, the plaintiff could have withdrawn its claim and brought fresh proceedings in this Court. In the circumstances it was placed in, unless the plaintiff applied for amendment of its claim to bring it beyond the Tribunal's jurisdiction, the claim remained within the Tribunal's jurisdiction, unless it was withdrawn.

71 As was submitted by the defendants in this Court, while the plaintiff had not made a formal application to the Tribunal to amend its claim, there was no question that it had applied for the proceedings to be transferred, because it had received advice that its claim in fact exceeded the Tribunal's jurisdictional limit. That had been revealed by the letter of 7 February and in the proceedings on 15 February before Member Harrowell. That was what had resulted in the application for transfer of the proceedings to this Court being listed for hearing on 18 February, together with the strike out application which the defendants later pursued by motion.

72 It was within the Tribunal's power to transfer the proceedings and to amend the application at any time. Amendment of the claim depended on the plaintiff convincing the Tribunal that it was "necessary in the interests of justice" for the application to be amended. It does not appear to have been suggested that the plaintiff's problems as to the amount of its claim were of its making. They appear to have been the result of ongoing problems with its experts and representative error. That was relevant to its transfer application.

73 The plaintiff had conceded at the hearing before Senior Member Smith that the new expert's declaration could not provide an evidentiary basis upon which its claim could be decided, given its form. Nevertheless, it revealed the basis upon which the expert had advised the plaintiff of his view that its claim amounted to some $1.8 million, not the $395,000 claimed in the original application. Thereby the plaintiff had served the information which the second defendant submitted in these proceedings it would have had to provide them as to its amended claim, namely what it was and how it differed from the original claim, if leave to amend were to be entertained.

74 The Tribunal was entitled as a matter of procedure to hear the transfer application without requiring the plaintiff to do more by way of formalising either that application, or any application for leave to amend the application which had commenced the proceedings (see s 28(2) and (3) and s 29 (1) and (4)). Had any formality been considered necessary, that could have been dealt with on 18 February, had Senior Member Smith heard the transfer application, as he indicated that he would, before dismissing the proceedings and had the amendment point then been relied on by the defendants.

75 What approach the defendants, the plaintiff or the Tribunal would have taken, if the defendants had pressed its reliance on the absence of an application for leave to amend the claim, cannot be known, because the transfer application was not heard. Any application then made for leave to amend the claim would have had to have been dealt with in accordance with s 28(3) namely, "with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms".

76 In the circumstances, the point, while important, was clearly a technical one. It is difficult to see that the plaintiff could have justly been denied at least the opportunity to seek leave to amend its claim to support its transfer application, had it been sought.

77 In issue between the parties was clearly a late application to transfer a claim to this Court, upon advice of a newly engaged expert that the claim exceeded the Tribunal's jurisdictional limit, in circumstances where the procedural history of the matter told against the plaintiff's case. Granting the plaintiff the opportunity to seek leave to amend the claim by increasing it to $1.8 million would have added nothing to the matters lying between the parties or their just resolution, given the circumstances in which the transfer application had come to be made.

78 Any application for leave to amend the claim and the transfer application would have turned on the same considerations, namely the amount of the claim originally brought on the first expert's advice; the procedural history of the matter; and the circumstances in which the applications came to be made, namely, after the plaintiff received expert advice that the claim in fact very considerably exceeded the Tribunal's jurisdictional limit.

79 The defendants submitted that even if the amendment application had been made, it would have been refused for three reasons. The first, because the expert's costings were unintelligible and would have had to be better expressed, to be of assistance to the Tribunal. That submission cannot be accepted. Evidence explaining why the amendment was sought and the transfer application should be granted was what was then required, not proof that a claim exceeding the statutory limit could thereby be established at any hearing.

80 The second was the procedural history of the matter, the plaintiff having persistently failed, without adequate explanation, to provide information directed by the Tribunal. That was certainly a relevant consideration, but of itself did not establish that the plaintiff's application would have been refused, had it been heard. Both parties had cogent cases to advance in support of their competing applications.

81 The third was the listing of the hearing with the plaintiff's consent and its failure, without reasonable explanation, to have served the new expert's report prior to the transfer application. There was an explanation for the service of the new expert's report, namely that the first expert had retired, a new expert had to be engaged and that he had advised the plaintiff that its claim exceeded the Tribunal's jurisdiction, and provided a Scott Schedule which it was accepted was not in proper form. Whether in the circumstances the explanation would have been accepted, cannot be determined.

82 The result of the course taken by Senior Member Smith was plainly jurisdictional error.

83 In Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 it was observed in relation to Tribunals such as the CTTT (at 179):

"...If such an administrative tribunal falls into an error of law which causes it to identify a wrong issued, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it."

84 In Kirk v Industrial Relations Commission; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales (Inspector Childs) [2010] HCA 1; 239 CLR 531 it was observed at [71] - [72] that:

"[71] ...The Court in Craig explained the ambit of jurisdictional error in the case of an inferior court in reasoning that it is convenient to summarise as follows.

[72] First, the Court stated ((1995) 184 CLR 163 at 177), as a general description of what is jurisdictional error by an inferior court, that an inferior court falls into jurisdictional error "if it mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist" (emphasis added). Secondly, the Court pointed out ((1995) 184 CLR 163 at 177) that jurisdictional error "is at its most obvious where the inferior court purports to act wholly or partly outside the general area of its jurisdiction in the sense of entertaining a matter or making a decision or order of a kind which wholly or partly lies outside the theoretical limits of its functions and powers" (emphasis added). (The reference to "theoretical limits" should not distract attention from the need to focus upon the limits of the body's functions and powers. Those limits are real and are to be identified from the relevant statute establishing the body and regulating its work.) Thirdly, the Court amplified ((1995) 184 CLR 163 at 177-178) what was said about an inferior court acting beyond jurisdiction by entertaining a matter outside the limits of the inferior court's functions or powers by giving three examples:

(a) the absence of a jurisdictional fact;

(b) disregard of a matter that the relevant statute requires be taken to account as a condition of jurisdiction (or the converse case of taking account of a matter required to be ignored); and

(c) misconstruction of the relevant statute thereby misconceiving the nature of the function which the inferior court is performing or the extent of its powers in the circumstances of the particular case.

The Court said ((1995) 184 CLR 163 at 178) of this last example that "the line between jurisdictional error and mere error in the exercise of jurisdiction may be particularly difficult to discern" and gave as examples of such difficulties R v Dunphy; Ex parte Maynes ((1978) 139 CLR 482 ; [1978] HCA 19), R v Gray; Ex parte Marsh (1985) 157 CLR 351 at 371.) and Public Service Association (SA) v Federated Clerks' Union ((1991) 173 CLR 132.)."

85 The exercise of the power to dismiss the proceedings, contrary to the requirements of this statutory scheme, without resolving the dispute as to the Tribunal's jurisdiction or considering the transfer application or the evidence relevant to the determination of how the competing applications should be resolved resulted in jurisdictional error, invalidating the orders made.

Should the Court's discretion be exercised to refuse the plaintiff relief?

86 The defendants relied on the Court's discretion under s 69 Supreme Court Act 1970 (NSW) to withhold the relief sought, relying on Senior Member Smith's reasons for dismissing the proceedings, and the procedural history of the matter discussed above.

87 I am not persuaded that the discretion can be justly so exercised, although the question is somewhat finely balanced.

88 The plaintiff's procedural delinquency in pursuit of the proceedings certainly appears to have been considerable. Given the referral of the plaintiff's solicitor to the Chairperson of the Tribunal, it appears that Senior Member Smith considered that the procedural problems revolved around failures on the part of legal representatives, rather than the plaintiff, which is a statutory corporation of home owners. Representative error, as well as error on the part of the first expert who advised the plaintiff, were matters on which it was entitled to rely to resist the dismissal of the proceedings and their transfer to this Court.

89 The result of the course pursued at the hearing is that neither the question of the Tribunal's jurisdiction, nor which of the competing relief which the parties sought should be granted, were determined as the legislative scheme required. Such circumstances are contemplated by s 65 of the Consumer, Trader and Tenancy Tribunal Act, the Tribunal having refused or failed, without explanation, to give a ruling as to its jurisdiction when its jurisdiction was clearly in dispute.

90 Both parties had cogent arguments to advance. Their competing applications must be determined on their merits.

Costs

91 The usual order as to costs is that they follow the event. In this case that is an order that the defendants pay the plaintiff's costs as agreed or assessed. Unless the parties approach within 14 days, that will be the Court's order.

92 Since reserving the NSW Civil and Administrative Tribunal has been created. The proper order in the circumstances appears to be that the proceedings be remitted to the NSW Civil and Administrative Tribunal in accordance with Schedule 1, Clause 8 of the Civil and Administrative Tribunal Act 2013 (NSW) to be dealt with according to law.

93 The parties have liberty to approach in relation to that order, if they take a different view.

Order

94 Accordingly, I order that the Tribunal's orders of 10 February and 30 April 2013 be quashed and the proceedings be remitted to the NSW Civil and Administrative Tribunal in accordance with Schedule 1, Clause 8 of the Civil and Administrative Tribunal Act 2013 (NSW) to be dealt with according to law.

95 All exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined.

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Decision last updated: 28 March 2014