Amirbeaggi v Matrix Group Co Pty Limited

[2020] NSWSC 827

Supreme Court

New South Wales

Medium Neutral Citation:

Amirbeaggi and Anor v Matrix Group Co Pty Limited [2020] NSWSC 827

Hearing dates:

10 June 2020

Date of orders:

30 June 2020

Decision date:

30 June 2020

Jurisdiction:

Common Law

Before:

Johnson J

Decision:

1. The Appellants are refused leave to appeal from the interlocutory judgment and orders of the Local Court of 25 November 2019.

2. The Summons filed on 18 December 2019 is dismissed.

3. The Appellants are to pay the Respondent’s costs of the Summons.

4. If a special costs order is sought by the Respondent, written submissions in support of the application are to be provided by email to Johnson J’s Associate and to the Appellants on or before 7 July 2020 and the Court will give directions for written submissions in reply with a view to determining the application on the papers and without the need for a further hearing.

Catchwords:

APPEAL – Magistrate refused application for stay of execution of Local Court civil judgment – judgment obtained by respondent following registration of adjudication certificate under s.25 Building and Construction Industry Security of Payment Act 1999 –

consideration of ss. 39 and 40 Local Court Act 2007 – whether judgment appealed against was an interlocutory judgment requiring leave – Local Court judgment held to be interlocutory – leave to appeal required – whether leave to appeal should be granted – appellants commenced separate proceedings in District Court against respondent seeking damages including recovery of money covered by Local Court judgment – District Court proceedings still on foot – claim of error in construction and application of ss.92 and 94 Home Building Act 1989 - issue sought to be argued on appeal not raised squarely in Local Court – appellants able to litigate issue in District Court proceedings – leave to appeal refused with costs

Legislation Cited:

Building and Construction Industry Security of Payment Act 1999

Civil Procedure Act 2005

Home Building Act 1989

Local Court Act 2007

Cases Cited:

Casa Maria Pty Limited v Trend Properties Pty Limited [1998] NSWCA 53

Ciszek v Enterprise Financial Solutions Pty Limited [2010] NSWSC 1265

Festa Holdings Pty Limited (In Liq) v Adderton (2005) NSW ConvR 56-117; [2004] NSWCA 228

Hall v Nominal Defendant (1966) 117 CLR 423; [1966] HCA 36

Laycock v Putty Community Association Incorporated [2006] NSWSC 900

Port of Melbourne Authority v Anshun Pty Limited (1980) 147 CLR 35; [1980] HCA 41

Sanofi v Parke Davis Pty Ltd (No. 1) (1982) 149 CLR 147; [1982] HCA 9

Sayed v Deng [2012] NSWSC 851

Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223

Souaid v Nahas [2019] NSWSC 1132

TFM Epping Land Pty Ltd v Decon Australia Pty Ltd [2020] NSWCA 118

Texts Cited:

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Category:

Principal judgment

Parties:

Farshad Amirbeaggi and Brooke Maniscalco (Appellants)
Matrix Group Co Pty Limited (Respondent)

Representation:

Counsel:
Mr AF Fernon (Appellants)
Mr F Corsaro SC (Respondent)

Solicitors:
Yates Beaggi Lawyers (Appellants)
Advanta Legal Pty Limited (Respondent)

File Number(s):

2019/397879

Publication restriction:

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Judgment

1. JOHNSON J: By Summons filed on 18 December 2019, Farshad Amirbeaggi and Brooke Maniscalco (“the Appellants”) seek to appeal under the Local Court Act 2007 (“LC Act”) with respect to a judgment and consequential orders made by a Magistrate on 25 November 2019 refusing the Appellants a stay with respect to enforcement of a judgment given in favour of Matrix Group Co Pty Limited (“the Respondent”).

Hearing of the Summons

2. Mr Fernon of counsel appeared for the Appellants at the hearing of the Summons. Mr Corsaro SC appeared for the Respondent.

3. A Court Book comprising five volumes of material was placed before the Court. The parties agreed that the Court should confine its attention to parts of the Court Book referred to in the course of submissions. Written submissions had been furnished in advance of the hearing of the Summons and counsel addressed orally at the hearing on 10 June 2020.

Factual Background

4. The factual background to this appeal is not in contest.

5. At all relevant times, the Appellants owned a terrace residence at 200 Edgecliff Road, Woollahra (“the Woollahra property”). In or around October 2016, the Appellants retained the Respondent, a construction company, to undertake building renovation works at the Woollahra property. The parties signed a Cost Plus Residential Contract on or about 19 January 2017 in which the estimated cost of works and fees was $330,000.00. The proposed date for commencement of the works was 2 November 2016 and the construction period was 120 days.

6. The parties were in dispute about the payment of the Respondent’s invoices. The Respondent sought an adjudication in its favour under s.25 Building and Construction Industry Security of Payment Act 1999 (“SOP Act”) and, on 25 January 2018, an adjudicator determined that the Appellants were liable to pay, by way of progress payment, an adjudicated amount totalling $58,848.25 (which included interest and the Appellants’ unpaid share of the fees of the adjudicator and the authorised nominating authority).

7. The Respondent filed the adjudication certificate under s.25(1) SOP Act and, on 20 February 2018, judgment was entered by the Local Court in favour of the Respondent against the Appellants in the sum of $60,253.02.

8. Thereafter, the Respondent took steps to enforce the judgment entered in the Local Court.

9. The Appellants asserted that the building works carried out by the Respondent were defective, incomplete and delayed and they terminated the contract in about February 2018.

10. On 27 March 2018, the Appellants commenced proceedings against the Respondent in the District Court of New South Wales claiming damages arising from the renovation works at the Woollahra property. Those proceedings remain on foot and have not advanced to a hearing before the District Court. An Amended Statement of Claim was filed by the Appellants in the District Court proceedings on 30 May 2019, to which reference will be made later in this judgment (at [36] below).

11. By Notice of Motion filed in the Local Court on 28 May 2018, the Appellants sought a number of orders including orders under ss.67 and 135(2)(c) Civil Procedure Act 2005 that the Respondent be prohibited from taking any further action to enforce the judgment entered on 20 February 2018 on a permanent basis or, alternatively, until the date on which District Court proceedings commenced by the Appellants against the Respondent had been finally determined.

12. It should be noted that the Appellants did not seek judicial review in this Court with respect to the adjudication certificate issued under s.25 SOP Act. Nor was there an application by the Appellants in the Local Court (if it was open to them) to set aside the judgment which had issued in favour of the Respondent following the filing of the adjudication certificate under s.25 SOP Act.

13. The hearing of the Appellants’ Notice of Motion proceeded over a number or days in the Local Court before Atkinson LCM.

14. Following delivery of judgment on 13 November 2019, her Honour made consequential orders on 25 November 2019 dismissing the Appellants’ Notice of Motion and dissolving previous orders temporarily staying the enforcement of the Local Court judgment, together with an order that the money paid into Court by the Appellants be released to the Respondent forthwith. In addition, the Appellants were ordered to pay the Respondent’s costs of the Notice of Motion filed on 28 May 2018 on an ordinary basis as agreed or assessed.

15. The judgment sum has been paid to the Respondent pursuant to these orders.

16. On 18 December 2019, the Appellants filed the present Summons which seeks to challenge the refusal of a stay.

Grounds of Appeal

17. At the hearing, Mr Fernon informed the Court that the following grounds only were pressed by the Appellants:

1. Ground 1 - Her Honour erred at law in:

1. determining it was not for the Local Court to make findings as to whether home warranty insurance cover was effective in respect of the Woollahra property;

2. failing to determine whether the Respondent held effective home warranty insurance in respect of the home building works undertaken by the Respondent on the Woollahra property; and/or

3. failing to determine that the Respondent did not have effective home warranty insurance in respect of the home building works undertaken by the Respondent on the Woollahra property.

2. Ground 6 - Her Honour erred in law in failing to determine that s.94 Home Building Act 1989 (“HB Act”) prohibited the Respondent from obtaining an adjudication in respect of the Woollahra property and/or from obtaining or enforcing the Local Court judgment.

3. Ground 9 - Her Honour erred in the exercise of her discretion in awarding costs of the Appellants’ Notice of Motion to the Respondent.

4. Ground 10 - Her Honour erred in law in dismissing the Appellants’ Notice of Motion.

18. The Summons sought that the Court allow the appeal and make orders in favour of the Appellants and against the Respondent as sought in the Appellants’ Notice of Motion filed on 28 May 2018.

19. In effect, it was submitted that this Court should find error and then determine the merits of the Appellants’ stay application, granting the relief which they sought before the Local Court. Remittal to the Local Court was not sought.

Do the Appellants Require Leave to Appeal to this Court?

Sections 39 and 40 LC Act

20. Sections 39 and 40 LC Act state:

"39    Appeals as of right

(1)    A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

(2)    A party to proceedings before the Court sitting in its Small Claims Division who is dissatisfied with a judgment or order of the Court may appeal to the District Court, but only on the ground of lack of jurisdiction or denial of procedural fairness.

40    Appeals requiring leave

(1)    A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

(2)    A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court:

(a)    an interlocutory judgment or order,

(b)    a judgment or order made with the consent of the parties,

(c)    an order as to costs."

The Parties’ Submissions

21. Mr Fernon submitted that the decision of the Magistrate dismissing the Appellants’ Notice of Motion was a final order, and not an interlocutory judgment or order, so that leave to appeal is not required.

22. Mr Fernon accepted that Grounds 1(a), (b) and (c) and Ground 6 were based only on a question of law under s.39(1) LC Act and required the Appellants to demonstrate error of law.

23. Mr Fernon accepted that Ground 9 (concerning the costs order) required leave to appeal: s.40(2)(c) LC Act. He accepted that Ground 10 does not add anything to Grounds 1 and 6 and should be treated as being a consequential claim of error of law arising from the matters asserted in Grounds 1 and 6.

24. Whilst noting that the application by the Appellants before the Local Court had been described on a number of occasions by the Magistrate as being an interlocutory one, Mr Fernon submitted that the decision of the Magistrate was not an interlocutory judgment or order for the purpose of s.40(2)(a) LC Act. He submitted that this was a final order as it finally disposed of the rights of the parties in the Local Court proceedings, relying on Port of Melbourne Authority v Anshun Pty Limited (1980) 147 CLR 35 at 38; [1980] HCA 41.

25. Mr Fernon submitted that the action or proceeding between the parties in the Local Court concerned the judgment obtained by the Respondent against the Appellants arising from the registration of the adjudication certificate obtained under the SOP Act and that, by reason of refusing the stay application, the Magistrate had also finally determined the Local Court proceedings so that there was no further action that could be taken by the Appellants in respect of that judgment.

26. Mr Corsaro SC submitted that the Appellants require leave to appeal under s.40(2)(a) LC Act as they seek to challenge an interlocutory judgment or order of the Local Court.

27. Mr Corsaro SC submitted that the Magistrate’s decision involved an interlocutory judgment or order. This was so even if the decision determined the fate of the particular stay application which was made by the Appellants: Hall v Nominal Defendant (1966) 117 CLR 423 at 439-440; [1966] HCA 36. Mr Corsaro SC submitted that the Appellants could make a further stay application with respect to the Local Court proceedings, with the Magistrate’s decision not preventing them from making such an application. He submitted that the position may be contrasted with the grant of a permanent stay which, whilst interlocutory, has the same practical effect as a final order so that a Court will more readily grant leave to appeal from it. He submitted that this was the real proposition which emerged from Port of Melbourne Authority v Anshun Pty Limited.

Leave to Appeal is Required

28. Basten J (sitting as a Judge in the Common Law Division) considered aspects of ss.39 and 40 LC Act in Souaid v Nahas [2019] NSWSC 1132 at [3]:

“Sections 39 and 40 of the Local Court Act reflect the conventional view that legal proceedings involve questions of law, questions of fact and questions of mixed law and fact. Such a tripartite classification is never easy to apply in practice. However, what appears not to be appreciated by the structure of the provisions of the Local Court Act is that there is no right of appeal, with or without leave, from findings of fact. The assumption that the application of law to the facts may be a question of “mixed law and fact” will rarely assist an appellant. If the legal principle has been incorrectly identified in the Local Court, that may be established on an appeal as of right. If it be a material error, that will usually result in an order setting aside the judgment below and may involve replacement with a different order, or remittal to the Local Court. It is only in the rare case that the legal principle has been correctly stated, but misapplied to the facts as found, that leave will be appropriate…”

29. Section 39 LC Act should be read as being subject to s.40(2)(a) LC Act such that leave to appeal is required if an error of law is said to arise in an interlocutory judgment: Ciszek v Enterprise Financial Solutions Pty Limited [2010] NSWSC 1265 at [10] (Schmidt J)].

30. In Laycock v Putty Community Association Incorporated [2006] NSWSC 900, Hoeben J (at [22]) determined that a preliminary Local Court decision as to jurisdiction was of an interlocutory kind within the meaning of s.40(2) LC Act because:

“While [the decision] was not final, it did have the practical effect of allowing the matter to continue before his Honour rather than be dismissed for want of jurisdiction which would have been its fate had his Honour determined that he did not have jurisdiction.”

31. It is the legal force of the judgment in question, and not its practical effect, that has to be considered in determining whether or not the judgment is final: Hall v Nominal Defendant at 440-441, 444-445; Sanofi v Parke Davis Pty Ltd (No. 1) (1982) 149 CLR 147 at 152-153; [1982] HCA 9; Ciszek v Enterprise Financial Solutions Pty Ltd at [8].

32. The decision in question in this appeal concerns the refusal to stay enforcement of a judgment which had been entered. No challenge was made to the judgment entered by registration of the adjudication certificate. The stay application involved a question of practice and procedure and was capable of being revisited by further application by the Appellants, at least in principle.

33. In TFM Epping Land Pty Limited v Decon Australia Pty Ltd [2020] NSWCA 118 (“TFM Epping Land”), the Court of Appeal observed (at [69]) that the decision of the primary Judge to dismiss an application for a stay of execution of a judgment under s.25 SOP Act was interlocutory and concerned a point of practice and procedure. The same may be said concerning the refusal of a stay which is the subject of the present appeal.

34. The Court of Appeal has observed that the purpose served by the filing of an adjudication certificate under s.25(1) SOP Act, and the entry of a judgment which is enforceable accordingly, is to ensure prompt payment to the builder under that legislation upon the clear basis that the matters covered by the adjudication certificate may be the subject of litigation in later civil proceedings: ss. 3, 32 SOP Act; TFM Epping Land at [22]-[25].

35. It remains open to the Appellants to litigate in the District Court proceedings the question of payment of the sum which was the subject of the certificate under s.25 SOP Act.

36. The Amended Statement of Claim filed on 30 May 2019 in the District Court proceedings makes clear that the Appellants propose to litigate the same issue which was sought to be advanced in the present appeal concerning the operation of ss.92 and 94 HB Act.

37. The consequence of the refusal of the stay by the Magistrate was that the Appellants were required to pay the sum which was the subject of the adjudication certificate (and Local Court judgment) to the Respondent, but with the Appellants having an opportunity in separate and later civil litigation to seek the recovery of that sum of money if they succeeded in that action against the Respondent.

38. This aspect of the present proceedings fortifies a conclusion that the decision of the Magistrate, which is the subject of the present appeal, constituted an interlocutory judgment so that leave to appeal is required.

39. I am satisfied that the decision of the Magistrate refusing to grant a stay to the Appellants constituted an interlocutory judgment or order so that leave to appeal is required under s.40(2)(a) LC Act.

Sections 92 and 94 HB Act

40. Before moving to the submissions made in this Court, it is appropriate to set out relevant parts of ss.92 and 94 HB Act.

41. Section 92(1) and (2) HB Act provide as follows:

“92    Contract work must be insured

(1)    A person must not do residential building work under a contract unless -

(a)    a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and

(b)    a certificate of insurance evidencing the contract of insurance, in a form approved by the Authority, has been provided to the other party (or one of the other parties) to the contract.

Maximum penalty - 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.

(2)    A person must not demand or receive a payment under a contract for residential building work (whether as a deposit or other payment and whether or not work under the contract has commenced) from any other party to the contract unless -

(a)    a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and

(b)    a certificate of insurance evidencing the contract of insurance, in a form approved by the Authority, has been provided to the other party (or one of the other parties) to the contract.

Maximum penalty - 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.

…”

42. Section 94(1)-(3) HB Act provides:

“94    Effect of failure to insure residential building work

(1)    If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the uninsured work), the contractor who did the work -

(a)    is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and

(b)    is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit).

(1A)    Despite section 92 (2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis.

(1B)    A contractor who applies to a court or tribunal for a remedy under this section, or who is awarded money under this section, is not guilty of an offence under section 92 (2) by virtue only of that fact.

(1C)    Without limiting the factors that a court or tribunal may consider in deciding what is just and equitable under subsection (1A) -

(a)    in relation to any contract - the court or tribunal may have regard to the impact on the resale price of the property if no contract of insurance is provided, and

(b)    in relation only to a contract entered into before 30 July 1999 - the court or tribunal is not to be limited by the fact that the required contract of insurance was not obtained until after the date of the contract.

(2)    However, the contractor remains liable for damages and subject to any other remedy in respect of any breach of the contract committed by the contractor.

(3)    Residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of this section if the required contract of insurance for the work is subsequently obtained.

…”

Should the Appellants Be Granted Leave to Appeal in this Case?

The Parties’ Submissions

43. Put shortly, Mr Fernon submitted that the Respondent did not have a contract of insurance as required by s.92 HB Act so that the Respondent was barred by s.94 from obtaining judgment from the Local Court under s.25(1) SOP Act, with a result that the Local Court should have stayed the execution of the judgment permanently. He submitted that the Respondent was not assisted by s.94(3) HB Act which has application where a contract of insurance is subsequently obtained.

44. I will refer later (at [68]-[69] below) to specific submissions made by Mr Fernon, which are better understood after parts of her Honour’s judgment are set out.

45. Mr Corsaro SC submitted that the Magistrate had not been asked to stay the enforcement of the judgment upon the basis that there was a failure to comply with s.94 HB Act so that there was, in effect, a statutory barrier to enforcement of the judgment. He submitted, in any event, that such an argument was not to be deployed appropriately in seeking a stay of enforcement of a judgment. He submitted that the Appellants had not sought judicial review of the adjudication certificate nor had an application been made to set aside the Local Court judgment.

46. Mr Corsaro SC submitted that, even if there was force in the Appellants’ argument concerning s.94 (which he did not accept), the present case did not involve the Magistrate being asked to consider the proper construction of s.94, let alone the submissions and authorities which Mr Fernon sought to advance before this Court.

47. Mr Corsaro SC submitted that the Appellants can make submissions concerning the construction of ss.92 and 94 HB Act in their District Court claim and that the Amended Statement of Claim indicates that that is one of the issues that they seek to litigate in those proceedings.

48. The Court was taken by both counsel to various parts of the transcript of the Local Court proceedings on 4 February 2019, 1 April 2019 and 31 May 2019 to provide an understanding of how the s.94 issue arose in the Local Court. In addition, reference was made to the final written submissions filed in the Local Court for the Appellants and the Respondent.

49. Following the hearing in this Court, and after the Court had reserved its decision, the transcript of the Local Court hearing on 23 August 2019 was provided by Mr Fernon with the consent of the Respondent.

50. The 23 August 2019 transcript indicated that submissions made by Mr Fernon to the Magistrate focused on the effect of ss.92 and 94 HB Act in support of the Appellants’ argument that the Respondent was insolvent or at risk of insolvency. No reference was made to cases cited in this Court, nor was there reference to the operation of s.94 as being a separate basis upon which a stay should be granted.

Decision

51. Generally, it is appropriate for the Court to grant leave to appeal only in cases that involve issues of principle or questions of public importance or where it is reasonably clear that an error has been made, going beyond what is merely arguable, that occasions an injustice: TFM Epping Land at [69].

52. The Court should keep in mind the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in civil proceedings (s.56 Criminal Procedure Act 2005) and the requirement that costs to the parties should be proportionate to the importance and complexity of the subject matter in dispute (s.60 Civil Procedure Act 2005). The quantum of the judgment under appeal, and the proportionality of that sum to the legal costs expended in the proceedings, are relevant to the question whether leave should be granted: Schwartz Family Co Pty Limited v Capital Carpets Pty Ltd [2017] NSWCA 223 (“Schwartz”) at [26]-[29], [47].

53. In Sayed v Deng [2012] NSWSC 851 at [33], Beech-Jones J observed that, given the Local Court’s limited monetary jurisdiction, appeals from interlocutory decisions in that Court could lead to there being “a significant risk that the overall costs of the proceedings would be completely disproportionate to the matters in dispute”.

54. A stay of execution of a judgment entered following adjudication under the SOP Act is generally less readily available than in relation to appeals arising from curial proceedings, with this being a consequence of the legislative purpose of giving cashflow to builders and subcontractors ahead of a final hearing in a court: TFM Epping Land at [87]-[88].

55. In my view, a proper understanding of what occurred in the Local Court is that the Appellants were relying upon the s.94 issue in support of a contention that the Respondent was insolvent and without insurance, and that this supported their application for a stay of enforcement of the 20 February 2018 Local Court judgment. The Appellants have not demonstrated that a submission was made to the Local Court that s.94(1) HB Act provided a barrier to enforcement of the 20 February 2018 Local Court judgment so that a stay should be granted.

56. In my view, nothing said in the transcript of submissions made to the Magistrate on 23 August 2019 assists the Appellants on their application for leave to appeal.

57. It is appropriate to set out extracts from the Magistrate’s judgment of 13 November 2019 to assist an understanding of what was determined by her Honour.

58. Early in her Honour’s judgment, the following was said (at [4]-[5]):

“4   In or around October 2016, Matrix was engaged to carry out the full renovation of a terrace at Woollahra that was owned by Mr Amirbeaggi and Ms Maniscalco. The parties signed a cost plus residential contract on or about 19 January 2017 in which the estimated costs of works and fees was $330,000. The proposed date for commencement of the works was 2 November 2016 and the construction period was 120 days. The work was not completed within that 120 day construction period.

5   Matrix did not initially take out home warranty insurance for the project but there is evidence that it did so at a subsequent time.”

59. Later her Honour noted (at [23]) that an argument had been advanced about the validity of the home building insurance for the Woollahra property and the terms of ss.92 and 94 HB Act were set out in the judgment.

60. Having noted a number of provisions and references to authorities (which are not presently relevant), her Honour turned (at [30] and following) to consider the merits of the stay application. In part of the judgment which is not challenged in the present appeal, her Honour said (at [36]):

“The judgment in these proceedings arises from the registration of an arbitration certificate. There is no evidence of any appeal against that decision. In that regard, I note Ball J's comments [in Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd [2016] NSWSC 1120 at [6](b)] that the absence of a challenge to the debt is a powerful factor against the grant of a stay.”

61. Her Honour then considered factors under a heading “The likelihood that the contractor will be unable to repay the amount the subject of the determination”, noting (at [37]) that “most of the evidence and submissions focused on this issue”. The issues raised under this heading concerned the Appellants’ assertion that the Respondent was insolvent and that this should provide a foundation for a stay of enforcement of the 20 February 2018 Local Court judgment.

62. Her Honour stated (at [40]) that she was “not satisfied that [the Appellants] have proven on the balance of probabilities that [the Respondent] was unable to pay all of its debts as they became due and payable”. Thereafter, her Honour amplified upon this critical finding that the Respondent was not insolvent.

63. Towards the end of the analysis under this heading, her Honour referred to the District Court proceedings brought by the Appellants ([52]-[53]):

“52   The amended statement of claim [in the District Court] pleads that there has been a failure to comply with s.92 of the Home Building Act and a breach of s.94(1) of that Act and that as a result of the breach of s.92(1), the plaintiffs have suffered loss and damage equivalent to the amounts paid under the contract namely $488,472.81.

53 Mr Fernon pointed to difficulties with the certificate of insurance that was tendered and queries whether it will be effective to provide the necessary protection for Mr Amirbeaggi and Ms Maniscalco. He urged the court to disregard an email from a client services officer of the insurer that the certificate of insurance is effective. However if the certificate of insurance was effective then s.94(3) of the Home Building Act may apply and Mr Amirbeaggi and Ms Maniscalco may be able to rely on the home warranty insurance should they be unable to recover an amount from Matrix. It is not for this court to make findings about whether the insurance cover was effective and if so, how it affects the rights of Mr Amirbeaggi and Ms Maniscalco.”

64. The high-water mark of the Appellants’ submission before this Court is that her Honour declined to make a finding about whether the insurance cover was effective (in the last sentence of the quotation at [63] above) and that, in taking this course, her Honour had failed to consider a matter which she was required at law to consider thereby giving rise to legal error.

65. Her Honour concluded that part of the judgment concerning the Appellants’ claim that the Respondent was insolvent, stating (at [55]-[56]):

“55   These proceedings can be distinguished from the facts in the cases I have referred to earlier. In those cases where the court did stay enforcement the court had evidence of serious difficulties on the part of the person or company who was entitled to the payment. Those difficulties do not exist in this case. Matrix has ongoing contracts for significant projects, it is continuing to trade and there is no evidence that it is not able to pay its debts as and when they become due.

56   When all of the evidence concerning Matrix's financial position is taken into account I find on the balance of probabilities that it is likely that Matrix would be able to repay the money if unsuccessful in [the] District Court.”

66. Her Honour then found that there was no evidence before the Court to show that there was a risk that the Respondent will become insolvent if a stay is granted (at [57]).

67. Her Honour concluded her judgment in the following way (at [58]-[60]):

“58   Some of the cases I was taken to reiterate the policy behind the Security of Payment legislation. It is legislation designed to keep the money flowing to builders and contractors so that they can continue to trade. It requires people to "pay now and argue later" which is precisely what is happening in relation to the current dispute.

59   For the above reasons, I am not satisfied on the balance of probabilities that Mr Amirbeaggi and Ms Maniscalco have discharged their onus to prove that proceedings should be stayed and I dismiss the notice of motion.

60   In relation to the monies that are currently held in court, I propose ordering that they be paid out to Matrix.”

68. Before this Court, Mr Fernon sought to argue that her Honour misconstrued s.94 HB Act, with submissions being made by reference to the proper construction of that provision and the words “in respect of” in s.94(1). Reference was made as well to decisions which have considered s.94 HB Act, including Casa Maria Pty Limited v Trend Properties Pty Limited [1998] NSWCA 53 and Festa Holdings Pty Limited (In Liq) v Adderton (2005) NSW ConvR 56-117; [2004] NSWCA 228. Mr Fernon acknowledged that the arguments put to this Court by reference to these cases, and the proper construction of s.94(1), were not advanced in the Local Court.

69. Mr Fernon submitted that, despite the different approach being taken in the Local Court and this Court on this issue, the effect of s.94 had been ventilated sufficiently before the Local Court so that it was appropriate for this Court to grant leave to appeal and determine whether the Magistrate had erred in law. He submitted that the proper construction of ss.92 and 94 HB Act was an important matter where a decision of this Court would be of assistance generally.

70. I am not satisfied that it is appropriate to grant leave to appeal in this matter for a number of reasons.

71. Firstly, I am not persuaded that the arguments sought to be put in this Court were in fact advanced in the Local Court so that it can be submitted here that the learned Magistrate has, in some way, erred in law in the approach adopted in determining the stay application.

72. It is sufficiently clear from the record of the Local Court proceedings that the s.94 issue was raised by the Appellants in support of an argument that the Respondent was insolvent and without insurance cover. I am not satisfied, however, that a submission was put that there was non-compliance with s.94 so that this aspect itself constituted a foundation for a stay of enforcement of the Local Court judgment.

73. In any event, there was a live issue before the Local Court concerning the later contract of insurance for the purpose of s.94(3) HB Act. As is clear from her Honour’s judgment (at [52]-[53] set out at [63] above), reference was made to these aspects in the context of any protection which the Appellants may obtain from the Respondent’s insurance cover. This was, in truth, the way in which the Appellants sought to agitate this issue in the Local Court. The submission related to the central argument as to whether the Respondent was insolvent or at risk of insolvency.

74. Secondly, the Appellants did not seek judicial review of the adjudication certificate, nor was there any application to set aside the Local Court judgment (if that course was open to them). The Appellants sought a stay of enforcement of the Local Court judgment which led to a protracted and costly hearing in the Local Court in which they failed.

75. Nevertheless, it remains open to the Appellants to agitate the proper construction of ss.92 and 94 HB Act in the District Court proceedings which are still on foot. As the learned Magistrate observed (at [58] of her judgment at [67] above), the purpose of the adjudication certificate procedure in s.25 SOP Act is to allow for prompt payment to a builder, but with the rights of other affected parties being preserved so that it is open to the Appellants to seek to recover the sum which they have paid (pursuant to the Local Court judgment) in the District Court proceedings which are yet to be heard. Her Honour’s understanding of the purpose of the adjudication certificate procedure was correct: TFM Epping Land at [22]-[25]. [78]-[86]. An essential aspect of the regime for progress claims under the SOP Act is that the rights created under it are enforceable as if there had been a final determination by a court, save only for the fact that they do not create a res judicata or any issue estoppels: TFM Epping Land at [78].

76. Thirdly, in these circumstances, there is simply no useful purpose to be served by this Court granting leave to appeal for the purpose of considering the proper construction of provisions of the HB Act, especially where the Magistrate was not asked to deal squarely with these issues, nor was her Honour assisted by submissions concerning the construction of the provisions.

77. To the extent that the Appellants submit that the issues raised in this litigation may warrant this Court construing ss.92 and 94 HB Act as a matter of general importance, it is sufficient to note that the Appellants will have an opportunity to ask the presiding Judge at the District Court hearing to consider these questions, with the prospect of possible later consideration by the Court of Appeal if the occasion arose.

78. It is not for this Court to provide a type of advisory opinion by reference to issues not truly litigated at first instance in the Local Court, in particular where the challenge was interlocutory in nature.

79. Finally, the approach of the Appellants in bringing separate but related proceedings in the District Court (for damages) and in this Court (by way of the present appeal) does not sit comfortably with their duty to facilitate the just, quick and cheap resolution of the real issues in dispute: s.56 Civil Procedure Act 2005. Added to this, is a legitimate concern about the proper use of Court resources and the proportionality of costs being expended in proceedings arising out of the dispute between the Appellants and the Respondent: s.60 Civil Procedure Act 2005 (see [52]-[53] above).

80. The interests of justice going beyond those that arise between the parties do not warrant the grant of leave to appeal in this case: Schwartz at [47].

Conclusion

81. For these reasons, I am satisfied that the Appellants should not be granted leave to appeal. Costs should follow the event and the Appellants should pay the Respondent’s costs of the Summons.

82. I make the following orders:

1. the Appellants are refused leave to appeal from the interlocutory judgment and orders of the Local Court of 25 November 2019;

2. the Summons filed on 18 December 2019 is dismissed;

3. the Appellants are to pay the Respondent’s costs of the Summons;

4. if a special costs order is sought by the Respondent, written submissions in support of the application are to be provided by email to my Associate and to the Appellants on or before 7 July 2020 and the Court will give directions for written submissions in reply with a view to determining the application on the papers and without the need for a further hearing.

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Decision last updated: 30 June 2020