Di Ronchi & Anor and Peter Russell Moore T/As Moore Perspectives & Anor - [2013] WASAT 55

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)

CITATION: DI RONCHI & ANOR and PETER RUSSELL MOORE T/AS MOORE PERSPECTIVES & ANOR [2013] WASAT 55

MEMBER: MR D AITKEN (MEMBER)

HEARD: DETERMINED ON THE DOCUMENTS

DELIVERED : 19 APRIL 2013

FILE NO/S: CC 1349 of 2012

BETWEEN: PHILLIP DI RONCHI & ANOR
Applicants
AND
PETER RUSSELL MOORE T/AS MOORE PERSPECTIVES & ANOR
Respondents

Catchwords:

Building Services (Complaint Resolution and Administration) Act 2011 (WA) Bankruptcy of respondents Determination of preliminary issue Whether a building service complaint is a provable debt in bankruptcy which requires leave under s 58(3)(b) of the Bankruptcy Act 1966 (WA) to be continued Whether a building service complaint is excluded from bankruptcy under s 82(2) of the Bankruptcy Act 1966

Legislation:

Bankruptcy Act 1869 (UK), s 31
Bankruptcy Act 1966 (Cth), s 5, s 27, s 58(3)(b), s 82, s 82(1), s 82(2), s 86, Pt X
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 3, s 5(1), s 9, s 11, s 11(1)(d), s 36(1), s 38(1)
Home Building Contracts Act 1991 (WA)
Magistrates Court (Civil Proceedings) Act 2004 (WA), s 7(5)
State Administrative Tribunal Act 2004 (WA), s 46(1), s 46(3), s 60(2)

Result:

The Tribunal determined, as a preliminary issue, that the building service complaint is a provable debt in the bankruptcy of the respondents and the applicants cannot continue the proceeding unless they obtain the leave of a court having jurisdiction under s 58(3)(b) of the Bankruptcy Act 1966 (Cth)

Summary of Tribunal's decision:

The respondents constructed a fence between the adjoining properties owned by the applicants pursuant to a contract between the parties. The applicants made a building service complaint under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) alleging that the fence was not built in a proper and proficient manner and that the work was faulty or unsatisfactory.
Prior to the complaint being determined the respondents became bankrupt, which gave rise to the preliminary issue of whether the complaint is provable in the bankruptcy of the respondents under s 82(1) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) or excluded from the bankruptcy under s 82(2) of the Bankruptcy Act. The significance of the preliminary issue was that if the complaint is provable in the bankruptcy then the proceeding in the Tribunal would be stayed until leave was obtained from a court under s 58(3)(b) of the Bankruptcy Act.
Section 82(2) of the Bankruptcy Act provides that demands in the nature of unliquidated damages arising otherwise than by reason of a contract are not provable in bankruptcy. The Tribunal considered the nature of building service complaints and decided that they are in the nature of unliquidated damages. The Tribunal then examined the decision of the High Court in Coventry v Charter Pacific Corporation Ltd (2005) 227 CLR 234 (Coventry) on the question of what constitutes a demand arising otherwise than by reason of a contract and decided that the rationale in that decision was pertinent and should be applied to building service complaints. By applying the rationale of Coventry, the Tribunal decided that the complaint the subject of this proceeding was a demand arising by reason of a contract. While it is a statutory claim rather than a contractual claim, it nevertheless is a claim arising out of the mutual dealing and bilateral relationship of contract between the applicants and the respondents. The Tribunal therefore decided that the complaint did not fall within s 82(2) of the Bankruptcy Act and is a provable debt under s 82(1) of that Act. Therefore, the applicants cannot continue with the proceeding unless they obtain leave from a court under s 58(3)(b) of the Bankruptcy Act.
The Tribunal noted that applying the rationale of Coventry to building service complaints will produce anomalous results, because a complaint by a subsequent owner of building works, who did not have any contract or mutual dealing with the person who carried out the work will fall within s 82(2) of the Bankruptcy Act and be excluded from and not be affected by the bankruptcy of that person.

Category: B

Representation:

Counsel:

Applicants: In person
Respondents : No appearance

Solicitors:

Applicants: N/A
Respondents : N/A

Case(s) referred to in decision(s):

Aliferis v Kyriacou (2000) 1 VR 447
Cornelius v Barewa Oil & Mining (NL) (in liq) (1982) WAR 311
Coventry v Charter Pacific Corporation Ltd (2005) 227 CLR 234

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

This proceeding is a building service complaint (complaint) which has been referred to the Tribunal by the Building Commissioner under s 11(1)(d) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BS(CRA) Act).
The complaint is in respect of a Colorbond fence constructed by the respondents, Mr Peter Russell Moore and Mrs Ann Francis Moore, trading as Moore Perspectives, on the boundary between the adjoining properties owned by each of the applicants, Mr Phillip De Ronchi and Mr Dennis Green pursuant to a contract between the parties for the amount of $9,830.15 (contract).

Background

The background to the complaint is that the applicants filed a claim against the respondents in the Magistrates Court at Armadale seeking a refund of the amount of $5,219.50 ($2,719.50 by Mr De Ronchi and $2,500.00 by Mr Green) which they paid to the respondents under the contract, and costs. The basis of the claim was stated to be that the contract had been cancelled because the fence was not built to the specification quoted and the work is substandard.
The applicants obtained default judgment in the Magistrates Court due to the failure of the respondents to file a statement of defence and appear at the trial. Pursuant to that judgment the Court ordered that the respondents pay $2,719.50 and costs of $76.20 to Mr De Ronchi and that the respondents pay $2,500.00 to Mr Green. However, the respondents were successful in obtaining an order from the Court that the judgment would be set aside if the respondents paid $2,500.00 into the Court, and that the matter would be transferred to the Building Commissioner if that occurred. It appears that the Court formed the view, at that stage, that it did not have jurisdiction to deal with the claim by virtue of s 7(5) of the Magistrates Court (Civil Proceedings) Act 2004 (WA).
The respondents paid $2,500.00 into the Court and the Magistrates Court transferred the matter to the Building Commissioner. Apparently the amount of $2,500.00 is still held by the Court, which is a curious situation since the Tribunal does not have the power or authority to order or direct what is to be done with that money. Nevertheless, the applicants are hopeful that the Court will pay the money to them if they are successful in obtaining an order from the Tribunal that the respondents pay to them the amount which they are seeking in this proceeding.
The Building Commission requested the applicants to complete and lodge a building complaint form and supporting documentation. In the complaint form the applicants state that the respondents failed to build the fence as per quote and verbal instructions and failed to bury posts as per manufacturer's specifications, and that the workmanship was substandard in that concrete was not trowelled to disperse water as per manufacturer's specifications. The Building Commission then requested the respondents to provide their comments and intentions in respect of the complaint. The respondents denied the allegations made by the applicants and said that they had not been allowed to complete the job and they proposed a financial resolution of the matter, involving an adjustment of monies payable under the contract. The applicants provided a reply to the respondents' response, in which the applicants stated that they were seeking the full amount of their claim of $5,295.70 plus costs. The Building Commission then carried out an investigation of the complaint under s 9 of the BS(CRA) Act and referred it to the Tribunal under s 11(1)(d) of the Act.
The complaint was listed for a final hearing by the Tribunal; however prior to the date of that hearing the respondents became bankrupt under the provisions of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) and Mr Phillip Kenneth Aggs (Trustee) of Robson Cotter Insolvency Group was appointed as the trustee of the bankrupt estate of the respondents.

What is the effect of the bankruptcy of the respondents on the complaint?

Under s 58(3)(b) of the Bankruptcy Act a proceeding against a bankrupt in respect of a 'provable debt', as defined in the Act, is stayed unless leave is given by a court having jurisdiction under the Act for the proceeding to be continued. Section 27 of the Bankruptcy Act provides which courts have jurisdiction under the Act.
Under s 5 of the Bankruptcy Act a provable debt is defined to be a debt or liability that under the provisions of the Act is provable in bankruptcy. Section 82 of the Act provides which debts and liabilities are provable in bankruptcy.
The relevant provisions in s 82 of the Bankruptcy Act for the purposes of this proceeding are s 82(1) and s 82(2), which provide as follows:
(1)Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
(2)Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.
The bankruptcy of the respondents gave rise to the issue of whether or not the complaint is provable in the bankruptcy of the respondents and, in particular:
1)whether the complaint falls within s 82(1) of the Bankruptcy Act, in which case it will be a provable debt and the applicants will need to obtain the leave of a court having jurisdiction under the Act pursuant to s 58(3)(b) of the Act for the Tribunal to be able to deal with it; or
2)whether the complaint falls within s 82(2) of the Bankruptcy Act, in which case it is not provable in the bankruptcy of the respondents and the Tribunal will be able to continue to deal with it.
The Tribunal made an order which gave the applicants, the respondents and the Trustee the opportunity to file submissions in respect of that issue.
Mr De Ronchi filed a submission in which he states:
…
It is our assertion that the Applicants [sic] claim indeed falls under s 82(2) of the Bankruptcy Act 1966 (Commonwealth) (the Bankruptcy Act) and it may therefore be dealt with by the Tribunal. This assertion is based on the following:
1)The Complaint Schedule of the Building Commission Building Complaint Form which [sic] stipulates the issues as being: 'Respondent failed to build fence as per quote and verbal instructions given. Respondent failed to bury posts as per manufacturers' [sic] specifications. Workmanship was substandard in that concrete was not towelled [sic] to disperse water as per manufacturer specifications'. As per the Bankruptcy Act subsection 82(2), the damages claimed by the applicant are unliquidated and clearly arise from substandard workmanship as acknowledged by the Administrator and the Respondent (copy attached). Damages claimed have arisen from other than a contractual matter and thus this matter cannot be considered under s 82(1) but falls instead under s 82(2) of the Bankruptcy Act.
2)As it is within the Tribunals [sic] jurisdiction to deal with this matter under s 82(2), the Applicants will be seeking the release of the $2500.00 held in trust by the Armadale Magistrates Court to be [paid] in full to the Applicants. The Magistrates Court has been notified and has agreed to inform the Applicants should any attempt be made to seek the release of these funds. It has also been advised that any such attempt by the Administrators or Respondent will be met with legal challenges that would result in costs far exceeding the possible gains.
3)Any challenge to the assertion that this matter should be considered under other than s 82(2) needs to be legally qualified and substantiated by the challenger at their cost.
Attached to Mr De Ronchi's submission was a copy of an extract from a report by the Trustee to creditors and a letter to the Trustee from the respondents, both of which refer to unprofessional and substandard work carried out by the respondents' subcontractors.
Neither the respondents nor the Trustee filed any submissions.
I then decided to determine the issue detailed above as a preliminary issue, entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
I have decided to approach the determination of the preliminary issue by, firstly, deciding whether the complaint falls within s 82(2) of the Bankruptcy Act. If I decide that question in the affirmative then the Tribunal will be able to continue to deal with the complaint. If I decide that question in the negative I will then decide whether the complaint falls within s 82(1) of the Bankruptcy Act, and if that is the case the complaint will be stayed under s 58(3)(b) of the Bankruptcy Act unless the applicants obtain leave from a court having jurisdiction to give that leave.

Does the complaint fall within s 82(2) of the Bankruptcy Act?

For the complaint to fall within s 82(2) of the Bankruptcy Act it must satisfy the following two requirements:
•Firstly, it must be a demand in the nature of unliquidated damages; and
•Secondly, it must arise otherwise than by reason of a contract, promise or breach of trust.
I will examine these two requirements in turn.

Is the complaint a demand in the nature of unliquidated damages?

In Cornelius v Barewa Oil & Mining (NL) (in liq) (1982) WAR 311 at 312 Burt CJ stated as follows:
In my opinion s 82(2) of the Bankruptcy Act when speaking, as in terms it does, of the 'nature' of the demand is using that word in its ordinary dictionary meaning so that the question raised by the sub-section in any particular case is: What is the essential quality of the demand made?
Adopting this approach, to decide whether the complaint is a demand in the nature of unliquidated damages, I need to consider the essential quality of the complaint.
The complaint is a building services complaint under the BS(CRA) Act. Section 3 of the BS(CRA) Act defines 'building service complaint' to mean a complaint under s 5(1) of the Act, which provides that a person may make a complaint about a regulated building service not being carried out in a proper and proficient manner or being faulty or unsatisfactory. The complaint that the respondents failed to build the fence in accordance with the agreed specification is a complaint that the work was not carried out in a proper and proficient manner, and the complaint that the workmanship is substandard is a complaint that the work is faulty or unsatisfactory.
The construction of the fence by the respondents was a regulated building service under paragraph (b) of the definition of that term in s 3 of the BS(CRA) Act because it is home building work carried out by the respondents for the applicants under a home building work contract within the meaning given to those terms in the Home Building Contracts Act 1991 (WA).
Under s 38(1) of the BS(CRA) Act if the Tribunal is satisfied that the work the subject of the complaint has not been carried out in a proper and proficient manner or is faulty or unsatisfactory then the Tribunal may make a building remedy order.
Under s 36(1) of the BS(CRA) Act a building remedy order may consist of an order that the person who carried out the work:
a)remedy the work as specified in the order;
b)pay to the complainant such costs of remedying the work as the Tribunal considers reasonable and specifies in the order; or
c)pay to the complainant a sum of money specified in the order to compensate for the failure to carry out the work in a proper and proficient manner or for faulty or unsatisfactory work.
If the Tribunal decides to make a building remedy order then the Tribunal must make an assessment of one of the following:
a)the remedial work which the Tribunal considers is necessary;
b)the cost of remedying the work which the Tribunal considers reasonable; or
c)the sum of money which the Tribunal decides should be paid to compensate the complainant.
The fact that the applicants are seeking a specific amount of money, namely, the refund of the money paid by them under the contract, does not change the essential quality or nature of their claim under the provisions of the BS(CRA) Act. If the Tribunal finds that the work of constructing the fence has not been carried out in a proper or proficient manner or is faulty or unsatisfactory, then Tribunal has a discretion regarding the type of building remedy order which it makes, but in each case the Tribunal must make an assessment, which is analogous to the assessment of unliquidated damages.
I have therefore decided that the complaint is a claim in the nature of unliquidated damages and the first requirement of s 82(2) is satisfied.

Is the complaint a demand arising otherwise than by reason of a contract, promise or breach of trust?

There is no suggestion that the complaint is a demand arising by reason of a promise or breach of trust. Therefore I will confine my consideration of the second requirement of s 82(2) of the Bankruptcy Act to whether the complaint is a demand arising otherwise than by reason of a contract. If the complaint is not a demand arising by reason of a contract then the second requirement of s 82(2) of the Bankruptcy Act will be satisfied.
The question of what constitutes a demand arising otherwise than by reason of a contract for the purposes of s 82(2) of the Bankruptcy Act is considered at length in the joint judgment of Gleeson CJ and Gummow, Hayne and Callinan JJ in Coventry v Charter Pacific Corporation Ltd (2005) 227 CLR 234 (Coventry).
I will examine that judgment in some detail because, in my opinion, the rationale developed in it, to answer that question, is relevant to this matter and, as will become apparent below, has significant consequences.
At [20] and [21] of Coventry, their Honours make the following observations about the ambit of s 82 of the Bankruptcy Act:
Several features of s 82 should be noticed. Sub-section (1) identifies the debts and liabilities that are provable in bankruptcy in terms that are very wide. Sub-section (8) amplifies the width of the provision by making plain that no narrow meaning is to be given to the references in the section to 'liability'. Sub-section (1A) then extends the debts provable in bankruptcy to include some particular kinds of obligations: obligations arising under maintenance agreements or maintenance orders.
Sub-sections (2), (3), (3AA), (3A) and (3B) of s 82 identify certain kinds of liability that are not debts provable in bankruptcy. Subsection (2) which is at the centre of this appeal is, therefore, an exception to an otherwise broadly drawn definition of debts provable in bankruptcy.
Their Honours then consider the development of bankruptcy legislation in the United Kingdom during the nineteenth century and conclude that s 82 of the Bankruptcy Act had its origins in s 31 of the Bankruptcy Act 1869 (UK) (1869 UK Act), which provided that demands in the nature of unliquidated damages arising otherwise than by reason of a contract or promise were not to be provable in bankruptcy.

Their Honours note that an important aspect of both the 1869 UK Act and the Bankruptcy Act is that they each contain setoff provisions and that the setoff provision in s 86 of the Bankruptcy Act is based on the provisions of the 1869 UK Act. Their Honours then at [34] of Coventry state:
For present purposes, what is important to notice is that the set-off provisions found in both Acts are engaged where there have been mutual dealings between the bankrupt and another person proving or claiming to prove a debt in the bankruptcy. The set-off cases therefore cast light upon what debts are provable in bankruptcy. And what an examination of the nineteenth century cases will reveal is that the set-off provisions were used to extend the reach of debts provable in bankruptcy by giving to the expression 'demand in the nature of unliquidated damages arising … by reason of a contract or promise' a more ample operation than the words might at first have been thought to suggest.
Their Honours then consider various nineteenth century cases concerning s 31 of the 1869 UK Act and at [48], [50] and [51] of Coventry state:
… For present purposes, it is enough to recognise two points that emerge from the [nineteenth] century cases. First, Jack v Kipping is taken to have established that a claim for damages for fraudulent misrepresentation, where the claim is made by one party to a contract against another, is a demand for unliquidated damages arising by reason of a contract or promise. But the second and related point, made in Re Giles, is that a claim for damages for fraudulent misrepresentation which has induced the claimant to make a contract with a third party is not a demand arising by reason of a contract or promise.
…
Why should this understanding of s 31 of the [1869 UK Act] be carried over to the construction of s 82(2) of the Bankruptcy Act 1966? Again, there are two related reasons. First, the text of s 82, like its legislative ancestors, shows that not all claims are provable in bankruptcy. Some content must therefore be given to s 82(2) and its reference to demands 'arising otherwise than by reason of a contract, promise or breach of trust'. Secondly, any amplification or extension of the content to be given to s 82(2), beyond the immediate operation conveyed by reference to demands arising by reason of a contract or promise, is to be fixed by reference to the operation of other provisions of the statute, and particularly the setoff provisions of s 86. A claim which may be made in answer to a claim which the bankrupt estate makes for damages for breach of a contract between bankrupt and claimant may be provable. That answering claim may be provable because it arises out of the mutual dealing or bilateral relationship of contract between bankrupt and claimant. By contrast, a claim which comes from a tripartite transaction, in which the bankrupt's misrepresentation induced the claimant to make a contract with a third party, does not arise from a mutual dealing and it arises otherwise than by reason of a contract or promise.
It is against the background provided by these nineteenth century English cases that the Australian cases must be considered. Not only is the drafting of the relevant provisions of the Bankruptcy Act 1966 for all practical purposes identical to the statutory language considered in those cases, there is the same need to work out the relationship between the provision for what debts are provable in bankruptcy (s 82) and the provision for setoff (s 86).
Their Honours then consider a number of Australian cases concerning s 82 and s 86 of the Bankruptcy Act. During this consideration their Honours make a distinction between a 'bilateral case', which involves a mutual dealing such as a commercial transaction, and a 'tripartite case', where there is no mutual dealing between a bankrupt and a claimant.
Their Honours conclude with a consideration of the decision of the Victorian Court of Appeal in the case of Aliferis v Kyriacou (2000) 1 VR 447 (Aliferis), noting that extensive reference was made to it in the decisions of the courts below in the Coventry matter.
Aliferis was a bilateral case concerning a claim for negligence, pleaded in both contract and tort, by a client against a solicitor, who had entered into a deed of arrangement under Pt X of the Bankruptcy Act. The Victorian Court of Appeal decided that the test to be applied for the purpose of deciding whether a demand is within the exclusion provided by s 82(2) of the Bankruptcy Act is whether a contract is an 'essential element' of the cause of action. The Court of Appeal decided that in a claim for professional negligence the existence of the contract for professional services is not an essential element in the cause of action and therefore the client's claim was one arising otherwise than by reason of a contract and was not provable in the bankruptcy.
In Coventry the High Court decided that the test stated in Aliferis does not satisfactorily reflect the meaning to be given to s 82(2) of the Bankruptcy Act. The Court held that the test stated in Aliferis should not be adopted or applied because it does not give any weight to the need to read s 82(2) in light of the setoff provisions of s 86 of the Bankruptcy Act and it does not distinguish between a bilateral case and a tripartite case because it treats as irrelevant whether the bankrupt was a party to a contract.
Coventry was a tripartite case concerning a statutory claim, under the Corporations Law (Qld), for unliquidated damages for misleading or deceptive conduct by a bankrupt which induced the claimant to make a contract with a third party. The High Court held that the claim was a demand arising otherwise than by reason of a contract, because the contract in Coventry was not between the claimant and the bankrupt. In other words, there was no mutual dealing between the claimant and the bankrupt. However, the Court stated that, by contrast, a claim for unliquidated damages for misleading or deceptive conduct which induced the making of a contract between the claimant and the bankrupt, which would be a bilateral case, would be a claim arising by reason of a contract and provable in the bankruptcy.
The High Court noted that to distinguish between those two types of claim is anomalous, and that the anomaly of the result stems ultimately from adopting the language used in the 1869 UK Act in s 82(2) of the Bankruptcy Act without making any later accommodation, not only for the provision of statutory causes of action but also for the differential outcomes revealed long ago in a couple of nineteenth century cases. The Court noted that the Australian Law Reform Commission identified in its General Insolvency Inquiry, Report No 45 (1988) Vol 1, pages 315 - 319, the existence of anomalies, and recommended changing the law governing insolvency to remove such anomalies; however, those recommendations have not been carried into effect; see Coventry at [7], [72], [140] and [141].
While Coventry was not dealing with the same type of claim as the complaint the subject of this proceeding, the rationale developed in the judgment of the High Court in Coventry is pertinent and should be applied to this matter.
By applying the rationale of Coventry I have decided that the complaint is a demand or claim which has arisen by reason of a contract and, therefore, the second requirement of s 82(2) of the Bankruptcy Act is not satisfied and the complaint is not excluded from being provable in the bankruptcy of the respondents under s 82(2). While the complaint is a statutory claim under the BS(CRA) Act, rather than a contractual claim, it nevertheless is a claim arising out of, and by reason of, the mutual dealing and bilateral relationship of contract between the applicants and the respondents and therefore it is a demand arising from that contract.
It does not matter whether or not a claim under the contract was made by the respondents against the applicants prior to their bankruptcy or since then by the Trustee. The point is that s 86 of the Bankruptcy Act allows for the set-off of claims by the applicants and the respondents against each other arising out of the mutual dealing between them regarding the construction of the fence. It is therefore one of the bilateral cases referred to in Coventry to which s 82(2) does not apply.

Does the complaint fall within s 82(1) of the Bankruptcy Act?

Having concluded that the complaint does not fall within the exceptions specified in s 82(2) of the Bankruptcy Act, in my opinion it falls within s 82(1) of the Bankruptcy Act, which is cast in very wide terms and clearly catches the complaint.

Conclusion

As a result of the complaint falling within s 82(1) of the Bankruptcy Act, it is a provable debt in the bankruptcy of the respondents.
Under s 58(3)(b) of the Bankruptcy Act the applicants cannot continue this proceeding unless they obtain the leave of a court having jurisdiction under the Bankruptcy Act.
I consider that three months is an adequate period of time to allow for the applicants to apply to an appropriate court for such leave if they want the Tribunal to continue to deal with the matter. If the applicants do not make such an application within that period then, unless good reason can be shown as to why they have not done that, the Tribunal will dismiss the proceeding under s 46(3) of the SAT Act for want of prosecution.
If the applicants decide that they do not wish to seek leave under s 58(3)(b) of the Bankruptcy Act, then it is open to them to apply to the Tribunal for leave to withdraw the proceeding under s 46(1) of the SAT Act.

Anomaly

I realise that applying the rationale of Coventry to building service complaints under the BS(CRA) Act, where the respondent who carried out the building service becomes bankrupt, will produce anomalous results depending on whether it is a bilateral case (where the complainant contracted with the respondent for the work) or a tripartite case (where the complainant is a subsequent owner of the building works who did not have any contract or mutual dealing with the respondent). In the former case, for the reasons stated above, the claim will be provable in the bankruptcy and leave will be required under s 58(3)(b) of the Bankruptcy Act for the Tribunal to be able to deal with it. In the latter case the claim will fall within s 82(2) and be excluded from, and not be affected by, the bankruptcy and therefore the Tribunal will be able to deal with such a claim notwithstanding the bankruptcy of the respondent. That anomaly of result is unfortunate, but it exists for the reasons explained by the High Court in Coventry and it is another example of the anomalies identified by the Australian Law Reform Commission in its 1988 report referred to above.

Orders

The Tribunal makes the following orders:
1.The Tribunal has determined, as a preliminary issue, that the building service complaint the subject of this proceeding falls within s 82(1) of the Bankruptcy Act 1966 (Cth) and is a provable debt in the bankruptcy of the respondents.
2.Under s 58(3)(b) of Bankruptcy Act 1966 (Cth) the applicants cannot continue this proceeding unless they obtain the leave of a court having jurisdiction under the Bankruptcy Act 1966 (Cth).
3.If the applicants wish to continue this proceeding:
(a)by no later than 19 July 2013 the applicants must apply to a court under s 58(3)(b) of the Bankruptcy Act 1966 (Cth) for leave to continue this proceeding; and
(b)by no later than 26 July 2013 the applicants must file with the Tribunal evidence that they have made the application referred to in order 3(a) above and a written estimate of the date by which they expect a decision by the Court regarding that application.
4.The proceeding is adjourned to a further directions hearing at 10 am on 31 July 2013.
5.If the applicants do not comply with order 3(a) and 3(b) above, then at the next directions hearing the Tribunal may make an order under s 46(3) of the State Administrative Tribunal Act 2004 (WA) dismissing this proceeding for want of prosecution.
I certify that this and the preceding [51] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR D AITKEN, MEMBER