Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib, Mohammad Chahrouk Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib
[2014] NSWCATCD 67
•31 January 2014
NSW Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib, Mohammad Chahrouk Draybi Bros Pty Ltd v Bede Diab, John Maklouf, Jihad Dib [2014] NSWCATCD 67 Hearing dates: 21 June 2013 Decision date: 31 January 2014 Before: M Harrowell, Principal Member Decision: Applications HB 10/47685 and HB 10/47969 are transferred to the District Court of New South Wales that has jurisdiction in the matters, to continue before that Court as if they had been instituted there.
Any application for costs is to be made to the Tribunal within 21 days of the date of publication of these orders and reasons, accompanied by submissions and any affidavits in support, and the applications thereafter listed for directions.
In the event no applications for costs are made, the Tribunal orders that the costs of the applications to transfer the proceedings shall follow the event.
Catchwords: Equitable estoppel, section 48K limits on Tribunal jurisdiction, the meaning of "a court" Legislation Cited: S 48K - Home Building Act 1989
S 6 - Law Reform (Law and Equity) Act 1972
S 23 - Consumer Trader and Tenancy Tribunal Act 2001Category: Principal judgment Parties: Draybi Bros Pty Ltd (Applicant)
Bede Diab (First respondent)
John Maklouf (Second respondent)
Jihad Dib (Third respondent)
Mohammad Chahrouk (Fourth respondent)Representation: Mr Carter for Draybi Bros Pty Ltd instructed by Doyles Construction Lawyers;
Mr Reynolds for Mssrs Diab, Dib and Chahrouk instructed by Ray Wehbe & Co
File Number(s): HB 10/47685 and HB 10/47969
reasons for decision
INTRODUCTION
The Tribunal is asked to determine two applications to transfer proceedings from the Tribunal to a court pursuant to section 23 of the Consumer Trader and Tenancy Tribunal Act 2001. The proceedings are applications number HB 10/47685 (Macquarie Road claim) and HB10/47969 (Amy Street claim).
The main basis of the application is that the Tribunal does not have jurisdiction to hear a claim involving an equitable defence by way of estoppel.
Other Issues for determination
In addition to the issue of whether or not the Tribunal had jurisdiction to hear and determine a defence by way of equitable estoppel, the Tribunal also noted that related and other matters needed to be considered. These were identified in the directions made on 23 May 2013. The issues included:
(a) Whether the Tribunal is a "court" within the meaning of section 6 of the Law Reform (Law and Equity) Act 1972 (Law Reform Act);
(b) The limitation period applicable to the various claims in the proceedings both in the Tribunal and at general law;
(c) Whether it is arguable that a duty of care was owed by the respondents to the applicant as alleged and the effect of the reasons I published in the decision of Owners SP 69050 v Glenzeil Pty Ltd [2013] CTTT 17;
(d) Factors relevant to the exercise of discretion to transfer the proceedings under section 23 of the Consumer Trader and Tenancy Tribunal Act 2001;
(e) The significance of the cross-claims found in the Points of Defence filed by the first, third and fourth respondents;
(f) The significance of the existence of Trade Practices based defences to the claims brought by the applicants.
As necessary, I will deal with these matters below.
Background
The Macquarie Road claim relates to the construction of a residential development located at 19-21 Macquarie Road, Auburn. The Amy Street claim relates to a residential development constructed at 2 Amy Street Regents Park. The claims are brought by Draybi Bros Pty Limited (applicant) against Mssrs Diab, Maklouf, Dib and Charouk in respect of the Macquarie Park claim and against Mssrs Diab, Maklouf and Dib in respect of the Amy Street claim. Other than Mr Maklouf (who did not appear) all parties were represented by counsel at the hearing of the transfer applications. Unless otherwise noted, my reference to the Respondents refers to those respondents except Maklouf.
The applicant was the contractor and the respondents were subcontractors carrying out rendering work. It appears various of the respondents Maklouf, Dib and Diab did so under the name Champion Faster Rendering as identified in invoices attached to affidavits of witnesses to which I refer below.
It seems common ground that the contract for each the Macquarie Road and Amy Street projects was an oral contract, or at least partly oral and that from time to time directions would be given to the respondents by the applicant's representative Mr Tony Draybi. There is a dispute about the terms of each of the contracts.
Macquarie Road claim
The applicant's claim is set out in points of claim filed with the Tribunal on 25 July 2011. Three claims are made being claims in contract (paragraphs 14-18), tort (paragraphs 19-21) and for misleading and deceptive conduct (paragraphs 22-23). In addition, a claim is made against the second respondent (Maklouf) for breach of the terms of a deed (Settlement Deed) dated 28 October 2010 (paragraphs 24-26).
It is relevant to note at this point that during the hearing before me on 21 June 2013 the applicant handed to the Tribunal a document entitled "Applicant's Amended Points of Claim" which I marked as MFI 1. This document seeks to amend the points of claim in regard to allegations of fact about when the works, the subject of the dispute were completed and the basis of the claim for misleading and deceptive conduct.
The respondents filed defences to the claim, which were lodged with the Tribunal in 2011. In addition to denying the claims, the respondents each raised defences of estoppel and proportionate liability. In relation to the defence of estoppel, the basis of this allegation was expanded in a document entitled "Pleading as to the Defence of Estoppel" filed with the Tribunal on 29 April 2013. It will be necessary to refer to this document in the course of these reasons.
The applicant filed a Reply to Defence of Estoppel dated 10 May 2013.
Each of the respondents included in their defence a section entitled "Points of Cross Claim". These claims were not the subject of a separate application by the respondents. However the allegations sought to impugn the conduct of the applicant and claim damages in consequence thereof. I will need to address the issue of whether or not such a claim has any status in these proceedings in due course, no application having been filed in the Tribunal and no procedure for the filing of "cross claims" being available in the Tribunal.
Finally at this point I should note that the respondent Maklouf has apparently taken no steps in these proceedings and has not filed any defences to the claims made.
The applicant's claim
In relation to the claim in contract, the applicant asserts various implied warranties. These are found in paragraph 16 of the points of claim. It is alleged that the respondents breached these warranties, thereby causing the applicant to suffer loss and damage. The warranties were in the following terms.
"1) An implied warranty that all materials provided for inclusion in the Works as part of the Services would be suitable and/or fit for purpose.
2) An implied warranty that the Rendering and the Services would be carried out in accordance with the drawings and specifications, the applicable Australian Standards, the Building Code of Australia and good building practice.
3) An implied warranty that the Rendering provided as part of the Services would be provided with the required degree of skill so as to ensure that the render would properly and he had to the services to which it was applied.
4)An implied warranty that all the materials provided for inclusion in the Works as part of the Services would not corrode due to the elements.
5) An implied warranty that all Rendering provided as part of the services would be of good quality and free from defects."
It is apparent that some (but perhaps not all) of the warranties said to be implied into the contract with the respondents were the statutory warranties implied by section 18B of the Home Building Act 1989. The Statutory warranties are in the following terms:
"(a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract,
(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,
(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,
(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,
(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,
(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment."
The categorisation of claims is relevant when considering the jurisdiction of the Tribunal and the proper application of section 48K of the Home Building Act, 1989 (HBA).
The second claim made is in tort. The duty of care asserted is particularised in paragraphs 19 of the points of claim and includes a duty to exercise due skill and care in the supply of materials and in the preparation and application of render to the building.
In relation to the misleading and deceptive conduct claim, the applicant asserts the respondents made representations to the applicant concerning the works, including that they would be carried out in a good and workmanlike manner and that materials used would be suitable and fit for purpose.
Finally, a claim was made against the second respondent (Maklouf) that he had entered the Settlement Deed which obliged him to carry out rectification works by 31 December 2010 which he failed to do.
The respondents' defence
The first respondent (Diab) filed a defence and the third and fourth respondents (Dib and Charouk) filed a separate defence.
All respondents contend that the claims for breach of statutory warranties were commenced outside the limitation period and/or that the Tribunal does not have jurisdiction by reason of Section 48K of the Home Building Act.
The first respondent (Diab) says he complied with the terms of the contract and instructions given and that any works under the contract were completed on or before March 2003. Further, the first respondent asserts that by reason of the settlement with the second respondent, Maklouf, and the terms of the Settlement Deed that the subject matter of the dispute therefore "cease(d) to exist" or that by reason of the settlement the first respondent no longer had any liability.
In relation to the claim in tort, the first respondent says that any duty owed was modified by reason of the instructions given and the supervision of the applicant including directions given in relation to material to be used. Further claims are made in relation to the applicant causing or contributing to its own loss by reason of its acts or omissions. Lastly, in relation to the claim in tort the first respondent says any loss suffered was in part due to the breach of the Settlement Deed by the second respondent and/or that the nature of the damages claimed is remote and not recoverable.
In relation to the claim for misleading and deceptive conduct, the applicant says the claim is outside the jurisdiction of the Tribunal having regard to section 48K (3) of the Home Building Act. Further, the first respondent says the claim is out of time by reason of section 68 (2) of the Fair Trading Act, 1987 (as it then was). This section was in the following terms:
"(2) Proceedings under subsection (1) may be commenced at any time within six years after the day on which the cause of action that relates to the conduct accrue."
Similar defences to those raised in connection with the claim in tort were also pleaded in relation to the misleading and deceptive conduct claim. The next defence was by way estoppel, a matter to which I will return below. In short, the first respondent (as did the other respondents) contended that the Tribunal has no jurisdiction to hear a defence of equitable estoppel.
The first respondent also raised a defence of proportionate liability. Here, the first respondent asserted that the applicant and each of the other respondents constituted concurrent wrongdoers.
Lastly, the document included "Points of Cross claim" to which I have referred above. This "cross-claim" sought various relief against the applicant for alleged breaches of the Trade Practices Act or Fair Trading Act and alleged the conduct of the applicant was misleading or deceptive or likely to mislead and deceive.
In relation to the third and fourth respondents, the defences were similar to that of the first respondent They rely on the defences relating to the second respondent agreeing to rectify the works in question pursuant to the Settlement Deed.
In relating to the contract claim the third and fourth respondents assert they carried out works in accordance with the agreement, using material specified and otherwise acted in accordance with instructions and supervision provided by the applicant. As with the first respondent, the third and fourth respondents assert any loss suffered by the applicant was caused by its own acts or omissions and that it failed to take steps to mitigate its loss and/or that the damages claimed was remote.
Also, the fourth respondent denied being in the country and asserted he had "nothing to do with the work".
In relation to the claim in tort, again the third and fourth respondents rely on section 48K (3) of the Home Building Act and section 14 of the Limitation Act, 1969 and that the claim is outside the applicable limitation periods. The third and fourth respondents assert the loss and damage was caused or contributed to by the actions of the applicant and they rely on the defence of voluntary assumption of risk and/or the provisions of Part 1A of the Civil Liability Act, 2002 in respect of the limitation of liability for inherent and/or obvious risks.
In relation to the misleading and deceptive conduct claim, the third and fourth respondents rely on the provisions of section 48K (3) of the Home Building Act and section 68 (2) of the Fair Trading Act, 1987. Also, there is a general denial of the allegations and an assertion that any loss and damage was caused or contributed to by the applicant.
Defences of estoppel and proportionate liability are in similar terms to the first respondent's defence.
Lastly, a "cross-claim" is made against the applicant in similar terms to that of the first respondent.
Amy Street claim
Applicant's claim
The applicant's points of claim were filed in the Tribunal on 16 March 2011. At the hearing on 21 June 2013 the applicant also sought to amend the Amy Street claim and the Tribunal marked as MFI 2 a document entitled "Applicants Amended Points of Claim" handed up by the applicant.
In the Amy Street claim (contained in the points of claim filed 16 March 2011), the applicant contends it entered into a contract in November 2004 with each of the respondents being Diab, Maklouf and Dib. As before, Maklouf did not file a defence and has taken no steps in the proceedings. Claims have been made in contract, tort and for misleading and deceptive conduct.
In relation to the contract claim, paragraph 6 of the points of claim sets out various implied warranties which have been breached. These warranties were in the following terms:
"1. An implied warranty that all the materials provided for inclusion in the Works as part of the Services would be suitable and/or fit for purpose.
2. An implied warranty that the Services would be carried out in accordance with the drawings and specifications for, the applicable Australian Standards, and the Building Code of Australia and good building practice.
3. An implied warranty that the rendering provided as part of the Services would be provided with the required degree of skill so as to ensure that the render would properly adhere to the services to which it was applied.
4. An implied warranty that all the materials provided for inclusion in the Works as part of the Services would not corrode due to the elements.
5. An implied warranty that all the rendering provided as part of the services would be of good quality and free from defects."
As with the Macquarie Road claim, an issue arises as to whether all of these implied warranty claims are warranties found in section 18B of the Home Building Act.
In relation to the claims in tort and misleading and deceptive conduct, the nature of the claims made is similar to those in relation to the Macquarie Road claim. For present purposes it is unnecessary to set out the claims in detail other than to record that the substance of the claims are the same as the Macquarie Road claim.
Respondents' defence
The points of defence filed by the first respondent on 6 July 2011 and the third respondent on15 September 2011 are in different terms.
The first respondent (Diab) says that he performed all work in accordance with the express directions and supervision provided by the applicant and that if there were any breaches, these were a result of decisions made by and directions given by the applicant to the respondents. In relation to the claim in tort, the first respondent provides a general denial as it does in relation to the claim for misleading and deceptive conduct.
In addition, the first respondent says that the claims against all respondents were compromised and settled by the terms of the Settlement Deed with the second respondent, Maklouf.
There is no defence by way of estoppel set out in the first respondents defence filed 6 July 2011 however the document entitled "Pleading as to the Defence of Estoppel" filed 30 April 2013 seeks to raise this issue for Mr Diab in relation to the Amy Street claim.
In relation to the third respondent, Dib, he asserts that there is no jurisdiction of the Tribunal to hear the claims by reason of the fact that the Amy Street claim was lodged on 14 October 2010, more than three years after the date on which supply was made, that date being some point prior to May 2005 (which is the date by which the third respondent says the disputed works were completed.
The third respondent contends section 48K (3) of the Home Building Act applies to these proceedings. Otherwise, the third respondent pleads the Settlement Deed between the applicant and the second respondent (Maklouf) and raises defences in relation to the contract, tort and misleading and deceptive conduct claims as he did in the defence filed in relation to the Macquarie Road claim. The third respondent also raises defences by way of this estoppel and proportionate liability in the same terms as those raised in the Macquarie Road claim.
Finally, the third respondent also has a "cross-claim" against the applicant in similar terms to the Macquarie Road claim.
The expanded estoppel defence and the applicant's reply - Macquarie Road claim and Amy Street claim
The defence of estoppel is raised in both matters in the document entitled "Pleading as to the Defence of Estoppel". In the Macquarie Road claim the basis of the estoppel is set out in paragraphs 2 - 21. In the Amy Street claim, the pleading is set out in paragraphs 22 - 40. In each claim the respondents assert equity would intervene so as to estop the applicant from departing from the matters pleaded as "assumptions", thereby entitling the respondents to have the claims against them in each of the Macquarie Road claim and Amy Street claim dismissed or stayed.
The applicant filed at a reply to the defence of estoppel which is dated 10 May 2013. Aside from denying various contentions said to ground the estoppel , the applicant asserts there is no equitable estoppel arising in part or at all and/or that there is no equitable forbearance or estoppel by convention (including any estoppel by representation and/or promissory estoppel) that arises in either of the Macquarie Road claim or Amy Park claim.
There is a dispute, inter alia, about whether the estoppel asserted is in the nature of an equitable estoppel or is to be properly categorised as some other type of estoppel.
EVIDENCE
For the purpose of the application, each of the parties filed a bundle of documents, one entitled "Applicants Submissions on Respondents' Defence of Estoppel", and one entitled "Bundle of Documents" filed by the first, third and fourth respondents. Included in this material were various affidavits filed by the parties to which I will refer as necessary.
The parties sought to rely on the evidence for various purposes. Firstly, to establish that there was as a matter of fact a reasonable basis for the assertion that there had been conduct this could give rise to the allegation of estoppel. Secondly in connection with limitation issues and whether particular claims were out of time having regard to the jurisdiction of the Tribunal pursuant to section 48K of the Home Building Act and/or whether the claims were also out of time having regard to the general law limitations applicable under the Limitations Act 1969.
In relation to the estoppel claim, the factual dispute concerns conversations relating to the use of galvanised angles for the purpose of forming up the corners of the building to which render was to be applied and whether the instructions given by Mr Tony Draybi to use galvanised angles(said to be given in the face of a recommendation by the second respondent that stainless steel corners should be used) and instructions in relation to what other work should be done, could give rise to estoppels so as to prevent the applicant from recovering any damages in consequence of the failure of the rendering work carried out in accordance with the instructions given or other defects said to exist.
The evidence referred to by the respondents included statements by Michael Diab dated 24 May 2012 and 7 June 2012, a statement of Bede Diab dated 7 June 2012 and a statement of Jihad Dib dated 11 June 2012.
The effect of part of the evidence for the Macquarie Road claim was that the respondents were told to use galvanised angles and not stainless steel angles in circumstances where Mr Maklouf had allegedly said:
"Which corners do you want? The expensive ones which are the stainless, or the standard galvanised ones? It should be stainless correction it should be the stainless because it is external work."
To which Mr Tony Draybi is alleged to have said:
"No, we don't need the expensive ones because we are nowhere near the beach. Just get the normal galvanised corners."
(See for example para 32 of the statement of Mr Diab dated 24 May 2012).
The respondents contend that there were express instructions in connection with the Macquarie Road property that relieved them from any obligations arising under the contractual warranties. In connection with the Amy Street property the respondents assert they were instructed to undertake the work in the same manner as the Macquarie Road property. For present purposes it is not necessary to reference the evidence for the Amy Street claim.
It is also alleged that instructions were given relating to the thickness of render to be applied and whether rectification of work applying additional render to edges should be done.
The respondents say that in carrying out such instructions they "assumed or expected that the applicant would not at any time make any claim or exercise its strict legal rights against the respondents arising from (carrying out the instructions)" (see Pleading as to the Defence of Estoppel- para 16- Macquarie Road claim and para 34 Amy Street claim).
In relation to the issue of when the Macquarie Road works were completed, the respondents rely upon the applicant's points of claim and the statement of Mr Raymond Draybi dated 20 April 2012 to the effect that the rendering work was completed in March 2003 (see applicant's original points of claim for Macquarie Road and paragraphs 45 - 46 of Mr Raymond Draybi's statement). On the other hand, the applicant says that it is entitled to amend its points of claim to the form of MFI I which asserts that while an occupation certificate for the works was issued on 14 March 2003, the whole of the residential building works by the applicant as builder was not in fact, completed until 12 October 2004.
The relevance of this evidence and what conclusions should be reached are dealt with below.
SUBMISSIONS
Respondents' submissions
The primary position of the respondents is that the application should be transferred to the Supreme Court of New South Wales by reason of the fact that the respondents have raised a defence by way of promissory estoppel.
The respondents say that the Tribunal has no jurisdiction to hear and determine a claim involving a defence by way of promissory or equitable estoppel because it is not a court within the meaning of the Law Reform Act and that a defence based on a claim of promissory or equitable estoppel is not an equitable defence within the meaning of section 6 of the Law Reform Act. In relation to whether or not the Tribunal is a court for the purpose of the Law Reform Act the respondents rely on the decision of Smart AJ in Da Silva and Da Silva Constructions Pty Ltd v Bresond Pty Ltd & Anr (2008) 71 NSWLR 556 where His Honour concluded that the decision in Woodcrest Homes Pty Ltd v Fair Trading Tribunal [2002] NSWSC 552 should not be followed, that is the Tribunal was not a "court" and that the reasoning of Spigelman CJ in Trust Company of Australia v Skiwing (2006) 66 NSWLR 77 should be applied (see [5] and [11]).
Secondly, even if the Tribunal was a court for the purpose of the Law Reform Act, the respondents submitted that the Tribunal should follow the decisions of the Supreme Court and conclude that a defence based on equitable estoppel was not an equitable defence but rather is a substantive claim. In this regard the respondents referred to the decision of Kirby J in Taylor Farms (Aust) Pty Ltd v A Calkos Pty Ltd [1999] NSWSC 186, particularly at paragraphs [82] - [84]. The respondents also rely on the decision of Adams J in Wilson v Interhealth Energies Pty Ltd [2008] NSWSC 1137, particularly paragraphs [10]-[12].
The respondents then provided an analysis of the claims made as there is a dispute concerning whether or not the allegations were properly to be categorised as giving rise to an equitable estoppel (which on the respondents contentions were outside the jurisdiction of the Tribunal) or whether the true nature of the claim was, as the applicant contended, a variation to the terms of the original contract or an estoppel arising under common law (for which the respondents accept the Tribunal would have jurisdiction).
The respondents, in their submissions, accept that common law and equitable estoppel are separate categories. Of common law estoppel, the respondents submitted that it operates upon a representation of existing fact whereas equitable estoppel operates upon representations or promises as to future conduct, including promises about legal relations. Inter alia, the respondents relied on the authors Young, Croft and Smith in their book On Equity (2009) at [12.170] and of the statement of Brennan J at pages 428-9 in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. The respondents contend that the Pleading as to Defence of Estoppel sets out that there was an assumption of a particular legal relationship then existing that an expected legal relationship would exist and that the applicant, by its conduct, induced the respondents to adopt the assumption or expectation and that the respondents acted or abstained from acting in reliance on that assumption or expectation which the applicant knew or intended the respondent would do. The respondents then say that the applicant's action or inaction, for example its instruction to use the galvanised angles meant that any liability incurred by the respondents in compliance with those instructions would, if they were sued by the applicant, constitute a detriment occasioned by the applicant departing from the assumption or expectation.
It would seem that the assumption of the respondents was that the applicant would not at any time make a claim or exercise any strict legal rights against the respondents by reason of them complying with the direction to use standard galvanised corners rather than stainless steel corners (see Pleading as to Defence of Estoppel at paragraphs 15 and 16-Macquarie Road and paragraphs 34 and 35-Amy Street).
In relation to the decision of Rein J in Bushby v Dixon Holmes du Pont Pty Ltd [2010] NSWSC 234, which dealt with the availability of a defence by way of equitable estoppel in the District Court of New South Wales, the respondents say that the Tribunal should not adopt the approach of Rein J because His Honour did not conclude that the decision in Taylor Farms was plainly wrong and, as a matter of the judicial comity and precedent a single judge has a duty to follow the decisions of another single judge in relation to the same legislation unless the interpretation is plainly wrong. Further, the respondents contend that Rein J's decision did not rest upon a view concerning Taylor Farms but rather that there would be a lack of practical utility in making the orders sought.
The respondents also made submissions concerning whether or not particular claims brought by the applicant in each of the Macquarie Road and Amy Street claims were out of time. At paragraph 18 of this submissions dated 17 June 2013 the respondents set out a summary of the limitation periods they asserted are applicable to the Macquarie Road proceedings (which were commenced on 28 October 2010) and the Amy Street proceedings (which were commenced 14 October 2010.
In relation to the Macquarie Road proceedings, the respondents contend that the claims in contract (excluding any statutory warranty claims), in tort and for misleading and deceptive conduct were outside the jurisdiction of the Tribunal by reason of section 48K(3) of the Home Building Act. In this regard the respondents contend that such claims in the Tribunal were required to have been brought no later than 14 March 2006. In relation to the statutory warranty claims, the respondents pointed to an issue whether sections 48K(3) or section 48K(7) of the HBA should apply. In any event, the respondents contend that the seven-year period applicable under section 48K(7) of the HBA required any proceedings to be commenced not later than 14 March 2010.
In these circumstances, the respondents contended that all claims in relation to Macquarie Road applications were, by reason of time, outside the jurisdiction of the Tribunal to determine.
In relation to the capacity of the applicant to maintain the proceedings in court, the respondent made the following submissions.
In relation to the claim in contract (excluding any statutory warranty claims) a six-year limitation period applied. As the cause of action must have accrued at some time prior to completion of the work in 2003 the six year period had expired. In this regard it is noted the relevant date specified by the respondents was not later than 14 March 2006 however this appears to be an error and should have read 14 March 2009.
In relation to the claim in tort, no assertion is made that the claim is out of time. However, the respondents say that no duty of care was owed. In this regard the respondents reply on a decision of McDougall J in Owners Corporation Strata Plan 72535 v Brookfield [2012] NSW SC 712 ("Brookfield") and a decision of the Tribunal in Owners - Strata Plan 69050 v Glenzeil Pty Ltd [2013] NSWCTTT 17 (at [233] - [244]). Further, the respondents assert that the applicant in the present case had a direct contractual relationship with the respondents and therefore could, if it chose to do so, bargain for express contractual terms to protect its position and, in the circumstances, its degree of vulnerability (or lack thereof). Therefore, the respondent's contend that the decision of the High Court in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] 216 CLR 515 would preclude the imposition of a duty of care in the present circumstances.
In relation to the claim of misleading and deceptive conduct, no suggestion is made that such a claim is out of time at general law however the respondents contend that no proper claim for relief has presently been made and, on the evidence presently filed, the application is "hopeless and unsupported".
In relation to the statutory warranty claim, for the reasons outlined above the respondents contend this claim is out of time whether or not the Macquarie Road proceedings are transferred to a court.
In relation to the Amy Street proceedings, again the respondents contend that the claims in contract (excluding statutory warranty claims), tort and for misleading and deceptive conduct are out of time - the relevant period for bringing a claim within the jurisdiction of the Tribunal expiring no later than 23 May 2008. In relation to the statutory warranty claim, the respondents accept this is within time if the provisions of section 48K(7) of the HBA apply, the relevant time period expiring 23 May 2012, well after the present proceedings were commenced in 2010.In relation to the Amy Street proceedings, if they were transferred to a court, the respondents accept that all claims are within time however the respondents also maintain their position that no duty of care could be owed in the present circumstances and that the claim for misleading and deceptive conduct is hopeless and unsupported and cannot be maintained. Applicant's submissions
In reply to the respondents submissions the applicant contends that, on the face of the pleading, estoppel does not arise. Rather, the applicant contends that "at its highest the so called "promise" alleged... is no more than a variation of the contract terms which existed between the parties." (Applicant's submissions dated 11 June 2013 at paragraph 7).
As to the question of whether or not the Tribunal is a court for the purpose of the Law Reform Act, the applicant contends the Tribunal falls within the definition of an inferior court. The applicant refers to the decision of Hope JA in State Rail Authority v Consumer Claims Tribunal and others (1988) 14 NSWLR 474 at pages 478-480. In relation to the decision of Kirby J in Taylor Farms and Adams J in Wilson (referred to above) the applicant does not suggest that these decisions determined that the Tribunal was not a court within the meaning of the Law Reform Act. The Applicant accepts in its written submissions dated 11 June 2011 that the jurisdiction conferred by section 6 of the Law Reform Act does not extend to promissory estoppel (see paragraph 53). However, its position was different in oral argument (see below).
In any event, the applicant contends that the proceedings ought to remain in the Tribunal and that the mere assertion of an equitable defence, not supported by evidence, is not sufficient to allow for the transfer of proceedings to a superior court (applicant's submissions dated 11 June 2013 at paragraph 199).
Further, the applicant contends that the decision of Rein J in Bushby should be followed, namely that if the Fair Trading Act provides similar relief for the respondents then an attempt to remove the proceedings by the respondents should be declined.
As indicated above, in oral submissions the applicant appeared to alter its position and embrace the reasoning of Rein J, namely it is necessary to determine what a claimant or defendant is seeking in order to categorise the nature of the claim being made and what relief is sought and that a defence based on equitable estoppel is a defence within the meaning of the Law Reform Act.
Further, in oral submissions the applicant contended that neither the decision in Skiwing nor the decision in Da Silva meant that the Tribunal in the present case was not an inferior court for the purpose of the Law Reform Act. Rather, the applicant submitted that each of the decisions of the Court of Appeal and Smart JA respectively dealing with whether or not a tribunal was a court was for the purpose of relevant Commonwealth legislation.
In relation to the limitation issue, the applicant contends that the breach of statutory warranty claims need to be commenced within 7 years from completion of the works in accordance with section 48K(7) of the Home Building Act.
For the purpose of the Home Building Act, the applicant submits that completion means "the totality of the works". (See applicant's submissions dated 11 June 2013-paragraph 150). In the case of the Macquarie Road project, the relevant date of completion is said to be 12 October 2004 and submissions were made by the applicant as to why the date 14 March 2003 for completion of the works was not applicable.
In relation to the claims under the Fair Trading Act and Trade Practices Act the applicant contends a six year period applies (applicant's submissions dated 11 June 2013 - paragraph 173 and following).
In relation to a claim made in tort the applicant submits that the "six year time bar must remain operative. Section 48K(3) cannot oust the operation of section 14(1)(b) of the Limitation Act as appears to be submitted by the (respondents). As identified at [104] of Glenzeil, the issue is whether the claim has been brought within the six year time limitation period. Draybi submit that it has done so." (Applicants submissions dated 11 June 2013 - paragraph 183).
In relation to whether or not a duty of care existed in the present circumstances, the applicant submits that the present case is distinguishable from the facts in both Woolcock and Brian v Maloney [1995] HCA 36. (See applicant's submissions in reply filed 19 June 2013 - paragraph 21 and following). Further, the applicant sought to distinguish the decision of McDougall J in Brookfield because the duty being considered in the present cases arise between the builder and subcontractor, not the builder and a successor in title. The applicant also submits that the defects were latent and that if no duty was imposed the applicant would "require a small army of professional and otherwise qualified staff to supervise every aspect of the design and construction work undertaken". Lastly, the applicant submits that there was "a sufficient relationship of proximity" as described by the majority in Brian v Maloney (see applicant's supplementary submissions dated 28 June 2013 - paragraphs 18-21).
Finally, on the issue of whether or not the applicant can advance a claim in tort by reason of the decision of McDougall J in Brookfield, the applicant submits that such a decision should await an outcome of the appeal of the Brookfield decision to the Court of Appeal (applicant's submissions for July 2013).
The Court of Appeal has subsequently dealt with another appeal from a decision of McDougall J involving Brookfield relating to a different strata property at Chatswood- being Owners Corporation Strata Plan 61288 v Brookfield Ltd [2012] NSWSC 1219. The Court of Appeal decision is The Owners - Strata Plan No 61288 v Brookfield Australia Investments Ltd [2013] NSWCA 317.
DECISION
The first matter for determination is whether or not the Tribunal has jurisdiction to hear and determine a claim in which equitable estoppel is raised by way of points of defence.
It is common ground that the Tribunal does not have a general power to grant equitable relief. However, the question is whether the Tribunal is an inferior court within the meaning of the Law Reform Act and if so, whether the claim of equitable or promissory estoppel is an equitable defence within the meaning of that section. Section 6 is in the following terms:
6. Defence in inferior court.
Every inferior court shall in every proceeding before it give such and the like effect to every ground of defence, equitable or legal, in as full and ample a manner as might and ought to be done in the like case by the Supreme Court under the Supreme Court Act 1970 .
As to the issue of whether or not the Tribunal is a court, the question was considered in relation to a predecessor to the Consumer Trader and Tenancy Tribunal, the Consumer Claims Tribunal by the Court of Appeal in State Rail Authority of New South Wales v Consumer Claims Tribunal and others (supra). In that case, Hope JA, with whom Samuels and Clarke JA agreed that the Consumer Claims Tribunal was a court exercising judicial powers.
The question of whether a tribunal was an "inferior court" under the Law Reform Act was considered by Kirby J in Taylor Farms. In that case His Honour concluded:
"Neither the Commercial Tribunal Act 1984, nor the Retail Leases Act 1994 specifically confer equitable jurisdiction upon the Tribunal. However, the Law Reform (Law and Equity) Act 1972 does confer limited equitable jurisdiction upon inferior courts. The Commercial Tribunal is, for the purpose of that Act, an inferior court (State Rail Authority of New South Wales v Consumer Claims Tribunal...)".
However, the respondents contend that these authorities should not now be followed having regard to the decision of the Court of Appeal in Skiwing and the decision of Smart AJ in Da Silva
.
Skiwing involved the issue of whether or not the Administrative Decisions Tribunal was a "court of the State" for the purpose of exercising jurisdiction under the Trade Practices Act, 1974. In delivering his judgement, Spigelman CJ expressed the following opinion:
"17. It is well established on the authorities that the word "court" has a protean quality and takes its meaning from its context. Various forms of quasi-judicial tribunal will fall within the concept of a "court" as that word is used in particular statutes. In the present case the statute has a constitutional overlay."
After considering the indicia of the Administrative Decisions Tribunal Act in support of the proposition it was a "court of the State" and those indicia operating against such a proposition His Honour said:
"29. For many purposes, the Tribunal would have sufficient of the characteristics of a court to answer the statutory provisions relating to "courts". However, the constitutional expression "court of a State" picked up in section 86 (2) of the Trade Practices Act, adopts a more stringent requirement than may be intended by the State Parliament when using the word "court" in a statute. The issue arises under a Commonwealth statute, which invokes section 77 (iii) of the Constitution."
Accordingly, His Honour concluded that the Administrative Decisions Tribunal was not a "court of a State".
The reasoning of Spigelman CJ was examined by Smart AJ in Da Silva. That case involved the question of whether the Consumer Trader and Tenancy Tribunal was a court for the purpose of making an order for security for costs under section 1335 of the Corporations Act 2001 (Cwlth). Smart AJ at [11], concluded that the attempt to distinguish the basic reasoning of Spigelman CJ in Skiwing was not successful. Further, His Honour concluded at [16] that "Having regard to the constitution of the Tribunal and the related matters as to tenure or lack of tenure the Tribunal cannot be regarded as a court."
In doing so His Honour declined to follow the decision of Bell J in Woodcrest Homes Pty Ltd v Fair Trading Tribunal and others [2002] NSWSC 552.
Woodcrest also involved the question of whether the Tribunal could order security for costs against Woodcrest pursuant to section 1335 of the Corporations Law. Bell J concluded the Tribunal could make such an order. Her Honour said:
"16. The Tribunal has been vested with power to determine disputes between citizens settling for the future the existence of rights and obligations. It approaches the determination of claims before it by ascertaining the law and applying it to the facts as it finds them to be. Its determinations are immune from traditional forms of review pursuant section 60 of the FTT Act. These factors indicate that the Tribunal is exercising judicial power and is properly categorised as a court.... "
Her Honour cites with approval the decision in State Rail Authority (supra) of Hope JA. While it is true that Her Honour at [25] indicated that the defendant did not contend the Fair Trading Tribunal was not a court, it seems clear from the passage at [16] that Her Honour did turn her mind to the issue of whether or not the Fair Trading Tribunal was in fact a court and concluded that it was a court. However, Her Honour did not have the benefit of the reasoning of the Court of Appeal in Skiwing which related to whether a Tribunal was a "court of a State" for the purpose of Commonwealth legislation.
This matter is one reason for Smart AJ departing from the decision in Woodcrest.
On the other hand, it is difficult to reconcile the view expressed by Smart AJ in Da Silva with the decision in Taylor Farms. Clearly Kirby J concluded the Commercial Tribunal (which was a predecessor of and had the same or similar attributes of the Consumer Trader and Tenancy Tribunal) was a court for state purposes- in particular the Law Reform Act.
Also, Da Silva appears at odds with the decisions of the Court of Appeal, particularly that of Hope JA in State Rail Authority and does not appear consistent with the reasoning of Spigelman CJ at [29] in Skiwing where the Chief Justice considered indicia similar to those set out by Smart AJ (Skiwing at [26]- [27]) and accepted that the Administrative Decisions Tribunal could be a court for State purposes.
In these circumstances, the decision of Smart AJ can be reconciled with the Court of Appeal decisions and Taylor Farms if one confines the decision to the meaning of a court for the purposes of exercising federal jurisdiction under the Corporations Act to order security for costs.
In my opinion, the issue of whether a Tribunal is a court needs to be determined in the context of the relevant legislation being considered. Presently, that is both the Law Reform Act and the Consumer Trader and Tenancy Tribunal Act.
The Tribunal is required to determine issues before it according to law. As indicated by Hope JA, when referring to an earlier decision of Yeldham J in Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 at 321, the Court of Appeal accepted that the Tribunal "is not concerned with "palm tree justice"" and "the Tribunal must act in accordance with and must apply the general law in determining the claim which has been made to it": see Hope JA in State Rail Authority at page 477. The authorities make clear the Tribunal is exercising judicial power. Hope JA accepted that the Consumer Claims Tribunal exercised judicial power (at 478D). The Consumer Trader and Tenancy Tribunal Act provides in section 28(3) that the Tribunal is to act "according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms". While this may be a general statement of the approach to be taken by the Tribunal where the rules of evidence do not apply, it suggests that issues of equity must be considered.
Section 5 of the Law Reform Act provides that the rules of equity prevail over the rules of common law where a conflict or variance occurs in connection with any dispute. This is a requirement of the Law Reform Act. The grant of equitable relief is not a precondition to this statutory provision. Section 6 provides equitable defences available in the Supreme Court are also to be available in inferior courts.
It would be a curious result that the Tribunal, when exercising judicial power and determining disputes according to law, should disregard the requirement expressed in section 5 of the Law Reform Act. On the other hand, section 5 can only be given effect if any equitable defence relevant to a claim is accounted for in exercising the judicial power conferred. This necessarily leads to the conclusion that the parliament intended that a Tribunal exercising judicial powers and making determinations according to law is a court for the purpose of section 6 of the Law Reform Act.
Having regard to these matters, in my opinion the Consumer Trader and Tenancy Tribunal is an inferior court within the meaning of the Law Reform Act.
The next question is whether or not a defence of equitable estoppel is a "ground of defence, equitable or legal" within the meaning of section 6 of the Law Reform Act or whether it is, by its nature (whether raised as a defence or as a positive claim) a claim for equitable relief.
Again, there is conflicting authorities from single judges of the Supreme Court of New South Wales. Those decisions to the effect that an equitable defence is a substantive claim and outside the operation of section 6 of the Law Reform Act are the decisions of Taylor Farms and Wilson- which follows the decision in Taylor Farms.
However, the decision of Rein J in Bushby is to the contrary. In that case, having set out the passages of Kirby J in Taylor Farms, Rein J said (at [25]) "it is clear that Kirby J in Taylor Farms did not take the view that promissory estoppel could not be used as a shield... But rather his Honours view was that if the tribunal did not have the remedy of injunction open to it, this would circumscribe the options available."
His Honour went on to say of Kirby J's decision that;
"25. ... His Honour felt that a defendant should not be able to constrain the relief that a court might give by raising it in the inferior tribunal but, with respect, I do not see why it is not open to a defendant to do just that, provided what is advanced and the relief sought is within the jurisdiction of the relevant tribunal or court.
26. If promissory estoppel is not a defence but is properly characterised as an equitable claim for injunctive relief with the possibility of damages in lieu, as Mr Handley propounds in his book, then it follows that section 6 of the Law Reform Act does not empower the District Court to deal with it as a defence...
27. I acknowledge the considerable respect due to anything written by Handley AJA (as he is now), but I am disinclined to accept the view that promissory estoppel cannot be included as a defence, and I do so for the following reasons...
28. It follows, in my view, that a defendant can plead promissory estoppel as a defence. I then need to deal with the question of whether section 6 of the Law Reform Act gives the District Court jurisdiction to deal with the equitable defence.
His Honour made reference to the English decision of Kingswood Estate Co Ltd v Anderson [ 1963] 2 QB 169 in which the English Court of Appeal upheld a County Court decision to give effect to an equitable defence, notwithstanding the County Court had no jurisdiction to grant specific performance (at [29]). Rein J then said:
"30. In Yahl, Master Allen, as His Honour then was, discussed Kingswood and noted that the learner authors of RP Meagher, WMC Gummow, and J RF Lehane, Equity Doctrines and Remedies (2nd edition, 1984), Butterworths, Sydney, contended that the equitable forms of defence referred to in section 6 of the Law Reform Act and its analogues should be given a more limited meaning, that is matters such as unclean hands all laches. Master Allen felt it unnecessary to decide the point, but held that "reliance", equitable estoppel and promissory estoppel were all within the category of defences that did not require independent relief. In Batley, Bruce J held that a defence of equitable estoppel could be dealt with by the Local Court.
31. ... I too do not need to determine whether Kingswood was correctly decided in relation to the Walsh v Lonsdale point, but the approach taken by the English Court of Appeal provide support for the view that section 6 of the Law Reform Act should not be read down, and with respect to those who hold a different view, I do not accept that the words of section 6 of the Law Reform Act should be read narrowly.."
Of the decision of Adams J in Wilson (supra) Rein J said:
"32... His Honour seemed to hold that promissory estoppel is a defence not a claim. If equitable estoppel used as a shield is an equitable defence, then section 6 of the Law Reform Act requires full effect to be given to it by the District Court (and see United Telecasters). I am of the view that in a case where it is the defendant that asserts promissory estoppel, it is in fact an equitable defence to which the District Court is empowered and required by section 6 to give full effect. It can be seen by section 7 of the Law Reform Act that the power of the District Court to grant relief is not expanded by virtue of section 6, but should the District Court come to the view that the only appropriate relief is injunctive relief, section 7 of the Law Reform Act specifically permits it to grant the relief it is able to give, subject to terms and conditions, or to postpone the grant of relief. ....
33. I am of the view that Yahl and Batley were correctly decided, and therefore the District Court does have jurisdiction to deal with a defence of promissory estoppel by virtue of section 6 of the Law Reform Act.
34. I accept that a defendant could choose to issue a cross-claim to assert estoppel seeking injunctive relief, and that if pleaded that way, there is a lack of jurisdiction in the District Court to grant that relief. The conclusion that a claim for promissory estoppel cannot be heard in the District Court if pleaded as a cross claim is a most unfortunate one from a practical point of view, and it may be desirable that amendment been made to the DCA giving the District Court express power to grant an injunction in any claim for promissory estoppel. The position is even more deserving of attention if it be correct that even a defence of promissory estoppel cannot be entertained in the District Court."
Rein J then dealt with what might happen if a cross claim were filed and how the District Court might transfer the proceedings to the Supreme Court which might, in turn, transferred back to the District Court the proceedings so as to enliven an enlarged jurisdiction by reason of section 144 of the Civil Procedure Act. For present purposes, these comments are not relevant.
In my view, what is clear from the above is that His Honour did conclude that a defence of promissory estoppel is a defence within the meaning of section 6 of the Law Reform Act.
The analysis of Rein J is, in my respectful opinion, correct and should be followed by the Tribunal. This is because where such a defence is successful, the consequence in proceedings in which the plea is raised as a defence is that the inferior court does not grant the remedy sought by the applicant/plaintiff and the withholding of a remedy is not properly to be considered granting equitable relief by way of remedy to the other party. Rather, it is in the nature of denying, postponing or granting limited relief (effectively "on terms and conditions") to the applicant/ plaintiff. No order is made in favour of the respondent/ defendant. This is consistent with section 7 of the Law Reform Act which does not extend jurisdiction to allow the grant of equitable relief but does allow the inferior court to "postpone the grant of relief, or grant relief (in favour of an applicant or plaintiff) subject to such terms or conditions of the nature of the case requires."
Accordingly, I conclude that the Tribunal does have jurisdiction to determine a defence of equitable estoppel.
In passing, I note there was considerable argument about whether the defence was indeed one of equitable or promissory estoppel or whether it is one of common law estoppel or merely an assertion the contract had been varied. For present purposes it is not necessary to resolve this debate or to rule on the issue of whether the defence can be made out. The evidence and a consideration of what occurred is relevant to determine the substantive issue and such an enquiry is inappropriate at this time.
Accordingly, the application for transfer because the Tribunal has no jurisdiction to hear a claim involving a defence by way of equitable estoppel is not successful.
For reasons that the Tribunal identified at the directions hearing, that is not an end of the matter.
As indicated above, there are claims under the Trade Practices Act (the Australia Consumer Law is not applicable to this claim), claims under the Fair Trading Act, claims in negligence and claims for breach of contract (which may not be claims for breach of the statutory warranties) which the respondents submitted are not within the jurisdiction of the Tribunal by reason of section 48K of the HBA. For the purpose of disposing of this application it is sufficient to look at one of the classes of claim alleged in the alternative to the statutory warranty claims, namely the claims in negligence in each of the Macquarie Road and Amy Street proceedings. The reason for considering this class of claim is that causes of action based on negligence accrue when the party suffers damage. In this case the applicant asserts this occurred well after the works, when the successors in the title (the Owners Corporation of each of the strata plans for Macquarie Road and Amy Street) make claims against the applicant builder.
There are significant disputes concerning whether or not the particular duty of care asserted in each case existed as a matter of fact, whether such duty in each case had been breached and when such breach occurred. These are matters ordinarily to be dealt with at a final hearing.
However, the Tribunal must consider whether it has jurisdiction to hear and determine such disputes. It is both appropriate and convenient to do so as part of the present application to transfer in order to avoid the possibility that the matters proceed to a final hearing on all issues with the prospect that the Tribunal concludes it has no jurisdiction in the proceedings necessitating a further consideration of the issue of transfer.
Section 48K of the HBA provides the Tribunal has jurisdiction to determine building claims, the limit of that jurisdiction being claims not exceeding $500,000. However there are time limits for the lodgement of applications affecting the Tribunal's jurisdiction which do not coincide with general law limitation periods applicable to particular claims. Where, by reason of the limitations in s48K the Tribunal has no jurisdiction to hear a case, the Tribunal may transfer the application to a court which has jurisdiction: see section 23 of the Consumer Trader Tenancy Tribunal Act. Prior to making an order for transfer it is necessary for the Tribunal to consider whether there is an action maintainable in the court so as to make such a transfer appropriate, or whether the application should otherwise be dismissed.
For example, the Tribunal has jurisdiction to hear a claim for breach of statutory warranty if brought within a period of 7 years (see sections 18 E and 48K(7)). If the time to bring such a claim had expired, neither the Tribunal nor a court has the power to make an award of damages and so the claim should properly be dismissed because there is no entitlement to bring such claim beyond the period of 7 years specified in s18E of the Home Building Act. On the other hand, various limits apply to the Tribunal's jurisdiction to hear non-statutory warranty claims which do not coincide with the general law limitation periods that are applicable to court proceedings. For example, a building claim brought in the Tribunal relating to building goods or services that are required under a contract to be supplied to a claimant within a specified period can only be brought in the Tribunal if lodged not more than 3 years after the date on which the supply was required under the contract, whereas a court would ordinarily have 6 years from the date of any breach of contract to hear and determine such claim. In these circumstances, the lack of jurisdiction of the Tribunal may make it appropriate for proceedings to be transferred to a court of the jurisdiction.
In addition to considering any jurisdictional limits applicable by reason of time limitations, which might justify transfer of the applications to a court, the Tribunal should also be satisfied the claim which is proposed to be transferred is otherwise maintainable at law. If not, then the Tribunal properly exercising its discretion should, in my opinion, dismiss the application rather than transfer the proceedings to a court.
Section 48K and whether a claim in negligence was maintainable at law were dealt with by me in the decision of Glenzeil (supra).
As indicated above, the parties made detailed written submissions concerning the proper interpretation of section 48K. The respondent contended that section 48K(3) was the applicable time limit for the Tribunal's jurisdiction for claims in tort. Section 48K(3) provides as follows:
(3). The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to all 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).
The respondents submitted (at paragraph 22 of their submissions dated 7 June 2013) that the views I expressed in relation to a claim by an owners corporation in respect of claim in negligence do not apply to the present situation "because the renderers clearly provided rendering services to the claimant. Section 48K (3) therefore applies".
The applicant's submissions primarily address the issue of whether or not section 48K of the HBA provides a defence or a bar to the claims which have been made. However they do not directly address the issue of whether or not the Tribunal has jurisdiction to hear and determine a claim. This is a different question to whether or not a court of competent jurisdiction has jurisdiction to hear the claim for which applicable general law limitation periods must be addressed and applied.
The applicant correctly identifies that section 48K does not fix a general limitation period for the bringing of the claim. This is found elsewhere. In the case of general law claims, the Limitation Act, 1969 is applicable. In respect of statutory warranty claims under the Home Building Act, the Home Building Act specifies the time within which proceedings must be commenced. This is found in section 18E of the HBA (as that legislation existed at the relevant time) which provides that:
18E Proceedings for breach of warranties
(1) proceedings for a breach of a statutory warranty must be commenced within 7 years after:
(a) the completion of the work to which it relates, or
(b) if the work is not completed:
(i) the date for completion of the work specified ward determined in accordance with the contract, or
(ii) if the is no such date, the date of the contract.
While the Tribunal is to be chiefly responsible for resolving building claims (see section 48L of the HBA) the jurisdictional limits applicable by section 48K of the HBA apply to limit the time within which the Tribunal can hear and determine particular claims (as opposed to the time in which a claimant may otherwise bring the action in a court of competent jurisdiction.
Accordingly, the issue remains as to whether or not the provisions of section 48K limit the jurisdiction of the Tribunal to hear and determine a claim in tort.
It is common ground that a claim in negligence is capable of being a building claim for which the Tribunal has jurisdiction. In my opinion this is clear from the decision of the Court of Appeal in Grygiel v Bain & others [2005] NSWCA 218 (per Basten JA at [62]).
In the present case, the duty of care asserted by the applicant arises in relation to the obligations of the respondent subcontractor renderers in the supply of services to the applicant builder under a contract. There is no regulation otherwise excluding such matters as building claims under the HBA. Accordingly, I am satisfied the claim in negligence is a building claim.
The real issue is whether or not section 48K (3) or 48K (8) applies to limit the jurisdiction of the Tribunal to hear this claim.
In Glenzeil I concluded that section 48K (3) did not provide a limitation on jurisdiction for the Tribunal to hear and determine a building claim being a claim in negligence by an Owners Corporation (see paragraph 146). In reaching that conclusion I said:
"142. It seems to me that a claim in negligence is not a building claim relating to goods or services that have been supplied "to" the Owners Corporation in the present case. Rather the claim relates to goods and services supplied to the developer by the builder.
143. Further, it seems to me that a claim in negligence does not relate to building goods or services that have been supplied "for" the Owners Corporation.
144. It is correct that the nature of these building works was the construction of a multi-unit development which was to become part of a registered strata plan, in consequence of which the Owners Corporation would receive the benefit of that part of the building goods and services relating to the construction of the common property. However in my opinion... the expression "supplied to or for the claimant" relates to a claimant to whom the original supply of building goods or services has been made or for whom it has originally been made.
145. A successor in title never receives the supply of goods or services nor can it be said the supply was "for" the successor in title."
In the present case, the dispute is between the builder and the respondent subcontractor renderers. Unlike the position of the Owners Corporation in Glenzeil, goods or services have been supplied by the respondents to or for the applicant builder. It is in connection with the supply of these goods and services that the applicant contended a duty of care was owed. Therefore the provisions of section 48 K(3) applies to limit the jurisdiction of the Tribunal to hear and determine only those claims lodged within 3 years after the date on which the supply by the respondents to the applicant was made. Having regard to the date on which each of the Macquarie Road and Amy Street applications were lodged, it seems to me that both applications were lodged after the relevant dates and therefore the Tribunal has no jurisdiction to hear and determine these building claims. In that regard I am satisfied that:
(a) In the case of the Macquarie Road claim the supply was no later than March 2003 [see Raymond Draybi affidavit sworn 20 April 2012 at paras 44-46 and Tony Draybi affidavit sworn 5 October 2012 at para 105]; and
(b) in the case of the Amy Street claim the supply was no later than May 2005 [see Raymond Draybi affidavit sworn 20 April 2012 at paras 59-61 and Tony Draybi affidavit sworn 5 October 2012 at para 189]
The next issue is whether, by reason of the conclusions I reached in Glenzeil a claim in negligence is maintainable at law. If not, it would be inappropriate to transfer such proceedings to a court.
In passing, I note it is unnecessary to determine the factual issue of whether or not the claim in negligence has been brought within the general limitation period applicable as the respondents concede both the Macquarie Road and Amy Street claims in negligence have been brought within such limitation period and/or is a matter for trial (see the table at paragraph 18 of the respondents' submissions dated 7 June 2013.
In Glenzeil I determined that such a claim was not maintainable at law.
In reaching that conclusion I had analysed the decisions of the High Court in Bryan v Maloney, Woolcock and Perre v Apand Pty Ltd (1999) 198 CLR 180. Such analysis requires a court or tribunal to consider the contractual arrangements between the parties and whether or not, having regard to principles of vulnerability, the particular contract by its terms precludes the imposition of a duty of care and whether such a duty can exist concurrently with any contractual obligations: see Astley and others v Austrust Ltd 161 ALR 151.
Such matters, if they were arguable, would militate in favour of transferring the proceedings to a court because the nature and extent of any duty of care owed is a matter properly determined at trial. This is particularly so in the present circumstances where there is a contractual arrangement constituted by an oral agreement, terms implied by statute and various correspondence and oral communications between the parties which might constitute variations.
The only reason not to transfer the proceedings is because such a cause of action is not maintainable at law.
In Glenzeil I concluded that an owners corporation/successor in title could not maintain such a claim because, inter alia, by the decision of McDougall J in Owners Corporation Strata Plan 72535 v Brookfield Ltd [2012] NSWSC 712, I was bound to conclude that where statutory warranties were available to an owners corporation/ successor in title, no duty of care is owed at law. This was the submission made by the present respondents in support of the contention that the proceedings should not be transferred (respondents submissions dated 7 June 2013 - paragraph 24).
The respondents also submitted:
"25. It should also be noted that, unlike the position of an owners corporation or subsequent owner vis-a-vis a builder, the applicant in the present case had a direct contractual relationship with the renderers and therefore could, if he so chose, bargain for express contractual terms to protect its position and, in the circumstances, its degree of vulnerability (or lack thereof) falls within the scenario discussed by the High Court in Woolcock...
26. It would follow that the negligence claim is doing to file both in the Tribunal and any other Court, which would weigh against transferring the proceedings and in favour of dismissal."
The applicant submitted that any decision on this aspect should await the decision of the Court of Appeal in the Brookfield litigation.
Subsequent to the parties finalising their submissions, the Court of Appeal has delivered a decision in the Owners-Strata Plan No 61288 v Brookfield Australia Investments Ltd (supra). In overruling the decision of McDougall J in Owners-Strata Plan No 61288 the Court of Appeal determined:
(a) that a duty of care could arise concurrently with any contractual obligations, particularly where there was no express term of the contract to exclude such a duty (per Basten JA at [91]-(98).
(b) that the plurality of the High Court in Barclay v Penberthy 246 CLR 258 had concluded "the presence or absence of a claim in contract would not be determinative of a claim in tort" (per Basten JA at [38]) and that this approach should be followed, notwithstanding it is difficult to reconcile with the decision of the plurality in Woolcock (per McFarlane JA at [139]).
(c) that the statutory warranties under the Home Building Act conferred various rights upon parties to the contract (and successors in title) which could not be restricted or removed by agreement (per Basten JA at [104];
(d) that where statutory warranties apply to the whole of the work there is no basis to conclude that this fact alone affected the commercial basis upon which any work was priced (Basten JA at [99].
(e) that it was necessary to analyse whether a party was "vulnerable" as that expression has been explained by the High Court; and
(f) that each case must be analysed in terms of the claims made, whether or not it might be a novel application (per Basten JA at [107] and Leeming JA at [146].
Further, Macfarlan JA concluded that the warranties imposed by Part 2C of the Home Building Act were intended to supplement, rather than limit existing rights of parties (at [134]).
Having regard to the above, it seems to me that the view I expressed in Glenzeil for rejecting the existence of a duty of care based on the earlier decisions of McDougall J should not be followed. Rather, a proper analysis of the facts and allegations made in this case may result in a court with appropriate jurisdiction concluding that a duty of care was in fact owed by the respondents to the applicant and that such duty has been breached. Whether or not such duty in fact exists and/or has been breached is a matter for final hearing. It is sufficient to conclude that the claims are arguable at law and that these applications should be transferred to a court of competent jurisdiction because the Tribunal does not have jurisdiction to hear and determine the claims made.
The next question is to which court should the proceedings be transferred?
One claim is within the jurisdiction of the District Court of New South Wales (Amy Street - $235,670.60) and one is within the jurisdiction of the Local Court of New South Wales (Macquarie Road claim - $40,285.30): see applicant's submissions dated 11 June 2013. While orders could be made to separate these proceedings and transfer one to the District Court and one to the Local Court, the disputes involved common questions of fact. For example, the respondents contend that the assumptions from which the estoppel is are said to arise in the Amy Street claim arose in consequence, in part, from conversations and instructions given in connection with performance of works under the Macquarie Road project. Accordingly, there will be common witnesses and issues of fact arising in respect of each of the claims and it would be undesirable to have the same issues litigated in two claims in different courts.
The second consideration is that there is a "cross-claim" found in each of the defences, although as I have noted above, no separate application has been filed in respect of each cross claim and there is no procedure in the Tribunal which allows a party to make such a cross claim in that form in a home building claim. The size of the potential cross-claim is unclear. However the relief claimed is by way of damages and is likely to be within the jurisdiction of the District Court.
In my opinion, both matters may conveniently be dealt with in the District Court and I am satisfied it is appropriate to make an order transferring both proceedings to the District Court of New South Wales pursuant to section 23 of the Consumer Trader and Tenancy Tribunal Act.
While the respondents might again seek to agitate the issue of jurisdiction to hear a defence based on the grounds of equitable estoppel, having regard to the decision of Rein J in Bushby it seems to me the District Court would have jurisdiction to hear and determine both claims. Any further issues can be dealt with by the District Court.
In relation to the issue of costs, each party has had some success. My preliminary view is that the costs of this application should follow the event and await the final determination of the dispute between the parties.
In the event either party contends for a different order for costs, they should make a written application to the Tribunal within 14 days from the date of publication of these reasons, such application to be supported by written submissions and any evidence.
ORDERS
Applications HB 10/47685 and HB 10/47969 are transferred to the District Court of New South Wales that has jurisdiction in the matters, to continue before that Court as if they had been instituted there.
Any application for costs is to be made to the Tribunal within 21 days of the date of publication of these orders and reasons, accompanied by submissions and any affidavits in support, and the applications thereafter listed for directions.
In the event no applications for costs are made, the Tribunal orders that the costs of the applications to transfer the proceedings shall follow the event.
M Harrowell
Principal Member
Civil and Administrative Tribunal of New South Wales
31 January 2014
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
**********
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Decision last updated: 31 July 2014
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