FAI General Insurance Co Ltd v Jameson

[2000] NSWSC 1032

CITATION:	FAI General Insurance Co Ltd v Jameson & Ors [2000] NSWSC 1032 revised - 22/11/2000
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	SC 30056/00
HEARING DATE(S):	31 October 2000, 1 November 2000
JUDGMENT DATE:	31 October 2000
PARTIES :	FAI General Insurance Company Limited (Plaintiff) Gregory Jameson (First Defendant) Tracey Jameson (Second Defendant) Fair Trading Tribunal (Third Defendant)
JUDGMENT OF:	Adams J at 1

LOWER COURT JURISDICTION :	Fair Trading Tribunal
LOWER COURT FILE NUMBER(S) :	BU 1999/759
LOWER COURT JUDICIAL OFFICER :	Mr S Forbes

COUNSEL :	Dr G Flick SC with Mr R Hollo (Plaintiff) Mr A J J Thompson (First & Second Defendants) Mr R N Gye (Third Defendant)
SOLICITORS:	Phillips Fox (Plaintiff) North & Badgery (First & Second Defendants) I V Knight (Third Defendant)
LEGISLATION CITED:	Home Building Act 1989 Fair Trading Tribunal Act 1998 Fair Trading Tribunal Regulation 1999
DECISION:	See paragraphs 19 and 20

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ADAMS J

TUESDAY 31 OCTOBER 2000

30056/2000

FAI GENERAL INSURANCE COMPANY LIMITED

v GREGORY JAMESON AND OTHERS

JUDGMENT

1 HIS HONOUR: Mr and Mrs Jameson built a house. Certain defects became apparent. They claim that these defects require the house to be demolished and rebuilt. They made a claim against FAI General Insurance Company Limited (FAI) for indemnification in respect of the cost of that demolition and rebuilding. FAI is of the opinion that the house is not so seriously defective as to warrant the extreme step of demolition but considers that the defects which have become apparent can be corrected by the builder who, indeed, has indicated a willingness to do so. 2 It seems to be agreed that the cause of the defects is a shifting concrete slab upon which the house is built. On the one hand, it is contended by the Jamesons that that shifting is already very serious and will become more substantial as time goes on, so that the house will never be without serious defects. On the other hand FAI says, although there has been some movement, the slab will shortly stabilise and that after the present defects are fixed there should be no further problem. 3 The Jamesons were unhappy with this response and appealed to the Fair Trading Tribunal, under s 84 of the Home Building Act 1989, against the decision of FAI. FAI sought to have joined to those proceedings the builder and the geotechnical engineer. The Tribunal refused to permit this joinder. I am satisfied that the essential reason for this refusal was the view that there was no jurisdiction in the circumstances for it to do so. This view may be conveniently summarised in the following paragraphs from the Tribunal's reasons for decision -

"92. The joining of all likely third parties to the hearing of the application may be seen as a prudent convenience by the insurer to seek to facilitate any future recovery, or contribution elsewhere, of any amount which the insurer could be ordered to pay by this Tribunal. However, the dispute which this Tribunal must exclusively focus upon, is in my view, restricted and confined to that dispute between the applicant and the insurer.
93. The dispute, put quite simply, involves an appeal against the insurer's decision. Nothing more. "

4    The Fair Trading Tribunal Act 1998 provides for the grant of relief by this Court upon the ground, amongst others, that "the Tribunal gave a ruling as to its jurisdiction that was erroneous": 60(2)(a). Although in terms the member did not advert to the jurisdiction of the Tribunal as to joinder I have come to the conclusion that his refusal to permit joinder was indeed a decision by him as to his jurisdiction. 5 The procedures in the Fair Trading Tribunal are directed to permit the determination of disputes falling within its purview with as little formality as possible having regard to the nature of the disputes and the requirement of procedural fairness. That this is so is explicitly stated in s 27(3) of the Fair Trading Tribunal Act 1998 which states -

“Procedure of Tribunal generally
(3) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice".

It is important also to note that under s 27(1) of the Act the Tribunal may, subject to the Act, determine its own procedural formalities. Wide powers in relation to procedural directions are given by s 28 of the Act, pointing to the desirability of reducing costs and achieving prompt hearing of matters in issue.

6    It is obvious that a claim of the kind made here which involves building defects of the sort specifically adverted to in the Home Building Act 1989 will involve the question of the competent completion of work by a builder or relevant specialist, here the geotechnical engineer. It is also obvious that a decision of an insurer under a contract of insurance required to be entered into under the Home Building Act 1989, and which is the basis for the claim against FAI in this case, must involve an enquiry into the extent of and reasons for the asserted defects and the appropriateness of the claim made by the home owner. 7 Having regard to the inevitability of these issues and the rights of the insurer to subrogation it would be a surprising result if an insurer, faced with such an appeal, could not join those responsible or allegedly responsible for the defects in proceedings brought against it by the home owner. 8 It is difficult to think of a procedural limitation which would cause greater and unnecessary multiplicity of action. Almost invariably the factual issues between the home owner and the insurer will be precisely the same issues as those contingently between the insurer and the providers of the relevant building work or services. It is conceded that this is so in this case. Not surprisingly, the home owner in a case such as the present may not wish to be involved in litigation between other parties directed to determining, in effect, their mutual rights of indemnification or contribution. It is this consideration which, it appears to me, significantly influenced the member’s ruling, in effect, that the Tribunal did not have jurisdiction to consider such claims. However, the Tribunal has ample powers to order its procedures to enable efficient determination of the primary factual issues (which, in the circumstances would inevitably affect all parties), prevent unnecessary duplication of questioning and multiplicity of witnesses, and separate out for distinct agitation and decision the outstanding issues between the primary respondent and third parties in a way that would not require the involvement of the applicants. 9 Unless joinder in those cases was specifically prohibited by the Fair Trading Tribunal Act 1998, I consider that s 27(1) of the Act would be an ample basis for the Tribunal to join such providers in an action by the home owner against a decision such as that made by FAI in this case. 10 Some difficulty arises from the terms of cl 27 of the Fair Trading Tribunal Regulation 1999 which is in the following terms -

"Joinder of parties
(1) If the Tribunal is of the opinion that a person has a sufficient interest in resolving the dispute to which an application to the Tribunal relates but the person has not been served with notice of the application, the Tribunal may make an order directing that the person be joined either as an applicant or as a respondent as appears to the Tribunal to be appropriate, and notice of the proceedings is to be served accordingly.
(2) The powers of the Tribunal under this clause may, in accordance with any relevant directions of the Chairperson, be exercised by the Registrar."

11 On first reading, the regulation suggests that an order for joinder can only be made at the instance of a third party which desires to participate in the proceedings. Although there may be circumstances in which a third party might seek to be so joined they will occur but rarely. Usually, a person will not voluntarily seek to be a party to litigation, the point of which would be in most cases to be subjected to orders effecting some detriment to them. 12 The opinion to which cl 27(1) is directed is not that of the third party but that of the Tribunal. If, in the Tribunal's opinion, that person has objectively a sufficient interest to warrant joinder, then the Tribunal may make an appropriate order directing that the third party be joined whether as an applicant or as a respondent and whether the party makes the application or not. The phrase "a person has a sufficient interest in resolving the dispute" is awkward since it suggests that the third person must desire to resolve the dispute. I consider that such subjective interpretations are inappropriate and the connection between the person, the sufficient interest and resolution of the dispute, if any, is to be resolved by the Tribunal and not by the third person. 13 Accordingly, even if s 27(1) of the Fair Trading Tribunal Act 1998, contrary to the view I have already expressed, was insufficient to give the Tribunal jurisdiction in a case such as the present, to join if otherwise appropriate the builder and the engineer, I consider that reg 27(1) does give that jurisdiction. It follows that the ruling of the Tribunal in this case as to its jurisdiction was erroneous. 14 It has been submitted by the geotechnical engineer in this Court that joinder cannot be sought by FAI since it has not purported to exercise its rights of subrogation. Whether such an objection would be good in other proceedings (and I am sceptical about this) I do not see how such a procedural step could properly justify a rejection of the joinder sought here since, clearly, any orders which might be sought to be made against the geotechnical engineer and the builder for that matter would only be made in the event that FAI's decision were held to be wrong and indemnity ordered to be made. 15 The breadth of the procedural jurisdiction given to the Tribunal to which I have already referred is more than adequate to cope with the need for the relevant election. I consider, therefore, that this is not an adequate basis to reject FAI's application for relief. 16 Since the Tribunal erred, the question arises as to what relief should be granted. There may be reasons which have not been exposed in this Court as to why joinder might be refused. However, if indeed the factual or evidentiary issues which arise between the home owners and FAI are the same or substantially the same as those which FAI wishes to litigate against the builder and the geotechnical engineer, it is difficult to see any other reasons which would justify refusal of joinder. 17 I have, however, been informed that evidence has already been taken from a number of witnesses before the Tribunal. The joinder of additional parties will have the consequence that they must be permitted to test that evidence if they wish to do so (although this appears unlikely) and, in due course, call evidence of their own. Since the assumption upon which joinder might be ordered is that the evidentiary issues presently arising between the Jamesons and FAI will not be changed, or at least significantly changed, by the addition of the two parties which I have identified, it may be that the Tribunal should permit those witnesses whom it was desired to further cross-examine to be recalled. If there were any real impediment in undertaking this course then that would be a factor which would militate against joinder at this stage. 18 It has not been submitted to me that, aside from some delay and inconvenience, recalling of witnesses will cause any substantial prejudice. In the light of this I feel it right to indicate that if this be so then, unless there is some matter which has not been brought to this Court's attention, there appears to be no good reason for refusing joinder as sought by FAI. However, since there remains some uncertainty about this, I do not consider it appropriate that I should make any order in this regard. 19 For these reasons, the rulings excluding Rawson Homes Pty Limited from and refusing to join Rust PPK Pty Limited (PPK) to the proceedings were erroneous and must be quashed. The Tribunal is to consider applications either by those parties or FAI to join them and determine those applications in accordance with these reasons. In the circumstances, and without meaning any disrespect for the Member whose rulings I have quashed, I consider that the question of joinder should be determined by the Tribunal differently constituted. 20 I order that PPK must pay to FAI the costs attributable to its involvement in these proceedings. Otherwise, I make no order as to costs.

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Last Modified: 11/22/2000