Gordon Lando v Krown Living Pty Ltd and Ors (Civil Dispute) - [2016] ACAT 60

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

GORDON LANDO v KROWN LIVING PTY LTD & ORS (Civil Dispute) [2016] ACAT 60

XD 1006/2015
Catchwords: CIVIL DISPUTE – contract dispute – non-payment of subcontractor for installation of building frames and trusses – non-attendance of the respondents at hearing – interest up to date of decision – interest after date of decision – enforcement of debt
Legislation Cited: ACT Civil and Administrative Tribunal Act 2008 ss 6, 18, 19, 22

Subordinate
Legislation cited: Court Procedure Rules 2006 rr 1619, 1620, 2000, 2001, 2002, 2004, schedule 2

Cases Cited:Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Group Konstrukt Pty Ltd v Arrow International Australia Ltd [2012] ACTSC 14

Tribunal: President G McCarthy

Date of Orders:  8 June 2016
Date of Reasons for Decision:         8 June 2016
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL       )               XD 1006/2015
BETWEEN:
GORDON LANDO
Applicant

AND:
KROWN LIVING PTY LTD
First Respondent
ISMAIL CETINKAYA
Second Respondent
IMRAN CETINKAYA
Third Respondent

TRIBUNAL: President G McCarthy

DATE:8 June 2016
ORDER

The Tribunal Orders that:

The first respondent within 28 days pay the applicant $9,712.32 comprised of the following amounts:
(a)$9,067 for the balance owing under the contract.
(b)$140 for the filing fee.
(c)$9 for the search fee.
(d)$496.32 interest.
The claims against the second and third respondents are dismissed.
.........................................
President G McCarthy

REASONS FOR DECISION

By debt application dated 26 August 2015, the applicant, Gordon Lando, brought a claim against Krown Living Pty Ltd (Krown) and its directors Imran Cetinkaya and Ismail Cetinkaya arising from partial non-payment of Mr Lando’s tax invoice dated 22 June 2015 for work done under contract for Krown.

Litigation history.

The application was originally listed for hearing on 13 January 2016. Confusion arose regarding the hearing date. Mr Lando attended the Tribunal on 12 January 2016 rather than 13 January. Consequent upon his non-appearance on 13 January, at Mr Ismail Cetinkaya’s request Mr Lando’s application was dismissed.
Where Mr Lando was unaware of the hearing date and wished to press his claim, he applied for the orders of 13 January 2016 to be set aside. On 29 March 2016 the Tribunal heard Mr Lando’s application for the orders to be set aside. This time, Mr Cetinkaya did not attend. After hearing from Mr Lando, the Tribunal set aside the orders made on 13 January 2016 and relisted the matter for hearing on 14 April 2016. The effect was to return the dispute between the parties to ‘square one’.
The Tribunal posted a copy of the orders made on 29 March 2016 to each of Krown, Imran Cetinkaya and Ismail Cetinkaya, but no one appeared for any of the respondents when the hearing commenced at 10am on 14 April 2016. The Tribunal telephoned Mr Ismail Cetinkaya to enquire of his whereabouts but received no answer. The Tribunal then commenced the hearing.
At approximately 10:30am, Mr Ismail Cetinkaya telephoned the Tribunal stating he had not received notice of the hearing despite agreeing that the three notices had been sent to the correct address. He stated he was not able to attend the hearing that day. Accordingly, and despite Mr Lando’s understandable opposition, the Tribunal decided to adjourn the hearing.
By orders made on 14 April 2016, the Tribunal listed the matter for hearing on 25 May 2016 at 10:30am. Further orders were made requiring the parties to file documents and witness statements upon which they intended to rely at hearing. Mr Lando was ordered to file his documents by 29 April 2016. The respondents were ordered to file their documents by 13 May 2016.
The orders were sent to the parties by post and by email to email addresses confirmed as correct by the parties in order to avoid any further claims that hearing notices had not been received.
On 11 May 2016, Mr Ismail Cetinkaya sent an email to the Tribunal stating
I am unable to attend the upcoming specified date, please contact me on the following details or contact myself via post for the changed date and time.
Mr Ismail Cetinkaya gave no explanation for why he was unable to attend and, it would seem, simply assumed that because he had sent an email stating he was “unable to attend” the Tribunal would therefore do as he wished by adjourning the hearing for a third time regardless of the interests of anyone else. His disregard for the law was breathtaking, especially from a person working in the building and construction industry where compliance with deadlines and appointments is critical to the functioning of the industry.
The administration of justice cannot function in the face of such disregard for the law, particularly when dealing with small claims. The Tribunal has an overarching responsibility under section 6(c) of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act) to ensure that applications “are resolved as quickly as is consistent with achieving justice.”
The Tribunal is also mindful of instruction from the ACT Supreme Court regarding the importance of timely case management. In Group Konstrukt Pty Ltd v Arrow International Australia Ltd [2012] ACTSC 14 at [19] – [26] referring to the High Court’s decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, Burns J said:
19. Aon marked a turning point in the application of principles concerning judicial management of civil litigation in our adversary system of justice. It is not appropriate for litigants or their lawyers to attempt to confine the decision in Aon to its particular facts. Much of what fell from the members of the High Court in Aon is applicable generally to civil litigation.
20.… On appeal to the High Court, in upholding the appeal by Aon Risk Services, French CJ said at [5]:
“Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system.”
21.Whilst these comments are directed towards inefficiencies arising out of the adjournment of trials, they are equally apt to be applied to inefficiencies arising out of repeated failures to comply with rules of court and directions given by the court, or to properly and efficiently prepare a case for trial. The evils identified by French CJ are not only to be found in cases of adjournment in the course of a fixed trial date but also, as here, where a litigant is subjected to the forensic equivalent of the death of a thousand cuts.
22.At par [24] in Aon his Honour continues:
“The discretion [to allow amendments] is exercised in the context of the common law adversarial system as qualified by changing practice. But that is not a system which today permits disregard of undue delay. Undue delay can undermine confidence in the rule of law. To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests. Another factor which relates to the interest of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates...because of noncompliance with court timetables...”
23. With respect to the operation of r 21 of the Court Procedure Rules, an issue central to this appeal, the plurality said:
“97. The objectives of case management are now expressly stated in r21 of the Court Procedure Rules. It cannot be overlooked that later rules, such as r 21, are likely to have been written with the decision in J L Holdings in mind. The purposes stated in r 21 cannot be ignored. The Court Procedures Rules make plain that the Rules are to be applied having regard to the stated objectives of the timely disposal of the proceedings at an affordable cost. There can be no doubt about the importance of those matters in litigation in the courts of the Australian Capital Territory.
98. Of course, a just resolution of proceedings remains the paramount purpose of r 21, but what is a “just resolution” is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed on re-pleading, when delay and cost are taken into account. The Rule’s reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution.”
24. Consistent application of case management principles as found in the Court Procedures Rules and interpreted in the light of r 21 is likely to provide many benefits to the community and to individual litigants, not the least of which is a levelling of the playing field between litigants of unequal financial strength. Nothing could be more corrosive of public confidence in the judicial system than the perception that the court’s own processes can be used as an instrument of oppression, perhaps with the objective of obtaining a forensic advantage in the dispute.
25. The respondent has had since default judgment was set aside on 11 August 2008 [time] to file a defence and counterclaim in proper form. To date, it has not done so. Its continuing failure to progress this matter in a timely and efficient manner is beyond any doubt prejudicial to the appellant. The appellant has been called upon to engage in numerous interlocutory processes, with concomitant cost accruing to it. Perhaps of more importance is that the failure of the respondent to comply with the rules of the court, and directions given by the court, has significantly delayed the appellant’s ability to have its claim for significant damages dealt with for the better part of three years.
26. It is apt to remember the dicta of Heydon J in Aon at [137]:
“Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees, and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce.”
In my view, the stage has been reached where costs orders are no longer a panacea for that prejudice. The learned Master fell into error by not properly applying r 21 to those provisions of the Court Procedure Rules which he considered or applied in the course of his decision of 4 February 2011. A just resolution of the appellant’s claim requires that the respondent’s defence be struck out and that judgment be entered for the appellant in the sum of $248,621.99 together with interest on that amount. The respondent’s counterclaim should be severed.
It is apparent from Burns J’s observations that whether an adjournment should be granted depends upon the facts and circumstances in each case and the competing interests of the parties. Mr Ismail Cetinkaya gave no reason for his inability to attend the hearing. He had no cause for believing the hearing would not be proceeding on the stated time and date. A party sued for non-payment of a debt cannot avoid prosecution of the claim simply by stating an inability to attend the hearing. Whether a hearing will be adjourned is a matter for the Tribunal to decide, not a party to assume.
On the morning of the hearing, 40 minutes before it commenced, Mr Ismail Cetinkaya sent another email to the Tribunal stating:
I have given prior notice regarding the issue today being that I am unable to make it as I have work commitments out of state. Due to this I am writing to clarify and assure that the issue does not get dismissed and another date has been selected. If there are any issues regarding this, please don’t hesitate to contact myself on the below. (sic)
Mr Ismail Cetinkaya provided no details as to when his work commitment arose, or why it had such urgency or importance that it should be given priority over a hearing listed 6 weeks earlier or where he was on the hearing day. He may well have been in Queanbeyan.
Again Mr Ismail Cetinkaya seems to have presumed that his work commitments had priority over the administration of justice – without even the need to obtain an adjournment.
At the commencement of the hearing on 25 May 2016, and because there were “issues” regarding Mr Cetinkaya’s inability to “make it”, the Tribunal telephoned Mr Ismail Cetinkaya to ascertain where he was and why he could not attend but there was no answer. The Tribunal therefore proceeded to hear the matter in the respondents’ absence.
In circumstances where none of the respondents had filed any documents by way of evidence in support of their response to the claim, per the Tribunal’s orders made on 14 April 2016 and earlier, the Tribunal gained a clear impression that the respondents had no intention of contesting the claim in any meaningful way.
Mr Lando has been unpaid now for nearly 12 months in an industry where margins on costs are small and timely cash flow is vital to survival. To adjourn the matter yet again, leaving his claims still undetermined, would have worked a serious injustice against Mr Lando.
I turn now to the applicant’s claim.

Consideration

Mr Lando carries on a business in his personal name as a carpenter. His primary area of work involves setting and marking out timber frames, trusses and joists for houses in the building and construction industry.
Imran and Ismail Cetinkaya are brothers. They are the directors and shareholders of Krown that, so far as I can understand, carries on business constructing new houses for sale to the market.
In late March or early April 2015, Mr Lando contracted with Krown via discussions with Mr Ismail Cetinkaya to install frames, trusses, bearers and joists as part of Krown’s construction of 11 freestanding townhouses on Block 1, Section 163 Harrison. The contract involved installation at rates per square metre or per hour proposed by Mr Cetinkaya and agreed by Mr Lando.
Mr Lando and his three sons commenced work on 23 April 2015. Over the following month or more, they assembled frames and trusses to units 5, 10 and 11, frames to units 3, 4, 6 and 7 and bearers and joists to units 6 and 7. They also marked out frames for units 8 and 9, fitted windows and sliding doors to units 10 and 11 and cut frames and reverse laundry doors to units 10 and 11.
On 22 June 2015 Mr Lando rendered his invoice for work done to a total of $19,067.
Mr Ismail Cetinkaya delayed paying Mr Lando’s invoice, stating he had not yet been paid by a third party, Ausem Developments & Construction Pty Ltd which I understood to be the developer for the whole project.
On 10 July 2015, Mr Ismail Cetinkaya paid Mr Lando $10,000 towards his invoice. Mr Lando gave evidence that he was told that he would get the rest of money by the end of the month, but by mid September 2015 he had not been paid the balance owing.
Mr Lando gave evidence, and I accept, that in September 2015, when Mr Lando pressed Mr Ismail Cetinkaya for payment of the balance, Mr Ismail Cetinkaya laughed at Mr Lando and said words or words the effect:
If you want me to pay you, take me to court. We’re not paying you.
Mr Lando gave evidence that this practice of part-payment of invoices rendered by subcontractors occurred from time to time with a shortfall of approximately $2,000 in the belief that the sum would be too small for subcontractors to pursue in the courts, but that ‘the bar’ seemed to have moved to $10,000.
Mr Lando gave evidence about the work he and his sons had done under his contract with Krown as reflected in his invoice.
The Tribunal received into evidence 11 photographs of the work that displayed work being done in a competent manner.
The Tribunal received a letter dated 6 November 2015 from Ausem Developments confirming that Mr Lando’s sons had done work on the site in May and June 2015 and that:
All work carried out by you and your sons while you were there and that was inspected by our certifier passed without any ratification (sic) faults.
Mr Ismail Cetinkaya had previously provided the Tribunal with a two page typed letter dated 23 March 2016 in which he stated various alleged failings on Mr Lando’s part, but provided no evidence in support of them.
Mr Cetinkaya claimed in his letter that Mr Lando and his sons were unreliable, but did not provide any witness statements in support of that claim or timesheets that recorded the times Mr Lando and his sons arrived or left the site. Mr Lando gave evidence on oath denying the claims. He gave evidence that he has been working in the industry for more than 20 years, and is known to be a competent and reliable carpenter. I accept his evidence.
Mr Cetinkaya claimed there were errors with Mr Lando’s work and that “the work that had to be fixed did come as an OH&S issue for the job site”, but gave no evidence in support of that claim. To the contrary, Mr Lando explained in his evidence, and I accept, that ‘OH&S issues’ were a matter for the leading hand on site, in this case being a person called ‘Benson’, and that issues of this kind necessarily must be raised and addressed immediately. Mr Lando gave evidence that Benson never expressed any concerns about his work. Further, Mr Lando gave evidence and I accept that the first time Mr Cetinkaya made any mention of ‘OH&S issues’ was in his letter to the Tribunal dated 23 March 2016.
Mr Cetinkaya claimed Mr Lando and his sons did not work “consistently and efficiently” which cost him time and money and caused Krown not to meet deadlines. Again, Mr Cetinkaya did not provide the Tribunal with any evidence in support of these claims by the dates he was ordered to provide evidence in support of the respondents’ response or at all. Also, to meet those claims, Mr Lando provided photographs at hearing of the worksite showing that his carpentry work was well ahead of schedule to the extent that frames were already stood for some units at a time when earthmoving equipment was still excavating in order for footings to be poured for other units.
On the evidence before the Tribunal, I am satisfied that Mr Lando performed the work identified in his invoice in a complete and competent manner and should be paid for it in accordance with the contract.
This is yet another example of claims in the Tribunal for non-payment of a debt made by subcontractors working in the building and construction industry. Mr Lando’s account of his dealing with Mr Cetinkaya is typical of an apparent practice in the industry where contractors do not pay their debts apparently for no other reason than a belief that no one can or will force them to do so.

Orders

Mr Lando acknowledged, consistent with the documents tendered in evidence, that he contracted with Krown, not Imran Cetinkaya or Ismail Cetinkaya, for the work done. Accordingly, I order Krown to pay the balance owing under the contract, namely $9,067, the filing fee of $140 and the ASIC search fee of $9.

Interest

Mr Lando also claims interest on the debt from 11 July 2015 to ‘current’ which I take to mean up to judgment.
Under section 22 of the ACAT Act, the Tribunal has “in relation to civil dispute applications, the same jurisdiction and powers as the Magistrates Court.” These powers include the power to award interest up to judgment and interest after judgment under rules 1619 and 1620, respectively, of the Court Procedures Rules 2006 (the Rules).
For interest up to judgment, under rule 1619(1)(a)(i) of the Rules, the Tribunal may set the rate of interest that “it considers appropriate”. However, when doing so, rule 1619(5)(b) permits the Tribunal to set the rate of interest “having regard to the rate of interest applying, from time to time, under schedule 2, part 2.1 (interest up to judgment)” of the Rules. Under clause 2.2 of schedule 2, the rate of interest up to judgment for a period after 30 June 2010 is “the rate that is 4% above the cash rate last published by the Reserve Bank of Australia” during applicable periods. In this case, at all material times the cash rate was 2%. Accordingly, the Tribunal orders Krown to pay simple interest of 6% on the balance owing under the contract from 11 July 2015, being $496.32.
For interest after judgment, under rule 1620(1)(b), interest is automatically payable “on the amount of the judgment debt” that is unpaid at any time at the rate of interest applying at that time under schedule 2, part 2.2 (Interest after judgment) of the Rules ), unless the Tribunal otherwise orders, save that interest is not payable if the judgment debt is paid in full not later than 28 days after the date judgment takes effect. Under clause 2.2 of schedule 2, part 2.2, the rate of interest after judgment for a period after 30 June 2010 is “the rate that is 6% above the cash rate last published by the Reserve Bank of Australia” during applicable periods. In this case, at all material times the cash rate was 2%. Accordingly, Krown will be liable to pay Mr Lando simple interest of 6% on any amount that remains unpaid, per the Tribunal’s orders, 28 days after the date of the orders.

The second and third respondents

Where Mr Lando agrees that he contracted only with Krown, the Tribunal dismisses the claims against Imran Cetinkaya and Ismail Cetinkaya.

Krown

Mr Lando expressed concern about enforcing the debt against Krown, not knowing what assets it holds and that he (Mr Lando) is not a person that “hides behind a corporate shell.” This is not a matter that the Tribunal can address. It can only determine rights and obligations between parties to a contract.
Mr Lando noted that Mr Imran Cetinkaya “holds a builder’s licence”, and so enforcement of the debt might be a matter that the Master Builders Association of the ACT and/or the Construction Occupations Registrar can address in the event that Krown does not comply with the Tribunal’s orders.
I have given Krown 28 days within which to pay the money. If the total amount owing ($9,712.32) is not paid within 28 days, the applicant may take enforcement action in the ACT Magistrates Court for non-payment of the debt. I refer to rules 2000-2002 of the Court Procedures Rules. Mr Lando’s costs of obtaining an enforcement order and interest would also be recoverable as part of the enforcement order under rule 2004 of the Court Procedures Rules.
For these reasons, the Tribunal orders that within 28 days the first respondent pay the applicant $9,712.32 comprised of the following amounts:
(e)$9,067 for the balance owing under the contract.
(f)$140 for the filing fee.
(g)$9 for the search fee.
(h)$496.32 interest.
………………………………..
President G McCarthy
HEARING DETAILS

FILE NUMBER:	XD 1006/2015
PARTIES, APPLICANT:	Gordon Lando
PARTIES, RESPONDENTS:	Krown Living Pty Ltd, Imran Cetinkaya and Ismail Cetinkaya
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	N/A
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	President G McCarthy
DATE OF HEARING:	25 May 2016