Hanson v Metricon Homes Pty Ltd

[2020] NSWSC 401

Supreme Court

New South Wales

Medium Neutral Citation:	Hanson v Metricon Homes Pty Ltd [2020] NSWSC 401
Hearing dates:	13 December 2019
Date of orders:	16 April 2020
Decision date:	16 April 2020
Jurisdiction:	Common Law
Before:	Hamill J
Decision:	(1) Extend time for the filing of the summons. (2) Grant leave to appeal against the decision of the Appeal Panel known as Hanson v Metricon Homes Pty Ltd [2019] NSWCATAP 133. (3) Set aside the orders of the Appeal Panel made on 31 May 2019 and in lieu thereof make the following orders: (i) Appeal allowed. (ii) The decision of Senior Member Goldstein dated 13 November 2018 is quashed. (iii) Metricon’s claim filed 15 December 2016 is remitted for hearing by a different single Member of the Tribunal to be dealt with according to law. (iv) Metricon is to pay the costs of and incidental to the internal appeal to the Appeal Panel. (4) Proceedings 2019/00006261 in the District Court of New South Wales are stayed pending the determination of Metricon’s claim in the Civil and Administrative Tribunal. (5) The defendant is to pay the costs of and incidental to the appeal to this Court.
Catchwords:	CIVIL LAW – building dispute – money owed on contract – cross-claim – defence – shoddy building work – proceedings before NCAT – procedural fairness – where owners abandon cross-claim – failure to deal with defence – unrepresented litigants – where lawyer seeks leave to withdraw on day of hearing – hearing did not start well – confusion over reason lawyer withdrew – refusal of adjournment – “stage fright” – late service of joint expert report – contradictory case management orders – whether owners denied opportunity to challenge joint expert – internal appeal – whether Appeal Panel erred in failing to find denial of procedural fairness
Legislation Cited:	Administrative Appeals Tribunal Act 1997 (NSW), s 73 Civil and Administrative Tribunal Act 2013 (NSW), ss 36, 38(5), 51, 80(2)(b), 83, 84(2)(b), cl 12(1) sch 4 Consumer Trader and Tenancy Tribunal Act 2001 (NSW), s 35
Cases Cited:	Collins v Urban [2014] NSWCATAP 17 Director of Public Prosecutions (NSW) v Hughes [2017] NSWSC 492 Dyason v Butterworth [2015] NSWCA 52 Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458 Hanson v Metricon Homes Pty Ltd [2019] NSWCATAP 133 Italiano v Carbone & Ors [2005] NSWCA 177 Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 Jones & Anor v Ekermawi [2009] NSWCA 388 Misrachi v the Public Guardian [2019] NSWCA 67 Mraz v The Queen (1955) 93 CLR 493 O’Connor v State of New South Wales & Anor [2017] NSWSC 598 Re Association of Architects Ex Parte Municipal Officers Association of Australia [1989] HCA 13; (1989) 63 ALJR 298 Sullivan v Department of Transport (1978) 20 ALR 323
Category:	Principal judgment
Parties:	Lloyd Hanson (First Plaintiff) Anna Hanson (Second Plaintiff) Metricon Homes Pty Limited (Defendant)
Representation:	Counsel: J Hyde (Plaintiffs) G Carolan (Defendant)   Solicitors: Wilkinson Building & Constructions Lawyers (Plaintiffs) Moray & Agnew Law (Defendant)
File Number(s):	2019/00254540
Publication restriction:	Nil
Decision under appeal	Court or tribunal: New South Wales Civil & Administrative Tribunal Jurisdiction: Appeal Panel Citation: [2019] NSWCATAP 133 Date of Decision: 31 May 2019 Before: L Pearson, Principal MemberD Fairlie, Senior Member File Number(s): AP 18/50018

Judgment

1. This is an application, brought by summons, for leave to appeal against a decision made by an Appeal Panel of the New South Wales Civil and Administrative Tribunal (“the Tribunal” or “NCAT”) on 31 May 2019. The summons also seeks orders in relation to the decisions of a Senior Member made on 13 November 2018. The parties agreed, however, that the case is properly to be understood as an appeal against the decision of the Appeal Panel. The broader issue between the parties involves a dispute over the non-payment of money owed on a building contract, and a cross-claim alleging shoddy and incomplete building work. However, the present dispute is largely confined to the failure of the Senior Member to grant an adjournment and the decision of the Appeal Panel dismissing an internal NCAT appeal of that decision. The present dispute centres on an assertion that there was a denial of procedural fairness. There is a further ground of appeal asserting that neither the Senior Member nor the Appeal Panel addressed the defence raised in the proceedings.

proceEdings in the tribunal

Background to the present dispute

2. In March 2015, Lloyd and Anna Hanson entered into a residential building contract with Metricon Homes and certain building works were carried out at their home address in Riverstone. Metricon asserts that the total value of the work performed under the contract, including subsequent variations, was $592,673. The Hansons have made payments totalling $423,241.85. In December 2016, Metricon brought a claim for the shortfall, being an amount of $169,431.15 (plus interest).

3. The Hansons filed a defence in the following terms:

“1.   On the 27th of October 2015 in a phone call with Metricon I was given assurances and when I questioned these assurances I was given a [verbal] guarantee that the build would be finished in March 2016.

2.   Practical completion should have been in June 2016 or July 2016 at the latest under the contract start date.

3.   Metricons extensions due to stop work notices are incorrect.

4.   Metricon has not taken into consideration the periods of time no work was done due to lack of trades people to attend our job site.

5.   Metricon has not taken into consideration the periods of time consumed correcting their own mistakes and omissions.

6.   Metricon has not taken into consideration the periods of time consumed correcting poor workmanship and mistakes by their tradespeople.

7.   Metricon, despite numerous verbal assurances on their commitment to complete our build in a timely manner there was delay after delay with no explanation.

8.   Considering points 1 to 7 above we served Metricon with a notice to complete, giving them 10 days to finish the build. They failed to respond until 9.45pm on the 10th day of the notice.

9.   Metricon employees attitude towards us, from being disregarded to being ignored, abused, threatened, assaulted, and mocked by Metricon and their employees in front of our family and others.

10.   The build is incomplete and the work done is of poor quality.

11.   Did not include times we constantly were required to do the job of the workers that they did not do.” [1]

1. Court Book (“CB”) 9.

4. There were delays in the litigation, partially to do with a serious illness suffered by Mrs Hanson and otherwise attributable to the Hansons and not to Metricon. On 10 November 2017, the Hansons filed points of cross-claim. [2] The cross-claim made a variety of complaints concerning the standard of the work carried out by Metricon including assertions that the work was incomplete. It is unnecessary to particularise the detail of these complaints other than to note that there was some cross-over with the matters raised in the defence. Metricon filed a defence to the amended cross-claim on 1 December 2017. [3]

   2. CB 12-19.

   3. CB 20-26.

Case management and expert reports

5. Metricon sought to have its claim for the debt heard separately, and first, but the Tribunal determined that the two claims should be heard together. The basis of that decision appeared to be that the defence and cross-claim had some common features and that the claim by Metricon could possibly be defeated or diminished if the cross-claim was successful in whole or in part. Principal Member Rosser gave certain reasons for ordering the matters to be heard together on 11 April 2018, although those reasons referred to an earlier decision of the Tribunal. [4]

   4. CB 202-204.

6. Various case management directions were made over time and evidence, including expert evidence, was filed by both sides. Joint expert reports were prepared, although there was substantial disagreement between the experts retained by each side. Metricon’s expert (Ken Winton) thought the defects in the work could be remedied for $7,405.20 while the Hansons’ expert (Paul Cavallo) estimated the remediation would cost a little over $193,000. The difference between these opinions is staggering but it is unnecessary to consider it further.

The Zakos report

7. Subsequently, the parties agreed and the Tribunal directed that an independent expert (George Zakos) provide a report.

8. The precise status of that independent expert report is controversial and, as it turned out, crucial to the decisions made by the Senior Member that are under review. On 11 April 2018, Principal Member Rosser made orders including:

“4. The Tribunal notes that the parties agree to be bound by the determination of the Independent building expert.” [5]

5. CB 202.

9. However, on 12 October 2018 Principal Member Rosser made orders including:

“3. To the extent that the owners claim not to rely on the Zakos report, they are to ensure that their expert witness is present at the hearing on 12 November 2018.” [6]

6. CB 205.

10. These seemingly contradictory directions were subject to dispute between the Senior Member and the Hansons towards the end of the first day of the hearing. [7]

    7. CB 119-120, Transcript (“T”) 94-95.

11. The Zakos report was not received by the parties until the Friday before the commencement of the hearing presided over by Senior Member Goldstein. According to the Hansons, it was the late service of the report that caused their lawyer to withdraw at the last minute because he was not in a position to meet or test it. I will return to the issue of its tender and the circumstances in which the Hansons were denied the opportunity to contest the Zakos report.

12. It was submitted on the hearing of this appeal, and it was put by Senior Member Goldstein, that the Zakos report was a “simple report”. I do not agree with that assessment. It may be simple for those who practice in the area of building and construction law, but it was not likely to be simple to an unrepresented litigant who arrived at court expecting to be represented by a lawyer. The report was around 100 pages in length and was served well out of time and on the last working day before the hearing.

The hearing before the Senior Member and the application for adjournment

How the case started and the first day of the hearing

13. At the heart of this appeal is the contention that the Hansons were denied procedural fairness at the hearing before the Senior Member. This submission arises from the fact that their lawyer withdrew from the case on the morning of the first day of the hearing and an application for adjournment was refused. It is submitted that the Hansons were unable properly to prosecute the case because they were unrepresented. Because these matters are at the forefront of the Hansons’ appeal, it is necessary to set out in a little detail the transcript of the proceedings before the Senior Member.

14. The matter came on for hearing before Senior Member Goldstein on 12 November 2018. The hearing did not start well for the Hansons. According to the transcript, this is how the hearing commenced:

“MR GOLDSTEIN: Good morning. For the sake of the transcript, today is Monday, 12 November 2018. There are two matters before the tribunal: HB 16/55283, Metricon Homes v Mr and Mrs Hanson. Also before the tribunal is 17/6192, Mr and Mrs Hanson v Metricon Homes. I will take the appearances. Who appears for Metricon Homes?

MR CAROLAN: Senior member, my name is Carolan, initial G. I'm instructed by Ms Lee from (indistinct)

MR GOLDSTEIN: Thank you, Mr Carolan. And for Mr and Mrs Hanson?

MR MORTENSEN: Mortensen, solicitor.

MR GOLDSTEIN: Thank you very much, Mr Carolan and Mr Mortensen. I understand these proceedings relate to a claim for money by your client. Is that correct, Mr Carolan?

MR CAROLAN: Yes.

MR GOLDSTEIN: And, Mr Mortensen, your clients' case is for damages for defective work. Is that correct?

MR MORTENSEN: Senior member, just before we start —

MR GOLDSTEIN: I asked you a question. Do you have an answer for me?

MR MORTENSEN: No, senior member.

MR GOLDSTEIN: That's not their case?

MR MORTENSEN: If you will allow me to - - -

MR GOLDSTEIN: I said, ‘I asked you a question.’ Is your clients' case for damages for defective work, yes or no?

MR MORTENSEN: Yes, senior member.

MR GOLDSTEIN: That was the answer I required. Yes, Mr Mortensen? You wanted to say something?

MR MORTENSEN: Yes, senior member. I am seeking the tribunal's leave to withdraw.

MR GOLDSTEIN: I see. Mr Mortensen, thank you for your courtesy in coming today and for seeking the leave to withdraw. Mr Carolan, do you wish to be heard in connection with that?

MR CAROLAN: No.

MR GOLDSTEIN: Mr Mortensen, you have leave to withdraw. Thank you very much.

MR MORTENSEN: Thank you, senior member.

15. From that point, the Hansons were not represented at the hearing, which continued:

MR GOLDSTEIN: Are Mr and Mrs Hanson in the tribunal?

MR HANSON: Yes.

MR GOLDSTEIN: Your solicitor has now withdrawn. Do you understand that?

MR HANSON: Yes.

MR GOLDSTEIN: Who do you propose - will you be undertaking the carriage of your case today?

MR HANSON: We have no other option.

MR GOLDSTEIN: Yes, I think you'll have to proceed in that way. Are those your bundles there, Mr Mortensen?

MR MORTENSEN: Yes, they are, senior member. I've left them for the client.

MR GOLDSTEIN: Thank you very much. Mr and Mrs Hanson, could you please come and sit at the bar table. Are you in a position to proceed today?

MRS HANSON: Not really.

MR HANSON: Not really.

MR GOLDSTEIN: This case has been adjourned a number of times. I understand that the builder's case dates from the year of 2016. Your case was brought in 2017. The fact of the matter is that the tribunal must hear these cases. There's been one adjournment of these proceedings early on in the piece and there may have been other adjournments for all I know, but I've looked at the procedural history of the matter and it's taken quite some time for the parties and for the tribunal to get this case in order to hear it. So really it's the obligation of the tribunal to have these proceedings heard and to bring the matter to an end both from your perspective and from Mr Carolan's perspective. I understand that there have been various meetings between engineers and building consultants and what have you, and so unless you can tell me about some extraordinary circumstance why the matter shouldn't go ahead today I'm minded to order that it should go ahead today because simply adjourning it and pushing it further into the future, first, because it's inconvenient is not really in accordance with the guiding principle of the tribunal.

MR HANSON: We understand that, sir. What's happened is the (indistinct) report was ordered by the commission, a joint engineering report, has been very, very late. It's only been received last Friday.

MR GOLDSTEIN: But you've had an opportunity - - -

MR HANSON: And this is the basis of what's led to Mr Mortensen stepping down, because he hasn't had time to digest and prepare for - - -   

MR GOLDSTEIN: It's a simple report. He's gone through all that; Mr Zakos has reached a conclusion and his conclusion is that there's some defective building work there. He's said what it is and he's said how much it's going to cost to rectify that defective building work. I don't really see the difficulty with that.

MRS HANSON: He's left a big component in the report.

MR GOLDSTEIN: Pardon?

MRS HANSON: He's left a big component, we were told, in the report.

MR GOLDSTEIN: Have you read the report yourselves?

MR HANSON: Yes.

MRS HANSON: No, I haven't but he has. I've been in hospital.” [8]

(Emphasis added.)

8. CB 28-30, T 2-4 (12 November 2018).

16. The case then commenced with discussions about the nature of the issues between the parties. As Mr Hanson was contesting the way in which the issues had been framed by counsel for Metricon, the following exchange occurred:

“MR GOLDSTEIN: So do you have a claim for incomplete work - - -

MR HANSON: We understand we have.

MR GOLDSTEIN: - - - in the evidence or the papers? Pardon?

MR HANSON: We understand that we have. We put all this evidence into

our previous solicitors and it was put into the bundle and we - - -

MR GOLDSTEIN: You can tell me where in the bundle, sorry .

MRS HANSON: We didn't get the bundle until - - -

MR GOLDSTEIN: It's there in front of you.

MR HANSON: This is our first time we've seen the bundle. You know, they have - - -

MR GOLDSTEIN: Just let me say this: no doubt you've spent some time

with your solicitor preparing this case for hearing. I don't know why he sought

leave to not appear any further today. Maybe it had something to do with fees or this, that and the other.

MR HANSON: No.

MRS HANSON: No, he's paid up.

MR HANSON: He got substantial money (indistinct)

MR GOLDSTEIN: Maybe. Anyway, if that's the case you must know why

he's left.

MRS HANSON: Yes, I think so, because like in his submissions to us last

Friday afternoon I said - can I just speak, sorry. I don't know if you know this

but I wasn't going to raise it but I was going to ask if we could have a closed

court. This is confidential to us.

MR GOLDSTEIN: If this is confidential, perhaps you best not say it because

this is an open court - - -

MRS HANSON: Yeah.

MR GOLDSTEIN: - - - and it's going to be recorded.

MRS HANSON: But it's just personal for me. I was diagnosed with cancer

and I've been in hospital most of this time. We told our solicitors what we

wanted done and what's happened to us and unfortunately even my husband,

he's had a huge burden at - we've had a huge burden at home, so we said to our solicitors, ‘We need you to know that this is what's happened,’ blah blah blah. There's certain aspects that we don't know - we were going to ask you - because we only found out that he's not representing us at the end of Friday because he doesn't feel he's got enough prep. He asked for an extension and he was denied that by the tribunal.

MR GOLDSTEIN: Maybe you can make a complaint against him because that doesn't seem to me to be an altogether satisfactory way for a solicitor to conduct himself. I'm terribly sorry to hear that you've been diagnosed with

cancer and I hope that you are in a state of - - -

MRS HANSON: I just feel that we've been done an injustice there. We haven't had time. They’ve got all their people that we had and we've paid up everything. We've never tried to dirty anyone or not paid anyone. It's just - we've had workers on our property that I don't want to put on the record treating us really wrong and we've got evidence of that, and we have evidence of everyone in that argument and our evidence has never been considered because apparently it hasn't been on the record. I don't know why and I can't ask - I know it's not your fault or anyone's fault.

MR GOLDSTEIN: lt's got to be someone's - you know, we're not really here to play the blame game but if your solicitor hasn't done the right thing by you then you can take that to the Law Society and record your complaints then and there.

MRS HANSON: But we've heard that if we continue today we can't claim for what we want to claim against Metricon if it's heard today.

MR GOLDSTEIN: I don't even know anything about that but what I'm trying

to say to you is that your case has been before the tribunal for all of - - -

MRS HANSON: We understand that, member, and we - - -

MR GOLDSTEIN: You understand, what, that your case has been before the

tribunal since - - -

MRS HANSON: Yes, but we were told it was because expert reports weren't

done. We've had a couple where we - - -

MR GOLDSTEIN: Just let me - - -

MRS HANSON: Yes.

MR GOLDSTEIN: Sorry, I'm trying to find out when you started this case.

At least maybe February 2017. So all of 2017, all of 2018 - virtually all of

2018. So virtually two years you've had to get your tackle in order, so to speak, or to get yourself organised. I know that you may have had personal

illnesses and issues like that but it's not really acceptable to come to the

tribunal on the day of the hearing and just say that you're not organised. You

should be organised. There's been adequate time for you to be organised.

MR HANSON: I agree there's been adequate time and - - -

MRS HANSON: We totally agree.

MR HANSON: - - - we've had these representations. We've had - - -

MRS HANSON: Around each other - - -

MR GOLDSTEIN: I can tell you what I'm quite happy to do. If you think that justice has not been given to you for whatever reason, although it pains me to do so what I would propose - and you can think about that - I will hear Mr Carolan's case - - -

MRS HANSON: Right.

MR GOLDSTEIN: - - - and then that may result in you having to pay Metricon a range of money. Then you can proceed with your case against Metricon in a more orderly way. I don't know whether that's going to be ultimately in your benefit because Metricon can't just sit here sitting on their hands. They brought their case in 2016. Interest is ticking away and you need to consider that Metricon, if they're entitled to be paid, should be paid. If you want to have another go at bringing your case against Metricon - but your case against Metricon, just from the brief amount that I've been told today, doesn't seem to amount to a large sum of money. It's basically Mr Zakos has said that your cost of rectifying defects is something like 28,000; liquidated damages, you say you dispute them, they're a thousand dollars, and even if you're right, they're not going to be more than double that. You understand that?

MR HANSON: I understand.” [9]

(Emphasis added.)

9. CB 29-42, T 13-16.

17. The discussion continued until Mrs Hanson asked the Senior Member “Are you saying to withdraw our claim?” [10] The discussion continued:

    10. CB 44, T 18.

“MR GOLDSTEIN: No, I'm not saying to withdraw your claim because you've

told me that somehow your solicitor has withdrawn in unsatisfactory

circumstances and he didn't - I suppose I didn't ask him why he was

withdrawing but he didn't give a full account of why he was withdrawing.

You're telling me he just got stage fright; that he didn't think that he could

present the case properly.

MRS HANSON: He put that in an email to us.

MR GOLDSTEIN: You can tender that if you like.

MRS HANSON: Yeah.” [11]

11. CB 44, T 18.

18. The email was not tendered and counsel for Metricon put his client’s position that he would be happy to have Metricon’s claim heard first, but was concerned that there be any further delay in the hearing of the cross-claim. [12] There was further discussion about the reasons the Hansons’ lawyer had withdrawn. Counsel for Metricon informed the Tribunal that there had been discussions between the lawyers on the previous Friday but that “his retainer was terminated”. [13] Counsel suggested that the circumstances surrounding the withdrawal of the solicitor “may be slightly different to what is being submitted to you”. [14] As to the discussions between the legal representatives, Mrs Hanson said “we had no idea of the talks between them” and Mr Hanson said “we know nothing about it”. [15]

    12. CB 73, T 48.

    13. CB 46, T 20.

    14. CB 46, T 20.

    15. CB 45-46, T 19-20.

19. After further argument, the Senior Member said:

“MR GOLDSTEIN: Look, what I think I'm going to deal with first is I'm going to deal with the two engineers. What I'm going to decide to do is I've decided that I'm going to not postpone your case but I'm going to proceed with the owners' case today because from what I understand the matter has been case managed and it has been dealt with in two experts' reports; one being a joint report from the engineers and, the second, there is a report from Mr Zakos. So far as the engineers are concerned, I think both engineers are here today. I ask them to come and sit together in the witness box as best they're able to do so. I've decided to proceed on this basis in accordance with the guiding principle of the tribunal set out in section 36 of the Act, which is the guiding principle of this tribunal is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. I'm going to do that on the basis that these cases have been going on for quite some time and, as I've said, there's a number of experts' reports which deal with the owners' case which I believe makes it appropriate for me to proceed notwithstanding that the owners have not got legal representation, and in that regard I note that the owners were legally represented as late as Friday, two days before these proceedings were due to commence but for some inexplicable reason the owners' solicitor sought and was granted leave to withdraw from these proceedings first thing this morning.” [16]

(Emphasis added.)

16. CB 67, T 42.

20. At that stage it appears that the Senior Member had decided to proceed with Metricon’s claim and the Hansons’ cross-claim at the same time. The case proceeded for the rest of the day, with expert witnesses (Mr Broune and Mr Barry) giving concurrent evidence. [17] Mr Hanson conducted the examination of these witnesses, with some questions and comments also coming from Mrs Hanson.

    17. I note that the first expert is referred to in the transcript of proceedings and in the Appeal Panel’s reasons as “Mr Brown”, but the joint report indicates that his name is spelt “Broune”: see CB 494.

21. Later in the day Mr Hanson indicated that he and his wife were unable to deal with the technical aspects of the case and were contemplating withdrawing their cross-claim. Mr Hanson said:

“MR HANSON: Senior Member, I would like to ask that we withdraw our claim at that stage because we’re grossly unprepared. Our representation left us this morning, as you know, and we feel we’ve been very disadvantaged in this situation because we have not got the knowledge, have not got the grounds to present our best case and get a fair hearing.” [18]

18. CB 104 (T 79).

The tender of the Zakos report

22. The issue of the Zakos report was then ventilated.

23. The Senior Member asked if the parties sought to tender that document. Mrs Hanson wondered if they had “any option” and said “we’d rather not because we don’t believe (indistinct) …” [19] Counsel for Metricon then tendered the Zakos report. It was received “over [the Hansons’] objection”. The Senior Member explained his reasons and the contents of the report at a little length. [20] In essence, the decision was based on the parties agreeing to be bound by the expert report and the orders made by Principal Member Rosser at the directions hearing on 11 April 2018.

    19. CB 113.

    20. CB 114-117.

24. It is necessary to reproduce this part of the transcript and the reasons of the Senior Member:

“MR GOLDSTEIN: Then he goes on and at paragraph 24 talks about Mr Winton's assessment. Here we have a case where Mr Covello assessed defects of 175,500 exclusive of GST but Mr Winton valued the cost of making good work that he believed was defective at $6732 exclusive of GST. Mr Zakos notes the cost difference between the two parties of $185,726.97. It is fair to say that the experts were extremely a long way apart in an extreme way.

At paragraph 449 Mr Zakos classifies or gives a summary of his opinion and says at 449:

The following table summarises my findings on the cost to make

good the allegations that I found to be classified as defects in the

builder's work and thus requiring rectification.

He has valued that at $27,946.65. I can understand that the owners are disappointed in that result but nonetheless it seems to the, having regard to everything that I have said regarding the guiding principle of the tribunal and the ability of the tribunal to determine its own procedure, the agreement of the parties, that that should be accepted, that amount there: So that seems to me to determine the owners' defects claim, building defects claim. Those are my reasons, in effect, for accepting the tender of Mr Zakos's report.”

25. Next, Mr Hanson attempted to articulate certain “exceptions” he took to the Zakos report. The transcript records the exchange with the Senior Member as follows:

“MRS HANSON: Sorry, senior member, I'm not well. Can I just go outside for a moment?

MR GOLDSTEIN: Of course you can. Hopefully there's a bathroom close by. The next aspect of your claim, as I understand it from your points of claim, is you have a case for liquidated damages. Is that correct?

MR HANSON: There is a case for liquidated damages (indistinct) exception to Mr Zakos's costings and this - - -

MR GOLDSTEIN: Pardon?

MR HANSON: Mr Zakos's costings.

MR GOLDSTEIN: You have exception to it?

MR HANSON: Yes, I do.

MR GOLDSTEIN: On what basis?

MR HANSON: (a) the amounts and (b) the way it's been done.

MR GOLDSTEIN: I know that you don't like the amounts but - -

MR HANSON: It's not "like"; it's I have an exception to it. It's - - -

MR GOLDSTEIN: What are the exceptions?

MR HANSON: Item 2 - - -

MR GOLDSTEIN: What page are you referring me to?

MR HANSON: Mr Zakos at 116 of the bundle, Mr Zakos's costings.

MR GOLDSTEIN: Yes.

MR HANSON: At item 2 he's got bathroom and laundry - bathrooms, sorry, and laundry for $6334.74 (indistinct) original report (indistinct) including tax of 7450 on his initial report, saying that was the only defect in the house. All three bathrooms and the laundry do not flow to the wastes, the floor wastes. The water runs away from the floor wastes. In the main bathroom Mr Winton threw a bucket of water on the floor and it ran out onto the carpet in the hallway and pooled at the opposite end of the bathroom to the floor waste. In the laundry if a bucket of water is thrown it goes inside the house towards the low spot in the engineering plans because it all slopes that way. It doesn't go to the floor waste and it doesn't go to the outside as it's supposed to.

The en suite bathroom, all floors don't flow to the floor waste. The shower does not drain away immediately or within reasonable time. There is a constant problem with mould in the en suite bathroom as well as the main bathroom because it all pools down one end, which I'm sure is starting to seep through and it's going to rot the timbers out before too long. The powder room downstairs, apart from the fact the water doesn't flow to the floor waste, there is a large piece of concrete inside the drain which was (indistinct) down. Now, if one bathroom was going to cost 7400 according to Mr Winton, how can three bathrooms and one laundry be fixed for $6300? It's not possible.

MR GOLDSTEIN: I hear what you say, but given the fact that both parties have agreed to refer this issue to Mr Zakos acting as an expert and to be bound by what he says, that's just part and parcel of what happens when an expert gives an expert determination.

MR HANSON: I just - - -

MR GOLDSTEIN: If I may- - -

MR HANSON: I draw your attention - - -

MR GOLDSTEIN: The tribunal at paragraph 4 of its orders of 11 April noted that the parties agreed to be bound by the determination of the independent building expert, so I'll find that you are bound in accordance with your agreement.

MR HANSON: I draw your attention to the 12 October hearing by Principal Member Rosser, item 3: To the extent that the owners claim not to rely on the Zakos report, they are to ensure that their expert witness is present at the hearing on 12 November - which is what we've done. We have Mr Covello here.

MR GOLDSTEIN: Yes, but I'm the one running this case and I'm not going to hear Mr Covello cavilling with what Mr Zakos has done, given the parties' agreement. The agreement made on 11 April, as recorded by the tribunal, is not an agreement that could be walked away from as and when it suited either of the parties.

MR HANSON: Mr Zakos has walked a long way from it. His original time for completion is recorded as well before 8 November when it was - - -

MR GOLDSTEIN: Yes, I understand that, and it is unfortunate, I agree.

MR HANSON: By doing that, he's left us in the position where there's been very little time to digest it, seeing this Zakos report only came into our possession on Friday- Thursday, maybe Friday morning, something like that. It's given us no time and without legal representation it's left us in this situation where we're not getting a fair hearing.

MR GOLDSTEIN: All right. You- - -

MR HANSON: We're not getting a fair chance to present our best case because it's - - -

MR GOLDSTEIN: What I keep saying to you and you don't - what I'd like you to understand is that when the parties agreed to accept Mr Zakos as an expert determiner they were going to accept his decision for better or worse.

MR HANSON: So once again our representation at that time we - Ms Lee informed Mr Mortensen last week that their costs so far are $180,000. I don't know why she informed him of that but she did. We've spent more than that on experts and we've spent more than that on legal representation and we're still sitting here in this situation and everyone in this room is getting paid but us. This is our life. This is our life.” [21]

(Emphasis added.)

21. CB 118-120 (T 93-95)

26. When Mrs Hanson asked whether they could decide if they wanted to withdraw (the cross-claim) before further evidence and arguments concerning damages, there was an exchange between Mrs Hanson and the Senior Member:

“MRS HANSON: Can we decide if we want to withdraw first before we go to more of that?

MR GOLDSTEIN: The liquidated damages? So in other words you want to pack up and go home now, do you?

MRS HANSON: I want to have advice.

MR GOLDSTEIN: I know but basically you’re not getting advice at this instant are you?

MRS HANSON: No.” [22]

(Emphasis added.)

22. CB 122-123, T 97-98.

27. The case was adjourned overnight to give the Hansons an opportunity to seek legal advice.

The second day and the withdrawal of the cross-claim

28. The second day of the hearing, Tuesday, 13 November 2018, was brief. The Hansons indicated that they had received "some fairly basic advice" overnight, and had decided to “withdraw our matter”. [23] There was then a discussion about the legal costs of the cross-claim in which the Senior Member said “I’m going to give everybody an opportunity to say every word that they want in connection to that issue”. [24] Directions were given for the filing of written submissions on costs.

    23. CB 134, T 109.

    24. CB 134, T 109.

29. The Senior Member then confirmed that Metricon’s case was closed on “the builder’s claim”. He then said to the Hansons:

“And your defence to that is effectively your defence was your cross-application. So I will proceed and determine the builder’s claim.” [25]

25. CB 135, T 110.

30. He then asked if there was “anything further” from Mr Hanson and the following dialogue ensued:

“MR HANSON: We’ve got the dispute on the liquidated damages with - - -

MR GOLDSTEIN: That’s your case. That’s part of your case, the liquidated damages claim, that you’ve just withdrawn.

MR HANSON: Right.

MR GOLDSTEIN: I mean if you wish to reventilate – it forms no part of your case, Mr Carolan. Is that correct?

MR CAROLAN: Yes.” [26]

(Emphasis added.)

26. CB 135, T 110.

31. This exchange, and the one the previous day, suggests that the Senior Member and the Hansons were at cross-purposes as to what the “liquidated damages” claim was. Mr Hanson seemed to think that it related to the defence to Metricon’s claim whereas the Senior Member was using the expression to refer to the cross-claim.

The decision of the Senior Member

32. The Senior Member said the proceedings on the builder’s claim were now at an end and he would “get out [his] decision as soon as possible”. It seems from the documents in the Court Book that orders were made, and short reasons delivered, later that day. [27] The Appeal Panel said at [43] that the Member reserved his decision on Metricon’s claim but later at [54] said the Member did not reserve his decision. [28] Based on the transcript and dates on the documents it appears that the Member may have adjourned briefly and returned on the same day to make orders and deliver his reasons.

    27. CB 137-139.

    28. Hanson v Metricon Homes Pty Ltd [2019] NSWCATAP 133; CB 151-174.

33. The Senior Member set out the terms of the contract and relevant variations and claims for interest. All that was said of the defence was this:

“12. The owners defence to the builder’s claim is a basic document of 11 paragraphs. They assert that the build is incomplete, among other things. However there is no assertion that the builder is not entitled to payment of the amount claimed for variations or the amount claimed for stage 06 completion.” [29]

29. CB 138.

34. An order was made in favour of Metricon in the sum of $208,757.74.

The appeal to the Appeal Panel

35. The Hansons appealed to the Appeal Panel pursuant to the provisions in s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (“NCAT Act”) which provides for internal appeals as follows:

(1) An appeal against an internally appealable decision may be made to an Appeal Panel by a party to the proceedings in which the decision is made.

Note : Internal appeals are required to be heard by the Tribunal constituted as an Appeal Panel. See section 27 (1).

(2) Any internal appeal may be made:

(a) in the case of an interlocutory decision of the Tribunal at first instance--with the leave of the Appeal Panel, and

(b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance--as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.

(3) The Appeal Panel may:

(a) decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and

(b) permit such fresh evidence, or evidence in addition to or in substitution for the evidence received by the Tribunal at first instance, to be given in the new hearing as it considers appropriate in the circumstances.

36. The grounds of appeal before the Tribunal were set out in the “Plaintiff’s Amended Appeal Submissions”. [30] To paraphrase these grounds, it was asserted that there was:

    30. CB 142.

1. A denial of procedural fairness in that the Hansons were not granted an adjournment and not given a reasonable opportunity to present their case, specifically on the basis of:

1. Mrs Hanson’s illness;

2. the failure of the Member to question the withdrawal of the solicitor on the morning of the hearing; and

3. the complexity of the Zakos report and the inability of the Hansons to deal with it while they were not legally represented; and

2. An error by the Senior Member in finding that there was no assertion (by the Hansons) that the builder was not entitled to payment of the amount claimed in circumstances where there were a number of allegations of incomplete and poor quality work.

37. Written submissions were filed and the case was heard on 25 February 2019. Judgment was delivered on 31 May 2019: Hanson v Metricon Homes Pty Ltd [2019] NSWCATAP 133. Leave to appeal was refused and the appeal was dismissed. A stay on the orders of the Senior Member was lifted.

The appeal to this Court

The initiating process

38. A summons was filed in this Court on 15 August 2019. An amended summons was filed on 6 September 2019. A further amended summons was filed in Court on 13 December 2019. I will disregard the earlier versions of the document and refer to the final incarnation as “the summons”.

39. The summons sets out the “details of the appeal” as an “appeal from the whole of the decision below in AP: 18/50018.” The file number relates to the appeal determined by the Appeal Panel.

40. The appeal is brought pursuant to s 83 of the NCAT Act which is in the following terms:

83   Appeals against appealable decisions

(1)  A party to an external or internal appeal may, with the leave of the Supreme Court, appeal on a question of law to the Court against any decision made by the Tribunal in the proceedings.

(2)  A person on whom a civil penalty has been imposed by the Tribunal in proceedings in exercise of its enforcement or general jurisdiction may appeal to the appropriate appeal court for the appeal on a question of law against any decision made by the Tribunal in the proceedings.

(3)  The court hearing the appeal may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) the following:

(a)  an order affirming, varying or setting aside the decision of the Tribunal,

(b)  an order remitting the case to be heard and decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of the court.

(4)  Without limiting subsection (3), the appropriate appeal court for an appeal against a civil penalty may substitute its own decision for the decision of the Tribunal that is under appeal.

(5)  Subject to any interlocutory order made by the court hearing the appeal, an appeal under this section does not affect the operation of the appealable decision of the Tribunal under appeal or prevent the taking of action to implement the decision.

41. The orders sought in the summons are as follows:

“1. Pursuant to section 83 of the Civil and Administrative Tribunal Act 2013 leave to appeal from the whole of the decision below in Decision AP19/35293 and HB:16/55283.

2. Pursuant to s 84(2)(b) of the Civil and Administrative Tribunal Act 2013 time be extended to permit the plaintiffs to appeal.

3. A declaration that the plaintiffs were denied procedural fairness at the hearing before the Tribunal Member on 13 November 2018.

4. An order setting aside the decision of the Tribunal Member of 13 November 2018.

5. An order setting aside the decision of the Appeal Panel of 31 May 2019.

6. An order remitting the case for a re-hearing in the Tribunal.

7. An order staying the decision of the New South Wales Civil & Administrative Tribunal, dated 13 November 2018, in HB 16/55283 pending determination of the Appeal.

8. An order staying the judgment in the sum of $208,945.74 in the District Court of New South Wales Proceedings 2019/00006261 pending a final determination of this Appeal.

9. An order that the judgement entered for the Defendant in District Court of New South Wales Proceedings 2019/00006261 be set aside.

10. An order that the proceedings in HB 16/55283 be remitted to NCAT for rehearing according to law.

11. An order that the Homeowners claims in proceedings HB 17/06192 and the Homeowners further claims in proceedings HB 18/49637 be determined at the same time as any rehearing of the matters in Order 10 herein.”

42. The summons raised the following grounds of appeal:

“1 The Appeal Panel erred in failing to grant the Plaintiffs leave to appeal pursuant to section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW).

2   The Appeal Panel erred in law in failing to find that the Plaintiffs had been denied procedural fairness and in consequence suffered detriment before the Tribunal at first instance when it refused the plaintiff's application to vacate the hearing in circumstances where:

(a)   The Plaintiff's legal representatives, without notice withdrew on the morning of the first day of the hearing where there was no issue as to fees, rather the legal representative considered that he was unable to present the Plaintiff's case, thereby leaving the Plaintiffs unrepresented through no fault of their own.

(b)   The Plaintiffs, as non-lawyers, who up to the start of the hearing had been represented were not equipped to cross-examine the expert witnesses.

(c)   The Tribunal should have made at least a cursory inquiry as to the reasons the Plaintiff's legal representative wished to withdraw at the start of the hearing, which would have revealed that it was because he, like them, was unprepared and not that fees were outstanding.

(d)   A joint expert report ordered by the Tribunal was not provided in accordance with the Tribunal's orders, with a 107-page report being provided in the afternoon of 8 November 2018, one (1) clear business day before the first hearing day, thereby compromising the Plaintiff's readiness for hearing, and further complicated by Mrs Hanson's serious illness, causing her not to have read the report in the limited time available to her.

(e)   Principal Member Rosser made ambiguous orders on 12 October 2018, prior to the substantive hearing, which the Plaintiffs understood to mean that there would be an opportunity for them to rely on their own expert evidence and not solely rely on the Zakos Joint Expert report, which had been served extremely late.

(f)   The Tribunal inadvertently misled the Plaintiffs because while the Tribunal Member drew their attention to time limitation issues, no mention was made of likely estoppel issues, the omission of which, in part, caused the Plaintiffs to proceed on an incorrect assumption, namely that they could re-agitate the same subject matter that was before the Tribunal.

(g)   Had the Plaintiffs been sufficiently appraised of the effect of withdrawing their claim, when on any view they were entitled to judgment in at least the sum of $27,946.65, as reflected in the joint expert report, they would not have withdrawn their claim and rather had judgment entered in their favour for at least that amount.

[3] The Appeal Panel erred in law by failing to adequately (or at all) consider the second ground of appeal which challenged the Tribunal's finding that the Plaintiffs had not raised incomplete work in HB: 1655283, otherwise known as Metricon's case.”

The written submissions

43. Written submissions were filed in advance of the hearing. The written submissions filed for the Hansons were directed to the conduct and decisions made by the Senior Member. In essence, the submissions asserted that the conduct of the proceedings before the Senior Member was “unorthodox” and that there was a denial of procedural fairness on a number of bases. The written submissions did not address ground [3] at all.

44. Metricon’s written submissions asserted there was no error in the reasoning of the Appeal Panel and stressed that “[t]he appealable decision is that of the Appeal Panel, not that of Senior Member Goldstein”. [31]

    31. Metricon’s Written Submissions filed 12 December 2019 at [11].

The hearing

45. At the oral hearing in this Court, a document was handed up that was relevant to the second ground of appeal and to an issue of estoppel and its relationship to the asserted lack of procedural fairness. [32] A Joint Court Book became Exhibit A and a joint report by a Mr Rafeletos and a Mr Barry was Exhibit B. The latter document was before the Appeal Panel but was not in the Court Book. It went to the issue of whether there was any allegation of incomplete work in the proceedings at first instance.

    32. “Aide Memoire”, MFI 1.

46. The parties first addressed the issue of the extension of time. The appeal was lodged around six weeks out of time and Metricon opposed the extension.

47. Counsel for Metricon submitted that the merit of the proposed appeal does not impact on the question of whether to grant an extension of time because there would be “no injustice in the situation that’s portrayed on the papers.” I cannot accept that submission. When the application “is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal”: Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458; see also, for example, Dyason v Butterworth [2015] NSWCA 52 at [65], O’Connor v State of New South Wales& Anor [2017] NSWSC 598 at [64]-[66]. The ultimate question is whether to refuse the application for an extension of time would constitute an “injustice”: Gallo v Dawson at 459, Misrachi v The Public Guardian [2019] NSWCA 67 at [38]. Put another way the question is whether it would be “just in all of the circumstances to [extend time]”: Director of Public Prosecutions (NSW) v Hughes [2017] NSWSC 492 at [52] citing Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27. The prospects of success of the appeal are relevant to these ultimate questions. I propose to determine the application to extend the time to permit the Hansons’ appeal taking into account all relevant considerations including the merits of the appeal.

48. The balance of the submissions was largely concerned with the question of procedural fairness. There was a specific issue as to whether part of the unfairness to the Hansons was that they are now confronted with a defence to their cross-claim which encompasses an assertion that they are estopped from pursuing their claim because the issue was litigated and resolved by the Senior Member and Appeal Panel, and because they agreed to be bound by the Zakos report.

49. Very few submissions were addressed to the third ground of appeal, that is, the assertion that neither the Appeal Panel nor the Senior Member dealt with the Hansons’ defence in any meaningful way or at all.

What happened to the Hansons’ cross-claim?

50. As to the cross-claim discontinued on the second day of the hearing before the Senior Member, the Hansons filed an application in the Consumer and Commercial Division of NCAT on 21 November 2018. [33] It sought a variety of orders including an order that they not be required to pay the damages ordered by the Senior Member and other damages in various large sums. For example, the total amount claimed on the cover sheet of the claim was stated to be $2,000,000. [34] In the alternative, there is a claim for unjust enrichment based on Metricon retaining the money paid by the Hansons under the building contract.

    33. CB 363-364.

    34. CB 363.

51. Metricon filed points of defence with NCAT on 11 April 2019. Relevant to one of the arguments made in the present proceedings, is the part of the defence that pleaded an estoppel as follows:

“31. In answer to the whole of the owners' claim and all or any of their causes of action based upon any defects with the building works, Metricon says that in prior proceedings by the owners against Metricon in the Tribunal (HB 17/06192) ('2017 claim'):

(a) on 14 February 2018, the owners and Metricon agreed to jointly appoint a

building expert to provide a binding determination in relation to any defects with the building works ('the binding expert determination agreement');

(b) in accordance with the binding expert determination agreement:

(i) the owners and Metricon appointed Mr George Zakos as the joint expert;

(ii) the owners and Metricon transferred $15,000.00 to their respective

solicitor's trust accounts for their share of Mr Zakos' fees;

(iii) the parties instructed Mr Zakos to provide a binding expert determination as to the existence of any defects with the building works, a scope of work for rectification of each defect item accepted by him and an assessment of the cost of doing the work;

(iv) the owners and Metricon each agreed to pay, and did pay, a 50% share of Mr Zakos' fees for the binding expert determination;

(v) Mr Zakos issued a binding expert determination report on 8 November 2018;

(c) in the circumstances, the owners are estopped from advancing their claim or any cause of action based upon any defects with the building works and are bound by Mr Zakos' expert determination;

(d) in the alternative, if the owners are not so estopped:

(i) the owners have breached the binding expert determination agreement;

(ii) in the event the Tribunal proceeds to hear and determine the owners' claim, Metricon is entitled to damages for the owners' breach of the binding expert determination agreement, including:

(A) its costs associated with the expert determination;

(B) any difference between the amount awarded by the Tribunal for the owners' claim and Mr Zakos' expert determination to the extent the Tribunal's determination exceeds that of Mr Zakos; and

(C) any other costs incurred by Metricon as a result of the owners' breach of the binding expert determination agreement;

(iii) any amount payable by Metricon to the owners for the owners' claim should be reduced for, or set off by, the damages payable by the owners for breach of the binding expert determination agreement.” [35]

35. CB 429-430.

52. The defence also pleaded that the Tribunal had no jurisdiction because the amount claimed exceeded the jurisdictional limit of the Tribunal. I understand that the Hansons’ claim has since been transferred to this Court. [36]

    36. CB 196, Affidavit of Mr Hanson at [30]

consideration

53. In view of the way in which the appeal was argued by the parties, I will address Ground 2, asserting a denial of procedural fairness, first. Very little attention was paid to Grounds 1 and 3 and, to a greater or lesser degree, they are dependent on the outcome of Ground 2.

Ground 2

54. Ground 2 asserts that the Appeal Panel erred in failing to find that the Hansons were denied procedural fairness in the hearing before the Senior Member. The ground relies in particular on the failure to adjourn the hearing in circumstances where the Zakos report was received very late and where their solicitor withdrew on the morning of the hearing without any explanation being sought for his withdrawal. In those circumstances it is submitted that the Hansons were “not equipped” to conduct the hearing or to cross-examine the experts. This ground also emphasises the fact that the orders made in relation to the status of the Zakos report were “ambiguous” and the manner in which the matter was dealt with was unfair. It is submitted that the Hansons were essentially or actually denied the opportunity to present their defence and call a witness contradicting aspects of the Zakos report.

55. Metricon asserts there was no procedural unfairness and relies on those occasions where the Senior Member explained aspects of the procedure to the Hansons in the course of the hearing. More fundamentally, it contends that the Appeal Panel made no error in its assessment of whether procedural fairness was afforded to the Hansons. It also submits that the ground should fail because no other result was possible based on all of the evidence. Thus, even if there is an extension of time and leave to appeal is granted, Metricon submits that the appeal should be dismissed.

56. In order to ensure that procedural fairness is afforded during the course of proceedings, the Tribunal has a duty to provide a reasonable opportunity for each party to be heard and to present their case. In Re Association of Architects Ex Parte Municipal Officers Association of Australia [1989] HCA 13; (1989) 63 ALJR 298 at 305, Gaudron J said:

“As was pointed out by Deane J in Sullivan v Department of Transport (1978) 20 ALR 323 at 343, procedural fairness requires only that a party be given ‘a reasonable opportunity to present his case’ and not that the tribunal ensure ‘that a party takes the best advantage of the opportunity to which he is entitled’.”

57. In addition to the common law, s 38(5) of the NCAT Act requires the Tribunal to ensure that parties understand proceedings and have an opportunity to be heard.

The Appeal Panel’s reasons

58. The Appeal Panel delivered a relatively lengthy judgment but the part of the judgment that deals with the allegation of procedural unfairness is relatively brief. It set out, for example at [34], [38] and [39], a number of occasions when the Senior Member discussed the case and the procedure with the parties and an occasion when he raised a potential limitation issue with re-instituting its cross-claim.

59. The Appeal Panel held at [47] that the Senior Member “had regard to the procedural history of the matters, the issues that needed to be determined in both applications, and the obligations imposed under s 36 of the NCAT Act.”

60. The Appeal Panel relied at [37] on the owners’ concession at the hearing that given proceedings had been ongoing for almost two years, there had been adequate time for them to be organised to present their case. This was a reference to the exchange at p 15 of the transcript (CB 41) but seemed to disregard the fact that:

1. The concession was extracted after the Senior Member told the Hansons it was “not really acceptable” that they were “not organised” and stated “there’s been adequate time for you to be organised”;

2. Mr Hanson attempted to emphasise that they had legal representation until the hearing commenced but was cut off;

3. Two pages earlier Mr Hanson said that this was “the first time we’ve seen the bundle”; and

4. The Hansons repeatedly said during the course of the first day that they were unable to present their case and were not receiving a “fair” hearing. Their subjective opinion is not relevant to the question the Appeal Panel (or I) have to decide, but their repeated contention that it was unfair to proceed raised the issue in an unambiguous way and called for close scrutiny of the proceedings at first instance.

61. The Appeal Panel found at [48] that the “transcript shows that [the Senior Member] was aware that the owners were at a disadvantage in the absence of legal representation, and in accordance with the obligations imposed on him under s 38(5) of the NCAT Act, had explained the issues”.

62. The Appeal Panel accepted that, although they did not make an adjournment application in those terms, the Hansons were seeking an adjournment to obtain new lawyers or otherwise prepare themselves for the hearing. In relation to the adjournment application, the Appeal Panel set out at [33] the Senior Member’s reasons without adverse comment. In particular, the Appeal Panel said:

“He stated that the Tribunal had an obligation to have the proceedings heard, and that unless there was some extraordinary circumstances why the matter should not go ahead he was minded to order it should go ahead rather than adjourning it and pushing it further into the future.” [37]

(Emphasis added.)

37. CB 163.

Relevant provisions of the NCAT Act

63. The power to adjourn proceedings in the Tribunal is set out in s 51 of the NCAT Act:

The Tribunal may adjourn proceedings to any time and place (including for the purpose of enabling the parties to negotiate a settlement).

64. Section 36 provides the “guiding principles” to be applied by the Tribunal to its practice and procedure:

(1) The ‘guiding principle’ for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The Tribunal must seek to give effect to the guiding principle when it:

(a) exercises any power given to it by this Act or the procedural rules, or

(b) interprets any provision of this Act or the procedural rules.

(3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal:

(a) a party to proceedings in the Tribunal,

(b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.

(4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.

(5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.

65. Section 38 sets out the “Procedure of the Tribunal Generally” as follows:

(1) The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision.

(2) 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.

(3) Despite subsection (2):

(a) the Tribunal must observe the rules of evidence in:

(i) proceedings in exercise of its enforcement jurisdiction, and

(ii) proceedings for the imposition by the Tribunal of a civil penalty in exercise of its general jurisdiction, and

(b) section 128 (Privilege in respect of self-incrimination in other proceedings) of the Evidence Act 1995 is taken to apply to evidence given in proceedings in the Tribunal even when the Tribunal is not required to apply the rules of evidence in those proceedings.

Note : Section 67 also prevents the compulsory disclosure of certain documents in proceedings in the Tribunal that would, in proceedings before a court, be protected from disclosure by reason of a claim of privilege.

(4) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.

(5) The Tribunal is to take such measures as are reasonably practicable:

(a) to ensure that the parties to the proceedings before it understand the nature of the proceedings, and

(b) if requested to do so--to explain to the parties any aspect of the procedure of the Tribunal, or any decision or ruling made by the Tribunal, that relates to the proceedings, and

(c) to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings.

(6) The Tribunal:

(a) is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings, and

(b) may require evidence or argument to be presented orally or in writing, and

(c) in the case of a hearing--may require the presentation of the respective cases of the parties before it to be limited to the periods of time that it determines are reasonably necessary for the fair and adequate presentation of the cases.

66. A few things can be said about these provisions. First, there is no statutory basis to say, as the Senior Member did, that the Hansons were required to establish “some extraordinary circumstance” before an adjournment could be granted. Second, the provision in s 38(5) casts a positive obligation on the Tribunal to ensure that the parties understand the nature of proceedings and the procedures of the Tribunal. Third, in addition to being “quick and cheap”, the Tribunal must facilitate the “just” resolution of proceedings.

67. The provisions, and the obligations imposed on decision makers, are substantially similar to the legislation considered by the Court of Appeal in Jones & Anor v Ekermawi [2009] NSWCA 388 (Administrative Appeals Tribunal Act 1997 (NSW), s 73) and Italiano v Carbone & Ors [2005] NSWCA 177 (Consumer Trader and Tenancy Tribunal Act 2001 (NSW), s 35). I am satisfied that there was a similar failure to comply with the statutory obligations and the common law requirements of procedural fairness. The failure of the Appeal Panel to recognise this constituted an error of law.

68. In particular, I am satisfied:

1. The Senior Member applied the wrong test in determining whether to grant the adjournment. Even allowing for the delays that had plagued the proceedings, there was no requirement for the Hansons to establish that there was “some extraordinary circumstance” that justified or required an adjournment. In any event, the fact that they had been left without legal representation on the morning of the hearing, when a lengthy expert report was served on the last business day before the proceedings and contrary to case management orders, and where it was clear that the unrepresented litigants had not seen the bundles of material upon which the decision was to be made, was capable of amounting to an “extraordinary circumstance”. The Appeal Panel failed to recognise this error and repeated the Senior Member’s words without comment.

2. The Senior Member granted leave for the Hansons’ solicitor to withdraw without having an understanding of why he was withdrawing. It appears he was under the misapprehension that the solicitor’s fees had not been paid, a matter the Hansons steadfastly refuted. The Hansons were not permitted to explain this until it was too late.

3. The Hansons misunderstood the status of the Zakos report or, alternatively, the Senior Member erroneously prevented them from challenging aspects of it, including by calling evidence. This situation arose because of the ambiguity surrounding the directions made on 11 April 2018 and 12 October 2018. The former direction, upon which the Senior Member acted, suggested the opinions in the report were to be binding on the parties because that is what they agreed to. However, the latter direction contemplated that the Hansons may wish to challenge the report and they were directed to have their expert present at the hearing. According to the transcript, they had their expert (Mr Covello) at the hearing. [38] However, in spite of Principal Member Rosser’s direction on 12 October 2018, the Senior Member said:

   38. CB 120.

“Yes, but I’m the one running this case and I’m not going to hear Mr Covello cavilling with what Mr Zakos has done, given the parties agreement.” [39]

39. CB 120.

While the Senior Member explained his reasons for this (the fact that the parties agreed in April 2018 that the report would be binding), and while the Tribunal has the power to determine its own procedures, it is clear that the Hansons acted on the strength of the more recent 12 October direction. They were prevented from calling the witness they brought to the hearing in accordance with that direction. That constitutes a substantial denial of their ability to present their case. Further, as was put to the Appeal Panel, the late service of the report compromised the Hansons’ ability to have their expert challenge the opinions stated by Mr Zakos. The delay in service of the Zakos report coupled with the fact that the Hansons were unrepresented, meant that they were ill-equipped to present their case. The manner in which the Zakos report was treated was critical to the outcome of the dispute.

4. The Appeal Panel did not grapple in any meaningful way with the fact that the Hansons were denied the opportunity to call Mr Covello or with the direction that they have their expert available. All that was said on this issue was:

“41. The Member admitted the report of Mr Zakos, tendered by Metricon, over the objection of the Owners (T89). He gave oral reasons for doing so (T89-92), referring to the agreement of the parties at the directions hearing on 11 April 2018 (at which the Owners were legally represented) that Mr Zakos be appointed as the independent building defects expert. The Member noted that the parties agreed to be bound by the determination of the independent building expert; the comprehensive scope of the report; and referred to ss 36 and 38 of the NCAT Act on the guiding principle of the Tribunal and the ability of the Tribunal to determine its own procedure.”

Those observations were made under the heading “The Appeal” and the sub-heading “Whether there was a denial of procedural fairness”. Under the heading “Discussion and findings” there was no consideration of this issue although the issue was ventilated, albeit to a limited extent, in the hearing before the Appeal Panel. [40] The lawyer then appearing for the Hansons referred to the fact that “the Zakos report was received late and … they didn’t have [the] time and opportunity to put on further evidence.” [41] The lawyer also referred to “the orders made in October 2018 by [Principal Member Rosser]” which stated that “to the extent the owners claim not to rely on the Zakos report they are to ensure that their expert witness is present at the hearing on 12 November 2018.” He also submitted “with the Zakos report being three and a half weeks late, the purpose of that order is frustrated”.

40. CB 475-476.

41. CB 475.

5. The Hansons misunderstood what the Senior Member was referring to when he spoke of the “liquidated damages claim” and did not understand that the Senior Member was proceeding on the basis that “effectively your defence was your cross-application”. [42] After the cross-application was withdrawn and the Senior Member indicated he would determine Metricon’s claim, it seems that Mr Hanson thought the “liquidated damages claim” was a reference to the defence of incomplete work or some other claim – he knew he and his wife had just withdrawn the cross-claim. He said:

   42. CB 135.

“We’ve got the dispute on the liquidated damages with ---“ [43]

43. CB 135.

The Senior Member replied:

“That’s your case. That’s part of your case, the liquidated damages claim, that you’ve just withdrawn.”

While the Senior Member also said “I mean if you wish to ventilate,” he then asked counsel for Metricon whether “it forms no part of your case … is that correct?” The argument moved on without the Hansons having any real opportunity to consider their position or grapple with the apparent misunderstanding as to what was happening. This misunderstanding meant that the Hansons were essentially (and again) denied the opportunity to put the case of incomplete work as it was formulated in their initial defence. It is reasonably clear that they did not understand that withdrawal of the cross-application was the equivalent (or was being treated as the equivalent) of withdrawing their original points of defence to Metricon’s claim.

6. Having withdrawn and re-instituted the cross-claim, and having been denied the opportunity to challenge the Zakos report, the Hansons are now confronted with a defence that includes the raising of an estoppel based on their agreement to be bound by the Zakos report in the earlier hearing. This possibility, which in fairness may not have occurred to the Senior Member and was not raised with him, was not explained to them when they withdrew the cross-claim.

7. There is no doubt that the Senior Member made some efforts to comply with s 38(5) of the NCAT Act. For example, he explained Tribunal procedures relating to expert evidence, identified the potential time limitation issue in relation to the Hansons’ case and adjourned for short periods on occasion to allow the Hansons time to discuss the evidence with their expert and seek advice. He also appeared to be vexed by the extensive delay in the proceedings and was justifiably keen and duty bound to move the litigation forward. Even allowing for these matters, upon reading the transcript in its entirety, I am satisfied that the Hansons were denied procedural fairness in their proceedings before the Senior Member.

Conclusion as to Ground 2

69. A decision whether or not to grant an adjournment is a discretionary one and it will be a rare case where that discretion is interfered with lightly on appeal. Further, it will be a rare case where the refusal of an adjournment is such as to give rise to a question of law as required by s 83 of the NCAT Act. On the other hand, whether a litigant has been denied procedural fairness constitutes a question of law. I am satisfied that the combination of the matters referred to above constitute a denial of procedural fairness in the proceedings before the Senior Member and that the failure of the Appeal Panel to recognise this amounted to an error of law.

Ground 1

70. Ground 1 asserts that the Appeal Panel erred in failing to grant the Plaintiffs leave to appeal pursuant to s 80(2)(b) of the NCAT Act.

71. In accordance with clause 12(1) of Schedule 4 of the NCATAct, the Appeal Panel’s discretion to grant leave is enlivened if the Panel is satisfied that:

“…the appellant may have suffered a substantial miscarriage of justice because:

(a) the decision of the Tribunal under appeal was not fair and equitable, or

(b) the decision of the Tribunal under appeal was against the weight of evidence, or

(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).

(Emphasis added.)

72. To satisfy the Panel that leave should be granted, it is enough that the appellant may have suffered a substantial miscarriage of justice, not that this was the actual outcome.

73. In Collins v Urban [2014] NSWCATAP 17 at [71] and [76], the Appeal Panel adopted the High Court’s explanation of what constitutes a ‘substantial miscarriage of justice’ in the context of the criminal law (see, for example, Mraz v The Queen (1955) 93 CLR 493 at 514), to the meaning of this term in the context of cl 12(1) of Schedule 4 of the Act.

74. Based on the matters in cl 12(1)(a), (b) and (c), I am satisfied that a substantial miscarriage of justice may have been suffered in circumstances where there was a significant defect in the way the matter was conducted or decided which deprived the appellant of a “chance which was fairly open” for a different and more favourable outcome.

75. The Hansons put on a defence to the original claim and later filed a cross-claim which covered some of the same territory as the defence. When they withdrew the cross-claim during the hearing, the Senior Member appeared to treat it as a withdrawal of the defence – a matter the Hansons did not understand. The Senior Member referred to the defence in his reasons, but mainly to emphasise that it did not allege Metricon was not entitled to repayment. He referred to a few of the particular complaints raised in the defence, but failed to explain why they might not impact upon the amount to be awarded to Metricon. The Hanson’s attempt to challenge the Zakos report, and to call their own expert, was rejected as described earlier in this judgment. The Hansons were denied the ability to dispute the findings set out in the Zakos report, despite having Mr Covello present on the day of the hearing.

76. If the Senior Member had taken into account the Hansons’ defence or allowed the opinion of their expert to be heard, there is a chance that the Hansons may have achieved a different and more favourable outcome, that is a judgment for Metricon but in a smaller sum.

77. I am satisfied that the denial of procedural fairness may have resulted in the Hansons suffering a substantial miscarriage of justice and that leave to appeal should have been granted.

78. I propose to uphold this ground of appeal.

Ground 3

79. In view of the disposition of grounds 1 and 2 and the absence of any substantial submissions on the issue, it is unnecessary to go into great detail in relation to the third ground of appeal. This ground asserts that the Appeal Panel erred in law by failing to adequately (or at all) consider the second ground of appeal which challenged the Tribunal’s finding that the Plaintiffs “had not raised incomplete work”.

80. The defence to Metricon’s claim, which has the appearance of having been drafted by a lay person, asserted “the build is incomplete and the work done is of poor quality”. [44]

    44. CB 9, paragraph 10.

81. Apart from mentioning it, this assertion was not dealt with by the Senior Member in the reasons for his decision. All that was said was that “they assert that the build [is] incomplete” but that “there is no assertion that the builder is not entitled to payment”. [45] While the reasons did not need to be extensive, there needed to be some engagement with the defence, the assertion that the build was incomplete, and why that did not encompass an assertion that Metricon’s claim should be denied or that the amount of damages be reduced.

    45. CB 138.

82. The Appeal Panel denied leave to argue this ground of appeal. In doing so, it did no more than refer to the Senior Member’s “succinct” reasons, determine that the Senior Member “had regard to the elements of the Owners’ defence”, and accept that the Senior Member was not required to “go into detail” because the Hansons had withdrawn their cross-claim. It concluded that the Hansons were not denied the opportunity of a different, more favourable, result.

83. While this third ground of appeal may not warrant a grant of leave on its own, because the allegation of incomplete work was argued in a very limited fashion, [46] it is difficult to disentangle from the more serious assertion that there was a denial of procedural fairness. The situation seems to be that the defence was dealt with in a peremptory manner because the Hanson withdrew their cross-claim.

    46. See the transcript of the hearing before the Appeal Panel at 25 and 30-31: CB 473, 478-479.

84. I would also uphold this ground of appeal.

Application for an extension of time

85. The Hansons require and sought an order to extend time for the bringing of the appeal pursuant to s 84(2)(b) of the NCAT Act. The delay in filing the summons was something in the order of five weeks. Affidavit evidence explains this delay by reference to Mrs Hanson’s serious illness. She has cancer and was undergoing chemotherapy during the period around and following the decision of the Appeal Panel. This is asserted in an affidavit of Mr Hanson and in various medical reports within the Court Book. [47] Mr Hanson says that the couple were “also under significant financial distress” and sought advice from various legal centres, the Legal Aid Commission and firms that offered pro bono assistance. Until they contacted their current lawyers, they were unable to obtain legal assistance until 15 August 2019. [48]

    47. See CB 198 (Mr Hanson’s affidavit) and 385-389 (medical reports).

    48. CB 198.

86. Against this is the fact that the proceedings before the Tribunal were obviously subject to procedural complexity and delay, matters that concerned both the Senior Member and the Appeal Panel. By the time the hearing came on before me, it was over three years since Metricon filed its claim with NCAT. This delay militates against granting the extension of time.

87. However, the delay in filing was a relatively small portion of the overall delay and the delay has been explained satisfactorily. Further, the second ground of appeal asserting a denial of procedural fairness is a matter of real substance and should be upheld.

88. I would extend time to file the summons.

Orders

89. As I understand it, the judgment entered in the Tribunal was registered for enforcement in the District Court. The District Court proceedings should be stayed pending the outcome of the proceedings before the Tribunal.

90. I make the following orders:

1. Pursuant to s 84(2)(b) of the Civil and Administrative Tribunal Act 2013, extend time for the filing of the summons.

2. Pursuant to s 83 of the Civil and Administrative Tribunal Act 2013, grant leave to appeal against the decision of the Appeal Panel dated 31 May 2019 and known as Hanson v Metricon Homes Pty Ltd [2019] NSWCATAP 133.

3. Set aside the orders of the Appeal Panel made on 31 May 2019 and in lieu thereof make the following orders:

1. Appeal allowed.

2. The decision of Senior Member Goldstein dated 13 November 2018 is quashed.

3. Metricon’s claim filed 15 December 2016 is remitted for hearing by a different single Member of the Civil and Administrative Tribunal to be dealt with according to law.

4. Metricon is to pay the costs of and incidental to the internal appeal to the Appeal Panel.

4. Proceedings 2019/00006261 in the District Court of New South Wales are stayed pending the determination of Metricon’s claim in the Civil and Administrative Tribunal.

5. The defendant is to pay the costs of and incidental to the appeal to this Court.

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Endnotes

Decision last updated: 16 April 2020