Orosi v Nourozi

[2023] NSWCATCD 59

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Orosi v Nourozi [2023] NSWCATCD 59

Hearing dates:

On the papers

Date of orders:

06 June 2023

Decision date:

06 June 2023

Jurisdiction:

Consumer and Commercial Division

Before:

R C Titterton OAM, Senior Member

Decision:

1. A hearing is dispensed with.

2. The application of Orosi Pty Ltd to transfer applications HB 22/46158 and HB 22/56030 is dismissed.

2. The costs of the transfer application are reserved.

3. The hearing of 13 October 2022 is confirmed.

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), s 50(2)

Home Building Act 1989 (NSW), s 48K

Cases Cited:

BKB Constructions Pty Ltd v Sawan [2022] NSWCATAP 103

Texts Cited:

Nil

Category:

Procedural rulings

Parties:

Applicant: Shanin Nourozi UT Pty Ltd ATF Shanin Nourozi Unit Trust
Respondent: Orosi Pty Ltd

Representation:

Solicitors:

Applicant: Australian Presence Legal Pty Ltd
Respondent: Development Lawyers Pty Ltd

File Number(s):

HB 22/46158

Publication restriction:

Nil

REASONS FOR DECISION

Summary

1. This is the application of Orosi Pty Ltd (Builder) to transfer proceedings HB 22/56030 and HB 22/46158 to the District Court of New South Wales (District Court).

2. For the following reasons, the application is dismissed.

Background

3. Application HB 22/46158 was filed on 17 October 2022 (Homeowner’s application). The applicant is Shanin Nourozi UT Pty Ltd ATF Shanin Nourozi Unit Trust (Homeowner). He seeks an order that the Builder pay him approximately $334,000 for loss and damage in relation to defective building works.

4. Application HB 22/56030 was filed on 20 December 2022 (Builder’s application). It seeks $215,616 for “unpaid monies”.

Transfer application

5. At a directions hearing on 31 March 2023, the Builder indicated that it was proposing to make an application to transfer the Builder’s application to the District Court. A timetable for submissions was set and the Tribunal subsequently received submission from the Builder on 11 April and 2 May 2023 (in reply), and from the Homeowner on 26 April 2023.

6. I summarise those submissions as follows.

Builder’s submissions

7. I summary, the Builder submits that:

1. there is a significant prejudice to it if the transfer application is not granted as it will be “shut out” from its claim “due it possibly being out of time to pursue [it]”;

2. the relevant limitation period for the Builder’s claim in the Tribunal was 3 years from the date of the contract. As the Builder’s application was filed on 19 December 2022 and the date of the contract was 1 July 2018, the Builder may be outside the applicable limitation period to commence proceedings in the Tribunal under s 48K(8)(a) of the Home Building Act 1989 (NSW) (HBA);

3. both the Builder’s application and the Homeowner’s application should be transferred to the District Court to avoid “inconsistent determination”.

Homeowner’s submissions

8. The Homeowner opposes the transfer of the proceedings to the District Court. In summary, the Homeowner submitted:

1. the Builder has not identified any good reason to transfer the proceedings;

2. the Builder’s claim that it would suffer prejudice if the proceedings are not transferred is baseless in that any amounts that are genuinely due to it under the alleged contracts that are the basis of the Cross-Claim can be determined and accounted for in any orders made by the Tribunal in the primary proceedings HB 22/46158;

3. because of cl 5(3) of Sch 4 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), the District Court does not have jurisdiction to hear or determine proceedings HB 22/46158 and thus an order for the transfer of proceedings HB 22/56030 to the District Court would be ineffective and inappropriate;

4. the Homeowner would in any event suffer prejudice in the form of increased cost and delay if the proceedings were transferred to the District Court;

5. the Builder is still within time to commence proceedings in the District Court;

6. as it is common ground that the Tribunal does not have jurisdiction to hear the Builder’s application, that application should be dismissed for want of jurisdiction.

Builder’s submissions in reply

9. On the whole, the Builder’s reply submissions simply disagree with the Homeowner’s submissions.

Preliminary issue

10. Neither party opposed the Tribunal determining the application “on the papers” and without a hearing. As I am satisfied that the issues for determination can be adequately determined in the absence of the parties by considering their written submissions, I dispense with a hearing: NCAT Act, s 50(2).

Relevant legislation and principles

11. Section 48K of the HBA provides:

48K Jurisdiction of Tribunal in relation to building claims

(1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations).

(2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section.

(3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made).

(4) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that are required under a contract to be supplied to or for the claimant on or by a specified date or within a specified period but which have not been so supplied if the date on which the claim was lodged is more than 3 years after the date on or by which the supply was required under the contract to be made or, if required to be made in instalments, the last date on which the supply was required to be made.

(5) The fact that a building claim arises out of a contract that also involves the sale of land does not prevent the Tribunal from hearing that building claim.

(6) The Tribunal does not have jurisdiction in respect of a building claim arising out of a building cover contract required to be entered into under this Act if the date on which the claim was lodged is more than 10 years after the date on which the residential building work the subject of the claim was completed.

(7) The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E).

(8) The Tribunal does not have jurisdiction in respect of a building claim relating to--

(a) a contract for the supply of goods or services to which none of subsections (3), (4), (6) and (7) applies, or

(b) a collateral contract,

if the date on which the claim was lodged is more than 3 years after the date on which the contract was entered into.

(9) This section has effect despite clause 5 (Relationship between Tribunal and courts and other bodies in connection with Division functions) of Schedule 4 to the Civil and Administrative Tribunal Act 2013 .

12. In BKB Constructions Pty Ltd v Sawan [2022] NSWCATAP 103 the Appeal Panel stated at [76] (citations omitted)

Under Cl. 6 of Sch. 4 of the NCAT Act, the Tribunal may transfer proceedings to a Court by the motion of a party or its own motion. In making a decision whether or not to transfer proceedings, there is a wide discretion to take into account any relevant matter …The fundamental consideration is whether there is “sufficient cause”; “sound ground”; or “good reason” for the transfer to be made. That permits a wide range of discretionary considerations. Those considerations may be impressionistic and evaluative …Where there is a significant risk the jurisdictional limit will be exceeded; or whether the Tribunal has jurisdiction at all, are important considerations …

13. The Appeal Panel continued

77. However, in proceedings where a homeowner seeking damages for the rectification for defective work and the builder asserts that it is owed monies under the contract because the homeowner has not paid the full contract price for the works, the assessment of damages to the homeowner must take into account the amount the homeowner would be liable to pay the builder under the contract for the work performed. The reason for this is to ensure that the homeowner is put into the same position as if the contract had been performed; not a better position (Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 at [5]; Sleiman t/as Perfect Kitchens v Dempsey [2020] NSWCATAP 26 at [79]-[84]).

78. The amount the owner was liable to pay the builder under contract (if any) is relevant to the owner’s claim for damages against the builder, and falls within the auspices of the owner’s proceedings in Matter HB 19/41921. The amount that the builder claimed it was owed under the contract was significantly less than the amount the owner claimed in damages for the cost of rectification of defects.

79. Taking these principles into account, if the builder had made an application to transfer its proceedings to a Court of competent jurisdiction at the hearing, the Tribunal would have had very strong grounds to refuse the application because:

(1) The builder’s claim that it was owed monies under the contract would still be taken into account in any assessment of damages to the homeowner. If the builder was not entitled to any further payment under contract there would be no adjustment made in any event; and the builder had not made a claim under quantum meruit.

(2) The proceedings had a long procedural history. The builder had consented to the owner’s application to transfer the builder’s proceedings to the Tribunal. If the proceedings were ‘split’ at a late stage between the owner’s proceeding remaining in the Tribunal and the builder’s proceedings being in the Local Court, there would have been clear unfairness to the homeowner by reason of increased cost; delay; and the undesirability of having two sets of proceedings in two different jurisdictions (RCR Resolve FM v Serco Australia [2014] NSWSC 1477 at [20]). If both sets of proceedings were transferred to a Court, there would be the same issues regarding increased cost and delay. A cost order against the builder if the proceedings were transferred may not cure such unfairness.

(3) Even if a transfer application had been made by the builder; such an application had been refused; and the owner ultimately obtained a work order rather than an award of damages; then as of the date of the Tribunal’s decision (20 July 2021) the builder would still have been well within the time period to take proceedings in the Local Court for breach of contract. Whether the builder would have been able to maintain such proceedings due to principles of res judicata or issue estoppel are not matters necessary to explore.

(4) The owner would likely argue that because issues in the builder’s proceedings were the subject of a dispute in the owner’s Tribunal proceedings, the Court would have no jurisdiction to hear and determine those issues in proceedings by reason of Cl. 5 (3) of Sch. 4 of the NCAT Act.

80. Contrary to the submissions of the builder on appeal, the mere fact that the builder’s claim was out of time in the Tribunal under s 48 (8)(a) of the HB Act is not, of itself, a sufficient reason for the Tribunal to have ordered the transfer of the builder’s proceedings in Matter HB 19/355528 to a Court of competent jurisdiction.

Consideration

14. As the Appeal Panel stated in BKB states, the fundamental consideration is whether there is “sufficient cause”; “sound ground”; or “good reason” for the transfer to be made.

15. In my view there is not. This is for the following reasons.

16. First, as BKB informs us, a builder’s claim that it was owed monies under the contract would be taken into account in any assessment of damages to the homeowner. The Homeowner is correct in submitting that any amounts that are genuinely due to the Builder under the alleged contracts can be determined and accounted for in any orders made by the Tribunal in the Homeowner’s application.

17. Secondly, as with BKB, these matters have had a long procedural history dating back to November 2022. This militates against a grant of the Tribunal’s discretion.

18. Thirdly, as the Homeowner’s rightly submit (putting aside the question of res judicata or issue estoppel), it appears that the Builder is still in time to file its own application for debt recovery in the District Court, even after the final hearing of the applications is heard on 13 October 2023.

19. Fourthly, I accept the Homeowner’s submission that any transfer would result in additional delay and expense.

Conclusion

20. For the above reasons, in the exercise of the Tribunal’s discretion, the Builder’s application of the Builder to transfer both the Builder’s Application and the Homeowner’s Application to the District Court is refused.

Orders

21. The Tribunal orders:

1. A hearing is dispensed with.

2. The application of Orosi Pty Ltd to transfer applications HB 22/46158 and HB 22/56030 to the District Court of New South Wales is dismissed.

3. The costs of the transfer application are reserved.

4. The hearing of 13 October 2022 is confirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Amendments

15 August 2023 - Formatting amendments.

Decision last updated: 15 August 2023