John Maiolo t/as M & N Peninsular Kitchens & Joinery v Chiarelli

1. [1]

   The Plaintiff by a Second Further Amended Summons dated 12 May 2017 seeks leave pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW) to appeal to this Court from two judgments of the Appeal Panel of the Civil and Administrative Tribunal of New South Wales. The first such judgment was given on 11 April 2016: John Peter Maiolo v Frank Chiarelli and Anor [2016] NSWCATAP 81 (the April Judgment) and the second was given on 26 September 2016: Maiolo v Chiarelli (No 2) [2016] NSWCATAP 219 (the Costs Judgment).

Background

1. [2]

   The proceedings at NCAT arose out of an agreement made between the parties on 14 November 2014 whereby the Plaintiff, who is a kitchen manufacturer and installer, agreed to supply and install a kitchen in the home of the Defendants. Before entering into the contract the Plaintiff had provided a quote to the Defendants for the supply and installation of the kitchen for $19,500 plus GST. The price was negotiated down to $15,950. The price was paid in advance to the Plaintiff.

2. [3]

   The Defendants alleged that the kitchen was delivered but not installed in February 2015. The Plaintiff agreed that it was not installed and said that that was because the Defendants had to undertake all necessary plumbing and electrical work to permit it to be installed. The Plaintiff said that the Defendants did not undertake the necessary work and purported to terminate the contract on 6 March 2015.

3. [4]

   Thereafter the Defendants commenced proceedings in NCAT claiming that the Plaintiff should pay to the Defendants the sum of $23,851. It was not clear how that sum was made up but it appeared to include an amount of $5000 which the Defendants claimed, but the Plaintiff denied, had been paid by the Defendants to the Plaintiff.

4. [5]

   On 3 July 2015 orders were made by Senior Member Boyce. Order 3 said this:

5. [6]

   The evidence before the Appeal Panel disclosed that the Plaintiff received the Tribunal’s orders of 3 July 2015 on 8 July 2015. His solicitor then wrote to the Defendants’ solicitors on 8 July saying that he was ready, willing and able to install the kitchen on 9 and 10 July 2015, that he sought access to the premises on those dates to carry out the work, that he would be out of the country from 14 July to 18 August 2015 and that he would not be able to complete the installation of the kitchen until his return unless access was permitted on 9 and 10 July. The Defendants refused access on 9 and 10 July because they said they had not received adequate notice to prepare the premises for the installation of the kitchen.

6. [7]

   The Plaintiff then made application to the Tribunal on 16 July 2015 for a variation of the orders on the basis that he had already booked travel to Los Angeles from 15 July 2015 to 18 August 2015. The Tribunal determined on 28 July 2015 not to vary the time for compliance with order 3 made on 3 July 2015 but by that time the Plaintiff had left for overseas.

7. [8]

   On 10 August 2015 the Defendants gave a Notice to Renew the proceedings. The proceedings again came before the Tribunal on 12 October 2015 when Senior Member Meadows made the following orders:

8. [9]

   The Plaintiff sought a stay on that order pending an appeal but the stay was refused. Accordingly, the Plaintiff paid the $14,190 to the Defendants.

9. [10]

   The Plaintiff appealed to the Appeal Panel from those orders. The Appeal Panel held that he was not required to seek leave to appeal, that natural justice was denied to him by the Tribunal and that relief should be granted to him in that regard. The orders made by the Appeal Panel were these:

10. [11]

    Somewhat anomalously the second order did not reflect what was said to be the wording of that order contained in paragraph 61 of the judgment in that the date specified at the end of the order in paragraph 61 was 18 April 2016. However, perhaps for that reason, on 6 May 2016 the Appeal Panel varied the second order by omitting the words “including returning and installing the respondents’ hot plate and under bench sinks on or before 9 May 2016” and removing the corresponding words with the different date in paragraph 61.

11. [12]

    On 26 September 2016 after receiving submissions in relation to costs from the parties the Appeal Panel issued its Costs Judgment. It noted that the effect of the Appeal Panel’s decision was that the Plaintiff was successful in challenging and setting aside the Tribunal’s orders handed down on 12 October 2015. The Appeal Panel then for the reasons it set out in that judgment declined to make any order for costs in relation to the proceedings before the Consumer and Commercial Division (from which the appeal had come) or of the proceedings before the Appeal Panel.

Grounds of appeal

1. [13]

   The relief sought in the Second Further Amended Summons is as follows:

2. [14]

   The grounds of appeal are as follows:

3. [15]

   It may be observed that grounds 1, 5, 10, 14 and 15 are not in fact grounds of appeal.

4. [16]

   The need for an extension of time arose because the solicitors for the Plaintiff wrongly commenced the appeal proceedings in the District Court. The Summons was not filed in this Court until 25 November 2016. No point was taken about the late commencement and no prejudice is shown. Time should be extended to 25 November 2016.

5. [17]

   It should be noted that, despite prayer 5, no application was made to amend the Summons (again). It should also be noted that no attempt was made to adduce further evidence. Since an appeal is only available on a question of law, and with leave, it is not clear what further evidence could have been led without trespassing into areas of fact and the merits of the decision.

Legislation

1. [18]

   The appeal to this Court derives from ss 82 and 83 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). Those sections relevantly provide:

2. [19]

   The powers of the Tribunal with regard to costs of proceedings before the Tribunal are found in s 60 of the NCAT Act. That section relevantly provides:

3. [20]

   However, rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) provides:

4. [21]

   Section 36 of the NCAT Act relevantly provides:

Submissions

1. [22]

   Despite the verbiage in the grounds of appeal the claims made by the Plaintiff on the appeal were relatively straightforward. In relation to the April Judgment the Plaintiff submitted that it was not open to the Tribunal to have made an order that the Plaintiff carry out the work without concomitantly making an order that the Defendants pay the Plaintiff for that work. The matter was put on the basis of the power or jurisdiction of the Tribunal including that s 48O of the Home Building Act did not allow such an order, and also on the basis that it offended fundamental principles of remedial justice in contract law, in particular fundamental principles of restitution.

2. [23]

   The Plaintiff relied also in submissions, although the matter was not articulated in the grounds of appeal, on the fact that he had made an application to the Tribunal on two occasions subsequent to the April Judgment for a variation of the orders to facilitate payment by the Defendants to him when the kitchen was installed, but the Tribunal ignored those applications. In that way it was submitted he had been denied procedural fairness.

3. [24]

   The Defendants submitted that the Appeal Panel could not have made an order for payment by the Defendants to the Plaintiff because the kitchen was not then installed. The Plaintiff would need to seek an equitable remedy of specific performance with compensation. The Defendants submitted that before payment could be made issues associated with the Plaintiff’s insurance would need to be sorted out because this kitchen formed part of work which exceeded $20,000. That was because of other work at the house for which the Plaintiff was contracted, and because of s 92(4) of the Home Building Act 1989 (NSW).

4. [25]

   The Defendants submitted that once the kitchen was installed, and there was a dispute that such installation was complete, it would be open to the Plaintiff to seek payment either in proceedings in the Tribunal or in the Local Court.

5. [26]

   In relation to the Costs Judgment the Plaintiff submitted that the principal error of law was that the Appeal Panel did not give any or adequate reasons for its decision. Ground 7 complained to that effect in relation to the costs of the Tribunal proceedings at first instance but there was no ground of inadequate reasons in relation to the costs of the appeal before the Appeal Panel.

6. [27]

   The Plaintiff submitted that the evidence disclosed that the basis for the Defendants’ claim in NCAT was a collateral purpose. That purpose was to put an end to the contract on the basis that they did not have development consent to install the kitchen and decided that they did not want it anymore. This was a matter the Appeal Panel ought to have considered in terms of s 60(3)(f) of the NCAT Act because of the submissions made about the failure of the Defendants to co-operate to enable the kitchen to be installed. The Plaintiff further submitted that he did not seek the costs of the appeal on any other basis except that the entirety of the proceedings was infected by a collateral purpose.

7. [28]

   The Defendants submitted that the starting point for costs was s 60 of the NCAT Act which provided for each party to bear their own costs unless special circumstances were shown. The Defendants submitted that the Tribunal had a broad-based discretion with regard to costs and that the Plaintiff had not demonstrated special circumstances. The Defendants specifically denied any collateral purpose in bringing the proceedings.

Consideration

1. [29]

   Under s 83 of the NCAT Act there are two matters which a Plaintiff must establish for this Court to have jurisdiction and intervene in the proceedings. The first is that there must be a question of law. The second is that leave needs to be given. A party seeking leave to appeal must point to something more than error.

2. [30]

   In Zelden v Sewell Henamast Pty Limited v Sewell [2011] NSWCA 56 Campbell JA (Young JA agreeing) said at [22]:

3. [31]

   In Jaycar Pty Limited v Lombardo [2011] NSWCA 284 Campbell JA (Young and Meagher JJA agreeing), having repeated his remarks in Zelden above, went on to say at [46]:

4. [32]

   It may be accepted that these cases concerned leave to appeal to the Court of Appeal from the District Court where there was a pecuniary threshold to be crossed before a right to appeal replaced the need for leave. However, the principles are applicable here where it is intended that matters involving small sums and small disputes be finalised within NCAT, particularly where an internal appeal is provided for as here.

5. [33]

   I shall deal with the leave matter when discussing each of the judgments against which the appeal is brought.

6. [34]

   On 21 April 2016, after receiving the April Judgment, solicitors for the Plaintiff wrote to the two members of the Appeal Panel a letter marked “Extremely urgent”. The letter raised a number of matters arising from the judgment and the Defendants’ actions immediately thereafter but, significantly, the letter said this:

7. [35]

   On the same day that letter was emailed the solicitors received an email from the Principal Registrar of the Tribunal saying this:

8. [36]

   Thereafter, the solicitors received no subsequent correspondence from the Tribunal.

9. [37]

   On 21 September 2016 the solicitors for the Plaintiff wrote to the Proper Officer of NCAT. The letter relevantly said this:

10. [38]

    The letter also attached a large amount of correspondence supporting all that was said in the letter. No response was received from the Tribunal to that letter. Instead, the Appeal Panel simply published its Costs Judgment on 26 September 2016. That judgment did not deal in any way with the application to re-list to deal with the issue of payment to the Plaintiff.

11. [39]

    Section 63 of the NCAT Act relevantly provides:

12. [40]

    It may have been helpful if the solicitors for the Plaintiff had identified this section of the Act perhaps with a reference to Commonwealth of Australia v McCormack (1984) 155 CLR 273 (discussed below) but it was inappropriate of the Appeal Panel or the Registrar not to respond to that letter.

13. [41]

    Although I do not accept the Plaintiff’s submission the Appeal Panel had no power to make the order it did for the carrying out of the work by the Plaintiff without a concomitant order for restitution or payment, whether the power was derived from s 48O(1)(c) of the Home Building Act or under the general law, the Appeal Panel ought to have given reasons for not doing so. There may be circumstances where such an order might be appropriate. Indeed, the Appeal Panel may have taken the approach, although it did not say so in its reasons, that it was simply ordering the Plaintiff to perform his side of the bargain which had not been carried out, leaving the Plaintiff to remedies at a later time to claim or sue for payment if the Defendants did not pay after the work was completed.

14. [42]

    It may have been appropriate for the Appeal Panel to have made an order for payment at least conditional upon the work being properly completed. Some support for that comes from Commonwealth of Australia v McCormack and the cases discussed at 276 of that judgment. I doubt, however, that the failure of the Tribunal in its April Judgment to make such an order could be regarded as an error of law, but the failure to give reasons for not doing so could be so regarded. That may depend on whether the matter was raised at the appeal. Whether it was so raised was not made clear at the hearing of this appeal.

15. [43]

    What is of much greater significance is the failure of the Appeal Panel to respond to the letters written on behalf of the Plaintiff of 21 April 2016 and 21 September 2016 and the failure of the Appeal Panel to deal with the matter in its Costs Judgment or otherwise. McCormack’s case makes perfectly clear that the failure to include an order for payment by the Defendants to the Plaintiff could be regarded as a slip that could be rectified under s 63(1) of the NCAT Act. Of course, the Tribunal could, when faced with those two applications, have reached a view that there was no slip and that it did not intend to make such an order and did not consider it appropriate. However, its failure to respond in any way to the applications leads to the conclusion that the Appeal Panel has denied procedural fairness to the Plaintiff in that regard.

16. [44]

    The matter may be characterised a number of ways. It could be said that there was a failure by the Appeal Panel to respond to a substantial, clearly articulated argument in reliance upon the matters raised: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088 at [24]. It could alternatively be said that the Appeal Panel failed to address the substance of the Plaintiff’s application and in that way there was a clear case of constructive failure to exercise jurisdiction: Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57; [2001] HCA 22 at [81]; AAMI Ltd v Ali [2012] NSWSC 969 at [48].

17. [45]

    In either case, an error of law is demonstrated. Moreover, because the error amounts to a denial of procedural fairness the Plaintiff demonstrates something more than that the Appeal Panel was arguably wrong in its approach to the matter. That is enough to justify leave to challenge the error of law.

18. [46]

    I accept that the grounds of appeal concerned with the April Judgment (grounds 1-3) do not identify the error of law in this way. The articulation of it in this form emerged during the course of submissions. No objection was taken to considering the matter in that way by the solicitor for the Defendants.

19. [47]

    Accordingly, leave should be granted in respect of the April Judgment. The Plaintiff demonstrates an error of law in that regard.

20. [48]

    The Appeal Tribunal first dealt with whether costs should be awarded in the Consumer and Commercial Division. The Appeal Panel said this:

21. [49]

    The Appeal Panel then considered the costs of the appeal. They set out s 60(1)-(3) of the NCAT Act. They noted that the Plaintiff had filed submissions dated 27 April 2016, those submissions enclosing various items of correspondence, and further submissions dated 20 May 2016. They noted that the correspondence attached to the submissions of 27 April 2016 did not specifically address the issue of costs. They noted that the submissions of 20 May 2016 related to events occurring after the Appeal Panel’s decision was handed down and that the submissions did not address ss 60(1)-(3) of the NCAT Act.

22. [50]

    The Appeal Panel then considered the Defendants’ submissions dated 9 May 2016 which dealt specifically with a number of the paragraphs in s 60(3) to justify a submission that the Defendants showed special circumstances to obtain a costs order. The Appeal Panel rejected all of those submissions.

23. [51]

    The Panel went on to say:

24. [52]

    Finally, in a section of judgment headed “General principles regarding section 60 of the NCAT Act” the Appeal Panel said this:

25. [53]

    The Plaintiff submitted that the Appeal Panel was in error in the view it took that s 60(3)(f) of the NCAT Act related to the time before the making of the orders in the proceedings. That submission appeared to be based on the view that the obligation in s 36(3) was an ongoing obligation and the Appeal Panel had made an order for the installation of the kitchen which required the cooperation of both parties. The Plaintiff submitted also that it did not seek costs on the basis that it had been successful but on the basis that the proceedings had been instituted and maintained for a collateral purpose.

26. [54]

    A few things should first be noted with relation to the present appeal regarding costs. First, as the Appeal Panel noted at [7]-[8], when the Plaintiff appealed from the judgment of the Tribunal of 12 October 2015, although the Tribunal had made an order that there was to be no order as to costs, no appeal was taken to the Appeal Panel against that order.

27. [55]

    Secondly, as the Appeal Panel made clear at [10] and [26], so far as costs were concerned, it would entertain an application for costs of the Appeal (see the April Judgment at [58]-[59]).

28. [56]

    Thirdly, the submissions lodged by the Plaintiff with the Appeal Panel dated 27 April 2016 recited over 93 paragraphs what the Plaintiff saw as the relevant history of the matter between the parties. Thereafter, and for the first time in those submissions, reference was made to costs as follows:

29. [57]

    Finally, in paragraph 96 the Plaintiff sought indemnity costs on the basis that the conduct of the Defendants had been “so egregious”.

30. [58]

    No doubt the Appeal Panel ascertained that the reference to s 60 of the Home Building Act 1989 (NSW) in paragraph 94 of the submissions should have been a reference to s 60 of the NCAT Act.

31. [59]

    What is apparent from those submissions is that there was no focus on the costs of the appeal but rather a general complaint about the way the Defendants had behaved from the time of the making of the contract. In that regard the Plaintiff seems to have understood “the proceedings” in s 60 as being a reference to the whole of the proceedings in the Tribunal. However, the Appeal Panel was only dealing with the costs of the appeal.

32. [60]

    The second lot of submissions lodged by the Plaintiff on 20 May 2016 took a somewhat different approach. They first continued the narrative from the date of the earlier submissions in relation to ongoing difficulties between the parties. The submissions then made the point that the whole of the proceedings had been instituted for a collateral purpose which was said at paragraph [23] to be the use of the proceedings as a vehicle to procure a release from the Defendants’ contractual obligations with the Plaintiff.

33. [61]

    Although the Plaintiff submitted that he had lodged three sets of submissions on costs with the Appeal Panel, what were described as the third set, forwarded on 21 September 2016, were not in fact submissions about costs but, as I have earlier described, a request to the Tribunal to re-list the matter so that an order could be made in relation to the Defendants paying the Plaintiff for the work carried out. Although there was a passing reference on page 3 of that letter to the assertion that the proceedings were brought for “a dishonest and collateral purpose” that statement was not related to any application for costs.

34. [62]

    Although I consider that the Appeal Panel’s reasons could have been more comprehensively expressed, I do not consider that the Plaintiff demonstrates anything to warrant the granting of leave to set aside the Appeal Panel’s judgment on costs. My reasons are these.

35. [63]

    First, the costs judgment was never concerned with, and was never intended to be concerned with, the whole of the proceedings. It was concerned with the costs of the appeal. The fact that there was no appeal against the costs order before the Senior Member of the Tribunal makes that clear.

36. [64]

    Secondly, I am not persuaded that the Appeal Panel was in error in considering that s 60(3)(f) of the NCAT Act was not concerned with events after the judgment in respect of which costs were to be ordered. The enumerated matters in s 60(3) are generally directed towards the way proceedings (here, the appeal) were conducted although it is accepted that paragraphs (d) and (e) look at the underlying nature of the proceedings. However, it is difficult to see how post-hearing and post-judgment events are relevant when the issue is who, if anyone, should pay the costs of that hearing. If, as in many cases, costs are determined at the time of the substantive judgment, it would scarcely be open to a party to seek to set aside or vary the costs order based on what a party subsequently did or failed to do.

37. [65]

    Thirdly, a submission that the proceedings generally were brought for a collateral purpose says little about how the costs of an appeal should be awarded. It was not argued at the appeal itself that the appeal should be upheld because the proceedings had been brought for a collateral purpose. That was a submission made only in relation to costs and in circumstances where the appeal was upheld for completely different reasons. Although in an ideal world the Appeal Panel might have said something to that effect, I do not consider that their omission to do so justifies the grant of leave and the demonstration of an error of law.

38. [66]

    Fourthly, it is clear that the Appeal Panel had regard to the extensive submissions put in by the Plaintiff and also the submissions lodged by the Defendants because the Appeal Panel refers to what those submissions had to say about the respective conduct of the parties before and after the April judgment – see at [28] and [30]. The Tribunal explained why (at [30]) it considered that it was undesirable to make a costs order based on disputed facts and the substantial material concerning the parties’ conduct and whether or not they had failed to cooperate.

39. [67]

    Fifthly, the Tribunal expressly had regard to the duty in s 36(3) of the NCAT Act (at [29]). They did so in the context of considering at [30] the dispute disclosed in the submissions about each side’s alleged failures.

40. [68]

    Sixthly, it was not unreasonable for the Appeal Panel not to have acceded to the Plaintiff’s argument about collateral purpose. Although the Plaintiff submitted that there could be no other explanation for the behaviour of the Defendants other than that they brought the proceedings for a collateral purpose, that is not the only inference that can be drawn from the dispute between the parties. Neither side seems to have covered themselves with glory in the matter. Both sides appear to have been less than cooperative at various times. If the Defendants were trying to set aside the contract it is at least an open inference that that was because they wanted to bring an end to the ongoing proceedings which had taken on a life of their own.

41. [69]

    Seventhly, costs involve an inherently discretionary decision. Although the Plaintiff suggested a House v The King error had been made in that the Appeal Panel did not consider the material provided to it the judgment expressly refers to the submissions and to the substance of them detailing the dispute between the parties as to lack of co-operation. Further, the ultimate determination on costs accorded with what s 60(1) provides as the norm. The Plaintiff has an onus to show why that norm should have been departed from in circumstances where he addressed the relevant considerations in s 60(3) in only a cursory way whilst probably overwhelming the Appeal Panel with irrelevant detail about the history of the matter.

42. [70]

    Finally, the Appeal Panel’s reasons were justifiably not more comprehensive when the value of the subject matter of these proceedings is borne in mind. The amount in dispute is an amount less than $16,000.

Conclusion

1. [71]

   Given the small amount involved in these proceedings I had hoped to make final orders disposing of these proceedings rather than remitting the matter to the Appeal Panel. However, there remains a dispute about the extent to which the kitchen has been installed that may impact on the amount that should be ordered to be paid to the Plaintiff. Although I suggested to the parties that they could agree on a figure so that, if I was minded to uphold the appeal, I could make final orders, they could not or would not agree. Both solicitors thought it appropriate to remit the matter to the Appeal Panel if I granted leave and found error. Although I consider that the parties and/or their lawyers have lost perspective in the way these proceedings have been conducted both in this Court and in the Tribunal, I do not see that I have any proper basis for doing other than remitting the matter to the Appeal Panel for the matter to be resolved there on any further evidence that will need to be given.

2. [72]

   Strictly speaking, in the light of the error I have found the matter should be remitted to the Appeal Panel for it to consider whether it should make any order for payment in the light of the submissions previously made to it that I have found were ignored or overlooked. However, as the Defendants accept that they should make a payment when the kitchen is installed, I consider that the matter should be remitted for the Appeal Panel to make an order for payment in favour of the Plaintiff subject to the evidence that is adduced before the Panel in relation to that payment. This matter must be brought to a conclusion and expeditiously.

3. [73]

   The Plaintiff has only been partly successful on the appeal. Bearing that in mind and also issues of proportionality (s 60 Civil Procedure Act 2005 (NSW)) I consider that there be no order for costs of the appeal to the intent that each side should pay his and their own.

4. [74]

   The orders I make are these:

   1. (1)

      Extend time for the filing of the Summons to 25 November 2016.

   2. (2)

      Leave to appeal in respect of the judgment of the Appeal Panel of the NSW Civil and Administrative Tribunal given on 11 April, 2016.

   3. (3)

      Appeal upheld.

   4. (4)

      Remit the proceedings to the Appeal Panel to vary its judgment to provide for payment by the Defendants to the Plaintiff for carrying out the order of the Appeal Panel to install the kitchen.

   5. (5)

      Otherwise dismiss the appeal.

   6. (6)

      There be no order as to costs of the proceedings in this Court to the intent that each party should pay his and their own costs.