Nutek Constructions Pty Ltd v Slotwinski

1. [1]

   On 1 July 2015 Julia Slotwinski entered into a residential building contract with Nutek Constructions Pty Ltd for the construction of three apartments at 8 Jackson Street, Balgowlah for the contract price of $1,650,000.

2. [2]

   After construction commenced, various disputes arose between the parties. Nutek repudiated the contract, and Ms Slotwinski accepted the repudiation and terminated the contract. At the date of termination the construction was about 25% complete.

3. [3]

   Nutek commenced two proceedings in the New South Wales Civil and Administrative Tribunal (NCAT), the first on 25 May 2016 and second on 7 February 2017. In those proceedings Nutek was seeking payment for work it had done on a quantum meruit basis prior to the termination of the contract, and for which it had not been paid.

4. [4]

   On 22 July 2016 Ms Slotwinski entered into a contract with Cutting Edge Building Pty Ltd to complete the works at a contract price of $1,398,600.

5. [5]

   On 28 February 2017 Ms Slotwinski commenced proceedings in this Court claiming damages amounting to $1,146,059 for costs to complete the building.

6. [6]

   Ms Slotwinski applied to the Tribunal to transfer the two Tribunal proceedings to this Court so that they could be heard with the proceedings commenced in this Court. That application was opposed by Nutek. It was heard and refused on 19 April 2017.

7. [7]

   On 6 June 2017 Ms Slotwinski commenced proceedings in the Tribunal which, in substance, claimed the same damages as had been sought in this Court. On 10 July 2017 the Tribunal dismissed Ms Slotwinski’s proceedings on the basis that it had no jurisdiction, because (inter alia) Ms Slotwinski had claimed damages in excess of $500,000, the limit in s 48K of the Home Building Act 1989 (NSW).

8. [8]

   Thereafter, in August and November 2017, the two proceedings commenced by Nutek were heard together by the Tribunal. The Tribunal’s decision was delivered on 2 May 2018, and Ms Slotwinski was ordered to pay Nutek the sum of $36,500. Both parties appealed from that decision.

9. [9]

   In the Nutek proceedings, Ms Slotwinski sought to rely on a set-off by way of defence, relying on what was said by White J in Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2015] NSWSC 289. An issue before the Appeal Panel was whether Ms Slotwinski was entitled to rely on a set-off by way of defence, particularly because the set-off amounted, in effect, to the amount Ms Slotwinski was claiming in the proceedings in this Court, which exceeded the jurisdiction of the Tribunal.

10. [10]

    The Appeal Panel delivered its reasons on 28 June 2019: Slotwinski v Nutek Constructions Pty Ltd; Nutek Constructions Pty Ltd v Slotwinski [2019] NSWCATAP 158. The Appeal Panel remitted the proceedings to the Tribunal for further determination of Nutek’s quantum meruit claim and Ms Slotwinski’s defence by way of set-off, on such further evidence as the Tribunal might consider appropriate.

11. [11]

    The remitted proceedings were heard on 12 November 2019 by Senior Member Blake, with the Tribunal’s decision being given on 13 November 2019.

12. [12]

    The Tribunal determined that it had jurisdiction to decide the equitable set-off as a defence. It awarded Nutek the sum of $55,558. Its basis for doing so was that Nutek was entitled to an order that Ms Slotwinski pay it $242,045 for its unpaid work assessed on a quantum meruit basis. It decided that Ms Slotwinski was entitled to an order that Nutek pay her $186,487 for damages for breach of contract, being the costs to complete the building work under the Nutek contract which Nutek had repudiated. It then set off those two amounts, and in doing so ordered Ms Slotwinski to pay Nutek $55,558.

13. [13]

    On 6 January 2020 the Tribunal delivered its decision on costs. It ordered Ms Slotwinski to pay Nutek’s costs of both the remitted proceedings and the first Nutek proceedings (other than in respect of the transfer application). That was because it said that costs should follow the event, and Nutek had succeeded to the extent of $55,558.

14. [14]

    On 10 July 2020 the Appeal Panel heard Ms Slotwinski’s appeal from the Turbunal’s principal decision of 13 November 2019. On 20 October 2020 the Appeal Panel published its reasons: Slotwinski v Nutek Constructions Pty Ltd [2020] NSWCATAP 216. The Tribunal upheld Ms Slotwinski’s appeal, set aside the order of the Tribunal, and in lieu ordered that Nutek’s proceedings be dismissed. I will return later in this judgment to the detail of the Appeal Panel’s reasons. In short, the Appeal Panel found that the amount of Ms Slotwinski’s set-off exceeded what Nutek was entitled to recover against her, and in that way it found that Ms Slotwinski’s defence was a complete answer to Nutek’s claim.

15. [15]

    On 17 November 2020 Nutek commenced proceedings in this Court appealing against the decision of the Appeal Panel.

16. [16]

    As a result of the Appeal Panel’s decision, the Appeal Panel then went on to consider an appeal filed by Ms Slotwinski against the Tribunal’s costs decision of 6 December 2020. The appeal against costs was dealt with on the papers. The Appeal Panel published its reasons on 5 May 2021: Slotwinski v Nutek Constructions Pty Ltd [2021] NSWCATAP 113.

17. [17]

    The orders made by the Appeal Panel in relation to costs were these:

18. [18]

    On 2 June 2021 Nutek filed a further summons in this Court to appeal against the costs orders made by the Appeal Panel on 5 May 2021.

19. [19]

    This judgment concerns the two summonses filed by Nutek in this Court appealing against the two decisions of the Appeal Panel.

The appeals

1. [20]

   The summons in the substantive appeal seeks that the orders made by the Appeal Panel be set aside and that either of the following orders be made:

2. [21]

   The summons set out three grounds of appeal as follows:

3. [22]

   There is only one ground of appeal in relation to costs. That ground is, in effect, that if the Court sets aside the substantive decision of the Appeal Panel, there would be no basis in law for maintaining the orders of the Appeal Panel in relation to costs.

4. [23]

   On 24 November 2020, Ms Slotwinski, acting for herself, filed a notice of motion seeking that Nutek’s request for leave to appeal should be denied and, in the alternative, seeking security for costs of $37,098.50.

5. [24]

   The notice of motion came before Garling J. His Honour noted that both parties treated the motion as if it were one for summary dismissal.

6. [25]

   On 25 March 2021 Garling J made orders dismissing paragraph 9 of Nutek’s summons, but otherwise dismissed the notice of motion and ordered that the costs of the notice of motion be costs in the cause: Nutek Constructions Pty Ltd v Slotwinski [2021] NSWSC 274.

7. [26]

   Subsequently, in the submissions filed by Nutek for the hearing of the summons, Nutek abandoned reliance on the third appeal ground, being paragraph 10 of the summons.

Reasons of the Appeal Panel in the substantive appeal

1. [27]

   In its reasons, the Appeal Panel first considered the approach taken by the Tribunal to the assessment of damages. The Appeal Panel noted the contract price of the Cutting Edge contract of $1,398,600. It noted the Nutek contract price of $1,650,000, to which there needed to be added an approved variation of $13,000, so that the total of the Nutek contract was $1,663,000.

2. [28]

   The Appeal Panel then said (where the appellant is Ms Slotwinski and the respondent is Nutek):

Nutek’s submissions

1. [29]

   Nutek submitted that under s 83(1) of the Civil and Administrative Tribunal Act 2013 (NSW) it has a right of appeal to the Supreme Court on a question of law against any decision made by the Tribunal in the proceedings. It should be said here that this submission is incorrect, because s 83(1) provides that a party to an internal appeal may, with the leave of the Supreme Court, appeal on a question of law to the Court. The appeal to the Appeal Panel was an internal appeal. It will be necessary later to say something of the need for leave.

2. [30]

   Nutek submitted that a common law ground of no evidence is an appeal on a question of law: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [90]. That submission may be accepted.

3. [31]

   Nutek made reference to the affidavit that Ms Slotwinski was directed by the Registrar to file and serve, which was to identify any evidence relied on in opposition to the no evidence ground. Nutek submitted that none of the documents or other matters identified by Ms Slotwinski comprised evidence.

4. [32]

   Nutek submitted that both Senior Member Blake and the Appeal Panel determined the matter on the basis of the contract price of the Cutting Edge contract rather than on the actual costs paid by Ms Slotwinski. Nutek submitted that the contract did not constitute evidence of the cost to complete. In that way, also, the expert report from Thomas Lee did not constitute evidence of the actual cost to complete the building.

5. [33]

   Ms Slotwinski submitted that the evidence she relied on was included in the court books of both the second appeal and the remitted proceedings. There were four matters in particular, being:

6. [34]

   Ms Slotwinski submitted that, in relation to the matters identified in ground 8, only the first matter was contained within the Appeal Panel’s determination. She submitted that the Appeal Panel did not make any findings as to the matters in paragraphs (b), (c) and (d). Ms Slotwinski referred to what was said by the Appeal Panel in paragraphs [84]-[86], [92]-[95] and [97]-[98] of its judgment.

7. [35]

   Ms Slotwinski submitted that there was evidence before the Appeal Panel that the Further Works (identified in paragraph [85] of the Appeal Panel’s decision) had been constructed. She identified the evidence of Mr Kalantzis, where he said he viewed the Certificate of Practical Completion issued by Cutting Edge and that he viewed a rental appraisal of Mr Aitchison on 8 June 2017. Ms Slotwinski submitted that, by inference, she must have paid for these works.

Need for leave

1. [36]

   In Ackerman v Morgan [2019] NSWSC 1250, Walton J considered the principles to be considered in deciding whether leave to appeal should be granted. His Honour made reference to a number of decisions of the Court of Appeal, particularly Be Financial Pty Ltd v Das [2012] NSWCA 164 and Chapmans Ltd v Yandell [1999] NSWCA 361. His Honour then said:

2. [37]

   In Ashi Pty Limited v Karasco Investments Pty Ltd [2009] NSWSC 780, I considered the principles that apply to a need for leave to appeal against costs orders. That case concerned s 40(2)(c) of the Local Court Act 2007 (NSW), but the principles apply more widely.

3. [38]

   In that case, I said:

4. [39]

   What was said there has been followed in a number of cases subsequently, including Ackerman v Morgan, Stephen Kirkman v Commissioner Department of Corrective Services [2013] NSWSC 833, Onik New Energy Australia Pty Limited v Henderson [2016] NSWSC 186 at [10]; and Pratten v Johns [2010] NSWSC 327 at [24]-[25].

Determination

1. [40]

   Ground 8 is worded in a manner that is not easy to understand. For example, in relation to ground 8(b) it reads, “There was no evidence to support the findings of the Appeal Panel that there was no evidence that the Further Works had been constructed at the subject premises”. That appears to be asserting that the Appeal Panel found that there was no evidence that the Further Works had been constructed. Similar comments can be made in respect of paragraphs (c) and (d). That does not seem to be what is intended.

2. [41]

   Nutek’s submission in relation to the appeal ground seems to suggest that what is meant is that there was no evidence before the Appeal Panel that the Further Works were paid by Ms Slotwinski separately to the Cutting Edge contract, that there was no evidence that the Further Works had been constructed, that there was no evidence of the actual costs of the Further Works, and that there was no evidence that the Cutting Edge contract sum had been paid by Ms Slotwinski.

3. [42]

   On that basis, Ms Slotwinski’s submission that the Appeal Panel made no findings of the matters in paragraphs (b), (c) and (d) is correct. The only finding made was one in accordance with paragraph (a). That was the finding made at paragraphs [84] - [86]. It was the acceptance of Ms Slotwinski’s submission that she had paid for the Further Works. It does not appear that the Appeal Panel was taken to evidence of actual payment for the Further Works.

4. [43]

   In that way there was no evidence of actual payment, but that was not what the Appeal Panel actually found, because that was not the way the case was run either before it, or before Senior Member Blake. The case was argued on precisely the basis that the Appeal Panel (and Senior Member Blake) determined it.

5. [44]

   It is important, therefore, to understand the basis for the Appeal Panel’s approach to assessing the damages.

6. [45]

   At the hearing before Senior Member Blake, Mr Archibald of counsel for Nutek said in submissions that there was a repudiation of the contract, there was a wrongful termination of the contract, and the liquidated damages clause did not apply in that situation, so that it was necessary to fall back on general contractual damages. He then went on to deal with the submissions of Mr Kozlowski, the solicitor for Ms Slotwinski, in relation to the cost of completion. The transcript then reads:

7. [46]

   Putting aside the figure of $517,411, it may be seen that the methodology put forward on behalf of Nutek was the methodology first adopted by Senior Member Blake and thereafter the Appeal Panel. Senior Member Blake said in his judgment:

8. [47]

   In the Appeal Panel’s judgment, it noted the submissions of the parties before Senior Member Blake as follows:

9. [48]

   The Appeal Panel then went on to adopt the same approach in the paragraphs of the judgment I have set out at [28] above.

10. [49]

    Although Nutek now wishes to submit that it was not appropriate to rely on the Cutting Edge contract price rather than evidence of the actual costs of completion of the Further Works, no submission was made on behalf of Nutek to that effect, either to Senior member Blake nor to the Appeal Panel. Moreover, if Nutek considered that Senior Member Blake had adopted the wrong approach in taking the contract price and the amounts in Mr Lee’s report, rather than actual costs paid by Ms Slotwinski, its failure to appeal or to cross-appeal from Senior Member Blake’s judgment stands in its way of a successful appeal to this Court.

11. [50]

    Even at the hearing of Ms Slotwinski’s appeal to the Appeal Panel, Nutek made no submission to the Appeal Panel that actual costs should have been the basis of any decision. Of course, such a submission could scarcely have been made, since it was Nutek who had put forward the methodology for the calculation of damages before Senior Member Blake.

12. [51]

    A reading of the transcript before the Appeal Panel shows that the focus was on the issue raised by Ms Slotwinski concerning whether the Further Works were within the Nutek contract. Although Mr Archibald pointed to an exchange between Senior Member Curtin and Ms Slotwinski, where the senior Member asked her where the evidence was of the cost of the items estimated in the Lee report, and Ms Slotwinski replied that it was not seen as relevant for the reasons she gave, the matter went no further, with Senior Member Curtin saying that he understood her point.

13. [52]

    Before the Appeal Panel, Nutek relied on lengthy written submissions, prepared by its lawyers. In addition, the director of Nutek, Nicholas Kalantsis appeared before the Appeal Panel. It was not submitted at any time before the Appeal Panel that the approach taken by Senior Member Blake was the wrong approach, or that there was no evidence about whether and how much Ms Slotwinski had paid. Indeed, at paragraph 80 of those submissions, Nutek’s lawyers said:

14. [53]

    In fact, there was evidence of actual payment contained in the affidavit of Mr Kalantsis sworn 31 July 2017, which was before both Senior Member Blake and the Appeal Panel, although not specifically referred to by the parties. In paragraph 18, Mr Kalantsis said that he had reviewed a General Ledger Report produced by Cutting Edge, and he observed that the total sum of $1,289,323.63 plus GST was paid to Cutting Edge to complete the project. That figure, when GST is added, almost approximates the figure referred to as the Cutting Edge contract price at paragraph [101] of the Appeal Panel’s judgment. The small difference would not have affected the outcome of the Appeal Panel’s judgment in any way.

15. [54]

    The Appeal Panel noted at [99] the evidence of Mr Lee. Mr Lee valued the items identified as the Further Works. Those amounts accorded, in any event, with the allowances for PC items set out in attachment 1 to the Nutek contract.

16. [55]

    Nutek had submitted to the Appeal Panel, as the Appeal Panel recorded at [96], that those items did not amount to a payment by Ms Slotwinski to Nutek for the work completed. The Appeal Panel said at [97], however, that that submission did not address the correct method of calculating Ms Slotwinski’s damages. The Appeal Panel was correct in that determination.

17. [56]

    Nutek is bound by the way the case was conducted both at first instance and on appeal to the Appeal Panel. It is not now open to it to contend that there was no evidence to support findings which, perhaps, should have been made if the case had been conducted as Nutek now contends. On the way the case was conducted, there was evidence to support the findings of the Appeal Panel, at [83] and [87] - [94] of its decision.

18. [57]

    The question arises whether Nutek has demonstrated that leave ought to be given to appeal in any event. No general principle is involved. The Appeal Panel went about its task in the way Nutek submitted it ought to. Even if that methodology was wrong, leave ought not to be granted because the Appeal Panel was led into error by the approach of Nutek. There is no injustice to Nutek.

19. [58]

    There is a further reason leave should not be granted. There have been two hearings at first instance before a Tribunal member and two appeals. In addition, Ms Slotwinski has commenced proceedings in this Court to give effect, in a sense, to the equitable set-off which she was entitled to raise before the Tribunal, although that entitlement did not result in her obtaining any damages. Nutek will be able to defend those proceedings. In all those circumstances, even if I had considered that the Appeal Panel had erred, I would not have granted leave to appeal.

20. [59]

    It follows from the refusal of leave to appeal that leave should also be refused to appeal against the costs orders made by the Appeal Panel. The defendant is self-represented in the proceedings. Any costs will be confined to reasonably incurred disbursements.

Conclusion

1. [60]

   I make the following orders:

   1. (1)

      In proceedings 2020/327546, leave to appeal is refused.

   2. (2)

      The summons in proceedings 2020/327546 is dismissed.

   3. (3)

      The plaintiff is to pay the costs of those proceedings.

   4. (4)

      In proceedings 2021/158356, leave to appeal is refused.

   5. (5)

      The summons in proceedings 2021/158356 is dismissed.

   6. (6)

      The plaintiff is to pay the costs of those proceedings.