Islam v Javam

HIS HONOUR: This case raises several interesting and difficult issues. None has only one obviously correct answer, so that neither party is certain of success. That is to be contrasted with something that is regrettably clear beyond any doubt at all: that the amount in issue between the parties is so small as to be disproportionate to the legal costs that have been generated thus far, and to the costs which are menacingly certain to be incurred in the future. The continuation of this litigation on its present trajectory is therefore potentially neither in the public interest nor in the best interests of the parties. That statement quite properly deserves some elaboration.

On 27 March 2017, the plaintiff filed an amended statement of claim in the Local Court. He made two claims. The first claim is that on 12 November 2014, he lent the defendant $20,000, repayable on 31 May 2016. The second claim is that the defendant agreed to construct a house for him for an original contract price of $340,000 plus variations and that he overpaid the defendant $16,096 which he now claims back with interest. The plaintiff’s total claim is accordingly for the modest sum of $36,096.

The defendant filed a defence on 2 May 2017. He denied that the plaintiff lent him $20,000. Instead he maintained that he and the plaintiff entered into an agreement on or about October 2014 whereby the plaintiff would provide him with $20,000 “as cost contingency for the construction of the plaintiff’s home”. The defendant went on to allege that the $20,000 was “only repayable to the plaintiff if there were no variations to the [building] contract or if the final cost of construction did not exceed the provisional allowance” in it. The defendant also filed a cross-claim on the same day claiming $111,450 alleged to be monies that remain owing to him by the plaintiff for the building work he carried out.

When the proceedings came before Magistrate Price on 29 August 2017, the defendant, who had up until then been legally unrepresented, sought an adjournment to 6 November 2017. On that day, the now legally represented defendant applied to have the proceedings transferred to the NSW Civil and Administrative Tribunal pursuant to s 48L of the Home Building Act 1989. That section relevantly provides as follows:

For some reason that is not explained to me, and which appears on its face, having regard to all of the issues raised in both the plaintiff’s amended statement of claim and the specific reference to the $20,000 in the defendant’s cross-claim, to be inexplicable, the matter was eventually listed in the Tribunal as two separate claims, being the plaintiff’s claim against the defendant and the defendant’s cross-claim against the plaintiff.

On 23 January 2018, the parties appeared by telephone at the first directions hearing before the Tribunal. In a way that is difficult to understand, a question arose in relation to the Tribunal’s jurisdiction to resolve all the issues in dispute between the parties. By way of explanation, somebody would appear to have been concerned that the Tribunal lacked jurisdiction to hear the plaintiff’s claim for his $20,000 pleaded as a contract of loan. The really silly part of that so-called dispute resides in the fact that the defendant had admitted the payment of the $20,000 as part of the building agreement, so that the plaintiff would have been unarguably entitled to a credit for that amount in the final wash up of the competing contentions arising on the defendant’s cross-claim.

Lest there be any doubt about that last mentioned fact, I should interrupt this somewhat tragic narrative to indicate that when the matter came before me, Mr Doyle, who appeared for the defendant, explicitly conceded after some discussion with me that the plaintiff was entitled to a credit of $20,000 in the cross-claim litigation, howsoever its original payment by the plaintiff to the defendant might ultimately be characterised. The following excerpts from the transcript make this crystal clear:

However, for reasons that appear clearly to be related to the somewhat unfortunate remarks of the Tribunal Member, the plaintiff became concerned that the transfer of the proceedings to the Tribunal had had the effect that his claim for the $20,000 could not be determined there. Those remarks included the suggestion that

It is a pity that more attention was not paid at the time to the defendant’s characterisation of that sum as a cost contingency under the building contract. Be that as it may the plaintiff, obviously but in my view erroneously, concerned about this perceived jurisdictional hiatus, proceeded to file an application in the Tribunal on 6 March 2018 to transfer the proceedings back to the Local Court pursuant to Sch 4, cl 6(1) of the Civil and Administrative Tribunal Act 2013. On 23 April 2018, the Tribunal dismissed the plaintiff’s application upon the basis that the Local Court had conclusively determined that the Tribunal was the correct forum to determine both claims: see, for example, s 48A of the Home Building Act. I am informed by the parties that the proceedings remain listed for hearing in the Tribunal.

But there is more. By summons seeking leave to appeal to this Court under Part 50, filed on 9 May 2018, the plaintiff seeks to challenge the 6 November 2017 decision of Magistrate Price ordering the transfer of the proceedings from the Local Court to the Tribunal. Just so that no one reading these reasons acquires the false impression that the issues in this Court are simple or obvious, it is instructive to observe that the plaintiff seeks the following orders:

Confronted with what on one view could be considered the somewhat limited utility of the present proceedings, I raised the issue of the $20,000 payment with the parties at an early stage of the hearing in this Court. The following somewhat lengthy transcript of what transpired eloquently bears this out:

Having regard to all these matters, it seems to me that the preferable and obvious course is for the present proceedings before me to remain on foot but on hold while the proceedings in the Tribunal continue to finality there. However, as the plaintiff’s appeal to this Court is presently framed, I doubt that I have the power to make an order to that effect. If common sense is to prevail, the parties acting reasonably could be expected to agree to return to the Tribunal and litigate their dispute under their building contract, safe in the knowledge that the plaintiff gets credit for his $20,000 against whatever is the outcome of that contest. The proceedings before me can be revived later should the need arise. I would like to be advised of the parties’ attitude to this suggestion in due course.

If agreement about this cannot be reached, I will proceed to determine the plaintiff’s appeal. In the event that that becomes necessary, I will also require the solicitors for both parties to file an affidavit setting out the costs incurred by each of them since the matter first commenced in the Local Court in March 2017, together with an estimate of the costs incurred in litigating this appeal before me, as well as an estimate of the costs likely to be incurred by each party if the matter were returned for determination in either the Local Court or the Tribunal. I will also require an affidavit from a principal of the respective firms of solicitors who act for the plaintiff and the defendant indicating that they have drawn the attention of their clients to these reasons for judgment and to the calculations and assessments of the past and anticipated future costs to which I have just referred.

I will do no more at this stage than to list the matter before me for directions on Monday 22 October 2018. I will expect the parties to advise me at that time what the position is, particularly having regard to the well-known provisions of Part 6, Division 1 of the Civil Procedure Act 2005.