Torbey Investments Corporated Pty Ltd v Ferrara

1. [1]

   McCOLL JA: I agree with Basten JA’s reasons and the orders his Honour proposes.

2. [2]

   BASTEN JA: Pursuant to a summons issued on 15 January 2016, the applicant, Torbey Investments Corporated Pty Ltd, seeks to review a judgment of the District Court with respect to an appeal from the Consumer, Trader and Tenancy Tribunal (“the Tribunal”). There being no statutory right of appeal from the District Court in exercise of its own appellate jurisdiction, the applicant is limited to relief under s 69 of the Supreme Court Act 1970 (NSW). That section allows the Court to set aside a judgment of the District Court, but only where the applicant establishes jurisdictional error or error of law on the face of the record.

Background

1. [3]

   The background to the proceedings may be briefly stated. The dispute arose out of a building contract entered into on 28 June 2005, pursuant to which the applicant undertook building and construction work on a residential property in Maroubra owned by the respondents. (It will be convenient on occasion to refer to the applicant as “the builder” and the respondents as “the owners”, in keeping with the nomenclature adopted below.) The contract anticipated that the building work would be completed in early 2006. However, completion was delayed for a number of reasons, which included variations proposed by the owners and “stop work” orders issued to the builder by Randwick Council for non-compliance with the development consent. The builder did not make claims for extensions of time, as was permitted under the contract. It did, however, complain that payments had not been made for the variations.

2. [4]

   By January 2007 the work was incomplete but little was done after that date. In May 2007 an officer from the Office of Fair Trading undertook an inspection and convened a meeting between the builder and the owners. The builder agreed to provide an itemised list of variations and agreed to finish the work by 30 June 2007. A list of variations was prepared, dated 21 June 2007. The work was not complete as at 30 June and the Office of Fair Trading issued a rectification order on 3 July 2007. No further work was carried out and the builder was fined for failure to comply with the order.

3. [5]

   On 9 July the owners sought to invoke cl 33 of the contract which involved the service of a notice identifying substantial breaches of the contract, which, if not rectified within 10 working days, would provide a basis for termination of the contract. On 23 July 2007 the builder replied to the notice under cl 33 stating that it wished to remedy any breaches of the contract and not end the contract. No further work was done before 3 August 2007, when the owners sent a further letter terminating the contract.

4. [6]

   On 24 June 2009 the builder commenced proceedings in the Tribunal seeking payment of an amount of $170,114, said to be a final progress claim under the contract, including variations, together with interest in an amount of $34,302 calculated on unpaid variations. On 18 August 2009 the owners filed a cross-claim seeking the cost of rectification of defective and incomplete building works.

5. [7]

   The hearing before the Tribunal commenced on 23 May 2011 and proceeded, somewhat episodically, over two days in that month, followed by three days in March 2012, three days in September 2012 and two days in December 2012, giving a total of 10 days. On 17 May 2013 a senior member of the Tribunal, Ms C Paull, made orders and findings and delivered reasons for her decision. On the builder’s application, she found that the respondent homeowners were liable to pay the builder $38,171.40. On the homeowners’ application, she found that the builder was liable to pay $115,055 for incomplete work and $39,697 for defective work, giving a total of $154,752. The lesser amount was set-off against the larger and the builder was required to pay the homeowners the balance, being $116,580.60.

6. [8]

   The matter was then stood over to 31 May 2013 to deal with any costs applications. On that day, the senior member made further orders requiring that the builder pay the owners’ costs of the proceedings to be assessed, up to and including 8 July 2011 on a party and party basis, and thereafter to be assessed on an indemnity basis.

7. [9]

   On 14 June 2013 the builder filed a summons commencing an appeal in the District Court, pursuant to s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (since repealed) (the “Tribunal Act”). That section relevantly provided:

8. [10]

   The appeal was heard by Judge Olsson SC over three days in November 2014. Judgment was delivered on 30 April 2015. [1] The judge concluded that the Tribunal had not, with one qualification, made any error of law in its determination of the matter. The qualification related to the manner in which the Tribunal dealt with a sum unpaid under the contract. That sum was not able to be calculated on the material before the Court, but the judge concluded that “[s]ave as to the deduction of the unpaid contract sum and any submission the parties wish to make on the question of costs, the appeal will be dismissed.” [2] The judge noted that she would hear the parties on the “question of costs and interest.” [3]

9. [11]

   Given the limited issues outstanding, the judge may have expected that the orders could be made following an exchange of written submissions. That did not happen, the parties apparently seeking a further hearing, a request to which the Court acceded, with the result that the matter was listed again on 17 July 2015, 9 September 2015 and finally 27 November 2015. Olsson DCJ delivered a second judgment on 18 December 2015, [4] dismissing a motion brought by the builder and making final orders on the appeal in the following terms:

10. [12]

    The variation of the Tribunal orders involved two elements. First, the amount which the owners were liable to pay to the builder was increased by the final progress payment under the contract, being $12,215. The balance payable by the builder was therefore reduced to $104,365.60. However, the judge allowed each party interest on the respective debts (before the offsetting of the principal sums), the two sums of interest being offset with the builder paying the balance to the owners, being an amount of $66,889.66.

(a) issues

1. [13]

   The summons in this Court contained 12 grounds of review. As developed in the course of the hearing, there were five separate issues which were said to give rise to either jurisdictional errors or errors of law on the face of the record.

2. [14]

   The first involved a challenge to the finding of the Tribunal (upheld in the District Court) that the owners had validly terminated the contract in accordance with cl 33 (grounds 1 and 2).

3. [15]

   The second issue concerned the entitlement of the owners to recover the costs of completing the works and the requirement to comply with the terms of cl 36 of the contract (ground 3).

4. [16]

   The third issue was said to involve a failure by the judge to consider “whether the Tribunal overlooked critical relevant evidence on the issue of extent of the completion of the works at the time of the purported termination” (ground 4). The ground contained five particulars; it was by no means clear from the summons that any error of law was raised.

5. [17]

   Fourthly, there was a challenge to the finding by the judge that the amount to complete the contract, which should have been part of the amount payable by the owners, was the sum of $12,500 (the actual sum was $12,215), which was said not to have been agreed, or to have been the subject of a finding by the Tribunal (grounds 6 and 7).

6. [18]

   Fifthly, there was a challenge to the manner in which the judge had calculated the interest payable by the builder (grounds 9-12).

7. [19]

   Two further grounds listed in the summons (grounds 5 and 8) were abandoned in the course of the hearing. [5]

8. [20]

   It is convenient to note one curiosity of the contractual arrangements, which was not referred to in the Tribunal or on the appeal, but which affected the legal obligations under the contract. The builder named in the contract was the applicant, a corporation. The principal of the company was Mr Salim Torbey. The building work was carried out by an employed licensed builder, Mr Carl Paton. Although Mr Paton treated himself in correspondence as the proper recipient of notices given under the contract to “the builder” that was technically not correct: notices were required to be sent to the corporation named in the contract, and that was the course taken by the owners from time to time.

(b) termination – clause 33

1. [21]

   Clause 33 of the contract provided:

2. [22]

   By letter dated 9 July 2007, addressed to the applicant and apparently copied to Mr Paton, the owners wrote:

3. [23]

   In the Tribunal, the applicant asserted that the notice did not comply with cl 33.3 and was not given by certified mail or personally.

4. [24]

   Relevant to this issue, on the basis of records made by an officer from the Office of Fair Trading following a site inspection in response to a complaint by the owners, the Tribunal found that: [6]

5. [25]

   In setting out the issues for determination, [7] the Tribunal identified the first issue as the entitlement of the builder to be paid for the variations claimed. The second issue was the question, “Were the homeowners entitled to terminate the contract?” The Tribunal noted that “the homeowners purported to end the contract pursuant to clause 33.” [8] The Tribunal then set out its findings, including the following: [9]

6. [26]

   The Tribunal continued: [10]

7. [27]

   The grounds of appeal in the District Court were numerous, but ground 3 alleged that the Tribunal “erred in law by finding or concluding that the Defendant lawfully terminated the Contract.” Depending on how the matter was argued, that ground might or might not have identified a decision of the Tribunal with respect to a matter of law. According to the appeal judge, senior counsel for the builder had identified the errors in the following terms: [11]

8. [28]

   The appeal judge considered the materials set out above and addressed a number of authorities to determine whether the ordinary postal service used rendered the notice of 9 July 2007 ineffective. The judge’s conclusions were set out in the following passage:

9. [29]

   The grounds of review in this Court, as articulated by the applicant in its written submissions, raised three issues:

10. [30]

    The first question is whether the judge did in fact deal with the complaint that the letter did not state that, if the breach were not remedied within 10 working days, the owners would be entitled to end the contract, as required by cl 33.3(b). The correctness of that proposition is by no means self-evident. After setting out the issues identified by counsel for the builder, [12] the judge continued: [13]

11. [31]

    It is tolerably clear from this passage that the judge, at that stage, was dealing with both alleged omissions together, in considering whether the requirement as to the means of giving notice was indeed mandatory. In the course of considering the authorities, her thinking may well have been diverted so as to focus on the issue of service, rather than the content of the notice. That may explain why her conclusion at [96] referred only to cl 33.5, dealing with service. However, there is no reason to suppose that the conclusion was not intended to apply equally to the requirements of cl 33.3.

12. [32]

    With respect to the first complaint (failure to deal with the alleged non-compliance with cl 33.3), even if the judge failed to address the complaint expressly, it is in any event by no means clear that cl 33.3(b) was not satisfied: if there were no demonstrated breach of that provision, relief could be refused on discretionary grounds, even if it were to be established that the judge failed to address the issue. After specifying the details of the alleged breaches, the letter said that the builder’s failure to remedy the breaches “within the timeframe set in the rectification order”, which was attached, would have consequences for the builder. Further, the statement that the owners would exercise their powers under cl 36, which prescribed what would happen if the owner ended the contract under cl 33, is a sufficient statement as to the owners’ entitlement (and intention) to end the contract. The timeframe specified in the attachment, namely 27 July 2007, was more than 10 working days from the date of the letter.

13. [33]

    In considering what precisely such a notice should include, a construction should be given to the clause, consistent with its purpose and context. First, the right to give a notice under cl 33.3 applies to breaches by either builder or owner and breaches potentially wide ranging in nature and effects. Further, the straightforward language is apt to conceal a variety of potential problems. In particular, what is required to remedy a breach will depend upon the nature of the breach; the notice is not required to state what must be done. In this case a substantial breach was delay: what action would have been sufficient to rectify the breach? Secondly, a literal reading would result in failure to comply with par (b) if the party giving the notice were, for example, to allow 14 working days within which to remedy the breach. Thirdly, the clause is silent as to the date from which the 10 working days will run. Even cl 40.1, which identifies how a notice is deemed to be given does not specify when it is deemed to be given, although cl 40.1(b) may have been intended to specify a time, namely the day following the day it was posted by ordinary mail.

14. [34]

    Other clauses in mandatory terms raise similar difficulties: see the discussion of cl 36 below. In these circumstances, there is much to be said for adopting a flexible construction of the language, so as to give effect to its commercial purpose. That was the approach adopted by the Tribunal and accepted by the District Court as giving rise to no error of law. Thus, in circumstances where it was established that the relevant information had in fact been received, and a purpose of the mandatory language had been achieved, any formal non-compliance should not be seen as rendering the notice ineffective under the contract.

15. [35]

    In dealing with a contractual provision in similar (though not identical) terms, Collins J in Eriksson v Whalley stated: [14]

16. [36]

    Collins J held that the failure to send the notice by registered post meant that service of the notice was “invalid” and the provisions of the relevant clause in the contract were not complied with.

17. [37]

    The first purpose, namely providing an independent source of corroboration for the giving of a notice, is not readily engaged in the present case, which permits the notice to be “given personally”. Secondly, there is probably a lesser degree of “solemnity” accompanying receipt of a letter sent by certified mail and there is certainly no solemnity attaching to the handing over a copy of the notice. So far as purpose is concerned, there is therefore little to be said for the proposition that an otherwise valid notice, of which receipt and comprehension is duly acknowledged, will not have been validly given.

18. [38]

    In Spectra Pty Ltd v Pindari Pty Ltd [15] Wootten J considered the effect of a notice in writing given by a lessee to a lessor in exercise of an option to renew the lease. The lease required that the notice should be sent “by prepaid registered mail” to the lessor’s last known place of residence. Such notices have particular conveyancing significance. [16] Nevertheless, Wootten J observed that the notice had in fact been sent to the defendant at an appropriate time and had been received in the normal course of the post. He identified the question as being whether the stipulation of pre-paid registered mail was “not merely a sufficient method of giving notice, but the sole and essential method of doing so.” [17] He continued:

19. [39]

    In Kennedy v Collings Construction Co Pty Ltd [18] the reasoning of Wootten J in Spectra was applied with respect to a building contract requiring a notice of termination to be given by registered post, where the notice was sent by ordinary post. In a passage cited by the judge in the District Court, [19] Giles J stated: [20]

20. [40]

    The Tribunal accepted, as was noted by the appeal judge, that each of the letter giving notice of default and a letter of termination sent on 3 August 2007 was the subject of a response from the building contractor. The responses effectively acknowledged receipt and an understanding that what was being proposed was termination of the contract.

21. [41]

    Although, as noted by Giles J in Kennedy, each contract must be construed according to its own terms, the approach adopted by Wootten J and Giles J should be applied to the terms of the present contract. Consistently with the operation of cl 36 discussed below, the effect of cl 33.5 is to provide a mandatory result if its conditions are followed, but not to invalidate a notice which is non-compliant. The result is that accepted by the judge below, namely that both notices were validly given for the purposes of the contract.

22. [42]

    Finally, the applicant raised a separate issue in relation to the date on which the “purported clause 33 notice was served”. The submission accepted an implicit finding by the Tribunal at par 76 of its decision that the first notice was received “on or before 23 July 2007 and responded to by the builder on that day.” If that were correct, the applicant submitted, then the letter of termination dated 3 August 2007 allowed only nine working days and not 10.

23. [43]

    There were a number of problems with that submission. First, it contained an inherent inconsistency in that it assumed that the first, cl 33.3, notice was given on the day that it was received; the termination letter, however, was assumed to be given on the day that it was sent. If reliance were to be placed on the accuracy of the statement by the licenced contractor, Carl Paton, as it was with respect to the cl 33.3 notice, then presumably the fact-finder would also have accepted his statement as to receipt of the notice of termination, which he stated, in his letter to the owners dated 7 August 2007, had been received on 6 August 2007. It follows that the Tribunal’s implicit factual finding as to the period of notice was not incorrect.

24. [44]

    Secondly, there was the legal difficulty that any such finding by the Tribunal was a finding of fact and was not subject to appeal to the District Court. Thirdly, there was the procedural difficulty that there was no attempt to appeal on such a ground and hence no basis for this Court to review what happened in the District Court in relation to this point.

25. [45]

    The challenge based on grounds 1 and 2 was not made out.

(c) costs of completion by owner – clause 36

1. [46]

   Ground 3 alleged legal error on the part of the appeal judge in failing to deal with “a clearly articulated argument” that the owners were not entitled to the costs of completing the work, except in accordance with cl 36 of the contract.

2. [47]

   The applicant’s argument was that cl 36 provided an exclusive mechanism for the owner to recover the costs of completing the building work in circumstances where the owner had terminated the contract under cl 33. Clause 36 was in the following terms:

3. [48]

   Clause 36 is illustrative of the care which must be taken in construing stipulations in the contract which used mandatory terms, such as “shall” and “must”. There are many difficulties with the operation of cl 36 if it is read in literal terms. For example, it would be absurd to say the owners were in any legal sense obliged to complete the contract, although cl 36.1 said they “must” do so. Nor would it be sensible to conclude that the failure of the owner to comply within five days of practical completion with the obligation imposed by cl 36.3 would prevent recovery of the expense. Without considering other problems which might arise (such as the ability of the builder to challenge the claimed amount) the substantive purpose of the clause might be understood in the following terms:

4. [49]

   The contract also gives the builder a right to be paid the balance if the unpaid balance exceeds the costs expended by the owner. It would be surprising if the owner were not required to pay the amount calculated under cl 36.4(b), if the owner had failed to supply the statement to the builder (with all invoices and receipts) within five working days of practical completion. Clearly further adjustments are needed to the language of the clause in order to make it work in a practical and commercially sensible way.

5. [50]

   For the purpose of the present submission, the applicant assumed that the contract had been properly terminated under cl 33. It then submitted that the only way in which the owners could recover the reasonable costs of completing the work was if they strictly complied with cl 36. In other words, effective termination under cl 33 would remove any general contractual entitlement to recover the costs of completion of the works. Neither the Tribunal [21] nor the District Court [22] accepted that cl 36 had that effect; rather, both accepted that the failure of the owners to comply with the requirements of cl 36 prevented the owners enjoying the benefits of entitlement to payment for the precise amount within seven working days, pursuant to cl 36.4.

6. [51]

   No relevant error was raised by this ground.

(d) overlooking critical evidence

1. [52]

   Ground 4 alleged that the judge erred by failing to consider whether the Tribunal “overlooked critical relevant evidence on the issue of the extent of the completion of the works” at the time of termination. The ground included five particulars, the first three of which identified express references by the Tribunal to the evidence; the fourth particular identified the paragraph in which the Tribunal made the relevant finding of fact. The fifth particular merely referred to a passage in the judgment in the District Court referring to other evidence relevant to the extent of completion of the works.

2. [53]

   These particulars provided an unpromising basis for asserting an error of law on the part of the Tribunal. While it is not true that a decision-maker cannot err in law in considering factual issues, the manner in which such an error can arise requires careful analysis. To acknowledge that it may be difficult to characterise the errors on which appellate jurisdiction depends in particular circumstances is not to deny the necessity of the exercise. There will be cases in which errors of law are not readily distinguished from errors of fact. What is important in the present case is to recognise that an error of law may be identified (a) in an ultimate finding, (b) in the process by which the finding was reached, or (c) in the written statement of reasons explaining how the finding was reached. However the error is said to have occurred, the starting point must be to identify the issue, in the determination of which the error is said to have arisen. Neither the particulars in the ground, nor the submissions for the applicant, engaged adequately with this exercise.

3. [54]

   The particulars identified two sources of so-called “critical evidence” which was said to have been overlooked. However, it was all evidence expressly adverted to by the Tribunal. The first such evidence was the file of the Office of Fair Trading, identified as Ex T13 and described as “the complete set of documents emanating from the Fair Trading Office.” [23] The first finding based on this material was that the work was incomplete as at 29 May 2007 and had not reached practical completion by 3 August 2007.

4. [55]

   That was by no means all the evidence before the Tribunal as to the state of completion of the works. The Tribunal had before it expert evidence from the owners’ architect (Mr Parsons) and a quantity surveyor (Mr Davies) engaged by the owners for the purpose of the proceedings. [24] In a passage noted in the third particular, the Tribunal accepted the evidence of Mr Parsons “as to the state of completion of the work when the contract ended.” [25]

5. [56]

   The Tribunal then turned to evidence as to the cost of the uncompleted works and the cost of rectification of defective works. The Tribunal noted that it had evidence before it from two experts and, where there was disparity between them, generally preferred the evidence of the quantity surveyor, Mr Davies. [26] Inconsistent evidence given by the owners was rejected as “too imprecise and unreliable.” [27]

6. [57]

   All of this discussion of the evidence was set out by the Tribunal by way of “Background” before identifying the issues for determination. The relevant issues for present purposes were identified in the following terms: [28]

7. [58]

   There was no challenge to the appropriateness of these formulations of the relevant issues. None of these issues required the identification of a percentage of the works which had been completed at the date of termination of the contract. As the judge noted, evidence of the state of completion came from the owners (50%), [29] the owners’ quantity surveyor, Mr Davies (42%), [30] the Office of Fair Trading report (85%) [31] and the evidence of the bank, which approved payments under the contract (90%). [32] The applicant was critical of the judge for speculating as to why there might have been such disparities in these estimates. [33] The speculation was little more than the application of common sense to the circumstances, but legally it was of no consequence.

8. [59]

   The first step in the applicant’s case was that the disparities in the percentages had to be resolved and could not be resolved by overlooking or disregarding parts of the evidence. That reasoning is fallacious on a number of bases.

9. [60]

   First, the issue before the Tribunal was not the percentage of the contract works (with or without the variations) which had been completed, but was rather which works under the contract had not been completed and their value. That exercise was undertaken with specific reference to the evidence relied upon for each item. [34] The total amount was $115,055. No doubt that figure could be specified as a percentage of the total contract price, but that exercise was not a necessary part of the Tribunal’s function, nor was it part of the actual reasoning adopted by the Tribunal, as revealed in the written reasons. The reasoning of the Tribunal in reaching its conclusion was, as the primary judge stated, set out with clarity. The evidence itself was summarised at pars 23-57. The Tribunal accepted the state of the building site at the date of termination as described by the owners’ architect, Mr Parsons. Mr Parsons inspected the site one week after the builder left and he took photographs. The building contractor, Mr Paton, agreed that the photographs represented the state of the building works when he was last on site. That evidence was preferred to evidence of other witnesses who did not attend the site until much later, and after much of the work had been completed. With respect to the value of the uncompleted works, the Tribunal accepted the evidence of Mr Davies, who was the only quantity surveyor to give evidence.

10. [61]

    It may thus be seen that the findings made by the Tribunal on the issue to be determined, correctly identified by the Tribunal in its reasons, were fully supported by evidence and the process of reasoning was fully revealed. That which the applicant alleged was overlooked was not critical but peripheral to the issue properly identified.

11. [62]

    The next problem in the applicant’s case revolved around the legal significance of overlooking critical evidence. To support the submission that this was, in some sense generically, a ground of review for error of law, and indeed jurisdictional error, the applicant relied upon the reasoning of Robertson J in the Federal Court decision, Minister for Immigration and Citizenship v SZRKT, [35] the statement of principles from which was adopted and applied by a Full Court of the Federal Court in Minister for Immigration and Border Protection v SZSRS. [36]

12. [63]

    The statement of principle articulated in SZRKT involved three elements. The first is sometimes described as a constructive failure to exercise jurisdiction, which occurs when the tribunal misapprehends the full extent of, or limitations on, its functions under the law. That involves an exercise in statutory construction in order to determine the scope of the functions. However, that cannot be an end of the matter. If the function of the Tribunal is to determine an application validly before it, an assessment must be made of whether that exercise has been undertaken. As explained by Gummow and Callinan JJ in Dranichnikov v Minister for Immigration and Multicultural Affairs [37] “[t]o fail to respond to a substantial, clearly articulated argument relying upon established facts” can amount to a constructive failure to exercise jurisdiction.

13. [64]

    The second proposition concerns the means by which the failure may be established. For example, if it could be shown that an amended application, containing a fresh ground with real prospects of success, was not before the Tribunal because it had been misplaced in the Registry, that might be sufficient. An alternative approach might be to look at the reasons of the Tribunal. Accepting that, in accordance with the statutory mandate to give reasons, the reasons will disclose the actual reasoning process adopted by the Tribunal, it may become apparent that the process was flawed because a substantial clearly articulated claim was not addressed in any form.

14. [65]

    The third proposition, which is critical for the present case, is that there may be no bright line distinction between a claim made by the applicant and evidence in support of the claim. In other words, to ignore or overlook apparently credible and relevant information, which might support an essential step in the reasoning process if the claim were to be upheld, may itself constitute a constructive failure to exercise the function conferred on the Tribunal. This point was made by Selway J in SHKB v Minister for Immigration and Multicultural and Indigenous Affairs [38] in a passage extracted and adopted by Robertson J in SZRKT. [39]

15. [66]

    Without departing from that reasoning, it is appropriate to strike a note of caution. A tribunal, like a court, is not obliged to refer to all the material before it which may be thought by a party, or even by the reviewing court, to constitute relevant evidence. Evidence is often repetitive and will be of variable reliability. Hundreds of pages of evidence may need to be reduced to a clear and succinct statement of written reasons. Comprehensiveness is a relative concept and must be balanced against other relevant values.

16. [67]

    This principle is in substance a development of the requirement that a tribunal take into account all relevant considerations. The term “considerations” is itself, perhaps, unfortunate, because it is imprecise. However, in legal parlance it refers to those matters which the statute expressly or by implication obliges the tribunal to consider. Thus the statement in Dranichnikov can be understood as a point of statutory construction: namely that the Migration Act (being the relevant statute in that case) in conferring jurisdiction on the tribunal implicitly required that it address the matters identified by the applicant as the basis of his or her application. A similar concept underlay the language adopted by Gummow J in Khan v Minister for Immigration and Ethnic Affairs, [40] that the decision-maker was required to “give proper, genuine and realistic consideration to the merits of the case”. However, as the High Court accepted in Minister for Immigration and Citizenship v SZJSS, [41] this language is “apt to encourage a slide into impermissible merit review”. [42]

17. [68]

    In short, although one can describe the overlooking of critical evidence as an error of law, it is important to understand the purpose and context of such a description. In this case, it is patent that the Tribunal did not ignore the material identified in the particulars: indeed, the particulars identified the material by reference to the reasons of the Tribunal and the appeal judgment. The complaint is merely that, for reasons she gave, the Tribunal member preferred other evidence. This ground did not establish an error of law on the part of the Tribunal, nor on the part of the District Court which correctly rejected it.

(e) fact-finding on appeal

1. [69]

   The primary judge accepted submissions on the appeal that the Tribunal had made an error in calculating the amount owing under the contract to the builder (ground 5).

2. [70]

   The Tribunal dealt with this issue by considering what variations were undertaken by the builder, for which it was not paid. The Tribunal had identified those variations which it had allowed and those which it did not. [43] The total amount of the variations allowed was $33,221. The Tribunal then considered three further variations identified by the builder’s expert, Mr Short. Of these, one was allowed in an amount of $4,950.40. As a result, the amount allowed on the builder’s application was $38,171.40. It is clear that that amount was purely for variations and did not include any amount owing under the contract, such as an unpaid progress payment. In the notice of appeal to the District Court, the builder claimed an error by the Tribunal “in calculating the award of damages for the Defendant [the owners] by failing to deduct the unpaid portion of the Contract Price of $31,080 from the sum of $115,055.” [44]

3. [71]

   This ground did not, in its terms, identify any error of law. Nor, in its terms, did it seek adjustment to that part of the Tribunal’s order which related to the award in favour of the builder. The judge accepted that, as a matter of contractual entitlement and as a matter of principle in assessing common law damages, the owners could not recover from the builder an amount required to complete particular works, even though they had to pay a third party for those works, if they had not paid the builder that amount in advance of completion. No complaint was made about that reasoning. Rather, the applicant complained that, on an appeal on a question of law, it was not open to the appeal judge to make the reduction which should have been made by the Tribunal absent agreement by the parties as to its quantum. That, it was submitted, involved an exercise in fact-finding, which should have been remitted to the Tribunal.

4. [72]

   As a matter of legal principle, there is merit in that challenge, although there may be different views as to the precise limits of the powers of the Court, having identified error, under s 67(3) of the Tribunal Act. [45] Assuming that there was error on the part of the trial judge in seeking to resolve a factual dispute, there is a further question as to whether, in the circumstances of the case, this Court should intervene.

5. [73]

   There are three reasons for thinking that the Court should not intervene. First, by identifying the proper deduction in its notice of appeal, the builder was expressly inviting the appeal judge to make a finding as to the final amount payable.

6. [74]

   Secondly, the difference between the amount claimed by the builder before the appeal judge (without supporting evidence) and the amount awarded by the judge (on the basis of the evidence before the Tribunal) is a fraction under $20,000. There is much to be said for the view that, in circumstances where there may in fact be no change to the ultimate result, it would not serve the ends of justice for the Court to set aside the finding and order the District Court to remit this issue to the Tribunal for determination.

7. [75]

   Thirdly, this issue was not resolved by the first judgment in the District Court. Rather, the appeal judge expressly desisted from making final orders stating, “I hope, given the amount involved, that agreement can be reached between the parties as to quantum.” [46]

8. [76]

   As the appeal judge explained in her second judgment, not only did the parties not reach agreement as to the outstanding contract sum, but the builder apparently raised its claim to some $68,000, calculated, not simply by reference to the contract, but by reference to a number of variations, which had otherwise been rejected both by the Tribunal and on appeal. [47] The matter was complicated by the builder filing a notice of motion seeking, in effect, to vary the orders already made. The fact that orders did not appear to have been made at that stage, but rather foreshadowed, did not deter a further expansive exchange of submissions and a further hearing.

9. [77]

   In declining to reopen the first judgment, the appeal judge said at [38]:

10. [78]

    The judge then addressed the question of the outstanding amount in the following terms at [41]:

11. [79]

    It is clear from the discussion of the submissions in the second judgment that, following delivery of the first judgment, the builder continued on the course it had adopted in its notice of appeal, namely to invite the appeal judge to determine the amount of the appropriate deduction. The builder comes to this Court because it does not like the result. In fact, the builder did not dispute the figure adopted by the appeal judge as the only amount outstanding under the contract. It adopted different figures by reference to a different calculation, including variations. That, as the appeal judge correctly pointed out, was not the exercise for which leave had been granted. The written submissions in this Court stated that the appeal judge had noted, at [36] in her first judgment, that “the male Owner himself conceded that he owed over $24,000 to the Applicant.” That submission was misleading. When the judge came to deal with the issue, she explained that figure in the following terms: [48]

12. [80]

    To put that figure forward on appeal as demonstrating error on the part of the trial judge was unjustifiable. Its purpose in the reasoning was to put it to one side, because no differentiation had been made as between the amount of the progress payment under the contract and that amount which related to approved variations. Rather than undertake the exercise which the judge had expressly identified as the relevant one, the builder continued, in this Court, to pursue a different basis of calculation. That approach warrants this Court declining to intervene, as a matter of discretion, whether or not the appeal judge was justified in making the deduction herself.

(f) payment of interest

1. [81]

   The last four grounds seeking intervention by this Court related to amounts of interest payable on the outstanding awards made by the Tribunal in favour of each party. The Tribunal awarded no pre-determination interest. The builder appealed on the basis that interest had been sought in its application to the Tribunal, but none had been awarded. Indeed, the Tribunal had not addressed the issue.

2. [82]

   The appeal judge dealt with this matter somewhat inconclusively in the following three paragraphs in her first judgment:

3. [83]

   Each of these statements was unfortunate. If there were no error of law, it was not appropriate for the District Court to make any order other than to disallow the appeal on that ground. If the builder were owed interest, it was not true that the owners were so entitled: there was no appeal by the owners. Further, if there had been, the failure to award interest to them would no doubt also not have been an error of law. Finally, how the interest was to be calculated and whether it was to be calculated on a net sum, depended on the power of the Tribunal to award interest.

4. [84]

   Unsurprisingly in the context of this litigation, no short minutes were filed; rather, lengthy submissions and further disputed hearings followed.

5. [85]

   When the matter came to this Court, an issue was raised by the Court as to whether the Tribunal had power to award pre-determination interest. If it did not, that would not only explain the absence of any such award, but would demonstrate why there had not only been no error of law, but why there could be no entitlement to an award by the District Court.

6. [86]

   Following the hearing in this Court, both parties filed submissions with respect to the question of interest. It was common ground that the power of the Tribunal to award interest was governed by cl 49 of the Consumer, Trader and Tenancy Tribunal Regulation 2009 (NSW) (now repealed). That clause provided:

7. [87]

   Section 101 of the Civil Procedure Act 2005 (NSW) deals with interest on an unpaid judgment debt. It is clear that that is the purpose and scope of cl 49. Accordingly, there was no power in the Tribunal to award pre-determination interest. (Post-determination or post-judgment interest is not, of course, awarded in the determination or judgment; it accrues by virtue of the statute where the amount adjudged payable is unpaid after a specified time.)

8. [88]

   Somewhat obscurely, counsel for the owners nevertheless submitted that “it was open to the court to award interest pursuant to the common law principle of interest damages”. Calculations were provided as to how the relevant amount should be calculated. The short answer to this proposition was that the Tribunal is not a court and does not have whatever (limited) powers a court may have under the general law to award pre-judgment interest.

9. [89]

   The respondents then argued that there was a judgment of the District Court entitling them to interest. Again, there was a simple answer to the proposition. There was no claim, and could be no claim, before the District Court on an appeal from a decision of the Tribunal on a question of law.

10. [90]

    In its reply, the applicant drew attention to the written submissions it had filed in the District Court in support of its appeal. That document was 68 pages long. The final paragraph stated that the claim for interest was a claim for interest “under the contract.” Reference was made to cl 16 of the contract. Nothing further was said in elucidation of the claim.

11. [91]

    Clause 16 was in the following terms:

12. [92]

    There are several difficulties in alleging error on the part of the Tribunal in this respect (except that it should have identified its reasons for not granting interest). First, the application to the Tribunal claimed interest only on amounts due for variations. As there were no written variations agreed to by the owners, it is by no means clear that cl 16 of the contract applied to them. Secondly, nothing in the application would have allowed the Tribunal to award interest on variations, had it considered that they fell within the contract. This Court was referred to no evidence (had there been any) which would have allowed the Tribunal to find that, on the particular variations it allowed, there was agreement as to when payments should be made and as to whether, and if so when, any payments were made.

13. [93]

    Both parties have acted opportunistically during this litigation, in pursuing claims to which they had no obvious entitlement. The appeal judge was correct to conclude that there was no error of law on the part of the Tribunal in not awarding interest to the builder. It follows that the order with respect to interest, made in favour of the owners who had not sought interest, and were not entitled to it, should not have been made.

Orders

1. [94]

   The judgment of 30 April 2015 did not purport to make orders in final form. Orders were made, however, on 18 December 2015 and have presumably been entered, although no copy of entered orders was before this Court. The first two orders dismissed a notice of motion filed by the builder on 17 July 2015. There is no reason to interfere with those orders. The following orders were made with respect to the appeal:

2. [95]

   It is clear that the second order must be set aside. The question is what order should be made in its place and whether the first order was correct.

3. [96]

   On one view, the proper outcome would be to allow the application for review in so far as it seeks to strip out the amounts of interest improperly included by the appeal judge in the District Court. The result would be an order that the builder pay the owners an amount of $104,365.60 which was the amount ordered by the Tribunal reduced, in accordance with the decision in the District Court, by the outstanding amount due under the contract, namely $12,215.

4. [97]

   This is the practical consequence of the foregoing reasoning, but the question is whether the Court has power to do more than set aside the orders in the District Court and remit the matter for that Court to make further orders, with a possible further remittal to the Tribunal (now NCAT). As the District Court is a party to the proceedings in this Court and would in any event be bound to follow the direction of this Court, on one view remittal would be a futility involving extra costs but no advantage. The question is then whether in the exercise of the Court’s supervisory jurisdiction with respect to another court in the judicial hierarchy, the Court is limited to granting under s 69 of the Supreme Court Act only that kind of relief which might have been available under the prerogative writs.

5. [98]

   In Solution 6 Holdings Ltd v Industrial Relations Commission (NSW), [49] Spigelman CJ noted that there might be features of the old prerogative writs which no longer applied to the statutory relief. [50] Although at least in some respects that must be so (the statutory intention being to free the jurisdiction from the procedural constraints which afflicted the writs), Handley JA declined to join in any suggestion that there had been an alteration to “the substantive law governing judicial review”. [51] The extent of that reservation was unclear; the Chief Justice was dealing with the scope of the discretion to refuse relief.

6. [99]

   The issue as to the scope of the available relief arose in Wende v Horwath (NSW) Pty Ltd. [52] In dealing with an application to review a judgment of the District Court on an appeal from a costs assessment, I said at [101]:

7. [100]

   The other member of the majority, Beazley P, agreed with the orders I had proposed. [53] A similar course was identified in SAS Trustee Corporation v Woollard [54] and in Wang v Farkas (No 3). [55] However, in Wende v Horwath (No 2), [56] Beazley ACJ stated that “on reflection, not only does that question remain open, I consider the better view is that this court does not have power to make substantive orders on an application brought pursuant to s 69.”

8. [101]

   Despite those misgivings, the authority of this Court supports the view that the Court can make an order in its supervisory jurisdiction not merely quashing the determination of the court below, but making in its place the only order available in law, consistent with the reasoning of the Court. That course involves only a notional interference with the authority of the court below, and does not involve the exercise of any discretionary power on the part of this Court.

9. [102]

   One consequence of taking that course is that the final judgment sum will be in the order of this Court, rather than in an order of the District Court. Nevertheless, nothing seems to flow from that consequence. It will be made on a different date from the date on which it would be made in the District Court, but courts can specify the dates from which a judgment will operate. To deny this Court the power to limit administrative costs (and costs to the parties) in this way is to defy the statutory mandate of Pt 6, Div 1 of the Civil Procedure Act, setting out guiding principles for the exercise of the Court’s civil jurisdiction. Of course, if the Court does not have the necessary power, it does not have power; but there is no authority requiring that conclusion and sound reasons for the contrary view. The Court should give effect to the conclusions reached above in its orders.

10. [103]

    So far as the costs of the proceedings are concerned, there is no reason to interfere with the order made in the District Court, namely that the plaintiff (builder) pay the costs of the defendants (the owners) in respect of the appeal.

11. [104]

    So far as the proceedings in this Court are concerned, the applicant has had one element of success in that the judgment against it has been reduced to remove the element of interest awarded in the District Court. There is some irony in that result, because the question of interest only arose because the applicant raised it on its appeal. On the other hand, the owners somewhat opportunistically embraced the suggestion by the appeal judge that, if the builder were entitled to interest they were also, and sought to maintain that part of the judgment in this Court. In those circumstances there must be some allowance in the costs which are otherwise payable by the applicant, it having been otherwise unsuccessful. These considerations would be appropriately reflected in an order that the applicant pay 85% of the respondents’ costs in this Court.

12. [105]

    Accordingly, the Court should make the following orders:

    1. (1)

       Set aside orders 1 and 2 made by the District Court on 18 December 2015 on the applicant’s appeal.

    2. (2)

       In place thereof, make the following orders:

    3. (3)

       Order that the applicant pay 85% of the respondents’ costs in this Court.

13. [106]

    SIMPSON JA: I agree with the orders proposed by Basten JA and his Honour’s reasons therefor.