Supreme Court New South Wales

Case Title: Oppedisano v Micos Aluminium Systems

Medium Neutral Citation: [2012] NSWSC 53

Hearing Date(s): 12 January 2012

Decision Date: 12 January 2012

Jurisdiction: Equity Division - Technology and Construction List

Before: McDougall J

Decision: Summons dismissed with costs. Money paid into court to be paid out to first defendant.

Catchwords: BUILDING AND CONSTRUCTION - Building and Construction Industry Security of Payment Act 1999 (NSW) – whether contract was one for the carrying out of residential building work for the purposes of s 7(2)(b) - whether, had s 7(2)(b) been found to apply, relief in the nature of certiorari should be withheld on discretionary grounds.

Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)

Home Building Act 1989 (NSW)

Cases Cited: Chase Oyster Bar v Hamo Industries [2010] NSWSC 1167

Shorten v David Hurst Constructions Pty Ltd (2008) 72 NSWLR 211

Texts Cited: Australian Oxford Dictionary 2nd Edition

Macquarie Dictionary, 5th edition

Category: Procedural and other rulings

Parties: John Oppedisano (Plaintiff)

Micos Aluminium Systems Pty Limited (ACN 125 225 443) (Defendant)

Representation

- Counsel: Counsel:

M Auld (Plaintiff)

F G Kalyk (Defendant)

- Solicitors: Solicitors:

CCS Legal Pty Ltd (Plaintiff)

Knight Lawyers (Defendant)

File number(s): 2011/413569

Publication Restriction:

JUDGMENT - EX TEMPORE (REVISED 13 JANUARY 2012)

1 HIS HONOUR: The plaintiff, Mr Oppedisano, is the owner of premises at Fairlight. He lives there and has lived there for some 27 years; that occupation being interrupted only when the premises were uninhabitable during the performance of the construction works that lie at the heart of this case.

The dispute

2 On 25 January 2010, Mr Oppedisano and the first defendant (Micos) entered into a contract under which Micos agreed to provide glazing in respect of work that had been carried out and was being carried out on the premises. There is no doubt that the contract is a construction contract for the purposes of the Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act). The question is whether, by operation of s 7(2)(b), the provisions of that Act do not apply to the contract.

3 Mr Oppedisano and Micos fell into dispute about the work done and material supplied by Micos. On 6 May 2011, Micos served a payment claim seeking $49,472. On 26 May 2011, Mr Oppedisano provided a payment schedule. The payment schedule gave a number of reasons for non-payment, but, did not assert that the provisions of the Act had not been validly engaged. (It could be said that some of the reasons for non-payment advanced by the payment schedule were "jurisdictional", in the sense that it alleged, among other things, that the payment claim did not comply with s 13(2)(a) of the Act because it did not properly identify the relevant construction work or related goods and services.)

4 The dispute thereby constituted was referred to the second defendant (the adjudicator) for adjudication. On about 24 June 2011, the adjudicator made his determination. He concluded that Mr Oppedisano was liable to Micos in the sum claimed and that Micos should pay all the adjudication fees and expenses. The authorised nominating authority has given an adjudication certificate and that certificate has been registered as a judgment of the Local Court.

The issues

5 The issues for decision in this case are essentially two. The first issue is whether the adjudicator had jurisdiction to determine the application. That issue rests on the application of s 7(2)(b) of the Act. The underlying question is therefore whether the contract was one for the carrying out of residential building work on such part of the premises in question as Mr Oppedisano resided or proposed to reside in. The second issue is whether, on the assumption that s 7(2)(b) does apply, relief in the nature of certiorari should be withheld on discretionary grounds. That issue arises because the jurisdictional question that is now raised was not flagged in the payment schedule or in the adjudication response. On the contrary, in each document, Mr Oppedisano sought to argue the merits of the payment claim.

The nature of the premises

6 The evidence is less than clear. It seems to me that the clearest account comes from the affidavit of Micos's solicitor Ms Levy. I say that because Ms Levy has visited the premises on two occasions, has inspected them thoroughly, has looked at various drawings, has taken a number of photographs, and has prepared an affidavit which sets out in detail the results of her inspections and observations. Since she was not crossexamined on that affidavit, I proceed on the basis that it is accurate.

7 The effect of the building work which has been carried out, can be described as follows. The property slopes down from the street. At street level, there is now a garage which can accommodate four motor vehicles, and a self-contained unit known as unit 1. Below unit 1 there is a selfcontained unit known as unit 2. On the same level as unit 2, there is what has been constructed as a self-contained unit, referred to by Micos as unit 3, but described on the drawings put into evidence by Mr Oppedisano as an "entertainment area ". On the lower ground floor, and essentially below unit 2, there is a further and apparently unnumbered unit. It too is a selfcontained unit.

8 The evidence is that unit 1 - the street level unit - was constructed and adapted to be occupied by Mr Oppedisano's mother, and that it is now occupied by her. The unit on the lower ground floor is occupied by Mr Oppedisano. Unit 2, and what Micos called (and from here on I will also call) unit 3, are occupied from time to time, but not all the time, by Mr Oppedisano's brother and members of his family (that is to say, the brother's family). Each of the units is fully self-contained, in the sense that it contains sleeping accommodation; at least one bathroom; laundry facilities (either separate or included within a bathroom); living area; and a kitchen.

9 The access to each of the units is external. There is no access internally from any one unit to any other. The original plans and, I think, the original construction work, provided for an internal staircase but that was demolished so as to provide for additional living space.

10 In addition, units 1, 2, and the lower ground floor unit have a balcony or loggia which appears to face west and out to the water view.

11 The photographic evidence makes it plain that there are separate letter boxes for each of the units and that three of them (units 1, 2 and 3) have separate numbers next to their entry doors. The parking area has been divided into lined spaces and those spaces have numbered from 1 to 4.

12 There is some dispute as to whether the premises are separately metered for electricity, or not, although the drawings which were put to Mr Oppedisano in cross-examination refer to "meter boxes", and one of the photographs taken by Ms Levy shows at least two "electrical rooms".

13 Further, there is an intercom or entry system with provision for 4 separate bells or buzzers. Mr Oppedisano explained that this was configured (at least at present) to enable a buzz from any one button to be answered from any one unit. That was necessary he said so that his mother, who was not very mobile and has limited English, need not be troubled to answer the door.

14 There is no evidence of any common facilities. There is a swimming pool, but it is within the area of unit 3.

15 There do not appear to be any communal living facilities, and there is no evidence that the occupants of the premises from time to time live together, or enjoy recreation time or recreational activities together.

16 Further, when Mr Oppedisano made a later development application, for the construction of what is now the garage at street level, he filled out (or there was filled out for him) and on any view he signed, development application and check list. The check list stated that before the proposed use that was the subject of the development application, the previous use was "multiple dwellings" and that the Building Code of Australia (BCA) classification was class 2.

17 I divert to note that a class 2 building under the BCA is defined as:

"a building which contains 2 or more sole-occupancy units, each being a separate dwelling".

18 Likewise, the BCA defines "sole-occupancy units" to mean:

"a room or other part of a building for occupation by one or joint owner, lessee, tenant or other occupier to the exclusion of any other owner, lessee, tenant or occupier and includes... a dwelling ...".

19 Returning to the development application, Mr Oppedisano also made application for a construction certificate. In that application also, he confirmed that the BCA classification was class 2.

20 To the extent that it is relevant, the premises are situated in an area where the other improvements comprise, at least for the most part, residential flat buildings.

Evidence of intention or purpose

21 Mr Oppedisano gave evidence as to his intention and as to what he had hoped to achieve through the renovations that led to the creation of the structure that I have described. I have some hesitation in accepting his evidence. First, I think, it was carefully framed with an eye to the issues in the present proceedings. Secondly, I think, it did not fully disclose the nature of the works that were undertaken. In particular, it did not disclose that there were four self-contained units constructed in the premises, but, rather, put forward the picture that there were 3 such units and the entertainment area. Finally, in this context, I think that more weight is to be given to prior assertions made by Mr Oppedisano (of the kind to which I have referred in the council documents) then to assertions made for the purposes of litigation.

22 Thus, whilst I want to make it perfectly clear that I do not think that Mr Oppedisano was seeking actively to mislead the court, I have some hesitation in accepting wholly, or at face value, his evidence as to intention or purpose.

Section 7(2)(b)

23 Section 7(2)(b) of the act is not entirely clear in its drafting. The role of s 7 in the Act is to provide for the application of the Act to construction contracts. It does so in subs (1) by saying that, subject to what follows, the Act applies to any construction contract whether written or oral or partly written or oral, and applies whether or not the construction contract is expressed to be governed by the law of a jurisdiction other than New South Wales.

24 There are then set out a number of exclusions. By subs (2)(b), the Act does not apply to:

"A construction contract for the carrying out of residential building work (within the meaning of the Home Building Act 1989) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in.

25 By s 3 of the Home Building Act 1989 (NSW), residential building work is defined in substance as work involved in the construction, altering, adding to or repairing etc of a dwelling. It is not necessary to set out the full definition. The expression "dwelling" is defined to mean:

"... a building or portion of a building that is designed, constructed or adopted for use as a dwelling (such as a detached or semi-detached house, transportable house, or townhouse, duplex, villa-home, strata or company title home unit or residential flat)...".

26 The definition continues to include associated structures and improvements that are prescribed by the regulations to form part of a dwelling, and provides that a dwelling does not include buildings or portions of buildings declared by the regulations to be excluded from the definition.

27 Regulations have been have been made in pursuance of that definition but I do not think anything turns on them.

28 Thus, the word "dwelling" is, in effect, defined self-referentially, by reference to the concept of "use as a dwelling."

29 In the Macquarie Dictionary, 5 th edition, the word "dwelling" is defined, relevantly, as:

"A place of residence or abode; a house.

30 In the Australian Oxford Dictionary, 2 nd Edition, the word "dwelling" is defined to mean:

"A house; a residence; an abode".

31 Perhaps not surprisingly in each case the expression "residence" is defined in a way that refers one back to the concept of a dwelling.

32 The proper construction of ss (2)(b) was considered by the Court of Appeal in Shorten v David Hurst Constructions Pty Ltd (2008) 72 NSWLR. In that case, Basten JA (who agreed with the majority) dealt with the proper construction of s 7(2)(b) at [28] and following. His Honour concluded at [29] that the exclusion for which s 7(2)(b) provides is limited to premises in which the respondent proposes to or does reside:

29 It is tolerably clear from the terms of s 7(2)(b) that its primary purpose is to exclude from the operation of the Security of Payment Act construction contracts for the carrying out of residential building work on premises in which the contracting party is or proposes to be resident. If a construction contract relates to a larger development, including dwellings other than the one in which a party proposes to reside, Parliament needed to decide whether the Act should apply to such a construction contract in accordance with its general operation. The question was: should the exclusion operate in relation to a contract limited to premises in which the other party sought to reside, or should the proposed residence of a party in one of a number of dwellings on the premises be sufficient to attract the exclusion? It is reasonably clear that the Parliament opted for the former (broader) application of the Act. It limited the exclusion to a construction contract for carrying out work "on such part of" the premises in which the party proposed to reside. (Grammatically, reference to "that part" might have been more felicitous, but the meaning would not be affected.) A construction contract to carry out work on the whole of the premises in circumstances where the party does not propose to reside in the whole of the premises is not within the exclusion.

33 Bell JA, with whom Hodgson JA agreed, said at [53] that the words "such part of any premises" which are to be found in s 7(2)(b) serve to identify the scope of the works that are the subject of the contract. It followed, her Honour said, that:

..[a] contract for the construction of 10 residential units, one of which is the proposed residence of the party for whom the work is carried out, is not a contract for the carrying out of residential building work on such part of any premises as the party proposes to reside in. This construction does not require reading the word "only" into the provision.

34 Accepting as I do that the reasons of Bell JA provide the reasoning of the court on the point, I think, nonetheless, that guidance can be drawn also, from the reasons of Basten JA. In substance, the essence of their Honours' reasoning is that on the proper construction of s 7(2)(b), the construction contract (if the Act is not to apply to it) must be one for the carrying out of residential building work only on that part of any premises in which the respondent resides or proposes to reside. I accept of course, that Bell JA said that it was not necessary to read the word "only" into the provision. Nonetheless, if I may say so respectfully, putting it in the way I have makes the operation relatively clear.

35 Thus, where in Shorten the contract was one for the construction of 10 separate strata title units, and the respondent proposed to live only in one, s 7(2)(b) did not take the contract outside the operation of the Act.

36 In this case, the evidence seems to be clear that the construction contract related to the premises as a whole. Certainly, it was not suggested in submissions that it related, for example, only to unit 2 or unit 3. If s 7(2)(b), is to apply (as Mr Oppedisano submits it should), it is necessary to show, the construction contract relating to the whole of the premises, that it is the whole of the premises in which he resides or proposed, at the time the contract was made, to reside. That is because, as Bell JA said, the words "such part of any premises" serve to define the scope of the works the subject of the contract.

37

38 In this case, as a question of fact, it seems to me that s 7(2)(b) has no application. As I have said, the property is divided into four separate units (even though only three of them appear to have been the subject of any development approval.) Mr Oppedisano lives in one. He intended, at the relevant time, that his mother would live in one of the others. He intended further, at that time, that, as required, other members of his family would reside in the others.

39 There is no evidence, as I have said, of any common household or family life. There is no evidence that the residents of one unit use and enjoy, as of right, the facilities of another. Nor is there any evidence that they do so by permission.

40 That seems to me to be entirely consistent with the acknowledgment by Mr Oppedisano, in the council documents to which I have referred, that the premises constitute a "multiple dwelling" and a class 2 building for the purposes of the BCA.

41 The adjudicator did not consider any of those matters. That is because the challenge was not raised. At one stage, it was submitted for Mr Oppedisano that there was enough material before the adjudicator to alert him to the problem. That is because, in paragraph 4.1 of the determination, the Adjudicator quoted from the adjudication application which stated that the contract was one for glazing "to the owner's residence and two (new) attached units" at the premises. I do not think that this necessarily drew the adjudicator's attention to the s 7(2)(b) problem. Nor was it drawn to his attention in any other way. Consistent with what I Jhave just said, the reference to two new attached units would raise the very question of where (in whole or in part) Mr Oppedisano, the owner, proposed to live.

42 Accordingly, and dealing with the first issue, I conclude that the adjudicator did not act in excess of jurisdiction in determining the application.

Discretion

43 In those circumstances, it is not necessary to deal in detail with the second issue: the question of discretion. It was submitted for Mr Oppedisano that, where excess of jurisdiction is shown, certiorari is granted almost as of right. I agree. But it is nonetheless a discretionary remedy, for the reasons that I pointed out in Chase Oyster Bar v Hamo Industries [2010] NSWSC 1167. In this case, the adjudication went through to finality in circumstances where Mr Oppedisano had provided a payment schedule dealing with the claim on its merits, and did not raise the question (under s 7(2)(b) of jurisdiction; and had taken a similar course in his adjudication response. As I have indicated before, to the extent that he did raise any Jurisdictional question, it was one as to the compliance with the requirements of s 13(2)(a).

44 Where it was Mr Oppedisano who knew the relevant facts, and who chose not to raise the jurisdictional argument, and taking into account the relatively small amount of this claim, I would have been strongly inclined in any event to withhold prerogative relief as a matter of discretion.

45 I accept that the effect of refusing relief (if, contrary to my conclusion, the adjudicator did lack jurisdiction) would have been to enable the parties to confer jurisdiction by consent on a person exercising statutory functions, where otherwise that person did not have jurisdiction. But that is not the point. The point is whether, in all the circumstances, someone who is apprised of the relevant facts and does not raise the point at the appropriate time should be permitted, after the other party has incurred substantial expense, to do so. I would require more persuasion than was offered to determine that question in favour of the party seeking the exercise of discretion in his or its favour.

Orders

46 For those reasons, I make the following orders.

1. Order that the summons be dismissed.

2. Order that the money paid into court be paid out to the first defendant.

3. Order the plaintiff to pay the first defendant's costs.

4. Otherwise make no order as to costs.

5. Order that the exhibit be handed out.

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