Advance Earthmovers Pty Ltd v Fubew Pty Ltd [2009] NSWCA 337 (20 October 2009)

Last Updated: 21 October 2009

NEW SOUTH WALES COURT OF APPEAL

CITATION:

Advance Earthmovers Pty Ltd v Fubew Pty Ltd [2009] NSWCA 337

FILE NUMBER(S):

40135/09

HEARING DATE(S):

27 August 2009

JUDGMENT DATE:

20 October 2009

PARTIES:

Advance Earthmovers Pty Ltd (Applicant)

Fubew Pty Ltd (Respondent)

JUDGMENT OF:

Tobias JA Young JA Sackville AJA

LOWER COURT JURISDICTION:

District Court

LOWER COURT FILE NUMBER(S):

DC 70/2008

LOWER COURT JUDICIAL OFFICER:

Delaney DCJ

LOWER COURT DATE OF DECISION:

3 April 2009

COUNSEL:

M Ashhurst SC and M Dolenec (Applicant)

S G Campbell SC and R K Weaver (Respondent)

SOLICITORS:

KQ Lawyers (Applicant)

Kevin E Worthington (Respondent)

CATCHWORDS:

ADMINISTRATIVE LAW- Administrative tribunals- Consumer, Trader and Tenancy Tribunal ("CTTT")- jurisdiction of courts and CTTT- s 22(3) of the Consumer, Trader and Tenancy Tribunal Act 2001 ("CTTT Act")- limited jurisdiction of courts where same "issue" to be heard in CTTT- whether respondent's claim of overcharging in CTTT is the same "issue" as claim in the District Court under the Building and Construction Industry Security of Payment Act 1999 ("SOPA"). CONTRACTS- building, engineering and related contracts- remuneration- jurisdiction of courts and CTTT- whether respondent's claim in CTTT is the same "issue" as claim in the District Court- s 22(3) of the CTTT Act . CONTRACTS- building, engineering and related contracts- remuneration- interpretation and application of s 7(2)(b) of the SOPA- whether right of a contractor to proceed under s 15(2)(a)(i) to obtain summary judgment for the amount claimed abrogated- whether corporation can contract for "residential building work" as defined in s 7(2)(b) of the SOPA- whether corporation can reside. WORDS & PHRASES- "Issue" in s 22(3) of the CTTT Act .

LEGISLATION CITED:

Building and Construction Industry Security of Payment Act 1999 , ss 3 , 4 , 5 , 6 , 7 (1), 7 (2)(b), 7 (3), 8 (1), 9 , 11 , 13 , 14 , 15 , 32

Constitution (Cth), s 75(iv)

Consumer, Trader and Tenancy Tribunal Act 2001 , ss 5(2) , 21 (1), 22 (3), 22 (6), 22 (7), 23

Home Building Act 1989 , ss 3 , 48A , 48I , 48J , 48K , 48L

CATEGORY:

Principal judgment

CASES CITED:

Australasian Temperance and General Mutual Life Assurance Society Ltd v Howe [1922] HCA 50 ; 31 CLR 290

Cohen-Hallaleh v Cyril Rosenbaum Synagogue [2003] NSWSC 395

Cox v Journeaux [1934] HCA 72 ; 52 CLR 282

Craig v South Australia [1995] HCA 58 ; 184 CLR 163

De Beers Consolidated Mines Ltd v Howe [1906] AC 455

Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 ; 62 NSWLR 385

Howell v Dering [1915] 1 KB 54

In re Little Olympian Each Ways Ltd [1995] 1 WLR 560

Kuligowski v Metrobus [2004] HCA 34 ; 220 CLR 363

R v The Judges of the District Court Holden at Brisbane; Ex parte Kruger Enterprises [1982] Qd R 623

Shorten v David Hurst Constructions Pty Ltd [2008] NSWCA 134 ; 72 NSWLR 211

The Cesena Sulphur Company Ltd v Nicholson (1876) LR 1 Ex D 428

Union Steamship Company of New Zealand Ltd v Ferguson [1969] HCA 73 ; 119 CLR 191

Unit Construction Co Ltd v Bullock [1960] AC 351

Westfield Concrete Co Pty Ltd v Fair Trading Tribunal [2001] NSWSC 267

TEXTS CITED:

DECISION:

(1) Leave to appeal granted; (2) Applicant to file notice of appeal within 7 days; (3) Appeal allowed; (4) Orders of Delaney DCJ set aside and in lieu thereof order that the respondent's notice of motion to set aside summary judgment be dismissed; (5) Order that the respondent pay the costs below and on appeal, but in respect of the latter, if qualified to receive a certificate under the Suitors' Fund Act 1951 .

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40135/09

TOBIAS JA

YOUNG JA

SACKVILLE AJA

Tuesday 20 October 2009

ADVANCE EARTHMOVERS PTY LTD v FUBEW PTY LTD

HEADNOTE

The respondent company contracted the applicant to do earthmoving work on its property for preparation of an access road prior to the construction on the site of a proposed residence for the respondent’s directors. The applicant completed work and rendered invoices to the respondent for $95,000. The respondent paid the applicant $15,000, disputing the payment of the rest of the invoice on the basis that any charges in excess of the $15,000 estimate given for the work were for remedial work for which the respondent was not liable.

The respondent filed a claim in the Consumer, Trader and Tenancy Tribunal (“CTTT”) against the applicant in respect of the alleged over charging. The applicant later brought proceedings in the District Court claiming, in the alternative, breach of contract, a claim in quantum meruit or a claim under s 15 of the Building and Construction Industry Security of Payment Act 1999 (“ SOPA ”) for the outstanding amount plus interest. The applicant obtained summary judgment against the respondent on the SOPA count. The respondent then applied to the District Court to set aside that judgment and to remove the proceedings to the CTTT. The same judge, the primary judge in this appeal, heard that application.

The primary judge set aside his earlier judgment and gave leave to the respondent to file a defence within 14 days. The primary judge set aside the judgment partly on the basis that the respondent had a good defence to the applicant’s claim on the merits because, pursuant to s 22(3) of the Consumer, Trader and Tenancy Tribunal Act 2001 (“ CTTT Act ” ), which states that a court does not have jurisdiction where an “issue” is already before the CTTT.

The applicant sought leave to appeal and appealed against the primary judge’s decision to set aside the summary judgment on the grounds that the trial judge erred in finding that s 22(3) of the CTTT Act applied, that the District Court had no jurisdiction (although it was contended that the primary judge did not make such a finding as to jurisdiction) and that he erred in not dismissing the respondent’s motion to set aside the summary judgment. Leave to appeal was granted.

The essence of the appeal was the interpretation and operation of the CTTT and Home Building Acts and the SOPA . The CTTT has jurisdiction to determine claims regarding residential building work pursuant to ss 48I - 48L of the Home Building Act 1989 . The CTTT Act removes jurisdiction from a court if an issue is already before the CTTT. The ability for a contractor to make a claim for payment under the SOPA is removed by s 7(2)(b) of that Act if the work is “residential building work” as defined in the Home Building Act .

In assessing whether the primary judge was correct in setting aside his earlier summary judgment, the Court considered whether the respondent had an arguable defence on the merits, as the primary judge found. This required the Court to consider the question of whether s 22(3) of the CTTT Act applied and the operation of s 7(2)(b) of the SOPA .

Two key issues in the appeal were a) whether the District Court, in determining the SOPA claim, would be hearing the same ‘issue’ as the CTTT in the respondent’s claim of overcharging and b) whether a corporation can contract for “residential building work” to be carried out so as to attract s 7(2)(b) of the SOPA .

As to a), Young JA (with whom Tobias JA agreed) held that the District Court would not be determining the same issue as the CTTT because the District Court determination would not be a final decision of whether the respondent had to pay the outstanding amount. Therefore, the District Court was not deprived of jurisdiction to determine the applicant’s SOPA claim by s 22(3) of the CTTT Act . Sackville AJA also held that the District Court would not be hearing the same issue as the CTTT.

As to b), Young JA (with whom Tobias JA and Sackville AJA agreed) held that a corporation could not reside therefore the work that the respondent contracted the applicant to do could not be considered “residential building work...on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in”. Thus, s 7(2)(b) of the SOPA is not enlivened and the SOPA applies, therefore the right of the contractor to make a SOPA claim is not abrogated.

Sackville AJA also reviewed the operation of the CTTT Act , SOPA and the Home Building Act and their inter-relationship in building cases.

The appeal was allowed. The Court set aside the orders of the primary judge. The summary judgment for the applicant was restored.

IN THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40135/09

TOBIAS JA

YOUNG JA

SACKVILLE AJA

Tuesday 20 October 2009

ADVANCE EARTHMOVERS PTY LTD v FUBEW PTY LTD

Judgment

1 TOBIAS JA: I agree with the orders proposed by Young JA for the reasons he has given as well as for the reasons given by Sackville AJA.

2 YOUNG JA: This is an application for leave to appeal from a decision of Delaney DCJ being heard concurrently with the appeal should leave be granted.

3 The basal underlying facts to the present dispute can be simply stated.

4 The applicant is a company whose principal function is as an earthmoving contractor.

5 The respondent, a company controlled by a Ms Dove and another woman, owns a property in the Southern Highlands upon which, at the time when it entered into the contract involved in the present dispute, it was intending to have a residence constructed for its directors.

6 The applicant was contracted by the respondent to do work on its property for preparation of an access road prior to the construction on the site of the proposed residence.

7 The applicant did work towards constructing the access road and rendered invoices to the respondent for about $95,000.

8 The respondent was dissatisfied with the amount charged for the work and did not pay the invoices except for an amount of about $15,000. The dispute seems to be that the estimate for the work was $15,000 and the additional charges were said by the respondent to be for remedial work for which it had no liability to pay.

9 On 25 August 2008, the respondent filed a claim in respect of the alleged over charging with the Consumer, Trader and Tenancy Tribunal (“CTTT”) at Moss Vale.

10 There is some doubt in my mind as to whether the CTTT had jurisdiction to determine that claim. This is because the CTTT would only have jurisdiction if what was being done was residential building work, vide Home Building Act 1989 , ss 48I - 48L .

11 However, counsel for the applicant conceded that the CTTT did indeed have jurisdiction to determine the respondent’s claim.

12 On 27 August 2008, the applicant filed a statement of claim in the Wollongong District Court in which it claimed in the alternative:

(a) $79,120.53 for breach of contract;

(b) $79,120.53 under s 15 of the Building and Construction Industry Security of Payment Act 1999 (“SOPA”); or

13 The statement of claim pleaded, inter alia, that the relevant contract was a construction contract as defined by s 4 of the SOPA , that it had made a payment claim under s 13 of that Act and the respondent had not within 10 days or at all, served any payment schedules as required by s 14(4) of that Act.

14 The applicant filed a motion for summary judgment on 31 October 2008.

15 That motion came on for hearing before his Honour Judge Delaney on 24 November 2008. The respondent did not appear. However, it had sent letters to the Court pointing out its view that there was no jurisdiction in the District Court to hear the matter because proceedings had been commenced in the CTTT two days before the filing of the statement of claim in the District Court.

16 Judge Delaney informed counsel for the applicant of that matter. Counsel informed his Honour that that did not matter because of s 48L(3) of the Home Building Act 1989 . That may well have been incorrect and may have misled the judge, though in saying this, I am not impugning the integrity of the barrister who made the submission.

17 His Honour found a verdict for the applicant on the SOPA count.

18 The applicant issued a statutory demand based on the judgment. A motion in the Equity Division of this Court to set aside that statutory demand was successful.

19 The respondent then filed a motion on 29 January 2009 to set aside the judgment and to remove the proceedings to the CTTT.

20 This second motion came on before Judge Delaney on 25 February 2009 and his Honour gave a written judgment on 3 April 2009. He appears to have held that the District Court had no jurisdiction to hear the matter. However, he also said that it would be a denial of natural justice not to set aside the judgment in the circumstances and that it would appear that the respondent had a good defence on the merits based on the interpretation of the Consumer, Trader and Tenancy Tribunal Act 2001 (“ CTTT Act ”).

21 The basis of the decision appears to be s 22(3) of the CTTT Act which provides:

“If, at the time when an application was made to the Tribunal in accordance with this Act, no issue arising under the application was the subject of a dispute in proceedings pending before a court, a court has no jurisdiction to hear or determine such an issue.”

22 His Honour then made orders setting aside the judgment, giving leave to the respondent to file a defence within 14 days and made orders for costs.

23 The draft notice of appeal contends that the primary judge was in error in finding that s 22(3) of the CTTT Act applied and that he erred in finding no jurisdiction and in not dismissing the respondent’s motion.

24 The orders sought involve vacating the judge’s order of 3 April 2009. This would reinstate the summary judgment.

25 Needless to say, the respondent resists this. In addition to other arguments, it says by a proposed notice of contention that the SOPA does not apply in the instant case as this case concerns a residential building work, vide s 7(2)(b) of the SOPA .

26 The applicant needs leave to appeal for at least two reasons:

(1) The judgment below is interlocutory;

(2) The amount involved is less than $100,000.

27 On this application and appeal, Mr M Ashhurst SC and Ms M Dolenec appeared for the applicant and Mr S G Campbell SC and Mr R K Weaver appeared for the respondent.

28 An applicant to set aside a judgment in the District Court ordinarily has to show two matters on the balance of probabilities: (a) some reason for not taking the appropriate action to defend in time; and (b) an arguable defence on the merits.

29 Although his Honour’s reasons are not particularly explicit on the matter, it would seem that he considered that the background of the letter to the Court regarding the claim before the CTTT and Ms Dove’s evidence of her belief that she had done all that she needed to do, satisfied requirement (a).

30 As to (b), his Honour considered that there was an arguable case on the merits.

31 The complicating factor is that he appeared to find that the District Court had no jurisdiction to hear the matter because of s 22(3) of the CTTT Act .

32 I say “appears”, because although his Honour wrote those words, his next following words that the interpretation of the CTTT Act afforded a defence on the merits and his giving leave for the respondent to file a defence, appears to negate this and show that his Honour was merely indicating that the point about no jurisdiction was fairly arguable.

33 There was considerable argument about what his Honour did actually decide. It is a matter of impression from the words used. Whilst my preliminary view was that his Honour did not actually decide the point about jurisdiction, after hearing the full argument, it seems to me that what he said on that issue is too clear to be cut down by his subsequent utterances.

34 In particular, the leave to file a defence might have been to allow for defences which did not fall foul of s 22(3) of the CTTT Act .

35 Mr Ashhurst submits that his Honour’s decision cannot be justified.

36 The submission may be summarised by saying that the CTTT alone had jurisdiction to decide whether in the ultimate the respondent must pay the applicant’s demand. That was the issue before the CTTT. However, the issue before the District Court was merely whether the applicant was entitled, in the interim, to be paid the amount of its demand in accordance with the SOPA .

37 The submissions pointed out almost ad nauseam that a judgment under the SOPA , whilst an order upon which execution may be levied, is not the final assessment of the underlying cause of action. The statute is aimed at the contractor being in possession of the amount in dispute with a proprietor or head contractor pending the decision on the disputed claim.

38 The key point is what is the meaning of “issue” in s 22(3) of the CTTT Act ?

39 The word “issue” derives from the Latin verb “to go” and an issue occurs where two or more people are going meet at a point.

40 “Issue” in litigation means a point in dispute between parties as in the pre-Judicature pleadings where in due course issue was joined by formulating a question to which a jury could answer “Yes” or “No”.

41 Now that point is not reached where one party is saying, “Ultimately I do not have to pay the demand” and the other party responds: “That may be so, but you have to pay the demand whilst we await such a final decision”.

42 Accordingly, it would seem that the District Court was not dealing with the same issue as in the CTTT and thus was not deprived of jurisdiction because of s 22(3) of the CTTT Act .

43 I should note that, in any event s 22(3) of the CTTT Act merely deprives the District Court of jurisdiction to try the same “issue” as is before the CTTT. It does not operate to deprive the District Court of jurisdiction to decide any other question arising between the parties.

44 However, two further matters must be considered.

45 First, it must be remembered that only one of the three alternate claims raised in the statement of claim was based on the SOPA . The breach of contract claim and the quantum meruit claim may well raise identical issues with the matter that had already been commenced in the CTTT by the respondent. Indeed, this was conceded by Mr Ashhurst with respect to the quantum meruit claim. However, this is irrelevant to the decision as to whether the second claim was barred because of the claim before the CTTT.

46 The second matter needs deeper consideration.

47 There is an awkward fit between the various pieces of legislation that govern the present dispute. Not only are the CTTT Act and the SOPA significant, but so also is the Home Building Act .

48 Section 7(2)(b) of the SOPA provides as follows:

“This Act does not apply to ...

(b) 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.”

49 Section 3 of the Home Building Act defines “residential building work” as work involved in the construction, making of alterations, repairing, renovating, decorating or protective treatment of a dwelling. “Dwelling” is defined in such a way as to include the actual house or flat etc plus any swimming pool or spa for use in conjunction with the house or flat etc.

50 Sections 48I and 48K of the Home Building Act confer jurisdiction on the CTTT in respect of building claims. A “building claim” is defined in s 48A of the Home Building Act as a claim arising from building services which means services in connection with residential building work.

51 Thus, the CTTT appears only to have jurisdiction with respect to residential building work.

52 That is why I had doubts as to the CTTT’s jurisdiction to hear the present claim as the work carried out for the respondent may not have been residential building work as defined.

53 That doubt can be put aside in the light of Mr Ashhurst’s concession.

54 However, the point may still need to be considered as to whether this contract involved residential building work as if it does, then it may be that the SOPA does not apply and thus the claimant’s proceedings under the SOPA should fail and there is, thus, a defence on the merits to the claim.

55 On this basis, there would or could be a common issue in both the CTTT and the District Court, the issue being whether the contract was for residential building work or not.

56 Mr Ashhurst submits that this issue does not arise because he has conceded that the CTTT has jurisdiction to hear the proprietor’s claim and notwithstanding that fact, the residential building work was not carried out on such part of any premises in which the party for whom the work was so carried out resides or proposes to reside so that s 7(2)(b) of the SOPA does not apply.

57 The key point is that as the respondent is a corporation it cannot reside in a dwelling.

58 There was not much discussion of this point: the statement in the preceding paragraph being thought to be obviously correct.

59 My research shows that it is not so obvious, but I still consider that it is correct.

60 When considering the High Court’s grant of jurisdiction under s 75(iv) of the Australian Constitution to hear matters between residents of different States, the High Court has constantly taken the view that a corporation cannot be considered a resident. This view was taken in 1922 in Australasian Temperance and General Mutual Life Assurance Society Ltd v Howe [1922] HCA 50 ; (1922) 31 CLR 290. The Court divided 3/2 on the issue in an ex parte matter in which Owen Dixon appeared for the unsuccessful plaintiff. In essence, Knox CJ and Gavan Duffy J said that the natural meaning of the word “resident” was to a natural person only and Higgins J agreed basing his view on the fact that there was apposition between the word “resident” and the word “citizen”. Isaacs and Starke JJ strongly disagreed.

61 The High Court was invited to overrule that decision in Cox v Journeaux [1934] HCA 72 ; (1934) 52 CLR 282 , but declined the invitation. In Union Steamship Company of New Zealand Ltd v Ferguson [1969] HCA 73 ; (1969) 119 CLR 191 at 196, Windeyer J applied the decision in the Australasian Temperance case and said, “the defendant, being a corporation, could not be a ‘resident’ of Victoria”.

62 There are, however, a series of cases where it has been decided that a corporation can be a resident for some purposes.

63 In The Cesena Sulphur Company Ltd v Nicholson (1876) LR 1 Ex D 428 , Kelly CB and Huddleston B decided that, under the then English Income Tax legislation, the plaintiff companies were residing in the United Kingdom. Huddleston B said at 452:

“The use of the word ‘residence’ is founded upon the habits of a natural man, and is therefore inapplicable to the artificial and legal person whom we call a corporation. But for the purpose of giving effect to the words of the legislature an artificial residence must be assigned to this artificial person, and one formed on the analogy of natural persons.”

64 This approach was endorsed by the House of Lords in De Beers Consolidated Mines Ltd v Howe [1906] AC 455.

65 A similar approach was taken in a case involving security for costs against a foreign plaintiff in In re Little Olympian Each Ways Ltd [1995] 1 WLR 560 .

66 However, in these and other cases, the judges often express the opinion that assigning a residence to a corporation is a highly artificial action mandated by the statute being considered, see eg per Lord Radcliffe in Unit Construction Co Ltd v Bullock [1960] AC 351 at 368 (another tax case) .

67 In the Australasian Temperance case , Isaacs J in his dissenting judgment analysed the tax and service of process cases and other cases where a corporation had been held to be resident. He conceded at 313 that where acts are referred to which are so clearly physical that they are impossible except for a human being then corporations are excluded. “A corporation cannot eat, drink or marry”. However, at common law, “person” includes “corporation” and the proper construction of a statute may be that the legislature intends the word “resident” in the case of persons who are corporations to mean, by analogy, the corporation “is here” (p 321).

68 When one looks to the Home Building Act , one can see that the clear indications are that “residence” is used in its natural sense. First, the Act is the Home Building Act . A home is where natural persons eat, drink and sometimes marry. Next the flavour of s 7(2)(b) of the SOPA is that the relevant party must have or intend some personal occupation of the residence.

69 Thus, in my view, residential building work performed for a corporation cannot fall within s 7(2)(b) of the SOPA so as to abrogate the right of a contractor to proceed under s 15(2)(a)(i) in the District Court to obtain summary judgment for the amount claimed.

70 Even though the amount involved is under $100,000, the issues involved and the error below, which operate to negate the advantage which the SOPA clearly confers on the applicant, mean that the Court should grant leave to appeal.

71 It follows that, in my view, the Court should grant leave to appeal and then allow the appeal with the result that the summary judgment must be restored.

72 Of course, the respondent has the right to make a further application to the District Court to set aside the judgment. However, on the material before us, the prospects of success would appear minimal.

73 Accordingly, I propose the following orders:

1. Leave to appeal granted.

2. Applicant to file notice of appeal within 7 days.

3. Appeal allowed.

4. Orders of Delaney DCJ set aside and in lieu thereof order that the respondent’s notice of motion to set aside summary judgment be dismissed

5. Order that the respondent pay the costs below and on appeal, but in respect of the latter, if qualified, to receive a certificate under the Suitors’ Fund Act 1951 .

74 SACKVILLE AJA: I have had the advantage of reading Young JA’s judgment. I agree with the orders proposed by his Honour. However, I prefer to state my own reasons. In doing so, I shall not repeat Young JA’s account of the facts or of the background to the application for leave to appeal from the decision of Delaney DCJ.

LEGISLATION

75 The interlocking legislation is of some complexity. The relevant provisions are to be found in the Building and Construction Industry Security of Payment Act 1999 (NSW) (“ SOP Act ”), the Home Building Act 1989 (NSW) (“ HB Act ”) and the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (“ CTTT Act ”). Since the proceedings before Delaney DCJ included an application by the claimant (“ Earthmovers ”) for summary judgment against the opponent (“ Fubew ”) in respect of Earthmovers’ claim under s 15 of the SOP Act , it is convenient to start with that legislation.

SOP Act

76 The objects of the SOP Act are set out in s 3, as follows:

“(1) The object of this Act is to ensure that any person who undertakes to carry out construction work (or who undertakes to supply related goods and services) under a construction contract is entitled to receive, and is able to recover, progress payments in relation to the carrying out of that work and the supplying of those goods and services.’

(2) The means by which this Act ensures that a person is entitled to receive a progress payment is by granting a statutory entitlement to such a payment regardless of whether the relevant construction contract makes provision for progress payments.

...

(4) It is intended that this Act does not limit:

(a) any other entitlement that claimant may have under a construction contract, or

(b) any other remedy that a claimant may have for recovering any such other entitlement.”

77 Section 7(1) of the SOP Act provides that the Act applies to any “ construction contract ”, whether written or oral, or partly written and partly oral. The term “ construction contract ” is defined in s 4 to mean:

“a contract or other arrangement under which one party undertakes to carry out construction work, or to supply related goods and services, for another party”.

“ Construction work ” and “ related goods and services ” are defined terms: ss 4, 5, 6.

78 Section 7(2) of the SOP Act relevantly provides as follows:

“This Act does not apply to:

...

...”

79 Section 8(1) of the SOP Act provides that a person who has undertaken to carry out construction work under a construction contract is entitled to a progress payment. The amount of the progress payment to which the contractor is entitled and the due date for payment are to be determined in accordance with the legislation: ss 9, 11.

80 Part 3 of the SOP Act sets out the procedure for recovering progress payments. Section 13(1) provides that a person referred to in s 8(1):

“may serve a payment claim on the person who, under the construction contract concerned, is or may be liable to make the payment”.

The person on whom the payment claim is served (referred to as “ the respondent ”) may reply to the claim by providing a payment schedule. The schedule must specify certain matters: s 14(1)-(3).

81 Section 14(4) of the SOP Act provides as follows:

“If:

(a) a claimant serves a payment claim on a respondent, and

(b) the respondent does not provide a payment schedule to the claimant:

(i) within the time required by the relevant construction contract, or

(ii) within 10 business days after the payment claim is served,

whichever time expires earlier,

the respondent becomes liable to pay the claimed amount to the claimant on the due date for the progress payment to which the payment claim relates”.

82 Section 15 of the SOP Act is headed “ Consequences of not paying claimant where no payment schedule ”. It provides as follows:

“(1) This section applies if the respondent;

(a) becomes liable to pay the claimed amount to the claimant under section 14(4) as a consequence of having failed to provide a payment schedule to the claimant within the time allowed by that section, and

(b) fails to pay the whole or any part of the claimed amount on or before the due date for the progress payment to which the payment claim relates.

(2) In those circumstances, the claimant:

(a) may:

(i) recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction, or

(ii) ...

...

(4) If the claimant commences proceedings under subsection 2(a)(i) to recover the unpaid portion of the claimed amount from the respondent as a debt:

(a) judgment in favour of the claimant is not to be given unless the court is satisfied of the existence of the circumstances referred to in subsection (1), and

(b) the respondent is not, in those proceedings, entitled:

(i) to bring any cross-claim against the claimant, or

(ii) to raise any defence in relation to matters arising under the construction contract.”

83 Section 32 of the SOP Act provides as follows:

“(1) ... nothing in this Part affects any right that a party to a construction contract:

(a) may have under the contract, or

(b) ..., or

(2) Nothing done under or for the purposes of this Part affects any civil proceedings arising under a construction contract, whether under this Part or otherwise, except as provided by subsection (3).

(3) In any proceedings before a court or tribunal in relation to any matter arising under a construction contract, the court or tribunal:

(a) must allow for any amount paid to a party to the contract under or for the purposes of this Part in any order or award it makes in those proceedings, and

(b) may make such orders as it considers appropriate for the restitution of any amount so paid, and such other orders as it considers appropriate, having regard to its decision in those proceedings.”

CTTT Act

84 Section 21(1) of the CTTT Act provides that the CTTT:

“has such jurisdiction to decide matters, and such powers to make orders and otherwise exercise any function in connection with any such decisions, as is conferred on it by this or any other Act”.

Section 5(2) provides that the CTTT:

“has and may exercise such functions as are conferred on it by or under any Act”.

85 Section 22 of the CTTT Act is headed “ Other jurisdiction excluded in Certain Cases ”. Section 22 relevantly provides as follows:

“(3) If, at the time when an application was made to the Tribunal in accordance with this Act, no issue arising under the application was the subject of a dispute in proceedings pending before a court, a court has no jurisdiction to hear or determine such an issue.

...

(5) Subsection (3) does not prevent a court from hearing and determining any proceedings in which it is claimed that any order, determination or ruling of the Tribunal is invalid for want of jurisdiction or from making any order as a consequence of that finding.

(6) For the purposes of subsection (3), an issue arises under an application made to the Tribunal only if the existence of the issue is shown in the applicant’s claim or is recorded in the record made by the Tribunal is accordance with this Act.

(7) If, at the time when an application is made to the Tribunal in accordance with this Act, an issue arising under the application was the subject of a dispute in proceedings pending before a court, the Tribunal, on becoming aware of those proceedings, ceases to have jurisdiction to hear or determine the issue.”

The expression “ court ” is defined broadly in s 22(1) of the CTTT Act and plainly includes the District Court.

HB Act

86 The Note to s 5(2) of the CTTT Act identifies the HB Act as one of the Acts conferring jurisdiction on the Tribunal. Section 48K(1) of the HB Act provides that the Tribunal:

“has jurisdiction to hear and determine any building claims brought before it in accordance with [Part 3A] in which the amount claimed does not exceed $500,000 [or the amount prescribed]”.

Section 48K has effect despite s 22 of the CTTT Act : s 48K(9).

87 “ Building claim ” is defined by s 48A(1) of the HB Act to include a claim for:

“relief from payment of a specified sum of money ... that arises from a supply of building goods or services whether under a contract or not”.

“ Building goods or services ” is defined by s 48A(1) to mean:

“goods or services supplied for or in connection with the carrying out of residential building work ... being goods or services:

(a) supplied by the person who contracts to do, or otherwise does, that work, or

(b) ...”

88 Section 3(1) of the HB Act defines “ residential building work ” to mean:

“any work involved in, or involved in co-ordinating or supervising any work involved in:

(a) the construction of a dwelling, or

(b) the making of alterations to a dwelling, or

“ Dwelling ” is also a defined term: s 3(1). It means, relevantly:

“a building or portion of a building that is designed, constructed or adapted as for use as a dwelling (such as a detached or semi-detached house, ... terrace or town house ... or residential flat). It includes any swimming pool or spa constructed for use in conjunction with a dwelling ...”.

89 Section 48L of the HB Act is headed “ Tribunal to be chiefly responsible for resolving building claims ”. It provides as follows:

“(1) This section applies if a person starts any proceedings in or before any court in respect of a building claim and the building claim is one that could be heard by the Tribunal under this Division.

(2) If a defendant in proceedings to which this section applies makes an application for the proceedings to be transferred, the proceedings must be transferred to the Tribunal in accordance with the regulations and are to continue before the Tribunal as if they had been instituted there.

(3) This section does not apply to matters arising under [s 15 of the SOP Act ].

(4) This section has effect despite section 23 of the [ CTTT Act ].”

Section 23 of the CTTT Act , which is referred to in s 48L(4), provides for the transfer of proceedings from the Tribunal to a court where the parties agree or the Tribunal directs.

FUBEW’S SUBMISSIONS

90 The primary Judge in his “ succinct reasons ” (to use the description of Mr Campbell SC, who appeared with Mr Weaver for Fubew), did not identify the “ issue ” arising under Fubew’s application to the Tribunal which, by virtue of s 22(3) of the CTTT Act , the District Court lacked jurisdiction to determine. In this respect, his Honour said only that he was satisfied that the District Court had no jurisdiction to hear and determine the issue in the statement of claim.

91 Fubew’s contentions on the appeal evolved as the argument developed. In its written submissions, Fubew contended that the critical question was whether “ the disposition of each [set of proceedings] will require determination of the same question ”: Cohen-Hallaleh v Cyril Rosenbaum Synagogue [2003] NSWSC 395 , at [38], per Barrett J. Fubew identified the common issue in dispute as “ whether the claims must be paid or not ”.

92 Without further elaboration, this submission does not come to grips with the obvious point that Earthmovers’ claim in the District Court, insofar as it is based on s 15 of the SOP Act , raises quite different questions than those presented by Fubew’s claim in the Tribunal in which it seeks relief from payment to Earthmovers of a specified sum of money (cf HB Act , s 48A (subpar (c) of definition of “ building claim ”).

93 As was pointed out by Handley JA in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd [2005] NSWCA 49 ; 62 NSWLR 385, at 389 [22], the SOP Act :

“confers statutory rights on a builder to receive an interim or progress payment and enables that right to be determined informally, summarily and quickly, and then summarily enforced without prejudice to the common law rights of both parties which can be determined in the normal manner”.

The latter part of Handley JA’s analysis reflects the terms of s 32 of the SOP Act (see [83] above).

94 The “ claim ” made by Earthmovers under s 15 of the SOP Act requires proof of the matters specified in ss 14(4) and 15. It follows that Earthmovers, in order to make out that claim, must prove that:

it undertook to carry out construction work under a construction contract with Fubew (see SOP Act , s 8(1)); it served a payment claim on Fubew in accordance with the SOP Act ; and Fubew did not provide a payment schedule within the specified time.

95 Fubew’s claim that it was not obliged to pay the sum of $79,500 to Earthmovers under the construction contract did not depend on proof of any of these matters (although it was common ground that the parties had entered into a construction contract). The principal question arising on Fubew’s claim in the Tribunal is whether Earthmovers has an entitlement against Fubew to payment of $79,500 by reason of the supply of building goods and services. The Tribunal has power to allow for and make orders for the restitution of any moneys previously paid by Fubew to Earthmovers ( SOP Act , s 32(3)). Accordingly, it is not correct simply to assert that the common issue in Earthmovers’ claim under s 15 of the SOP Act and Fubew’s building claim before the Tribunal under s 48K of the HB Act is whether the “ claims ” must be paid or not.

96 Mr Campbell recognised this difficulty and sought to overcome it in his oral submissions. His argument proceeded in the following way:

(i) The heart of the dispute in the proceedings brought in the Tribunal and in the District Court was whether the work performed by Earthmovers was “ residential building work ”.

(ii) In correspondence preceding Fubew’s application to the Tribunal, Ms Dove (a director of Fubew) referred to the work performed under the contract as “ residential building work ”. Earthmovers’ solicitors, in a letter dated 22 October 2008 (written after Fubew filed its application in the Tribunal), asserted that the work performed by Earthmovers was not “ residential building work ” and thus s 7(2)(b) of the SOP Act did not exclude Earthmovers from relying on the statutory remedy created by s 15 of the SOP Act . It followed that the parties were in dispute on the question of whether Earthmovers had performed “ residential building work ”.

(iii) Although Fubew’s application to the Tribunal did not specifically identify any issue as to whether Earthmovers had performed “ residential building work ”, the issue necessarily arose in the proceedings. This was because the Tribunal had jurisdiction over the matter only if Fubew’s claim was a “ building claim ” as defined in s 48A of the HB Act . It could not be a “ building claim ” unless the claim arose from the supply of services supplied “ for or in connection with the carrying out of residential building work ”.

(iv) The District Court was deprived by s 22(3) of the CTTT Act of jurisdiction to determine whether Earthmovers had performed residential building work. It was therefore deprived of jurisdiction to determine whether s 7(2)(b) of the SOP Act (which says that the Act does not apply to a contract for the performance of residential building work) prevented Earthmovers from relying on the statutory recovery procedure laid down by s 15 of the SOP Act . The District Court could not quell the controversy between the parties because s 22(3) of the CTTT Act deprived it of jurisdiction to address the threshold question relating to whether Earthmovers performed residential building work.

(v) Thus the primary Judge was correct to hold that the District Court lacked jurisdiction to determine Earthmovers’ application for summary judgment.

REASONING

Application of s 22(3) of the CTTT Act

97 One of the difficulties with appeals in which submissions emerge only in the course of oral argument (as distinct from the written submissions required in advance of the hearing) is that important questions may be overlooked, or given less attention than they deserve. Fubew’s submissions seem to me to encounter two difficulties of this kind. The first is that s 22(3) of the CTTT Act , which is the foundation for Fubew’s case, is qualified by s 22(6). Neither party referred to s 22(6) in the course of argument.

98 Section 22(3) of the CTTT Act can be broken up into its component parts as follows:

if at the time when an application is made to the Tribunal in accordance with the CTTT Act ;

no issue arising under the application ; was the subject of a dispute in proceedings before a court; and a court has no jurisdiction to hear and determine such an issue .

99 Section 22(6) provides that an issue arises under an application made to the Tribunal only if the existence of the issue is shown in the applicant’s claim, or is recorded in the record made by the Tribunal in accordance with the Act.

100 Fubew’s application to the Tribunal was filed two days before Earthmovers commenced its proceedings in the District Court. The application to the Tribunal was constituted by a standard printed form with the various boxes completed or ticked. Question 14 asked: “ What is your dispute about? ”, Fubew, through its director Ms Dove, answered as follows:

“Contractor agreed with both the builder and owner on 23 Nov 2007 to:

(a) Cut the site as per the pegging of the builder.

(b) Remove material from the site cut to use on access road for building works.

(d) Geo fabric to be supplied by owner.

(e) Any additional material from cut to be used on farm (erosion).

(f) Work to take about 4 to 6 weeks.”

The application indicated that Fubew sought an order that it did not have to pay $79,120.53 to Earthmovers.

101 Fubew’s application to the Tribunal did not assert that it was making a “ building claim ” under s 48K(1) of the HB Act . Nor did the application expressly assert that Fubew’s claim arose from the supply of services in connection with the carrying out of residential building work.

102 It could be argued, however, that the residential building work issue was sufficiently “ shown ” for the purposes of s 22(6) of the CTTT Act by the heading to the printed application form, which was as follows:

“HOME BUILDING DIVISION APPLICATION

Under the Home Building Act 1989 ”

The heading, when read with the answer to Question 14 (which referred to an “ access road ” and identified the property on which the work was undertaken as a “ farm ”), might be said to have demonstrated that a threshold issue as to the nature of the work performed by Earthmovers was in “ existence ”. This would require the word “ shown ” to receive an expansive meaning, perhaps informed by the necessity for the Tribunal to be satisfied that it has jurisdiction to deal with a matter before it. On the other hand, s 22(6) of the CTTT Act , as a matter of construction, might be thought to limit “ an issue ” for the purposes of s 22(3) to one which appears on the face of the application.

103 As the point was not argued, or indeed adverted to by the parties, I do not think it appropriate to express a final view. It is enough to say for present purposes that it is not self-evident that Fubew’s application to the Tribunal “ showed ” that the issue on which it relied for the purposes of s 22(3) of the CTTT Act was “ in existence ”. Nor is it self-evident that the issue was recorded in the record made by the Tribunal in accordance with the CTTT Act . It is not clear what documents formed part of the record of the Tribunal on the date Fubew made the application (which appears to be the relevant time), other than the application form itself: cf Craig v South Australia [1995] HCA 58 ; 184 CLR 163 , at 180-183, per curiam (dealing with error on the face of the record for the purposes of the writ of certiorari), M Aronson, B Dyer and M Groves, Judicial Review of Administrative Action (4 ^th ed 2009), [4.220]-[4.230].

104 The second difficulty confronting Fubew is to identify the issue arising under the application to the Tribunal, for the purpose of determining the extent (if any) to which the District Court was deprived of jurisdiction by virtue of s 22(3) of the CTTT Act . In his oral submissions, Mr Campbell identified the issue common to the proceedings in the Tribunal and the District Court to be whether the work performed by Earthmovers was “ residential building work ”.

105 The Tribunal had jurisdiction to hear and determine Fubew’s claim, subject to monetary limits, if it was a “ building claim ” within the meaning of s 48K(1) of the HB Act . The claim answered this description only if (relevantly) it was a claim arising from a supply of services, whether under a contract or not , by Earthmovers “ for or in connection with the carrying out of residential building work ” (s 48A(1)). The jurisdictional issue that arose (or potentially arose) in the Tribunal proceedings was whether Fubew’s claim answered this description.

106 The SOP Act applies to any “ construction contract ”: s 7(1) (see the definition in s 4, [76] above). Section 7(2) provides that the SOP Act does not apply to certain construction contracts, including (s 7(2)(b)):

“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 or proposes to reside in”.

The issue that arises under s 7(2)(b) (leaving aside the question of when the issue can be said to arise) is not whether Earthmovers supplied services to Fubew for or in connection with the carrying out of residential building work . It is whether the construction contract between Fubew and Earthmovers answered the description in s 7(2)(b) of the SOP Act . That description incorporates several elements, including a requirement that the construction contract be “ for the carrying out of residential building work ”.

107 In R v The Judges of the District Court Holden at Brisbane; Ex parte Kruger Enterprises [1982] Qd R 623 , McPherson J construed the expression “ issue in dispute ” in s 17(1) of the Small Claims Tribunals Act 1973 (Qld). His Honour adopted (at 626-627) a definition of “ issue ” given by Buckley LJ in Howell v Dering [1915] 1 KB 54 , at 62:

“that which, if decided in favour of the plaintiff, will itself give a right to relief, or would, but for some other consideration, in itself give a right to relief; and if decided in favour of the defendant will in itself be a defence”.

108 In Cohen-Hallaleh v Cyril Rosenbaum Synagogue , Barrett J was concerned with s 22(7) of the CTTT Act ([85] above). His Honour identified (at [38]) the purpose of this provision as being to:

“avoid the risk of concurrent findings by the [Tribunal] and a ‘court’ ... with respect to a particular ‘issue’. For the section to operate, more must be shown [than] that the proceedings in the respective forums concern the same subject. It must be seen that disposition of each will require determination of the same question”.

See also Westfield Concrete Co Pty Ltd v Fair Trading Tribunal [2001] NSWSC 267 , at [22]ff, per James J; Kuligowski v Metrobus [2004] HCA 34 ; 220 CLR 363 , at 379-381, per curiam (dealing with the “ strict requirements for the application of issue estoppel ”). If Barrett J’s construction applies to s 22(3) of the CTTT Act (as I think is likely), the provision only deprives a court of jurisdiction to hear and determine an issue if the same issue has arisen under the application to the Tribunal.

109 These questions were not explored in any depth in the argument. Once again, it is enough to observe that it is not self-evident that s 22(3) of the CTTT Act deprived the District Court of jurisdiction to determine whether s 7(2)(b) of the SOP Act rendered the Act inapplicable to the contract entered into between Earthmovers and Fubew. The better view seems to be that it is necessary, in order for s 22(3) to deprive the District Court of jurisdiction, that the same issue arises in both sets of proceedings. If that is so, while the issues in each set of proceedings were similar, there may be difficulty in concluding that the same issue arose in both.

Earthmovers’ Alternative Contention

110 Young JA upholds Earthmovers’ alternative contention that residential building work done for a corporation cannot fall within s 7(2)(b) of the SOP Act . That being so, s 7(2)(b) cannot remove the construction contract between Earthmovers and Fubew from the application of the SOP Act . It follows, if the contention is correct, that no issue arises in Earthmovers’ proceedings in the District Court as to whether the contract was for the carrying out of “ residential building work ” as that term is defined in the HB Act . Even if the contract was for the carrying out of “ residential building work ”, s 7(2)(b) could not be satisfied where the party for whom the work is carried out is a corporation.

111 Section 7(2)(b) of the SOP Act is satisfied only where:

(i) there is a construction contract;

(ii) for the carrying out of residential building work (within the meaning of the HB Act );

(iii) on such part of any premises as the party for whom the work is carried out resides in or proposes to reside in.

112 As Basten JA pointed out in Shorten v David Hurst Constructions Pty Ltd [2008] NSWCA 134 ; 72 NSWLR 211, at 218 [29], the language of s 7(2)(b) is not precisely grammatical. It was held in that case that the words “ such part of the premises ” serve to identify the scope of the works that are the subject of the contract: at 222 [53], per Bell JA (with whom Hodgson JA agreed); at 218 [29], per Basten JA. For the exclusion to apply, “ the party for whom the work is carried out ” must as a matter of fact reside or propose to reside on the premises on which the work is carried out: at 223 [56].

113 The word “ party ” is used on five separate occasions in s 7(2) of the SOP Act: once in s 7(2)(b) and four times in s 7(3). Section 7(3) is as follows:

“(3) This Act does not apply to a construction contract to the extent to which it contains:

(a) provisions under which a party undertakes to carry out construction work , or supply related goods and services, as an employee (within the meaning of the Industrial Relations Act 1996 of the party for whom the work is to be carried out or the related goods and services are to be supplied, or

(b) provisions under which a party undertakes to carry out construction work , or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution, or

(i) to lend money or to repay money lent, or

...” (Emphasis added.)

114 On three occasions, s 7(3) uses the expression “ a party undertakes ”. On each of these occasions, the word “ party ” clearly means “ a party to the construction contract ”. This conclusion follows from the context: each of the sub-paragraphs refers to “ provisions [of the construction contract] under which a party undertakes ” to do certain things. On the fourth occasion (s 7(3)(a) the reference is to “ the party for whom the work is to be carried out ”. It is hardly likely that the drafter used the same word in a single sub-paragraph in two different senses. In my view, the fourth reference is also intended to mean a party to the construction contract.

115 Section 7(2)(b) also uses the word “ party ’. In my opinion, it has the same meaning in s 7(2)(b) as it does in s 7(3). Indeed, the expression “ the party for whom the work is carried out ” in s 7(2)(b) appears in identical form in s 7(3)(a). It follows that for the exclusion in s 7(2)(b) to apply, a party to the construction contract must reside or propose to reside in the premises on which the residential building work under the construction contract is to be carried out.

116 It is true that elsewhere in the SOP Act the drafter uses “ person ” to refer to someone who has undertaken construction work under a contract: see s 8(1). However, the lack of uniformity in language used elsewhere in the SOP Act cannot justify a different construction being given to the clear and uniform language in s 7.

117 Fubew was a party to the construction contract with Earthmovers. The directors of Fubew were not parties to the contract. For the reasons given by Young JA, it cannot be said that Fubew, a corporation, resided in or proposed to reside in the premises. It is not to the point that the directors of Fubew resided on the premises. It follows that the exclusion provided for by s 7(2)(b) of the SOP Act does not apply and that Earthmovers, if it is able to meet the requirements of s 15, will be entitled to an order against Fubew for the “ claimed amount ” under that section.

CONCLUSION

118 I agree with the orders proposed by Young JA.

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LAST UPDATED:

20 October 2009