Kostas v HIA Insurance Services Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: French CJ,Hayne,Heydon,Crennan,Kiefel JJ
• Judgment Date: 29 September 2010
• Neutral Citation: [2010] HCA 32,2010-0929 HCA B
• Court: High Court
• Docket Number: S84/2010
• Date: 29 September 2010

[2010] HCA 32

HIGH COURT OF AUSTRALIA

French CJ, Hayne, Heydon, Crennan and Kiefel JJ

S84/2010

Peter Kostas & Anor

Appellants

and

Hia Insurance Services Pty Limited T/As Home Owners Warranty & Anor

Respondents

Representation

J T Gleeson SC with R J Carruthers for the appellants (instructed by Pryor Tzannes & Wallis)

B W Walker SC with F R Clark and E Raper for the first respondent (instructed by Mills Oakley Lawyers)

Submitting appearance for the second respondent

Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), ss 66(2), 67.

Home Building Act 1989 (NSW), ss 48A(1), 48K(1).

Supreme Court Act 1970 (NSW), s 75A.

Kostas v HIA Insurance Services Pty Limited

Courts — Appeals — Jurisdiction and powers — Section 67(1) of Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) provided for appeal from Consumer, Trader and Tenancy Tribunal to Supreme Court ‘[i]f, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law’ — Appellants purported to terminate building contract because of builder's failure to meet obligations — Validity of termination turned on disputed claims for extension of time — Tribunal decided that material properly before it supported conclusion that disputed claims for extension had been served — Whether that question could be raised on appeal to Supreme Court — Whether ‘no evidence ground’ raises question of law.

Words and phrases — ‘question with respect to a matter of law’, ‘no evidence ground’.

ORDER

Appeal allowed.

Set aside the order of the Court of Appeal of the Supreme Court of New South Wales made on 16 September 2009 and, in lieu thereof, order that the appeal to that Court be dismissed with costs.

First respondent to pay the costs of the appellants.

French CJ

Introduction

1 The Consumer, Trader and Tenancy Tribunal of New South Wales (‘the Tribunal’) is a body set up by the Parliament of New South Wales to entertain a variety of commercial and consumer claims with the object of having such claims determined in an informal, expeditious and inexpensive manner 1. Until 2008, an appeal lay from the Tribunal to the Supreme Court of New South Wales from a decision of ‘a question with respect to a matter of law’ 2. A dispute about the scope of that jurisdiction and the ancillary powers of the Supreme Court has led to this appeal.

2 The appeal to this Court comes in the tenth year of a process which began in September 2000, when Peter and Christine Kostas commenced proceedings in what was then the Fair Trading Tribunal, a statutory predecessor of the Tribunal. The proceedings, which arose out of a dispute between Mr and Mrs Kostas, their builder and its statutory insurer 3, HIA Insurance Services Pty Limited (‘HIA’), concerned a $330,000 building contract. Mr and Mrs Kostas said they had validly terminated the contract on account of the builder's failure to meet its contractual obligations.

3 The Tribunal decided that Mr and Mrs Kostas had not validly terminated the disputed contract. A judge of the Supreme Court, on appeal, held that they had and that the Tribunal had made a number of errors of law in reaching its decision 4. On an appeal from the judge's decision, the Court of Appeal of the Supreme Court of New South Wales held that the judge did not have jurisdiction as there was no decision of a ‘question with respect to a matter of law’ before him 5. For the reasons that follow, the appeal to this Court from the Court of

Appeal should be allowed. The Tribunal made a finding adverse to Mr and Mrs Kostas to the effect that the builder had properly given notice of claims for extensions of time. That was a finding for which there was no evidence before the Tribunal. It was critical to the Tribunal's conclusion that notices of default grounding the termination by Mr and Mrs Kostas were not valid. The primary judge acted within his jurisdiction and powers when he allowed the appeal against the Tribunal's decision.

Procedural history

4 Mr and Mrs Kostas' claim in the Tribunal was for indemnity under a Home Owners Warranty policy with HIA 6. The claim related to loss and damage suffered because of the alleged failure by Sydney Construction Company Pty Ltd (‘SCC’) to complete contracted building works at their residence in Blakehurst. Mr and Mrs Kostas alleged that they had terminated the building contract. HIA denied liability. On 14 December 2000, SCC was joined as a defendant to the proceedings. It alleged that the purported termination of the contract was a wrongful repudiation, which it had accepted, and that it had been unable to complete its obligations because of the conduct of Mr and Mrs Kostas.

5 The substantive hearing did not commence until 20 October 2003, more than three years after the proceedings were commenced 7. Affidavit evidence was tendered and Mr Kostas and other witnesses were cross-examined. On 23 October 2003, the hearing was adjourned. It did not resume until 27 January 2004. It was again adjourned until 8 November 2004. Upon resumption of the hearing, Mr and Mrs Kostas and SCC agreed to withdraw their claims against each other. Mr and Mrs Kostas and HIA agreed, in relation to the continuing claim against HIA, that the Tribunal should determine as a preliminary question whether Mr and Mrs Kostas had lawfully terminated the building contract.

6 Central to the debate on the preliminary question were letters alleging breaches of the building contract, sent by the solicitors for Mr and Mrs Kostas on 4 May 2000 and 12 May 2000 and addressed respectively to SCC and its solicitors. The breaches alleged were inability and unwillingness to complete the

work, suspension of work without reasonable cause and failure to proceed diligently with the work. The first letter gave notice, pursuant to cl 24 of the contract, that if the alleged breaches were not rectified within 10 working days the contract would be terminated. It also set out a list of 42 items said to be uncompleted work. The second letter referred to the notice given on 4 May and also gave notice to SCC that it had failed to rectify defective work and was required to do so. It repeated that unless the breaches of contract were remedied by SCC within 10 working days the contract would be terminated in accordance with cl 24. Mr and Mrs Kostas purported to terminate the contract by letter on 29 June 2000 8. On 4 July 2000, SCC's solicitors replied denying any entitlement to terminate and treating the purported termination as a repudiation.

7 On 10 November 2004, counsel foreshadowed to the Tribunal the evidence they would rely upon in relation to the preliminary question. There followed a short re-examination of Mr Kostas. Written submissions were filed. By then, more than four years had elapsed since the proceedings had been commenced.

8 On 25 May 2005, the Tribunal found that Mr and Mrs Kostas' purported termination was not effective and made an order, declaratory in form, that they had repudiated the contract. It made a direction for the filing of a minute of orders to give effect to its reasons 9.

9 On 22 June 2005, Mr and Mrs Kostas instituted an appeal against the decision of the Tribunal in the Supreme Court under s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (‘the CTTT Act’) 10. The section creates a right of appeal against a decision by the Tribunal of ‘a question with respect to a matter of law’.

10 The appeal was heard by Rothman J on 14, 15 and 21 June 2006. His Honour did not deliver judgment until 30 October 2007 11. The reasons for the substantial delay do not appear from the record. His Honour quashed the orders of the Tribunal made on 25 May 2005 and costs orders, which it had made on 20 September 2005. He declared that the termination of the building contract by Mr and Mrs Kostas was lawful and effective. He ordered that HIA pay their costs of the appeal and of the proceedings before the Tribunal. The matter was otherwise remitted to the Tribunal. By that time, more than seven years had passed since the commencement of the proceedings.

11 On 16 September 2009, the Court of Appeal (Spigelman CJ, Allsop P and Basten JA) unanimously allowed HIA's appeal against the decision of the primary judge 12. It did so substantially on the basis that what had been identified by the primary judge as decisions of the Tribunal on questions with respect to matters of law were not such as to attract the jurisdiction of the Supreme Court under s 67 of the CTTT Act. By this time, more than nine years had elapsed since Mr and Mrs Kostas had instituted their proceedings in the Tribunal.

12 Special leave to appeal to this Court was granted by Gummow and Heydon JJ on 12 March 2010. The grounds of appeal are largely directed to the jurisdiction and powers conferred on the Supreme Court by s 67 of the CTTT Act. They require consideration of the legislative scheme relating to the Tribunal's way of operating and appeals from its decisions.

The Tribunal's way of operating

13 The Tribunal was established by the CTTT Act 13. It replaced the Fair Trading Tribunal and the Residential Tribunal 14. Its creation was the culmination of a process of amalgamation of smaller specialist tribunals. A number of the statutes creating the precursor tribunals made provision for referrals and appeals

to the Supreme Court in language substantially reproduced in ss 66 and 67 of the CTTT Act 15.

14 The Tribunal's jurisdiction, powers and functions are defined as those ‘conferred on it by this or any other Act’ 16. The jurisdiction invoked by Mr and Mrs Kostas was that created by s 48K of the Home Building Act 1989 (NSW), sub-s (1) of which provides that the Tribunal can hear and determine any ‘building claim’ 17 brought before it in which the amount of the claim does not exceed $500,000. There was no dispute that the claim was a...