Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Amirbeaggi v Matrix Group Co Pty Ltd [2021] NSWCA 21 Hearing dates: 24 February 2021 Date of orders: 24 February 2021 Decision date: 26 February 2021 Before: Basten JA; Meagher JA Decision: (1) Refuse the application for leave to appeal from each of the judgments of Johnson J in the Common Law Division of 30 June 2020 and 29 July 2020. (2) Order that the applicants pay the respondent's costs in this Court, assessed on the ordinary basis. Catchwords: APPEALS – leave to appeal – where primary judge refused leave to appeal to raise argument not dealt with by magistrate – whether argument made to magistrate – no error of primary judge in concluding not made Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW), s 25(1), (4) Home Building Act 1989 (NSW), ss 92, 94(1), (3) Cases Cited: Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd [2016] NSWSC 1120 Hungry Jack's Pty Ltd v Fourtounas [2020] NSWCA 325 Category: Principal judgment Parties: Farshad Amirbeaggi (First Applicant) Brooke Maniscalco (Second Applicant) Matrix Group Co Pty Ltd (Respondent) Representation: Counsel: N Kidd SC (Applicants) L Shipway (Respondent) Solicitors: Yates Beaggi Lawyers (Applicants) Advanta Legal (Respondents) File Number(s): 2020/221679 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Citation: [2020] NSWSC 827; [2020] NSWSC 962 Date of Decision: 30 June 2020 Before: Johnson J File Number(s): 2019/397879 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. THE COURT: The applicants, Mr Amirbeaggi and Ms Maniscalco, seek leave to appeal from two decisions of the primary judge (Johnson J). By the first (Amirbeaggi v Matrix Group Co Pty Ltd [2020] NSWSC 827 (Judgment 1)), his Honour refused the applicants leave to appeal from an interlocutory judgment of the Local Court dismissing their stay application, and by the second (Amirbeaggi v Matrix Group Co Pty Ltd (No 2) [2020] NSWSC 962 (Judgment 2)) ordered the applicants to pay the respondent's costs of the proceedings in the Supreme Court on an indemnity basis. 2. At the conclusion of oral argument, orders were made dismissing the application for leave to appeal, with costs. These are the Court's reasons for making those orders. 3. The underlying proceedings relate to a dispute about a payment claim made by the respondent builder (Matrix Group) for works done at the applicants' residential premises in Woollahra. In October 2016, the respondent was engaged to carry out the building works, which appear to have commenced in November 2016. The parties then signed a building contract in mid-January 2017. 4. By February 2018, they were in dispute, the applicants alleging that the building works were defective, incomplete and delayed. The respondent obtained an adjudication certificate under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Security of Payment Act) and filed it as a judgment in the Local Court for an amount of $60,253 (s 25(1)). That judgment was entered on 20 February 2018. 5. The applicants did not seek judicial review with respect to the adjudication certificate. Nor was there any application made in the Local Court to set aside the judgment which issued (s 25(4)). 6. In late March 2018, the applicants commenced proceedings in the District Court, claiming damages for defective works by the respondent. By an amended pleading filed in May 2019, it was also alleged that the respondent had breached s 92 of the Home Building Act 1989 (NSW) by undertaking residential building work without there being a contract of home warranty insurance in force. 7. On 23 May 2018, the applicants filed a notice of motion in the Local Court seeking a stay of enforcement proceedings in respect of the judgment in that court. As a condition for the granting of a temporary stay, the amount in question was paid into court. On 13 November 2019, following a hearing which proceeded over 11 days between 21 June 2018 and 23 August 2019, the Local Court (Atkinson LCM) dismissed that motion with costs. The funds paid into court were then released to the respondent and applied in satisfaction of the judgment debt. 8. It follows that there is no longer any enforcement proceeding capable of being stayed in the event that leave to appeal was granted and this Court determined that the primary judge should have given leave to appeal and allowed the appeal from the Local Court order dismissing the motion for a stay. In their draft notice of appeal the applicants seek orders that the Local Court judgment be "set aside" and that the respondent pay their costs in the Local Court, in the proceedings before the primary judge, and in this Court. No order is sought for the repayment of the funds paid out of court. Rather, reflecting no doubt the fact that the costs incurred substantially exceed that amount, the applicants seek to overturn the costs orders made in the Local Court and by the primary judge. In oral argument it was contended that if leave to appeal was not granted, the "fundamental injustice" to the applicants would result from the making of those costs orders. 9. The first and central question for this Court when considering an application for leave to appeal is whether, at least arguably, there was some error on the part of the trial judge. However, the existence of error is not sufficient to obtain a grant of leave. As Basten JA (White JA agreeing) recently observed in Hungry Jack's Pty Ltd v Fourtounas [2020] NSWCA 325 at [9]: ... more is required than identification of error on the part of the trial judge, even if it can be said that the error is reasonably clear. Generally, the court will also need to be satisfied that there is a matter of some public importance engaged and that the costs of further litigation are not disproportionate to the amount in issue. Further, it should be established that, to leave any putative error uncorrected, would give rise to a substantial miscarriage of justice. 1. The proposed ground of appeal pressed before the primary judge was that the magistrate erred in failing to determine that the respondent did not have home warranty insurance in respect of the building works and in failing to hold that s 94 of the Home Building Act prohibited the respondent from obtaining and filing the adjudication certificate and enforcing the judgment in the Local Court (Judgment 1 at [17]). Thus, before the primary judge, and in this Court, the applicants sought to argue that if the relevant residential building work was not the subject of a contract of insurance required by s 92 of the Home Building Act the respondent was prevented by s 94 from obtaining judgment from the Local Court, with the result that the Local Court should have stayed the execution of that judgment permanently. 2. The primary judge declined to grant leave to appeal on that ground, on bases which included that: the argument in support of a stay sought to be made by reference to ss 92 and 94 had not been advanced in the Local Court; the evidence in the Local Court indicated that there was a "live issue" (which was not determined by the magistrate) as to the application of s 94(3), a contract of insurance having been obtained, albeit after residential building work was commenced; and the applicants had not sought judicial review of the adjudication certificate, or to set the Local Court judgment aside, but rather had sought a stay of enforcement leading to a lengthy Local Court hearing (Judgment 1 [70]-[80]). 3. Critically for present purposes, the primary judge concluded at Judgment 1 [55]: ... a proper understanding of what occurred in the Local Court is that the Appellants were relying upon the s.94 issue in support of a contention that the Respondent was insolvent and without insurance, and that this supported their application for a stay of enforcement of the 20 February 2018 Local Court judgment. The Appellants have not demonstrated that a submission was made to the Local Court that s.94(1) HB Act provided a barrier to enforcement of the 20 February 2018 Local Court judgment so that a stay should be granted. 1. In reaching that conclusion the primary judge had regard to the transcript of oral submissions made to the magistrate on 23 August 2019 (Judgment 1 at [56]), the structure and content of the magistrate's reasons (Judgment 1 at [55]-[67]) and the concessions by counsel for the applicants, who appeared both in the Local Court and before his Honour, that arguments as to the proper construction of s 94(1) put on the application for leave to appeal were not advanced in the Local Court (Judgment 1 at [68], [69]). 2. This Court did not have the written submissions of the parties before the Local Court. Nor did it have the transcript of argument, other than for the closing oral submissions on 23 August 2019. However, in the argument before the primary judge, his Honour asked counsel where in the written submissions "you fairly and squarely raise s 94 as a complete barrier". In response, it was accepted that none of the written submissions "clearly elucidate it" and that the submission "must have been [made] orally". Eventually, two passages from counsel's argument were identified. 3. There is nothing in either of those passages which resembles the argument sought to be made on appeal. As the primary judge correctly observed at Judgment 1 [50], no reference was made "to the operation of s 94 as being a separate basis on which a stay should be granted". Furthermore, as the applicants' counsel accepted in argument before the primary judge, the "scope or otherwise of s 94" arose "in relation to the insolvency risk issue", although it was suggested by counsel that the argument thereafter "developed" and was not "limited to that point". The primary judge was right to reject the implicit contention that the asserted effect of s 94 as a bar to enforcement of the Local Court judgment was otherwise raised, but not expressly. In his concluding argument in the Local Court counsel described the fundamental issue between the parties as being "the approach that one takes to these financial statements", a subject relevant to the respondent's financial position and solvency but not to any argument in reliance on the application of s 94. 4. The learned magistrate dealt with the stay application on that basis. Having identified the factors to be considered in deciding whether to stay the enforcement of an adjudication certificate (being those referred to by Ball J in Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd [2016] NSWSC 1120 at [6]), the magistrate dealt with those factors – the strength of the applicants' claim, the basis of the applicants' claim, the likelihood that the contractor will be unable to repay the amount the subject of the determination, and the risk that the contractor will become insolvent if a stay is granted. The question whether the applicants could "rely on the home warranty insurance should they be unable to recover an amount from Matrix" was dealt with under the third of these topics. There was no reference to any argument relying on the application of ss 92 and 94 in relation to the second, the magistrate noting instead that "the absence of a challenge to the debt is a powerful factor against the grant of a stay". 5. In the result, the primary judge did not err in concluding that the argument sought to be made on appeal was not put in the Local Court. It follows that his Honour did not err in dismissing the application for leave to appeal on a ground which does not merely involve a question of law. The argument which the applicants seek to make presupposes that the work the subject of the payment claim was uninsured work which was not covered pursuant to s 94(3). The possibility that the payment claim related to work covered by insurance was left open by the magistrate's finding that home warranty insurance had been taken out after the work commenced. Any appeal would necessarily require that those factual issues, not addressed by the magistrate, be determined. Furthermore, the amount in issue has now been paid to the respondent. As there is no challenge to the magistrate's finding that the respondent "would be able to repay that money if unsuccessful in the District Court", there is no obvious prejudice or injustice to the applicants by reason only of the dismissal of the stay application. The order that, as unsuccessful parties, they pay the costs of that application followed, and on the face of it was wholly justified in circumstances where the applicants do not now suggest (other than by the argument dealt with above) that the magistrate erred in disposing of the arguments made in support of their application. Even were they to be allowed to agitate the issue now sought to be raised, and were successful, it would not follow that the adverse costs order which is the cause of their present grievance, would be set aside. 6. Finally, although the applicants also seek leave to appeal from the primary judge's indemnity costs order, little was said in support of an argument that there was any separate error in that exercise of the primary judge's discretion. In Judgment 2 at [25]-[27], his Honour correctly observed that it was necessary to demonstrate some delinquency or unreasonableness on the part of the unsuccessful party in order to justify the making of an order for payment of costs on an indemnity basis. In the applicants' written summary of argument, it is said that if their arguments made in support of the grant of leave to appeal "be correct, then the Costs Judgment is in error and should be overturned". That conditional argument must necessarily be dismissed. No different or other submission was made in oral argument. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 February 2021