Civil and Administrative Tribunal New South Wales Medium Neutral Citation: COLOURRENDER (AUSTRALIA) Pty Ltd v Sarkis [2022] NSWCATAP 291 Hearing dates: 12 & 19 August 2022 Date of orders: 19 August 2022 Decision date: 08 September 2022 Jurisdiction: Appeal Panel Before: A Suthers, Principal Member Decision: (1) Pending further order of the Appeal Panel, order 2 made in the proceeding at first instance is effective only to the extent of requiring the appellant to pay the respondent the sum of $64,000.00. (2) The Application for a Stay is otherwise dismissed. (3) The appellant has leave to renew its application for a stay in respect of the award of costs at first instance in the event that it is required to lodge a response to a costs assessment application, in respect of those costs, prior to determination of the appeal. (4) The appellant is to pay the respondents' costs of the application for a stay, fixed in the sum of $8500.00 For the avoidance of doubt, this order incorporates the costs ordered on 12 August 2022 at order 15, and the costs are payable immediately. Catchwords: PRACTICE AND PROCEDURE – application for a stay – need for evidence to substantiate allegation appeal may be rendered nugatory due to liquidation of appellant company if judgment enforced – need for thorough and candid disclosure of financial position Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Home Building Act 1989 (NSW) Cases Cited: Beck v Colonial Staff Super Pty Ltd and Ors (No 2) [2015] NSWSC 1360 Bentran v Sabbarton [2014] NSWCATAP 37 Cockle v Isaksen (1957) 99 CLR 155 at 161; [1957] HCA 85 Cook's Constructions v Stork Food Systems Aust Pty Ltd [2008] QCA 322 Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33 Diao v Rawson Homes Pty Ltd [2021] NSWCATAP 273 Federated Amalgamated Government Railway and Tramway Service Association v The New South Wales Railway Traffic Employees' Association (1906) 4 CLR 488 at 493-495; [1906] HCA 94 McMillan v Coolah Tourist Park Pty Ltd [2021] NSWCATAP 73 Metwally v University of Wollongong (1985) 59 ALJR 481; [1985] HCA 28 New South Wales Bar Association v Stevens [2003] NSWCA 95 Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 SAS Trustee Corporation v Rossetti [2018] NSWCA 68 Texts Cited: None cited Category: Principal judgment Parties: COLOURRENDER (AUSTRALIA) Pty Ltd (Appellant) George Sarkis (First Respondent) Sonya Sarkis (Second Respondent) Representation: Counsel: M Luitingh (Appellant) R Zikmann (Respondents) Solicitors: Jane Button and Associates (Appellant) Respondents (Self-represented) File Number(s): 2022/00220143 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not reported Date of Decision: 29 June 2022 Before: S McDonald SM File Number(s): HB 20/21551 REVISED Ex TEMPORE DECISION 1. This matter came before me on two hearing dates to deal with an Application for a Stay lodged by an appellant builder against a decision of the Consumer and Commercial Division, ordering it to pay the respondent homeowners the sum of $76,660 and costs to be assessed on the ordinary basis. I gave my decision and oral ex tempore reasons at the conclusion of the hearing on the second day. The respondents have asked for written reasons in respect of my decision on the Application for a Stay, which are hereby provided. 2. The appellant has lodged its appeal within time and there is a cross appeal which has been lodged by the respondents. The appellant also sought a stay of the orders against it, both in respect of the issue of costs and of the substantive judgment amount. 3. I should indicate that there appears to be no dispute that the amount ordered by the Tribunal should have been in the approximate sum of $64,000, as there has been an error in addition made by the Tribunal. 4. The issue raised by the appellant in the appeal is a jurisdictional issue. It says that the Tribunal acted beyond jurisdiction in making the orders it did because the proceedings were commenced by the respondent homeowners more than two years after the appellant finished work on the premises, and that there is no provision for the Tribunal to extend the time for lodgement of the application beyond two years. I understand that position to be uncontroversial if the defects alleged are not "major defects" and the claim relates to a breach of statutory warranty under s 18 of the Home Building Act 1989 (NSW). 5. As I said when adjourning this matter on the last occasion, that is a matter of considerable import. It was, as I understand it, not raised by the appellant in the proceedings at first instance. However, the usual considerations as to whether the matter should be able to be raised for the first time in an appeal, set out in such decisions as Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33 and Metwally v University of Wollongong (1985) 59 ALJR 481; [1985] HCA 28, have to be viewed with some caution in this matter due to the need for this Tribunal (and in fact any court or tribunal that does not have inherent jurisdiction), to ensure that it keeps itself within its jurisdiction. 6. The Appeal Panel of this Tribunal has been minded to raise issues of jurisdiction itself in appeals, even when the issue has not been raised by the parties. In a decision of McMillan v Coolah Tourist Park Pty Ltd [2021] NSWCATAP 73 at [43], the Appeal Panel noted: "The Tribunal has such jurisdiction and functions as may be conferred or imposed on it by or under the NCAT Act or any other legislation: NCAT Act, s 28(1). Further, by operation of s 29(1) of the NCAT Act, "The Tribunal has general jurisdiction over a matter if… legislation … enables the Tribunal to make decisions … of a kind specified by the legislation in respect of that matter" and the matter does not otherwise fall within certain other types of jurisdiction. It may be seen, then, that the Tribunal's general jurisdiction (the jurisdiction purportedly exercised by the Tribunal in this matter) depends upon legislation conferring upon it the power to consider a matter and make decisions in relation to the matter." 1. As that Appeal Panel recorded, at [50], even where the respondent has not appealed from a decision, if a real issue as to jurisdiction suggests itself to the Tribunal, even if the parties do not take the point, it must be addressed. The Appeal Panel there referred to SAS Trustee Corporation v Rossetti [2018] NSWCA 68 at [3]; Federated Amalgamated Government Railway and Tramway Service Association v The New South Wales Railway Traffic Employees' Association (1906) 4 CLR 488 at 493-495; [1906] HCA 94 and Cockle v Isaksen (1957) 99 CLR 155 at 161; [1957] HCA 85. 2. The issue arises here because the timing of the completion of the works by the appellant under the contract between the parties was given little specific attention by the parties and there are limited specific factual findings in the Tribunal's decision at first instance. As I previously stated, the issue does not seem to have been raised for the Tribunal's consideration. 3. Certainly, on any view of the evidence before me (the parties having both sought to rely on new evidence in respect of this application for a stay) there is a close temporal proximity between when the appellant now asserts works were completed and when the respondents say they were. The period of two years from those dates straddles the commencement date of the proceedings at first instance. 4. Given the obligation on the Tribunal to constrain itself to its own jurisdiction and where the Tribunal does not, on my reading of the decision, make any specific finding as to the jurisdictional fact of the proceedings having been commenced in time, I am satisfied that the appeal is arguable. 5. However, because the matter was not raised at first instance and because, even if it is allowed to be raised in the appeal, there appears to be a significant controversy between the parties as to when works were completed, it does not seem to me that the argument is so certain to succeed that the stay must necessarily be granted in the interests of justice. Further, if the Tribunal's decision can also be considered to make findings that there was a breach of contract by the appellant, which is, with respect, not explicitly clear, a three-year limitation period applies: Diao v Rawson Homes Pty Ltd [2021] NSWCATAP 273 at [43]. 6. The mere lodgement of an appeal such as this one does not affect the operation of the decision which is appealed. Nonetheless, it is clear from s 43(3) of the Civil and Administrative Tribunal Act 2013 (NSW) that I have a discretion, to be exercised judicially, to stay the operation of a decision pending the determination of the appeal. The considerations which apply were set out by the former President of this Tribunal, Wright J in Bentran v Sabbarton [2014] NSWCATAP 37. 7. To summarise them for today's purposes, it is sufficient to cite what was said by Slattery J in Beck v Colonial Staff Super Pty Ltd and Ors (No 2) [2015] NSWSC 1360 at [35] with the citations omitted, that: "The principles governing a stay of a judgment pending appeal are well established. The applicant must demonstrate that there is a reason for the grant of a stay or that a matter is an appropriate case in the exercise of the Court's discretion. It is not necessary for the applicant for the stay to establish special or exceptional circumstances. The stay is likely to be granted if the appeal would otherwise be rendered nugatory. The Court considering the grant of a stay is not required to determine the merits of the appeal but usually considers whether the applicant has at least an arguable case, and the Court may impose such conditions on the grant of a stay, including that the applicant pay a sum of money in Court or otherwise secure the payment of the disputed sum. The central determinant as to whether a stay would be granted, and if so upon what terms, if any, is the Court's assessment as to what is a fair balance of the rights of the parties, given that an appeal does not of itself operate as a stay and the party who has succeeded at trial is entitled to the fruits of its victory." 1. I note that the overriding principle in any application for a stay is to ask what the interests of justice require: New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83]; Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 at [18]. 2. Here, then, the respondents should be taken to be entitled to the benefit of the decision they received at first instance unless the appellant can demonstrate that there is an appropriate case for the grant of a stay. Whilst it is neither necessary nor appropriate that I try to determine whether the appeal will succeed, the question of whether it is fairly arguable, which I referred to earlier, is a relevant consideration. Having determined that the appeal may be considered arguable, I need to consider the balance of convenience and the competing rights and interest of the parties. 3. In that regard, I need to say something about what occurred on the last occasion this matter was before me. I expressed the preliminary view to the parties that the appeal raised important issues concerning the tribunal's jurisdiction but that the appellant had, in my preliminary view, failed to properly address with evidence, the issue of its asserted inability to pay the judgment sum. This had been the primary assertion, beyond the apparent relative strength of the appeal, as to why the stay should be granted. 4. For completeness, I note that there was no suggestion that the respondents could not repay the judgment sum in the event that a restitutionary order is made if the appeal succeeds. 5. Relevantly to that issue, before me on the last occasion was simply the balance of a bank statement for the appellant's sole director and of an account of the appellant at a particular date, together with a bare assertion that the appellant could not pay the judgment sum. As I indicated to counsel for the appellant on the last occasion, I took the view that was insufficient. That appears now to be uncontroversial given the further material that has now been lodged. 6. I record that history, though, for this reason. On the last occasion, I took the opportunity to refer the appellant's counsel to some comments of the Queensland Supreme Court of Appeal in a decision of Cook's Constructions v Stork Food Systems Aust Pty Ltd [2008] QCA 322 at [18] – [20]. There, the Court (per Keane JA with McMurdo P and White AJA in agreement) indicated the importance of there being some proper attempt by an appellant who seeks a stay to demonstrate that the appeal may be rendered nugatory, on the allegation that it may be wound up between the lodgement and conclusion of the appeal. 7. I was prepared, as I indicated for the reasons I gave on the last occasion, to adjourn the matter for the appellant to put on more evidence. The fact that I took the view that the appellant should have been better prepared on the first occasion was reflected by the indemnity costs order I made on that day in respect of the adjournment, and it is also why I intend to consider the appellant's evidence stringently in terms of what has been lodged since that date. 8. In that regard, in accordance with a direction made by me, the appellant put on a further affidavit of its Director, Mr Eugene Conlon, sworn and lodged on 17 August 2022. The affidavit itself was of reasonably short compass. It attached three years of tax returns for the company but no balance statements. It also provided some bank statements which, as it transpires, are incomplete although despite that issue being argued before me today I draw no adverse inference against the appellant in that regard. 9. There was a continued assertion by the appellant's Director that the Company cannot pay the judgement sum, and that he cannot help it do so, including in the following terms, at paragraph 5, "I do not own any property in Australia. I am renting…" and the address was inserted. The affidavit then moved on to other personal circumstances of the appellant's Director which do not need to be read into the record. At paragraph 10, Mr Conlon says "[i]f payment is enforced, I would need to place my company into administration or liquidation". At paragraph 11, the affidavit goes on to explain the consequences as asserted by the appellant of that occurring. 10. There was a lack of candour in Mr Conlon's affidavit in that regard. 11. Quite properly, after further evidence was adduced by the respondents in response to that affidavit, which I will come to, the appellant through its counsel conceded that it can in fact pay the judgment debt as a result of access to other sources of funding which are available to it, via Mr Conlon who is its sole shareholder. 12. The concession, as I indicated, was in my view properly made by counsel and I certainly make no criticism of counsel or his instructing solicitor, but Mr Conlon's affidavit of 17 August 2022 was clearly directed, in part, to an explanation of his financial circumstances. As it transpires, he now concedes that he has a house in England. It also transpires that he has other assets in the form of company shareholdings in England and in a new business organisation in Australia, none of which was disclosed. 13. If the respondents had not been in a position to draw the Tribunal's attention to the apparent gaps in the evidence provided by Mr Conlon in that regard, I am left with a serious doubt that his instructions to counsel would have led to the concession which was made at the outset of today's hearing. 14. Mr Luitingh, for the appellant, submits that history of the proceedings is now irrelevant because the concession was made. I disagree. It remains relevant to weighing the competing interests and rights of the parties. The reason for that again goes back to what was said by the Queensland Court of Appeal in Cook's Constructions and in a decision of the Victorian Court of Appeal in Challenge Charter Pty Ltd v Curtain Bros (Qld) [2004] VSCA 66 at [17]. There, Callaway JA with whom Chernov JA agreed said this: "In my opinion, the relevance of a threat of liquidation and the weight to be given to it vary from case to case (Compare Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd [1997] HCA 24; (1997) 145 ALR 121 at 123–4 ; [1997] HCA 24; 71 ALJR 814 at 816 ...). Sometimes it is significant that a winding-up order will bring a company's business to an end or diminish the value of its assets or both or that the company, regarded as a legal person, will cease to exist when the winding up is completed ... it is not irrelevant that the liquidator may still pursue the appeal if he or she considers that to be worthwhile. The liquidator would take into account the director's views and the director would be well placed to assist the liquidator if the appeal proceeded. It is quite wrong to regard it as the director's appeal (Compare Kalifair Pty Ltd v Digi-Tech (Australia) Ltd at 742 [22].) It is the company's appeal. Mr Sifris submitted that it was unfair to the director to displace him, but that is not the test. I am not persuaded that it would be unfair to Challenge Charter for a liquidator to evaluate the prospects of its appeal. An unpaid creditor is prima facie entitled to use the processes of company law to recover a debt owing to it and there is a public interest in insolvent companies being wound up (In some cases it may be relevant to the grant or refusal of a stay that a pending appeal may be taken into account on an application for winding up.)." 1. As was said by the court in Cook's Constructions at [18], it is in the nature of small to medium proprietary limited companies that: "…the longer the judgment creditor is held out of the fruits of its judgment, the longer does the judgment debtor remain under the exclusive control of persons who have an obvious financial interest in reducing the impact of the judgment upon them as contributories or creditors of the company. The courts should not be sanguine about exposing a judgment creditor to the risks involved in such a situation." 1. The Court went on, and clearly considered relevant that in the first instance proceedings leading to that appeal, there was no evidence on the appellant's behalf that it was unable to borrow against its assets to meet its liability or was not in a position to dispose of assets in order to create a fund sufficient to pay the amount owing. 2. Given the onus on an applicant in that situation, the Court also acknowledged the view expressed by the judge at first instance that one might have thought there would be some detailed analysis of the borrowing capacity of the appellant or attempts it has made to raise further capital through its contributors. 3. Mr Conlon, it seems to me, is a contributor of the company and complete candour as to his capacity to assist the company in raising funds was a relevant issue. I consider the lack of candour in his affidavit to be concerning. 4. The Court went on at, [29], in Cook's Constructions to note that: "…it would … be wrong for this Court to proceed on the basis that Cook is unable to raise the funds necessary to pay the judgment. That inability appears to be due only to its shareholder's unwillingness to make those funds available. That unwillingness may be understandable, but it cannot outweigh the legitimate interest of a judgment creditor in recovering the fruits of its judgment." 1. One might ask why I have made findings on these issues where the appellant has conceded today that it can in fact fund the judgment debt. There are two reasons. The first is that I have considered it in the context of the stay as it was initially argued before me. The second is that whilst it is now conceded that there is capacity in the appellant to pay the judgment sum, it is submitted that it may take approximately two months for those funds to be obtained. 2. There is a complete lack of any probative evidence before me as to that issue and, in the circumstances I have outlined, I find that completely unsatisfactory and the allegation unpersuasive. Again, to be clear, I intend no criticism of counsel for advancing the argument, but refer to the appellant discharging its obligation to satisfy me that there should be a stay. 3. By the end of the hearing, appellant's counsel at least tacitly conceded that perhaps the real issue for me to consider was not whether an unconditional stay should be granted but whether it should be granted conditionally upon the monies being held in a trust account pending the determination of the appeal. Counsel also conceded, though, that there was no allegation or evidence from which I could draw an inference that if the monies were paid, they could not be repaid by the respondents if a restitutionary order was made upon a successful appeal. On that basis, I do not consider it necessary to deal with that issue any further. 4. Weighing all of those matters and asking myself the overriding question of what the interests of justice require, I do not consider that they require me to grant a stay in this matter and I will dismiss the application for a stay. However, I will do so subject to one exception. I will, until further order, vary the operation and effect of the decision at first instance such that the amount to be payable under order 2 is in the sum of $64,000. 5. It was argued by the appellant today that the amount should be further reduced due to some concession contained at [36] of the decision at first instance that the respondents acknowledged that they owed the appellant the sum of approximately $35,000. I do not read the judgment of the Tribunal in that way. It seems that there was a concession that there were invoices issued by the appellant. That does not equate to an acceptance that the moneys were payable and it seems inconsistent with the fact that the appellant has had to take separate proceedings in the District Court seeking to recover that sum, that there was some concession in that regard. 6. I also indicated to the parties in argument that I would not stay the orders for costs as assessed, but that I would grant the appellant liberty to apply in the event that process reached a stage where the appellant was forced to respond to a costs assessment application before determination of the appeal. In my view, that appropriately balances the right of the respondents to continue with the assessment process, without unreasonably exposing the appellant to the risk of expending costs in that process where those costs may be rendered unnecessary if the appeal succeeds. 7. I then dealt with the issue of costs of the application before me, about which written reasons were not sought. Orders 1. My Orders were, relevantly as follows (although order 5 has been renumbered as 4 to omit irrelevant procedural matters): 1. Pending further order of the Appeal Panel, order 2 made in the proceeding at first instance is effective only to the extent of requiring the appellant to pay the respondent the sum of $64,000.00. 2. The Application for a Stay is otherwise dismissed. 3. The appellant has leave to renew its application for a stay in respect of the award of costs at first instance in the event that it is required to lodge a response to a costs assessment application, in respect of those costs, prior to determination of the appeal. 4. The appellant is to pay the respondents' costs of the application for a stay, fixed in the sum of $8500.00 For the avoidance of doubt, this order incorporates the costs ordered on 12 August 2022 at order 15, and the costs are payable immediately. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 08 September 2022