Supreme Court New South Wales Medium Neutral Citation: Nu-Stone Building Pty Ltd v McInerney [2023] NSWSC 67 Hearing dates: 08 February 2023 Date of orders: 09 February 2023 Decision date: 09 February 2023 Jurisdiction: Common Law Before: Wright J Decision: (1) Orders 3 and 4 made by the Appeal Panel of the Civil and Administrative Tribunal of New South Wales on 14 November 2022 are stayed until the determination of the plaintiff's application for leave to appeal made by the summons filed on 2 September 2022 and of any appeal, if leave is granted. (2) The costs of this motion are to be costs in the cause. (3) The hearing of the plaintiff's application for leave to appeal and, if leave is granted, the appeal are listed for hearing on 21 and 22 June 2023. Catchwords: PRACTICE AND PROCEDURE – Application for a stay of proceedings pending determination of application for leave to appeal and any appeal from a decision of the Appeal Panel of the Civil and Administrative Tribunal of New South Wales – Whether there is an arguable ground of appeal on a question of law – Whether arguable that leave to appeal would be granted – Where there is a risk of substantial prejudice to the plaintiff if that the orders are not stayed – Where there is no or limited risk of substantial prejudice to the defendants if the orders are stayed – Balance of convenience and the interests of justice favour the granting of a stay Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 78, 83 Home Building Act 1989 (NSW), s 42A Uniform Civil Procedure Rules 2005 (NSW), r 50.7 Cases Cited: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 Chen v Lym International; Chen v Marcolongo [2009] NSWCA 121 Dwyer v National Companies & Securities Commission (1988) 15 NSWLR 285 Kalafair Pty Limited v Digitec (Australia) Pty Limited (2002) 55 NSWLR 737; [2002] NSWCA 383 Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2014] NSWCA 231 NSW Bar Association v Stevens [2003] NSWCA 95 NSW Land and Housing Corp v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231 Nu-Stone Building Pty Ltd v McInerney [2022] NSWCATAP 285 Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449 Vaughan v Dawson [2008] NSWCA 169 Welsch v Carnival PLC t/as Carnival Australia [2014] NSWCA 430 Yolarno Pty Ltd v Shandong Delisi Food Co Ltd [2022] NSWCA 30 Category: Procedural rulings Parties: Nu-Stone Building Pty Ltd (Plaintiff) Garry John McInereny (First Defendant) Gladys Bridget McInerney (Second Defendant) Representation: Counsel: M Klooster (Plaintiff) M Galvin (Defendants) Solicitors: Sachs Gerace Lawyers (Plaintiff) Walker Hedges Forestville (Defendants) File Number(s): 2022/00364333 Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Appeal Panel Citation: [2022] NSWCATAP 285 Date of Decision: 14 November 2022 Before: R C Titterton OAM, Senior Member C Mulvey, Senior Member File Number(s): AP 2022/0037784 AP 2022/00053249 Judgment 1. By a summons filed on 2 December 2022, the plaintiff, Nu-Stone Building Pty Ltd, seeks leave to appeal from a decision of the Appeal Panel of the Civil and Administrative Tribunal (NCAT) made on 14 November 2022. The NCAT proceedings concern home building work carried out by the plaintiff to the house of the defendants, Mr and Mrs McInerney. 2. The relevant parts of the Appeal Panel's decision of 14 November 2022 were the following orders: "3. Set aside order 1 made by Senior Member Thode on 19 January 2022 and in lieu thereof order that Nu-Stone Building Pty Ltd is to pay $178,965.59 to Garry and Gladys McInerney immediately. 4. Nu-Stone Building Pty Ltd to pay Garry and Gladys McInerney's costs of primary applications (HB20/36393 and HB20/15757) on the ordinary basis as agreed or assessed. 5. That there be no order as to costs of the Appeal proceedings [before the Appeal Panel]." 1. The Appeal Panel's reasons for its decision had been given earlier on 31 August 2022: Nu-Stone Building Pty Ltd v McInerney [2022] NSWCATAP 285. 2. Under s 83(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act), a party to an internal appeal before the Appeal Panel, such as the plaintiff in the present case, "may, with leave of the Supreme Court, appeal on any question of law against any decision made by the Tribunal [including the Appeal Panel]". 3. By notice of motion filed on 8 December 2022, the plaintiff seeks the following orders: "1. A stay of execution of orders 3 and 4 of the decision below … pending final determination of the Appeal. 2. Costs of the motion be costs in the cause. 3. Such further or other orders that the Court considers appropriate." 1. The order for a stay is sought in light of s 83(5) of the NCAT Act and of r 50.7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) which, by virtue of r 50.1(a), applies in the present case. 2. Section 83(5) of the NCAT Act provides: "Subject to any interlocutory order made by the court hearing the appeal, an appeal under this section does not affect the operation of the appealable decision of the Tribunal under appeal or prevent the taking of action to implement the decision." 1. UCPR r 50.7 provides: "An appeal to the court— (a) does not operate as a stay of proceedings under the decision of the court below, and (b) does not invalidate any intermediate act or proceedings, except so far as the court (or, subject to any direction of the court, the court below) may direct." 1. Accordingly, unless this Court in effect stays the operation of the decision appealed against, it will continue in operation and may be enforced as a judgment of a court if the certification and registration procedure in s 78 of the NCAT Act are followed. 2. The terms in which s 83(5) and r 50.7 are expressed indicate that the Court has a wide power by order or direction in effect to stay the operation of a decision of the Appeal Panel which is the subject of an application for leave to appeal to the Court: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 (Alexander v Cambridge Credit) at 692 (Kirby P, Hope and McHugh JJA) concerning an earlier rule substantially the same as UCPR r 50.7. In addition, it has been held that the power to order a stay or restrain enforcement of an order appealed against is incidental to the right of appeal and derives from the inherent power of the Court to do whatever is necessary to prevent injustice in relation to proceedings in the Court: Dwyer v National Companies & Securities Commission (1988) 15 NSWLR 285 at 287 (McLelland J). 3. Accordingly, the Court has power to stay the operation of, and proceedings under, orders 3 and 4 of the Appeal Panel decision of 14 November 2022. 4. The relevant principles concerning the exercise of the discretion to grant a stay were not substantially in dispute in these proceedings. They include the following: 1. It is a matter of discretion whether the Court grants a stay and, if so,on what terms and the overriding principle to be applied when determining an application for a stay is to ask what the interests of justice require: Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 at [18] (McColl JA); NSW Bar Association v Stevens [2003] NSWCA 95 at [83] (Spigelman CJ). 2. Generally a successful party is entitled to the benefit of the decision or orders that the party has obtained at first instance, but a stay may be granted where the appellant has demonstrated an appropriate case to warrant the exercise of discretion in its favour: Kalafair Pty Limited v Digitec (Australia) Pty Limited (2002) 55 NSWLR 737; [2002] NSWCA 383 (Kalafair) at [28] (Handley, Sheller and Ipp JJA), Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2014] NSWCA 231 (Mushroom Composters) at [7] (Gleeson JA). 3. In practical terms, the onus is on an applicant for a stay to make out a case that it is appropriate for the court to make such an order: Alexander v Cambridge Credit at 694, Vaughan v Dawson [2008] NSWCA 169 at [16] (Campbell JA). 4. It is unnecessary for an applicant for a stay to establish special or exceptional circumstances but the applicant must nevertheless persuade the court that there is a proper basis for a stay: Alexander v Cambridge Credit at 693-5; Kalafair at [17]; Yolarno Pty Ltd v Shandong Delisi Food Co Ltd (Yolarno) [2022] NSWCA 30 at [4] (MacFarlan JA). 5. Initial considerations include: 1. the strength or otherwise of the case of the party seeking the stay and, in particular, a preliminary assessment of whether there is a reasonably arguable point in relation to any of the grounds of appeal: Alexander v Cambridge Credit at 695; Chen v Lym International; Chen v Marcolongo [2009] NSWCA 121 at [15] (Beazley JA); and 2. whether there is a real risk that the appellant will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal: Yolarno at [4]. 1. In exercising the discretion, the Court will also weigh the balance of convenience and the competing rights of the parties and may impose appropriate conditions so as to achieve a result that is fair to all parties: Alexander v Cambridge Credit at 694, Mushroom Composters at [21] and [22]. The cases illustrate that fairness in the context of an appeal against an order for the payment of a sum of money, should take into account the financial positions of the appellant and the respondent to the appeal and the consequences for each if a stay is or is not granted. 2. A successful party is entitled to be protected, as far as practicable, from the risk that if the appeal fails assets which earlier were available to satisfy the judgment will no longer be available for that purpose. It is for this reason that an appellant may be required to provide appropriate security as the price of a stay which may make the judgment creditor a secured creditor. Nonetheless a requirement for security is only intended to protect the status quo, that is the existing value of the judgment, and not to improve the position of the judgment creditor by increasing that value: Kalifair at [28]; Mushroom Composters at [8]. 1. The grounds of appeal in respect of which leave is sought by the plaintiff challenged, in substance, the conclusion of the Appeal Panel that "the Tribunal [at first instance] erred in including the value of Invoice number NU0421 which was issued on 18 March 2021 for Payment Claim 4 in its contract reconciliation": [91] of the Appeal Panel's reasons and see also [81]-[82] and [96]-[97]. 2. The parties agreed that the consequence of this finding by the Appeal Panel was that the plaintiff should be ordered to pay to the defendants $178,965.59 and, accordingly, order 3 to that effect was made by the Appeal Panel on 14 November 2022. 3. The practical import of the proposed appeal to this Court is that the Appeal Panel's finding in respect of invoice NU0412 was affected by relevant error and, as a result, the plaintiff should not have been ordered to pay the amount of $178,965.59 and may not be required to pay any amount to the defendants, depending on the nature and extent of the work actually carried out by the plaintiff that was included in the total work for which payment was claimed in invoice NU0412. 4. Under s 83(1) of the NCAT Act, leave to appeal can only be granted for "an appeal on a question of law … against any decision made by the Tribunal [including the Appeal Panel]". 5. The three grounds of appeal set out in the plaintiff's summons indicated that its proposed appeal was an appeal on a question of law on three bases: 1. the Appeal Panel failed to give any or adequate reasons for its finding that "the Tribunal [at first instance] erred in including the value of Invoice number NU0421 … in its contract reconciliation [for the purposes of determining the value of the work actually performed by the builder under the contract]": ground 1; 2. the Appeal Panel applied a wrong principle of law in making that finding: ground 2; and 3. the Appeal Panel identified a wrong issue, asked itself the wrong question, and arrived at a mistaken conclusion in making that finding: ground 3. 1. The plaintiff submitted that each of the grounds relied upon raised, at least arguably, an error of law and thus amounted to an appeal on a question of law. It was also contended that, in light of the relevant principles in relation to granting leave to appeal in a case such as the present, there was at least an arguable basis for leave to be granted because the case involved a standard form contract and raised an issue of principle and question of some public importance. It was also submitted in effect that the case could be found to involve an injustice that was reasonably clear, in the sense of being more than merely arguable. 2. The defendants submitted that the Appeal Panel's finding was only a conclusion of fact and did not involve any error. Alternatively, if there was any error, it was only an error of fact and not of law. Thus, it was contended in effect that no arguable appeal on a question of law had been identified in the present case and thus leave to appeal would be refused. 3. Furthermore, it was submitted that, even if it was arguable that one or more the grounds of appeal did amount to an appeal on a question of law in the present case, the plaintiff's case was very weak and this should be taken into account as not favouring the exercise of the discretion to grant a stay, when considering the balance of convenience and what the interests of justice required. 4. The Appeal Panel's reasoning to explain and support its findings that the Tribunal at first instance erred in including the value of invoice number NU0421 in determining the value of the work actually performed by the builder was in large measure limited to accepting various submissions made on behalf of the defendants. As far as I could determine on an initial review sufficient for the purposes of the present stay application, the essence of the reasoning was set out in the following paragraphs of the Appeal Panel's reasons: "79 Nevertheless, the [plaintiff's] argument remains the same, the costs to complete the contract, being $457,255.295 ($397,613.30 plus 15% margin) is less than the balance payable under the contract (being $494,492.15), and therefore that the award for completion costs should be NIL. 80 However, for the reasons submitted by the [defendants] and the calculations set out in their submissions, we do not accept that proposition. 81 The substance of the [defendants'] response to the [plaintiff's] Appeal, and form part of their own appeal (Ground 1), is that the value of Invoice number NU0421 … should have been deducted from the value that was assigned by Mr Nguyen to the completed work. 82 We accept that proposition. We agree that the Tribunal erred in failing to exclude [the amount of invoice NU0421] in its calculation of the contract price. … 91 We also consider the Tribunal erred in including the value of Invoice number NU0421 … in its contract reconciliation. … 96 These matters were substantively raised in the [defendants'] response to the [plaintiff's] appeal, that is the Tribunal erred in including the value of Invoice number NU04212 … in its contract reconciliation. 97 For the reasons set out above, we accept this submission, and we would allow the [defendants'] appeal to this extent. " 1. One of the functions of reasons for decisions is to explain to the losing party why he or she lost and to explain the process of reasoning that led to the result: Welsch v Carnival PLC t/as Carnival Australia [2014] NSWCA 430 (Welsch) at [5] and [9] (McColl JA, Sackville AJA agreeing), [61] (Adamson J, McColl JA and Sackville JA agreeing). It is open to a decision maker to accept, and incorporate by reference, one party's submissions, as long as it is clear what is being accepted and why, in adjudicating between the cases put by the parties, one party's case was rejected: Welsch at [61]-[62]. While the reasons of the Appeal Panel must be read fairly and as a whole and those reasons contained more than has been quoted above, there did not appear to be any substantial or articulated reasoning as to why the defendants' submissions were correct or why the defendants' case on this point should be accepted rather than the plaintiff's case. 2. Taking into account the principles in relation to adequate reasoning on the part of tribunals referred to by Bell P (as his Honour then was) in NSW Land and Housing Corp v Orr (2019) 100 NSWLR 578; [2019] NSWCA 231 at [65]ff and in particular at [71], [76]-[77], in my view it is reasonably arguable that the Appeal Panel failed to give adequate reasons for its finding at [91] and elsewhere which was the foundation for order 3 made on 14 November 2022. 3. Failure to give adequate reasons may be an error of law: Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449 at [41] (Santow JA, Mason P and Sheller JA agreeing) and the cases there cited. Consequently, a ground of appeal asserting such error raises a question of law. 4. Given the paucity of reasoning, it is not possible to reach a view as to whether any error of legal principle was involved in the Appeal Panel's conclusion. 5. In addition, while it is not entirely clear why the Appeal Panel reached the conclusion that it did in relation to the finding at [91] and elsewhere, it is also arguable that the Appeal Panel identified a wrong issue, asked itself the wrong question, and thereby arrived at a mistaken conclusion in making that finding. Part of the reason why this was so is because the proposition that the Appeal Panel said they accepted, namely that "the value of Invoice number NU0421 … should have been deducted from the value that was assigned by Mr Nguyen to the completed work" was arguably not relevant to the issue to be determined by the Appeal Panel because that issue did not turn on "the value … assigned by Mr Nguyen to the completed work". 6. Accordingly, I am satisfied that the plaintiff's appeal includes grounds which are reasonably arguable. Furthermore, I accept, as the plaintiff submitted, that there was a reasonably arguable basis for leave to appeal being granted. The issues to be determined in the appeal if leave is granted relate, at least in part, to the standard form home building contract and may well raise issues of principle of some importance beyond the interests of the particular litigants in the present case. It is also arguable that the present case involves an injustice that is reasonably clear, in the sense of being more than merely arguable. 7. As to the balance of convenience and the interests of justice, the evidence established that the plaintiff is presently in a difficult financial position. The plaintiff company carries on business as a residential and remedial builder. The plaintiff held a building licence which expired in November 2022 and, although an application for renewal was made before expiration, a renewed licence has not yet been received. Mr Younan, the sole director of the plaintiff, also holds a current builders licence. The plaintiff has three current jobs with a total contract price or value of approximately $1.06 million, which are expected to be completed by about March 2023. It is not clear on the evidence, however, how much of that total contract price or value has been received by the plaintiff to date and how much remains to be paid on completion of the work under each contract. The plaintiff engages 10 to 15 contractors across its various projects from time to time. The plaintiff has: funds in bank accounts totalling approximately $51,600; loans and credit card debts of approximately $106,000; and, credit facilities available up to approximately $33,000. The plaintiff does not have other substantial assets from which it could pay the amount of $178,965.59 in order 3 made by the Appeal Panel. 8. Mr Younan is the only employee of the plaintiff and has recently sold his house with settlement to occur in March 2023. It is not clear whether and to what extent any net proceeds of that sale might be available or used to assist the plaintiff to meet its financial obligations. 9. It was not in dispute that there is a risk that if order 3 of the Appeal Panel is not stayed, the plaintiff's licence may be, or may have been, suspended by reason of the operation of s 42A of the Home Building Act 1989 (NSW). 10. In these circumstances, there is a significant risk that if order 3 of the Appeal Panel is not stayed: 1. the plaintiff would be unable to pay its debts as and when they fall due and thus would be insolvent and unable to continue to trade with the consequence that the plaintiff would not have the ability to complete its outstanding contracts or to continue to engage its contractors; and 2. the plaintiff would not be able to prosecute the application for leave to appeal or any appeal. 1. As to the defendants' position, they have substantial assets and a substantial annual income with no significant debts. If the amount specified in order 3 were paid to them and the plaintiff's appeal is successful with orders in the plaintiff's favour eventually being made either in this Court or in the Tribunal, the defendants could repay the amount with interest. In addition, however, the defendant's financial position means that the defendants will suffer little if any hardship if the amount of $178,965.59 is not paid to them before the plaintiff's appeal is determined. 2. If a stay is not granted, the defendants' prospects of recovering the amount in order 3 do not appear to be significantly different from their prospects if a stay is granted and the plaintiff's application for leave to appeal or any appeal is unsuccessful. 3. It can be accepted that the considerations which apply in relation to the payment of the amount of $178,965.59 in order 3 made by the Appeal Panel also apply in relation to the assessment and payment of costs by the plaintiff which is the subject of order 4. 4. Given the financial positions of the plaintiff and the defendants and the other circumstances of this case, I am satisfied that there is little risk of the defendant's suffering any significant prejudice, if the plaintiff's appeal is unsuccessful, by reason of a stay being granted until the appeal is determined. By way of contrast, the risk of harm to the plaintiff and those who depend on it if a stay is not granted appears to me to be very substantial. 5. I note that the plaintiff's appeal can be listed for hearing in June and that the parties are available for a two day hearing on 21 and 22 June 2023. If the hearing of the application for leave to appeal and any appeal, if leave is granted, are listed for those dates, the risk of harm to the defendants if a stay is granted is not likely to be substantially increased because of any delay. 6. In all the circumstances, in my view it is fair as between the parties and in the interests of justice for orders 3 and 4 made by the Appeal Panel to be stayed until the determination of the plaintiff's application for leave to appeal and of any appeal. Orders 1. For these reasons the orders of the Court are: 1. Orders 3 and 4 made by the Appeal Panel of the Civil and Administrative Tribunal of New South Wales on 14 November 2022 are stayed until the determination of the plaintiff's application for leave to appeal made by the summons filed on 2 September 2022 and of any appeal, if leave is granted. 2. The costs of this motion are to be costs in the cause. 3. The hearing of the plaintiff's application for leave to appeal and, if leave is granted, the appeal are listed for hearing on 21 and 22 June 2023. ********** Amendments 24 July 2023 - Typographical error in [1] 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: 24 July 2023