Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Lane v AGY Global Wealth Pty Ltd t/as Skylight Energy [2024] NSWCATAP 83 Hearing dates: 14 December 2023 Date of orders: 15 May 2024 Decision date: 15 May 2024 Jurisdiction: Appeal Panel Before: M Harrowell, Deputy President A Boxall, Senior Member Decision: (1) The orders made on 19 September 2023 in applications HB 23/11847 and GEN 23/13529 are set aside. (2) The proceedings are remitted to the Consumer and Commercial Division to determine the Remittal Questions in paragraph 108 of these reasons. (3) New or additional evidence in the remitted proceedings is limited to that identified in paragraph 109 of the reasons. Otherwise the evidence is that originally placed before the Tribunal in the 2023 proceedings and any transcript of oral evidence from that hearing. Catchwords: JUDGEMENTS AND ORDERS – res judicata and issue estoppel – applicable principles – application where party not a party to the proceedings – Anshun estoppel – principles applicable – abuse of process – subsequent proceedings where issue lost in earlier proceedings by party propounding issue EQUITABLE DEFENCES – equitable set-off – availability in Tribunal proceedings – principles applicable – ability to set-off judgement in Local Court against claim in Tribunal dealing with the same subject matter Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil Procedure Act 2005 (NSW) Gas and Electricity (Consumer Safety) Act 2017 (NSW) Home Building Act 1989 (NSW) Cases Cited: Al-Daouk v Mr Pine t/as Furnco Bankstown [2015] NSWCATAP 111 AWA Limited v Exicom Australia Pty Ltd (1990)19 NSWLR 705 Baines v State Bank of New South Wales [1985] 2 NSWLR 729 Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 Collins v Urban [2014] NSWCATAP 17 Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA Curtis v Potter & Co Pty Ltd t/as The Africa Safari Co [2016] NSWCATAP 196 Hill v Ziymack [1908] 7 CLR 352; [1908] HCA 13 Jackson v Goldsmith (1950) 81 CLR 446; [1950] HCA 22 Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508 Pople v Evans [1969] 2 Ch 255 Port of Melbourne Authority v Anshun Pty Ltd (1980-81) 147 CLR 589; [1981] HCA 45 Rawson v Samuel Cr & Ph 161; 41 ER 451 Reichel v Magrath (1889) 14 App Cas 665 Rippon v Chilcotin 53 NSWLR 198; [2001] NSWCA 142 State Bank of NSW Ltd v Stenhouse Ltd (1997) Aust Tort Rep 81-423 Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2015] NSWSC 289 Walton v Gardner (1993) 177 CLR 378; [1993] HCA 77 Texts Cited: Nil Category: Principal judgment Parties: Scott Lane (Appellant) AGY Global Wealth Pty Ltd t/as Skylight Energy (Respondent) Representation: Appellant (self-represented and assisted by D Litchfield) A Tyurikov (Director) (Respondent) File Number(s): 2023/00328761 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 12 August 2023 Before: C Campbell, General Member File Number(s): 2023/407062 (formerly HB 23/11847) and 2023/405609 (formerly GEN 23/13259) reasons for decision Introduction 1. This appeal concerns two matters determined by the Consumer and Commercial Division (CCD). 2. The first matter was proceedings 2023/407062 (formerly HB 23/11847) (contractor's 2023 application), being a claim brought by the respondent (contractor) against the appellant (subcontractor). The contractor claimed an amount of $10,196.00 said to be compensation "for the financial loss caused by the negligence and non-compliance of the [subcontractor] when completing a job at Mr Anderson's (homeowner) residents". This work involved, inter-alia, the installation of a solar panel system. 3. The second matter was proceedings 2023/405609 (formerly GEN 23/13259) (subcontractor's 2023 application). In those proceedings, the subcontractor claimed from the contractor an amount of $7,350.00, said to be monies unpaid for services performed as well as an order to be relieved from an obligation to pay the contractor the amount of $10,196.00. 4. Collectively, we will refer to the contractor's 2023 application and the subcontractor's 2023 application as the "2023 proceedings". 5. We should note at this point that the work, the subject of these claims, was specialist work within the meaning of the Home Building Act 1989 (NSW) (HB Act) being electrical wiring work within the meaning of the Gas and Electricity (Consumer Safety) Act 2017 (NSW). At least some of this electrical wiring work was performed by the subcontractor. Consequently, even though the subcontractor's claim was filed in the General List of the CCD, both claims are building claims within the meaning of the HB Act. 6. On 19 September 2023, the Tribunal made the following orders (2023 decision): Re HB 23/11847 1. The respondent Scott Lane is to pay the applicant AGY Global Wealth $10,916 within 28 days from the date of these orders. Re GEN 23/13529 2. The application is dismissed. 1. The Tribunal provided written reasons for its decision (2023 reasons). 2. The subcontractor has appealed the 2023 decision. History of the disputes prior to the 2023 decision 1. In order to understand the issues raised in this appeal, it is necessary to set out the history of various proceedings between the parties which has been long and protracted. The following information is taken from earlier (different) proceedings between the parties, being applications HB 22/05753 and GEN 22/09223 (collectively the 2022 proceedings) and the reasons of the Tribunal dated 7 July 2022 (2022 reasons). 2022 proceedings 1. In proceedings HB 22/05753 (contractor's 2022 application), the contractor was the applicant who filed proceedings against the homeowner and subcontractor. The contractor claimed an amount of $3,780.00 said to be owing by the homeowner for unpaid monies in relation to a contract to install solar panels to the homeowner's residence in August 2021. The subcontractor was named as a respondent in those proceedings, although, as the 2022 reasons state, no orders were sought against the subcontractor in the application as filed. 2. In proceedings GEN 22/09223 (homeowner's 2022 application), the applicant was the homeowner. In those proceedings the respondent was the contractor. The homeowner claimed that the contractor had breached its contract with the homeowner and claimed an amount of $15,066.00 as compensation, including in respect of defective work. 3. Ultimately, the Tribunal found that the contractor had performed defective installation work and had damaged cladding to the building. That defective work was done by the subcontractor who was also found to have damaged cladding. The Tribunal determined that the homeowner was entitled to damages and awarded $6,416.00 after offsetting the balance of the contract sum payable by the homeowner to the contractor. The orders of the Tribunal (2022 first decision) were as follows: 1. ORDERS 1 In application GEN 22/09223 the respondent is to pay the applicant $6416.00 immediately. 2 In application HB22/05723 the First Respondent is excused from further attendance and the applicant has leave until 28 July 2022 to write to the registry and Second Respondent setting out any amended orders it seeks against the Second Respondent and by 11 August the Second Respondent is to provide the applicant and Tribunal with any documents in response. 3 The matters referred to in 2 above will be set down for a 90 minute hearing on a date as soon as possible after 11 August 2022. 1. As can be seen, at this time the Tribunal only made final orders in respect of the homeowner's 2022 application, not the contractor's 2022 application. By order 2, the Tribunal left open to the contractor to seek to amend the contractor's 2022 application to seek relief against the subcontractor. In doing so, the Tribunal made an order that the homeowner was excused from further attendance in that application. 2. In making these orders, the Tribunal noted the following matters and made the following findings: There is no issue that Mr Lane installed the panels. As to the installation damage to the cladding Mr Lane disputes this arises from his actions and lays the blame at others but could not make this more precise by nominating, let alone substantiating who and when. Mr Lane also denies faulty workmanship in installing the panels. He made various calculations as to the correct sizing of the cabling and the correct method of installation. These were unsupported. Mr Lane advised that he was not made aware of any issues between the Homeowner and Contractor until 6 months after installation as neither Mr Anderson nor AGY contacted him. … FINDINGS … The evidence of Mr Anderson as to the defects with the workmanship in installing the subject panels is largely supported by the Solar Service Report on which he relies and which is not directly refuted by equally persuasive evidence and so I accept it. … There is also the issue of the damage to the cladding. The photographs in evidence support Mr Anderson's claim and although Mr Lane raised the possibility that others were responsible this was conjecture and unsubstantiated evidence. The fact is Mr Lane was on site and working in the areas where the damage occurred. … In AGY's application (the Contractor's claim) Mr Anderson and Mr Lane are both named as respondents, however, AGY did not specifically seek an order against Mr Lane, although quite clearly AGY's evidence addressed Mr Lane's role and Mr Lane gave evidence today refuting AGL's case and Mr Anderson's case. The findings I have made today rest on an assessment of all 3 parties' cases and evidence in considering both the Homeowner's application and the Contractor's application and these findings stand. What I propose to do, however, given that evidence, the findings I have made and the fact that AGY specifically joined Mr Lane as a second respondent, is to adjourn the Contractor's claim in so far as it relates to Mr Lane and allow AGY to amend its orders to specify any specific orders it seeks against Mr Lane as the second respondent, given the findings I have made. 1. That is, the Tribunal concluded the work of the subcontractor in installing the solar panel system was defective and that Mr Lane had damaged the surrounding cladding. 2. It was for this reason that the Tribunal in the contractor's 2022 application adjourned the matter for a 90 minute hearing to determine: 1. whether the contractor's 2022 application should be amended; and 2. what, if any, orders made against the subcontractor. 1. As to what subsequently happened in relation to the contractor's 2022 application, as indicated in the 2023 reasons at [7], the contractor failed to appear on the next listing date, which was 17 August 2022. Consequently, this application was dismissed under s 55(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). We will refer to this decision as the "2022 second decision". 2. We note in passing that the 2022 second decision was made by a different Member, not the Member who would otherwise appear to have been part heard. However, no point has been taken in relation to whether the Tribunal was properly constituted at that time. 3. We also note that neither the 2022 first decision nor the 2022 second decision were the subject of an appeal. 2023 proceedings 1. In the 2023 reasons the Tribunal recorded that, in the contractor's 2023 application, it was seeking an order that the subcontractor pay it the sum of $10,196.00. This amount was said to represent the amount of $6,416.00 plus the amount of $3,780.00, which represented the unpaid contract sum between the homeowner and the contractor, which had been set-off against the homeowners original claim. 2. We should note at this point that the order made by the Tribunal was for an amount of $10,916.00, the amount claimed being erroneously recorded in the 2023 reasons at [2], [16] and [18], but correctly recorded at [8]. The correct amount is $10,196.00. 3. The subcontractor's 2023 application records the following orders were sought: 1. that the contractor pay to the subcontractor $7,350.00; 2. an order that the subcontractor did not have to pay the contractor the sum of $10,196.00. 1. Of the subcontractor's 2023 application the Tribunal said at [3]: The sub-contractor denies liability for the sum claimed by the contractor. He also seeks and (sic) an amount of money in excess of the contract sum. I note the sub-contractor issued proceedings in the Local Court seeking a money order in matter 2022/00056000 and judgment was entered on the 12 May 2022 in the sub-contractor's favour. An order for the contractor to pay him the sum of $2,851.82 inclusive of costs. 1. Having set out the claims made by the parties, the Tribunal then set out a very short history of the 2022 proceedings, including the fact that the contractor had failed to appear on 17 August 2022, at the relist of the contractor's 2022 application following the first 2022 decision: 2023 reasons at [7]. The Tribunal also set out extracts from the 2022 reasons, including some of the findings made in those earlier proceedings: at [9]-[10]. 2. The Tribunal then said at [11]: I am satisfied that in accordance with the reasons and findings made by the senior member the homeowner was ordered to pay the contractor the balance of the contract sum of $3,780. The contractor was ordered to pay the homeowner the sum of $6,416 for rectification works relating to the defective installation of the contract works which were undertaken by the sub-contractor. I am also satisfied that the contractor was found to be liable for the damage to the cladding which the senior member found was caused by the sub-contractor. 1. The Tribunal then found, because the Tribunal in the 2022 proceedings was exercising judicial power, that the principles of res judicata and issue estoppel applied to the 2023 proceedings and that it was bound by the determinations made in the 2022 proceedings. At [13]-[17] the Tribunal said: 13. While the tribunal is not a court for most purposes it does exercise judicial power for the purpose of quelling disputes finally amongst the parties to the proceedings before it. This means that the principles of res judicata including those relating to issue estoppel apply to proceedings before it and ultimate finding of fact in earlier proceedings bind the tribunal in subsequent proceedings amongst the same parties where the same substantial issues is raised in both proceedings. In the present case each of the homeowner, the contractor and sub-contractor were parties who participated in the hearing before the senior member. The issues in that case are the same as the issues in this case between the contractor and the sub-contractor: Jackson v Goldsmith (1950) 81 CLR 446; Kuligowski v Metrobus (2004) 220 CLR 363. 14. In my opinion I am bound in law by the findings made by the senior member which were important in the resolution of the issues she arrived at. This is an important aspect of the finality principle. I acknowledge that the application between the sub-contractor contractor was not before the senior member. Even so, as I have said, the issues were the same. It may have been different had there been some particular stipulation in the sub-contract which required a different outcome, such an indemnity clause or an exclusion clause favouring the sub-contractor, but there is none. 15. The senior member found that the homeowner's losses were caused by the breach of the sub-contract by the sub-contractor. There is nothing in the sub-contract requiring a different result in the present applications. Accordingly, an application of the doctrine of the issue estoppel requires me to ultimately find in favour of the contractor. 16. For these reasons I find the contractor was entitled under the previous orders to obtain payment of the balance of the contract sum from the homeowner, which was set-off in the sum of $3,780 against the orders made for the costs of rectification of the defective work and repair of the damaged cladding. In the present case I find the sub-contractor is liable to pay the contractor the same amount in the sum of $10,916. 17. I dismiss the sub-contractor's claim for the contractor to pay him monies owed in excess of the contract sum for the following reasons: (a) He never issued a tax invoice for the alleged additional works; and (b) He did not include that amount in the Local Court proceedings where he successfully claimed his unpaid fees for the subject contract works. 1. It was on this basis that the Tribunal made the orders the subject of this appeal. Notice of Appeal and history of appeal proceedings 1. The Notice of Appeal was filed on 17 October 2023. The appeal was lodged in time, being within 28 days after the decision was received by the subcontractor. 2. The appeal was heard on 14 December 2023, the subcontractor appearing in person and being assisted by Mr Litchfield. The contractor was represented by its director Mr Tyurikov. Each party made oral submissions at the hearing. 3. The grounds of appeal are contained in an attachment (Attachment) to the Notice of Appeal which is more accurately described as a narration to the 2023 reasons. The "grounds" do not clearly identify a question of law. However, the challenges made can be summarised as follows: 1. the subcontractor challenges the award made in favour of the contractor. The subcontractor contends "there has been no formal verification of the cost incurred by [the contractor] from the homeowner and the quantum of costs applied is not based on reasonable substantiation". This substantiation is said to require "proof of payment" by the contractor to the homeowner and "evidence of system replacement to which the cost is claimed" (Attachment items 2 and 6). 2. The findings of the Tribunal are incorrect, based on incomplete evidence and "application of incorrect due process and entitlement under relevant legislation". The subcontractor also says the matter should be dealt with as "a claim to Clean Energy Council which is the industry body that issues licenses and has the power to investigate and order rectification works if required" (Attachment item 5). 3. In connection with the 2022 proceedings and the fact the contractor failed to appear, the subcontractor says evidence had not been properly considered (Attachment item 7). 4. While the system installed by the subcontractor may have contained minor defects "it did not stop the system from operating as intended, generating electrical input as intended and was deemed a compliant installation by CEC". The homeowner having claimed a rebate and because there was no major defect, the subcontractor says that the order made "demonstrates unjust enrichment to the [contractor] and homeowner to the detriment of the [subcontractor]" (Attachment item 8) 1. In addition, the subcontractor seeks leave to appeal as the decision was not fair and equitable or was against the weight of evidence. 2. In summary, the subcontractor says the homeowner had not proved his loss, had derived a significant benefit from the solar system, was able to claim a government rebate and has not produced evidence of payment in respect of the claim for cladding and rectification costs for the solar system. 3. The subcontractor also says that his invoice for $2,851.82 remains unpaid and has not been taken into account by the Tribunal. As to his Local Court proceedings in which he obtained a default judgement, he states in section 6Bi of his Notice of Appeal: The old court order referred to by the member had an incorrect ABN listed for the respondent so was unenforceable and invoice remains unpaid. 1. Next, the subcontractor contends that he was not informed of defects or the need to resolve them "until 6 months after receiving the complaint and defects report from the homeowner" and that the contractor failed to attend the homeowner's residence to verify the claims made. Again, reference is made to the Clean Energy Council of Australia as the relevant regulatory body. 2. In Section 6Biii of the Notice of Appeal, the subcontractor says: The [subcontractor] notes that evidence substantiating the [subcontractor's] position was not accepted under the previous NCAT order HB 22/09223 (sic) as the member reviewing these submissions did not differentiate the evidence provided as new evidence and relied on previous findings. 1. On this matter, the subcontractor continues that, in the 2023 proceedings, the Tribunal proceeded on the basis of the earlier findings in the 2022 proceedings and did not consider the evidence submitted. 2. The subcontractor also seeks leave to rely on new evidence, however on its face this evidence was reasonably available at the time the 2023 proceedings were heard and should not now be permitted: see Sch 4 cl 12(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) and Al-Daouk v Mr Pine t/as Furnco Bankstown [2015] NSWCATAP 111 at [19] and following. 3. At the hearing of the appeal, the subcontractor reiterated his position concerning the fact he was denied access to the property to rectify the defects and that the homeowner and the contractor had been unjustly enriched. He said the system was not defective, the homeowner received rebates for the system and that credit should have been given by the homeowner for income earned from placing extra electricity into the "grid". 4. In the course of submissions, the subcontractor accepted that the contractor had paid the award made against it in favour of the homeowner in the homeowner's 2022 application. The subcontractor also accepted the Tribunal had jurisdiction. 5. During the course of the hearing, the Appeal Panel noted that the subcontractor had not provided a transcript of the 2023 proceedings, the subcontractor informing the Appeal Panel that he did not seek an adjournment in order to do so. 6. In its Reply to Appeal, the contractor contended the Tribunal's decision was correct. In saying so, the contractor said no additional payment should be made to the subcontractor. The contractor also made reference to the homeowner carrying out rectification works himself and not providing the contractor an opportunity to inspect the defects or carry out repairs. 7. In oral submissions, the contractor contended the Tribunal was bound by the decision in the 2022 proceedings. Otherwise, the contractor referred us to various documents said to support the factual findings that had been made. Consideration 1. There is a right of appeal on a question of law. Otherwise leave to appeal is required: s 80(2)(B) NCAT Act. 2. There are two matters which, in our view, raise a question of law. 3. First is whether the Tribunal was correct in its view concerning the principles of res judicata and issue estoppel and whether those principles applied in the present case. If not, is the subcontractor otherwise bound by the findings in the 2022 reasons. 4. Secondly, whether the subcontractor was entitled to have set-off against any amount owing to the contractor: 1. If the Local Court judgement is enforceable, the amount of the judgement obtained by the subcontractor in the Local Court upon default judgement and/or any additional amounts to the amount of the judgement; or 2. if the Local Court judgement was unenforceable, any amounts unpaid to the subcontractor. 1. We will deal with these matters under the following headings: 1. Is the subcontractor bound by findings in the 2022 reasons? 2. Is the subcontractor entitled to set-off against the contractor's claim any unpaid moneys? 1. The other matters raised require leave. Leave may only be granted if the subcontractor may have suffered a substantial miscarriage of justice because the decision was not fair and equitable, against the weight of evidence or there is significant new evidence that was not reasonably available at the time of the original decision: Sch 4 cl 12(1) NCAT Act. Legal principles relevant to the questions of law 1. It is convenient to set out the principles applicable to the questions of law which we have identified. Res judicata and issue estoppel 1. Of the defence of res judicata, in the decision of Full Federal Court of Australia in Effrem Foods v Trawl Industries 115 ALR 337, Northrop and Lee JJ said at p380 line 10: In principle, res judicata is a defence to a claim in a legal proceeding. Traditionally it is a technical defence allowing no discretion in the court. The defence, if made out, is a complete bar to the claim. Unfortunately lack of a clear dichotomy between the defence of res judicata and similar defences based upon estoppel can give, and has given, rise to confusion in Australia, England and the USA. 1. The Tribunal in the 2023 reasons referred to the case of Jackson v Goldsmith (1950) 81 CLR 446; [1950] HCA 22 (Jackson). In that case, Fullagar J also referred to the decision of Dixon J (as he then was) in Blair v Curran (1939) 62 CLR 464; [1939] HCA 23 (Blair). 2. In Jackson, Fullagar J said at 466-8: The rule as to res judicata can be stated sufficiently for present purposes by saying that, where an action has been brought and judgement has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action. This rule is not, to my mind, correctly classified under the heading of estoppel at all. It is a broad rule of public policy based upon the principles expressed in the maxim "all". The rule as to issue estoppel is generally stated in the words of Lord Ellenborough in Outram v Morewood (1803) 3 Beast 346 at 355; 102 ER 630 at 633. His Lordship said that the parties and privies are "precluded from contending to the contrary of that point, or matter of fact, which having been once distinctly put in issue by them … has been, on such issue joined, solemnly found against them". This is I think, a true case of estoppel, analogous to estoppel by deed and estoppel by representation. The same rule was concisely stated by Dixon J in Blair v Curran (1939) 69 CLR and 531 where his Honour said "A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies." It is unnecessary here to discuss these two principles further beyond noting two points. In the first place, if A sues B to judgement and in subsequent proceedings between them a plea of res judicata is raised, the primary question is whether the cause of action in the later proceedings is the same as that which was litigated in the former proceedings. This was the question which arose in the well-known case of Brunsden v Humphrey (1884) 14 QBD 141. It was held there that the causes of action were not the same. The injuria was the same but the damnum was different, and, since damage was "of the gist" of the particular action, the causes of action were not the same. The plea therefore failed. On the other hand, if A sues B to judgement and in subsequent proceedings between them a plea of issue estoppel is raised, the plea may succeed although the causes of action in the two cases are entirely different. The question will be whether an issue of fact or law which is raised in the later proceedings was an issue of fact or law which was also raised in the earlier proceedings and therein determined. In the second place, it follows from the very nature of the difference between the plea of res judicata and the plea of issue estoppel that different materials are relevant in each case. Where the pleas of res judicata, only the actual record is relevant. Where the plea is of issue estoppel, any material may be looked at which will show that issues were raised and decided. Reasons given for the judgement pronounced are likely to be particularly important for this purpose: see Ord v Ord [1923] to KB 432 at 440 and Marginson v Blackburn Borough Council [1939] 2 KB 4 to 6 at 437. Both those cases were cases of issue estoppel and were clearly treated as such, though I think, with great respect, that both illustrate the unfortunate absence of a clear legal terminology, to which I have already referred. It should perhaps be added that, as Dixon J said in Blair v Curran [1939] 62 CLR at 532, the estoppel, so far as it applies to the facts, is confined to ultimate facts. It does not extend to mere evidentiary facts. 1. In Blair, Dixon J said: A judicial determination directly involving an issue of fact or of law disposes once and for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgement, decree or order necessarily established as the legal foundation or justification of its conclusion. … Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue- estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established." 1. From the above cases, the following principles are relevant to this appeal: 1. the cause of action must be the same to establish res judicata; and 2. issue estoppel only covers "those matters which the prior judgement, decree or order necessarily established as the legal foundation or justification of its conclusion". In both cases, the principles operate "between the same parties or their privies", not third parties. 1. Finally, the principles of res judicata and issue estoppel apply to a default judgement: Linprint Pty Ltd v Hexham Textiles Pty Ltd (1991) 23 NSWLR 508 (Linprint) per Kirby J at 518 and Clark JA at 5 to 6 (Samuels JA agreeing). Set-off 1. At common law, a set-off is permitted in a contractual dispute where a right is granted under the contract in question. There is no suggestion that such a contractual right existed in respect of the contract between the contractor and subcontractor (subcontract). Consequently, it is unnecessary to consider this matter further. 2. As to equitable set-off, reference should be made to a number of cases setting out the applicable principles. 3. First is the decision of Rawson v Samuel Cr & Ph 161; 41 ER 451 (Rawson). There, in the decision of Lord Cottenham, the headnote records: Equitable set-off exists in cases where the party seeking the benefit of it can shew some equitable ground floor being protected against his adversary's demand. The mere existence of cross demands is not sufficient. Still this will be caught interfere on the ground of equitable set-off, to prevent a party from recovering a sum awarded to him by a jury as damages for a breach of contract, merely because there is an unsettled account pending between him and the party against whom the action is brought, although the subject matter of the account consists of dealings and transactions arising out of the contract, the breach of which is the subject of the action. 1. This statement was approved by the High Court in Hill v Ziymack [1908] 7 CLR 352; [1908] HCA 13 per Griffiths CJ at 360-1. There, as the headnote records, the High Court was considering whether a plaintiff, who had recovered damages for an action in conversion, could be restrained on the ground of equitable set-off from issuing execution to recover the amount of a verdict where there were unsettled accounts pending between the parties. The headnote records "although the subject matter of the accounts consists of dealings and transactions affecting the property in respect of which the action was brought", applying the principal in Rawson, the court determined no right of equitable set-off applied. 2. That is, equitable set-off is not available to prevent execution of judgement, at least where there is no debt which has then been established. 3. The next case to consider is the decision of Giles J (as he then was) in AWA Limited v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 (AWA). At 711C and following, His Honour said: …There must be something additional to the fact of a cross-demand to cause the court, in the exercise of its equitable jurisdiction, to require the plaintiff to set-off against his claim the claim of the defendant. That requirement has often been expressed in language to the effect that the equitable set-off must go to the root of or impeach the title of the plaintiff's claim. What is meant by such phrases, particularly in light of the more recent cases, itself needs explanation. In D Galambos & Son Pty Ltd v McIntire (at 18) Woodward J extracted the language used by Lord Cottenham in Rawson v Samuel and the cases to which his Lordship referred that the prerequisites of an equitable set-off were clear cross claim is for debts or damages which were: "… so closely related is to subject matter that the claim sought to be set off impeach the other in the sense that it made it positively unjust that there should be recovery without deduction" (Emphasis added.) 1. Having then referred to various authorities both in New South Wales and the United Kingdom, His Honour continued at 712D: In the consideration of all the circumstances of the case no mechanical test can be applied. Relevantly, although it is of course a matter to be taken into account, it is not determinative that Exicom's claim relates to the sale price as distinct from the other payments for which the deed provides (although as will be seen I do not accept that such a neat distinction can be drawn). Conversely, although it is again a matter to be taken into account it is not determinative that both claims arise under the deed. The ultimate question is whether, bearing in mind that the existence of Exicom's claim is not enough and that something more is needed, sufficient to warrant the intervention of equity to protect it would be unjust or inequitable that AWA be permitted to proceed with its claim. Primarily that throws up the relationship and closeness of connection between the claims. 1. Finally, his Honour said at 712F: Those observations were given effect in APM Wood Products Pty Ltd v Kimberley Homes Pty Ltd (Cole J, 17 February 1989, unreported) where an equitable set-off was denied notwithstanding closeness of the respective claims because the cross claimant's failure to investigate, quantify or press its cross-claim disentitles it in equity from maintaining the cross-claim as defence. 1. It should be noted at this point that equitable set-off is an equitable defence and as such is available to a respondent in proceedings in the Tribunal: Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2015] NSWSC 289 at [66] and following. Is the subcontractor bound by findings in the 2022 reasons? 1. In order to answer this question it is first necessary to make some brief observations concerning the 2022 proceedings, the resolution of the contractor's 2022 application and orders which are not the subject of this appeal. 2. First, as noted above, the 2022 second decision was made by a Tribunal differently constituted to that which made the 2022 first decision. If the Member who made the 2022 first decision was part heard, arguably another Member could not constitute the Tribunal to determine any residual matters which remained to be resolved unless the Tribunal was reconstituted. In this regard the provisions of s 52 of the NCAT Act would apply. This is a matter of practice and procedure. It may constitute an irregularity permitting the 2022 second decision to be set aside under s 53 of the NCAT Act or by an affected party lodging an appeal. However the contractor's 2022 application is not the subject matter of this appeal nor have we been asked to make orders in connection therewith. Further, no application has been made to set aside the 2022 second decision. 3. Secondly, the 2022 second decision, in respect of the contractor's 2022 application, was an order which dismissed the proceedings because the contractor failed to appear. The order was made under s 55(1)(c) of the NCAT Act. It was not a decision which granted substantive relief. Nor was it a dismissal of the claim on the merits, that is on the basis that while liability may have been established against the subcontractor, no relief was sought. 4. Neither party appealed this decision. But it is this decision which must be considered in determining whether the principles of res judicata or issue estoppel have any application in this case. 5. In our view they do not and the Tribunal was in error in this regard. 6. In respect of the principles of res judicata, to paraphrase the words of Fullagar J in Jackson, there has been no "judgement" entered in an action between the contractor and the subcontractor in the contractor's 2022 application. The proceedings were dismissed for non-appearance. The only "judgement" entered was in respect of the homeowner's 2022 application against the contractor, the contractor's 2022 application being dismissed for non-appearance. This is an interlocutory decision. Consequently, no res judicata arises: see eg Pople v Evans [1969] 2 Ch 255 and Baines v State Bank of New South Wales [1985] 2 NSWLR 729. 7. As to issue estoppel, which is the basis upon which the Tribunal determined the subcontractor could not challenge the findings made in the 2022 reasons, an application of the principle does not lead to the conclusion reached by the Tribunal. As noted by Dixon J in Blair: 1. the principle only applies to the parties and their privies; and 2. "[t]he estoppel covers only those matters which the prior judgement, decree or order necessarily established as the legal foundation or justification for its conclusion" (emphasis added). 1. The only matters necessary to found a decision to dismiss an application under s 55(1)(c) of the NCAT Act are that the affected party was served with the notice of hearing, that the party has not appeared and there is no adequate explanation for the non-appearance. 2. None of the findings concerning the substantial dispute are necessary to establish an order should be made under s 55(1)(c) of the NCAT Act. 3. However, that is not an end of the matter. 4. A party, in subsequent proceedings, might also be prevented from challenging findings made in earlier proceedings where to do so may constitute an abuse of process. 5. The decision of Rippon v Chilcotin 53 NSWLR 198; [2001] NSWCA 142 (Rippon) explains the principles and how they operate. In that case, the reasons of the Court were provided by Handley JA, Mason P and Heydon JA agreeing. 6. Importantly, the principle can apply to subsequent proceedings involving a party who was not a party to the original proceedings: Rippon at [15]. As was the case in Rippon, it can apply where, in subsequent proceedings, there is "an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings": Rippon at [28]. 7. As Handley JA explained (Mason P and Heydon JA agreeing), the principal derives from the House of Lords decision in Reichel v Magrath (1889) 14 App Cas 665 (Reichel). There, Lord Halsbury said at 668: "… it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again … There must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of its procedure …". 1. The principle has been approved by the High Court, including in Walton v Gardner (1993) 177 CLR 378; [1993] HCA 77 at 393. There, at [26], Mason CJ and Brennan and Deane JJ accepted such principles could apply to a tribunal in regulating its own processes in the exercise of jurisdiction granted to that tribunal. 2. As to its application, Handley JA said in Rippon at [31]-[33]: 31 In Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404 at 414 Hunt CJ at CL distilled the following statement of principle from the authorities: "There are obviously limitations to striking out pleadings or causes of action as an abuse of process upon the basis stated in Reichel v Magrath … The issue determined in the earlier case which is sought to be litigated in the later case must be one which the party propounding it in the latter lost in the former … It must be an issue which was necessarily determined in the earlier case, and one of importance to the final result. It must have been properly argued - by which I mean that … the tribunal which decided it was an appropriate one to do so, that the parties were appropriate contradictors and that the issue was regarded by them as one of importance … In normal circumstances the decision disposing of the issue must have been a final one … There may also be circumstances in which, notwithstanding the absence of an appeal, it is clear that the earlier decision has overlooked some binding authority, or that it has caused the unsuccessful party a manifest injustice … all the circumstances of the determination in the earlier case may be considered …". 32 In State Bank of NSW Ltd v Stenhouse Ltd (1997) Aust Tort Rep 81-423, another case involving abuse of process in seeking to re-litigate an issue, Giles CJ Comm D said at 64,089: "The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are - (a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or ultimate issue; (b) the opportunity available and taken to fully litigate the issue; (c) the terms and finality of the finding as to the issue; (d) the identity between the relevant issues in the two proceedings; (e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; … (f) the extent of the oppression and unfairness to the other party if the issue was relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and (g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process". 33 These considerations, as Heydon JA pointed out in R v O'Halloran (2000) 36 ACSR 315, 344, "turn on precise identification of the issues". 1. Alternatively, an "Anshun" estoppel might arise. In the High Court decision in Port of Melbourne Authority v Anshun Pty Ltd (1980-81) 147 CLR 589; [1981] HCA 45, it was said an estoppel may arise where a respondent fails to raise an available defence in earlier proceedings and is thereby estopped from pursuing the claim in subsequent proceedings. As stated by Gibbs CJ and Mason and Aickin JJ at 602 - 603: "In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few." … "It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment." 1. In the present case, the subcontractor was a party to the contractor's 2022 application but not the homeowner's 2022 application. As reflected in the 2022 reasons, the applications were heard together and evidence in one was evidence in the other. Further, as recorded in the 2022 reasons (set out at [14] above), the Tribunal made the following findings: 1. Under a contact between the homeowner and the contractor, the contractor agreed to instal solar panel system. This work was undertaken by the subcontractor who supplied and installed the system under a contract with the contractor; 2. The system was defective; 3. During installation of the system, cladding was damaged by the subcontractor while carrying out his work; 4. The homeowner was entitled to damages on his claim against the contractor which totalled $10,196.00. This represented the rectification costs for the system and repair costs to the cladding; 5. The contractor was to pay the homeowner $6,416 after setting off the unpaid contract sum of $3,780 in respect of the homeowner's contract with the contractor. 6. In respect of the contractor's 2022 application, it was adjourned to allow the contractor to consider amending its claim against the subcontractor, the homeowner being otherwise excused. Ultimately it was dismissed for non-appearance. 1. In the subcontractor's 2023 application, the subcontractor sought to recover an amount of $7,350 as well as being relieved from an obligation to pay the builder the amount of $10,196. The second part of the application, seeking relief from an obligation to pay the contractor, is clearly a challenge to the findings in the first 2022 decision that the subcontractor was solely responsible for the defective work. 2. In the contractor's application, the subcontractor sought to defend the claim on the basis that he was not responsible for the defective work or for the damage to the cladding. These defences clearly seek to contradict the findings in the 2022 proceedings. 3. Having said that, the subcontractor also seeks to claim unpaid monies and makes that claim in both the contractor's 2023 application and the subcontractor's 2023 application. The subcontractor's claim was not the subject of determination in the 2022 reasons. However, in the 2023 proceedings, the Tribunal rejected the subcontractor's claim for unpaid money. 4. Having regard to the above, it seems to us that: 1. The subcontractor is estopped, by reason of the principle in Anshun, from now asserting he was not liable for the defective work as subcontractor and that it would be unreasonable for him to now be permitted to bring such a claim in fresh proceedings. This is because the subcontractor's 2023 application seeks to challenge the findings made by the Tribunal in the 2022 proceedings that the defects in the works and the damaged cladding, the subject of this dispute, in the 2022 proceedings, were caused by and/or are the responsibility of the subcontractor. Those findings were so relevant to the subject matter of the first action that it would have been unreasonable for the subcontractor to not rely upon any defence to those claims in those proceedings. While the subcontractor says there is further evidence upon which he would seek to rely in connection with the 2023 proceedings, such evidence should have been advanced at the hearing of the 2022 proceedings. As to the subcontractor obtaining a default judgement in the Local Court for monies unpaid under his contract with the contractor (a matter to which we will return below), such default judgement does not give rise to res judicata or an issue estoppel preventing the contractor from pursuing any claim for defective work. 1. Further, and alternatively, it seems to us that the principles in Rippon extend to the present case and operate to prevent the subcontractor from bringing or defending proceedings in which he contends, contrary to the 2022 reasons, the Tribunal ought to find he was not responsible for the defective work or damage to the cladding. That is because, if such a claim was successful, it would be contrary to an earlier decision of the Tribunal made in proceedings in which the subcontractor was a party. To use the words of Giles CL Comm D in State Bank of NSW Ltd v Stenhouse Ltd (1997) Aust Tort Rep 81-423: 1. the issue sought to be relitigated was: 1. an evidentiary issue of importance in and to the 2022 proceedings, 2. an issue about which the subcontractor had an opportunity available and did take to fully litigate; 3. the findings made were relevant to tripartite claims; 4. the issue is central to both the 2022 proceedings and the 2023 proceedings; 5. no reasons are advanced as to why any new evidence could not have been provided at the original hearing; 1. if permitted to be relitigated, there is risk of oppression and unfairness to the contractor who has paid the homeowner the amount found to be due on the 2022 proceedings and to which the contractor's 2023 application relates; and 2. there is no reason why preventing the subcontractor's challenge to the findings in the 2022 proceedings concerning the defective system, the damage to the cladding and the findings in connection with the contractor's liability would otherwise result in an injustice to the subcontractor. Any issue the subcontractor wished to raise and any evidence on these matters could have been fully ventilated in the 2022 proceedings. 1. It follows that while the Tribunal was incorrect in its reasons concerning why the subcontractor should not be permitted to challenge the earlier findings made by the Tribunal in the 2022 proceedings, the Tribunal was nonetheless correct to reject the subcontractor's claim that he was entitled to relitigate the issue previously resolved. 2. In reaching this conclusion, we should note that we have not overlooked the fact that the contractor's 2022 application was dismissed for non-appearance. 3. This fact does not alter the conclusion we have reached. Because those proceedings were dismissed for non-appearance, the contractor's claim was not ultimately dismissed on its merits. 4. It was open to the subcontractor to apply for dismissal of the proceedings at first instance, there having been a full hearing, because no application was made to amend the contractor's claim to seek relief against the subcontractor in light of the findings made. This did not occur. Similarly, it was open to the subcontractor to contend at the hearing of the contractor's 2023 application that the contractor was not permitted to pursue that application in light of the earlier proceedings. Again this did not occur. 5. If either of these applications had been made, there would need to have been an enquiry concerning whether the conduct of the contractor in failing to pursue an amendment to the contractor's 2022 application and the subsequent commencement of fresh proceedings gave rise to an abuse of process and, if so, whether there was any factual matters counting against summary dismissal if such abuse of process were established. In the absence of these issues being raised at the hearing of the 2023 proceedings, they should not now be permitted to be raised on appeal: Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA at [9]. 6. Accordingly, the subcontractor is bound by the findings of liability of the subcontractor in respect of defective work and damage to cladding made by the Tribunal in the 2022 proceedings and by the assessment of damages suffered by the homeowner and liability of the contractor in connection therewith. Is the subcontractor entitled to set-off against the contractor's claim any unpaid moneys? 1. In its decision, the Tribunal dismissed the subcontractor's claim. The Tribunal's reasons are set out at [17] of the 2023 reasons, which we have recorded at [26] above. When awarding damages to the contractor, the Tribunal did not take account of the monies which, apparently, remained unpaid in respect of the Local Court judgement and/or amount claimed by the subcontractor in excess of the Local Court judgement. 2. In an action for damages for breach of a contract to do residential building work, it is an unremarkable proposition that the assessment of damages for breach of contract would, ordinarily, require the bringing to account of any amounts unpaid under the contract. Otherwise, the person claiming damages for defective work would receive the full value of any work without paying for the work in question. 3. If a claim is made for defective work, without a proper accounting for any unpaid sums payable to the party who contracted to do the relevant work, an equitable defence by way of set-off may be raised in opposition to a party claiming rectification costs. To use the words of Giles J in AWA, the claim for unpaid monies goes to the root of or impeaches the title of the party claiming damages for defective work. Further, it would be unjust or inequitable not to permit this to occur where the respondent to the claim actively prosecutes an entitlement to set-off. 4. It follows, in our view, that the Tribunal was in error in failing to permit the subcontractor to set-off his claim. 5. The fact that a judgement may have been obtained in the Local Court and the subcontractor's claim may have merged on judgement does not alter this position. It would be unjust for the contractor to obtain an order permitting recovery of the full amount of his claim without paying the Local Court judgement or bringing to account any unpaid sum due to the subcontractor arising out of the same transaction. 6. This is not a situation like Reichel where the Court refused to grant an injunction sought to prevent enforcement of a judgement where the set-off had not been proven. Rather, to the extent the Local Court judgement is enforceable, it is a debt payable following a determination of the court. 7. Alternatively, while there is no power in the NCAT Act to permit a set-off of judgements or money orders (cf s 96 of the Civil Procedure Act 2005 (NSW)): 1. s 79U(1) of the Fair Trading Act 1987 (NSW), which requires the Tribunal to be satisfied that the orders will be fair and equitable to all the parties to the claim; and 2. s 58 NCAT Act, which permits the power of the Tribunal to impose conditions in respect of orders made, may permit a conditional order to be made on terms that any award in favour of the contractor may only be enforced for the net amount after set-off unless the Local Court judgement is first paid. In this regard, s 79U applies to building claims: see s 48O(3) HB Act. The operation of s 79U was explained in Curtis v Potter & Co Pty Ltd t/as The Africa Safari Co [2016] NSWCATAP 196 at [67] and following. 1. In either case, the Tribunal could set-off from any amount due to the contractor the amount due for the Local Court judgement. 2. There is a further complication. As noted above, there is a question as to whether the Local Court judgement is enforceable against the contractor. If not, the subcontractor would be entitled to set-off any amounts due to him against the claim of the contractor, in the same manner the contractor was able to set-off the unpaid contract sum against the claim made by the homeowner. 3. However, whether or not the Local Court judgement is enforceable, the 2023 decision should be set aside. Orders 1. The next question is what orders should be made in light of the above. 2. If the Local Court judgement is enforceable, it operates as a res judicata and the subcontractor cannot pursue amounts in excess of the judgement. This is so even where the judgement is obtained by default: see Linprint above. 3. In this case, it would be appropriate for us to make an order that the amount of the Local Court judgement, together with any costs and interest thereon, be set-off against the amounts due to the contractor as damages. The amount due to the contractor is $10,196. 4. On the other hand, if there is no valid judgement in favour of the subcontractor against the contractor, then the Local Court judgement does not prevent the subcontractor from seeking to set-off amounts due to him, even if in excess of the Local Court judgement amount. Of course, this would require appropriate proof. 5. We have not been provided with a copy of the Local Court judgement or evidence concerning its terms or enforceability. Nor have we been provided with relevant evidence from the proceedings at first instance to enable us to adjudicate on the subcontractor's claim if the Local Court judgement is unenforceable. 6. In light of the above, we are unable to finally resolve this appeal. Rather it will be necessary to remit the proceedings to the Tribunal to determine relevant factual matters. The questions to be dealt with on remittal (Remittal Questions) are the following: 1. Is there a valid Local Court judgement in favour of the subcontractor against the contractor in connection with amounts payable under the subcontract? 2. If yes, what is the amount now due to the subcontractor to be set-off against the sum of $10,196 payable to the contractor? 3. If there is no valid Local Court judgement, what amount, if any, is the subcontractor entitled to against the contractor? 4. In light of the above, what orders, if any should be made for the payment of money after set-off. 1. The remitted proceedings should be dealt with on the basis that the subcontractor may not challenge the findings of the Tribunal in the 2022 proceedings concerning his responsibility for the defective work and the damaged cladding and the damages assist in favour of the homeowner (including the contractor's set-off). Rather, the remitted proceedings are to deal solely with the amounts, if any, which the subcontractor can set-off against the contractor's entitlement of $10,196. New or additional evidence is permitted as to the Local Court judgement and any amount due to the subcontractor if the Local Court judgement is not enforceable against the contractor. Otherwise, no new evidence should be permitted. 2. The Appeal Panel makes the following orders: 1. The orders made on 19 September 2023 in applications HB 23/11847 and GEN 23/13529 are set aside. 2. The proceedings are remitted to the Consumer and Commercial Division to determine the Remittal Questions in paragraph 108 of these reasons. 3. New or additional evidence in the remitted proceedings is limited to that identified in paragraph 109 of these reasons. Otherwise the evidence is that originally placed before the Tribunal in the 2023 proceedings and any transcript of oral evidence from that hearing. ********** 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: 15 May 2024