New South Wales Supreme Court CITATION : Vero Insurance Ltd v Buckle; Reynell v Buckle [2008] NSWSC 73 HEARING DATE(S) : 11 February 2008 JUDGMENT DATE : 18 February 2008 JUDGMENT OF : Malpass AsJ DECISION : Decision made by Mr O'Keeffe set aside; proceedings before him dismissed; costs of those proceedings remitted back to the Tribunal; costs of proceedings before this Court reserved. CATCHWORDS : BUILDING CLAIM - Terms of Settlement - arising from supply of building goods or services - collateral contract - jurisdictional time limit LEGISLATION CITED : Consumer Trader and Tenancy Tribunal Act 2001 Home Building Act 1989 CATEGORY : Principal judgment CASES CITED : Grygiel v Baine [2005] NSWCA 218 30055/07: Vero Insurance Limited (Plaintiff) Peter Alan Buckle (First Defendant) Lesley Lynn Buckle (Second Defendant) Peter Andrew Reynell (Third Defendant) Leanne C Reynell (Fourth Defendant) David A Kearns (Fifth Defendant) Sheila Kearns (Sixth Defendant) PARTIES : Consumer Tenancy & Trader Tribunal of New South Wales (Seventh Defendant) 30060 /07 Peter Andrew Reynell (First Plaintiff) Leanne C Reynell (Second Plaintiff) David A Kearns (Third Plaintiff) Sheila Kearns (Fourth Plaintiff) Peter Alan Buckle (First Defendant) Lesley Lynn Buckle (Second Defendant) Consumer Trader and Tenancy Tribunal (Third Defendant) FILE NUMBER(S) : SC 30055/07; 30060/07 30055/07: Ms M Dolenec (Plaintiff) Mr S Coleman (First &Second Defendants) COUNSEL : Mr DG Charles (Third, Fourth, Fifth & Sixth Defendants) 30060 /07: Mr DG Charles (First, Second, Third & Fourth Plaintiffs) Mr S Coleman (First & Second Defendants) 30055/07: Mills Oakley (Plaintiff) CBD Law, Solicitors (First & Second Defendants) SOLICITORS : Turnbull Hill Lawyers (Third, Fourth, Fifth & Sixth Defendants) 30060 /07: Turnbull Hill Lawyers (First, Second, Third & Fourth Plaintiffs) CBD Law Solicitors (First & Second Defendants) LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW LOWER COURT FILE NUMBER(S) : HB 06/24098 LOWER COURT JUDICIAL OFFICER : Member GG O'Keeffe LOWER COURT DATE OF DECISION : 23 April 2007 LOWER COURT MEDIUM NEUTRAL CITATION : Buckle and Buckle v Reynell & Others NSWCTTT 23 April 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST Associate Justice Malpass Monday 18 February 2008 30055/07 Vero Insurance Limited v Peter Alan Buckle & Ors 30060/07 Peter Andre Reynell & Ors v Peter Alan Buckle & Ors JUDGMENT 1 HIS HONOUR: Mr and Mrs Buckle ("the Buckles") are the owners of a property at Woy Woy. The Buckles entered into a contract with a builder ("Reynell") for the construction of a dwelling on the property. The contract was in writing and dated 26 April 2000 ("the building contract"). 2 In late 2000, disputes arose as to the work, the Buckles stopped payment and Reynell ceased building work. 3 The Buckles brought an application in the Consumer Trader and Tenancy Tribunal of New South Wales ("the Tribunal") bringing a monetary claim for defective work. There was a cross claim by Reynell for payment. The home warranty insurer, Vero Insurance Limited ("Vero"), was joined as a party. 4 The proceedings came before a Tribunal member (Mr George). A settlement was reached. Written Terms of Settlement were signed on behalf of the parties. 5 The Terms of Settlement were as follows:- "By consent and without admissions 1. Second respondents to rectify the works in accordance with the intent of the annexed drawing, subject to final drawing by design engineer. 2. Works as rectified to be certified by the design engineer at second respondent's cost. 3. Applicants and second respondents to share equally the cost of any additional excavations, cartage and tip fees. Such excavation to be the subject of independent supervision. Payment to be made within 14 days of receipt of invoice. 4. Applicants to obtain dilapidation report for adjoining properties. 5. Applicants to provide access in accordance with the contract. 6. Works to commence within 28 days of the date of receipt of the dilapidation report with a construction period of 8 weeks. Any claim for extensions of time to be in accordance with the contract. 7. Second respondents to do all things necessary to transfer to the applicants title to structural steel and window materials the subject of the cross-claim at no cost to the applicants. Applicants to arrange and pay for delivery. 8. All claims otherwise dismissed. 9. Applicants acknowledge these terms dispose of their claim against the first respondent the subject of these proceedings. 10. Each party to pay their own costs. 11. Each party releases the others from any claim whatsoever arising from the building contract dated 26 April 2000 save and except for any breach of statutory warranties." 6 On 6 August 2003, the Tribunal member made the following notation:- "The Tribunal notes that this matter has settled without admissions and in accordance with the Terms of Settlement signed by the parties or their legal representatives a copy of which is attached hereto." 7 The Terms of Settlement were never implemented. A number of problems emerged. I will mention certain of them. 8 By 11 December 2003, the Buckles would not allow Reynell back on the site and would only supply the dilapidation report to a new contractor of their choice. An issue had arisen concerning the need for council approval for the rectification contemplated by the Terms of Settlement. 9 The Buckles brought the matter back before the Tribunal. It came before another Tribunal member (Mr Bordon). The Buckles applied to have the Terms of Settlement set aside. This relief was sought on a number of bases. (See paragraphs 2 – 5 of the written reasons of Mr Bordon.) However, it does not appear that any question of repudiation and/or acceptance thereof was raised by them. 10 The application was purportedly brought back before the Tribunal as a renewal of the proceedings pursuant to s 43 of the Consumer Trader and Tenancy Tribunal Act 2001 ("the Act"). 11 The Tribunal member ruled that s 43 had no application in the circumstances of this case (the section being one that enabled the enforcement of orders of the Tribunal and that the Tribunal had no jurisdiction to set aside the Terms of Settlement in the absence of an order). He also concluded that there was no power had by the Tribunal to set aside the Terms of Settlement. This took place in June 2004. 12 In 2006, the Buckles again returned to the Tribunal. These proceedings came before Mr O'Keeffe. 13 It was brought by way of fresh application. An order was sought for the payment of $199,098.50. The application alleged breach of the Terms of Settlement. The claims brought against both Reynell and Vero were resisted. Reynell took, inter alia, a jurisdictional point. Vero contended, inter alia, that there was no cause of action that could be brought against it (the claim against it was said to be frivolous and vexatious). 14 After a short hearing the Tribunal member reserved his decision. He gave his decision (together with reasons for that decision) on 23 April 2007. In the reasons he dealt with, inter alia, what he described as a threshold issue raised by Reynell and also expressed his views on various other matters. 15 In respect of the threshold issue, he found as follows:- "It follows from all of the above that the Tribunal has jurisdiction to hear and determine the dispute that now exists as between the owners and the builder as a building claim and a building dispute within the meaning of the Act. Further evidence is to be adduced with respect to the jurisdiction to hear the owners' claim against the insurer." 16 At this stage, it is convenient to record how the Tribunal member came to that decision. The issue that he was required to address was whether or not there was a "building claim" as contemplated by the provisions of the Home Building Act 1989 ("HB Act"). 17 He considered the submissions made on behalf of the Buckles (that the Terms of Settlement were either a building contract or a contract that was collateral to such a contract). 18 He found that clause 11 of the Terms of Settlement terminated the building contract and that the making of the Terms of Settlement brought about a new building contract. 19 He considered what he regarded to be a question of construction of the Terms of Settlement implicit in submissions made by the Buckles. He expressed the view that this was ultimately a matter for evidence and found that there was an arguable case for the admission of extrinsic evidence capable of establishing that a contract collateral to the building contract came into existence between the Buckles and Vero upon the execution of the Terms of Settlement. 20 He then found that extrinsic evidence was admissible in respect of a question involving the implication of a term into the Terms of Settlement. 21 In some way that remains unclear, Mr O'Keeffe came to the conclusion that any dispute concerning the Terms of Settlement was a "building dispute" within the meaning of s 48K of the HB Act. It appears that it was this finding of the existence of a "building dispute" that led him to the decision that the Tribunal had jurisdiction to entertain the claim then being brought by the Buckles. Such reasoning process as was disclosed in relation to that decision was plainly fallacious and did not have regard to the relevant provisions of the HB Act. I shall return to that matter in due course. 22 It is also convenient at this stage to record what he did in relation to certain of the other various matters that were argued before him. 23 He concluded that there was no merit in submissions made by Reynell on the question of res judicata and by Vero on the question of Anshun estoppel. 24 In respect of an issue of repudiation (which was raised by Reynell), he observed as follows:- "The filing of the renewal application cannot, of itself, constitute a repudiation of the settlement as alleged by the builder, but is merely evidence that a dispute exists concerning it." 25 After dealing with these arguments, he proceeded to consider submissions put by Vero. 26 The written submissions relied on by Vero were expressed to be in addition to the matters set out in the submissions made by Reynell. These submissions propounded three matters under the headings "Anshun Estoppel", "Abuse of Process" and "Accord and Satisfaction". 27 Mr O'Keeffe dealt at some length with its accord and satisfaction argument. On this issue he expressed the view that there was an arguable case that no satisfaction existed upon which Vero could rely. 28 The final matter to be referred to in the Reasons is what appeared in paragraph 11 thereof. Reynell and Vero had ventilated what has been referred to as a limitation defence. This defence is briefly alluded to by way of rejection in that paragraph. I shall return to this matter in due course. 29 I shall now move to the next stage of this long-running litigious saga. 30 Rather than continue with the hearing before Mr O'Keeffe, proceedings have been brought in this Court by both Reynell and Vero. Relief was sought pursuant to s 67 of the Act. For present purposes, it is unnecessary to embark on a dissertation of the intricacies of that provision. 31 Both proceedings were heard on 11 February 2008. All parties were now legally represented. Hitherto the Buckles had been unrepresented. 32 The principal matter agitated by Reynell was the decision reached on the threshold issue. It was argued that the finding of jurisdiction was erroneous. 33 The principal matter agitated by Vero concerned whether or not the Buckles had an arguable cause of action against it. This is a matter that can be quickly put aside. Clearly, the Tribunal member made no final decision on the issue. If Vero did raise any jurisdictional issue (this seems to be a matter of some doubt), it was also not the subject of any final determination. 34 I now return to what has been described as the threshold issue. The resolution of this matter requires a consideration of the HB Act. 35 The relevant provisions may be found in Part 3A of HB Act. It is headed "Resolving building disputes and building claims". Division 1 thereof provides definitions. Division 2 thereof is headed "Dealing with a building dispute". Division 3 thereof is headed "Making an application for determination of a building claim. Division 4 thereof is headed "Jurisdiction in relation to building claims". Division 5 thereof is headed "Powers of the Tribunal". 36 Section 48A of Division 1 contains a definition of a "building claim". In the definition, it is expressed to mean a claim for: "(a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)–(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim." 37 Division 1 also contains a definition of "building dispute". In that definition, it is expressed to mean a dispute that has been notified as referred to in s 48C. 38 Section 48C falls within Division 2 and enables any person to notify the Director-General that the person has a dispute of the nature specified therein. Sections 48D and 48E deal with the investigation of the dispute by the inspector and what the inspector may do after completing the investigation. 39 At this point, it is convenient to observe that Division 2 has no application to what has happened in this case and that Mr O'Keeffe was clearly in error in finding that there was a "building dispute" between the Buckles and Reynell. 40 Section 48I of the Division 3 enables a person to make application to the Tribunal for the determination of a "building claim". 41 Section 48K of Division 4 confers jurisdiction upon the Tribunal to hear and determine any building claim brought before it in accordance with Part 3A in which the amount claimed does not exceed $500,000.00. It is common ground that the claim brought by the Buckles does not exceed that amount. 42 The powers conferred by s 48O of Division 5 enable, inter alia, the making of an order that one party to the proceedings pay money to a party or to a person specified in the order, whether by way of debt, damages or restitution. 43 Section 48K confers the jurisdiction on the Tribunal in respect of "building claims" only. It does not confer any jurisdiction on the Tribunal in respect of "building disputes". Indeed, those words do not appear in the section. It was clearly erroneous for Mr O'Keeffe to find that the Tribunal had jurisdiction because the Buckles and Reynell were parties to a "building dispute". 44 I now return to the definition of "building claim". There is no dispute that there has been a supply of building goods or services by Reynell to the Buckles. Accordingly, it is unnecessary to dwell on the definition provided for "building goods or services". Also, it is common ground that it is unnecessary to look at the regulations. 45 Whilst the construction of the Terms of Settlement may not be an easy matter, the submissions made in this appeal have accepted that the Terms of Settlement brought the building contract to an end. This is what was found by Mr O'Keeffe and such a finding seems to be inevitable. 46 Apart from addressing that matter, the Terms of Settlement were also intended to address other matters that were intended to bring an end to claims and the proceedings before the Tribunal. They were intended to bring about certain building work (inter alia, rectification work). They were intended to bring about a transfer of title in respect of structural steel and window materials. They were intended to bring about releases in relation to all parties ("save and except for any breach of statutory warranties"). 47 The claim brought by the Buckles in the Tribunal involved an alleged breach of the Terms of Settlement. In effect, what is sought to be litigated is a claim for damages for the loss of benefits that they allege should have been received under the Terms of Settlement. 48 The application claims payment of a specified sum of money. The Tribunal will have jurisdiction if the claim is one that arises from either a supply of building goods or services or arises under a contract that is collateral to a contract for the supply of building goods or services. 49 The relevant dictionary meanings attributed to the word "arising" invoke the concepts of "to come into being", "to originate", "to emerge" or "to result from". 50 In Grygiel v Baine [2005] NSWCA 218, observations were made concerning the approach to be taken to the construction of Part 3A (see Basten JA at, inter alia, [58]). 51 There has been a supply of building goods and services by Reynell to the Buckles subsequent to the building contract. The supply of building goods and services gave rise to the disputes that were the subject of the agreement comprised in the Terms of Settlement. 52 Reynell places emphasis on the claim being founded on breach of the Terms of Settlement and it is said that as such it cannot be characterised as a "building claim". In my view, this approach misconceives the task that has to be undertaken by reason of the language of the section. 53 The question is whether the claim for breach of the Terms of Settlement arises from that supply of building goods and services. In my view, it does. What will fall within the definition will depend on the facts of each particular case. It seems to me that the claim which the Buckleys now wish to prosecute had, inter alia, its origin in the supply of building goods and services. 54 Although it may be unnecessary to do so, I shall make some brief observations concerning the alternative. This involves a consideration of what is a collateral contract. 55 The dictionary meaning of "collateral" involves the concepts of "running side by side"; "parallel"; or "accompanying or supporting the main thing" and "secondary". 56 There have been cases in which the word has been considered in statutory context (see, inter alia, Grygiel). It appears from the cases that the notion of primacy may have been jettisoned and that the word should be understood in the sense of "related to or even in addition to" (see [68]). 57 Whatever meaning be given to "collateral", it seems to me that the Terms of Settlement cannot be regarded as being a contract that is collateral to a contract to a supply of building goods or services. The Terms of Settlement brought the building contract to an end. As a consequence, it was the only contract remaining on foot and was one concerning the supply of building goods or services. 58 Apart from deciding the threshold issue, the only other matters upon which final views were expressed were the issues of res judicata and Anshun estoppel. I am not satisfied that there is any basis for disturbing Mr O'Keeffe's views on those matters. It is unclear as to how it could be asserted that these doctrines could have application in the circumstances of this case. It suffices to mention certain matters. Mr George made no findings and there was no judgment. What was decided by Mr Bordon resolved a jurisdictional issue only. 59 I should also make some observations concerning the issue of repudiation. It seems to me that what was said by Mr O'Keeffe in paragraph 14 of his reasons was no more than an observation concerning the impact of the bringing of the renewal application. The renewal application did not seek to agitate the issue of repudiation. Even if it did, it does not seem to me that the bringing of the application itself would be determinative. 60 There would seem to be a real question as to whether or not the Terms of Settlement remain on foot and/or can now be implemented. A variety of issues may now become relevant. I will mention one of them. The conduct of the parties since the making of the Terms of Settlement would seem to throw up real considerations of whether or not there has been a repudiation and an acceptance of that repudiation. All of these questions are yet to be determined. 61 Most of what has been earlier said could be expected to lead to the result that the Summonses should be dismissed. However in the light of what has been said concerning a "building claim", the provisions of s 48K(3) inevitably bring about a different result. The provisions are as follows:- "The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made)." 62 In his reasons, Mr O'Keeffe observed as follows:- "It follows that any dispute concerning the settlement, is a 'building dispute' within the meaning of s 48K of the Act. … [T]he owners allege a dispute exists concerning the settlement. As the settlement (and the new building contract) came into existence on 4 August 2003, the subject application is within time: s48K(3)." 63 It seems to be common ground that no building work was done after 5 December 2000. The application in the proceedings before Mr O'Keeffe was lodged on 12 May 2006. In these circumstances, he fell into error on this question. 64 What is envisaged by the provisions of s 48K(3) cannot be categorised as a limitation defence. It is not of the nature of a defence that operates to bar a remedy. The language of the provision operates as a jurisdictional matter where jurisdiction is attracted by reason of the claim arising from a supply of building goods or services. The claim must be lodged within the three year period after the date on which the supply was made. If the claim is not brought within that period, there is no jurisdiction to entertain it. 65 In this case, the supply of building goods or services had taken place by 5 December 2000. As the application was not brought until 12 May 2006, it has been instituted well out of time and the Tribunal has no jurisdiction to entertain it. 66 This conclusion does not necessarily mean that the Buckles may be without remedy. If they do have a viable claim, relief may be available to them in a court of competent jurisdiction. 67 Because of this insurmountable jurisdictional problem, the proceedings now before the Tribunal are doomed to failure. 68 The decision made by Mr O'Keeffe as to jurisdiction is set aside. The proceedings before him are dismissed. Any question of the costs of those proceedings is remitted back to the Tribunal. The costs of the proceedings before this Court are reserved. Exhibits may be returned. ********** 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.