Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Rockwall Constructions Pty Ltd v Nayak [2017] NSWCATAP 226 Hearing dates: 17 May 2017 and 30 August 2017 Date of orders: 08 December 2017 Decision date: 08 December 2017 Jurisdiction: Appeal Panel Before: K Rosser, Principal Member G Sarginson, Senior Member Decision: (1) Leave to appeal is refused. (2) The appeal is dismissed. (3) The stay order made on 22 March 2017 is lifted. (4) Any application for costs is to be made in writing to the Tribunal (with a copy sent to the other party) within 14 days of the date of publication of these reasons for decision and is to be accompanied by a submission not exceeding three pages in length. (5) Any submission in response to the costs application is not to exceed three pages in length and is to be provided to the Tribunal and the other party within 14 days of receipt of the costs application. (6) Any submission in reply is to be provided to the Tribunal within seven days thereafter. (7) In their submissions on costs, the parties are to address whether the issue of costs can be determined without a hearing, on the basis of the written submissions. Catchwords: APPEAL – jurisdiction – right to hearing on the merits – mitigation of loss Legislation Cited: Civil and Administrative Tribunal Act 2013 ss 36, 38, 55, 80, cl 10 Sch 4, cl 12 Sch 4 Civil and Administrative Tribunal Rules 2014 cl 38A Home Building Act 1989 ss 48L, 48K Civil Procedure Act 2005 s 91 Legal Profession Uniform Law Application Act 2014 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Pople v Evans [1969] 2 All ER 743 Birkett v James [1978] AC 297. Madden v Kirekegord Elwood and Partners [1983] 1 Qd R 649 Raw Business Services Pty Ltd v Felekos [2014] NSWCATAP 89 Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 397 Attorney-General for the State of Victoria v Weston [2004] VSC 314 Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251 Batistatos v Roads and Traffic Authority of NSW [2006] HCA 27; (2006) 226 CLR 256 Castle Constructions Pty Ltd v Fekula Pty Ltd [2006] NSWCA 133 The Owners - Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067 Sotiros Shipping Inc. and Aeco Maritime S.A. v. Sameiet Solholt; (The 'Solholt') (1983) 1 Lloyds Rep, 605 Anderson v Armitage [2015] NSWCATAP 72 Texts Cited: Colbran, Spender, Douglas and Jackson Civil Procedure Commentary and Materials (6th ed) Lexis Nexis Butterworths [2015] Category: Principal judgment Parties: Rockwall Constructions Pty Ltd (Appellant) Srinivas Nayak and Deepti Nayak (Respondents) Representation: Ms J E Stuckey-Clarke of Counsel for the Appellant, instructed by A.I Legal Mr G Aronstan, Solicitor, for the Respondents File Number(s): AP 17/10955 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 6 February 2017 Before: S F Smith, General Member File Number(s): HB 15/48165 reasons for decision Introduction 1. This is an internal appeal under s 80(1) of the Civil and Administrative Tribunal Act 2013 ('the NCAT Act'). It arises from a decision made in proceedings HB 15/48165, which was an application under the Home Building Act 1989 ('the HB Act') made by the respondents Srinivas Nayak and Deepti Nayak ('the owners') against the appellant Rockwall Constructions Pty Ltd ('the builder'). 2. The Appeal Panel was originally constituted by Senior Member P Callaghan SC and Senior Member G Sarginson. The hearing of the appeal commenced on 17 May 2017, but was not completed on that day. The hearing was re-listed on 30 August 2017. 3. Due to the unavailability of Senior Member Callaghan, the President reconstituted the Appeal Panel under s 52(1) (a) of the NCAT Act, having first sought submissions from the parties. The parties did not object to the reconstitution of the Appeal Panel. 4. For the reasons set out below we have refused leave to appeal and dismissed the appeal. Scope and nature of internal appeals 1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) NCAT Act. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on that basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. 1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 2. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed. Background 1. The parties entered into a residential building contract in the NSW Fair Trading standard form on 7 December 2012. The contract price was $977,636.24. The parties fell into dispute. 2. On 27 August 2014, the builder's solicitor wrote to the owners' solicitor requesting a conference, relevantly stating: Unless your client is agreeable to the conference and notice is provided to our office by close of business on Friday 29 August 2014, we are instructed to terminate the Home Building Contract ('the contract') pursuant to clause 26. In the event our client terminates the contract based on your client's conduct, we put your client on notice that our client will require: …. 1. On 8 September 2014, the builder purported to terminate the contract under clause 26 of the written contract. The owners treated the builder's purported termination of the contract as a repudiation. 2. The owner commenced proceedings in the Tribunal on 9 September 2014, seeking damages for defective and incomplete work: (Matter HB 14/44429). The builder subsequently filed a cross application on 31 October 2014 seeking damages for breach of contract (including unpaid variations to the contract) or in the alternative compensation on a quantum meruit basis (Matter HB 14/53291). 3. On 12 September 2014 (after the owners had commenced proceedings and prior to the builder filing the cross application), the builder's solicitor again wrote to the owners' solicitor, relevantly stating: Our client denies that they have wrongfully terminated the previous Home Building Contract entered into between the parties and has instructed our office to make the following request in a sign of good faith and without admissions: 1. The parties attend a round table conference; and 2. The parties enter into a new Home Building Contract at an agreed price to complete construction of the house ….. 1. The parties did not enter into a new contract. 2. As a result of non-compliance with procedural directions made by the Tribunal, on 11 June 2015 the owners' proceedings were listed for a hearing to show cause why the application should not be dismissed. The Tribunal evidently made a decision on the day of the hearing, although written reasons for decision were published on 24 July 2015. The Tribunal dismissed the proceedings on the basis of the owners' want of prosecution of the proceedings (s 55(1) (d) of the NCAT Act) and because the owners had conducted the proceedings so as to unreasonably disadvantage the builder (cl 10 Schedule 4 of the NCAT Act). In doing so, the Tribunal relevantly stated (at paragraph [54] of the reasons): Although appellant courts have criticised the striking out of a claim where the matter can be brought again within the limitation period, it is significant to note in the present circumstances that the parties were, or ought to have been aware of the intention of the Tribunal to deal with the builders claim for balance of monies owing at the same time as the owners claim for damages for failure to complete the contract. The actions of the applicants, through their solicitor, have frustrated this purpose and it is appropriate, in the present case that the provisions of s 55 of the Act and of cl 10 of Pt 5 to Sch 4 should be invoked to strike out the present proceedings. The respondent has requested the strike out procedure be ordered notwithstanding that the builder may be exposed to some disadvantage where the proceedings are separated. In the circumstances the applicants' proceedings are dismissed and the Tribunal orders that costs of these proceedings be paid as agreed or assessed in accordance with the Legal Practitioners Act 2004. Although no steps have been taken to make a specific order for costs against any particular person or persons, it is hoped that if the delays in dealing with this matter fall at the hands of the solicitors for the applicants that the applicants themselves will not be obliged to bear the order for costs. 1. The owners lodged an internal appeal against the Tribunal's decision: AP 15/42652. The appeal was withdrawn and dismissed on 31 July 2015. The owners were ordered to pay costs to the builder in the sum of $1000. 2. The owners commenced fresh Tribunal proceedings in Matter HB 15/48165 which are the subject of this appeal on 10 August 2015. The application was listed for directions on some twelve occasions between 8 September 2015 and 14 September 2016. 3. At the first directions hearing on 8 September 2015, the Tribunal ordered that the owners' application would be dealt with separately to the builder's application. 4. The builder's application was heard on 8 October 2015 by Senior Member Goldstein. The Tribunal's reasons for decision were published on 16 March 2016. The reasons are 46 pages in length, and contain extensive factual findings. While the Tribunal dealt primarily with the builder's variation claim, it also (by the consent of the parties) dealt with the issue of how the contract had been terminated. The builder's position was that it had terminated under cl 26 of the contract, relying on a notice given on 8 September 2014. 5. The Tribunal found that the notice the builder relied on was not a proper notice of termination as it did not comply with cl 26 of the contract. Rather, the Tribunal found that the builder had repudiated the contract and that the owners had accepted the builder's repudiation, thereby bringing the contract to an end. 6. The owners appealed the Tribunal's decision that it pay the builder $56,848.54 in respect of the builder's variation claim: AP 16/16931. On 30 January 2017 the Appeal Panel varied the Tribunal's order and ordered that the owners pay the builder the sum of $46,070.63. The Appeal Panel did not disturb the Tribunal's findings as to how the contract came to an end. 7. In respect of the owners' fresh proceedings against the builder, a directions hearing occurred on 19 April 2016. The Senior Member presiding at that directions hearing noted that: Tribunal notes agreement of the parties that sole issue to determine at hearing is quantum. Parties note the decision of Senior Member Goldstein dated 23 March 2016 and in particular the findings in paragraphs [131]-[159] which are not the subject of appeal and are binding on the parties. Tribunal notes that both parties expert reports estimate damages beyond the jurisdictional limit of the Tribunal but the applicants submit to the Tribunal's jurisdiction. 1. The matter was subsequently listed for hearing on 20 July 2016. That hearing date was adjourned, as was a hearing on 14 September 2016. 2. The matter was listed for hearing on 31 October 2016. On that date, the builder filed a submission claiming that the owner's decision to proceed to finish the works as an owner-builder rather than enter into a new contract with the builder amounted to an absolute failure to mitigate his loss or in the alternative broke any causal nexus between repudiation of the contract by the builder and any loss sustained by the owners. This position was argued in oral submissions at the hearing. 3. It was also argued on behalf of the builder that the owners' proceedings amounted to an abuse of process, that the owners were estopped from pursuing the claim because of the dismissal of their earlier application and that the owners' loss was not caused by the builder's breach. 4. The parties filed written submissions following the hearing. The Tribunal's reasons for decision were published on 6 February 2017. The Tribunal's decision 1. The Tribunal made the following orders: 1. Builder to pay the owners $404,908 plus interest computed in accordance with Regulation 39 on or before 10 February 2017. 2. Parties are invited to make submissions on or before 17 February 2017 on whether or not costs should follow the event. 1. Relevantly, the Tribunal found that: * The builder's argument that the owners were estopped from taking fresh proceedings in the Tribunal by reason of dismissal of the earlier proceedings did not confront the legal presumption that, in all forums, litigants are entitled to a hearing of their case on the merits. * Even a dismissal for want of prosecution after formal adjudication does not stand in the way of a party commencing an action provided it is not out of time. * The right of the parties to a hearing on the merits is so well established that it would need plain words to overturn it. * Nothing came of the suggestion made by the builder before and after it repudiated the contract that there should be a round table discussion about what may be a way forward. * The builder, having underquoted on the job, purported to terminate the contract. No amount was ever discussed as being a suitable contract price to complete the works. * If the owners had refused to re-sign at a nominated figure materially lower than the actual cost to complete, there could be some factual foundation for the builder's claim that the owners had failed to mitigate their loss. The evidence fell substantially short of the required factual foundation. * Similar considerations apply if the builder's claim is viewed as a question of causation rather than mitigation. * The parties are bound by the joint conclave report computed on an owner builder basis. This provides for compensation in favour of the owners in the sum of $404,908, including an overpayment of $177,955. * Interest of $27,909.84 was due to 30 June 2016 and accrued thereafter at the rate of $88.75 per day. Notice of Appeal 1. The Notice of Appeal was lodged on 6 March 2017. It is not in dispute that the appeal is within time. 2. An amended Notice of Appeal was lodged on 21 March 2017. The grounds of appeal are as follows: 1. The Member erred in finding that the owner's conduct in commencing and maintaining the proceedings in all the circumstances was not vexatious pursuant to s 55(1) (b) and Schedule 4 Part 5 clause 10 of the NCAT Act and in failing to dismiss the proceedings on that ground. 2. Alternatively, the Member erred in finding that the Tribunal had jurisdiction to hear and dispose of the proceedings on the merits. 3. The Member erred in finding that the owners had not failed to mitigate their loss by not accepting an invitation to negotiate a further contract with the builder. 4. The Member erred in failing to find that the owners had failed to mitigate their loss by refusing without explanation in all the circumstances to enter into negotiations with the builder for a new contract on similar terms and for a similar price, subject to the resolution of the disputed variation payments. 5. The Member erred in failing to find that the owners' refusal to enter into negotiations for a new contract was commercially unreasonable. 6. The Member erred in finding that the builder's wrongful repudiation of the contract was the cause of the owners' loss. 7. The Member erred in failing to find that the owners' refusal to enter into negotiations for a new contract was the cause of the owners' loss, not the builder's wrongful repudiation of the contract. 1. The builder claims that the grounds raise questions of law. The builder also seeks leave to appeal on grounds other than error of law. In relation to grounds 1 and 3-7 the builder claims that the decision was not fair and equitable and against the weight of the evidence. In relation to ground 2, the builder claims that the Tribunal's decision was against the weight of the evidence. Evidence and submissions 1. In making a decision, we have considered the following documents: 1. The builder's bundle of documents, including the original Notice of Appeal dated 6 March 2017, affidavits in the proceedings before the Tribunal, the transcript of the hearing on 31 October 2016, submissions made to the Tribunal following the hearing on 31 October 2016, the Tribunal's reasons for decision in the builder's proceedings (HB 14/53291) and the Tribunal's reasons for decision in the owners' proceedings; 2. The Amended Notice of Appeal and attached documents, received on 21 March 2017; 3. The owners' bundle of documents received on 28 March 2017, which includes the Reply to Appeal dated 20 March 2017; the joint conclave report dated 11 August 2016; directions made by the Tribunal on 8 September 2015 and 19 April 2016; 4. The builder's submissions received on 5 April 2017; 5. The owners' submissions received on 27 April 2017; 6. The builder's submissions in reply received on 1 May 2017. Consideration 1. The builder's grounds of appeal can be conveniently grouped together. 2. Grounds 1 and 2 relate to whether the Tribunal had jurisdiction to deal with the owners' application after the owners' earlier application had been dismissed and, if the Tribunal did have jurisdiction, whether the proceedings were vexatious or an abuse of process. It is appropriate to deal with jurisdiction before dealing with whether the proceedings were vexatious of an abuse of process. 3. Grounds 3 to 7 relate to whether the owners failed to mitigate their loss by not entering into negotiations with the builder for a new contract after the builder had repudiated the original contract, or in the alternative whether the loss suffered by the owners arose from their failure to enter into negotiations for a new contract rather than from the builder's repudiation of the contract. Grounds 1 and 2 Did the Tribunal have jurisdiction to deal with the owners' fresh application? 1. As noted above, the Tribunal dismissed owners' first application HB 14/44429 under s 55(1) and cl 10 Schedule 4 of the NCAT Act. The owners' appeal against that decision was withdrawn and the owners commenced fresh proceedings. 2. The builder submits that the Tribunal had no jurisdiction to hear the owners' application because there is no provision in the NCAT Act, the Civil and Administrative Tribunal Regulation 2013 (the Regulation) or the Civil and Administrative Tribunal Rules 2014 (the Rules) which permit the recommencement or reinstatement of proceedings struck out for want of prosecution under s 55(1) (d). 3. Section 55 of the NCAT Act provides: 55 Dismissal of proceedings (1) The Tribunal may dismiss at any stage any proceedings before it in any of the following circumstances: (a) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) withdraws the application or appeal to which the proceedings relate, (b) if the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance, (c) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) has failed to appear in the proceedings, (d) if the Tribunal considers that there has been a want of prosecution of the proceedings. (2) The Tribunal may reinstate proceedings that have been dismissed under subsection (1) (c) if the Tribunal considers that there is a reasonable explanation for that failure. 1. Clause 10 of Schedule 4 of the NCAT Act relevantly provides: 10 Proceedings causing disadvantage (1) The Tribunal may exercise the powers conferred by this clause if the Tribunal is of the opinion that a party in any proceedings for the exercise of a Division function is conducting the proceedings in such a way that unreasonably disadvantages another party in the proceedings by any conduct (including by failing to comply with an order or direction of the Tribunal). (2) The Tribunal may: (a) if the party causing the disadvantage is the applicant—order that the proceedings (or part of the proceedings) be dismissed or struck out, or (b) if the party causing the disadvantage is not the applicant: (i) determine the proceedings (or part of the proceedings) in favour of the applicant and make any appropriate orders, or (ii) order that the party causing the disadvantage be struck out of the proceedings (or part of the proceedings). …. 1. It is clear that the owners' first application was dismissed on the basis of a failure to prosecute their claim, including by failing to comply with Tribunal directions, and not on the basis that the owners had no arguable cause of action. Their first application was therefore not determined on its merits. 2. At common law, if proceedings are dismissed for want of prosecution, the plaintiff may issue further proceedings (provided they are within the limitation period) because there has been no determination on the merits, unless to further commence proceedings would be an abuse of process. Issue estoppel and res judicata do not apply to this situation. The principles are set out in Colbran, Spender, Douglas and Jackson Civil Procedure Commentary and Materials 6th ed Lexis Nexus 2015 at pp. 214-215, citing authorities including Pople v Evans [1969] 2 All ER 743 and Birkett v James [1978] AC 297. Accordingly, Courts are reluctant to dismiss proceedings for want of prosecution if the limitation period has not expired because the plaintiff is not prevented from filing fresh proceedings. 3. It is well established that fresh proceedings may be commenced after proceedings have been summarily dismissed or struck out in whole for want of prosecution, subject to consideration of whether it would be an abuse of process to allow the commencement of fresh proceedings. The principle was succinctly enunciated by the Full Court of the Supreme Court of Queensland (Kelly J with whom Lucas and Hoare JJ agreed) in Madden v Kirekegord Elwood and Partners [1983] 1 Qd R 649 at 652-53 as follows: Where an action has been discontinued or dismissed for want of prosecution and the second action in the same court between the same parties seeking the same relief and based on the same grounds as in the earlier action is then commenced within the limitation period, that action should not for that reason alone be stayed or dismissed as an abuse of process. That this is so appears from the speeches in Birkett v James [1978] AC 297 especially at pp. 320-321 per Lord Diplock, pp. 328-329 per Lord Salmon and pp. 333-334 per Lord Edmond-Davies. There may be certain circumstances in which the conduct of the plaintiff is such that a stay would be justified as, for example, where the plaintiff's conduct in a previous proceedings has induced the defendant to do something which will create more difficulties for him in presenting his case of trial than he would have had if the previous proceedings had never been started ... or where the plaintiff has so misled the defendant that it would be wrong to allow him to sue afresh." 1. The principle has been applied in the Tribunal to allow the commencement of fresh proceedings by an applicant whose proceedings had been dismissed under section 55(1) of the NCAT Act for non-appearance and who did not seek that the proceedings be re-instated under s 55(2) of the NCAT Act: Raw Business Services Pty Ltd v Felekos [2014] NSWCATAP 89. 2. The Tribunal's reasons for decision in HB 14/44429 reflect the application of the principle that the dismissal of the first proceedings for want of prosecution did not create an estoppel preventing the filing of fresh proceedings. The Tribunal Member considered that the owners could file fresh proceedings in the Tribunal notwithstanding the dismissal of the proceedings for want of prosecution. The Member indicated in his reasons that the builder wanted the owners' claim "struck out" to obtain an order for costs, but fresh proceedings could be filed. This is clearly reflected by the reasons of the Tribunal Member stating at para [54]: Although appellant courts have criticised the striking out of a claim where the matter can be brought again within the limitation period…The respondent has requested the strike out procedure be ordered notwithstanding the builder may be exposed to some disadvantage where the proceedings are separated. In the circumstances the applicants' proceedings are dismissed and the Tribunal orders that the costs of these proceedings are to be paid as agreed or assessed… 1. The issue of reinstatement of proceedings dismissed for non-appearance under s 55 (2) of the NCAT Act is not relevant to this matter. Section 55(2) should not be interpreted to mean that proceedings otherwise dismissed under s 55 without a hearing on the merits cannot be the subject of fresh proceedings. Although the NCAT Act and Rules do not have any provision such as s 91(2) of the Civil Procedure Act 2005 (which makes clear that fresh proceedings can be filed after proceedings are dismissed for want of prosecution), the absence of such a provision does not indicate a legislative intention to restrict the circumstances in which fresh proceedings can be taken in the Tribunal. 2. Clear words would be required to displace the position at common law that a party is entitled to a decision on the merits, even in circumstances where prior proceedings have been dismissed for want of prosecution or otherwise dismissed without a hearing on the merits. The principle of statutory construction known as the 'principle of legality' was discussed by the NSW Court of Appeal (Basten JA, with whom Leeming J and Macfarlan JA agreed) in Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) [2016] NSWCA 397 as follows (at [39]-[46], citations omitted): Identification of the scope of the principle should be undertaken with caution. The label 'principle of legality is apt to mislead. Both its ordinary meaning and its traditional usage engage a particular aspect of the rule of law, namely that government action (whether legislative or executive) which intrudes on the rights and liberties of individuals should be justified by legal authority. Its use as a principle of statutory construction is of recent origin. Further, depending on context, it is expressed in variable terms. A common formulation, adopted in Attorney-General for the Northern Territory v Emmerson, was as follows: "The principle relied upon is the principle of legality. Shortly stated for present purposes, legislation affecting fundamental rights must be clear and unambiguous, and any ambiguity must be resolved in favour of the protection of those fundamental rights." … The standard of clarity required of the parliament has also been expressed in differing language. However, in X7 v Australian Crime Commission, in a passage cited in R v Anti-corruption Commissioner, Kiefel J stated: "The requirement of the principle of legality is that a statutory intention to abrogate or restrict a fundamental freedom or principle or to depart from the general system of law must be expressed with irresistible clearness. That is not a low standard. It will usually require that it be manifest from the statute in question that the legislature has directed its attention to the question whether to so abrogate or restrict and has determined to do so." Although it has not been expressed in such terms, it seems likely that the level of clarity required of the legislature will depend upon the nature of the perceived infringement, the nature of the rights or general principles infringed and, no doubt, other factors. It is not necessary, and is probably misguided, to construct some quasi-constitutional distinction between categories of legislation, requiring different standards of expression on the part of the legislature in order to achieve their apparent purpose. Indeed, what is covered by the "general system of law", at least in civil jurisdiction, remains to be identified. 1. Section 55(1) of the NCAT Act should not be interpreted as removing the common law right to commence fresh proceedings within the relevant limitation period set out in s 48K of the HB Act in circumstances where previous proceedings have been dismissed for want of prosecution, other than in circumstances where the commencement of fresh proceedings is an abuse of process. The issue of whether the commencement of fresh proceedings was an abuse of process will be discussed below. 2. There are no words in s 55(1) of the NCAT Act that clearly show the legislature intended that, if proceedings were dismissed in the Tribunal for want of prosecution, the party is prevented from commencing fresh proceedings in the Tribunal. The common law principles remain unaltered. Further, s 55(1) of the NCAT Act deals only with the ground upon which proceedings may be dismissed. It is silent on the circumstances in which proceedings may, or may not, be commenced. 3. The builder submits that the Tribunal should adopt a purposive construction of Section 55(1) of the NCAT Act consistent with the guiding principle of the Tribunal in respect of the "just quick cheap and efficient resolution of the real issues in the proceedings" under s 36(1) of the NCAT Act. However, we are not satisfied that to interpret s 55(1) of the NCAT Act in a manner that allows fresh proceedings to be filed in the circumstances of this matter is inconsistent with s 36(1) of the NCAT Act for the following reasons. 4. First, the concept of "just" applies to both parties, not exclusively to the builder. It would not be "just" to interpret s 55(1) of the NCAT Act in a manner that would prevent the homeowner from filing fresh proceedings in the Tribunal where such a right exists at common law, and the legislature has not clearly removed that right. 5. Second, in respect of the owners' first proceedings, the Tribunal made a costs order in favour of the builder. That costs order provided a remedy to the builder for the legal costs incurred in the first set of proceedings. 6. Third, the builder accepted, in oral submissions at the Appeal Panel hearing, that the dismissal of the proceedings for want of prosecution would not prevent the homeowner from bringing proceedings against the builder in a Court, subject to the limitation period not having expired. The builder's argument was that the dismissal of proceedings in the Tribunal for want of prosecution only prevented the homeowner from bringing fresh proceedings in the Tribunal, rather than, for example suing the builder in the District Court. However, that would result in an outcome where the parties may have concurrent separate proceedings against each other involving overlapping issues in two separate jurisdictions. Such an outcome would not be consistent with the just, quick, cheap and efficient resolution of the real issues in the proceedings in the Tribunal. 7. Fourth, s 48L of the HBA states that the Tribunal is to be chiefly responsible for resolving building claims. If a person commences proceedings involving a building claim in a Court and the building claim is one that could be heard by the Tribunal, if the defendant applies for proceedings to be transferred to the Tribunal (subject to limited exceptions) the Court must transfer the proceedings. If the builder's interpretation of s 55(1) of the NCAT Act is accepted, it could lead to a situation where an owner commenced fresh proceedings in a Court and the Court ordered (on application by the builder) that the proceedings be transferred back to the Tribunal, because the owners' original proceedings in the Tribunal had not been dismissed on the merits. The potential that this situation could arise is eliminated if the owner can commence fresh proceedings in the Tribunal, subject to the issue of expiration of the limitation period and whether the fresh proceedings are an abuse of process. 8. We consider that the same reasoning applies to proceedings struck out or dismissed under cl 10 of Schedule 4 of the NCAT Act as to proceedings dismissed under s 55(1) of the NCAT Act where there has not been a determination on the merits. 9. The jurisdiction of the Tribunal in home building matters is set out in s 48K of the HB Act. The owners' second application (that is, the fresh proceedings) constituted a "building claim" for "building goods and services" and were brought within the limitation period. We are satisfied that the Tribunal had jurisdiction to deal with the application. 10. The Tribunal did not err in how it dealt with the issue of jurisdiction. Nor is the Tribunal's decision in this regard against the weight of evidence. Ground 2 is not established. Was the owners' second application vexatious or an abuse of process? 1. We are not satisfied that the owners' second application was either vexatious or an abuse of process. As discussed previously, when questioned by the Appeal Panel at the hearing on 17 May 2017, Counsel for the builder accepted that the owners could have filed fresh proceedings in a Court after the dismissal of the owners' first application. Had this been done, the builder would have been met with exactly the same claim, but in a Court rather than in the Tribunal. 2. Vexatious proceedings are proceedings which have been brought for an improper purpose or which have been revealed to be hopeless: Attorney-General for the State of Victoria v Weston [2004] VSC 314 at [23]. We are not satisfied that fresh proceedings brought by a homeowner against a builder in the Tribunal under the HB Act after the initial proceedings were dismissed for want of prosecution constitute vexatious proceedings, particularly in circumstances where the homeowner was ultimately successful against the builder when the application was heard and determined on the merits. 3. Proceedings which involve an abuse of process are not limited to fixed categories (per Mason CJ in Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251 at [3]). However, they usually fall into the categories of either (a) court procedures being invoked for an illegitimate purpose; (b) the use of court procedure that is unjustifiably oppressive to one or the parties; or (c) the use of procedure of the court's procedures that would bring the administration of justice into disrepute: per McHugh J in Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251 at [16] p 286. 4. In Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251 at 286, McHugh J stated: Many, perhaps the majority, of cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of process. 1. The doctrine of abuse of process applies to proceedings in Tribunals as well as in courts and an abuse of process can arise in circumstances where there is no moral delinquency or oppressive conduct by the plaintiff: Batistatos v Roads and Traffic Authority of NSW [2006] HCA 27; (2006) 226 CLR 256 per Glesson CJ, Gummow, Hayne, and Crennan JJ at [70]. 2. The builder submitted that it was an abuse of process for the owners to bring and continue the fresh proceedings because (a) the previous proceedings were dismissed for want of prosecution; (b) the owners had failed to particularise the claim for damages; and (c) the owners had failed to pay the costs order made in the previous proceedings. 3. The owners' failure to 'particularise' their claim is not, of itself, an abuse of process, considering s 38(4) of the NCAT Act which provides that the Tribunal is to "act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to legal technicalities and forms". In any event, the builder could have sought interlocutory orders regarding points of claim, or raise the issue of the owners' failure to particularise the claim when the matter was listed for directions. 4. Even if there was a failure to particularise, this did not prevent the builder from obtaining expert evidence or arguing the issue of termination of the contract during the hearing of the builder's application before Senior Member Goldstein or arguing the issue of issue of quantum in the hearing of the owners' second application. Further, considering the builder's expert had agreed with the owners' expert on the amounts of overpayments under the contract and the increased cost of completing the work, it is difficult to envisage how the builder was unfairly disadvantaged. 5. We are not satisfied that the owners'' failure to comply with a costs order is an abuse of process. After having costs assessed under the Legal Profession Uniform Law Application Act 2014, the builder could take enforcement proceedings in relation to the costs order in a Court of competent jurisdiction, including through a writ of execution or a garnishee order, or by seeking to bankrupt the owners. The failure of the builder to have recovered some or all of its costs pursuant to the costs order made in the first proceedings does not make the commencement of fresh proceedings by the owners against the builder an abuse of process in circumstances where the owners' claim was not determined on the merits, and the builder has the ability to take an array of enforcement measures in respect of the costs order. The same principles are applicable to the costs order made by the Appeal Panel against the owners when they withdrew their appeal against the decision to summarily dismiss the first proceedings against the builder. 6. Further, the builder did not claim that the owners were estopped from bringing a further application or that the application was an abuse of process until the hearing on quantum on 31 October 2016. The issue was not raised when the matter was listed for directions on 19 April 2016, when the Tribunal noted that both parties agreed the sole issue for determination was quantum, the Tribunal's findings on the circumstances of termination of the contract in the builder's proceedings having not been appealed. 7. In circumstances where the owners commenced proceedings within the relevant limitation period and where the parties had agreed more than six months prior to the hearing that quantum was the only issue to be determined, we are not satisfied that the builder has established that the Tribunal erred in failing to find that the owners' second application was either vexatious or an abuse of process. No error of law has been established. Nor is the decision against the weight of evidence or not fair and equitable. 8. Ground 1 is not established. Does the failure by the owners to negotiate a new contract with the builder amount to a failure to mitigate their loss? Did the owners' loss arise from their failure to negotiate a new contract with the builder? 1. As noted above, both before and after the builder repudiated the contract with the owners, its solicitor wrote to the owners' solicitor suggesting a conference between the parties and that the parties enter into a new contract "at an agreed price". 2. The builder submits that not entering into negotiations for a new contract represents a failure by the owners to mitigate their loss. It submits that the Tribunal erred in its finding in relation to mitigation and that the Tribunal's finding in this regard was not fair and equitable and against the weight of evidence. It also submits that the owners' loss arose from the failure to negotiate a new contract, rather than from the builder's repudiation of the previous contract. 3. It is well established that damages cannot be recovered for any loss which could have been prevented by reasonable mitigation action of the injured party: [23.41] Cheshire and Fifoot 9th Edition. A loss which is attributable to the failure to mitigate can be regarded as an aspect of causation: Castle Constructions Pty Ltd v Fekula Pty Ltd [2006] NSWCA 133 at [21]. 4. We consider that the builder's arguments about mitigation and causation are in effect the same argument. 5. In The Owners - Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067 Ball J stated at [42] in connection with mitigation of loss: Generally speaking, a person who suffers loss as a consequence of a breach of contract is required to act reasonably in relation to that loss in order for the loss to be recoverable. An important aspect of this general principle is that the party who has suffered a loss is under a duty to mitigate its loss. Sometimes the use of the word "duty" in this context is criticised, since there is no requirement that the plaintiff act in a particular way and no requirement that the plaintiff minimise its loss: see, e.g., J Carter, E Peden and GJ Tolhurst, Contract Law in Australia, (5th ed, 2007, LexisNexis) at [35-35]. Rather, the principle is that the plaintiff is not entitled to recover losses attributable to its own unreasonable conduct. As O'Connor J explained in Hasell v Bagot, Shakes & Lewis Ltd [1911] HCA 62; (1911) 13 CLR 374 at 388: 'One of the principles on which damages are assessed [is] that a party to an agreement suffering injury from the other party's breach of its terms is bound to exercise reasonable care in mitigating the injurious consequences of the breach, and is not entitled to recover from the party in default any damage which the exercise of reasonable care on his part would have prevented from arising. 1. In the case of Sotiros Shipping Inc. and Aeco Maritime S.A. v. Sameiet Solholt; (The 'Solholt') (1983) 1 Lloyds Rep, 605, Sir John Donaldson M.R. stated: A plaintiff is under no duty to mitigate his loss, despite the habitual use by the lawyers of the phrase "duty to mitigate". He is completely free to act as he judges to be in his best interests. On the other hand, a defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting. A defendant is only liable for such part of the plaintiff's loss as is properly to be regarded as caused by the defendants' breach of duty. As Viscount Haldane, L.C., put it in British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground Electric Railways Co. of London Ltd, [1912] A.C. 673 at p. 689: The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps. 1. The builder submits that the owners refused to take up the opportunity to negotiate a new contract "on similar terms and for a similar price". This submission was made to the Tribunal in the submission dated 31 October 2016. It was repeated in the Amended Notice of Appeal. It was also made orally by the builder's Counsel at the Appeal hearing on 30 August 2017. 2. The builder relies on an affidavit dated 20 November 2015 of Marley Mehcur (the builder's project manager) and a letter dated 12 September 2014 which was sent by the builder's solicitor to the owners' solicitor and is attached to the affidavit in relation to this issue. The affidavit and the letter are included in the builder's bundle of documents on the appeal. 3. However, the letter dated 12 September 2014 refers to the parties negotiating a new contract at "an agreed price". It says nothing about the terms of any prospective new contract or that it would be for a "similar price". Mr Mehcur's affidavit also does not state that any new contract would be "on similar terms and for a similar price". In these circumstances, we are not satisfied that the builder's submission that the proposed new contract would be on similar terms and for a similar price is supported by the evidence. 4. In our view, the Tribunal satisfactorily dealt with the issue of mitigation and causation at [21] to [26] of the reasons for decision, when it stated: 21 The other set of arguments relied on by Miss Stuckey Clarke dealt with causation and mitigation of loss. In many cases these might be the same category viewed from different perspectives. In essence her point here was that the owners should have re-signed with the builder immediately upon termination of the original contract. 22 From the material before me I am able to find that as a matter of fact it was suggested before and after repudiation that there should be a round table discussion about what might be a way forward. However it seems that nothing came of the suggestion and the owners completed the project on an owner builder basis. 23 The submission for the builder was that it was unreasonable for the owners so to act and that the extra cost to complete was not caused by the builder or that the owners failed to mitigate their loss by not pursuing a further contract with the builder. 24 Miss Stuckey Clarke relied on "The Solholt" [1983] 1 Lloyd's Rep 605. In that case a contract for the purchase of a ship was terminated for late delivery on a rising market. The Court of Appeal for England and Wales held that the refusal by the plaintiff purchaser to renegotiate buying the ship was a failure to mitigate loss. 25 It seems that the basic principle has been accepted in Australia (see Castle Constructions v Fekala (2006) NSWCA133 although it is said that there is a tendency to see to question from the vantage point of causation. Shevill v Builders Licensing Board (1981)149 CLR 620 is cited as authority. 26 The main problem for the builder in all of this is that it was the builder who, having underquoted on the job, terminated the contract. And in this case (unlike "The Solholt") no amount was ever discussed as being a suitable renegotiated contract price to complete the works. If no amounts have been mentioned how can it be established that refusal was unreasonable? Had the owners refused to re-sign at a nominated figure materially lower than the actual cost to complete there could be some factual foundation for the builder's claim. However the evidence is a long way short of that. It is insufficient to assert that if the parties had negotiated they might have arrived at a particular figure. 27 I think similar considerations apply if the claim is viewed as a question of causation. 1. We detect no question of law arising from the Tribunal's findings or its analysis of the builder's argument. Nor are we satisfied that the Tribunal's decision in relation to this point was not fair and equitable or against the weight of evidence. The owners failing to enter into negotiations with the builder for a further contract, in circumstances where the builder had purported to terminate the contract, and where no sum was proposed as the basis of a new contract, was not commercially unreasonable. Nor does the owners' conduct give rise to a finding that they had failed to take reasonable steps to mitigate loss, or a finding that they had caused their own loss. 2. We note that in the Amended Notice of Appeal, the builder submitted that that: …. [T]he Member found that the reason the Appellant repudiated the contract was that it had "underquoted for the job". There was no evidence that to that effect and no such finding was made by Senior Member Goldstein in his determination on liability dated 18 March 2016. 1. In relation to this, we note first that the builder's Counsel conceded at the hearing on 30 August 2017 that the contract price was underquoted. In any event, on this point, the Tribunal's reasons for decision state at [26]: 26 The main problem for the builder in all of this is that it was the builder who, having underquoted on the job, terminated the contract. 1. Contrary to the builder's submission, the Tribunal does not state that the builder terminated the contract because it had underquoted for the job. In any event, even if the comment could be interpreted in such a manner, it was clearly an obiter dictum. The Tribunal in HB 14/53291 (the decision of Senior Member Goldstein) found that the builder had repudiated the contract. The fact of, and reasons for, the repudiation were not at issue in the proceedings before the Tribunal in this matter. The Tribunal's comment about the builder having underquoted had no effect on its findings on the issue of the damages to the owners for the increased cost of completing incomplete work under the contract, nor on the amount the owners had overpaid the builder under the contract, which were the salient issues for determination by the Tribunal. 2. The builder has not established any question of law in the Tribunal's conclusions concerning mitigation and causation of loss. Nor are the Tribunal's findings in this regard not fair and equitable or against the weight of evidence. The Tribunal noted (at para [8] of the reasons) that there had been a joint expert report where the experts had agreed on the cost to complete the work by the owners as owner/builders and agreed upon the amount of overpayments to the builder under the contract prior to its discharge. 3. In such circumstances, we are not satisfied that the decision was not fair and equitable, or against the weight of evidence under cl 12 of Schedule 4 of the NCAT Act so that leave to appeal other than on a question of law should be granted. In particular, in light of the joint expert report and the findings that had been made in the builder's proceedings in HB 14/53291 regarding the builder's repudiation of the contract, we are not satisfied that the builder has established the evidence in its totality preponderates so strongly against the findings of the Member that the decision should be overturned: Anderson v Armitage [2015] NSWCATAP 72 at [54]-[58] and the principles discussed therein. Conclusion 1. The builder has not established a question of law in relation to any of the grounds of appeal, or that the Tribunal's decision is not fair and equitable or against the weight of evidence 2. Leave to appeal is accordingly refused, the appeal is dismissed and the stay order made on 22 March 2017 is lifted. Costs 1. The parties did not make submissions regarding the costs of the appeal. This is an appeal in which cl 38A of the Civil and Administrative Tribunal Rules 2014 applies. The Appeal Panel does not have to find special circumstances to make an order for costs. In the ordinary course of events, costs would follow the event. This is subject to the submissions of the parties. We have therefore made orders for the filing and service of any application for costs and related submissions. ********** ​ I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 December 2017