Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Champion Homes Pty Ltd v Guirgis [2018] NSWCATAP 54 Hearing dates: 12 February 2018 Date of orders: 27 February 2018 Decision date: 27 February 2018 Jurisdiction: Appeal Panel Before: M Harrowell, Principal Member R Titterton, Principal Member Decision: (1) Leave to appeal is granted and the appeal is allowed. (2) Orders 1 (a), (b), (c) and (d) and order 2 made 8 December 2017 in application HB 17/09553 are set aside. (3) In lieu thereof the following orders are made in application HB 17/09553: 2. The application to set aside summonses addressed to the National Australia Bank, the Australia and New Zealand Banking Group Ltd, Richard Ataalla of Richard Ataalla Financial Services and Vow Financial Group Pty Ltd is dismissed. 3. Subject to any claim for privilege, access is granted to the parties to inspect the documents produced by the persons and entities in order 2. 4. Each party is to pay its own costs of the application. (4) Subject to order 5, the appellant's costs of the appeal are to be the appellant's costs in the cause. (5) If either party seeks a different costs order to that in order (4), the following directions apply: (a) The applicant for costs (costs applicant) must file and serve any cost application, including submissions and any evidence in support, within 7 days of the date of these orders. (b) The respondent to the costs application is to file and serve any submissions and evidence in reply within 14 days from the date of these orders. (c) The costs applicant is to file any submissions in reply within 21 days from the date of these orders. (d) Any submissions are to include submissions on the issue of whether an order should be made pursuant to s 50(2) of the Civil and Administrative Tribunal Act dispensing with a hearing of the costs application. (e) In the event an application is made pursuant to order 5, order 4 shall cease to have effect. Catchwords: PRACTICE AND PROCEDURE – Interlocutory decision - leave to appeal - relevance of cl 12 of Sch 4 of the Civil and Administrative Tribunal Act 2013 - need to show substantial miscarriage of justice - applicable principles to grant of leave. SUMMONS - application to set aside - applicable principles - need to identify issues in dispute - apparent relevance - "throw light on" issues in dispute - unduly onerous - oppressive. COSTS - general discretion - partial success in application. Legislation Cited: Civil and Administrative Tribunal Act, 2013, s 36(1) and (3), cl 12 of Sch 4 Civil and Administrative Tribunal Rules, 2014, r 38, r 38A Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; [1981] HCA 39 BHM v BHN & Ors [2014] NSWCATAP 26 BHP Billiton Ltd v Dunning [2013] NSWCA 421 Collins v Urban [2014] NSWCATAP 17 Commissioner of Railways v Small (1938) 38 SR (NSW) 564; 55 WN (NSW) 215 CPJ v University of Newcastle [2017] NSWCATAD 35 Coulter v R (1988) 164 CLR 350; [1988] HCA 3 Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 Eltran Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 195 Ex parte Bucknell (1936) 56 CLR 221 Fried v National Australia Bank Ltd [2000] FCA 911 In re Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318 Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] 104 FCR 564 Johnston v Department of Education and Training (GD) [2007] NSWADTAP 6 Liristis v Gadelrabb [2009] NSWSC 441 Minogue v Williams [2000] FCA 125 Oshlack v Richmond River Council 193 CLR 72; [1998] HCA 11 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21 Thompson v Chapman [2016] NSWCATAP 6 Tony Azzi Automobiles Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 283 Texts Cited: Nil Category: Principal judgment Parties: Champion Homes Pty Ltd (Appellant) Merial Guirgis (Respondent) Representation: Counsel: C Stomo (Appellant) T Flaherty (Respondent) Solicitors: Carneys Lawyers (Appellant) Holding Redlich (Respondent) File Number(s): AP 17/54145 Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 8 December 2017 Before: J Ringrose, General Member File Number(s): HB 17/09553 Decision under appeal reasons for decision Introduction 1. This is an appeal from an interlocutory decision in which the Consumer and Commercial Division of the Civil and Administrative Tribunal (the Tribunal) set aside five summonses issued at the request of the appellant (builder) (the Decision). The Decision was made 8 December 2017. 2. The substantive proceedings in which the Decision was made relate to disputes concerning a contract for residential building works between the builder and the respondent (homeowner). 3. The builder sought summonses to be issued to various persons. Relevantly, four of the summonses required documents to be produced by the National Australia Bank (NAB), the Australia and New Zealand Banking Group Ltd (ANZ) and financial services providers, Richard Ataalla of Richard Ataalla Financial Services and Vow Financial Group Pty Ltd. These documents related to the financial position of the homeowner and her ability to fund the building works. A fifth summons required documents to be produced by the homeowner concerning medical and working history records relating to her. 4. The homeowner successfully applied to set aside all the summonses. 5. This appeal only relates to the decision to set aside the four summonses seeking financial information of the homeowner from third parties and the decision in respect of costs of the set aside application awarded by the Tribunal in favour of the homeowner. 6. The proceedings in which the summonses were issued were home building proceedings HB 17/09553. In those proceedings, the applicant was the homeowner and the respondent was builder. In her application, the homeowner seeks orders that she be relieved from paying to the builder the sum of $211,362.40. In addition, she claimed damages for defective work and damages for incomplete work. 7. There are related proceedings brought earlier in time by the builder against the homeowner, application HB 16/55486. In those proceedings, the builder asserted that the contract had been repudiated by the homeowner following the builder suspending the works as permitted by the contract. The builder claims that it accepted the repudiation and had terminated the contract. The builder claims an amount of $246,377.31, presumably by way of damages, including an amount of $26,675.00 said to represent a price increase which the builder says it was entitled to by reason, inter alia, of the homeowner's failure "to have available funds to comply with the contractual payments". 8. Neither claims have been finally determined. 9. The appeal proceedings were listed for call over on 18 January 2018. Directions were made for the hearing of the appeal, and the matter was fixed for hearing on 12 February 2018. At that time, the proceedings at first instance were fixed for a three-day hearing and therefore some urgency attached to the present appeal, the documents sought by the summonses said to be required by the builder for the purpose of that hearing. That hearing has subsequently been vacated and the matter is yet to be re-fixed for final hearing. Consequently, the urgency originally attached to this appeal has passed. Grounds of Appeal, submissions and hearing of the appeal 1. The Notice of Appeal was filed on 22 December 2017. The appeal was lodged in time. 2. The builder sought leave to appeal. In doing so it relied on cl 12 of Sch 4 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) and sought to establish that it may have suffered a substantial miscarriage of justice. We will return to this issue below. 3. The matters which the builder relied on in its Notice of Appeal were: 1. The Tribunal's decision "fails to allow the Builder to properly run its case and thus denies the Builder to put its case (sic) properly to the Tribunal": [6A]; 2. "A party before the Tribunal should expect that the rules of natural justice and the importance of a just resolution be impeded (sic) by procedural considerations and thus expect to be able to put all material before the Tribunal": [6A]; 3. The Tribunal failed to consider that the documents sought "went to the veracity of the letter of the Homeowner's ability to pay and not to the Homeowner's credit". That is, the ability to pay was a precondition to starting work and "whether the Builder could pass on the price increase": [6B 1]; 4. The test to be applied in determining whether the summons should be set aside is whether the request for production is one of "legitimate forensic purpose". The Tribunal wrongly prevented production "on grounds of hearing time on cross examination": [6B 2, 3]; 5. The Tribunal erred in not having access to all evidence, the Tribunal files being incomplete and the Tribunal "could not follow the discussion of the evidence in respect of whether the Homeowner admit the contractual preconditions (namely documents in respect of the Homeowner's financing)"; [6B 4]; 6. The Tribunal erred in its decision in respect of costs in not having regard to the fact that the homeowner "withdrew any suggestion that her health was a factor to be considered under her claim pursuant to the Contract Review Act". In this regard, the builder said it had been put to unnecessary expense and did not press its claim in connection with the summons issued to the homeowner having regard to "a key admission on the day"; [6B 5]; 7. The Tribunal erred in not hearing submissions on costs and if the Builder is to lose, the proper order was that costs should be "in the cause" and the builder should not have to pay costs in respect of the summons issued to the homeowner: [6B 6]. 1. The homeowner filed a Reply to Appeal dated 16 January 2018. 2. The Reply stated that various grounds of appeal were not properly formulated. However, the short point made in the Reply was that the Tribunal correctly applied the relevant law in concluding at [38] that the builder had not demonstrated that the documents sought in respect of the financial affairs were relevant to a fact in issue. Insofar as the builder asserted it had been denied procedural fairness, the homeowner said that the builder failed to specify how this occurred. In respect of the order for costs, the homeowner said that despite the homeowner's submissions at pars [22] and [23], the builder pressed the summonses addressed to the homeowner and that the Tribunal ruled on this issue. 3. The parties provided written and oral submissions in respect of the appeal. In addition, the parties provided an agreed bundle of documents containing the Points of Claim and Points of Defence filed in the builder's application HB 16/55486. However, the Appeal Panel was not provided with the points of claim and points of defence in the homeowner's application HB 17/09553. 4. In its submissions, the builder set out a history of the building work and the circumstances in which the contract had been terminated. The builder referred to the evidence filed by the homeowner concerning obtaining finance for the building work and correspondence which had been exchanged between the parties. The builder also referred to various correspondence between the parties during the course of the proceedings by which requests for documents were made. 5. Inter alia, the builder explained: 1. There was an obligation on the homeowner under the building contract to provide written advice from its financier that there was sufficient funding to pay the contract price; 2. That it had suspended the works under cl 32 of the building contract, due to non-payment or progress claims; 3. The homeowner had wrongly purported to terminate the building contract following the suspension and thereby repudiated the building contract; and 4. The builder had accepted the homeowner's repudiation and terminated the building contract. 1. Having set out what occurred in respect of the hearing of the application to set aside the summonses, the builder detailed various errors which it said the Tribunal had made in reaching its Decision. In doing so, the builder made the following submissions: 1. The documents sought will provide evidence that "will establish the provenance of the 9 September 2015 letter", this letter being from the National Australia Bank confirming the availability of funds (NAB Funding Letter), the obligation to provide this letter said to arise under cl 4 of the building contract, the subject of the dispute; 2. While the rules of evidence do not apply, the summonses should not have been set aside if the documents sought "affects the veracity of the evidence"; 3. The fact that the documents sought might be relevant to the issue of credit does not make the summonses liable to be set aside. The builder referred to Liristis v Gadelrabb [2009] NSWSC 441. The builder continued that the homeowner's "knowledge of the status of the loan as at 7 October 2015 is of material importance because the price escalation which is claimed by the builder is dependent on her providing a letter from her bank evidencing a capacity to pay. If the letter is false or misleading and that information was so, especially, to her knowledge, the acceptance by the builder is nugatory". In this regard, as explained in oral submissions, the builder was referring to the obligations under cl 4 and special conditions cl 44.3 and 43.4 of the building contract, the entitlement to a "contract price adjustment of 3.75%" in the event the commencement of building works was delayed 7 October 2015 and the issue to and non-payment by the homeowner of Contract Price Adjustment No 1 dated 1 September 2016 which became the subject of a Notice of Suspension of the building work; 4. The Tribunal applied an incorrect test when examining the likely effect of any delay or expense in the proceedings and failed to consider any effect on the "administration of justice". The builder also said the provision of documents would likely reduce cross examination time "if the provenance of the letter can be proven by the documents themselves"; 5. The Tribunal incorrectly applied the decision of Weinberg J in Fried v National Australia Bank Ltd [2000] FCA 91, that decision being authority for the proposition that a subpoena seeking documents solely to impeach credit may be set aside if it is "little more than (trawling) for documents". In the present case, the builder said that it was seeking production of "specific documents going to the specific issues associated with a fact which is directly relevant to the builder's claim which is 'an identified' and 'legitimate forensic purpose'"; 6. Finally, the builder said that had it known the true position that the homeowner had not complied with their obligations under cl 4 of the contract, the builder would have been entitled to terminate the contract under cl 4.2. In this regard the builder said it "would have had to know the falsity of the latter (sic) and with the misleading nature of the letter in order to proceed with that course, given the serious nature of termination". Consequently, the builder submitted that it "would be all could be deprived of a valuable right to pursue both as an alternative cause for termination of the contract or to prove his claim". 1. The Appeal Panel asked the parties to identify what were the real issues in dispute in the proceedings. During these exchanges, the builder's Counsel said that an amended claim had been prepared but had not been served. Counsel also confirmed that no leave to amend the builder's claim had been sought, let alone granted. 2. In oral submissions, the builder said that the contract had been proceeding on the basis the homeowner could meet her financial obligations and there was a fundamental issue about the homeowner's ability to pay. The builder also said it was seeking to obtain documents relating to "hearsay" evidence in the homeowner's affidavit, a matter which the Tribunal did not address in its decision. In making this submission, the builder said there was an issue of misleading conduct although Counsel made clear that it was not asserting that any documents provided by the homeowner were fraudulent. 3. In response, the homeowner said that leave to appeal should not be granted. As with the builder, the homeowner referred to cl 12 of Sch 4 of the NCAT Act and the decision of the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 and the principles applicable to the grant of leave referred to. 4. In relation to the grounds of appeal, the submissions of the homeowner can be summarised as follows: 1. The issue of whether the builder was entitled to terminate the contract under cl 4.2 had not been pleaded. This, the homeowners said, was for good reason being that any right the builder may have had to terminate the building contract under this clause ceased once physical work commenced; 2. The builder has failed to establish that the documents sought are relevant to a fact in issue in the proceedings. In this regard the homeowner says that the builder's claim "is based upon the failure of the (homeowner) to pay monies allegedly paid under the Contract, not an inability to pay. This is why the summonses have no forensic purpose, other than a trawling exercise in an attempt to attack the credit of the (homeowner)"; 3. Insofar as the builder seeks on appeal to limit the scope of production, this was not an issue raised in the original application for the Tribunal; 4. In short, there is no issue raised in the proceedings that would make relevant the documents sought to be produced in the summonses and the Tribunal was correct to set aside the summonses. 1. In response, the builder said that it had prepared amended points of claim which were as yet undelivered. No suggestion was made that leave had been granted by the Tribunal to permit such an amendment. 2. The parties also made submissions about costs. 3. In relation to this issue, the builder said it had been denied an opportunity to provide submissions about what, if any, costs order should be made. In this regard, the builder pointed to the fact that having regard to concessions made by the homeowner concerning her health and expertise, the builder "quite properly did not press these summons". Consequently, the proper order should have been no order for costs or a hearing should have been permitted. 4. In reply, the homeowners said there was a general discretion to award costs under r 38 of the Civil and Administrative Tribunal Rules 2014 (Rules). Having regard to the applicable authorities such as Oshlack v Richmond River Council 193 CLR 72; [1998] HCA 11, the homeowner as the successful party should have its costs. Further, insofar as any concession was made by the homeowner concerning her medical and work history, this was made prior to the hearing. However, the builder continued to press its application for access to the documents required from the homeowner on this matter. 5. During the course of the hearing and having regard to the fact that the original proceedings were no longer listed for hearing, the Appeal Panel was concerned that there was a failure to identify precisely what issues were to be determined at the final hearing. In this regard, the parties were requested on several occasions to identify the actual issues for determination and where the Tribunal set out those issues in its Decision to set aside a summons. The parties referred the Appeal Panel to those parts of the Decision where the Tribunal summarised each party's contentions. In addition, the respondent identified [30] of the Decision and [35] was also identified as recording the issues in dispute. 6. In light of the potential for amendment of the builder's claim, the Appeal Panel adjourned the hearing for a short period of time for the purpose of permitting the parties to discuss these matters and whether the appeal could otherwise be resolved. This attempt proved unsuccessful. 7. Accordingly, the Appeal Panel was left to determine the appeal on the basis of the material which had been provided. Consideration 1. This appeal relates to an interlocutory decision (to set aside the summonses) and an ancillary decision (to award the homeowner costs): see definition (c) of "interlocutory decision" and "ancillary decision", s 4(1) NCAT Act. Consequently, leave to appeal is required to appeal the interlocutory decision under s 80(2)(a) of the NCAT Act and leave to appeal the ancillary decision is required other than in respect of a question of law under s 80(2)(b) of the NCAT Act. Principles applicable to grant of leave to appeal interlocutory decisions 1. The parties submitted cl 12 of Sch 4 applies to the appeal in respect of the interlocutory decision as well as the ancillary decision, and that the builder must establish it may have suffered a substantial miscarriage of justice. We disagree. Clause 12 only applies to the appeal in respect of the ancillary decision, the right to appeal an ancillary decision being regulated by s 80(2)(b) of the NCAT Act. 2. The introductory words of cl 12(1) provide: An Appeal Panel may grant leave under s 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice …. 1. It is clear that from the text that this requirement in respect of leave only applies to an appeal under s 80(2)(b), that is, an appeal for which leave is required other than an interlocutory appeal. There is no "lacuna" and no basis to conclude cl 12 applies to an appeal under s 80(2)(a) of the NCAT Act. 2. Otherwise, there is no specification in the NCAT Act as to the circumstances in which leave should be granted in respect of interlocutory decisions. Rather, there is a discretion to be exercised and general principles apply to the grant of leave to appeal such decisions. 3. As stated in various decisions of the Tribunal and its predecessor, the Administrative Decisions Tribunal, the principles to be applied are to be derived from the principles applicable to leave applications in courts: see for instance, Johnston v Department of Education and Training (GD) [2007] NSWADTAP 6 and BHM v BHN & Ors [2014] NSWCATAP 26. These principles include the following: 1. It is unnecessary and unwise to lay down rigid rules of practice or exhaustive criteria governing the grant of leave to appeal: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 175; [1981] HCA 39; 2. However, the requirement for leave is a filter restricting access to the appeal process: Coulter v R (1988) 164 CLR 350; [1988] HCA 3 at 359 per Deane and Gaudron JJ; 3. Leave should only be granted where there are substantial reasons to allow an appellate review: Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] 104 FCR 564; 4. Circumstances justifying leave may be an error of principle resulting in substantial injustice: Minogue v Williams [2000] FCA 125. However, these concepts may not be cumulative; 5. There is a difference between the exercise of a discretion concerning a matter of practice and procedure and an exercise of a discretion that determines substantive rights: Adam P Brown per Aickin, Wilson and Brennan JJ at 177 citing with approval Jordan CJ in In re Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318 at 323; 6. Where an interlocutory decision effectively determines the substantive rights of the parties, that may be a significant factor in favour of granting leave to appeal: Eltran Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 195 per Spender J at [14]-[15], referring to Ex parte Bucknell (1936) 56 CLR 221 at 225-6; 7. In connection with a matter of practice and procedure, restraint should be applied in reviewing such decisions, especially if an application for leave is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21], referring to Adam P Brown and in In re Will of FB Gilbert (dec); 8. Leave should not be granted unless a substantial injustice would result and the decision is attended with sufficient doubt to warrant it being reconsidered by the appeal body. What is sufficient is dependent on the particular case: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-9; 9. Lastly, subject to the above, the matters set out in Collins at [84 (1)-(2)] are also relevant to the exercise of a discretion to grant leave. Principles applicable to the application to set aside a summons 1. In the present case, the appeal is in respect of a decision to set aside summonses said to be issued for an improper forensic purpose. As explained above, this is an interlocutory decision. 2. In CPJ v University of Newcastle [2017] NSWCATAD 35], Deputy President Hennessy LCM explained the circumstances in which a summons may properly be issued and considerations relevant to setting it aside. At [10]-[13] the Deputy President said: 10. It is an abuse of process to issue a summons in relation to documents which have no "apparent relevance" to the issues in dispute: Portal Software v Bodsworth [2005] NSWSC 1115 Brereton J at [22] and [23]; Becwell Legal Services Pty Ltd v McMaster [2011] FCA 1501 at [26]. It is also impermissible for a party to use a summons for "fishing". The author Bernard Cairns describes "fishing" as "where a party attempts by way of a subpoena to find out facts, matters and circumstances which might enable the party to advance a case of which there is no present knowledge": Bernard Cairns, Australian Civil Procedure, Thomson Reuters (10th ed 2014) at 585. 11. The question is not whether the documents would be admissible in evidence or will "definitely advance the case of the parties" issuing the summons: Portal Software v Bodsworth [2005] NSWSC 1115 Brereton J at [25]. The test is whether the documents sought under the summons have apparent, as distinct from actual, relevance to the case: National Employers' Mutual General Assn Ltd v Waind [1978] 1 NSWLR 372; Casley-Smith v District Council of Stirling (1989) 51 SASR 447. 12. In a recent Supreme Court case, Brereton J summarised the principle as being "… that there is a reasonable basis for supposing that the material called for will likely add, in the end, in some way or another, to the relevant evidence in the case. This reflects the notions that the documents relate to, throw light on or are sufficiently relevant to the dispute; that they "appear relevant in the sense they relate to the subject matter of the proceedings"; or that they could possibly throw light on the issues in the case": Sharpe v Grobbel [2017] NSWSC 1065 at [35] (footnotes deleted.) Identification of issues in the proceedings 13. To determine whether the summons should be set aside I need to identify the relevant issues in the proceedings… 1. While it is inappropriate to seek to define all circumstances in which a summons is liable to be set aside, a summons may also be set aside where it is oppressive because: 1. It imposes an unduly onerous obligation upon a person to collect and produce documents: see Commissioner of Railways v Small (1938) 38 SR (NSW) 564; 55 WN (NSW) 215; 2. It involves the production of numerous documents and would unduly impinge upon a party's preparation for conduct of, the proceedings: Tony Azzi Automobiles Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 283 at [8]. Determination of application for leave to appeal order setting aside summons 1. The parties do not appear to disagree about the applicable principles. Rather, the builder's primary contention is that the summonses should not have been set aside as there was a legitimate forensic purpose in their issue. 2. The summonses were addressed to two brokers and two banks with whom the homeowner had apparently dealt in obtaining finance for the building work. While each of the summonses was in slightly different terms, the following form of summons sent to the National Australia Bank sets out the general scope of the documents sought: A copy of all documents held by NAB in respect of: 1. Merial Guirgis's loan file (including the application and approval) for a loan with ANZ for the purpose of financing building works at ### … 2. The bank confirming that Merial Guirgis has satisfied of all bank requirements to begin draw downs on the loan; and 3. The transfer of such loan or refinancing of the loan between lenders. If there are multiple loan applications, approvals and or loans, please provide copies of such. 1. For present purposes, there is no relevant difference between the summonses. 2. As indicated above, the builder was asked to identify the issues to which the summonses were said to be relevant. Having regard to the fact that the proceedings had, until recently, been fixed for hearing and that the parties had filed points of claim and points of defence, the Appeal Panel received a somewhat unsatisfactory response. This response included a suggestion by the builder that it was going to amend its claim and had prepared an, as yet, undelivered amended points of claim and/or points of defence to the homeowner's claim. 3. In relation to the commencement of the contract period and the relevance of the documents sought, the language used in the submissions of the builder was that it wished to ascertain the "provenance" and/ or the "veracity" of the letter dated NAB Funding Letter provided by the homeowner in purported satisfaction of its obligation under cl 4.1(d) of the building contract. This was said to relate to the entitlement of the builder to rely on the clause to adjust the contract price because the contract period for the works did not commence until the homeowner had satisfied its obligations and in fact had available funds. 4. The builder also suggested that the documents sought went to the ability of the homeowner to pay progress claims, the builder having lawfully suspended the work for non-payment and subsequently accepting the (alleged) repudiatory conduct of the homeowner who treated the suspension as a wrongful repudiation and terminated the contract. It appeared from the submissions made to the Appeal Panel that the builder was asserting the documents approving the homeowner's finance were relevant to the issue of whether or not the homeowner could pay monies due under the building contract. 5. The homeowner's response was that the issues identified by the builder were not issues in the proceedings. At best, the homeowner said, they related to proposed amended points of claim and/or points of defence which had not been served and for which no leave had been given by the Tribunal. In these circumstances the documents were not shown to be relevant and the member was correct to conclude that the production of the purpose of cross examination was likely to lead to the unnecessary prolonging of the hearing. 6. As we indicated above, the Appeal Panel was only provided with the builder's points of claim and the homeowner's points of defence to that claim. In the builder's points of claim, the builder identified pars [9]-[14] as the paragraphs setting out the issue to which the summons related. In these paragraphs, the builder contends that it is entitled to increase the price of the contract sum by an amount of 3.75% if the building site was not handed over to the builder by 7 October 2015 (at [11]). The builder then says: 1. It "could not have been, and was not, handed the Site until completion of the retaining wall by the respondent in February 2016"; at [12]; and 2. The homeowner did not comply with all of her obligations by 7 October 2015, in particular the homeowner "failed to have available funds to comply with the contractual payments"; at [13 (b)]. 1. Otherwise, the Appeal Panel was not provided with the points of claim or points of defence in the homeowner's claim nor other documents in the nature of pleadings in which the builder or homeowner raised issues concerning the ability of the homeowner to pay amounts due under the building contract at the time the works were suspended or that the homeowner had allegedly repudiated the contract or breached the building contract because she was unable to make payments under the building contract at that time. In addition, we were not referred to any part of the transcript of the hearing at first instance where such issues were identified as being issues in the proceedings. The submissions made in the proceedings at first instance as recorded in the transcript appear to centre around whether the homeowner was "exactly truthful about her capability to pay" at the time when the NAB Funding Letter was provided to the builder: see for example the transcript at appeal bundle 48, tscpt p 14 line 5. 2. In this regard, the NAB Funding Letter is found in the Appeal Bundle at p 239. That letter was headed "Unconditional approval letter" and was in the following terms (formal parts omitted): Facility Type: NAB HomePlus Home Loan Variable Interest Rate 1- Int only Amount: $1,500,000.00 Lame Term: 30 yrs Thank you for your recent home loan application. We are pleased to confirm that it has been unconditionally approved. Where to from here? We will issue contracts based on the information provided. You need to be aware that although you have received formal approval, there are some situations that may impact finalisation of your loan. These include changes to your financial situation, the suitability of your security and any other aspects relevant to your application. If you have any questions, please contact your mortgage broker. 1. Of the NAB Funding Letter, the builder, through its Counsel, said to the Appeal Panel that it was not asserting the letter was fraudulent. Rather, the builder made submissions in terms of special condition 44 and to the effect that there was an obligation on the homeowner under the building contract to ensure she continuously had available to her funds sufficient to pay amounts due under the building contract. It was the homeowner's ability to pay that the builder said was a fundamental issue and, having regard to par [121] of the homeowner's affidavit in the proceedings sworn 8 June 2017 (Appeal Bundle [107]), the builder was properly entitled to seek documents to cross-examine the homeowner concerning her ability to pay. In this regard, the homeowner says at [121] of her affidavit: When Mr Malesev [a representative of the builder] began to chase me for payment of the home warranty insurance invoice in about October or November 2015, I provided the invoice to the NAB, however, the bank stalled and when I follow it up I was told by the bank's representative to contact my mortgage broker. I spoke to my mortgage broker … By telephone. He said to me words to the effect of: "The bank wants more documents, including your 2015 group certificate, because the loan has expired." 1. It would seem from the paragraphs of the homeowner's affidavit following [121] that she subsequently obtained loan approval from the ANZ Bank, having paid the home warranty insurance invoice from her own funds: at [125]-[126]. That is, finance was provided by ANZ, not NAB. 2. It is against this background and in the absence of an agreed statement of issues that this appeal must be determined. 3. However, in doing so, we should also note that both parties in their submissions to the Appeal Panel appeared to rely upon those parts of the Tribunal's reasons recording the submissions which they made at the original hearing as detailing the issues in dispute. 4. In connection with the summonses to the financial institutions and the brokers, the issues raised by Mr Lane (the solicitor for the builder at the original hearing) were recorded by the Tribunal under the heading "Respondent's Submissions". There, the Tribunal said at [10] and following: 10. It was noted that cl 4(d) of the building contract required the home owner to provide proof of evidence of the availability of funds to the value of the contract price and authority from the bank to commence as a pre-condition to commencement of the works. A certificate of this nature was provided from the National Australia Bank on 9 September 2015. 11. Reference was made to Ms Guirgis refinancing through the ANZ bank and there is no doubt that a certificate was issued during the currency of the contract demonstrating her ability to pay money then owing. Although the information was slightly short of the money demanded it was issued from the ANZ bank and there is nothing to suggest that the balance could not have been obtained if required. 12. Mr Lane noted that the matter was brought to a head under the contract and Ms Guirgis failed to make progress payments when called upon. He claims that this gave rise to a suspension of building works on 18 November 2016 and he noted that there had been explanations provided for failure to pay in January 2016 when it was suggested that NAB had blocked payments until tax returns had been completed. 13. Mr Lane argued that the documents under summons go to the very issue of capacity to be able to pay as and when asked for in accordance with the terms of the contract. He claimed that her capacity to make payments was a condition of the building contract and was one of the central issues between the parties as to her credibility on this point. 1. The Tribunal also recorded submissions in reply from Mr Lane as follows: 16. In oral submissions Mr Lane argued that the summonses issued should be allowed to give the respondent the ability to test the evidence and that the question of relevance could be argued later at the Hearing. He submitted that the scope of the summonses was narrow and targeted to determine whether the criteria for the loan had been satisfied. He noted that the owner had a continuing obligation to satisfy the builder of her ability to pay pursuant to cl 5.2 of the contract although it would appear that there was only one request made in October 2015 when he claimed there was a suspicious reference to an attachment made 2014 while the actual attachment was a letter dated 9 September 2015. 1. In setting aside the summonses, the Tribunal found at [30]: In Raphael Ahn v Toppro Pty Ltd … Brereton J also noted that the fact that a manner is raised that an affidavit (sic) does not make a summons directed at related documents appropriate, it must still be directed at the substantive issue in dispute. In the case of Toppro the issue concerned the provision of documents which would provide a basis for suggesting a motive or consciousness of guilt which would in fact be relevant, not only to credit, but also go to a fact in issue. A comparison of that nature is not available in the present case as Mr Lane has suggested that the material should be available to enable the builder to determine whether it has been deceived or whether there were inconsistencies in the documents which could be tested. This does not establish a fact in issue but rather suggests that the documents are sought in an endeavour to pursue a case which is merely suspected against the applicant. 1. Having referred at [34] to s 36 of the NCAT Act (being that the guiding principle requiring the just, quick and cheap resolution of the real issues in dispute) and to the obligation on the Tribunal to observe the principles of natural justice, the Tribunal said at [35] and [38]: 35. Mr Jacobs, on behalf all the (homeowner), has submitted that the builder seeks to test apparent inconsistencies in the evidence whereas the real question in the case is whether the owner satisfied her obligations under the contract. This is a matter of law and the basis of cross examination can properly be regarded as purely for credit purposes. There is little doubt that the time of the Hearing would be increased if the legal representatives for the builder were permitted to cross-examine on the financial documents sought to be produced. … 38. It follows that the four summonses seeking financial records are to be set aside as the respondent has not established on the material that the documents are necessary to go to an issue in the proceedings as to an issue purely on credit. 1. In short, the Tribunal set aside the summonses because the Tribunal determined: 1. The real issue in dispute was whether the owner satisfied her obligations to provide finance; 2. This issue was a question of law; and 3. The documents sought relate solely to the issue of credit and their production and use in cross examination at the final hearing would likely extend the length of the hearing. 1. In our view, the Tribunal was incorrect to conclude in the circumstances of this case that the issues for determination only raised a question of law, that the documents were not relevant to a fact in issue and that the summonses only went to the issue of credit. We have reached that conclusion for the following reasons. 2. First, as we recorded above, particular 13(d) of the builder's points of claim expressly put in issue that the homeowner "failed to have available funds to comply with the contractual payments", that fact being asserted by the builder in its points of claim to exist as at 7 October 2015. 3. Secondly, the Tribunal recorded at [13] of the Decision that an issue identified by Mr Lane on behalf of the builder was whether the homeowner had the capacity to pay in accordance with the terms of contract, such an obligation being a condition of the contract. 4. While there may be an issue about whether the NAB Finance Letter, by its terms, was a document which met the requirements of cl 4.1(d) of the building contract, the builder has asserted as a matter of fact that the homeowner did not have available funds to comply with the contractual payments. 5. The homeowner submitted that this was irrelevant having regard to the terms of the building contract. While that might ultimately prove to be correct, the points of claim indicate there is a factual dispute and the documents sought by the summonses go to this fact and the point in time, if any, when the homeowner obtained and had finance available. 6. In this regard, although expressed in the terms of being "unconditional" the NAB Finance Letter suggests the approval is not unconditional because "there are some situations that may impact finalisation" of any loan. 7. Further, the evidence provided by the homeowner at [121] of her affidavit and following, provides evidence about when her loans were finally approved in a form so she could draw down the loans and pay progress payments. Presumably, this evidence has been provided by her to support her claim that she could pay progress payments as and when they fell due and that the builder had wrongly suspended work under the building contract. 8. It has not been suggested to the Appeal Panel that this material was not before the Tribunal when it made its decision concerning the summonses. 9. Prima facie, the documents sought are relevant to establish the fact of whether or not finance was available, and if so when the homeowner was able to draw down the loan to make payments under the contract. 10. In its decision, Tribunal did not explain why the homeowner's capacity to pay was not an issue in the proceedings and it would appear the Tribunal was in error in concluding the summonses sought documents relating solely to the question of credit. Should leave to appeal be granted? 1. The question that remains is whether, in these circumstances, leave to appeal should be granted. 2. Factors against the grant of leave to appeal include the following: 1. The builder was not able to succinctly identify the issues in dispute by reference to the points of claim and points of defence and that the Appeal Panel had not been provided with the points of claim and points of defence in respect of the homeowner's claim; 2. The appropriateness of the summonses may be affected by any amendment which the builder might make to its points of claim and/or its points of defence to the homeowners claim; 3. The issue raised is substantially one of practice and procedure, the builder being able to raise any issues concerning access to documents during the hearing should any issue arise from cross-examination of the homeowner. 4. The builder has not identified with any precision the exact facts it wishes to prove or what will be the legal consequence of those facts if proved. 5. The final hearing has been adjourned and any issues concerning production and access to documents should be resolved after any foreshadowed amendments have been made to the points of claim and points of defence. 1. Factors in favour of the grant of leave include the following: 1. Despite the NAB Finance Letter, the homeowner's letter suggests her original finance application had "expired", necessitating a second application to ANZ; 2. The availability of funding at particular points in time during the contract, may be relevant in determining whether the builder properly suspended the works, whether the homeowner was in breach of her obligations and whether there were circumstances, even if not known to at the time the builder purported to accept the homeowner's repudiation, which justified termination by the builder: see Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21; 3. The documents, the subject of the summonses, have apparently been produced to the Tribunal. Having regard to the submissions made by the parties during the course of the hearing at first instance and on appeal, the failure to resolve the issue of access now will likely lead to further applications for documents and/or summonses being issued. Such an outcome would be contrary to the guiding principle, namely the just, quick and cheap resolution of the real issues in dispute. 1. On balance, we have formed the view that leave to appeal should be granted. 2. On any view, by her evidence, the homeowner has raised the issue of when she secured finance and when she had had available to her loans which she could draw down to pay for the building work. This evidence appears to be put forward to demonstrate the homeowner was able to pay progress claims. The assertions made are matters about which the builder would ordinarily be entitled to cross-examine the homeowner. The nature and extent of the cross-examination is a matter to be determined by the Tribunal at the final hearing. To not allow access to the documents in circumstances where they have already been produced and the party producing them has, apparently, made no objection, would likely lead to further applications, costs and possibly delay. 3. Insofar as it transpires the documents contain relevant material adverse to the homeowner's case, access should be permitted. Insofar as the documents are irrelevant, or have little or no relevance on the real issues in dispute, no doubt the legal representatives of the parties will ensure that steps are taken to avoid any inappropriate cross-examination or undue protraction of the proceedings: see s 36(3) of the NCAT Act. 4. Accordingly, we propose to grant leave to appeal and set aside orders 1(a), (b), (c) and (d) of the orders made 8 December 2017. 5. In doing so, we should make clear that these types of applications of interlocutory decision should not be encouraged. 6. Further, this case is a reflection of the parties and their legal representatives not ensuring that the issues in dispute are clearly defined and/or not assisting the Tribunal in ensuring that there is a just, quick and cheap resolution of the real issues in dispute. Appeal in relation to costs 1. Having regard to the decision we have reached, it is appropriate to set aside the order for costs originally made by the Tribunal and make an alternative order. 2. The builder had submitted that we should, in any event, set aside that order because the Tribunal failed to take account of the fact that the summons to the homeowner became unnecessary because of a concession made by the homeowner concerning her medical and work history. The builder said that the Tribunal failed to weight this fact in its costs decision. 3. It seems clear to us that the builder did not withdraw its claim for access to the documents the subject of the summons addressed to Ms Guirgis. In these circumstances, the Tribunal was required to resolve this claim. It did so by dismissing the summons directed to Ms Guirgis, a matter not challenged on appeal. 4. Having regard to the decision we have reached in relation to the summonses concerning financial matters, in the absence of successfully challenging the summons addressed to Ms Guirgis, the builder is only partially successful in connection with the original application. 5. Accordingly, we have formed the view that each party should bear their own costs of the application before the Tribunal. Costs of appeal 1. The parties appear to agree that r 38 of the Rules applies to the appeal. Rule 38A makes r 38 applicable to the award of costs on appeal. This is because the amount claimed or in dispute is greater than $30,000. 2. In these circumstances, there is a general discretion to award costs: see eg Thompson v Chapman [2016] NSWCATAP 6 at [68] and following. 3. Our preliminary view is that the builder has been successful and a costs order should be made in its favour. However, having regard to the unsatisfactory state of the points of claim and points of defence, the potential for further amendments and the possibility of further changes to the issues in dispute, the appropriate order is that the builder's costs of the appeal should be the builder's costs in the cause in the proceedings at first instance. By this we mean that if the builder is ultimately successful in the proceedings before the Tribunal and has an order for costs made in its favour, it can recover the costs of the appeal. The homeowner will not be entitled to recover costs of the appeal in any event. Orders 1. The Appeal Panel makes the following orders: 1. Leave to appeal is granted and the appeal is allowed. 2. Orders 1 (a), (b), (c) and (d) and order 2 made 8 December 2017 in application HB 17/09553 are set aside. 3. In lieu thereof, the following orders are made in application HB 17/09553: 2. The application to set aside summonses addressed to the National Australia Bank, the Australia and New Zealand Banking Group Ltd, Richard Ataalla of Richard Ataalla Financial Services and Vow Financial Group Pty Ltd is dismissed. 3. Subject to any claim for privilege, access is granted to the parties to inspect the documents produced by the persons and entities in order 2. 4. Each party is to pay its own costs of the application. 1. Subject to order 5, the appellant's costs of the appeal are to be the appellant's costs in the cause. 2. If either party seeks a different costs order to that in order (4), the following directions apply: 1. The applicant for costs (the costs' applicant) must file and serve any costs application, including submissions and any evidence in support, within 7 days of the date of these orders. 2. The respondent to the costs application is to file and serve any submissions and evidence in response within 14 days of the date of these orders. 3. The costs' applicant is to file any submissions in reply within 21 days from the date of these orders. 4. Any submissions are to include submissions on the issue of whether an order should be made pursuant to s 50(2) of the Civil and Administrative Tribunal Act, dispensing with a hearing of the costs application. 5. In the event an application is made pursuant to order 5, order 4 shall cease to have effect. ********** ​ 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: 27 February 2018