Islam v Javam [2018] NSWSC 1430

Supreme Court New South Wales

Medium Neutral Citation: Islam v Javam [2018] NSWSC 1430 Hearing dates: 18 September 2018 Date of orders: 21 September 2018 Decision date: 21 September 2018 Jurisdiction: Common Law Before: Harrison J Decision: The matter is listed before me for directions on Monday 22 October 2018. Catchwords: CIVIL PROCEDURE – appeal from Local Court – application for leave to appeal – application for leave to appeal out of time – where amount in issue is disproportionate to the costs incurred – where appeal is arguably not in the best interests of the parties Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), Sch 4 cl 6(1) Civil Procedure Act 2005 (NSW), Pt 6 Div 1 Home Building Act 1989 (NSW), ss 48A, 48L Uniform Civil Procedure Rules 2005 (NSW), rr 18.4, 50.12 Category: Principal judgment Parties: Sirajul Islam (Plaintiff) Abdollah Javam (Defendant) Representation: Solicitors: Somerville Legal (Plaintiff) Doyles Construction Lawyers (Defendant) File Number(s): 2018/145618 Publication restriction: Nil

Judgment 1. HIS HONOUR: This case raises several interesting and difficult issues. None has only one obviously correct answer, so that neither party is certain of success. That is to be contrasted with something that is regrettably clear beyond any doubt at all: that the amount in issue between the parties is so small as to be disproportionate to the legal costs that have been generated thus far, and to the costs which are menacingly certain to be incurred in the future. The continuation of this litigation on its present trajectory is therefore potentially neither in the public interest nor in the best interests of the parties. That statement quite properly deserves some elaboration. 2. On 27 March 2017, the plaintiff filed an amended statement of claim in the Local Court. He made two claims. The first claim is that on 12 November 2014, he lent the defendant $20,000, repayable on 31 May 2016. The second claim is that the defendant agreed to construct a house for him for an original contract price of $340,000 plus variations and that he overpaid the defendant $16,096 which he now claims back with interest. The plaintiff's total claim is accordingly for the modest sum of $36,096. 3. The defendant filed a defence on 2 May 2017. He denied that the plaintiff lent him $20,000. Instead he maintained that he and the plaintiff entered into an agreement on or about October 2014 whereby the plaintiff would provide him with $20,000 "as cost contingency for the construction of the plaintiff's home". The defendant went on to allege that the $20,000 was "only repayable to the plaintiff if there were no variations to the [building] contract or if the final cost of construction did not exceed the provisional allowance" in it. The defendant also filed a cross-claim on the same day claiming $111,450 alleged to be monies that remain owing to him by the plaintiff for the building work he carried out. 4. When the proceedings came before Magistrate Price on 29 August 2017, the defendant, who had up until then been legally unrepresented, sought an adjournment to 6 November 2017. On that day, the now legally represented defendant applied to have the proceedings transferred to the NSW Civil and Administrative Tribunal pursuant to s 48L of the Home Building Act 1989. That section relevantly provides as follows: "48L Tribunal to be chiefly responsible for resolving building claims (1) This section applies if a person starts any proceedings in or before any court in respect of a building claim and the building claim is one that could be heard by the Tribunal under this Division. (2) If a defendant in proceedings to which this section applies makes an application for the proceedings to be transferred, the proceedings must be transferred to the Tribunal in accordance with the regulations and are to continue before the Tribunal as if they had been instituted there." 1. For some reason that is not explained to me, and which appears on its face, having regard to all of the issues raised in both the plaintiff's amended statement of claim and the specific reference to the $20,000 in the defendant's cross-claim, to be inexplicable, the matter was eventually listed in the Tribunal as two separate claims, being the plaintiff's claim against the defendant and the defendant's cross-claim against the plaintiff. 2. On 23 January 2018, the parties appeared by telephone at the first directions hearing before the Tribunal. In a way that is difficult to understand, a question arose in relation to the Tribunal's jurisdiction to resolve all the issues in dispute between the parties. By way of explanation, somebody would appear to have been concerned that the Tribunal lacked jurisdiction to hear the plaintiff's claim for his $20,000 pleaded as a contract of loan. The really silly part of that so-called dispute resides in the fact that the defendant had admitted the payment of the $20,000 as part of the building agreement, so that the plaintiff would have been unarguably entitled to a credit for that amount in the final wash up of the competing contentions arising on the defendant's cross-claim. 3. Lest there be any doubt about that last mentioned fact, I should interrupt this somewhat tragic narrative to indicate that when the matter came before me, Mr Doyle, who appeared for the defendant, explicitly conceded after some discussion with me that the plaintiff was entitled to a credit of $20,000 in the cross-claim litigation, howsoever its original payment by the plaintiff to the defendant might ultimately be characterised. The following excerpts from the transcript make this crystal clear: "HIS HONOUR: Putting aside the matters that you have just referred to, Mr Doyle, you agree that Mr Hemsworth starts $20,000 in front on the building dispute, don't you? DOYLE: He gets the advance. He starts $20,000 in advance because we have received the money and any claims we have against it we will deducted off it, the balance he gets it, and that's the essence of the defence… HIS HONOUR: At all events, if the building matter were determined in the Local Court Mr Hemsworth's client starts $20,000 ahead. DOYLE: As they do in the Tribunal. HIS HONOUR: I will start again. I meant to say if the building dispute is determined in either the Local Court or the Tribunal, Mr Hemsworth's client starts $20,000 ahead. DOYLE: He starts $20,000 ahead whether he wins on his letters or any other evidence or whatever. He starts $20,000 ahead and then there's a question of what goes from there and that's in dispute between the parties and that's an argument that should be put to the Tribunal and determined. HIS HONOUR: That was what was under my skin when I walked in the door at 10.00 o'clock. DOYLE: And it should be obvious to everyone who reads this decision the Tribunal has said it's already been determined before it got here that we've got jurisdiction, that this is the proper cause for claim. HIS HONOUR: Your concession that Mr Hemsworth starts $20,000 ahead has got nothing to do with jurisdiction. DOYLE: No. HIS HONOUR: It's a concession you make. DOYLE: Irrespective of jurisdiction, and was made in the defence in the sense that it starts it there." 1. However, for reasons that appear clearly to be related to the somewhat unfortunate remarks of the Tribunal Member, the plaintiff became concerned that the transfer of the proceedings to the Tribunal had had the effect that his claim for the $20,000 could not be determined there. Those remarks included the suggestion that "… a significant part of the home owner's claim relates to an allegation of an unpaid personal loan of $20,000, paid to the builder in his personal capacity. Clearly this is not a consumer claim for the purposes of the Fair Trading Act and, on its face, not a frank and obvious claim under the Home Building Act." 1. It is a pity that more attention was not paid at the time to the defendant's characterisation of that sum as a cost contingency under the building contract. Be that as it may the plaintiff, obviously but in my view erroneously, concerned about this perceived jurisdictional hiatus, proceeded to file an application in the Tribunal on 6 March 2018 to transfer the proceedings back to the Local Court pursuant to Sch 4, cl 6(1) of the Civil and Administrative Tribunal Act 2013. On 23 April 2018, the Tribunal dismissed the plaintiff's application upon the basis that the Local Court had conclusively determined that the Tribunal was the correct forum to determine both claims: see, for example, s 48A of the Home Building Act. I am informed by the parties that the proceedings remain listed for hearing in the Tribunal. 2. But there is more. By summons seeking leave to appeal to this Court under Part 50, filed on 9 May 2018, the plaintiff seeks to challenge the 6 November 2017 decision of Magistrate Price ordering the transfer of the proceedings from the Local Court to the Tribunal. Just so that no one reading these reasons acquires the false impression that the issues in this Court are simple or obvious, it is instructive to observe that the plaintiff seeks the following orders: "1. Pursuant to Regulation 50.12(1)(c) of the Uniform Civil Procedure Rules the time for filing a summons seeking leave to appeal be extended to 9 May 2018. 2. Leave to appeal from the part of the decision below constituted by the Court making order 1 on 6 November 2017. 3. Appeal allowed. 4. Order 1 of the court below transferring the proceedings to the NSW Civil and Administrative Tribunal be set aside. 4A. Leave sought by the defendant pursuant to rule 18.4 of the Uniform Civil Procedure Rules 2005 for abridged service of the notice of motion filed on 6 November 2017 be refused. 5. That the proceedings be re-listed for hearing in the Local Court of New South Wales." 1. Confronted with what on one view could be considered the somewhat limited utility of the present proceedings, I raised the issue of the $20,000 payment with the parties at an early stage of the hearing in this Court. The following somewhat lengthy transcript of what transpired eloquently bears this out: "HIS HONOUR: I have read some of the documents. There is no dispute, is there, that your client received – I forget whether it was a borrow in advance of the contract – $20,000? DOYLE: No. The credit is not in dispute. HIS HONOUR: The credit is not in dispute? DOYLE: No, it is a credit, we say, against other things. HIS HONOUR: Why doesn't the Tribunal have jurisdiction if you simply make a concession that that is a credit for $20,000 and you get on with arguing the building issue? DOYLE: We say that is the proper purpose and we resist the appeal on that basis. HIS HONOUR: Isn't that a solution? I have read your submissions and you say there is no jurisdiction. The $20,000 agreed, you get a credit for if one way or the other. If there is buildings issues under the contract in respect of which the Tribunal has jurisdiction you can argue that and somebody can make a decision. HEMSWORTH: They have categorised a simple debt. HIS HONOUR: No, no, no. HEMSWORTH: I understand what you are saying. HIS HONOUR: It is a credit in your favour against the building works on his view or a loan that he owes you which you can set off against any money you owe him if ultimately you are found to owe him money. Isn't that right? HEMSWORTH: It is not pleaded that way. HIS HONOUR: No. Look. This is the modern era. It is not 1875 when the people in England were seeking common injunctions to restrain matters being transferred from one Court to another. I have got documents here a mile high that must have cost a fortune to produce when the simple point is how do you characterise money that you get credit for one way or the other? Doesn't the Tribunal have jurisdiction to deal with it, if that is the case? HEMSWORTH: The Tribunal has said that it hasn't. HIS HONOUR: No, the Tribunal has said – pardon me if I am wrong but you correct me – has not got jurisdiction to deal with an assessment of a loan. HEMSWORTH: Yes. HIS HONOUR: But if you go to the Tribunal and say 'It is agreed whatever happens we get credit for $20,000 against the ultimate outcome of the proceedings', it has got jurisdiction under the Home Building Act under the Home Owners Warranty Legislation, doesn't it? HEMSWORTH: That is – it certainly has not been put to me before. HIS HONOUR: I am surprised it hasn't occurred to you before. HEMSWORTH: Well, your Honour, the reason being is that the case has been put against me, it was a contingency payment. HIS HONOUR: Yes. HEMSWORTH: And that that contingency payment was not owing. So how… HIS HONOUR: I understand that but… HEMSWORTH: That then mixes it into the building claim and whether payments were made to subcontractors within the building claim and whether that $20,000 forms a credit within that claim. HIS HONOUR: But does it matter? You get the credit for the $20,000 either way. HEMSWORTH: If my friend is prepared to concede that, that the $20,000 starts as owing and whether it then gets offset at some point by the building claim, well… HIS HONOUR: When you say 'is owing', it is $20,000 for which you get credit either as a debt that is repayable to you with interest at the rate you allege – put that aside for the moment – or against the building works that have been completed by the builder or your behalf. Am I overcomplicating it or missing something? HEMSWORTH: Your Honour, you are not, but you are obviously – your Honour's idea is to change the way my client has framed his case. HIS HONOUR: But does it matter at the end of the day? HEMSWORTH: No, if my friend is prepared to make that concession. HIS HONOUR: Mr Doyle, is that a concession? DOYLE: We are concerned because the question here today will be one of costs and we say this has been clear from the start. HIS HONOUR: Forget about costs. Put that aside. I want to get to the bottom of it. DOYLE: We would take you to Court Book 43 where the defence is filed. This was filed on 2 May 2017, well before the hearing. HIS HONOUR: This is your defence? DOYLE: That is my client's defence. The situation is, he says 'Would provide $20,000. The costs contingency construction was only repayable to the plaintiff at no variation to the contract if final costs do not exceed the provisional hours'. It has got to be repayable if that doesn't happen. It has been clear since the start. Then in paragraph 3, 'The plaintiff did advance the 20,000 to the defendant ... 12 December … November'. The situation has been clear from the start and this appeal is fundamentally misconceived, which we explained in our submissions. We say that we can't – we have asked for the matter to be transferred to the Tribunal. We can't be heard to say that the Tribunal can't deal with it. We say that the credit is there, as has been the defence all along. HIS HONOUR: The alternative is if you want to deal with it in a different fashion, but what is transferred from the Local Court to the Tribunal is the cross claim. DOYLE: What has been transferred is perfectly proper and should be transferred, we say my friend's misconception is whether he gets the advance as a credit or a loan or what it is and it doesn't matter. It is conceded that it is a credit. The credit stands to his account. This appeal is nonsense. HIS HONOUR: Well DOYLE: Respectfully. HIS HONOUR: I have not decided it but on the face of it it makes a lot of sense. No one is going to deny that the 20,000 was paid. It is either recoverable as a loan or it is something for which you get credit. In fact if your claim fails… DOYLE: He gets his 20,000. HIS HONOUR: He gets his $20,000. DOYLE: That is in the defence." [Emphasis added] 1. Having regard to all these matters, it seems to me that the preferable and obvious course is for the present proceedings before me to remain on foot but on hold while the proceedings in the Tribunal continue to finality there. However, as the plaintiff's appeal to this Court is presently framed, I doubt that I have the power to make an order to that effect. If common sense is to prevail, the parties acting reasonably could be expected to agree to return to the Tribunal and litigate their dispute under their building contract, safe in the knowledge that the plaintiff gets credit for his $20,000 against whatever is the outcome of that contest. The proceedings before me can be revived later should the need arise. I would like to be advised of the parties' attitude to this suggestion in due course. 2. If agreement about this cannot be reached, I will proceed to determine the plaintiff's appeal. In the event that that becomes necessary, I will also require the solicitors for both parties to file an affidavit setting out the costs incurred by each of them since the matter first commenced in the Local Court in March 2017, together with an estimate of the costs incurred in litigating this appeal before me, as well as an estimate of the costs likely to be incurred by each party if the matter were returned for determination in either the Local Court or the Tribunal. I will also require an affidavit from a principal of the respective firms of solicitors who act for the plaintiff and the defendant indicating that they have drawn the attention of their clients to these reasons for judgment and to the calculations and assessments of the past and anticipated future costs to which I have just referred. 3. I will do no more at this stage than to list the matter before me for directions on Monday 22 October 2018. I will expect the parties to advise me at that time what the position is, particularly having regard to the well-known provisions of Part 6, Division 1 of the Civil Procedure Act 2005.