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Disputes ----------------1

I Res Judicata and Estoppel in theBuilding Disputes Tribunal

- Philip Davenport, Lecturer, School ofBuilding, University of New South Wales.

Although this article specifically addresses thejurisdiction of the Building Disputes Tribunal of NSW,the problems discussed have much wider implications,particularly for the Commercial Tribunal of NSW whichsince 1 May 1997, by sections 89A and 89B of the HomeBuilding Act 1989 (NSW), has been given jurisdiction inrespect ofresidential building claims exceeding $25,000.Section 89B provides that the Commercial Tribunal "maytake any action that a building disputes tribunal may take".There is no upper limit to the amount which can beawarded by the Commercial Tribunal.

SynopsisAn order of the NSW Building Disputes Tribunal

does not appear to create a res judicata but it can create anissue estoppel. More significant than either are claimsplitting, accord and satisfaction and true estoppel. Whileany of these five doctrines may result in dismissal of aclaim, the reasons for dismissal will be quite different ineach case. But in essence the reasons resolve down totwo, public policy and true estoppel. This articledistinguishes the doctrines and provides examples of theirapplication.

IntroductionThe doctrines of res judicata, issue estoppel, claim

splitting, accord and satisfaction and true estoppel areparticularly relevant to claims in the NSW BuildingDisputes Tribunal. This is so because building claimsfrequently exceed the jurisdictional limit of $25,000 orinvolve many separate items, crossclaims and settlements. I

After a discussion of legal principles and particularcases involving the NSW Consumer Claims Tribunal, thepractical application of the respective doctrines isillustrated by reference to the following examples:

1. A builder claims $25,000 and an owner has acrossclaim of $50,000 for defects.

2. An owner claims that work is defective and abuilder has a crossclaim for $50,000.

3. An owner sues in respect of 5 defects, after a

hearing obtains an order against the builder,and subsequently sues in respect of another 4defects which could have been, but were notdiscovered at the time of the hearing of the firstclaim.

4. An owner sues in respect of 5 defects, after ahearing obtains an order against the builder,and subsequently sues in respect of another 4defects (latent defects) which existed but couldnot reasonably have been discovered at the timeof the hearing of the first claim.

5. Examples 3 and 4 where the order is madeunder s.29 of the Consumer Claims TribunalsAct 1987 NSW to give effect to a settlement.

6. A builder sues or counterclaims for the contractprice and subsequently sues separately forextras.

7. An owner claims that the owner is not liableto pay a ''final'' invoice for $25,000 from thebuilder but at the hearing the builder claimsthat the amount now due is $50,000 andchallenges the jurisdiction of the Tribunal.

8. An owner makes a claim against a builder inrespect of certain alleged defects. The claimis dismissed in the Building Disputes Tribunalbut the owner subsequently makes a claim onthe Building Services Corporation InsuranceFund in respect of the same defects.

Public policy principlesRes judicata, issue estoppel and claim splitting are

three manifestations of the public policy that there shouldbe finality in litigation.

A litigant should not be able to go to several courtsor tribunals and get conflicting decisions on the sameissues. Unless a decision is set aside or quashed by asuperior court, the decision must be accepted as"incontrovertibly correcf'. "Issue estoppel and res judicataor cause ofaction estoppel are mechanisms which protectagainst conflict ofthat kind" (per Deane and Gaudron JJ

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in Rogers v The Queen [1994] 68 ALJR 688 at 699).A related but separate doctrine is that of claim

splitting. If a claimant splits a claim and attempts to bringa second claim for matters not included in the first claim,the second claim may sometimes be defeated by thedoctrines of res judicata or issue estoppel but, irrespectiveof those doctrines, a court or tribunal can dismiss thesecond claim on the basis ofabuse ofprocess. If a claimantcould have included several debts in the one action, butdoes not, then the separate action can be dismissed.

In The Shell Company v Humeville, unreported,Carruthers 1, NSW Supreme Court, 10 December 1990,held that section 27 of the Consumer Claims Tribunal Act1987 gives the Tribunal jurisdiction to dismiss a claimwhere the claim is an abuse of process, such as claimsplitting.

A plain English definition of issue estoppel is givenby McHugh J in Rogers v Queen at 704. It is:

"The policy of the law is to prevent ultimate issuesoffact or law in dispute between parties from beingadjudicated in judicialproceedings more than once.Afinal determination on an ultimate issue offact orlaw, once given by a judicial tribunal acting withinits jurisdiction, forever binds the parties and allthose who claim through them. As a result of thispolicy, neither the parties nor those claimingthrough them can dispute the correctness of thedetermination in subsequent litigation. The remedyfor the incorrect determination ofan ultimate issueis to set it aside; it cannot be attacked collaterallyin other judicial proceedings. However, a judicialdetermination is only binding in respect ofmattersthat were fundamental to the determination. Thosematters include every matter that was essential tothe decision even if that matter was not itselfcontested in the litigation."

In the same case Deane and Gaudron 11 at pp.698 ­670 discuss the true nature of res judicata and issueestoppel. At p.699 they say:

"Thefirst expresses the need, based onpublic policy,for judicial determinations to be final and bindingand conclusive. The second looks to the position ofthe individual and reflects the ilJ,justice that wouldoccur if he or she were required to litigate afreshmatters which have already been determined by thecourts."

Deane and Gaudron 11 conclude that issue estoppelis not a true estoppel. At p.699-670 they say:

"In our view, it ought now to be seen, not as a trueestoppel, but as a different manifestation of thosesame policy considerations."

In Blair v Curran (1939) 62 CLR 464 Dixon 1 at531 distinguished res judicata and issue estoppel asfollows:

"The distinction between res judicata and issue-

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estoppel is that in thefirst the very right or cause ofaction claimed or put in suit has no longer anindependent existence, while in the second, for thepurpose of some other claim or cause ofaction, astate offact or law is allegedordenied the existenceofwhich is a matternecessarily decided in the priorjudgment, decree or order."

Once judgment is given on a claim, the claim ceasesto exist. The entitlement based on the claim is extinguishedand replaced by the judgment. The claim can thereafternever be the subject of a cause of action. If the claimantattempts to commence an action, the defendant can haveit struck out on the basis of the doctrine of res judicata.

Chamberlain v Deputy Commissioner ofTaxation[1988] 164 CLR 502 is an illustration ofres judicata. TheCommissioner issued a writ in the Supreme CourtofSouthAustralia against Chamberlain, a solicitor for $25,557..92The amount due was ten times that. The amount due was$255,579.20 but an error was made in the typing of theclaim. Chamberlain, perceiving the error, consented tojudgment. The trial judge described the solicitor's conductas "a shabby trick and indutiably unconscionable''' ..Nevertheless, the High Court held that once judgment wasgiven by the Court, that was the end of the matter.. TheCommissioner could not sue again for the balance.. Thepre-existing debt had ceased to exist.. The whole debtwas extinguished, not merely the portion for whichjudgment was obtained.

Res judicata and subsequently discovereddefects

Res judicata bars the whole cause ofaction, notjusta claim for the particular damage recovered under ajudgment. For example, in Conquer v Boot [1928] 2 KB336, Conquer, an owner brought an action against Boot,a builder who had contracted to build a bungalow forConquer. The owner obtained judgment in respect of alist ofdefects. Subsequently the owner found other defectswhich he could not have discovered at the time ofthe frrstaction. He sued the builder again but for different defectsto those listed in the fITst action. In the second action thebuilder raised the defence ofres judicata. The Court foundfor the builder and awarded judgment against the owner.Sankey L.l at. 342 said:

"The cause of action here is: (1) the contract tocomplete in a good and workmanlike manner abungalow, and (2) the breach of it. I do not thinkthat every breach of it - every particular brick orparticular room that is faulty - gives rise to aseparate cause ofaction."

Conquer v Boot was followed in Onerati v PhillipsConstructions Pty. Ltd. (1989) 16 NSWLR 730.. Phillips,the builder constructed five home units for the owner,Onerati. The owner refused to pay moneys due to thebuilder. The builder commenced an arbitration and in thearbitration the owner crossclaimed for defective work. The

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arbitrator awarded the builder $222,932 and the owner$107,566 on the crossclaim, leaving a net award in favourof the builder of $115,376. The builder attempted toenforce the arbitrator's award by registering it as ajudgment of the Supreme Court pursuant to s.33(1) of theCommercial Arbitration Act 1984 NSW.

After the arbitration, the owner discoveredadditional defects which were not visible at the time ofthe arbitration. By then the builder was hopelesslyinsolvent so the owner sought to delay the builder's actionto enforce the arbitrator's award until a second arbitrationabout to be commenced by the owners was decided. Theissue was whether the owners could commence a secondarbitration or whether the award in the first arbitrationwas a bar to any future proceedings by the owner againstthe builder.

In the arbitration there was a 27 page Scott Schedulelisting hundreds of items of allegedly defective work.After the arbitrator's award was published, there washeavy rain and the owner asked the architect to inspectthe units again. The architect found serious waterpenetration. He made openings in the walls and discovereddefects not previously visible, including substantial mortardroppings in the cavity, absence of flashings in some areasand incorrectly installed flashings, bridging of cavities bybricks and mortar and other defective work.

The Court held that the doctrine of res judicata wasa bar to the owner commencing a second arbitration. Atp.746 Giles J summarised the law as follows:

"1. In curial proceedings, for the purposes of theprinciple ofres judicata there is but one causeofaction for breach ofcontract founded uponbreach ofa promise such as to carry out workin a workmanlike manner. There are not anumber of causes of action according toparticular defects or classes ofdefect resultingfrom the breach.

2. Accordingly, judgment in one proceeding willbe a bar to second proceedings to recoverdamages with respect to defects or classes ofdefect not the subject of the first proceedings.

3. This will be so even where the defects or classesofdefects the subject ofthe secondproceedingswere not apparent to the plaintiffat the time ofthe first proceedings.

4. The same position obtains for arbitrationsunless on the proper construction of theagreement for reference the parties haveagreed that the award shall determine theirrights and obligations only with respect to thedefects or classes of defect referred whileleaving their rights and obligations withrespect to other defects or classes of defectunaffected. "

Tribunal orders do not create a res judicataIn Maganja v Arthur Trading as Shirley Arthurs

Beauty Centre [1984] 3 NSWLR 561, Yeldham J held thatan order made in the Consumer Claims Tribunal NSW

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does not, of itself, constitute a judgment such as to permitthe defendant to successfully plead res judicata. Hedistinguished res judicata and issue estoppel. He heldthat a Consumer Claims Tribunal is a judicial tribunal butwhere the order of the Tribunal has not been registeredwith the equivalent of the Local Court under the presents.35 of the Consumer Claims Tribunals Act 1987, it doesnot have the effect of a judgment. There are somedifferences between the wording of the section of theearlier Act considered by Yeldham J and s.35 of the 1987Act but it appears that they are not such that the decisioncould be said to be inapplicable in the interpretation ofthe 1987 Act.

In Cachia v Issacs [1985] 3 NSWLR 366, the NSWCourt of Appeal held that the Consumer Claims Tribunalhas the power to create an issue estoppel. McHugh Jdissented holding that a decision in the Tribunal createdneither a res judicata nor an issue estoppel.

It is submitted that the better view is that a defenceof res judicata in respect of a previous order of the Tribunalis not available in a subsequent action before the Tribunal.However, the defences of accord and satisfaction, issueestoppel and estoppel are available. Also, a claim can bedismissed under s.27 if the Tribunal is satisfied that theclaimant has engaged in claim splitting.

In other words, the fact that a party previouslyobtained an order in the Tribunal based on a particularcause of action, e.g. breach of contract, is not in itself abar to a second claim arising out of the same cause ofaction. The cause of action is not necessarily extinguishedbut the second claim could be dismissed:

(1) if the claimant has engaged in claim splitting;(2) the cause of action has been extinguished by

accord and satisfaction;(3) there is an issue estoppel; or(4) the claimant is otherwise estopped.

The final result may be the same as it would havebeen had res judicata applied but the reasons for reachingthat result would be different.

Accord and satisfactionFrequently building disputes are settled, sometimes

in a mediation, sometimes in a hearing before the Tribunal.Accord and satisfaction is a complete defence to a claimbased upon a right which has been finally extinguishedby agreement. Accord is the agreement to accept anamount of money or the performance of work or someother consideration in return for releasing a claim.Satisfaction is the payment of the money or theperformance of the work or the provision of theconsideration. Just as a debt is extinguished by paymentof the amount due, so too a cause of action can beextinguished by agreement (the accord) and performanceof the agreement (the satisfaction).

Where there is only accord, there is the possibilityof breach or rescission of the agreement. Sometimes aparty will be compelled to specifically perform theagreement. But while there is merely accord and not

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satisfaction, the cause of action which the parties intendedto extinguish may still be in existence. This will be aquestion of fact in each case.

Where an order of the Tribunal under s.29 of theConsumer Claims Tribunals Act 1987 is made to giveeffect to the settlement, the interesting question arises ofwhether the order creates an issue estoppel. For example,a builder may claim payment of $10,000 being the contractprice. The owner may crossclaim for $15,000 for defects.The parties may agree that the owner will pay the builder$5,000. The order of the Tribunal would say that the ownermust pay the builder $5,000. Now assume that the ownerthen sues for $15,000 for defective work. The buildercould raise as a defence any release contained in theagreement but can the builder also raise issue estoppel asa defence to the claim for $15,000?

It is submitted that the better view is that theTribunal's order made under s.29(2) does not create anissue estoppel. The Tribunal has not actually made adecision on any issue between the parties. There appearsto be no public policy reason why another Referee or acourt should be precluded from entertaining a claim basedon the same facts as the original claim before the Tribunal.The second Referee or court would have to interpret theagreement made between the parties. That agreement maybe a defence to the second claim but the fact that the firstTribunal made an order giving effect to the agreement "tothe extent permitted" by the Consumer Claims TribunalsAct 1987 is irrelevant.

Where a settlement agreement is incorporated in ajudgment of a court then res judicata applies. However,on the authority of Maganja (above), the order of theTribunal does not create a res judicata unless it is registeredin the Local Court.

Of course, if the settlement agreement has beenperformed by one party, that party may be able to pleadaccord and satisfaction. However, if one party hasbreached the settlement agreement, it appears that the othercould commence an action in the Tribunal based on theoriginal claim. For example, a builder may claim $25,000but agree to accept $5,000 in settlement of the claim. Thesettlement agreement may provide that the amount mustbe paid within 14 days. Assume that the Tribunal makesan order in those terms and the amount is not paid within14 days. The builder could file the order in the LocalCourt and enforce it as judgment of the Local Court.Alternatively, the builder might commence a fresh claimin the Tribunal or a court to recover $25,000. If the ownerpleaded the agreement as a defence, the owner may befaced with the fact that the owner had repudiated theagreement by not paying the $5,000.

Could the owner plead issue estoppel? Could theowner plead that a final order had been made by theTribunal that the builder's entitlement is $5,000 andtherefore the builder cannot sue again. It is submittedthat the owner could not raise res judicata or issue estoppelas a defence unless the builder actually filed the order inthe Local Court.

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True estoppelTrue estoppel and issue estoppel are quite different.

It is true estoppel rather than issue estoppel is most likelyto arise in the Tribunal. In Rogers v The Queen (above) at700 Deane and Gaudron JJ said:

"Of course, there may be true estoppels whichprevent a personfrom raising an issue bearing on amatter to be judicially determined. An estoppel ofthat kind may come about because of the way inwhich proceedings have been conducted with theresult that the issue cannot thereafter be raised inthose proceedings or on appeal. And ifa partyfailsto raise an issue although he or she mightreasonably have done so, there may well be a trueestoppel which precludes that party from raising itin later proceedings.

Considerations bearing on estoppel resulting fromthe failure to raise some issue which couldreasonably have been raised in earlierproceedingshave sometimes been conflated with considerationsrelevant to the various principles aimed at ensuringthe final, binding and conclusive nature ofjudicialdeterminations. This seems to have been the casewith the so-called "extended principle" inHenderson v Henderson ((1843) 3 Hare 100 at 115)which would allow that:

'(t)he plea of res judicata applies, except inspecial cases, not only to points upon whichthe Court was actually required by the partiesto form an opinion and pronounce a judgment,but to every point which properly belonged tothe subject oflitigation, and which the parties,exercising reasonable diligence, might havebrought forward at the time. '

It is clear that that principle, if it be one, is to betreated with caution.

It may be that some cases oftrue estoppel resultingfrom the failure to raise a matter which couldreasonably have been raised in earlierproceedingswill also prove, on analysis, to involve animpermissible challenge to the incontrovertiblecorrectness of the judgment given in thoseproceedings. ... However, in our view, estoppel isseparate and distinct from the principles whichsecure the final, binding and conclusive nature ofjudicial determinations and their conflation can onlyresult in confusion. "

Assume an owner claims that the respondentbuilder's work is defective in 9 aspects. After a hearingin the Tribunal, the Referee decides that only 5 of the 9alleged defects are in fact defects and makes an order thatthe builder must pay the owner $10,000 for those 5defects. If the owner commenced a second action in acourt or the Tribunal in respect of the remaining 4 allegeddefects, the respondent builder could plead that in respect

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of the whole 9 defects there is an issue estoppel. Ajudicialtribunal has made a final determination on the whole 9claims.

But what if the owner's claim form merely claims$25,000 for defective work and in the hearing the ownerraises only 5 defects? There is no determination on anyother possible defects. Therefore, what is to stop the ownerbringing a separate action for other defects? If an order ofthe Tribunal had the effect of creating a res judicata then,on the authority of Conquer v Boot and Onerati v PhillipsConstructions Pty. Ltd., (above) the owner's cause ofaction, namely breach of contract, would have beenextinguished. The owner's second claim would bedefeated by the plea of res judicata.

However, on the authority of Maganja v ArthurTrading as Shirley Arthurs Beauty Centre (above), resjudicata would not apply except perhaps if the owner filedthe Tribunal's order in the Local Court. Since theadditional claims were never mentioned in the Tribunal,there is no adjudication of them and hence no issueestoppel.

If it could be shown that the owner split the claimin order to avoid the jurisdictional limit of the Tribunal orfor some other illegitimate purpose, then on the authorityof The Shell Company v Humeville (above) the Tribunalcould dismiss the claim under s.27 of the Consumer ClaimsTribunals Act 1987 NSW.

Since there is no settlement agreement, accord andsatisfaction have no relevance. That leaves true estoppel.Should the owner be permitted to commence an action inrespect of defects which existed at the time of the firsthearing? If the owner was aware of the defects and chosenot raise them in the hearing, then there is a clear case foran estoppel. However, where an owner could not withreasonable diligence have discovered the additionaldefects at the time of the first hearing then there seems tobe no reason for the owner being estopped from raisingthem in a second action. In other words, Conquer v Bootand Onerati v Phillips Constructions Pty. Ltd., (above)are not authority for barring a second suit where the firstsuit is brought in the Building Disputes Tribunal as distinctfrom in a court or arbitration.

However, if the owner files the order of the Tribunalin the Local Court under s.35 of the Consumer ClaimsTribunals Act 1987 NSW, it is not clear whether resjudicata would also apply. Yeldham J did not actuallydecide that issue in Maganja (above). S.35(3) providesthat "the order shall for the purposes ofthe Local Courts(Civil Claims) Act 1970 be taken to be an unsatisfiedjudgment". The section of the earlier Act considered byYeldham J in Maganja was in slightly different terms. Itprovided that "the order shall be deemed to be ajudgment" of the Court. The words in the 1987 Actsuggest that the order may not be taken to be a judgmentfor all purposes.

The above conclusions are applied in the examplesbelow.

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Examples

Example 1

A builder claims $25,000 and an owner has a crossclaimof$50,000 for defects.

If the owner raises the crossclaim as a defence tothe builder's claim, the Tribunal will have to make adecision on the crossclaim. The maximum which theTribunal could award is $25,000. The decision of theTribunal would create an issue estoppel. If the ownerthinks that the owner is entitled to recover from the buildermore than $25,000 and the owner wishes to preserve theright to do so, the owner must not raise the crossclaim inthe Tribunal.

It may be possible for the owner to defeat thebuilder's claim without the need for the crossclaim. Theowner may be able to prove that the builder did not in factdo work to the value of the amount claimed. The contractmay be a whole contract and the owner may be able toshow that the builder did not substantially complete it.But it may be that in the absence of a crossclaim, theTribunal must make an award in the builder's favour.

Assuming that the owner has not argued thecrossclaim in the Tribunal, the Referee should be carefulto note that fact in the reasons. It should be made clear toany other tribunal or court that there is no issue estoppelwith respect to the crossclaim. Because the owner has agood reason for not raising the crossclaim in the Tribunal,true estoppel would not prevent the owner from pursuingthe crossclaim in another forum.

Example 2

An owner claims that work is defective and a builder hasa crossclaimfor $50,000;

The builder is faced with a similar dilemma to thatfaced by the owner in the preceding example. The buildermust elect between raising the crossclaim and acceptingthat the builder will not recover more than $25,000 orarguing the case without raising the crossclaim.

If the builder says, "Even if my work is defective,the owner is not entitled to payment because the ownerhas not paid me", the builder raises the crossclaim. Toavoid raising the crossclaim, and creating an issueestoppel, the builder would have to confine the defenceto an argument that the work was not work which thebuilder carried out or that it was not defective.

In the latter event, the Referee would simply makean order with respect to the alleged defects and note thefile to the effect that the builder chose not to raise thecrossclaim before the Tribunal. Since the builder has asound reason for not raising the crossclaim, the builder'sfailure to do so would not give rise to an estoppel.However, for more abundant caution, the builder shouldspecifically mention in the hearing that the builder has

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the crossclaim but has elected not to raise it because theamount exceeds $25,000.

Example 3

An owner sues in respect of 5 defects, after a hearingobtains an order against the builder, and subsequently suesin respect ofanother 4 defects which could have been, butwere not discovered at the time of the hearing of the firstclaim.

This would not be a case for dismissal of the claimon account of claim splitting. Claim splitting wouldinvolve knowledge of the additional defects at the timethe claim is brought. It is not a case of issue estoppelbecause no adjudication has been made on the additional4 claims. It may be a case for true estoppel. Could it besaid that the owner has represented that the 5 defects arethe only defects? Has the respondent relied upon anyconduct of the owner? Would it be unjust to require thebuilder to defend another claim for the additional 4defects? It is possible that, believing that the owner hadonly 5 complaints, the builder made a settlement whichthe builder would not have made had the builder knownthat the owner had not checked for all visible defects?

If it could be said that it is unreasonable for theowner not to have included the additional 4 items in thefirst claim, then there is the basis for an estoppel. Thisestoppel would be a true estoppel. It is sometimes referredto as the principle in Henderson v Henderson (above) butit is submitted that the true basis is estoppel (see quotefrom Deane & Gaudron JJ above).

Finally, section 27 of the Consumer ClaimsTribunals Act 1987 empowers a Tribunal to dismiss a claimif the Tribunal is satisfied that ''for any other reason itshould not deal with the claim". There could be a reasonother than merely public policy or true estoppel.

Example 4

An owner sues in respect of 5 defects, after a hearingobtains an order against the builder, and subsequently suesin respect ofanother 4 defects (latent defects) which existedbut could not reasonably have been discovered at the timeof the hearing of the first claim.

Since the additional defects could not reasonablyhave been discovered at the time of the hearing of thefirst claim, there appears to be no basis for true estoppel.Since the additional 4 claims have not been the subject ofan adjudication, there appears to be no basis for issueestoppel. As discussed above, it appears that Tribunalorders do not create a res judicata.

In Bryan v Maloney , the High Court (23 March1995) recognised the right of an owner, even a subsequentpurchaser, to sue a negligent builder in tort for economicloss suffered by the owner upon discovery of a latentdefect. Since Tribunal orders do not create a res judicata,

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it seems that a decision of the Tribunal on 5 defects wouldnot prevent an action in tort based on the builder'snegligence. But issue estoppel would prevent either partyrelitigating issues already decided in the Tribunal.

ExampleS

Examples 3 and 4 where the order is made under s.29 ofthe Consumer Claims Tribunals Act 1987 NSW to giveeffect to a settlement.

If in examples 3 and 4, the first claim had beenresolved by a settlement agreement, there might be accordand satisfaction. Accord and satisfaction could extinguisha cause of action, i.e. any right to make any claims, presentor future, arising out of defective work. Whether theagreement settled possible future claims or only the 5which were made at the time of settlement, would be amatter of interpretation of the settlement agreement. Thisillustrates an avenue for the astute builder to avoid futureclaims.

The Tribunal's order giving effect to the settlementwould not itself create an issue estoppel. An issue estoppelrequires a determination by the Tribunal of an issue offact or law. The administrative function of recording theagreement is not a determination of an issue.

Example 6

A builder sues or counterclaimsfor the contractprice, anorder is made by the Tribunal, and subsequently thebuilder sues separately for extras.

Would the claim be defeated by a defence of issueestoppel or true estoppel? If the builder had an entitlementto payment for the extras at the time of the hearing of thefirst claim then almost certainly the builder's second claimshould be defeated by a defence of issue estoppel or trueestoppel.

If the issue before the Tribunal in the first hearingwas the amount due from the owner to the builder, thenthat amount has been decided and issue estoppel wouldbe a complete defence to the second claim. The buildershould have included in the one action all moneys allegedto be due. If the issue before the Tribunal was morelimited, e.g. what was the amount due for some part ofthe work, then there may be claim splitting or true estoppel.However, it would be rare for the issue to be so limited.

If the defence of issue estoppel is raised then it wouldbe a matter of examining the issues in the first case to seejust what issues were canvassed. If the owner raises trueestoppel as a defence, then it is a question of examiningwhether the additional claims should have been includedin the first action. The builder would have to find a goodreason for not having included all claims in the first action.Otherwise the builder should be estopped from raisingthe matters in the second action.

In other words, if in the first action the additional

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claims were raised, it is issue estoppel. If they were notraised then it is true estoppel unless the builder can showa very good reason for not raising them.

Example 7

An owner claims that the owner is not liable to pay a ''final''invoice for $25,000 from the builder but at the hearingthe builder produces a second invoice and claims that theamount now due is $50,000. Sometimes the builder thenchallenges the jurisdiction of the Tribunal.

This is a ploy sometimes adopted by builders in anattempt to avoid the jurisdiction of the Tribunal and havethe matter heard in arbitration or in court. It can workvery successfully. The Tribunal still has jurisdiction toentertain the claim for relief from payment of $25,000but for the reasons covered below, the owner will probablywish to withdraw the claim.

S.12(c) of the Consumer Claims TribunalAct 1995defines a "building claim" to include a claim for "relieffrom payment ofa specified sum ofmoney". When such aclaim is made, s.30(1)(£) empowers the Tribunal to makean order "declaring that a specified amount of money isnot due and owing by the claimant to the respondent".

If the owner is claiming relief from payment of aparticular invoice then the issue involves the alleged debtconstituted by that invoice. A decision by the Tribunal onthat invoice would not give rise to an issue estoppel onany other invoice. However, the doctrines of claimsplitting or true estoppel may bar a subsequent claim bythe owner for relief from payment of other invoices. Ifthe claimant at the time of hearing has two invoices andonly seeks relief from payment of one, a subsequent actionto seek relief from payment of the other may be an abuseof process which should result in the dismissal of theowner's subsequent claim under s.27 of the ConsumerClaims Tribunals Act 1987 NSW (see The Shell Company'v Humeville above).

The principles of issue estoppel, claims splitting andtrue estoppel are designed to prevent "law suits byinstalments" (in the words of Crossly J in MelcorDevelopments Ltd. v Edmonton (City) (1982) 136 D.L.R.(3d) 695). The owner will often be faced with no realchoice. The builder cannot be forced to submit the claimfor $50,000 to the Tribunal. Therefore, to preserve theowner's right to defend the claim for $50,000, the ownermust withdraw the claim for relief from payment of$25,000.

Example 8

An owner makes a claim against a builder in respect ofcertain alleged defects. The claim is dismissed in theBuilding Disputes Tribunal but the owner subsequentlymakes a claim on the Building Services CorporationInsurance Fund in respect of the same defects.

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There is no simple answer to this problem. Themere fact that the Tribunal dismisses the claim does notmean that a claim on the insurance fund is barred. Clause8(2) of Form 4 of the Regulations under the BuildingServices Corporation Act 1989 provides that theCorporation may decline to pay claims where the ownerhas settled a claim in respect of the same residentialbuilding work; but there is no mention of the effect of adecision of the Building Disputes Tribunal dismissing aclaim.

A claim can be dismissed for various reasons, e.g.not being brought within time, or that the only order whichwould be fair and equitable to all the parties (s.31 of theConsumer Claims Tribunals Acts 1987) would be todismiss the claim. Dismissal does not necessarily involvea finding that the work is not defective.

However, if after hearing the claimant's allegations,the Tribunal makes a decision that a defect does not exist,it would not be open to the claimant to argue again in acourt or another tribunal that the defect does exist. It issubmitted that public policy dictates that the owner shouldnot be able to go to several courts or tribunals to getconflicting decisions. This is an instance where issueestoppel would apply. Hence, if the Corporation refusedto pay where the Tribunal has decided that work is notdefective, the owner would have no remedy in law.