ACT Builders Pty Ltd v Haridemos

Appellant's Submissions In Reply

1. The appellant says that the respondent's submission that costs should follow the outcome of the appeal is misconceived. The appellant relies on the decision of Wilson J in Symes v Mick Fabar Constructions Pty Ltd [2015] NSWSC 1922 at [36]-[38]. The appellant says the respondent must demonstrates special circumstances.
2. The appellant says that other than the fact that the appeal was unsuccessful, the respondent has failed to identify any matters to substantiate the submission that the appeal had no tenable basis in fact or in law.
3. Secondly, the appellant submits that the appeal was not unusually complex. The appellant relies on the fact that each party's submissions were only a few pages, the appeal was listed for less than half a day and the grounds of appeal were "limited and precise, rather than being a general appeal". In this regard the appellant referred to paragraph [35] of the Appeal Panel's decision. The appellant also said that the quantum was limited to $55,750.00.
4. The appellant seeks to distinguish the cases of Megerditchian v Kurmond Homes Pty Ltd and Tofighi v Adami relied upon by the respondent. In relation to Megerditchian the appellant says the claim was for a large sum of money, namely $432,495.55, an amount substantially in excess of the quantum in the present appeal. In relation to the decision of Tofighi v Adami, the appellant says that was a complex case as a result of numerous grounds of appeal that were ultimately abandoned, a feature not present in this appeal.
5. The appellant does not accept the characterisation of her as the "losing party" at first instance, a description which is "apt to mislead". In this regard the appellant says she claimed an amount of $102,093.00 plus interest and was wholly successful in this claim. However, the respondent claimed the sum of $500,000.00 and was only awarded $179,973.90. In relation to the availability of costs at first instance as a special circumstance warranting an award of costs, the appellant says that submission should be rejected for three reasons.
6. First, the availability of an award of costs at first instance is not of itself "a feature which dictates the availability of cost proceedings before the Appeal Panel". The appellant relies on the decision of Symes at [43].
7. Secondly, cases where the Appeal Panel has had regard to the availability of costs at first instance have involved claims for significant amounts of money. Two cases referred to by the appellant are Megerditchian v Kurmond Homes Pty Ltd, a claim for $432,495.55 and Sahyoun v Owners Corporation Strata Plan 75123 (No 2) [2015] NSWCATAP 70 where the quantum in dispute was $210,725.00. The appellant submits the quantum in this case is significantly different.
8. Thirdly, having regard to the modest success of the respondent, the original award in her favour being $22,126.10, an award should not, in effect be automatic.

Respondent's Submissions In Reply

1. The respondent reiterates that the amount which was in dispute in the appeal was $55,750.00, a sum in excess of $30,000.00 therefore a factor to be taken into consideration.
2. The respondent also referred to the decision of Tadrosse v MacFayden & Anor [2015] NSWCATAP 178 and says this case is an example of where an award for costs has been made by the Appeal Panel where the amount in dispute was only $18,070.93.
3. The respondents say that the appellant's submissions misstate the respondent's position in connection with the rule that "costs follow the event". In essence, what the respondent appears to submit is that costs follow the event in the original proceedings, this could be a significant factor in cases where the losing party has brought an appeal and has again been unsuccessful, even though the rule that costs follow the event may not apply to the appeal proceedings.
4. The respondent also says that the appellant inappropriately seeks to rely on the outcome of the proceedings at first instance and that in the context of the respondent's submission in support of her application for costs, the "losing party" was the appellant who had sought to disturb a finding in favour of the respondent in the sum of $55,750.00 in relation to the yard levels.
5. As to the issue of complexity, the respondent restates her position set out in paragraphs [10]-[13] of her submissions in chief and says that the length of the appeal is not determinative of its complexity.

Consideration

1. These appeal proceedings were commenced in 2015. Consequently, r 38A of the Civil and Administrative Tribunal Rules, 2014 (NCAT Rules), which relates to costs of internal appeals, does not apply.
2. Section 60(1) of the NCAT Act provides that each party is to pay their own costs. However, the Tribunal may award costs in relation to proceedings but only if satisfied that there are special circumstances warranting an award: see s 60(2). Factors that may be considered in determining whether special circumstances exist are set out in s60(3) of the NCAT Act.
3. As made clear in Megerditchian v Kurmond Homes Pty Ltd, the requirement to demonstrate special circumstances applies to appeals from the Consumer and Commercial Division, notwithstanding that a party to proceedings at first instance may have been entitled to recover costs in those proceedings pursuant to r 38 of the NCAT Rules: see Megerditchian v Kurmond Homes Pty Ltd at [7] - [8].
4. Special circumstances means circumstances which are out of the ordinary. The circumstances do not have to be extraordinary or exceptional: see Megerditchian v Kurmond Homes Pty Ltd at [11] referring to the decision of Cripps v G & M Mawson [2006] NSWCA 84 at [60]. The approach taken in Megerditchian v Kurmond Homes Pty Ltd was confirmed by the Supreme Court in Symes v Mick Fabar Constructions Pty Ltd at [38].
5. Consequently, it is necessary for the Appeal Panel to determine in this application whether or not special circumstances exist which warrant the making for costs, and if so, what that order should be.
6. At the most general level, the respondent submits, by analogy to other cases identified in her submissions, that an award for costs should be made in the present circumstance. For example, the respondent refers to the statements made by the Appeal Panel in Wright v Commissioner of Police (Costs).
7. At [9] in Wright v Commissioner of Police (Costs) the Appeal Panel said: However Appeal Panels have tended to accord more weight to outcome as a significant factor in cases where the losing party has brought an appeal and again been unsuccessful. This is the situation here in respect of both appeals.
8. First, it should be noted that no order for costs was in fact made in favour of either party in that case Wright v Commissioner of Police (Costs). Rather, each party was ordered to pay its own costs of the appeals, having had their respective appeals dismissed.
9. However, the more fundamental issue is that reliance of this statement by the respondent in one sense diverts attention from the essential matter which the Appeal Panel is required to determine. That is whether or not, in the particular case, there are "special circumstances warranting an award for costs". In this regard, the failure of an appeal, even by a party who has originally been "unsuccessful" is an unsatisfactory way to commence the examination required by s 60(3) of the NCAT Act. This is because with the exception of s 60(3)(g) the factors to be considered relate to the appeal proceedings and not the success or otherwise of the appellant in the proceedings at first instance. Secondly, the mere fact of an appeal, even if unsuccessful, is not of itself sufficient to establish there are special circumstances to enliven the power to award costs on appeal pursuant to s 60(2) of the NCAT Act.
10. Rather, the Tribunal is required to make findings as to whether or not special circumstances are established and, if so, to exercise the discretion to make an appropriate award for costs.
11. As set out above, the respondent says special circumstances are made out for three reasons: 1. The appellant's appeal had no tenable basis in fact or law; 2. The proceedings were complex in nature; and 3. The appellant was the losing party and, in effect, the amount in issue was $55,750.00, being the cost of rectification being allowed by the Tribunal at first instance in relation to the yard level.
12. In relation to the first ground, the respondent submitted at [11] that: The Appellant's challenges have no tenable basis in fact and are simply untrue.
13. In our view, the use of the expression "untrue" is an unhelpful submission in the context of the Appeal Panel's task of evaluating whether or not the factor in s 60(3)(c) is established. This subsection provides that the factor the Appeal Panel is required to have regard to is whether: The relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law
14. That is, the question to be determined is the relative strength of the party's cases, an extreme case being where an appeal has "no tenable basis in fact or law". In the present case, the relative strength of the party's positions needs to be considered by reference to the claims made and the Appeal Panel's decision.
15. As the Appeal Panel identified, ground 4 of the grounds of appeal were that the appellant had been denied procedural fairness because the respondent's claims concerning the contractual requirements for terracing had not been identified and, in connection with evidence said to have been adduced for the first time in re-examination, the appellant had not been afforded an opportunity to respond.
16. As set out in the Appeal Panel's reasons at [38]-[71] the appellant failed on this ground and an analysis of the facts as set out in the Appeal Panel's decision demonstrates that this ground of appeal was relatively weak. While it is true that it was necessary to consider the history of the proceedings and the body of evidence presented to the Tribunal at first instance, a review of this material by the appellant would have revealed this position.
17. In relation to grounds 1, 2 and 3 of the appeal, again with one exception it seems to us that the grounds of appeal were also relatively week. Firstly, in relation to the factual dispute concerning placement of the fill, for the reasons expressed in the Appeal Panel's decision at [82] and following, it seems reasonably clear that fill had in fact been placed within one metre of various boundaries, thereby requiring the construction of retaining walls as provided by the development consent condition 19.
18. In relation to the award for damages, the appellant relied on the decision of Bellgrove v Eldridge [1954] 90 CLR 613 and said that the award made of $55,750.00 was not consistent with the principles set out in Bellgrove v Eldridge in that the amount did not represent the costs to bring the works into conformance with the contract. This was against a finding made by the Tribunal at first instance that the fill had been placed in terraces in the yard by the appellant in breach of its obligations under the contract with the respondent.
19. At [104]-[105] of the decision the Appeal Panel said: 104 The only "disagreement" appears to be a legal question about whether or not a reasonable method of rectification of the appellant's breach of contract in placing fill in terraces within one metre of the boundary without adequate retention was to stabilise the existing site rather than remove the fill and restore the site to the state contemplated by the original plans and specifications. 105 In the absence of any evidence to the contrary and in the absence of the experts providing an opinion that some other method was reasonable and appropriate to rectify the damage caused by the appellant by reason of placement of fill material in terraces, in our view there is no basis to conclude that the Tribunal was in error awarding $55,750.00 as the reasonable cost to rectify the damage which had been caused by the appellant. Further, to the extent the terraces were to be retained, no error is shown by including in awarding an amount for the cost of constructing any necessary retaining walls as required by condition 19 of the Development Consent.
20. In circumstances where an award was made to stabilise the terrace material and in circumstances where no other evidence as to an alternative method of rectification was put forward by the appellant, again it seems to us that the position of the appellant on these grounds was relatively week.
21. The second matter raised in support of the application for costs relates to the nature and complexity of the proceedings.
22. In our view the matters identified by the appellant to substantiate this ground do not establish special circumstances in the present case. The fact that an appeal may require leave and that assessments must be made under cl 12 of Sch 4 of the NCAT Act is a matter common to all appeals from decisions of the Consumer and Commercial Division where leave to appeal is required. This of itself is not sufficient to establish complexity.
23. As to the substantial grounds of appeal, these do not appear to be out of the ordinary. In this regard the Appeal Panel has many appeals based on claims of denial of procedural fairness and/or the incorrect factual provisions and evidence adduced at hearings.
24. The final matter to consider is the provisions of s 60(3)(g).
25. As we have indicated above, in our view the outcome of an appeal, even if brought by a party who is originally unsuccessful, is not of itself a fact warranting a finding of special circumstances.
26. However, the item in dispute was an amount of $55,750.00 and a successful appeal would have significantly altered the relative position of the parties and which party was to pay the other.
27. When these matters are considered as a whole, particularly our conclusion that all grounds of appeal were, on our analysis, weak grounds of appeal, in our opinion special circumstances are established and an order for costs is appropriate.

Orders

1. The Appeal Panel makes the following orders: 1. Pursuant to s50(1)(c) of the Civil and Administrative Tribunal Act, 2013 Appeal Panel dispenses with a hearing of the costs application by the respondent. 2. The appellant is to pay the costs of the respondent on a party/ party basis, such costs to be as agreed or assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014)

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 June 2016