Actol Pty Ltd v Rise Products Pty Ltd; Rise Products Pty Ltd v Actol Pty Ltd

NCAT Appeal Panel|2023-12-04|Before: Hodgson CJ

Summary

On 18 September 2023, we determined two appeals in respect of the decisions in competing applications before the Consumer and Commercial Division: Actol Pty Ltd v Rise Products Pty Ltd; Rise Products Pty Ltd v Actol Pty Ltd [2023] NSWCATAP 259. This decision relates to the costs in the proceedings at first instance and that appeal, and assumes familiarity with our primary decision. We will use the same abbreviations for the parties here.
In summary, on Rise's appeal, we were satisfied that the Tribunal at first instance erred by finding that it had jurisdiction to award Actol more than $40,000 (the limit in the Tribunal) in the proceedings brought by it. The consequence of our decision was that Actol is required to repay Rise the amount awarded (and paid) over $40,000, in the sum of $10,650.60.
Actol failed in its appeal from the decision at first instance.
We made provisional orders as to the costs of the appeals. In short, on Rise's appeal, we ordered that each party pay its own costs. On Actol's appeal, we ordered Actol to pay Rise's costs. The order in respect of Actol's appeal is not challenged and will stand.
Rise, however, asks that we vary our order. It seeks its costs of the appeal on the ordinary basis. We also need to determine how our decision should affect the decision of the Tribunal to make no order as to costs between Actol and Rise in the decision at first instance, if at all.
We gave the parties the opportunity to oppose the remaining issues being dealt with without an oral hearing. Neither opposed us dealing with the costs issues on the papers and we have received comprehensive submissions that are sufficient for us to determine the issue in that manner. We will dispense with an oral hearing.

Principles relating to costs

The primary provision governing costs in relation to proceedings in the Tribunal is s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). Pursuant to that section, each party to proceedings is generally to pay their own costs in proceedings unless: 1. the amount in issue in the proceedings at first instance exceeds $30,000 in those proceedings; and 2. for an appeal, the same applied in the proceedings at first instance and remains applicable in the appeal: see the combined effect of rr 38 & 38A of the Civil and Administrative Tribunal Rules 2014 (NSW); Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25.
However, pursuant to s 60(2) of the NCAT Act, the Tribunal may award costs if it is satisfied that there are special circumstances warranting it doing so. Section 60(3) provides a non-exhaustive list of relevant factors which might constitute special circumstances.
Each application for costs must be determined on its own merits and the central and overriding principle in any order as to costs is that of doing justice between the parties in each particular case: Moseley v AB (No 2) [2017] NSWSC 1812 at [65] - [66].
"Special circumstances" are circumstances that are out of the ordinary but need not be those which are exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] (Santow JA); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. Even if satisfied that there are special circumstances, we must further be satisfied that they are circumstances "warranting an award of costs": Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21].

The submissions by Rise

Arising from the outcome of its appeal, Rise submits that the Appeal Panel should vary the costs orders made at first instance on 11 April 2023 ("Costs Decision") as follows: 1. Actol is to pay Rise's costs of all issues in the proceedings with the exception of Actol's claim in the sum of $50,650.60 for product not delivered ("Non-Delivery Claim") as agreed or assessed under the applicable costs legislation. 2. Rise is to pay Actol's costs of the Non-Delivery Claim as agreed or assessed under the applicable costs legislation.
In the alternative, Rise submits it is open to the Appeal Panel to vary the Costs Decision to make the orders sought by it at first instance, as follows: 1. Actol is to pay 90% of Rise's costs as agreed or assessed under the applicable costs legislation. 2. Rise is to pay 10% of Actol's costs in the proceedings as agreed or assessed under the applicable costs legislation.
Rise repeats and relies on the submissions it made as to costs at first instance.
They were summarised in the Tribunal's decision as to costs (Actol Pty Ltd v Rise Products Pty Ltd; Rise Products Pty Ltd v Benth Holdings Pty Ltd t/as Gledswood Projects (No 2) [2023] NSWCATCD 49 ('Costs Decision')), as follows: "14 Rise Products and Mr Pszczonka cited the decision of the Court of Appeal in Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 (Mobis Parts) at [5] as stating "the relevant principles for awarding costs where an applicant is only partially successful". 15 In that case, the Court of Appeal stated: "5 There is no issue as to the relevant principles. The discretion under Civil Procedure Act 2005 (NSW), s 98 is ordinarily exercised by requiring that "costs follow the event": Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1. This default position was historically understood to mean (so as to preserve the practice, where any issue was tried with a jury, that those costs followed the outcome of that event) "that the costs of the several issues went to the party who succeeded on them respectively, while the general costs went to him who on the whole succeeded on the action": Reid, Hewitt & Co v Joseph [1918] AC 717 at 724-725 (Lord Finlay LC). But more recent authority favours the award of the costs of proceedings to the party successful overall without any differentiation as to issues, at least "unless a particular issue or group of issues is clearly dominant or separable": Waters v PC Henderson (Australia) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328 at 330-331 (Mahoney JA); Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [63]-[64] (Campbell JA). And the costs arising from such issues have more readily been apportioned where the party successful overall is the plaintiff: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [22] (Hodgson JA, Allsop P and Macfarlan JA agreeing)." 16 On the basis that "Mobis has succeeded on all substantial issues arising under the Local Policy except those as to 'Acceptance of Liability', the cause of the collapse being hail rather than storm, and its claim that all stock not damaged in the collapse was physically lost because its recovery was uncertain", the Court ordered the respondent to pay 90% of the appellant's costs. 17 I note that Rise Products' written submissions suggested that the Court had ordered a partially successful plaintiff to pay 90% of the defendant's costs. That is not correct. The defendant was ordered to pay 90% of the partially successful plaintiff's costs. I do not consider that Mobis Parts is an example of a case where costs were awarded against a partially successful plaintiff. 18 In respect of the circumstances of this case, Rise Products submitted: "9 Actol's claim against Rise was largely unsuccessful. Actol claimed the sum of $476,321.56: Reasons for Decision para [5]. It was awarded the sum of only $50,650.60, being 10.6% of the amount claimed by the Applicant: Reasons for Decision para [384]. 10 The "central issue in these proceedings is the nature of the contractual arrangements between Actol, Rise Products and 3Form.": Reasons for decision para [153]. The issues upon which the Applicant's claim failed were "clearly dominant or separable", being: ● the terms of the contract; ● the identity of the parties to the contract; ● whether the installation or product were defective; ● whether misrepresentations were made or relied upon; ● whether Actol was a "consumer" [for the purposes of the Australian Consumer Law]; ● whether Rise had breached statutory warranties; ● whether Rise had taken over the supervision of the job; ● what if any role and liability did the cross-defendants have; and ● whether Actol suffered or was entitled to any delay costs. 11 The great bulk of the evidence, hearing time and lengthy submissions were devoted to the above issues. These were discrete issues, severable from the one issue upon which Actol succeeded, being its claim for non-delivery of the product. Taking a pragmatic approach, as this represented only 10.6% of the amount claimed by Actol, this serves as a reasonable proxy for the amount of costs that may have been devoted to this issue. In reality, it was probably less than that but it would be impractical and uneconomic to embark on an exhaustive analysis of the precise amount of time spent on this issue…"
In addition, Rise submits that it has subsequently been successful on the question as to the applicable limit on the Tribunal's jurisdiction. Thus, it has been almost wholly successful in the proceedings at first instance.
The substantial issues at first instance (and on appeal) were whether the contract between Actol and Rise was one for the supply and installation of Rise's products or for supply only, and if for supply and installation, whether the installation gave rise to the defects alleged by Actol. There is no doubt that these issues occupied the bulk of the hearing time and the subject matter of the evidence: Costs Decision at [28]. Had Actol confined its case to the Non-Delivery Claim, it would have taken only half a day, not four days: Costs Decision at [31]. Actol was only partially successful on its Non Delivery Claim in that it has been awarded only $40,000, being less than the $50,650.60 claimed. Actol brought a claim for $476,321.56 where it was apparent both at the time it commenced the proceedings and as now affirmed on appeal, its entitlement to any monetary award was capped at $40,000, being 8.4% of the amount Actol claimed. Actol nevertheless prolonged the hearing by three and a half days where even if Actol had been wholly successful in all of its claims, it would not have added a single dollar to the amount which was ultimately awarded in its favour because of the statutory limit on the Tribunal's jurisdiction.
The Non-Delivery Claim was "clearly distinct and separable from the issues on which Actol failed": Costs Decision at [33]. It follows that the claims on which Actol failed were "dominant and separable" (to use the formulation adopted in Mobis Parts Australia Pty Ltd v XL Insurance Company SE (No 2) [2019] NSWCA 19 (Mobis Parts) at [51] (cited at [14] - [15] in the Costs Decision) and Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik) at [38] (cited at [25] of the Costs Decision).
Rise submits that the exercise of the learned Senior Member's discretion as to costs miscarried in finding that he was unable to conclude that it was "unreasonable of Actol to raise any of the issues on which it did not succeed": Costs Decision at [36]. Actol was decisively defeated on all but the Non-Delivery Claim. Even it had succeeded on its other claims, it would have been a Pyrrhic victory for the reasons above. Rise submits that it would unjust if it were ordered to bear 100% of its costs in defending Actol's claim where Rise was successful in defending itself against all but a minor and separable claim, quantifiable as comprising only 8.4% of the total dollar amount claimed by Actol.
In respect of the costs of its appeal, Rise submits it has been successful on the dominant issue raised, being the question as to the applicable monetary jurisdictional limit. It follows that costs should "follow the event".
Rise's Appeal from the Costs Decision occupied only a few minutes of hearing time as Rise took the stance at the hearing of the appeals that the outcome of the appeals would bear heavily upon the outcome of any challenge to the Costs Decision. Accordingly, any variation of the Costs Decision was not the "dominant" question on the appeals. As a result, Rise submits that the Appeal Panel should order that Actol pay Rise's costs of Rise's Appeal as agreed or assessed under the applicable costs legislation.

The submissions in response by Actol

In respect of the Costs Decision, Actol submits that the Tribunal at first instance: 1. firstly, had the benefit of all the evidence before it in relation to the dispute; 2. secondly, made a factual finding in the dispute, which was averse to Rise's interests, namely that it had failed to deliver goods worth a not insignificant sum to Actol when Rise had already been paid for such goods; and 3. thirdly, was in the best position to consider and weigh up the competing submissions as to costs before coming to a reasoned decision based upon its unique position as arbiter of fact in relation to the dispute.
While Actol does not cavil with our decision that the Tribunal's power to award damages for the non-delivery of goods was limited to $40,000 it submits that this was a pure question of law for which there was no clear precedent, due to the fact that during the course of the dispute there had been an amendment of the relevant legislative provisions.
Accordingly, it cannot be said that the Tribunal fell into obvious error based upon established legal precedent. This is not a case where there has been a clear and identifiable failure by the Tribunal to follow existing precedent when exercising its powers under the NCAT Act. There was an arguable case for both sides.
Additionally, the Costs Decision was one of practice and procedure and the Appeal Panel should exercise particular caution when reviewing such a decision: McInnes v Rheem Australia Pty Limited [2021] NSWCA 89 at [21] - [25]; followed in Roberts v The Owners - Strata Plan No 4393 [2023] NSWCATAP 119 at [54] - [56] and Veney v The Owners - Strata Plan No 2245 [2023] NSWCATAP 262 at [49].
However, even if wrong in that, Actol submits that the fact remains that the Rise was found to have had the benefit of $40,000 of Actol's money for a not inconsiderable period of time. Rise did not admit (nor tender) the $40,000 to Actol and then leave the balance of $10,650.60 to be disputed.
Actol submits it is incorrect for Rise to submit that if "non delivery" had been the sole issue for determination by the Tribunal that the hearing would have occupied only half a day. It says the costs would have been significant and lay witnesses of fact would have been called by each party.
Actol posits that Rise's submission that the Tribunal's discretion in the Costs Decision "miscarried" is an attempt to untie the proverbial gordian knot of facts and circumstances that made up the dispute matrix between the parties.
Additionally, the arithmetical exercise used by Rise to arrive at a figure of "...only 8.4% of the total dollar amount claimed..." is the precise approach warned against by Beazley JA (as her Excellency then was, with Ipp and Basten JJA agreeing) in Bostik at [38]. The passage from Bostik has most recently been cited and followed with approval by the Court of Appeal in Xiao v BCEG International (Australia) Pty Ltd (No 2) [2023] NSWCA 87 at [6] per Gleeson JA.
In response to Rise's submission that it should have its costs of its appeal, whilst Actol acknowledges that there has been a victory, of sorts, by Rise upon appeal, the practical effect of the Tribunal's decision remains; namely that Rise was required to refund $40,000 to Actol for failing to deliver the balance of the product to site. The victory Rise asserts is effectively Pyrrhic as a substantial monetary liability to Actol remains in place. The net monetary sum central to Rise's success on appeal was only $10,650.
Actol submits that this is not an instance in which the Appeal Panel ought to depart from the general rule that each party bears its own costs of an appeal as the relevant criteria in s 60(3) of the NCAT Act has not been satisfied.

Rise's costs of its appeal

Rise's submissions overlook that there was no amount in issue in its appeal over $30,000. Its appeal involved an issue of statutory interpretation which, when resolved in its favour, benefited its position by less than $30,000. As it has not sought to establish special circumstances warranting an order for costs, and we see none, we will dismiss the application to vary our provisional order.

Rise's costs of Actol's proceedings at first instance

We are disinclined to depart from the several authoritative statements by courts that appeals from the exercise of discretions, particularly as to costs, should be considered on the "deferential standard" and a "constrained" basis: see for example McInnes v Rheem Australia Pty Limited [2021] NSWCA 89 per Gleeson JA, with whom Bell P (as his Honour the Chief Justice then was) and Payne JA agreed, at [22]. The appellant generally needs to show that the Tribunal erred as described in House v R (1936) 55 CLR 499, in that it: 1. made an error of legal principle; 2. made a material error of fact; 3. took into account some irrelevant matter; 4. failed to take into account, or gave insufficient weight to, some relevant matter; or 5. arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning.
However, those decisions must be considered in context. What is different here is that we have already allowed an appeal from the Tribunal's substantive decision, meaning that, in this case, it is established that the Tribunal made a material error of fact as it misunderstood its monetary jurisdictional limit in claims under the Australian Consumer Law (NSW). That clearly had a material bearing on the exercise of its discretion, leading to a significant possibility that Rise may have suffered a substantial miscarriage of justice on the basis that the Costs Decision was not fair and equitable. We will grant leave to appeal the Costs Decision, noting that the amount in issue at first instance exceeded $30,000 and so the usual principles as to costs apply.
We have sufficient material to redetermine the issue. In doing so, we should accept the Tribunal's relevant findings that were not directly challenged on an evidenced basis, or otherwise unsupported or glaringly improbable. In that regard, we have had regard to the following paragraphs of the Costs Decision: 31 The hearing ran for four days and the submissions to well over 100 pages. If Actol had limited its claim to restitution of the price paid for the product which had not been delivered, it is reasonable to assume that the hearing would have been concluded within half a day. 32 I do not accept Actol's submission that it was compelled to run the proceedings as it did by Rise Products' failure to repay the cost of the undelivered product. That submission cannot be reconciled with the way in which Actol conducted the proceedings, in particular its maintenance of the claim that Rise Products contracted to install the RiseWall formwork. 33 In my view the claim for repayment of the cost of the undelivered product was clearly distinct and separable from the issues on which Actol failed. I also consider that the issues on which Actol failed were dominant, in the sense that most of the evidence filed by the parties was directed to those issues and those issues took up most of the time at the hearing and the bulk of the written submissions. 34 In my view the appropriate order is that there be no order as to costs between Actol and Rise Products. That order takes into account that, although Actol succeeded in obtaining an award in its favour which was not unsubstantial, that award reflected just over 10% of the amount claimed and reflected success on an issue which took up an even smaller proportion of the evidence and hearing time. 35 I have given consideration to the question whether I should make an order requiring Actol to pay some of Rise Products' costs. On a strict allocation of costs according to the parties' success on particular issues, there is no doubt in my view that the costs which Actol would be ordered to pay Rise Products would exceed the costs which Rise Products would be ordered to pay Actol. However, it is necessary to bear in mind the fact that Actol was ultimately successful in obtaining an order for the payment of money by Rise Products: see Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [20]. As Hodgson CJ in Eq suggested in Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, Hodgson CJ in Eq, NSWSC, 3 June 1998), it would usually only be where it was unreasonable to raise an issue on which an otherwise successful party has failed, that a party successful overall would be ordered to pay the unsuccessful party's costs of that issue. 36 I am unable to conclude that it was unreasonable of Actol to raise any of the issues on which it did not succeed. 37 In my view Rise Products' success on the dominant issues is sufficient to justify declining to make an award of costs in favour of Actol but, in the absence of further disentitling conduct, it is not sufficient to justify an order that Actol pay any costs to Rise Products.
In redetermining the issue, we accept the Tribunal's findings contained in that reasoning as correct, save that we are unable to discern from the Tribunal's reasons why it reached a state of satisfaction that it was not "unreasonable of Actol to raise any of the issues on which it did not succeed": at [36]. We accept in that regard the submission by Rise that Actol was decisively defeated on all but the Non-Delivery Claim and that even it had succeeded on its other claims, it would have been a Pyrrhic victory. We are satisfied the extent of the unsuccessful claims, compared to the simple nature of the claim on which Actol ultimately succeeded, makes this the sort of unusual case referred to by Hodgson CJ in Eq in Permanent Trustee Aust Ltd (above).
However, we do not think the proportional approach based on the amount claimed, as opposed to that received by Actol, as suggested by Rise is warranted. In that regard we note the "question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation": James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296, citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.
On the Tribunal's findings, a more appropriate rule of thumb to adopt would be that the severable issues on which Actol failed represented 7/8ths of the costs overall, based on the hearing time and our assessment of the submissions and evidence before the Tribunal, which was lodged by the parties in the appeal. However, we acknowledge the illusory nature of even that assessment.
We do not think it just, quick or cheap that the outcome of the exercise of our discretion should be to order that Actol pay Rise that (or a similar) proportion of Rise's costs and that Rise pay Actol the remaining proportion of its costs. Such an order would simply lead, in all likelihood, to a lengthy and expensive costs assessment process.
Rather, we intend to take a broader brush approach with a view to bringing a greater level of finality to the dispute, and in doing so will simply order that Actol pay Rise seventy percent of its costs of defending Actol's claim at first instance.

Orders

Our Orders are as follows: 1. A further hearing of the remaining issues is dispensed with. 2. The application to vary order 4 made on 18 September 2023 in these proceedings is refused. 3. Leave to appeal in respect of order 3 of the decision of the Tribunal in proceedings HB 20/35833 is granted. 4. That order is varied and is now: "Actol Pty Ltd is to pay seventy percent of the costs of Rise Products Pty Ltd as agreed or as assessed."

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: 04 December 2023

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