AWD Cavallo Pty Ltd t/as Kutchenhaus v Turner

(1) the appellant had agreed to termination on 1 November 2024,

(2) it had agreed orally to waive the design fee prior to contract,

(3) there was no evidence to prove that the appellant had actually incurred costs of $5500,

(4) to the extent that figure included GST or profit margin, it was not a cost incurred, and

(5) clause 3.3 of the contract, which provided that 'design costs and provision of plans are costed at $5500 plus GST ...', was not applicable in the circumstances.

1. On 20 June 2024, the Tribunal below ordered the appellant to refund the entire deposit. It found that the appellant had unconditionally agreed to the termination of the contract on 1 November 2024, that clause 13.2 did not operate to permit the respondent to retain an amount for work done because its consent was unconditional, that there was insufficient evidence to establish what costs were actually incurred by the appellant and that they were reasonable as required by clause 13.2.
2. It rejected a claim by the appellant in quantum meruit on the basis of a lack of sufficient evidence.
3. The Appellant appealed. It was represented by its solicitor. The respondent Ms Turner represented herself on appeal, as she had below.
4. On 11 October 2024, the Appeal Panel made the following orders:

(1) Leave to appeal is granted, the appeal is allowed and the amount of $6375.00 in order 1 made 20 June 2024 in proceedings 2024/00075480 is varied to $325.00, that amount to be paid immediately.

(2) Subject to order 3, each party is to pay their own costs of the proceedings.

(3) If either party contends for a different order to that of order 2, the following directions apply: ...

1. The Tribunal then issued a timetable for filing and service of any costs application and submissions. With respect to costs of the appeal, the Appeal Panel observed:

92. Section 60 of the NCAT Act applies to costs of the appeal. As such each party is to pay their own costs: NCAT Act s 60(1). The Tribunal may only award costs if there are special circumstances warranting such an award.

93. Prima facie, there are no special circumstances, this case being typical of appeals brought in connection with consumer claims. Consequently, we will make an order that each party is to pay their own costs as contemplated by s 60(1) but permit either party to apply for a different order if they consider that appropriate.

(1) Each party to proceedings in the Tribunal is to pay the party's own costs.

(2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.

(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following -

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) 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,

(d) the nature and complexity of the proceedings,

(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(f) whether a party has refused or failed to comply with the duty imposed by section 36(3),

(g) any other matter that the Tribunal considers relevant.

1. In The Owners - Strata Plan No 63731 v B & G Trading Pty Limited (No 2) [2020] NSWCATAP 273, the Appeal Panel observed:

6. The general rule set out in s 60(1) was:

"... designed to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as is practicable: Choi v University of Technology Sydney [2020] NSWCATAP 18 at [41]. [1]

7. In Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42 the Appeal Panel said, at [8], that the discretion to award costs had to be exercised judicially:

"...having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. (See eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (no 2) [2016] NSWCATAP 168 at [16].)"

8. Section 60(2) says that the Appeal Panel may award costs to a party "only if" satisfied there are special circumstances warranting an award of costs.

9. Section 60(3) sets out a non-exclusionary list of factors to which an Appeal Panel may have regard in determining whether special circumstances warranting an award of costs exist.

10. "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 J); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107].

11. However, it does not follow that a costs order should be made simply because one or more of the factors in s 60(3) are made out.

12. Even if satisfied that there are special circumstances, the Appeal Panel 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]; Youssef at [108].

13. The exercise of the discretion requires the Tribunal "to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]; Obieta v Australian College of Professionals Pty Ltd (2014) NSWCATAP 38 at [81]; Khalafv Commissioner of Police [2019] NSWCATOD 178 at [29]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35].

14. He who asserts must prove, and so the party seeking the costs order bears the onus of proving that special circumstances exist - Styles v Wollondilly Shire Council [2017] NSWCATAP 108 at [5] under the heading "Costs".

15. Whether special circumstances exist is a question of fact and each case must be assessed according to its circumstances: Wynne Avenue Property Ltd v MJHQ Pty Ltd (No 2) [2019] NSWCATAP 68 at [57]; The Owners - Strata Plan 20211 v Rosenthal [2019] NSWCATAP 49 at [15].

1. In DYH v Public Guardian (No 3) [2022] NSWCATAP 34, the Appeal Panel observed at [19]:

18. ... The concern with access to justice, evinced in s 60(1), indicates that the Tribunal should not award costs too readily on the basis that one party's claim was stronger than the other party's claim (see NCAT Act, s 60(3)(c)). The relative strengths of the parties' claims is one factor to be taken into account, but a finding that a party's claim is weak does not necessarily mean that there are special circumstances warranting an award of costs (see Choi v University of Technology Sydney [2020] NSWCATAP 18 at [45]).

19. In this context, we consider that the power to award costs is to be exercised with some tolerance for self-represented litigants who do not understand legal concepts.

1. The parties have filed written submissions. Their submissions have been taken into account.
2. In summary, the appellant says it should have an order for costs of the appeal because it was successful on appeal, the respondent's case was unclear at the outset, it was untenable in fact or law, and it included an attempt to raise an entirely new argument on appeal based on the Australian Consumer Law.
3. It says that the phrase 'untenable in fact or law' means 'a case that is so weak that it should not be argued or so weak that it would be an abuse to seek to maintain it'. It relies on a first instance decision for which it provides no citation.
4. The respondent submits in summary as follows:

(1) If there was lack of clarity in her case below, it is not relevant to the issue of costs on appeal.

(2) The parties' success on appeal was 'mixed' in that the order below was varied so as to order the repayment of part only of the deposit.

(3) The finding by the Tribunal below to the effect that the appellant's consent to termination of the contract was unconditional (which the Appeal Panel was found was in error) was not the fault of the respondent. She made the opposite submission below.

(4) The respondent's case on appeal was not untenable, as the repayment order was preserved in part, and even though the Appeal Panel found that the alleged waiver of the design fee could not form part of the contract, it did so on the basis that it did not satisfy the criteria in Codelfa Construction Pty Limited v State Raile Authority of NSW (1982) 149 CLR 337, which was an issue of some complexity.

(5) To the extent that she raised a new issue under the Australian Consumer Law on appeal, she was representing herself and did not know that new arguments could not be raised on appeal, she did so in response to the Tribunal's pro forma Reply to Appeal which includes at 3A a question whether there are other reasons not given by the Tribunal which support the original orders, and some leeway should be provided in those circumstances. The point was dealt with expeditiously by the Appeal Panel, did not impede the speedy determination of the appeal, and there was no evidence that increased costs in any significant way.

(6) The dispute was over a sum less than $6500 and therefore did not warrant the involvement of a solicitor.

1. The appellant's submission that Ms Turner's case was unclear 'from the outset' appears to be a reference to the proceedings below. That is reinforced by the submission (Appellant's submissions at [16]) that she 'led evidence of the Appellant unconditionally consenting to the termination of the contract whilst simultaneously acknowledging that the Appellant was exercising a power under s 13.2 of the contract to retain the deposit'. Evidence was only led below.
2. The strength of respondent's case below, though relevant to the issue of costs in those proceedings, is not a factor relevant to the issue of costs on appeal. Even if it were, the fact that she was successful below demonstrates that her case was at least arguable, and that it was not untenable in fact or law.
3. If the appellant is submitting that her case on appeal was unclear from the outset, the submission is rejected. On appeal, she supported the decision below. Her case was expressed in terms that were clear to the Appeal Panel. It is at [8] to [10] of the Panel's reasons.
4. The appellant submits that her case below was contradictory, as she argued on the one hand that there was unconditional consent to her termination of the contract, and on the other that the appellant was exercising a right to retain the deposit under clause 13.2 as a condition of its consent. It relies on paragraph 23(a) and (c) of the respondent's Points of Claim below, which the appellant did not file on appeal. Paragraph 23 was in the following terms:

23. On 1 November 2023, the respondent wrote to the applicant representing that:

a) the respondent consented to the termination;

b) Contrary to the Manufacturing Representation, the order for the design was sent to the respondent's manufacturers on 26 October 2023;

c) The respondent was exercising its power pursuant to clause 13.2 of the Contract and retaining the Deposit on account of alleged out of pocket expenses comprising deign fees totalling $5,500.00 plus GST.

Particulars

Email from the respondent to the applicant dated 1 November 2023.

1. Contrary to the appellant's submission, paragraph 23 contains no allegation to the effect that consent was unconditional. That was the finding of the Tribunal below.
2. The result of the appeal was that the appellant was successful in part, and the respondent was successful in part. The amount of the deposit ordered to be repaid was substantially but not wholly reduced. In the result, the appellant was not entitled to retain the whole of the deposit as it did. The Appeal Panel ordered it to repay the balance of the deposit, after varying the amount of the repayment. It cannot be said that the respondent was wholly unsuccessful.
3. In any event, section 60 provides that, in the absence of special circumstances, each party is to pay its own costs. The usual position adopted by courts, that costs follow the event, is displaced. The mere fact, if it be the case, that a party is unsuccessful does not compel a costs order against it.
4. The fact that a party is unsuccessful, or that there is a finding against it in respect of one or other of its submissions, or all of them, does not of itself constitute special circumstances.
5. In any event, the respondent is not responsible for the finding below that consent to termination was unconditional. The fact that the Appeal Panel interpreted the respondent's email of 1 November 2023 differently from the Tribunal below is not a circumstance that supports a finding of special circumstances.
6. As indicated, the Appeal Panel found that the alleged waiver of the design fee was ineffective, because it did not satisfy the requirements in Codelfa. Though the respondent's submission that it applied did not attract the Appeal Panel, no reasons have been provided as to why it was 'untenable' in fact or law, as opposed to being merely unpersuasive. Whether or not it satisfied the principles in Codelfa is, as the respondent submits, a matter of some complexity. I am not satisfied that this finding demonstrates that the respondent's case was untenable.
7. Even if - contrary to my view - special circumstances exist, I would not be inclined to exercise the discretion to award costs as, at least in such a case, it is appropriate to observe 'some tolerance for self-represented litigants who do not understand legal concepts': DYH.
8. As indicated, the respondent attempted to raise a new issue on appeal under the Australian Consumer Law, when she responded to the question 3A on the Reply to Appeal form. The issue did not take up any significant time at hearing. It was able to be dealt with by the Panel expeditiously, and was not pressed by the respondent after she was informed that new matters cannot be raised. There is no evidence that it gave rise to any significant increase in the costs incurred by the appellant. As it could not be ventilated on appeal, and was not argued, it is not possible to say whether the point was untenable in fact or law.
9. In any event, having regard to all the discretionary factors listed in the preceding paragraph, and to the leeway applicable where litigants represent themselves, it would not persuade me to exercise the discretion to award costs.
10. There are two further reasons which would dissuade me from making a costs order, even if - contrary to my view - special circumstances exist.

(1) In the result, the Appeal Panel determined that some part of the deposit must be repaid to Ms Turner, but that the balance may be retained by the appellant. Much of the argument, and the Appeal Panel's consideration, went to the issue of what portion must be repaid and what portion may be retained. That depended on whether the quantification of design fees in clause 3.3 applied in this case. That clause commenced with the words, 'If you do not agree to a revised quotation, this Agreement will terminate automatically and any monies paid by you to us will be refunded, less cost incurred by us. ...'. For the reasons it gave, the Appeal Panel was persuaded that the clause applied in this case. As this was not a case of failure to agree to a revised quote, the contrary was reasonably arguable, even if it did not succeed.

(2) For the reasons given by the Appeal Panel, the appellant was not entitled to keep the whole of the deposit as it did. By retaining the whole of the deposit, the appellant forced Ms Turner to seek repayment, in whole or in part, by commencing the proceedings below. Though the Appeal Panel varied the order below for repayment of the deposit, it preserved the order so far as it related to part of the deposit paid. Ms Turner could not have achieved that result without commencing the proceedings below, and appearing and arguing her case on appeal. She was entitled to do so.

1. Application for costs of the appeal dismissed.
2. Each party is to pay its own costs of the appeal.

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.