Bajic v Paraskevopoulos

Background to appeal decision

1. The Homeowners owned property at Rockdale. The Builder undertook building and construction works pursuant to a contract. Various issues arose resulting in the Homeowners terminating the contract.
2. The Builder commenced proceedings HB 17/13535 (the Builder's Proceedings). He claimed $40,226.60 on a quantum meruit basis for work undertaken in respect of a suspended ground floor formwork deck. The Homeowners in turn commenced proceedings HB 17/21112 and HB 17/40804 (the Homeowners' Proceedings). They sought payment of $94,736.52 in respect of defective works, completion costs, disputed payments and consequential losses.
3. In its decision of 22 May 2018, the Consumer and Commercial Division of the Tribunal (the Tribunal): 1. dismissed the Builder's Proceedings; and 2. in the Homeowners' Proceedings, ordered the Builder to pay the Homeowners $86,431.52.
4. The Builder appealed from the Tribunal's decision. Broadly speaking, the grounds of appeal concerned the adequacy of the reasons given by the Tribunal. We found that the reasons for decision were detailed, comprehensive and persuasive.
5. There were four grounds of appeal being: 1. the Tribunal erred in law by failing to take into account or give proper weight to the first respondent's admission, against interest, that further works had been undertaken at the subject property prior to the first inspection of the expert Mr Nisbett; 2. the Tribunal erred in law by failing to take into account or give proper weight to the first respondent's admission, against interest, when it concluded that Mr Nisbett's evidence was unchallenged; 3. the Tribunal failed to give reasons why it rejected the admission as being evidence of further works being completed at the premises or make any specific reference to it at all; 4. the expert report offended the basis rule.
6. For the reasons set out at pars [39] to [43] of the primary decision, we rejected the first ground of appeal. We considered that it was not correct to describe Mr Paraskevopoulos' statement to the Tribunal as an admission or concession against interest. We also considered (as did the Tribunal) that the issue was irrelevant to the Tribunal's task. Even if Mr Paraskevopoulos' statement was given weight as an admission against interest, this would only lead to a finding that some rectification works were carried out, which, the Tribunal correctly identified, could only, as a matter of logic, decrease the value of the Homeowners' claim for incomplete works, and could not form part of the Homeowners' claim for defective works when no actual rectification costs were sought.
7. As to the second ground of appeal, as we rejected the proposition that Mr Paraskevopoulos' statement was an admission against interest, it followed that the Tribunal did not err by failing to consider this matter in considering the weight to be given to Mr Nisbett's reports.
8. Our conclusions on those matters were sufficient to dispose of the appeal, which we dismissed. However for completeness, we also briefly considered the Builder's written submissions, which also raised matters requiring leave. We concluded at [60] that we would not grant leave to appeal on any of the four grounds. We were not satisfied that any ground involves an issue of principle, a question of public importance, an injustice which was reasonably clear or where the Tribunal had gone about its fact finding process in such an unorthodox manner that it was likely to have produced an unfair result.

Homeowners' application for costs

1. By written submissions dated 16 August 2018 the Homeowners seek an order that the Builder pay the costs of the appeal: 1. up to and including 26 June 2018 on an ordinary basis; and 2. on the indemnity basis thereafter.

Costs up to and including 26 June 2018

1. The Homeowners submit, in summary:

• r 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules) applies to the appeal;`
• by reason of r 38A(2), the Appeal Panel must apply the first instance costs provisions (defined in r 38A(1)), in relation to the costs of the appeal;
• the first instance costs rules are contained in r 38;
• as the costs claimed or in dispute in the appeal were more than $30,000, while the award of costs is discretionary, the "usual rule" is that costs follow the event: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67].

1. The Homeowners rely on Thompson v Chapman [2016] NSWCATAP 6. In that decision, the Appeal Panel stated at [71] and [72]: "71. Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 88 and Kirby J at 121 - 123. 72. The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: (1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made: see for example Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304; and (2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 41 - 44."
2. We agree with the Homeowners. Rule 38A does apply to this appeal. The amount in dispute did involve more than $30,000, as that expression is explained in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25and we see no reason why the usual costs rule should not apply; that is, the unsuccessful party (here the unsuccessful appellant Builder) should pay the Homeowners' costs up to and 26 June 2018 as agreed or as assessed.
3. We are satisfied that the dispute the subject of the appeal involved an amount of more than $30,000. The Builder sought to appeal against the orders of the Tribunal dismissing his claim for $40,226.00, and ordering him to pay the Homeowners $86,431.52. To use the language of TriCare, we are satisfied that the issues in dispute in the appeal, had a realistic prospect of changing the wealth of the Builder by more than $30,000.
4. We see no reason why the usual rule should be displaced in whole or in part.

Indemnity costs after 26 June 2018

1. Here the Homeowners rely on a letter from their solicitors to the Builder's solicitors dated 26 June 2018 (the Letter). The Letter contained a "Calderbank Offer" made in accordance with the principles set out in Calderbank v Calderbank [1976] Fam 93 and applied in Messiter v Hutchinson (1987) 10 NSWLR 525.
2. The Calderbank Offer was that the Builder withdraw the appeal, and that each party bear their own costs. The Calderbank Offer was open for acceptance until 5pm on 5 July 2018.
3. The Homeowners rely on Mendonca v Tonna [2017] NSWCATAP 176 at [59] to [64] where the applicable principles are extensively discussed. They submit, correctly, that in determining whether to make an indemnity costs order pursuant to a Calderbank offer, the Tribunal should have regard to the following matters

• whether there was a real and genuine element of compromise;
• whether the refusal was unreasonable, the reasonableness being assessed at the time the offer is made, and not with the benefit of hindsight;
• relevant factors in relation to whether the rejection was reasonable include the stage of the proceedings at which the offer was received, the time allowed to consider the offer, the extent of compromise offered, the offeree's prospects of success (assessed at the date of the offer), the clarity with which the terms of the offer were expressed and whether the offer foreshadowed an application for indemnity costs in the event of rejection.

1. The letter asserted that the Builder had no prospects of success on appeal as:

• the grounds of appeal failed to clearly identify any error of law, and failed to articular which grounds required leave;
• to the extent that some grounds required leave, the basis upon which leave should be granted pursuant to Pt 6 of Sch 4 of the Act had not been identified;
• to the extent the Builder sought to challenge factual findings, as those factual findings were founded on adverse credit finings the Builder would be unable to establish a "Fox v Percy" error (a reference to Fox v Percy (2003) 214 CLR 118);
• while the Builder sought an order that the Homeowners pay him an unspecified amount of money on the basis that his quantum meruit claim was upheld, no ground of appeal put in issue any of the findings of fact or issues of law that resulted in the Builder's quantum meruit claim being dismissed; and
• to the extent that leave to appeal was required, the Builder had failed to identify any issues of principle or public importance that might justify a grant of leave.

1. As noted, no submissions were received from the Builder. Thus we do not know why the Builder refused the Calderbank Offer, or what the Builder's views are about the reasonableness of the offer or the time available to accept it. In the circumstances, and for the following reasons, we accept the Homeowners' submissions. We consider it appropriate to make the order sought by the Homeowners.
2. First, the terms of the Calderbank Offer contained a real and genuine element of compromise in that the Homeowners were prepared for forego a costs order that they would otherwise ordinarily be entitled to upon success in the appeal. The letter was sent just over one month before the hearing of the appeal by which time, we infer, the Homeowners would have incurred substantial costs in defence of the appeal. Relevant costs provisions were expressly stated and drawn to the attention of the Builder.
3. Secondly, the Calderbank Offer set out in detail the difficulties with the Builder's appeal.
4. Thirdly, the Builder had legal representation, including experienced counsel, at the time the Calderbank Offer was made and accordingly was in a position to assess the matters raised in the Letter.
5. Fourthly, given that the appeal was to be heard on 30 July 2018, the Builder had nine days to consider the matters raised in the Calderbank Offer.
6. Fifthly, at the time the Calderbank Offer was made the Builder was in receipt of the Homeowners' Reply to Appeal, which contained appropriate detail for the Builder to properly understand and assess the issues of law that would be raised by the Homeowners in the appeal.

Orders 1. The appellant is to pay the respondents' costs of the appeal up to and including 26 June 2018 as agreed or as assessed. 2. The appellant is to pay the respondents' costs of the appeal thereafter on the indemnity basis 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: 31 August 2018