Boden v Gleeson

Judgment 1THE COURT: These are the Court's reasons for refusing the application for leave at the conclusion of oral argument. 2The application for leave concerns costs. The magnitude of those costs is unknown, although the argument in the court below concerning them (and interest) seems to have taken six days, following the adoption of an expert's reports. Originally, a modest claim and cross-claim had been commenced in the Consumer, Trader and Tenancy Tribunal (CTTT) in 2007, concerning a building contract entered into more than a decade ago. 3It is convenient to call the applicants for leave in this Court, who were the cross-claimants in the District Court, the Owners, and the respondents in this Court, who were plaintiffs in the District Court, the Builder. For some reason the second respondent was joined although she seems not to have been a contracting party, but nothing turns on that. 4The dispute arose out of a building contract for alterations and additions to a house in Mosman in 2003. Practical completion was certified on 3 June 2005, but on 24 November 2005 a list of defective works was issued, some but not all of which were rectified by the Builder. In June 2007, the Builder sought in the CTTT: (1)outstanding contract moneys, being the balance of the retention, in the amount of $42,000; (2)delay damages in the amount of $48,622, and (3)interest and costs . 5On 7 August 2007, the Owners, by "response/cross-application" in the CTTT: (1)denied liability for the Builder's claim; (2)sought damages for the rectification of defects, and (3)sought $16,000 for liquidated damages. 6The litigation proceeded for almost two years with no determination in the CTTT. The parties exchanged their evidence by the middle of 2008, and the proceedings were listed on 3 November 2008 with an estimate of three days. That date was vacated, further evidence was served, and the proceedings were listed for hearing on 16 March 2009 with an estimate of five days. On 16 March 2009, on the Owners' application, the hearing was vacated so as to permit them to have the proceedings transferred to the District Court so that they could pursue a claim against an engineer in respect of an allegedly defective blade wall. The Builder neither opposed nor consented to the transfer. The CTTT ordered the Owners to pay the Builder's costs thrown away by reason of the vacation. 7Thereafter, it took some two and a half years to obtain judgment in the District Court. The main features of that phase of the proceedings were as follows. Following the transfer to the District Court, an engineering firm was joined as the third cross-defendant, and the proceedings were set down for hearing on 24 May 2010 with an estimate of four days. That hearing was vacated on the application of the Owners, who were ordered to pay the other parties' costs, and the matter was set down for a ten day hearing commencing 1 November 2010. The Court directed the parties to mediate no later than 30 September 2010. The mediation was in part successful. There was agreement to dismiss the proceedings against the engineers with no order as to costs, and to resolve the Owners' claim for rectification by way of binding expert determination, with the hearing on 1 November 2010 to be confined to the Builder's claim for delay damages. On 1 November 2010, the District Court, over the opposition of the Owners, directed that the claim for delay damages also be determined by an expert. The same expert determined both claim and cross-claim. He found that the Owners were entitled to $72,634.30 (including $57,421.50 in rectification costs and $16,000 for liquidated damages) and the Builder was entitled to $47,425 in respect of delay damages. Taking into account the $42,000 retention in the hands of the Owners, it followed that the Owners were to be paid $30,634 by the Builder and the Builder to be paid $47,425 by the Owners. 8Some adjustments were made after the District Court determined that a further report was required by reason of an error of law when the Owners had been denied procedural fairness. Ultimately, a judgment was entered on 22 December 2011 in favour of the Builder in the amount of $48,622, and judgment was entered in favour of the Owners in the amount of $30,634. 9That took place at the end of 2011. Although the record in this Court is incomplete, it appears that no fewer than six days throughout 2012 were directed to the question of costs and interest. 10The primary judge, on 18 December 2012, ordered, relevantly for present purposes, that: "4. [T]he [Owners] jointly and severally pay the [Builder's] costs on the [Builder's] claim: ▪ on the ordinary basis, as agreed or assessed, up to and including 23 April 2010; and ▪ on an indemnity basis as and from 24 April 2010. 5. [N]o order for costs in respect of the cross-claim up to and including 23 April 2010. 6. [O]rder that the [Owners] jointly and severally pay the [Builder's] costs on the cross-claim on an indemnity basis as and from 24 April 2010." 11Her Honour made a special order (order 7) that the Owners jointly and severally pay the Builder's costs on an indemnity basis in respect of the: "whole of the proceedings in the motion filed first on 9 August 2012 and the whole of the matter before me, including the listings on 26 July; 30 August, 12 September, 2 and 5 October; and 21 November 2012." 12The principal questions sought to be agitated by the draft notice of appeal were (a) whether the "starting point" for the costs discretion is that of the Court or the CTTT, and (b) whether the indemnity costs payable after 24 April 2010 reflected appellable error. Although concededly outside the draft notice of appeal, and unsupported by any written submissions, a further attack was made orally upon the special costs order (order 7) in respect of the costs of the days on which costs had been argued. 13In relation to the first question, the Owners submitted that the primary judge had erred in treating the costs regime in the CTTT as applicable by reason of the fact that the litigation had commenced in the CTTT. They said that s 23(1)(b) of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) had the effect that the proceedings once transferred were to be treated as if they had been commenced in the District Court, so that the default position of costs following the event applied. In oral submissions, the Builder accepted that the Owners were in this respect correct, and did not seek to defend that aspect of the reasoning. 14In relation to the second question, the Owners complained that there were two separate "events", namely, the judgments that each party obtained on the claim and cross-claim, and that there was error in taking an overall approach. Further, they said that if an overall approach were taken, the Owners had been successful, since the effect of the judgments was that the Owners kept the $42,000 retention, as well as obtaining a judgment for $30,634, while the Builder had merely obtained a judgment for $47,425. In relation to the Calderbank letter, the Owners said that it did not represent a compromise at all, if it was a compromise, they had bettered it, and in any event it had been reasonably refused. 15The starting point is that leave is required because what is sought to be argued on appeal is a question of costs. The principles are settled. They were collected by Basten JA in Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[39] and applied by Meagher and Leeming JJA in St George Bank - A Division of Westpac Banking Corporation (formerly St George Bank Ltd) v Jin [2013] NSWCA 306 at [20]. It is necessary to demonstrate more than arguable error. Ordinarily, it is necessary to show that there is an issue of principle, a question of general importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable. None of the Owners' submissions on either of the principal questions sought to be agitated satisfied that test. 16Dealing with the first question, the primary judge erred in not having regard to the effect of s 23(1)(b) of the Consumer, Trader and Tenancy Tribunal Act. It was on that basis that her Honour made order 5. That was an order in the Owners' favour. They obtained the benefit of no order for costs against them, in circumstances where her Honour formed the view that the Owners had (a) considered overall, failed in their claims (see further below) and (b) even considered separately, had enjoyed very modest success in the District Court (they had claimed $202,961.85). Further, her Honour expressed the tentative view that even without the Calderbank letter, it would have been open to order indemnity costs against the Owners from the outset of their cross-claim. 17Turning to the second question, no appellable error is disclosed by exercising a costs discretion having regard to the overall result of the dispute between the parties. Although there were separate judgments and separate pleadings, the subject matter of the dispute was identical - the extent to which the parties established breaches of the same contract in respect of the same building. The same expert was retained to determine the claims of both the Owners and of the Builder. The discretion as to costs is a wide one, which may be exercised in an appropriate case (a) separately in respect of particular issues within the same proceedings, or (b) separately as between statement of claim and cross-claim, or (c) globally in relation to the whole of the dispute between the parties. There is no rule that there is a single "event" for the purposes of costs for each and every pleading, or for that matter for each and every judgment entered. Section 90 of the Civil Procedure Act 2005 (NSW) empowers a court to give separate judgments in respect of the claim and the cross-claim, or alternatively to give a single judgment for the balance. The fact that the power to give a single judgment was not exercised does not stand in the way of a global assessment of the parties' success. No error of principle or question of general importance or injustice arises from the approach taken by her Honour. 18Consistently with the foregoing, the Calderbank letter proceeded on the available basis that it was an offer to resolve the whole of the controversy between the parties. The Builder offered to give up its entitlement to the $42,000 retention (it had already conceded the Owners were entitled to $16,000 liquidated damages) but on the basis that the Owners pay the Builder's costs. That was a genuine offer, involving the Builder giving up part of what it was claiming in the litigation. It was an offer which was bettered by the Builder in the outcome, for ultimately the Owners kept the $42,000 retention but were ordered to pay some $16,782 more to the Builders than the Builders were ordered to pay to the Owners. It was open to her Honour to find that the Owners' failure to accept it was unreasonable. It was made in March 2010, almost three years after litigation had been commenced, and after much evidence had been exchanged between the parties: the Owners had served four expert reports by two experts (Messrs Fowler and Allsopp), and the Builder had served one (Mr Iskowicz). Once again, no issue of principle, or question of general importance, or reasonably clear injustice arises from her Honour's reasons. 19Finally, so far as is disclosed by the materials available to this Court, it was open in light of the history of this matter for her Honour to conclude that the Owners' conduct in relation to litigating the remaining issues of costs and interest after the referee's reports had been adopted warranted a special costs order against them. 20For those reasons, we refused leave with costs. No application was made for any special costs order in this Court.