Bondi Builders Pty Limited v Dennett

NCAT Appeal Panel|2022-09-15

Introduction

This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal on 19 May 2022.
It is convenient to refer to the appellants as the builder and to the respondents as the owners. The first instance proceedings also involved a painter, but he is not a party to this appeal. This appeal challenged the exercise of the discretion as to costs.
For the reasons set out below, we have decided that, even if it could be said that the error for which the builder contended occurred, the outcome would be no different. Accordingly, there has been no miscarriage of justice with the consequence that there is no basis warranting a grant of leave to appeal.

Background

There were three applications under consideration at first instance: 1. a claim by the owners against the builder, 2. a claim by the builder against the owners, and 3. a claim by the builder against the painter.
After a hearing on 27 August 2021, those applications were determined on 18 February 2022 as follows: 1. the owners were awarded $35,281.21 against the builder, 2. the builder was awarded $2,685 against the owners, 3. the builder was awarded $17,028 against the painter.

Scope and nature of internal appeals

Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) NCAT Act.
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: (a) the decision of the Tribunal under appeal was not fair and equitable; or (b) the decision of the Tribunal under appeal was against the weight of evidence; or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
As to that provision, Collins v Urban [2014] NSWCATAP 17 at [76] (Collins) suggests a substantial miscarriage of justice may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). An appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32].
In Collins, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.

Submissions and evidence

In deciding the appeal, we have had regard to the following documents which have been provided to the Tribunal by the parties to this appeal on the dates indicated: 1. the Notice of Appeal, received on 16 June 2022, 2. the Reply to Appeal, received on 29 June 2022, 3. the builder's submissions, received on 3 August 2022, 4. the owners' submissions, received on 15 August 2022, and 5. the builder's submissions in reply, received on 25 August 2022.
There were no oral submissions as the appeal was listed for hearing on the papers.

Notice of Appeal

The Notice of Appeal was lodged on 16 June 2022, within the 28-day period specified in rule 25 the Civil and Administrative Tribunal Rules 2014 (the Rules). The grounds of appeal were expressed as follows: The exercise of the discretion with respect to costs miscarried because the primary basis for exercising the discretion in the relevant way was contrary to the findings of the Tribunal. In particular, the primary basis for making a costs order in favour of the Home Owners (the Respondents) was that they were successful in relation to "almost all" of the six items in dispute. However, the Tribunal had found that it was in fact the Builder (the Appellant) that was successful in relation to almost all of the six items in dispute.
It was contended by the builder that the 19 May 2022 costs order be set aside, that an order should be made for the owners to pay 60% of the costs of the builder, and that the owners be ordered to pay the costs of the appeal.
Leave to appeal was sought on the basis that the decision was not fair and equitable because the primary basis for that decision was inconsistent with the Tribunal's findings and therefore involved an obvious error which was said to constitute a miscarriage of justice.

Reply to Appeal

The contents of the Reply to Appeal may be summarised by noting that the owners claimed there were five key issues in the case: 1. the owners' claim for defective work, 2. whether a work order or a money order should be made, 3. the owners' claim for incomplete work, 4. the owners' claim for monetary adjustments, and 5. the builder's claim for monetary adjustments.
The owners contended they were successful on (2) and (3), and substantially successful on (1) and (4). Reference was also made to the sixteen items of work alleged to have been defective, which are considered below. It is sufficient to record here that the owners supported the decision as to costs.

Builder's submissions

It was submitted that the issues raised by the appeal were (1) whether leave to appeal should be granted, (2) if so, whether the costs order should be set aside, and (3) if so, what order for costs should be made.
The basis of the appeal was the claim that there was an obvious error in the reasons which was said to be fundamental to the exercise of discretion, namely the sentence which said: Of the 16 items of defective work the dispute was reduced to 6 items of which the Home Owners were successful in almost all.
In support of the builder's case on appeal, it was suggested that it was successful in relation to most of the six disputed items because: two of them were abandoned by the owners in their closing submissions, the builder succeeded in relation to four items, and the owners only succeeded in relation to two items. It was also contended that the owners were "almost entirely unsuccessful" in relation to their claim for monetary adjustments, having claimed more than $200,000 but only being awarded $1,356.08.
After noting that the Appeal Panel could, if the costs order were to be set aside, either remit the question of cost for redetermination or determine that issue based on the submissions provided, it was maintained that if the suggestion that the owners were entitled to recover 60% of their costs on the basis that they succeeded in relation to "almost all" of the alleged defects, then it followed that the builder was entitled to recover 60% of its costs on the same basis. In the alternative, it was submitted that the owners should pay 50% of the builder's first instance costs.
A claim was also made for the costs of the appeal, which were said to be $6,424.50 ($2,062.50 for 5.5 hours of counsel's time at $375 per hour, $3,500 for solicitor's fees, and $862 for the filing fee). It was suggested that, on a party/party basis, an amount of $5,000 should be awarded for the costs of the appeal.

Owners' submissions

After setting out the five key issues at first instance, it was contended that the decision as to costs was not primarily based on a consideration of the six disputed defects. It was noted that both parties addressed all five key issues in their submissions as to costs and that the reasons referred to more than just the disputed defects.
The owners' submission as to the outcome of the five key issues, listed in [17] above, was: 1. defective work - owners substantially successful, 2. work order or a money order - owners successful, 3. incomplete work - owners successful, 4. owners' claim for monetary adjustments - owners unsuccessful, and 5. builder's claim for monetary adjustments - builder unsuccessful.
After referring to various aspects of the parties' submissions made in relation to costs at first instance, it was submitted that the owners should be awarded at least 60% of their costs and should not be ordered to pay any of the builder's costs. The owners also sought their costs of the appeal.

Submissions in reply

The builder conceded that the defects claim was not the only reason for the decision as to costs but contended it was a significant factor, if not the primary factor that was taken into consideration. It was noted that there were items which were abandoned by the owners and items agreed by the builder. Further, that the owners made 43 claims for adjustments, for which more than 1,000 pages of evidence were tendered in support of a claim for more than $200,000, but only one such claim was successful. It was also noted that the owners were only awarded a small amount in relation to their claim for incomplete work. The builder's case was said to be that the general principle that costs follow the event was of little assistance in a case such as this.

Relevant law

As the amount claimed or in dispute at first instance exceeded $30,000, it was not disputed that costs had to be determined not by s 60 of the NCAT Act but by rule 38 of the Rules. When rule 38 applies there is a general discretion to award costs and it is well established, by decisions such as News v Cotes [2019] NSWCATAP 186, Bonita v Shen [2016] NSWCATAP 159 and Thompson v Chapman [2016] NSWCATAP 6, that: (1) the starting point is that the usual order for costs should be in favour of the successful party, (2) the award is not to punish the unsuccessful party but to compensate the successful party for the costs incurred in the proceedings, and (3) departure from the usual order is permissible if the circumstances favour that outcome.
Simply stated, when rule 38 applies it is not necessary to establish special circumstances and the order usually made is that costs follow the event (ie follow the outcome of the case) unless there is disentitling behaviour by the successful party (Latoudis v Casey [1990] HCA 59, Oshlak v Richmond River Council [1998] HCA 11 (Oshlack) which can include unreasonable refusal of an offer of settlement.
Since a decision in relation to costs involves an exercise of discretion, the outcome depends on the circumstances of each case although that discretion must be exercised judicially (eMove Pty Ltd v Dickinson [2015] NSWCATAP 94 at [48]) and not either arbitrarily or capriciously (Oshlack at [22]).
An appeal to the Appeal Panel does not provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. What an appellant is required to establish is that either there is an error of law or a matter which warrants leave to appeal being granted.
Since a decision as to costs involves the exercise of discretion, the position in this instance is governed by what was said in the joint judgement of Dixon, Evatt, and McTiernan JJ in House v The King [1936] HCA 40, 55 CLR 499 (House) at 504-505: [i]t is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed ... It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.
On the question of whether to consider the issues rather than just the outcome on the question of costs, the Tribunal notes the principles set out in Bostik Australia v Liddiard (No 2) [2009] NSWCA 304 (Bostik) at [38], omitting case citations: The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows: • Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed • In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument • If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed • A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter • Where there is a mixed outcome in proceedings, 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
Consistent with those principles, the decision of the Appeal Panel in Smith v Giro Construction Pty Ltd [2015] NSWCATAP 214 (Smith) at [27-28] suggested two propositions. First, that where there are multiple issues there is generally no attempt to differentiate between those on which a party succeeded and those on which it failed. Secondly, that a successful party should only be deprived of a costs order where the unsuccessful issues were dominant or severable, having regard to the significance of those unsuccessful issues to the outcome, the time they occupied at the hearing and (to the extent it can be determined) in preparation for that hearing.

Consideration

The reasons the subject of this appeal, after referring to the position as between the builder and the painter, indicated as follows (numbers added): In turning to the costs application between the Home Owners and Builder I note there is no issue that the matter falls to be considered under rule 38 if the NCAT legislation In considering how to exercise the Tribunal's discretion in awarding costs I have considered the parties written and oral submissions noting in particular the following matters. (1) Of the 16 items of defective work the dispute was reduced to six items of which the Home Owners were successful in almost all. (2) Furthermore they were successful in having the Tribunal make a money order rather than a work order (3) The Home Owners were also successful in obtaining a money order for incomplete work (4) On the other hand, the Home Owners completely failed in their monetary claim for adjustments for sums paid by them to the builder and crucially this was because their claim completely lacked clarification and substantiation (5) By the same token it must be noted that the Builder also failed to substantiate its cross-claim and the only award made in its favour was a sum conceded by the Home Owners In considering the above I find it appropriate that the Builder be ordered to pay 60% of the Home Owners['] costs on a party party basis.
Neither of the parties to this appeal contended there should have been a separate order for the costs of each application and, even if they did, it is understandable that a single costs order should be made to cover both applications since that avoids the difficult exercise of apportioning costs between the application of the owners and the application of the builder.
Further, it is clear a decision was made to determine costs by reference to issues rather than the outcome. Again, neither party has challenged that aspect and, having regard to what was said in Bostik, there were issues that were clearly separable.
As this appeal was based on what was said as to the claim for defects, the position in relation to each such defects is set out below, using abbreviations: 1. driveway - builder succeeded, 2. water penetration - builder succeeded, 3. box gutter - builder succeeded, 4. bedroom doors - agreed amount of $1,295.82, 5. door furniture - agreed amount of $36.85, 6. Stair handle brackets - included in (14), 7. glass - agreed amount of $1,170.23, 8. floor - agreed amount of $157.04, 9. pool fence - owners succeeded, awarded $7,430, 10. backets - owners succeeded, awarded $992.31, 11. window lock - agreed amount of $55.06, 12. painting - owners succeeded, awarded $12,900, 13. landscaping - agreed amount of $190.20, 14. stair rail - not pressed, 15. louvre window door - agreed amount of $230, and 16. scaffolding cost - not pressed.
While the builder was successful as against the painter, this appeal relates to the position as between the owners and the builder. By reference to outcome as between the owners and the builder, there were 15 defects because items 6 and 14 overlapped: 7 were agreed to be defects, 2 were not pressed, the owners succeeded in relation to 3 items, and the builder succeeded in relation to 3 items.
It could be said that, since 7 items were agreed by the builder and the owners succeeded on 3 items, that the owners succeeded on 10 of 15, or 10 out of 13 if the items that were not pressed are excluded. It could also be said that there were 6 contested items, since 2 items were not pressed, and each party succeeded on 3 of those items.
It is by reference to those circumstances, that the words: "Of the 16 items of defective work the dispute was reduced to six items of which the Home Owners were successful in almost all" have to be considered. The application of House involves a consideration of the question of whether that quoted sentence "mistakes the facts".
It must be observed that the quoted words were only one of five sentences. It does not necessarily follow that, because the quoted statement was the first of five statements, it was the primary reason for the decision as to costs: only that it was the first of five considerations upon which the order was based.
Even assuming, in favour of the appellant, that the quoted sentence did mistake the facts, any proper exercise of the discretion as to costs would take the following matters into consideration: 1. Taking the usual approach that costs follow the event would mean that the builder would be ordered to pay the costs of the owners' application and the owner would be ordered to pay the costs of the builder's application. 2. Such orders would create the practical difficulty of requiring an apportionment of which part of the costs related to which application. 3. The owners would have needed to commence proceedings to achieve recovery in respect of defects if even only one defect was disputed. 4. The overall outcome was in favour of the owner. 5. Costs incurred were not confined to the hearing but included events and preparation for that hearing and submissions after that hearing. 6. There were separable issues in the proceedings. 7. As to the claims of defective work, the owners were successful in relation to 10 of 15 separate items (about 60% of them), including 3 of the items disputed at the hearing, there being 8 such items at the commencement of the hearing and 6 at the conclusion of that hearing. 8. The owners were successful on the issue of whether a work order should be made although that issue was not a major contributor to the costs of the proceedings. 9. The owners were successful in relation to their claim for incomplete work, for which they were awarded $1,647.75. 10. The owners' claim for monetary adjustments, which involved more than 50 items and a claimed amount exceeding $200,000, was successful as to only one item for which an amount of $1,356.08 was awarded. 11. The builder's application was successful in the amount of $2,685.
As was observed in Bostik, the question of apportionment of costs depends on impression and evaluation and is not capable of precision. Relevant matters include the extent to which the owners' defects claim succeeded, the negligible success of the owner's claim for monetary adjustments, and the builder's success in relation to its claim.
Having regard to the above matters, it was open to the Tribunal member to make a percentage reduction in the costs recoverable by the owner to allow for both the builder succeeding in its application and for the extent to which the owners were unsuccessful in their application. The conclusion reached by the Tribunal member that the reduction in the costs recoverable by the owners should be 40% was, in our view, open to the Tribunal in the exercise of its discretion without any mistake of facts.
Accordingly, we do not consider any different order for costs is warranted. As a result, there has been no miscarriage of justice with the result that there is no basis for granting leave to appeal. It remains to consider what order should be made in respect of the costs of this appeal.

Costs of the appeal

By reason of rule 38A(2), the costs of this appeal are governed by the provision which applied at first instance. As a result, rule 38 and not s 60 of the NCAT Act applies when considering the costs of this appeal.
The respondents have succeeded and there does not appear to be any disentitling conduct. Both parties sought an order for costs in the event they were successful in this appeal.
Although we consider the owners are entitled to an order that the builder pay their costs of the appeal, it should be observed that the owners appear to have been self-represented in relation to the appeal and that self-represented parties are not entitled to recover for the cost of their time: Cachia v Hanes [1994] HCA 14.

Conclusion

For the reasons indicated above, the following orders are made: 1. Leave to appeal is refused. 2. As a result, the appeal is dismissed. 3. As to the costs of the appeal, the appellant is to pay the costs of the respondents, on the ordinary basis, as agreed or 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

Amendments 06 October 2022 - Amended case title from 'Bondi Builder Pty Ltd' to 'Bondi Builders Pty Ltd'. 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: 06 October 2022

At a glance

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