Builtex Constructions Pty Ltd v He

Background

1. On 9 August 2013 the parties entered into a contract for the construction of a dual occupancy dwelling with detached garage for a contract price of $337,962 (the Contract). The Contract was in the form of the Master Builders Association residential building contract. Work did not commence until 20 March 2014 owing to delays in obtaining home owner's warranty insurance and a construction certificate. The Contract schedule named the Owner's architect, Mr Becerra, as "nominating officer" for the purpose of mediation pursuant to clause 26 of the Contract.
2. The parties subsequently fell into dispute. Mr Becerra was involved in communicating with the Builder about the dispute. The Tribunal set out the progress of this dispute in detail at [23] to [75] of the Reasons for Decision (the Reasons).
3. The Owner filed an application in the Tribunal on 19 May 2016, seeking orders including damages for breach of statutory warranty in respect of works claimed to be defective and liquidated damages for the Builder's alleged delay in completing the building works.
4. On 9 September 2016 the Builder filed an application in the Tribunal, seeking relief by way of quantum meruit in respect of the contract works, on the basis that the Owner had repudiated the Contract. The Builder purported to accept a repudiation of the Contract by the Owner, which the Builder claimed had occurred when the Owner issued a termination notice in April 2015.

Clauses 26, 27 and 28(a) of the Contract

1. The proper interpretation of clauses 26, 27 and 28(a) of the Contract between the parties were at issue, both before the Tribunal below and on appeal.
2. Clause 26 of the Contract, is headed "Dispute Resolution" and provides as follows: a) The parties agree that where a property of an item of work performed by the Builder satisfies the requirements of the Guide to Standards and Tolerances that property not cause that item of work to be defective. However, if the item of work does not satisfy the requirements of the guide to standards and tolerances that alone will not be sufficient to determine such item to be defective, being a matter to be determined in the context of the Works. Notify the other party of matters in dispute b) If any dispute or difference (a dispute) concerning this agreement or work arises between the Owner and the Builder then the party saying there is a dispute must give the other party written notice of the dispute. Parties must meet and seek to resolve dispute c) Within ten (10) business days after the giving of such a notice the parties must confer at least once to attempt to resolve the dispute or to agree on methods of resolving the dispute by other means such as mediation, expert determination or arbitration. The mediator, expert or arbitrator is set out at Schedule 2 Item 8. At any such conference each party must be represented by someone having authority to settle the dispute. d) Any agreement reached at the above meeting is to be recorded in writing and a copy kept by both parties. An agreement may be relied upon as an addendum to this contract and used as a response to any subsequent action or inaction by a party to this agreement. e) In the absence of such a meeting a party is not entitled to terminate the contract whether pursuant to clauses 28 or 29 or otherwise. However, if a party refuses to attend the meeting the other party can rely on its willingness to attend as satisfying the holding of the meeting and thereby proceed pursuant to Clause 28 or 29 as appropriate.
3. Clause 27 of the Contract is headed "Details Required to Support Notices Under Contract or to Substantiate a Dispute". It provides as follows: With regard to any notice issued by a party pursuant to or which relies upon Clauses 26, 28 or 29 the said notice must accurately set out the matters giving rise to the issuing of the notice. Any notice which merely recites the words or intent of clothes 26, 28 or 29 without proper details will not be a valid notice. Further, any document which exists and is relied upon to support the position put forward in any of the above notices must also be served with the notice. A failure to do so will mean the notice served will be of no effect as a notice.
4. Clause 28 of the Contract is titled "Termination by the Owner". Clause 28(a) relevantly provides as follows: a) If the Builder is in default in any of the following respects, namely: i. commits an act of insolvency; or ii. fails to proceed with the works with due diligence or in a competent manner with regard to the circumstances of the contract works; or iii. if without cause under the contract the Builder wholly suspends the carrying out of the works before practical completion; or iv. If the Builder persistently refuses or persistently neglects - a) to comply with the requirements of Clause 12 of these conditions; b) to remove or remedy defective work or improper materials, so that by the refusal or persistent neglect the works are materially affected; or v. If the Builder states in writing that he she or it is unable or unwilling to complete the works or abandons the contract; AND if, in the case of any default that is capable of remedy, the default continues for twenty five (25) days after notice in writing has been given to the Builder specifying the default and stating the Owners' intention to terminate this Contract, THEN the Owner may, without prejudice to any other rights or remedies, by notice served as allowed by Clause 30, terminate this contract. ……
5. The Builder argued that the Owner had failed to comply with the contractual dispute resolution process set out in clause 26 of the Contract. It submitted that the Owner had not issued a valid Notice of Dispute under cl 26(b) of the Contract, had failed to convene a Dispute Resolution Conference under cl 26(c), had not issued a valid Notice of Default under clause 28(a) of the Contract and had therefore not validly terminated the Contract.
6. The Builder's case was that, as the Owner had repudiated the Contract, it was entitled to claim the fair value of the works on a quantum meruit basis. The Builder claimed that the value of the works it carried out exceeded amounts paid by the Owner.

Tribunal decision

1. The Tribunal heard the matter over four days 6 and 7 March, 3 July and 4 October 2017. The Tribunal's reasons for decision were published on 24 April 2018. The decision in relation to costs was published on 24 July 2018, as was a direction to amend the sum awarded to the Owner.
2. In relation to the Owner's claim, the experts agreed a number of items in a joint report and the Builder conceded a number of other items. Of the 15 remaining items in dispute, the Tribunal found in favour of the Owner in relation to ten items. The Tribunal also awarded the Owner a sum in respect of out of pocket expenses.
3. The Tribunal found in favour of the Owner in respect of the termination issue and consequently dismissed the Builder's quantum meruit claim. The Tribunal ordered the Builder to pay the Owner $105,941.10. This included a retention sum of $7,500. The sum was amended to $106,077 by application of the slip rule in s 63 of the NCAT Act on the same date as the Tribunal made the costs decision. The amendment is not in issue in the appeal proceedings.

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) NCAT Act.
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. 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: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
4. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 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.
5. 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).
6. In Collins v Urban, 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

1. In deciding the appeal, we have had regard to the following:

• The Amended Notice of Appeal lodged on 15 August 2018
• The Reply to Appeal lodged on 6 June 2018;
• The Builder's submissions in chief received on 13 July 2018;
• The Owner's submissions received on 3 August 2018;
• The Builder's submissions in reply received on 17 August 2018;
• The oral submissions made at the hearing;
• The Tribunal's reasons for decision in the substantive application and the costs application;
• Directions made at callover;
• The Owners' application to the Tribunal; and
• The Agreed Bundle.

Notice of Appeal

1. The Notice of Appeal was lodged within the 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules).

Grounds of Appeal

1. The grounds of appeal specified in the Amended Notice of Appeal are: 1. The Tribunal erred in finding that the Owner validly terminated the Contract. 2. The Tribunal erred in finding that the Owner issued a valid dispute notice under clause 26(b) and 28(c) of the Contract. 3. The Tribunal erred in finding that the Owner issued a valid notice of default under clause 27 and 28(a) of the Contract. 4. The Tribunal erred in construing the Owner's contractual obligations with respect to the $7,500 bank guarantee. 5. Not pressed. (We note that Ground 5 in the original Notice of Appeal alleged an error in the Tribunal's calculation of damages for out of pocket expenses). 6. The Tribunal erred in dismissing the Builder's claim for quantum meruit. 7. The Tribunal erred in awarding costs.

Consideration

1. Grounds 1, 2 and 3 all concern whether the Owner properly terminated the contract.
2. In essence: 1. Ground 1 concerns the interpretation of clause 27 of the Contract, as well as the Tribunal's findings in relation to the role of the Owner's architect; 2. Ground 2 concerns whether the Owner gave proper notice of a dispute under clause 26(b) of the Contract and held a proper dispute resolution meeting under clause 26(c) of the Contract. 3. Ground 3 concerns whether the Owner gave a proper notice of default under clause 28 of the Contract.

Ground 1 - Clause 27 of the Contract and the role of the Owner's architect

1. The Builder submits that the Tribunal erred in finding that the Owner validly terminated the Contract by failing to correctly construe the express terms of the Contract, making findings that were unsupported by evidence and made findings that were not reasonably available on the evidence, including the express terms of the Contract.
2. The Builder submits that the Tribunal misdirected itself and fell into error in three respects: 1. The involvement of the Owner's architect; 2. The validity of the notices; and 3. Findings without or against the weight of evidence.
3. In relation to the involvement of the architect, the Builder submits that the Tribunal misdirected itself by: 1. Finding that the architect was the Owner's agent, as there was no provision in the Contract for the architect or anyone else to act on behalf of the Owner as agent or in any other supervisory or administrative capacity. 2. Determining the matter on the basis that the Builder was contractually obliged to comply with the architect's instructions. 3. Failing to apply the Tribunal's finding regarding the architect's lack of contractual capacity when considering whether the Builder's claimed failure to fully comply with the Owner's instructions was reasonable in the circumstances. 4. Failing to find that, by permitting the architect to issue instructions to the Builder and then relying on his assessments and certificates to demand performance by the Builder, the Owner repudiated the Contract by refusing to be bound by its express terms.
4. The Owner's architect was Mr Becerra. In relation to Mr Becerra's role, the Tribunal found, at [20] to [22] of the Reasons for Decision: 20 The contract schedule named the Owner's architect, Mr Becerra, as "nominating officer" for the purpose of mediation pursuant to clause 26 of the contract. 21 Mr Becerra undertook a supervisory role on behalf of the Owner during the course of the contract. Although Mr Becerra gave evidence that he thought that in doing so he was acting as mediator appointed under the contract, I do not accept that Mr Becerra was acting in any official role. I find that communications with the Builder were undertaken by Mr Becerra as the Owner's agent. 22 The Builder submitted that the contract merely appointed Mr Becerra to nominate the mediator for any mediation in the course of resolution of any dispute and gave him no further role. Whether or not that be correct, it seems to me that Mr Becerra could have appointed himself as mediator had a mediation been convened. However I do not find that Mr Becerra at any time acted as a mediator between the parties. Even had he done so, that would not have given him any capacity to issue formal directions to the parties.
5. We are not satisfied that the Tribunal erred in finding that Mr Becerra was the Owner's agent in his communications with the Builder. First, the terms of the Contract did not prevent the Owner authorising someone else to deal with the Builder on her behalf. Second, the fact that the Contract did not give Mr Becerra an official role beyond being the nominating officer for the purpose of mediation did not preclude him acting as the Owner's agent. Third, it is clear that the Builder's representative, Ms Chen, communicated with Mr Becerra in that capacity. Examples of this are set out at [36] to [46] of the Reasons for Decision, which detail email correspondence exchanged between Mr Becerra and Ms Chen.
6. Fourth, the Tribunal's finding in the last sentence of [22] that Mr Becerra would have lacked capacity to issue formal directions as a mediator, even if he had appointed himself one, is not inconsistent with the Tribunal's finding that Mr Becerra was authorised to, and did, act as the Owner's agent when dealing with the Builder.
7. In relation to the validity of notices, this ground of appeal turns on the Tribunal's interpretation of clause 27 in particular. We do not accept that the Tribunal erred in construing clause 27 of the Contract.
8. First, the Tribunal clearly had regard to the Builder's submissions in relation to the interpretation of clause 27. The Builder's submissions are accurately summarised at [193] of the reasons for decision. In relation to the interpretation of clause 27, the Tribunal stated at [223] of the reasons for decision: 223 Clause 27 required that a notice of default must accurately set out the matters giving rise to the issue of the notice and must have any relevant documents attached. However it does not follow that a notice purportedly served pursuant to clause 28 will be an invalid notice if it includes allegations of default which are not ultimately established or capable of being established. It is sufficient, in my view, that the notice identify an actual default and attach documents relevant to that default, regardless that there may be other allegations of default which are either unjustified or not adequately supported by relevant documents.
9. Second, for a notice to comply with clause 27 it must "accurately set out the matters giving rise to the issuing of the notice". We agree with the Tribunal that this does not mean that all allegations of default referred to in the notice must be established or capable of being established. If a notice identifies a dispute, and if documents are relied on in support of the party's contention, those documents are attached to the notice, it does not matter if other allegations of default are made which are unjustified or inadequately supported by relevant documents. All that clause 27 requires is that a notice properly reflect the matters in dispute and which have led to the notice being issued.
10. Third, the validity of a notice is not dependent on a subsequent finding by a Court or Tribunal that each matter raised in the notice was correct. Rather, clause 27 sets out the circumstances in which a notice could be invalid: 1. If the notice "merely recites the words or intent of Clause 26, 28 or 29 without proper details; and 2. If the notice fails to include "any document which exists which exists and is relied upon to support the position put forward".
11. Fourth, this interpretation of the requirements of clause 27 is consistent with the principle referred to in Shepherd v Felt Textiles Australia Ltd [1931] 45 CLR 359, in which the High Court stated at 378: It is a long established rule of law that a contacting party who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not.
12. In Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 262, Mason CJ stated: Shepherd v Felt & Textiles Australia Ltd stands as authority for the general proposition that a termination of a contract may be justified by reference to any ground that was valid at the time of termination, even though it was not relied on at the time and even though the ground actually relied on is found to be without substance.
13. Fifth, this interpretation of clause 27 is not inconsistent with the Appeal Panel's decision in M & M Building Pty Ltd v Keith [2017] NSWCATAP 88, in which the Appeal Panel stated, at [51] that "the object of clause 27 is to ensure that the precise matter of complaint is brought to the attention of the Builder by the home Owner". In our view, this should not be taken to mean that if a notice raises complaints that later prove to be unjustified, it cannot be a valid notice, even if it also contains a justified complaint.

Ground 2 - Notices of Dispute and dispute resolution meetings

1. The Builder's position is that the Owner did not issue a notice to the Builder in accordance with clause 26(b) and that no dispute resolution meeting was held in accordance with clause 26(c).
2. In relation to this issue, the Tribunal found: 206 I am satisfied that a number of items of correspondence in November 2014, including the email from Mr Becerra to the Builder on 17 November 2014 attaching the list of external defects, the email from Mr Becerra to Ms Chen on 25 November 2014 seeking confirmation that the defects on the defects list had been addressed, and Mr Becerra's email to Mr Schmidt-Liermann of 28 November 2014, satisfied the requirement that the Owner serve a Notice of Dispute. 207 I do not consider that a notice issued under clause 26 must be identified as a notice pursuant to that clause or be stated to be a "notice of dispute". Any written document identifying a dispute between the parties may in my view constitute a notice pursuant to clause 26. 208 Although clause 26 expressly provides that neither party can terminate the contract unless the parties have met and sought to resolve the dispute or one party refuses to attend a meeting which the other party was willing to attend, I do not consider that the obligation to notify a dispute requires great specificity or detail concerning the issues in dispute or that a party is not permitted to terminate a contract in reliance on clauses 28 or 29 unless a specific notice regarding a specific dispute is issued and a meeting held in respect of the particular issues ultimately relied upon to terminate the contract. 209 In my view clause 26 is directed to ensuring that the parties are at least aware of the existence of a dispute and have an opportunity to seek to resolve that dispute before formal notices of default are issued. Once a communication has taken place which identifies the existence of a dispute, and as long as it cannot be said that the dispute has finally been resolved through an agreement resolving all outstanding issues, then a notice of dispute remains in effect for the purposes of clause 26. 210 I note the requirement in clause 27 that the notice must accurately set out the matters giving rise to the notice and must have served with it any document which exists and is relied upon to support the position put forward in the notice. I do not consider that that requirement imposes significant constraints upon what documents might constitute a notice pursuant to clause 26. The only requirement of clause 26 is that the notice identify the existence of a dispute and the nature of the dispute. 211 In my view the correspondence referred to above satisfied that requirement. 212 The Owner also relied, as notices of dispute for the purposes of clause 26, on the Owner's email of 3 March 2015 and the emails from the Owner and Mr Becerra of 18 March 2015. 213 I am satisfied that each of these communications constituted a notice of dispute satisfying the requirements of clause 26. 214 A meeting was held on 3 December 2014 at which some agreement was reached but it is clear that the parties remained in dispute from that point forward. The issues which the Owner had raised by the correspondence of November 2014 included the 22 alleged defects on the external defects list and the Builder's failure to supply necessary certificates. 215 The fact that the dispute notified in the various communications from November 2014 onwards continued into March 2015 is demonstrated by the fact that the record of the meeting with the inspector from Fair Trading NSW on 12 March 2015 referred to the list of 22 external defects provided by Mr Becerra in November 2015. 216 For the purposes of clause 26 therefore, the meeting held on 3 December 2014, which clearly did not resolve all items in dispute, was a sufficient meeting for the purposes of clause 26. 217 Were I incorrect in this conclusion I nevertheless find that the meeting held on 13 [sic] March 2015 was a sufficient meeting for the purposes of clause 26 in respect of the Owner's email of 3 March 2015. 218 I also find that although a meeting did not take place on 26 March 2015, Mr Becerra did attend at the specified time and Ms Chen, on behalf of the Builder, failed to attend. It is clear from the correspondence that Ms Chen was aware that the meeting was to take place at 10 am. 219 Clause 26 states that the holding of a meeting can be satisfied where a party "refuses to attend the meeting". I consider that Ms Chen's failure to attend the meeting constituted a refusal in circumstances where she was clearly aware of the date and time of the meeting which was to take place on site. Ms Chen gave evidence that she sent an email to Mr Becerra at 8.42 am on 26 March 2015 stating: I cannot come at 10 am today, after 12.30 pm shall be OK." 220 Ms Chen did not in her correspondence or her evidence provide any explanation why she could not attend at 10 am. Nor did Ms Chen suggest the Builder could not have sent another representative. In light of Ms Chen's equivocation in her emails over the previous two days as to whether she would attend the meeting, I am not satisfied that the Builder was genuinely unable to attend the meeting which had been fixed for 10 am on 26 March 2015. 221 I find that Ms Chen "refused" to attend the meeting (within the meaning of clause 26) and that that refusal satisfied the requirements of clause 26 in respect of the emails from the Owner and Mr Becerra of 18 March 2015. 222 Accordingly I conclude that the requirements of clause 26 had been satisfied by the Owner before the issue of the notice of default in April 2015.
3. The Builder submits that the Tribunal erred in finding that notices of a dispute had been given in accordance with clause 26(b) of the Contract because:

• None of the email correspondence between Mr Becerra or the Owner and the Builder referred to by the Tribunal was sufficient for the purpose of giving "a Notice of Dispute" of the kind required by clause 26b) of the Contract.
• The first three emails (dated 17 November 2014, 25 November 2014 and 28 November 2014) were incapable of being valid Notices of Dispute because they were all written well before the meeting eventually held on 27 January 2015.
• The meeting held on 27 January 2015 was not capable of being a meeting for the purpose of clause 26c) because that clause required the parties to meet "within 10 business days" of the giving of a notice claiming the existence of a dispute.
• Upon the signing of an agreement, any disputes which may have existed were settled by mutually binding agreement on agreed terms and ceased to exist for the purpose of clause 26 of the Contract.
• Various of the emails were given by Mr Becerra, who had no contractual authority to issue notices or demand performance from the Builder.
• Various of the emails did not purport to be notices;
• Various of the emails did not claim that there was any actual dispute or request a meeting;
• Various of the emails breach the requirement for "accuracy" and "proper details" required by clause 27 of the Contract.

1. The Builder submits that the Tribunal erred in finding that three meetings were held that satisfied the requirements of clause 26(c) of the Contract because:

• No valid notices had been given under clause 26(b) to notify a dispute;
• The 3 December 2014 meeting was a meeting between Mr Becerra and the Builder to discuss Mr Becerra's "defects list". However, the works had not reached practical completion and the items were incomplete rather than defective.
• The meeting of 12 March 2015 was not a meeting for the purpose of clause 26(c) because it was not held within 10 business days of a valid clause 26(b) notice accurately identifying all the issues claimed by the Owner to be in dispute and because the meeting came about as a result of a complaint to Fair Trading lodged in about November 2014.
• The planned meeting of 26 March 2015 was not a meeting for the purpose of clause 26(c) because no notice under clause 26(b) had been issued and because the Builder's representative Ms Chan had not refused to attend the meeting. Rather, she had asked to reschedule the meeting and had attended at 12.30pm. It was not put to Ms Chan in cross-examination that she could have sent a representative or that she should expand on why she did not attend at the scheduled time.

1. We do not accept that the Builder's submissions that notices of dispute in accordance with clause 26(b) or that meetings were not held in accordance with 26(c).
2. First, we have found that the Tribunal did not err when it found that Mr Becerra was acting as the Owner's agent in his dealings with the Builder. Therefore, the fact that Mr Becerra sent emails to the Builder does not of itself mean that the emails were not notices of dispute for the purpose of clause 26(b) of the Contract.
3. Second, the Tribunal did not find that the meeting of 27 January 2015 was a meeting for the purpose of clause 26(c).
4. Third, as set out above in connection with Ground 1, clause 27 does not require everything set out in a notice given under clause 26(b) to be established or capable of being established in order for a notice to be valid. All that is required of such a notice is that it notifies the other party of the existence of a dispute and attaches relevant documents, if documents are relied on.
5. Fourth, there is nothing in either clause 26 or clause 27 which requires a notice of dispute to be identified as a notice given under clause 26(b) of the Contract in order to be valid.
6. Fifth, there is nothing in clause 26 or clause 27 that requires a notice of dispute to request a meeting.
7. Sixth, while clause 26(c) states that a dispute resolution meeting should be held within 10 business days of a notice of dispute, it does not state that if a meeting is not held within that period, the notice of dispute will be invalid. If that were the case, it would arguably be possible for a valid notice of dispute to become invalid even if the parties had a perfectly legitimate excuse for not meeting within 10 business days; for example, because of illness or overseas travel. It would also be possible for a builder to avoid a meeting - as opposed to refuse to attend a meeting - and then be in a position to claim that the notice was invalid.
8. Seventh, the fact the Builder's position in relation to the "defects list" discussed at the 3 December 2014 meeting was that the works were incomplete rather than defective does not negate the existence of a dispute. If anything, it demonstrates the Builder's understanding of both the existence of a dispute and its nature.
9. As noted above, the Tribunal found that three notices met the requirements of clause 26(b) and three meetings met the requirements of clause 26(c). In our view, as long as one of the notices and one of the meetings held as a result of that notice fulfilled the requirements of clause 26, Ground 2 fails.
10. We turn to the Owner's email to the Builder dated 3 March 2015, which is included in the Agreed Bundle at Volume 4 page 3030. We are satisfied that this email is a Notice of Dispute satisfying the requirements of clause 26(b) of the Contract because: 1. It identified a number of issues which were in dispute, including the completion of work, defective and/or incomplete work and the provision of certificates. 2. The email confirmed that the Owner would attend a meeting with the Builder and the Fair Trading inspector on 12 March 2015, which was within 10 business days of the date of the email, and specified that this was for the purpose of mediation. 3. Email correspondence sent by Ms Chen to Mr Becerra on 9 March 2015 (at Volume 4 pages 3033 and 3034 of the Agreed Bundle) acknowledged that the parties were in dispute.

Ground 3 - Notice of Default

1. The Notice of Default relied on by the Owner is dated 28 April 2015 and is at Volume 1 pages 771-943 of the Agreed Bundle.
2. The Notice specified nine main areas of claimed default, including: 1. Breach of statutory warranties and clause 1 of the Contract; that is a failure to perform work in a proper and workmanlike manner; 2. Failure to perform work forming part of the contract scope of work and performing work outside the contract scope of work; 3. Failure to provide proper certificates for certain parts of the works; 4. Failure to attend meetings requested by the Owner; 5. Failure to proceed with due diligence and in a competent manner; 6. Breaches of clause 12(a)(i) of the Contract by failing to comply with an order issued by NSW Fair Trading on 12 March 2015; 7. Breaches of clause 17 of the Contract by failing to provide evidence that there were valid insurances in place; 8. Suspending the works without notice in breach of clause 21 of the Contract; and 9. Breaching clause 22(a) of the Contract as the works were incapable of reaching practical completion due to defective and incomplete works.
3. The Tribunal found as follows in respect of the Notice of Default: 223 Clause 27 required that a notice of default must accurately set out the matters giving rise to the issue of the notice and must have any relevant documents attached. However it does not follow that a notice purportedly served pursuant to clause 28 will be an invalid notice if it includes allegations of default which are not ultimately established or capable of being established. It is sufficient, in my view, that the notice identify an actual default and attach documents relevant to that default, regardless that there may be other allegations of default which are either unjustified or not adequately supported by relevant documents. 224 I accept that the notice did contain allegations of defaults and issues in dispute which were not warranted, including: (1) That the Builder had wholly suspended the carrying out of the works before practical completion, notwithstanding that practical completion had been achieved on 9 February 2015; (2) That the notice claimed liquidated damages in circumstances where no entitlement to liquidated damages could arise after practical completion; and (3) That the notice purported to rely upon the "penultimate certificate" produced by the architect which had no contractual significance; However I find that the fact that the notice contained unjustified allegations did not have the effect of rendering the notice invalid. 225 The notice did identify as events of default the Builder's failure to produce certificates and the Builder's failure to rectify a number of defects identified on the list of external defects of 17 November 2014. 226 The experts were in agreement that the Builder did not provide a glazing certificate which met the certifier's requirements. It was also established in evidence that the Builder had failed to produce the plumbing certificate required to be provided under the Plumbing and Drainage Act. The experts also agreed, and I have found, that the western side fence was defective and required replacement: see [84] to [89] above. 227 Mr Goldstein, counsel for the Owner, also identified in oral submissions a number of the defects listed on the external defects list which remained outstanding at the time of termination and were listed as agreed defects in the experts' joint report. Those defects included: Item 15 - Brick cleaning (item 5 in the external defects list) Item 19 - Masonry perpend joints (item 6 in the external defects list) Item 22 - External wall articulation joints (Item 8 in the external defects list). 228 Accordingly I find that at the time of issue of the notice on 28 April 2015 the Builder was in default in having failed "to proceed with the works…in a competent manner with regard to the circumstances of the contract works" and in having refused "to remedy defective work, so that by the refusal…the works are materially affected". 229 In particular, by the failure to provide the necessary glazing certificates, the Builder prevented the Owner obtaining an occupation certificate so as to enable the occupation of the premises.
4. The Tribunal went on to make findings in relation to a $7,500 retention sum, which is the subject of Ground 4, and concluded at [236] that the Notice of Default was valid and that the Owner had validly terminated the Contract.
5. The Tribunal relevantly found that: 1. The Builder had failed and/or refused to remedy breaches of statutory warranties: [226] and [227] of the Reasons for Decision; 2. The Builder failed to provide certificates: [226] and [229] of the Reasons; 3. The Builder failed to proceed in a competent manner: [228] of the Reasons; 4. The Builder refused to remedy defective work "so that by that refusal the works are materially affected, in particular by not providing glazing certificates, which meant that the Owner could not obtain an occupation certificate.
6. The Builder submits that the Tribunal erred in finding that the Owner had issued a valid Notice of Default under clause 28(a) of the Contract on the basis that the purported Notice of Default: 1. Did not accurately set out the matters giving rise to the issuing of the notice as required by clause 27 of the Contract; 2. Contained numerous substantial inaccuracies in breach of clause 27; 3. Made numerous unreasonable demands for performance which the Owner was not entitled to make and which had no contractual basis; and 4. Misleadingly represented to the Builder that a professional independent assessment had been made by Mr Becerra when no such independent assessment had been made and/or independent certified.
7. We have already dealt with the construction of clause 27 under Ground 1.
8. In relation to the construction of clause 28(a) of the Contract, clause 28(a) specifies that a notice of default may be issued where the Builder is "in default in any of the following respects". A default notice may therefore be issued if the Builder is in default in any one of the respects listed in that clause.
9. It would not be consistent with clause 28(a) to find that a Notice of Default was invalid because one or more of the alleged defaults notified "did not accurately set out the matters giving rise to the issuing of the notice", in circumstances where a Builder was actually in default in one or more of the remaining notified respects.
10. Further, clause 28(a) of the Contract provides that an Owner may terminate the Contract: in the case of any default that is capable of remedy, the default continues for twenty five (25) days after notice in writing has been given to the Builder specifying the default and stating the Owners' intention to terminate this Contract. (Emphasis added)
11. The right to terminate therefore arises in respect of "any default" that continues for 25 days after notice is given of the default.
12. In this case, the Tribunal found, as a matter of fact, that the Notice of Default was validly issued in a number of respects. That finding was consistent with, and correctly applied, the principles in Shepherd v Felt & Textiles. For a Notice of Default to be valid, each claimed default does not have to be established or capable of being established. The Tribunal found three particular allegations unjustified (see [227] of the Reasons) and made no findings about other claimed defaults. However, even if these claimed defaults were not defaults, that does not mean that the Notice of Default was not valid and could not be relied on to terminate the Contract.
13. We can identify no error in the Tribunal's finding in relation to the Notice of Default. Ground 3 fails.

Ground 4 - Bank guarantee

1. It is not in dispute that the Contract provided for a defects liability period of 13 weeks from practical completion and that it did not provide for a retention sum. On 27 January 2015, the parties signed an agreement (the Contract Sum Adjustment Agreement). Details of the Agreement were recorded in a document prepared by Mr Becerra. This had the effect of varying the contract to provide for a retention sum of $7,500. The final paragraph of the Contract Sum Adjustment Agreement stated: The defects liability period begins at PC and is for 13 weeks at which, subject to defects being completed and satisfy inspection of the same, the $7500 in the form a Bank Guaranty is released the same day.
2. The Builder argued that the Notice of Default (and therefore the consequential termination of the Contract) was not valid because the Builder was not obliged to provide certificates until the retention sum had been paid. The Builder further argued that the Owner was in fundamental breach of the Contract because she had not provided the bank guarantee in respect of the retention sum.
3. In relation to this issue, the Tribunal found that: 230 Insofar as the Builder asserts that the certificates were not required to be produced until the retention sum of $7,500 was paid to the Builder, I consider that submission is predicated on a misreading of the variation agreement of 27 January 2015. That agreement provided that the $7,500 was to be released at the end of the 13 weeks defect rectification period, subject to the defects being completed and subject to satisfactory inspection. 231 The Builder persistently asserted in the emails sent to the Owner and Mr Becerra in March 2015 that the retention sum was to be released before the keys were handed over. That attitude was founded upon a misconstruction of the variation agreement. The retention sum was to be released after the 13 week rectification period. 232 Although the home Owner did not either obtain a bank guarantee in respect of the retention sum or release either the retention moneys or a bank guarantee to the Builder at the conclusion of the defects rectification period (that is 13 weeks from 9 February 2015), on the basis of the number and extent of defects which have been subsequently been identified I am satisfied that the Owner had no obligation to pay that money to the Builder at that time. 233 The retention sum is to be taken into account in calculating the amount owing between the parties in the ultimate outcome of these proceedings. 234 The Builder submitted that the Owner was in fundamental breach of the contract at the time of the notice of default in that she had not provided a bank guarantee in respect of the retention sum. It is notable that the obligation to provide a bank guarantee arises only by implication from the terms of the 27 January variation agreement which does not specify when the bank guarantee needs to be provided. It merely provides that the $7,500 in the form of a bank guarantee is released "the same day", that is on the completion of defects and satisfactory inspection at the conclusion of the defects liability period. It cannot be said that the Owner was in "fundamental" breach of the contract even if she had failed to comply strictly with its terms in that the bank guarantee had not been provided. 235 The Owner stated in evidence that she had endeavoured to obtain the bank guarantee but she had not been able to do so because of issues with the name on the home Owner's warranty certificate. The evidence in this regard was not clear and I do not make any findings in regard to whether the Owner was at fault. There was some suggestion that the Builder had failed to attend at the bank in order to obtain the bank guarantee. Why a misstatement of the Owner's name on the home Owner's warranty certificate or the failure of the Builder to attend at the bank should have the effect that the Owner could not obtain the bank guarantee was not further explored in the evidence. If it were necessary to determine this issue, I would not be satisfied that the home Owner had a reasonable excuse for not having a bank guarantee available. However, as noted above, it is not clear that the failure to deliver a guarantee to the Builder by the time of issue of the notice of default or by the time of termination was necessarily a breach of the contract let alone a fundamental breach. 236 Accordingly I find the notice was validly issued and, as there is no evidence that the Builder did anything to rectify the fence or other defects or to provide the glazing certificates before 4 June 2015, which was more than 25 days after service of the notice, I find the Owner validly terminated the contract.
4. The Builder submits that: 1. The bank guarantee was for the benefit of the Builder and not for the benefit of the Owner. It was intended to give the Builder comfort that it would eventually be paid. 2. The bank guarantee was not in lieu of "retention" and the Owner was not entitled to withhold it until the end of the defects liability period. 3. The Owner was in breach of her obligation to provide the bank guarantee to the Builder at the time the Notice of Default was issued and being in breach, was not entitled to demand performance from the Builder. 4. The Owner, being in breach because of the failure to provide the bank guarantee, was not entitled to terminate the Contract on the basis of non-performance by the Builder.
5. The Builder argues that the Tribunal misdirected itself by: 1. Finding that the Owner's obligation to provide a bank guarantee arose only by implication when it was an express obligation on the Owner. 2. Failing to find that the provision of the bank guarantee was an essential term of the Contract Sum Adjustment Agreement. 3. Failing to recognise the importance of the provision of the bank guarantee and failing to appreciate that a failure to provide it was a fundamental or "at the very least a serious" breach by the Owner of the express terms of the Contract Sum Adjustment Agreement. 4. Failing to find that by purporting to terminate the Contract while in fundamental breach, the Owner repudiated the Contract and the Builder was entitled to accept the repudiation.
6. We are not persuaded by the Builder's submissions.
7. First, the Tribunal did not err when it found that the obligation to provide a bank guarantee arose by implication. The agreement does not specify a date on or by which the bank guarantee is to be provided. It implies that a bank guarantee is to be provided because it refers to the release of the guarantee. However, there was nothing in the terms of the agreement that would have prevented, for example, the provision of a bank guarantee on the same day it was released.
8. Second, the test of whether a term of a contract is essential is the test stated by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) NSWLR 633 at 641-642. This test has been cited with approval and adopted on numerous occasions: see, for example, Associated Newspapers Limited v Bancks (1951) 83 CLR 322 at 327; DTR Nominees Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 430-431; and Ankar Pty Ltd v National Westminster Finance Limited (1987) 162 CLR 549 at 555.
9. Jordan CJ stated that a term is essential if the promisee would not have entered the contract except on the assurance of strict (or in some cases substantial) performance. If strict performance were required, and not provided, then the promisee might terminate. The promise might also terminate if substantial performance were required and not provided.
10. His Honour stated (citations omitted): The question whether a term in a contract is a condition or a warranty ie an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict, or a substantial, performance of the promise, as the case be, and that this ought to have been apparent to the promisor … . If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach would ordinarily justify a discharge. In some cases it is expressly provided that a particular promise is essential to the contract, eg by a stipulation that it is the basis or of the essence of the contract … but in the absence of express provision the question is one of construction for the Court, when once the terms of contract have been ascertained …. In general, Courts of common law have been more ready than Courts of Equity to regard promises as essential. This is in part due to the fact that Courts of common law are in the main concerned with ordinary commercial contracts in which it is common to find provisions which are intended to be strictly and literally performed. It is now provided … that stipulations in contracts, as to time or otherwise, which would not … have been deemed to be or to have become of the essence of such contracts in a Court of Equity shall receive in all Courts the same construction as they would have heretofore received in such Court. This serves to make equitable liberality of construction supersede common law strictness, so far as is consistent with apparent intention, in fields where equity and common law overlap; but it does not affect the principle that effect must be given to the apparent intention of the parties as disclosed in the contract ….
11. In circumstances where the Contract Sum Adjustment Agreement did not specify a date for provision of the bank guarantee, the failure to provide it cannot be characterised either as a fundamental breach of the Contract or as a very serious breach.
12. Third, even if the provision of the bank guarantee was an essential term of the Contract, we conclude that the Tribunal did not err in finding that it was not clear that any failure by the Owner to deliver the bank guarantee "by the time of issue of the notice of default or by the time of termination was necessarily a breach of the contract let alone a fundamental breach". This is because the Contract Sum Adjustment Agreement provided that: 1. The defects liability period began at practical completion and continued for 13 weeks; 2. During the defects liability period it was expected that the Builder would satisfactorily "complete" (that is, rectify) defective work; 3. If the Builder satisfactorily rectified defective work, it would be entitled to be paid $7,500 by way of a bank guarantee.
13. However, the Tribunal found that the Builder had not satisfactorily rectified defective work. The Tribunal ultimately found that the defective work would cost approximately $106,000 to rectify. As the Builder did not satisfactorily rectify the defective work, the Builder was in breach of this term of the Contract Sum Adjustment Agreement. It was therefore not entitled to the sum of $7,500. We conclude that in these circumstances, the Owner had no obligation to provide a bank guarantee and did not repudiate the Contract by failing to do so.
14. In these circumstances, and in view of our findings in relation to Grounds 1, 2 and 3, we find no error in the Tribunal's finding at [236] that the Owner validly terminated the Contract.
15. This ground of appeal fails.

Ground 5 - Out of pocket expenses

1. As noted above, this ground of appeal was not pressed.

Ground 6 - Dismissal of the Builder's claim

1. The Builder claimed in quantum meruit on the basis that the Owner had repudiated the Contract.
2. We have found that the Tribunal did not err in finding that the Owner validly terminated the Contract. As there is no other basis on which the Builder could claim in quantum meruit, this ground of appeal fails.

Ground 7 - Costs

1. In the costs decision, the Tribunal ordered the Builder to pay the Owner's costs on the ordinary basis from up to an including 30 June 2017 and on an indemnity basis from 1 July 2017.
2. In determining that costs should be paid on the ordinary basis until 30 June 2017, the Tribunal did not accept the Builder's submission that costs should be apportioned or that the Owner should be denied costs of both applications. The Tribunal stated: 32 The owner did fail to establish a number of items included in her claim. However, in other respects the owner did not recover the amount she had sought because I accepted the builder's expert's estimate of the cost of rectification of what were agreed to be defects in preference to the estimate provided by the expert called by the owner. 33 I do not consider the proportion which the amount recovered by the owner bore to the amount claimed, either in the original application (which the builder referred to) or at the commencement of the hearing (as referred to by the owner), is of significance in this case. The amount awarded was not an insignificant proportion of the amount claimed in either case. 34 The defects and out of pocket expenses in respect of which the owner did not recover compensation were: (1) Item 2 - the rainwater tank, in respect of which the owner claimed an amount of $1,435; (2) Item 35 - the provision of plumbing and drainage certificates in respect of which the owner claimed an amount of $9,376.40 but received only nominal damages of $10; (3) Out of pocket expenses consisting of: (a) PCA costs in the amount of $220; (b) Architect's costs in the amount of $364; (c) Plumbing services in the amount of $550; (d) Ducting for the stove range hood in the amount of $816. 35 None of these items involved a significant amount of evidence or took a significant amount of time at the hearing. Moreover, in relation to the largest of those items, the owner did establish a breach of contract by the builder but received only nominal damages because she had failed to provide evidence to establish the cost of rectifying the builder's breach. 36 As the builder pointed out, the significant item on which the owner did not succeed was the claim for liquidated damages at the rate of $1,000 per week from 31 January to 4 June 2015, an amount of about $17,000. 37 The claim for liquidated damages did not take up significant proportion of the trial nor was such evidence as might have been relevant to the claim for liquidated damages "clearly separable" from other evidence in the proceedings. 38 I do not accept that a significant amount of time or proportion of the hearing was taken up on the items on which the owner did not succeed. I am not persuaded that those matters "took up a significant part of the trial either by way of evidence or argument". In my view the builder has not identified any issue on which the owner did not succeed and which occupied a significant proportion of the trial. The builder has not identified any issue on which the owner did not succeed which required the expenditure of significant time either in the experts dealing with it, or in other evidence. 39 The one issue which substantially prolonged the hearing was the builder's claim to a quantum meruit which led to the filing of further affidavits after the initial two days of hearing and further cross examination of the owner on the third day of hearing. The builder failed in that claim. 40 I note that in paragraphs [14] and [15] of my decision I did identify that a number of issues which were canvassed in the lay evidence filed on behalf of the owner "had no obvious relevance to the issues which I ultimately have to determine". Nevertheless that material did not occupy any hearing time and was not the subject of any submissions. 41 The owner has succeeded in recovering a significant sum in respect of defects and out of pocket expenses. The builder has not pointed to any improper conduct on the part of the owner or any other conduct on the part of the owner which would make it unfair that the builder pay the owner's costs of the proceedings.
3. The order for costs to be paid on an indemnity basis was made because the Tribunal found that the Builder unreasonably refused to accept a settlement offer of $90,000 which was made in a Calderbank letter. The offer was made on 16 June 2017, which was between the second and third day of the hearing, and was open for acceptance until 30 June 2017. The Tribunal stated: 49 The builder had ample time to consider the offer. It was made on 16 June 2017 and was open for acceptance until 30 June 2017. The third day of hearing was fixed for 3 July 2017 and the builder should at that stage have been in a position to make a prompt and informed decision concerning whether or not to accept the offer. 50 The offer was clearly expressed. 51 Finally the offer was a significant compromise, being a reduction of about 15% from the judgment ultimately achieved. 52 I note that the letter did not expressly foreshadow an application for indemnity costs in the event it was rejected. However, in my view, where an offer is made to accept a specified amount of money, and the usual rule in the event the offeror succeeded in recovering that amount or a greater amount would be that the offeror would receive an order for costs, it is implicit in the reference to Calderbank v Calderbank, which was included in the letter of offer, that a failure to accept the offer would lead to an application for indemnity costs in the event the offeror obtained a better result. The offer would otherwise have no potential significance in relation to the allocation of costs. 53 I do not consider that either the earlier Calderbank letter sent by the owner or the counter offer from the builder have any relevance to my consideration of this issue. All either letter establishes is that the party making the offer was prepared to settle the proceedings on a basis more favourable to that party than the ultimate outcome of the proceedings. I do not consider that a willingness to accept more than a party is entitled to or a rejection of such an offer is relevant to consideration whether either of the parties acted reasonably in seeking to resolve the proceedings. 54 The fact that the builder had an unduly optimistic view of the strength of its quantum meruit case does not alter the fact that, objectively considered, the offer should have been accepted. 55 I note that my finding that the owner had validly terminated the contract did not depend on any finding as to the credit of any witness. The conclusion was reached by reference to the objective documentary evidence. 56 I do not consider the builder's rejection of the offer was reasonable and accordingly will order that the builder pay the owner's costs of both proceedings on an indemnity basis as agreed or assessed from 1 July 2017.
4. The Builder's position is that the Tribunal erred because: 1. The costs orders were based on the Tribunal's findings and orders in the substantive proceedings, which themselves contained errors of law. 2. Based on the findings the Builder submits should have been made, costs orders should have been made in favour of the Builder. 3. The award of costs on an indemnity basis was not a reasonable exercise of the costs discretion. 4. The Owner was only entitled to costs for the 53% of the claim in which she was successful. 5. The Builder successfully defended 47% of the Owner's claim and was entitled to the costs of doing so.
5. It is not in dispute that Rule 38 of the Civil and Administrative Tribunal Rules 2014 (the Rules) applied to the issue of costs in this case, as the amount claimed or in dispute was more than $30,000. The effect of Rule 38 is that the Tribunal could award costs in the absence of special circumstances.
6. Rule 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9].
7. The exercise of a discretion is only appellable in accordance with the principles in House v The King (1936) 55 CLR 499 at 505. For present purposes, this means that the Builder must establish error by showing that the Tribunal acted upon a wrong principle; gave weight to irrelevant matters or failed to give weight or sufficient weight to relevant considerations or made a mistake as to the facts or that the result is so unreasonable or plainly unjust that the Appeal Panel can infer that there has been a failure properly to exercise the discretion.
8. In view of our findings concerning the other grounds of appeal, Ground 7 has no merit insofar as the Builder submits that the costs decision was based on the Tribunal's substantive findings.
9. In relation to apportionment, the Tribunal has the power to apportion costs. The general approach is to order costs in favour of the successful party based on the outcome of the proceedings as a whole, without differentiating between particular issues on which the party may not have succeeded. A different costs order may be made if the losing party succeeds on significant issues: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [31]-[36]; Sydney Ferries v Morton (No 2) [2010] NSWCA 238 at [10]-[12].
10. Costs will generally only be apportioned where the successful party was unsuccessful in respect of an issue that was clearly dominant or separable: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]. In Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 288 ALR 385, Campbell JA (with Macfarlan JA and Young JA agreeing) held at [107] that an issue or group of issues is "clearly dominant" when it is clearly dominant in the proceedings as a whole. In that case, the approach by counsel to analysing the percentage of costs between the parties - counting the proportion of paragraphs and pages devoted to each factual topic - was held at [84] to be "a highly artificial way of proceeding" which gave "a false air of mathematical precision".
11. In relation to separable issues, a successful party's entitlement to the whole of the costs of the proceedings should not be discounted to allow for another party's success in a separate issue that played a very minor part in the proceedings as a whole: Macourt v Clark (No 2) [2012] NSWCA 411 at [7]. Further, in Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30 at [14], the Court of Appeal held that the severability of one issue on which the successful party failed is not, without more, sufficient to warrant departure from the general approach. The exercise of discretion will often depend upon matters of impression and evaluation: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [11].
12. Where costs are apportioned, the nature and extent of the apportionment is discretionary. Mathematical precision is illusory: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272.
13. In our view, the Tribunal did not err in finding that costs should not be apportioned. The Tribunal made a finding of fact that the claims on which the Owner was unsuccessful took up little time in the hearing. It also made a finding of fact that the one issue which substantially prolonged the hearing was the builder's unsuccessful quantum meruit claim. Those findings were clearly open to the Tribunal.
14. In relation to the Tribunal's award of costs on an indemnity basis, the principles applicable to such an award have been the subject of extensive judicial and Tribunal consideration. In Singapore Airlines Cargo Pty Ltd v Principle International Pty Ltd (No 2) [2017] NSWCA 340, the NSW Court of Appeal stated (at [30]): Calderbank offers are a well-established means of parties seeking to compromise proceedings in circumstances where, provided that the offer is a genuine offer of compromise and the opposing party unreasonably rejects the offer, the court may, in the exercise of its discretion, make a special costs order in favour of the offeror.
15. However, a Calderbank offer in more favourable terms than the outcome of proceedings does not of itself entitle the offeror to an order for indemnity costs: Jones v Bradley (No. 2) [2003] NSWCA 258.
16. In Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344, Basten JA identified two questions which are relevant to a Calderbank offer and a claim for indemnity costs. They are whether there was a genuine offer of compromise and whether it was unreasonable for the offeree not to accept it.
17. We consider that the Tribunal's approach to indemnity costs was in accordance with established principles. The Reasons demonstrate that the Tribunal considered both relevant evidence and the Builder's submissions in relation to these issues. There is no basis to disturb the Tribunal's conclusion that the Owner's settlement offer represented a genuine offer of compromise and that it was unreasonably refused.
18. For these reasons, we are not satisfied that the Tribunal's exercise of the costs discretion miscarried.
19. Ground 7 fails.

Leave to appeal

1. The Builder seeks leave to appeal on the basis that it may have suffered a substantial miscarriage of justice because the decision was not fair and equitable and against the weight of evidence.
2. We are not satisfied that the Builder has established either that the decision was not fair and equitable or that it was against the weight of evidence. Even if the Builder had established that this was the case, we would not grant leave to appeal as we are not satisfied that there is a basis for leave to appeal to be granted, taking into account the principles set out in Collins v Urban: see [21] above.
3. Leave to appeal is refused.

Costs

1. The Builder has been unsuccessful in appealing both the substantive and the costs decisions and we have refused leave to appeal.
2. Given that Rule 38 applies to costs in the Tribunal, the operation of Rule 38A means that Rule 38 also applies to the costs of both appeals.
3. We conclude that Builder should pay the Owner's costs in view of Owner's successful defence of the appeal and the application for leave to appeal. However, as we did not hear from the parties on the issues of costs of the appeal, we have given the parties leave to apply for a different costs order.

Orders 1. Leave to appeal is refused. 2. The appeal is dismissed. 3. The appellant is to pay the respondent's costs of the appeal, as agreed or assessed. 4. If either party seeks a different costs order, the following orders apply: 1. Order 3 is stayed until further order of the Appeal Panel. 2. The party seeking a different costs order (the costs applicant) is to file an application, supported by evidence and submissions, within 14 days of the date of publication of these orders. 3. The other party is to file and serve evidence and submissions in response to the application within 14 days thereafter. 4. The costs applicant is to file and serve any submissions in reply within 7 days thereafter. 5. Subject to the parties' submissions, an application for a different costs order will be determined on the papers. 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: 18 April 2019