Burgon v Oz Style Homes Pty Ltd [2021] NSWCATCD 41 | Case summary

NCAT Consumer and Commercial|2021-07-01

REASONS FOR DECISION

In the decision given in these proceedings on 12 May 2021, the parties were ordered to have their experts prepare work orders having regard to specific paragraphs of the Reasons for Decision.
Orders were made in the event that a party was minded to apply for a costs order.
On 26 May 2021 the applicants filed an application for a costs order. The applicants submit that they were the successful party in their application and that in accordance with orthodox principles, they should receive an order for costs in their favour. The applicants consented to their costs application being determined on the basis of the parties written submissions and attached documents without the need for a hearing on costs.
Also on 26 May 2021 the respondent made a costs application. It sought the following orders: 1. From 27 February 2019 to 24 June 2020, it pay the applicant's costs discounted by 50%; and 2. From 24 June 2020 the applicants pay its costs on the indemnity basis or alternatively, on the ordinary basis.
The respondent consented to its costs application being determined on the basis of the parties written submissions and attached documents without the need for a hearing on costs.
On 27 May 2021, the respondent applied to vary its costs application. To the extent that an extension of time is necessary for this, such extension is granted pursuant to s41 of the Civil and Administrative Tribunal Act 2013, since the extension required is so minimal. The further alternative costs order sought by the respondent is that, 'from 27 February 2019 to 24 June 2020 each party bear its own costs'.
On 9 June 2021 the applicants filed and served their Reply costs submissions.

Successful party

As stated above, the applicants contend that they were the 'successful' party in the proceedings.
The respondent submits that the applicants were partially successful in that they were not successful on each of the claims that were in their scott schedule. In addition the respondent submits that the applicants were seeking a money order, but were not successful in obtaining such an order. Instead, they obtained a work order. This leads the respondent to submit that each party enjoyed a measure of success and as a result, the applicants should only recover 50% of their costs.
The Court of Appeal decision in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 dealt with awarding costs where there are multiple issues in a case and the parties each have a measure of success. The relevant extract from Bostik Australia Pty Ltd v Liddiard is at [38] where the Court stated: '38 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: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). • 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: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. • 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: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. • 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: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). • 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: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. • 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: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272.'
In Johnson T/As One Tree Constructions & Ors v Lukeman & Anor [2017] NSWCATAP 45 the parties in the Appeal proceedings achieved what may be described as a 'mixed result,' namely each of them had a measure of success, or to put it another way, the appellant was not successful on all of its grounds of appeal and was not successful in overturning the decision appealed against. At [28] and [29] the Appeal Panel stated: 'Whilst the appellants have had substantial success (adopting the words of Black J in Grain Growers) so too have the respondents. For this reason the Appeal Panel considers it inappropriate for either party to suffer an adverse costs order. In conclusion, the Appeal Panel determines that each party pay should pay their own costs. Accordingly, no costs order will be made.'
In these proceedings the applicants' claim was made up of numerous building defect claims and a loss of rent claim. I find that in connection with the building defects claims, while the claims had different rectification costs attributed to them, there was no particular defect claim or group of defect claims that was clearly dominant or separable. In that context, I find that it is neither possible nor appropriate to make of an order for costs so as to reflect the time taken in dealing with a particular issue or issues in which the applicants did not succeed.
I am of the view that there was a 'mixed outcome' outcome at the hearing, in that the applicants were not successful in a number of the claims that they made, namely; 1. First floor balconies; 2. Rear terrace paving; 3. Encroachment of alfresco roof; and 4. Loss of rental claim.
The applicants were partially successful in connection with their Roof drainage system claim.
The decisions in Bostik Australia Pty Ltd v Liddiard and Johnson T/As One Tree Constructions & Ors v Lukeman & Anor demonstrate that if I consider it appropriate, I may as a matter of discretion depart from the general rule that costs follow the event. Having regard to their mixed success in the proceedings which involves a consideration of the issues upon which they were and were not successful, I am of the view that it is appropriate that the applicants as the successful party should recover some costs of the proceedings, limited to 50% of their costs.

Calderbank offers

The respondent relies upon two calderbank offers to support its submission that the applicant should pay its costs on an indemnity basis.
The first offer was dated 23 July 2019. In this offer the respondent offered to pay the applicants the sum of $5,000.00 and proposed that the proceedings be dismissed with no order as to costs.
As a general proposition and subject to compliance with a number of factors, a party will be entitled to rely on an offer to settle proceedings and thereby as an exception to the general rule that costs follow the event, obtain an order that the successful party not receive an order for its costs, or pay the costs of the other party. In that scenario, the offer must be one that the successful party does not 'better' in the sense of obtain a better or more advantageous final outcome.
I have no doubt that the outcome obtained by the applicants bettered the respondents 23 July 2019 calderbank offer. I find that this calderbank offer does not justify an indemnity costs order being made in favour of the respondent.
The respondent's second calderbank offer was dated 24 June 2020. It stated that it was made 'Without Prejudice Save as to Costs'. The offer referred to s48MA of the Home Building Act and the principle that rectification of defective work by the responsible party was the preferred outcome. The offer contained an offer for the respondent to return to site and carry out the following work in accordance with its scott schedule, namely the scott schedule prepared by its expert: 1. Roof drainage system; 2. First floor balconies; and 3. Window and door assemblies.
The applicants did not accept this offer.
In In Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 344 Basten JA identified two questions which are relevant to a 'Calderbank' offer and a claim for indemnity costs. They are whether: 1. there was a genuine offer of compromise, and 2. it was unreasonable for the offeree not to accept it.
I do not doubt that the 24 June 2020 calderbank offer was a genuine offer to compromise the applicants' claim and to bring the proceedings to an end.
The question of whether it was unreasonable for the applicants to have refused the calderbank offer should be considered at the time the offer was made, 24 June 2020. At that time the applicants' expert had filed his first report as had the respondent's expert.
I find that it was not unreasonable for the applicants not to have accepted the respondent's 24 June 2020 calderbank offer as at that date it was in my view reasonable for them to have an expectation that their expert's opinions and rectification methodologies had a reasonable prospect of being accepted by the Tribunal. In that respect apart from asserting that a work order and not a money order was the preferred outcome, the respondents' 24 June 2020 calderbank offer made no comment as to why it was more likely that their expert's opinions would be accepted by the Tribunal rather than the applicants.
I therefore find that it was not unreasonable for the applicants not to have accepted the respondent's 24 June 2020 calderbank offer. As a result there is no basis for making a costs order in the respondent's favour based on an unreasonable failure to accept such offer.
For the reasons set out above I will make an order that the respondent must pay 50% of the applicants' costs of the proceedings such costs if not agreed to be assessed in accordance with the Legal Profession Uniform Law Application Act 2014.

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: 16 August 2021

Burgon v Oz Style Homes Pty Ltd

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Judgment (5 paragraphs)

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Legislation Cited (3)

Cases Cited (10)