Catapult Constructions Pty Ltd v Denison

Introduction

1. On 28 June 2018 the Appeal Panel made orders in this internal appeal under s 80(2) (b) of the Civil and Administrative Tribunal Act 2013 ('the NCAT Act'): (1) Appeal allowed in part. (2) Costs of the appeal reserved. (3) Within 28 days of the date of the decision, each party to file and serve a proposed scope of works; proposed work order; and any written submissions in regards to the proposed work order to reflect the findings of the Appeal Panel in these proceedings. (4) The submissions under Order 3 are to also address; (a) The orders to be made as to the orders of the Tribunal which have been stayed, and (b) Whether the Appeal Panel should proceed to make final orders, including orders as to any application and submissions as to costs, without conducting a further hearing.
2. On 1 August 2018 the Appeal Panel made an order [1] pursuant to s.48O(1)(c) of the HB Act that the Builder execute specified Rectification Works to the residence of the Respondent.
3. Order 1 nominated the drawings in accordance with which the rectification work was to be executed, and specified in detail the scope of work and also included directions concerning the performance of the Rectification Works.
4. The orders made on 1 August 2018 also included: As to costs of the proceedings HB 15/52872 and HB 15/53181; and of AP 17/46569. (1) The Appellant is to file and serve submissions within 28 days of these Orders. (2) The Respondent is to file and serve any submissions in addition to those dated 18 July 2018 within a further period of 21 days. (3) The Appeal Panel will make Orders as to costs on the papers. As to Outstanding Orders. (1) Either party may make submissions as to any outstanding Order including any order as to the transfer of funds held in an account under an order of the Tribunal.
5. On 31 August 2018 the Builder filed submissions as to the costs of the Appeal AP 17/46569, and as to the two first instance matters HB 15/52872 and HB 15/53181.
6. On 20 September 2018 the Owner filed submissions in Response to the Builder's submissions on costs and also referred to submissions as to costs which were included in her primary submissions dated 29 January 2018 and the submissions dated 19 July 2018 as to the terms or the work order.

Builder's Submissions

1. The Builder's submissions addressed the issues as to the jurisdiction of an Appeal Panel to make orders as to costs of first instance proceedings. It was submitted that in the absence of a costs application at first instance the Appeal Panel does not have jurisdiction to make orders for costs. Alternatively it was submitted that the Appeal panel may make an order for costs in the first instance proceedings under appeal, ie HB 15/52872.
2. In the further alternative the Builder seeks an order that the Owner pay the Builder's costs in both proceedings on an indemnity basis since 11 May 2016 in reliance upon a Calderbank offer.
3. In relation to the costs of the Appeal Panel proceedings the Builder submitted that the appropriate order is that each party should pay their own costs.

Owner's Submissions

1. In her primary submissions on the appeal the Owner sought an order that the Builder pay her costs of the initial proceedings and the Appeal, the latter on an indemnity basis, or as agreed or assessed. These proposed orders were based upon an extensive analysis as to the amount in dispute in both matters.
2. In the 19 July 2018 submissions similar orders were sought which were also based upon extensive consideration as to the amounts in dispute.
3. The Owner submits that the Appeal Panel cannot make an order in favour of the Builder in HB 15/53181, the Builder's application, because there has been no appeal from the orders in that matter, however the Appeal Panel may make an order in HB 15/52872, the Owner's application, on the basis that the Owner was successful in obtaining a work order requiring extensive, and expensive rectification works.
4. As to the costs of the Appeal the Owner submits that the Builder was unsuccessful in the appeal insofar as the order for performance of rectification work has not been set aside and in fact the work order made by the Appeal panel is more comprehensive than that made at first instance.

Consideration - the costs of the first instance proceedings

1. As noted above these appeal proceedings only concern an appeal against the orders in the Owner's application HB 15/52872.
2. S.81 of the NCAT Act provides 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following: (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when varying, or making a decision in substitution for, the decision under appeal.
3. Rule 38A of the Civil and Administrative Tribunal Rules 2014 (the NCAT Rules) also refers to costs in appeal proceedings: 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of: (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
4. The Builder in its submissions referred to the decision of the Appeal Panel in LMA Contractors Ltd v Changizi [2017] NSWCATAP 145 (LMA) at [17] -[20] in which an Appeal Panel considered an application by an appellant that the Appeal Panel make orders for the costs of the proceedings at first instance: 17. No costs application was made to the Tribunal member at first instance as a result of his decision of 8 December 2016. As stated above, the respondents have applied for an order that we determine the costs of the proceedings below. 18. [Set out s.81] 19 We are of the view that section 81 of the Act does not allow us to make a costs determination in relation to the proceedings before the Tribunal Member at first instance, in circumstances where there was no application for an order for the costs of those proceedings. The Tribunal at first instance was not able to consider the question of costs if there was no application and therefore we as the Appeal Panel are not able to do so either. 20. However, the respondents may apply for an order for the costs of the proceedings at first instance. In that regard orders 2 and 3 of the orders made by the Tribunal Member on 8 December 2016 gave leave to the parties to make submissions on the question of costs.
5. The Owner submits that the interpretation by the Appeal Panel in LMA of s.81 is wrong, but further refers to the Transcript of the hearing before the Tribunal when the issue of costs was raised. After indicating that the parties were to provide primary submissions, the following was said: Mr Blackwell: Those submissions won't include submissions in relation to costs or would you like submissions in relation to that. Tribunal Member: No, What I will do in relation to costs - well, I suppose it would save time, perhaps, but I generally make the decision and request any submissions on relation to costs then. Mr Blackwell: That's fine member. Mr Atkinson: I'd prefer that, member. Tribunal Member: All right, I'll deal with it that way….
6. The Owner submits that there was in fact an application for submissions on costs in both proceedings at first instance. Therefore even if LMA is correct on the narrow issue of whether there is a pre-condition upon an Appeal Panel having jurisdiction to deal with an application for costs before the Tribunal, this Appeal Panel has jurisdiction to consider the submissions as to first instance costs of the proceedings under appeal. These appeal proceedings concern the Builder's appeal from the orders made in the Owner's application HB 15/52872.
7. The Owner submits that the Appeal Panel does not have jurisdiction to make an order in the Builder's application, HB 15/53181, because the decision in that matter is not the subject of an appeal. The Appeal Panel accepts that submission.
8. The Appeal Panel is not satisfied that it has jurisdiction to consider the Owner's application for costs of the proceedings at first instance. There was no determination of costs by the Tribunal and consequently there was not a "decision" on costs.
9. We are not satisfied that an oral exchange between the bar table and the bench at the conclusion of the hearing is sufficient to enliven the jurisdiction of the Appeal Panel under s 81(2) of the NCAT Act. There must be a "decision" on the issue of costs by the Tribunal at first instance. The meaning of "decision" is defined in s 5 of the NCAT Act. For the Appeal Panel to have jurisdiction under s 81 of the NCAT Act, there must be determination of the issue of costs by the Tribunal at first instance in the form of a "decision", because without this having occurred, there is no "decision" that can be varied, quashed or set aside under s 81 (1) (b), (c) or (d) of the NCAT Act, and the Appeal Panel has no power under s 81(2) of the NCAT Act to vary or substitute its own decision; there being no "decision" on the issue of costs at first instance within the meaning of s 5 of the NCAT Act.
10. The Tribunal at first instance did not make an order or refuse to make an order for costs, it merely did not make any orders, because there was no formal application for a decision on costs by the Tribunal at first instance by either party in circumstances where the Builder lodged proceedings in the Appeal Panel. Accordingly, there is no "decision" on the issue of costs under appeal which the Appeal Panel has jurisdiction in respect of.

The Costs of the Appeal

1. The Owner seeks a costs order in her favour on the basis that the Builder was unsuccessful in the application on appeal to set aside the orders for the performance by the builder of rectification work to the Owner's residence.
2. We are satisfied that the amount claimed or in dispute in the proceedings at first instance was in excess of $30,000 and by reason of r 38A of the NCAT Rules the Appeal Panel may make an order for the costs of the appeal without a party having to establish "special circumstances" under s 60(2) of the NCAT Act.
3. The Appeal Panel in Catapult Constructions Pty Ltd v Denison [2018] NSWCATAP 158 at [14] to [40] found that the Builder's primary ground of appeal, that there was no legal basis for the conclusion of liability on the part of the Builder, should be dismissed.
4. The Appeal Panel also found at [45] to [61] that the terms of the work order made by the Tribunal were inappropriate. Orders were made for the parties to provide submissions as to the terms of a proposed work order.
5. The Appeal Panel in Catapult Constructions Pty Ltd v Denison (No 2) [2018] NSWCATAP 186 made an amended work order and at [58] to [60] referred to the difficulties for the Tribunal in drafting work orders pursuant to s.48O(1) of the HB Act. The Appeal Panel's reasoning, particularly at [59]-[60] referred to an obligation upon a party contending for a work order to provide assistance to the Tribunal to ensure that the "requirements of certainty, practicability and enforceability" are satisfied.
6. The Appeal Panel does not conclude that the party seeking a work order has an evidentiary onus to prove the precise extent or scope of the work, however the Tribunal is not expected to draft the work order in a vacuum.
7. The uncertainty in and impracticability of the terms of the work order made by the Tribunal has been addressed by the Appeal Panel, which has made an amended order. It might be said that to a limited degree the Builder's appeal has been justified.
8. The Appeal Panel concludes that the appropriate order should be that each party is to bear their own costs of the Appeal. The Builder 'won' the appeal in the sense that the Appeal Panel was satisfied that there was error in the decision of the Tribunal, but 'lost' the majority of its grounds of appeal.
9. In such circumstances, the Appeal Panel has the discretion to depart from the usual order that a successful party obtain a costs order in its favour and make a proportionate costs order. However, a proportionate costs order should only be made 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].
10. 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 the circumstances of this matter, we are satisfied that the "dominant" issue raised in the appeal by the Builder was the issues of breach and causation. The Builder was unsuccessful on these issues. However, an issue raised in the appeal was the discretionary powers of the Tribunal to make work orders under s 48O of the HB Act, and on this issue the appeal succeeded, although not for the reasons directly raised by the Builder in submissions.
12. If we were to exercise our discretion regarding awarding costs on a proportionate basis, we would apportion each party 50% of the costs of the Appeal. However, we are not satisfied that there is any utility in making such an order in the circumstances of this matter, where one costs order will as a matter or practicality, subsume the other costs order. Accordingly, we are satisfied that the appropriate order is that each party bear their own costs of the Appeal.
13. In respect of the 'Calderbank' offer made by the Builder in May 2016, we only have jurisdiction to consider this offer in respect of the Appeal Panel proceedings, not the proceedings at first instance. In SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323, Giles JA stated at [37]: "The making of an offer of compromise in the form of a Calderbank Letter … where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure."
14. In Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 at [25] the NSW Court of Appeal listed a number of non-exhaustive criteria relevant to whether or not it was unreasonable to to accept the 'Calderbank' offer at the time it was made, including the stage of proceedings the offer was received; the time allowed to consider the offer; the extent of the compromise offered; the offeree's prospects of success at the date of the offer; the clarity of the terms of the offer; and whether the offer forshadowed an application for indemnity costs in the event it was rejected.
15. We are not satisfied that, in the context of the Appeal Panel proceedings, that it was unreasonable for the Owner to reject the Builder's offer made in May 2016 that the Builder pay the owner $30,000 with both sets of proceedings being dismissed with no order as to costs. Considering the extensive work orders made by the Appeal Panel, we are not satisfied that the Owner was less successful than the monetary amount of the offer, nor that it was unreasonable for the Owner not to have accepted the offer. The Builder's application for an order for costs of the Appeal on the basis of the rejection of the 'Calderbank' offer in May 2016 is refused.

Orders As to HB 15/52872 and HB 15/53181: 1. The Appeal Panel has no jurisdiction to determine costs. Either party may apply to the Senior Member of the Tribunal who heard Matter HB 15/52872 and HB 15/53181 for a determination of costs in those proceedings. As to AP 1746569 1. Each party is to bear their own costs of the appeal

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: 26 November 2018