Cavers v Gleeson

Tribunal proceedings and reasons for the Final Decision

1. The history of the proceedings between the parties, and how the Tribunal reached its Final Decision is relevant for context. In its reasons for that decision, the Tribunal recorded, relevantly: 1. The proceedings involve disputes in respect of residential building work at Carlingford NSW. The disputes came before the Tribunal initially by way of an application lodged on 20 December 2019 by a builder, David Gleeson (Builder) in file no HB 19/57318, against home owners, Shane Cavers, William Cavers and Melissa Cavers (Owners). The Builder's claim is for the recovery from the Owners of $162,246.25 on a contractual basis; or alternatively, the recovery of $101,556.50 from the Owners on a quantum meruit basis. 2. As part of their defence to the Builder's claim, the Owners assert that they are entitled to set off against the amounts claimed by the Builder, their damages for misleading or deceptive conduct of the Builder: see [91] - [94] of "Respondents' Defence to Amended Points of Claim" dated 20 December 2020. In essence, the allegation of misleading or deceptive conduct is that the Builder procured payment from the Owners of a Final Variation claim (up to $93,000.00) by representing, in error that the Final Variation payment would ensure construction of the residential building with the Owners not required to make any further payments to the Builder. 3. Further, the Owners have brought their own cross application in file no 20/06029 (lodged with the Tribunal on 4 February 2020) based in part upon the same allegation of misleading or deceptive conduct as was put in their Defence to the Builder's claim: see [2] of the Owners' "Amended Points of Cross Claim" dated 20 December 2020. 4. Both applications were listed before me for final hearing on 22 February 2021. … 7. At the commencement of the formal hearing on 22 February 2021, the Owners' counsel requested that I should not proceed to hear and determine the substantive merits of each application without first determining the Tribunal's jurisdiction to hear and determine both applications. The Owners' position is that Part 3A of the Civil and Administrative Tribunal Act 2013 NSW (NCAT Act) applies, in that the determination of the applications in both proceedings would involve an exercise of federal jurisdiction. The Builder refutes that Part 3A of the NCAT Act applies, and submits that federal jurisdiction is "colourable" and that it is not bona fide for the Owners to rely upon the ACL (Cwlth) in circumstances where the Owners could press a claim and a defence based on misleading or deceptive conduct under the Australian Consumer Law NSW (the "ACL (NSW)") which applies as the law of New South Wales by reason of s 28 of the Fair Trading Act 1987 NSW. 8. Nevertheless, the Builder's counsel accepted that the Tribunal must hear and determine the issue of jurisdiction at the commencement of the hearing. I agree a hearing on that preliminary issue is the appropriate course. As Kirby J said in Old UGC v Industrial Relations Commission in Court Session [2006] HCA 24 at [51]: Indeed, it is the first duty of judicial and quasi-judicial bodies, when a question of their jurisdiction and powers is raised to satisfy themselves as to such jurisdiction and as to their power to afford the relief claimed. 9. Accordingly, the initial question for determination at the commencement of the hearing is whether the applications in file no HB 19/57318 and file no HB 20/06029 raise a federal matter about which the Tribunal has no jurisdiction to determine. … 21. If the Owners' case based upon misleading or deceptive conduct is established, this would require making orders to award damages in consequence of a contravention of s 18 of the ACL Cwth. I find that this constitutes the exercise of judicial power as it "settles for the future, as between defined persons, … [by] the existence of the right or obligation": Gatsby at [123] per Bathurst CJ. Having regard to the issues raised by the Owners in their misleading or deceptive conduct case, I further find there is a claim and defence that arises under Commonwealth law in each of the applications and that both applications require the exercise of federal jurisdiction. 22. Although it is far from clear on what legal basis the Builder relies on the Australian Consumer Law in the prosecution of his claim: see [62] of the "Further, Further Amended Points of Claim" of the Builder dated 11 December 2020, I am also satisfied that the Owners acted appropriately in assuming for the purposes of their application to the Tribunal which was dealt with by Principal Member Rosser on 18 November 2020 and is now the subject of Appeal Panel proceedings (AP 20/49959) that the proceedings were already in federal jurisdiction. I make this finding because of the Builder's statement about its Further Amended Points of Claim, which was then in the form of a proposed draft submitted to the Owners' solicitors in accordance with order 3 of Senior Member G Blake made at the directions hearing on 13 October 2020. The statement (with Emphasis Added in the text of the email reproduced below) is evidenced in an exchange of emails between the parties' solicitors on 30 October 2020 (the email of the Owners' solicitors) and on 2 November 2020 (the email of the Builder's solicitors): The 30 October 2020 email said: We are seeking further instructions in relation to the proposed Amended Points of Claim. Could you please urgently clarify whether your client relies on ACL NSW or the Federal legislation and thus federal jurisdiction? We await your urgent response. The response in the 2 November 2020 email was: I refer to your email dated 30 October 2020. I confirm that the legislation relied upon is the Federal legislation. (Emphasis Added) … 24. The Tribunal may not exercise judicial power to determine any part of the justiciable controversy in both proceedings; to do so would be to exercise the judicial power of the Commonwealth and that the Tribunal cannot do. It follows that the Tribunal does not have jurisdiction to determine the applications in both proceedings and it declines to do so. The Tribunal must deal with the proceedings in accordance with Part 3A of the NCAT Act.

Which costs provisions apply?

1. Section 60 of the NCAT Act deals with the usual position as to costs: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following - (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may - (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section - costs includes - (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
2. Rule 38 of the NCAT Rules varies the position in s 60 of the NCAT Act in respect of costs in the Consumer and Commercial Division of the Tribunal in certain circumstances, and relevantly provides: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if - … (b) the amount claimed or in dispute in the proceedings is more than $30,000.
3. Rule 38A of the NCAT Rules deals with costs in internal appeals, and provides: 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. Neither party thoroughly grappled in their submissions with the question of whether r 38A of the NCAT Rules applied, such that an award of costs could be made in the absence of special circumstances.
5. Clearly, the amount in dispute in the proceedings below exceeded $30,000.00: see the reasons for the Final Decision at [1] of the reasons for that decision, above. The terms of r 38A(1)(c) of the NCAT Rules are met. However, that is not enough to engage r 38A(2) of the NCAT Rules. As was determined in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25, the "amount claimed" or the "amount … in dispute" in the appeal must also exceed $30,000.00 before r 38A of the NCAT Rules takes effect and alters the usual position set out in s 60 of the NCAT Act.
6. Here, that is not the case. What was in issue in this appeal was a procedural decision as to the timing of when the homeowners' challenge to the Tribunal's jurisdiction would be determined. Rule 38A of the NCAT Rules is not engaged and the usual rule that each party must pay their own costs unless special circumstances warranting an award of costs are demonstrated, applies.
7. On that basis, the usual considerations applied by courts where the discretion to award costs is at large do not assist, including the general proposition that, where an appellant discontinues without the consent of the defendant or respondent, the latter is entitled to an order unless a court orders otherwise: see, for example Scope Data Systems Pty Ltd v Agostini Jarrett Pty Ltd [2007] NSWSC 971.

The homeowners

1. The homeowners say that they should have their costs on the indemnity basis. They say that the withdrawal of the appeal was not, as characterised by the builder, a capitulation by them but was, rather, caused by the supervening event of the Final Decision being released to the parties, rendering the appeal otiose: One.Tel Ltd v Commissioner of Taxation [2000] FCA 270; 101 FCR 548 at 553 ; Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5]. They say that the appeal was reasonably commenced and that the costs of the parties were incurred, in part, by the builder urging a determination of the appeal before the Final Decision was made, which they resisted. They point to the fact that the builder was, in effect, instrumental in robbing the Tribunal of jurisdiction by raising federal jurisdiction due to the stance taken in his solicitor's email of 2 November 2020.
2. As a secondary position, the homeowners refer to the comments of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 at 624-625 ("Lai Quin"). They say where, as here, they acted reasonably in pursuing the appeal (given that it was listed before the Final Decision was made and where they failed in obtaining a stay in the appeal), until it became futile. On that basis, they say that if we do not grant the order sought by them, no order for costs should be made.

The builder

1. The builder submits that, the homeowners having withdrawn the appeal without his consent, he should have his costs. He points to the lateness of the withdrawal, notified for the first time after the commencement of the hearing and some two weeks after the Final Decision was released to the parties. Despite the homeowners' success in the proceedings below, the builder says, relying on McHugh's comments to this effect in Lai Quin supra, that it is not appropriate for us to "try a hypothetical action between the parties [in respect of this appeal]. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided".
2. Again, in reliance on Lai Quin and its subsequent application by the NSW Court of Appeal in respect of an application governed by the Uniform Civil Procedure Rules 2005 (NSW) in Prodromos Anastasi Foukkare v Angreb Pty Limited & Ors [2006] NSWCA 335 at [68], the builder says that the usual order should follow, that is, that he should have his costs.

Determination

1. As we have set out above, the authorities provided by the parties are not binding on us, as they were all made in the context of decisions where the issue of costs was at large, subject only to the need for the court to act judicially, in furtherance of the objects of the relevant legislation being applied.
2. Here, we must be satisfied that there are special circumstances warranting an order for costs in favour of either party, to justify departure from the ordinary rule that they each pay their own costs of the appeal.
3. Both parties prosecuted the appeal appropriately and diligently, complying with directions in the appeal. Whilst it may be difficult for an appellant to gain relief in respect of a procedural order which does not alter or finally determine the rights of the parties (Champion Homes Pty Ltd v Guirgis [2018] NSWCATAP 54), the Final Decision vindicates the homeowners' concerns and they were content to allow the appeal to be prepared and determined after the Final Decision was made, in the usual course: Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 at [49].
4. It was not surprising or unusual that the builder sought to resist the appeal, despite the homeowners' ultimate success. He was successful in arguing for a disposition of the appeal before the Final decision was made, if necessary.
5. In our view, until the Final Decision was made each party acted reasonably and there was nothing unusual in the conduct of the appeal.
6. The one feature of the conduct of the appeal which does stand out as unusual, is the homeowners' delay of approximately two weeks between receiving the Final Decision and deciding, at the hearing of the appeal, to withdraw.
7. Given that the Final Decision clearly and unequivocally rendered the appeal otiose on 24 February 2021, we are satisfied that is a circumstance unusual enough to be described as special, and to warrant an order as to costs. To use the terms of s 60 of the NCAT Act, the appellant was responsible for prolonging unreasonably the time taken to complete the proceedings.
8. Of course, the appellant was entitled to a reasonable period to consider the Final Decision and take advice. Given the impending hearing of the appeal, though, and the consequent costs incurred by the parties if the matter was not promptly resolved, we would accept no more than one week as reasonable for that to occur.
9. On that basis, we will order that: 1. The appellant is to pay the respondent's costs of the appeal on the ordinary basis for the period 3 March 2021 to 9 March 2021 as agreed or, if not agreed, then assessed on the basis set out in the legal costs legislation as defined in Legal Profession Uniform Law Application Act 2014 (NSW) s 3A.

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: 24 May 2021