The appellant home owner, Mr Cominos, appeals against decisions made on 1 April 2016 in the Consumer and Commercial Division of the Tribunal that he pay the costs of the respondent builders, the Di Ricos, in relation to proceedings concerning claims under the Home Building Act 1989 (NSW) (the HB Act).
For the reasons that follow, we have decided that the appeal should be allowed because aspects of the wording of the costs orders create difficulties, and because the Tribunal below has not given adequate reasons to explain why it used the wording that it did.
[2]
Background
There were claims by both the home owner against the builders for defective work and by the builders for the recovery of the costs of labour, equipment and materials for building works performed by the builders. Originally the builders, the Di Ricos, commenced proceedings in the Local Court of New South Wales. This was a debt recovery action by the builders for the amount of unpaid invoices (their own and third party invoices) plus interest under the Civil Procedure Act 2005 (NSW) and costs. Default judgment was entered for the builders but this was later set aside on 22 August 2013 on the application of Mr Cominos, the home owner. On 28 August 2013, the home owner filed a defence and cross claim in the Local Court proceedings. The Local Court proceedings were fixed for final hearing on 3 March 2014. A final hearing of those proceedings did not take place in the Local Court because Mr Cominos applied under s 48L of the HB Act to have the proceedings transferred to this Tribunal. This application was heard on 10 March 2014, and on 19 March 2014 the Local Court ordered that the proceedings be transferred to the Tribunal, and that the home owner pay the builders' costs of the application to transfer the proceedings to the Tribunal.
Since there is no provision in the Tribunal for cross claims, the proceedings transferred from the Local Court were constituted in the Tribunal as two proceedings between the same parties: HB 14/18947 in which the home owner claimed against the builders and HB 14/18936 in which the builders claimed against the home owner.
These proceedings were heard together and on 30 June 2015 the following orders were made (Antonio & Marianna Di Rico v Dion Cominos; Dion Cominos v Antonio & Marianna Di Rico [2015] NSWCATCD 75):
"1 In the proceedings constituted by File No HB 14/18936, the respondent [Mr Cominos] is to pay the applicants [the Di Ricos] the sum of $47,206.30 within 28 days of the date of these orders.
2 In the proceedings constituted by File No HB 14/18947, the application is dismissed.
3 The Tribunal directs the parties to confer with a view to reaching an agreement between themselves as to payment of the costs in both proceedings.
4 If the parties cannot reach an agreement on costs, then either party has leave to apply to the Deputy Divisional Registrar on or before 31 August 2015, to have the applications relisted for argument on any costs' orders in both proceedings."
The home owner appealed to the Appeal Panel in respect of this decision but was unsuccessful: Cominos v Di Rico [2016] NSWCATAP 5. The application for costs of the hearing at first instance had been stayed pending the determination of the appeal. On 3 February 2016, after the stay on seeking costs was lifted, the Tribunal made procedural directions for submissions on costs. On 1 April 2016, the Tribunal made orders to the effect that the home owner was liable to pay the costs.
[3]
The Costs Decision at First Instance
The costs orders made on 1 April were as follows:
1. In proceedings HB 14/18947
"1. The applicant [Mr Cominos] shall pay the costs of the respondent [the Di Ricos] incidental to the proceedings including the submissions on costs as assessed on a party/party basis under Part 7, Div 7 of the Legal Profession Uniform Law Application Act 2014 (NSW).
2. The costs assessed under Order 1 shall be payable within 28 days of assessment."
1. In proceedings HB 14/18936
"1. The respondent [Mr Cominos] shall pay the costs of the applicant [the Di Ricos] incidental to the proceedings including the submissions on costs as assessed on a party/party basis under Part 7, Div 7 of the Legal Profession Uniform Law Application Act 2014 (NSW).
2. The costs assessed under Order 1 shall be payable within 28 days of assessment."
In making these orders, the Tribunal noted that s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) establishes the general rule that each party should pay its own costs but that costs may be awarded in "special circumstances". The Tribunal also took into account the fact that r 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules) applied in these proceedings to displace the general rule in s 60 because the proceedings were in the Consumer and Commercial Division and the claims were for more than $30,000.
The Tribunal stated in its reasons:
"The proceedings were heard in the Consumer and Commercial Division of the Tribunal, so that Rule 38 applies. This means that I have the discretion to award costs in these proceedings irrespective of whether or not there are 'special circumstances' because the amount claimed by the builder in the case against the home owner (File No HB 14/18936) was more than $30,000.00. The home owner's cross application (File No HB 14/18947) was to resist the builder's principal claim for payment and was necessarily heard at the same time with the builder's claim. The evidence in the builder's proceedings was also evidence in the home owner's proceedings.
The discretion to award costs is broad and unfettered, save that it must be exercised judicially: see, for example, Ruddock v Vardalis (No 2) (2001)115 FCR 229. The usual principle in determining costs is that a successful party should be awarded cost in its favour (i.e. that costs 'follow the event').
At paragraph 146 of my Reasons for Decision dated 30 June 2015, I observed that the builder had been substantially successful in both proceedings save as to the matter of pre-judgment interest on the builder's claim. However, in my view, the builder's argument as to payment of pre-judgment interest did not engage any significant time of the Tribunal during its two day hearing. I am not convinced that the builder's failure on that point is sufficient for me to depart from the usual principle that costs follow the event.
Nor am I persuaded that the home owner's personal circumstances warrant departure from the usual principle. I am satisfied that the builder should have his costs paid on a party/party basis as assessed by a costs assessor. Orders are made accordingly."
[4]
The Appeal
On 27 April 2016, Mr Cominos lodged a notice of appeal against the costs decisions made on 1 April 2016. This was within the 28 day appeal period established by r 25(4)(c) of the Rules.
Although in his notice of appeal Mr Cominos identifies only the order in proceedings HB 14/18947 as the subject of the appeal, it was obvious from the submissions of both parties and the way in which this appeal was conducted that this was an oversight and that the appeal in fact related to the virtually identical costs orders made in each of proceedings HB 14/18947 and HB 14/18936.
In order to give effect to the guiding principle in s 36(1) of the NCAT Act by facilitating the just, quick and cheap resolution of the real issues in the proceedings and to act with as little formality as the circumstances of the case permit and according to the substantial merits of the case without regard to technicalities or legal forms, as required by s 38(4), the Appeal Panel intends to deal with this appeal on the basis that the costs decisions in both proceedings are being appealed against.
[5]
Grounds of Appeal and Orders Sought on Appeal
Mr Cominos listed in his notice of appeal the following six grounds of appeal:
"1. The order granted does not state the basis of costs & is not clear in excluding other jurisdictions and costs already granted.
2. Costs are not intended to penalize an unsuccessful party. It is not an appropriate basis for the exercise of the discretion that an order for costs may cause hardship to the party against whom the order is made.
3. The test of whether or not an order for costs should be made against an unsuccessful plaintiff or defendant is not whether he or she had done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated.
4. There was no regard to the Uniform Procedures Act 50? which states that the parties should endeavour to have litigation and costs just, quick & cheep [sic].
5. There was no regard to the fundamental intention of the NCAT Act and why NCAT was established in the first place in regards to costs.
6. No consideration to reasons why the Builder should have require [sic] a team of 4 solicitors and a barrister against a self represented unsophisticated litigant was given."
Mr Cominos sought the following orders on appeal:
"1. Costs order should be amended to read 'costs at NCAT' only.
2. Costs order should have a fair and equitable amount nominated for a two day NCAT hearing for one solicitor as agreed to by the defendant. Fair & Equitable would be $5,000.00.
3. Costs for extended team of solicitors and a barrister should not be allowed.
4. Bill of Costs should only be allowed for a nominated amount and assessed on this amount."
[6]
Parties Submissions
Mr Cominos's submissions generally reiterated the points raised in his grounds of appeal. As to grounds 2 and 3, he confirmed that he was submitting that the principles he identified had not been properly applied by the Tribunal below.
His submissions also made it clear that the reference to the "Uniform Procedures Act" was intended to refer to the same principle as is set out in s 36(1) of the NCAT Act. The submissions stated that there was "clearly no regard to the 'Guiding Principle'" (s 36) and that "the Act is clear, the Member is compelled and must have regard to 36 (1) there's no escaping it - the member is bound by it."
Mr Cominos appeared at times to seek to re-agitate issues of fact principally relevant to the substantive proceedings. Mr Cominos also questioned the decision to grant the Di Ricos leave to be legally represented. In this regard, it can be noted that this decision was not the subject of an appeal and Mr Cominos acknowledged in his written submissions that he "didn't object to the builder having a legal practitioner represent him".
The Di Ricos did not lodge a reply to appeal, but did file submissions. In their submissions, they emphasised that the order was for "costs as assessed" and that Mr Cominos had proceeded with the litigation despite having been alerted by the Member below to the risk of losing and the potential liability for costs. They noted that "Mr Cominos's grounds for appeal and reasons for leave do not provide evidence to establish that the Tribunal erred in making its decision … Mr Cominos's disagreement and general dissatisfaction with the order is not sufficient grounds to establish leave to appeal."
[7]
Jurisdiction of the Appeal Panel
Section 80(1) of the NCAT Act provides that an appeal against an internally appealable decision may be made to the Appeal Panel. By section 80(2) of the Act, an appeal from an internally appealable decision lies, as of right, on any question of law or, with the leave of the Appeal Panel, on any other grounds.
In Antonio v Ian Cubitt's Classic Home Improvements Pty Ltd [2016] NSWCATAP 37, the Appeal Panel explained that a costs decision is an "ancillary decision" as that term is defined in s 4(1) of the NCAT Act and the decision in that case was an "internally appealable decision" because it was a "decision made by the Tribunal in proceedings for a general decision" (at [58]). As in the present case, the costs decision in Antonio was made in relation to proceedings brought under the HB Act, which are proceedings for a general decision. Hence the same conclusion that the costs decision was an internally appealable ancillary decision applies in this case.
Consequently, Mr Cominos has a right to appeal on any question of law but requires leave of the Appeal Panel for any other grounds.
[8]
Nature of the Appeal
In accordance with the principle in House v The King [1936] HCA 40; 55 CLR 499 at 504-505, the exercise of a statutory discretion on a matter of practice and procedure such as that conferred by r 38 of the Rules can only be overturned on appeal in limited circumstances: Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45]. This principle from Micallef was relied upon recently in Hannaford v Commonwealth Bank of Australia [2014] NSWCA 297 at [14] where Emmett JA held that any attack on a discretionary decision on a matter of practice and procedure must fail:
"unless it can be demonstrated that the decision maker
(a) made an error of legal principle,
(b) made a material error of fact,
(c) took into account some irrelevant matter,
(d) failed to take into account, or gave insufficient weight to, some relevant matter, or
(e) arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning."
[9]
Grounds and Questions of Law
It is appropriate for an Appeal Panel to review a self-represented appellant's stated grounds of appeal, along with the submissions and other material provided and the first instance decision, to see whether it is possible to discern any grounds that raise a question of law. In Cominos v Di Rico [2016] NSWCATAP 5 it was said at [13]:
"It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]-[316])."
Adopting this approach in the present appeal, it is possible to view each of the grounds as raising a question of law. To the extent that this is correct, leave to appeal is not required.
[10]
Ground 1
Ground 1, as formulated in the notice of appeal, raises two specific points: first, "the order granted does not state the basis of costs" and, secondly the order "is not clear in excluding other jurisdictions and costs already granted." In addition, a more general point may be being raised concerning the clarity, appropriateness and justification for the costs orders. We shall deal with the two specific points first.
As to the first point, if the "basis for costs" refers to the basis of assessment of costs in the technical sense, it can be noted that the costs order does state a "basis of costs", namely "costs as assessed on a party/party basis". We shall at this point consider whether there was any error of law involved in referring to this basis of assessment in this case. If the "basis for costs" refers more generally to the reasons for awarding costs, we shall consider this when dealing with the general issue of the clarity, appropriateness and justification for the costs orders.
The awarding of costs in relation to proceedings in the Consumer and Commercial Division of the Tribunal is governed by s 60 of the NCAT Act and r 38 of the Rules.
In the present case, it should also be noted that cl 59 of the Legal Profession Uniform Law Application Regulation 2015 states:
59 Ordered costs - transitional provision
The provisions of the Legal Profession Act 2004 and the Legal Profession Regulation 2005 relating to ordered costs continue to apply to a matter if the proceedings to which the costs relate commenced before 1 July 2015.
Thus, by operation of cl 59 of the Legal Profession Uniform Law Application Regulation, the provisions of the Legal Profession Act 2004 (NSW) (the LP Act) and the Legal Profession Regulation 2005 relating to ordered costs continue to apply to the costs awarded in these proceedings, since the Local Court proceedings, and the proceedings as constituted in the Tribunal after their transfer from the Local Court, were commenced before 1 July 2015. It appears to the Appeal Panel that this requires s 60(4)(b) of the NCAT Act to be read as continuing to refer to Pt 3.2 of the LP Act, as it did prior to 1 July 2015, rather than referring to the "legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) [(the Application Act)]" as s 60(4)(b) did after 1 July 2015.
Section 60 of the NCAT Act prior to 1 July 2015 was relevantly as follows:
"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.
…
(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 Division 11 of Part 3.2 of the Legal Profession Act 2004 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."
Rule 38 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."
As the amount claimed or in dispute was more than $30,000, r 38(2)(b) of the Rules applied and the Tribunal had a general discretion to award costs.
Part 3.2 of the LP Act, referred to in the pre-1 July 2015 version of s 60(4)(b), contained Div 11 which established, among other things, the considerations that a costs assessor must take into account when conducting an assessment of legal costs payable as a result of an order made by the Tribunal. Division 11 of Pt 3.2 of the LP Act relevantly included the following:
Subdivision 3 Party/party costs
364 Assessment of costs - costs ordered by court or tribunal
(1) In conducting an assessment of legal costs payable as a result of an order made by a court or tribunal, the costs assessor must consider:
(a) whether or not it was reasonable to carry out the work to which the costs relate, and
(b) whether or not the work was carried out in a reasonable manner, and
(c) what is a fair and reasonable amount of costs for the work concerned.
(2) In considering what is a fair and reasonable amount of legal costs, a costs assessor may have regard to any or all of the following matters:
(a) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter,
(b) the complexity, novelty or difficulty of the matter,
(c) the quality of the work done and whether the level of expertise was appropriate to the nature of the work done,
(d) the place where and circumstances in which the legal services were provided,
(e) the time within which the work was required to be done,
(f) the outcome of the matter.
(3) An assessment must be made in accordance with the operation of the rules of the relevant court or tribunal that made the order for costs and any relevant regulations.
(4) If a court or a tribunal has ordered that costs are to be assessed on an indemnity basis, the costs assessor must assess the costs on that basis, having regard to any relevant rules of the court or tribunal and relevant regulations.
Because of cl 59 of the Legal Profession Uniform Law Application Regulation, assessment under s 364(1) was the applicable basis of assessment for costs ordered to be paid in proceedings HB 14/18947 and proceedings HB 14/18936. As the heading to this Subdiv 3 of Div 11 of Pt 7 of the LP Act indicates, costs assessed on the basis set out in s 364(1) could be referred to as "party/party costs". Thus, there was no error in the Tribunal's awarding costs to be assessed on a "party/party" basis.
It can be observed, however, that the reference in s 364(4) to "costs … assessed on an indemnity basis", which is also found under the heading "Party/party costs", might be taken to suggest that costs on an indemnity basis could also be called party/party costs. That would, however, be contrary to what has been the usual usage of the expression "party/party costs" or cognate expressions in costs orders. Accordingly, although the Tribunal did not fall into any legal error in awarding costs to be assessed on a "party/party" basis in its 1 April 2016 orders, it might have been preferable not to refer simply to party/party costs given the different types of costs to which s 364 and Subdiv 3 of Div 11 of Pt 3.2 of the LP Act could apply.
It is also useful here to note that in respect of proceedings commenced after 1 July 2015, the situation is somewhat different. Since 1 July 2015, s 60(4) of the NCAT Act has been in the following terms:
(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.
Section 3A of the Application Act includes the following definition:
"legal costs legislation means:
(a) Parts 6 and 7 of this Act, and
(b) Schedules 1, 2 and 6 to this Act, and
(c) Part 4.3 of the Legal Profession Uniform Law (NSW), and
(d) regulations or rules made under or for the purposes of the provisions referred to in paragraphs (a)-(c)."
Part 7 of the Application Act deals with costs assessments and Div 3 of that Part specifically governs the assessment of "ordered costs" which means "costs payable under an order or rule of a court or tribunal", see s 63 of the Application Act. Sections 75 and 76, which are found in Div 3 of Pt 7 of that Act, are similar in effect to s 364 of the LP Act and establish the criteria for costs assessments of ordered costs. They are in the following terms:
75 Conduct of costs assessments of ordered costs
(1) An assessment of ordered costs must be made in accordance with:
(a) the terms of the order, rule or award under which the costs are payable, and
(b) the rules of the relevant court or tribunal that made the order for costs, and
(c) any relevant regulations, and
(d) any order made for interest on costs under section 101 of the Civil Procedure Act 2005.
(2) If a court or tribunal has ordered that costs are to be assessed on an indemnity basis, the costs assessor must assess the costs on that basis, having regard to any relevant rules of the court or tribunal and any relevant regulations.
76 Criteria for costs assessments of ordered costs
(1) In conducting an assessment of ordered costs, the costs assessor must determine what is a fair and reasonable amount of costs for the work concerned.
(2) In considering what is a fair and reasonable amount of costs for the work concerned, the costs assessor may have regard to the factors in section 172 (1) and (2) of the Legal Profession Uniform Law (NSW) (as if that section also applies to ordered costs and so applies with any necessary modifications).
Subsections 172(1) and (2) of the Legal Profession Uniform Law (NSW) (the Uniform Law) are similar to but not exactly the same as s 364(1) and (2) of the LP Act. Section 172(1) and (2) provide:
(1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are -
(a) proportionately and reasonably incurred; and
(b) proportionate and reasonable in amount.
(2) In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect -
(a) the level of skill, experience, specialisation and seniority of the lawyers concerned; and
(b) the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and
(c) the labour and responsibility involved; and
(d) the circumstances in acting on the matter, including (for example) any or all of the following -
(i) the urgency of the matter;
(ii) the time spent on the matter;
(iii) the time when business was transacted in the matter;
(iv) the place where business was transacted in the matter;
(v) the number and importance of any documents involved; and
(e) the quality of the work done; and
(f) the retainer and the instructions (express or implied) given in the matter.
In order to avoid difficulties with the form of costs orders, in the Appeal Panel's view, it is preferable, if the basis of assessment is to be stated, to refer to the basis for assessment by referring to the applicable legislation specifically or by using the terms found in the applicable legislation. It is not necessary, however, if it is intended that costs be assessed not on an indemnity basis or some other special basis, for the order to refer to the basis of assessment because the costs will be liable to be assessed on the basis set out in s 364(1) and (2) of the LP Act or s 172(1) and (2) of the Uniform Law, as applicable, unless another basis is stated in the order.
Further, the Appeal Panel notes here that for proceedings commenced after 1 July 2015, the use of the expression "party/party basis" in costs orders in respect of such proceedings is not helpful, since the expression "party/party basis" or "party/party costs" does not appear in Div 3 of Pt 7 of the Application Act or in the relevant provisions of the Uniform Law.
In summary, it is not correct that the Tribunal below did not state a basis for the assessment of costs and its reference to costs assessed on a party/party basis did not involve any error of law. We would not uphold ground 1 because of a failure or error in relation to the basis upon which costs were to be assessed.
The second, specific point raised under ground 1 was that the order "is not clear in excluding other jurisdictions and costs already granted".
As to the exclusion of costs incurred in other jurisdictions, we take this to refer to the costs attributable to the part of the proceedings conducted in the Local Court prior to their transfer to the Tribunal. For the purposes of s 60 of the NCAT Act, "costs" is and was defined in s 60(5) as including:
"(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."
In our view, the proceedings commenced in the Local Court were not disposed of in that Court and fresh proceedings were not started in the Tribunal. Rather, what occurred was that the proceedings in the Local Court were transferred under s 48L of the HB Act to the Tribunal. Section 48L relevantly provides:
"48L Tribunal to be chiefly responsible for resolving building claims
(1) This section applies if a person starts any proceedings in or before any court in respect of a building claim and the building claim is one that could be heard by the Tribunal under this Division.
(2) If a defendant in proceedings to which this section applies makes an application for the proceedings to be transferred, the proceedings must be transferred to the Tribunal in accordance with the regulations and are to continue before the Tribunal as if they had been instituted there.
… "
From s 48(2) it is clear that:
1. the proceedings are transferred from the relevant Court to the Tribunal; and
2. the proceedings are to continue before the Tribunal as if they had been instituted there.
In other words the transferred proceedings are not new proceedings in the Tribunal but are the same proceedings that were in the Local Court and are to be treated as if they had been instituted in the Tribunal. On this basis, costs in respect of the transferred proceedings can be awarded by the Tribunal "as if [those proceedings] had been instituted there". Thus, the costs of, or incidental to, proceedings in the Tribunal would include any costs incurred while those proceedings were being conducted in the Local Court, relying on s 60(5)(a). Even if we were wrong in reaching this conclusion and the proceedings in the Local Court were not part of the "proceedings in the Tribunal" referred to in s 60(5)(a), those costs would fall within s 60(5)(b) "costs of, or incidental to, the proceedings giving rise to the application" in each of proceedings HB 14/18947 and proceedings HB 14/18936 in the Tribunal.
Therefore, as a result of the inclusive definition of "costs" in s 60(5) of the NCAT Act, there was no error in the Tribunal simply referring to the costs of the proceedings and not differentiating between the costs incurred in the Local Court and the costs incurred in the Tribunal. The Appeal Panel is of the view that the orders of 1 April 2016 were both proper and clear in this respect. The costs of the proceedings ordered to be paid on 1 April 2016 could, and did, include:
1. the relevant costs incurred in relation to that part of the proceedings conducted in the Local Court; and
2. the relevant costs incurred in relation to the proceedings in the Tribunal.
There was no error by the Tribunal below as contended by Mr Cominos in this regard.
As to the failure to refer to other costs orders, whilst it is true that prior costs orders were not referred to in the 1 April 2016 orders, any earlier orders will stand, and be enforceable, in their own right. The 1 April 2016 orders do not apply to any costs the subject of those earlier orders. There was no error on the part of the Tribunal in not referring to earlier costs orders.
Finally in relation to ground 1, we turn to the more general issues concerning the clarity, appropriateness and justification for the costs orders. We do so because it occurred to the Appeal Panel that in so far as ground 1 relies on the contention that the orders do not "state the basis of costs", the basis being referred to by Mr Cominos may not be the technical legal "basis" for assessment of costs, which is expressly referred to in the orders and has been addressed in detail above. Rather, it may be that Mr Cominos was referring more generally to the foundation, and reasons, for granting the order for costs.
In this regard, there are two aspects of the orders which cause the Appeal Panel concern. First, the orders refer to the costs being assessed under "Part 7, Div 7 of the Legal Profession Uniform Law Application Act 2014 (NSW)". Secondly, the orders award only "costs incidental to the proceedings".
As to the first aspect, in the light of cl 59 of the Legal Profession Uniform Law Application Regulation (set out in full above), it appears to us that the costs in these proceedings, which were commenced prior to 1 July 2015, should be assessed under the LP Act and the Legal Profession Regulation 2005 and not under Pt 7 of the Application Act. Further, even if cl 59 does not have this effect, Div 7 of Pt 7 is not the Division of the Application Act under which ordered costs are to be assessed. Division 7 of Pt 7 relates to the Costs Assessment Rules Committee and the costs assessment rules. As the Appeal Panel understands it, no such rules have yet been made. The correct Division to refer to would be Div 3 of Pt 7 which is headed "Assessment of ordered costs - additional provisions" and contains ss 74 to 80, of which ss 75 and 76 are the most relevant for present purposes. They have been referred to above. Consequently, the reference to Div 7 of Pt 7 of the Application Act in the costs orders of 1 April 2016 is wrong and should be corrected.
As to the second aspect, the reference to "costs incidental to the proceedings" is unclear. Under the definition in s 60(5) of the NCAT Act, "costs" includes, among other things, "the costs of, or incidental to, proceedings in the Tribunal". The expression "costs of or incidental to proceedings" is well known in the law. What is covered by costs limited to "costs incidental to proceedings" is less clear.
In The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174, the Full Court of the Federal Court held at [14]:
"[14] …The authorities show that an order for costs of and incidental to an application may include costs incurred in the preparation for litigation, as well as in the litigation, providing they satisfy the relevant test for determining the recoverability: see Société Anonyme Pêcheries Ostendaises v Merchants' Marine Insurance Co [1928] 1 KB 750 at 756-757, 762-763, 765; Scheff v Columbia Pictures Corporation Ltd [1938] 4 All ER 318 at 323 (Slesser LJ), 324 (MacKinnon LJ); Re Gibson's Settlement Trusts [1981] 1 Ch 179 at 188-189; Higgins v Nicol (No 2) (1972) 21 FLR 34 at 37-38; Quick R, Quick on Costs (Lawbook Co., subscription service) at [6.740] (update 64); and Costs Guide New South Wales (Lawbook Co., subscription service) at 2-7066 (update 92)…."
In Comcare v Labathas [1995] FCA 996; 61 FCR 149, Finn J distinguished between "costs of proceedings" and "costs of and incidental to proceedings" and concluded that costs allowable under one formula may not be allowable under another. His Honour held (at 154):
"Secondly, the formulae used in statutes and rules of court to authorise the award of costs are by no means uniform in their language. A consequence of this is that there can, in fact, be variations in the scope of the costs power given by different statutes and rules of court. A growing body of modern case law, for example, supports the view that a power to award costs "of and incidental to the proceedings" is of larger ambit than one to award costs "of the proceedings" see In re Gibson's Settlement, Mellors v Gibson [1981] 1 Ch 179 at 184; McIntyre v Perkes (1987) 15 NSWLR 417 esp per Samuels JA at 426; Council of City of South Sydney v Forte Enterprises Pty Limited, Land and Environment Court of NSW, 15 July 1993, per Bignold J. I would note in passing that the SRC Act, s67(8) uses the latter formula. Differences in the language in which the costs power is expressed may, then, have the effect that costs encompassed by one formula may not be allowable under another."
The New South Wales Court of Appeal in McIntyre v Perkes (1988) 15 NSWLR 417 observed at 426:
"The current meaning of the formula ["costs of and incidental to the proceedings] may be taken from the judgment of Megarry VC in Re Gibson's Settlement Trust [1981] Ch 179 at 184. There, his Lordship points out that the words "incidental to" extend the ambit of an order for costs to costs incurred as part of the preparations for litigation. Equally, as the passage also establishes, such costs may be taxed upon any of the available bases, depending upon the nature of the case and judicial discretion, and the word "incidental" does not of itself import any particular basis of taxation."
It may be that the Tribunal at first instance merely made a clerical slip in the 1 April 2016 orders and instead of awarding "costs of and incidental to the proceedings", by mistake, left out the words "of and". Alternatively, the Tribunal may have deliberately left out the words "of and" and intended to award only those costs incurred as part of the preparations for the proceedings. If the Tribunal had deliberately left out those words, it would have been expected that this would have been mentioned in the reasons for decision. Whilst the reasons for decision deal more than adequately with many aspects of the orders made, they do not clarify what was intended by not including the words "of and". As a result, the Appeal Panel is left in the unsatisfactory position that it does not know whether the Tribunal below has made a mistaken or a deliberate omission.
In these circumstances, the situation could be characterised as a failure by the Tribunal below to give adequate reasons to explain this aspect of its decision. A failure to give reasons amounts to an error of law (see Collins v Urban [2014] NSWCATAP 17 at [56] and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13(1)]) and a ground for setting aside the decisions.
Given the incorrect reference in the order to Div 7 of Pt 7 of the Application Act, and the failure to give reasons to explain whether the words "of and" were deliberately or inadvertently left out of the orders, the Appeal Panel has, reluctantly, formed the view that the most appropriate course is to uphold the appeal on this aspect of ground 1 and set aside the orders. This has been done so that the Tribunal below has the opportunity to remake the orders to reflect what was actually intended.
Having reached that conclusion in respect of ground 1, it is not necessary to consider the other grounds of appeal in detail. Nonetheless, for the sake of completeness, we make the observations on the remaining grounds as set out in the following paragraphs.
[11]
Grounds 2 and 3
While in their form in the notice of appeal grounds 2 and 3 are just statements of legal principle and do not explicitly suggest any error on the part of the Tribunal, we proceed on the basis that these grounds 2 and 3 were intended to raise the issue that the Tribunal erred by failing to apply these principles. Approaching the grounds in this way, both of them raise a question of law and an error of the kind noted in House v The King.
The principle relied upon in ground 2 that "Costs are not intended to penalize an unsuccessful party" appears to be derived from authorities such as Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67] and Sze Tu v Lowe (No 2) [2015] NSWCA 91. In Sze Tu it was held (at [37]):
[37] Costs are not awarded by way of punishment of the unsuccessful party but, rather, "are compensatory in the sense that they are awarded to indemnify to successful party against the expense to which he or she has been put by reason of the legal proceedings": Latoudis v Casey [1990] HCA 59; 170 CLR 534 at 543 (Mason CJ); Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [67]; Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 (Mahenthirarasa (No 2)) at [8] (Basten JA; Giles and Bell JJA agreeing). It follows that the inquiry as to what costs order should be made is primarily directed to the position of the successful party: Latoudis v Casey at 542; Mahenthirarasa (No 2) at [9].
The principle relied upon in ground 3 is similar, being that "the test of whether or not an order for costs should be made against an unsuccessful plaintiff or defendant is not whether he or she had done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated."
There is nothing in the reasons to suggest that the Tribunal below awarded costs by way of punishment of the unsuccessful party. Nor is there any basis for inferring, from the orders themselves, that they were intended to be punitive. The costs were awarded on the usual principle that costs follow the event and can be seen to have been intended to be compensatory.
For these reasons, the appeal based on grounds 2 and 3 should be dismissed.
[12]
Grounds 4, 5 and 6
Grounds 4 and 5 were as follows:
"4. There was no regard to the Uniform Procedures Act 50? which states that the parties should endeavour to have litigation and costs just, quick & cheep [sic].
5. There was no regard to the fundamental intention of the NCAT Act and why NCAT was established in the first place in regards to costs.
6. No consideration to reasons why the Builder should have require [sic] a team of 4 solicitors and a barrister against a self represented unsophisticated litigant was given."
Mr Cominos did acknowledge in submissions that he was seeking now to refer to s 36 of the NCAT Act rather than the CP Act. Indeed, he identified s 36 as "fresh evidence". By this, we understand that he meant that s 36 had only come to his attention after the costs orders were made and the notice of appeal was lodged. We note that it is beyond dispute that proof by way of evidence is not required for matters of law such as Acts of Parliament, see the Evidence Act 1995 (NSW) s 143. In any event, the Tribunal is not relevantly bound by the rules of evidence, see s 38 of the NCAT Act which provides, subject to certain exceptions which do not apply in this case, that "The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit…". Consequently, Mr Cominos does not need to rely on any "fresh evidence" in this regard.
Since it is not necessary to decide these issues in the light of our conclusion in relation to ground 1 and, given the terms in which grounds 4, 5 and 6 are expressed and the fact that the Appeal Panel has not had the benefit of full argument from legal representatives on these or reformulated grounds, we do not think it is appropriate to express a concluded view on these grounds.
Nonetheless, it did appear to us that Mr Cominos's complaints focused either upon:
1. decisions that had been made earlier in the proceedings which had not been challenged at the time they were made, such as the decision to grant the Di Ricos leave to be legally represented; or
2. matters that would be relevant in an assessment of costs under s 364(1) and (2) of the LP Act or s 172(1) and (2) of the Uniform Law, whichever is applicable. For example, whether the "team of 4 solicitors and a barrister" mentioned in ground 6 was reasonably required in order to present the builders' case is not a consideration which is primarily relevant to whether or not there should be a costs order. Rather, it is a consideration which goes to the heart of whether any costs claimed in respect of that team were fair and reasonable within s 364 or s 271, as applicable. Similarly, Mr Cominos's submission that "the Builders representatives had artificially inflated the subject matter for their own gain" and that "[t]his was a simple matter or [sic] whether or not I had an agreement with the Builder of $4.00 per block laid (The Industry Standard) or should have the Builder been paid an hourly rate" is relevant to the assessment of costs having regard to the "complexity, novelty or difficulty" of the matter or the issues involved, as referred to in s 364(2)(b) or s 172(2)(b), as applicable, but not so much to the question of whether there should be a costs order at all.
To this extent, these grounds 4, 5 and 6 appear to us to be potentially misdirected and not ones which would be likely to be upheld, although we reach no firm conclusion in this regard.
[13]
Conclusion
For the reasons set out above in relation to ground 1, we allow the appeal and propose to set aside the costs orders made on 1 April 2016 and remit the matter to the Consumer and Commercial Division to reconsider the question of costs of the proceedings with directions for the exchange of submissions on the costs orders to be made.
[14]
Orders
The orders and directions of the Appeal Panel are:
1. Appeal allowed.
2. The costs orders made on 1 April 2016 in proceedings HB 14/18947 and in proceedings HB 14/18936 are set aside.
3. The matter is remitted to the Consumer and Commercial Division of the Tribunal, as previously constituted, to reconsider the question of costs in both proceedings HB 14/18947 and HB 14/18936.
4. Each party is to provide to the Tribunal and to the other party any written submissions upon which he or they wish to rely on the question of the costs orders and on the question of whether the reconsideration should take place on the papers without an oral hearing on or before 19 July 2016.
5. Each party is to provide to the Tribunal and to the other party written submissions in reply on or before 26 July 2016.
[15]
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
[16]
Amendments
27 June 2016 - Added (No 2) to MNC.
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: 27 June 2016
Parties
Applicant/Plaintiff:
Cominos
Respondent/Defendant:
Di Rico
Legislation Cited (9)
Legal Profession Act 2004(NSW)
Legal Profession Regulation 2005(NSW)
Legal Profession Uniform Law Application Regulation 2015(NSW)