Commissioner for Fair Trading v Younan

REASONS FOR DECISION

1. By its decision published on 21 December 2016, Commissioner of Fair Trading v Younan [2016] NSWCATAP 270 ("the principal decision") this Appeal Panel made the following orders: In respect of the appeal AP 16/09215: (1) The appeal is upheld in respect of the Gosford rectification order and is dismissed in respect of the Manly rectification order. (2) The orders made in the decision under appeal are set aside. (3) The proceedings are remitted to the Occupational Division of this Tribunal for a further review of the Commissioner's decision. (4) That review is to be made on the basis that the Gosford rectification order was valid and effective and that the Manly rectification order was invalid and ineffective and otherwise in accordance with this decision. (5) Any application by the respondent for costs of this appeal to the extent that they relate to the Manly rectification order is to be made by written submissions filed and served within 21 days after publication of this decision. The appellant may reply to any such application by written submissions filed and served within 21 days after service on the respondent of any such application. The application will then be decided by the Appeal Panel on the papers. In respect of appeal AP 16/25075: (1) The appeal is upheld. (2) The order made in the decision under appeal is set aside. (3) The issue of costs in the Occupational Division proceedings, including those in proceedings OD 1520194, is remitted to the Occupational Division. (4) Each party is to pay their own costs of the appeal.
2. There is now under consideration an application by the respondent pursuant to Order 5 in the first appeal that the appellant pay the respondent's costs (in that appeal) to the extent that they relate to the Manly rectification order.
3. The appeals were from each of two decisions in the Occupational Division ("OD") of this Tribunal.
4. The first decision under appeal in an administrative review, set aside a decision ("the Commissioner's decision") which had been made on 2 September 2015 by the Commissioner for Fair Trading ("the appellant" or "the Commissioner") and which in an internal review, agreed with and affirmed a decision of a Delegate of the Commissioner pursuant to s 62(c) of the Home Building Act 1989 ("the HBA"). The Delegate had determined that Mr Wardy Younan ("the respondent" or "Mr Younan") had conducted himself, as a director of Nazero Pty Ltd, in a manner that would warrant the taking of disciplinary action against him and that he be required to pay to the Commissioner, as a penalty, $3,000.00.
5. In the second decision under appeal the Commissioner was ordered to pay Mr Younan's costs of those proceedings.
6. The material facts involved in the allegations against Mr Younan, shortly stated were: 1. At all relevant times Mr Younan was a director of Nazero Construction Pty Ltd (later known as Zeecat Constructions Pty Ltd) which was a licensed contractor under the HBA ("the contractor"). 2. The contractor failed without reasonable cause to comply with the requirements of rectification orders issued to it, requiring it to rectify defective work in relation to residential building work it had done on two properties, one at Manly and one at Gosford. 3. The contractor was therefore guilty of improper conduct under s51(2)(b) of the HBA and Mr Younan, as a director of the contractor, was guilty of improper conduct under s54(1) of the HBA.
7. Additional matters concerning the Manly property included: 1. On 17 April 2013 an inspector of NSW Fair Trading issued to the contractor a rectification order ("the Manly rectification order") requiring the contractor, by 18 May 2013, to attend to defective work, evidently involving a bathroom leak in a home unit. 2. On 19 March 2014, the owner of the property instituted a building claim against Nazero in the Consumer and Commercial Division of this Tribunal, which included the defective work referred to in the Manly rectification order.
8. Additional matters concerning the Gosford property included: 1. On 2 July 2014, at a site meeting involving the owners of a home unit in the property, Mr Younan and an inspector of NSW Fair Trading, the inspector issued to the contractor a Complaint Inspection Advice under s48D of the HBA requiring the contractor to rectify by 23 July 2014 an issue described in the notice thus, "Water ingress from shower area of main bathroom into hallway area. A flood test revealed water coming from the recess". 2. On 18 August 2014 an inspector of NSW Fair Trading issued to the contractor a rectification order under s48E of the HBA requiring the contractor, by 1 September 2014, to attend to an item of defective work in the subject unit described in the Order thus, "Rectify water ingress coming from shower recess in main bathroom" ("the Gosford rectification order").
9. In relation to the Manly rectification order, the first decision dealt with what was described as a "threshold issue". The threshold issue was, as described in the principal decision at [10], essentially, whether by reason of the institution on 19 March 2014 of the building claim which included the defective work referred to in the Manly rectification order, and of the operation of s48F of the HBA as amended by the Home Building Amendment Act 2014 ("the 2014 Amendment Act"), the Manly rectification order ceased to have effect. No building claim had been instituted in respect of the Gosford property so the threshold issue did not apply to the Gosford rectification order. The threshold issue and its disposition in favour of the appellant, in the first decision under appeal, were detailed in the principal decision at [11] to [19].
10. In the first appeal, there was a concession by the Commissioner (detailed in the principal decision at [25]) to the effect that by reason of non-compliance by the Department of Fair Trading with s48D(2) of the HBA in respect of the Manly work, the Manly rectification order could not stand, nor consequently could the Commissioner's decision insofar as it related to the Manly work ("the s48D(2) concession"). The threshold issue was therefore no longer a matter to be dealt with in the appeal. Nevertheless, submissions were made in the appeal by the Commissioner which effectively sought to maintain the propriety in law of the Commissioner's contentions in respect of the threshold issue. This situation was dealt with in the principal decision at [38] to [41]. As we explained in [41] we did not make a decision on the Commissioner's argument on the threshold issue, but we did express the view that it "may be difficult to sustain" (but also the view that it should not be described as "untenable"). While the threshold issue also had relevance to the second appeal (on costs - principal decision at [42]), agitation of the issue in the submissions and the appeal hearing was not confined to that appeal; apart from other considerations, these submissions were filed in the first appeal.
11. The costs situation is regulated by s60 of the Civil and Administrative Tribunal Act 2013 ("the NCAT Act"): 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 proceeding, (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.
12. In support of his application for costs, the respondent submits that the Commissioner's submissions in relation to the Manly rectification order have complicated and needlessly prolonged the appeal; have "led to lengthy written and oral submissions on both parties which in turn caused significant costs to be wasted"; have "been extremely costly and burdensome to the respondent"; and were such that "it would not be just for the respondent to bear the costs of responding to the appeal in relation to the Manly rectification order". The respondent also submits that pars (b), (c) and (d) of s60(3) are relevant as is also par (g) with general special circumstances constituted by the Commission without power (as now conceded) - (a) making the Manly rectification order; (b) holding a show-cause hearing relating to that order; (c) applying a penalty for purported breach of that order; (d) rejecting an internal appeal of that penalty; (e) defending and losing an internal appeal of that penalty; and (f) appealing the loss of the external appeal.
13. The appellant put on detailed submissions in response concluding that the respondent's costs application should be refused "because the respondent has not demonstrated, nor could demonstrate, any special circumstances warranting (the) award of costs" pursuant to s60(2) of the NCAT Act.
14. The appellant also filed an affidavit from a Director, Energy & Utilities, Building Construction Service, Fair Trading in the Department of Finance, Services and Innovations. That affidavit is apparently tendered in support of a submission that the Commissioner made the s48D(2) concession promptly after the Commissioner's advisers became alert to the legal point involved. The affidavit is objected to by the respondent who says it, and the documents attached to it, "should be disregarded", particularly absent any order having been made for evidence and the respondent complains of prejudice by not having the opportunity to cross-examine on the affidavit.
15. We are of the view that fairness to the respondent, consistently with the respondent's submissions, dictates that the affidavit should not be received in evidence. Nevertheless, we are also of the view that on the material otherwise before us, it is appropriate to accept that the Commissioner made the s48D(2) concession promptly after his legal advisers became alert to the legal point involved.
16. The appellant's submissions refer to many cases dealing with costs. The submissions emphasise, with reference to case law, principles such that costs are compensatory and not punitive and that reasonableness in the conduct of proceedings is a core notion. They also refer to the principle that special circumstances are circumstances that are out of the ordinary but need not be extraordinary or exceptional. We accept the principles put forward but do not see that it is appropriate to canvass the details of the decisions which have been cited.
17. A crucial consideration to our minds is that while the s48D(2) concession meant that the threshold issue was no longer a matter for decision in this appeal, the Commissioner still addressed submissions on the threshold issue to which the respondent had to respond, and which we then dealt with in the appeal. The threshold issue related only to the Manly rectification order and was thus separable. The Commissioner did not withdraw the appeal in respect of the Manly rectification order and the appeal was dismissed in respect of the Manly rectification order. These matters, in our opinion, constitute an out of the ordinary situation and special circumstances.
18. Accordingly, in respect of the first appeal (AP 16/09215) the appellant is ordered to pay to the respondent the respondent's costs to the extent they relate to the Manly rectification order, as agreed or assessed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar 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: 23 May 2017