D&K Developments Pty Ltd v Tchetchenian

Consideration

1. There is a right of appeal on a question of law, including in relation to a cost decision. This is because a cost decision is an ancillary decision within the meaning of the NCAT Act to which the rights of appeal found in s 80(2)(b) apply. The ground of appeal raises a question of law.
2. The issue of whether there has been a denial of procedural fairness requires an examination of the orders made by the Tribunal and the opportunities afforded to the parties to make submissions on costs.
3. In respect of any cost application, the directions made by the Tribunal on 5 October 2018, contained in order 14, were in the following terms 14. The parties are to make written submissions to the Tribunal on costs by 30 October 2018. Both parties submitted that the Tribunal should determine the question of costs on the papers.
4. The appellant did not provide any submissions on costs as permitted by this direction.
5. On 7 November 2018, the Tribunal made additional directions in consequence of the material filed by the respondents, who were the applicants for costs. These directions included the following: If the [respondents'] have not already done so, they must provide a provide a copy to the respondent (sic). While Order 14 did not contemplate a further date for reply submissions, given the length and detailed in the [respondents'] cost submissions the Tribunal considers it appropriate to ensure the [appellant] has a chance to be heard on the costs application. The Tribunal therefore allows the [appellant] to provide its submissions in reply to the costs application made against it by Monday, 26 November 2018 attention Senior Member Wilson. Submissions must be filed in the Tribunal and served on the applicant by 26 November in hardcopy.
6. In relation to what occurred following the orders made 7 November 2018, we make the following findings: 1. Mr Ratnam was aware of the directions which had been made on 7 November 2018, despite his former solicitors HWL Ebsworth, having ceased to act: see affidavit of Mr Ratnam the firm 31 January 2019 (Ratnam affidavit) para 6. Consequently, we are satisfied the appellant knew the date by which its submissions were due to be filed consequent upon the orders made on 7 November 2018. 2. The appellant sent an email requesting a copy of the costs application on 7 November 2018. 3. As directed by the Tribunal, the respondents served by post a copy of the application for costs and submissions. The evidence of these matters is found in the affidavit of Eric Cheng sworn 12 February 2019 and Gabriel Vesic sworn 12 February 2019 (Vesic affidavit). The documents were sent to the office of the appellant at Suite 6, Level 6. Century Circuit Bella Vista by ordinary post. This occurred on 8 November 2018: see Vesic affidavit para 3 and following. 4. The documents were not received by the director of the appellant, Mr Ratnam. This evidence is found in the affidavit of Mr Ratnam affirmed 31 January 2019 (Ratnam affidavit). 5. There is no evidence that Mr Ratnam made any inquiries within the company to see whether any documents had been received and, despite being aware of the direction, the appellant took no steps to apply for an extension of time or communicate with the respondents lawyers after an initial email was sent requesting a copy of the costs application to which the orders of 7 November 2018 referred. 6. There is no evidence the appellant followed up in respect of the lack of response to the email request for the costs application despite knowing of its existence and the need to file submissions by the date specified in the directions of 7 November 2018.
7. In our view, the respondents complied with the directions of the Tribunal in respect of service, there being no challenge to the evidence provided.
8. While we accept Mr Ratnam did not actually receive the documents personally, we are not satisfied they were not otherwise received by the appellant. Further, and in any event, we are satisfied that the appellant failed to take necessary steps to follow up when it had not received a copy of the application and that it failed to take any steps to seek an extension of time or obtain a copy of the application from the Tribunal so that it could otherwise comply with the directions and file any submissions.
9. In our view, there has been no relevant denial of procedural fairness. A party cannot sit idly round when under an obligation to provide submissions to the Tribunal and take no action to follow-up and obtain necessary information in order to comply with such obligations. This is so even if an opponent is in default. As stated in s 36(3) of the NCAT Act, both parties (and their legal representatives) are under an obligation to cooperate with the Tribunal to give effect to the guiding principle and to participate in the processes of the Tribunal and to comply with the directions and orders of the Tribunal so as to facilitate the just, quick and cheap resolution of the real issues in dispute.
10. It follows that the appeal should be dismissed.
11. Even if we had come to a different view and determined there had been a denial of procedural fairness, we would not have reached a different conclusion concerning costs to that reached by the Tribunal. In this regard it is sufficient to refer to the decision of the Court of Appeal of the Supreme Court of New South Wales in Ibrahim v PERI Australia Pty Ltd [2013] NSWCA 328 which sets out the principles applicable to dealing with a costs application made when a dispute is finalised, without there being a final adjudication on the merits. At [16]-[17], the President of the Court of Appeal (with whom Leeming JA agreed) said: 16 The primary judge, in determining whether a costs order ought to be made in the applicant's favour, on the discontinuance, reviewed the case law including, relevantly, Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; 44 FCR 194; Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622; ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; 101 FCR 548; Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497; and Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 32. 17 Although each of those cases related to different facts, the principles that are to be derived from them, in circumstances where a Court is requested to make a costs order, when proceedings have not been heard to termination include the following: whether a party acted reasonably in commencing the proceedings; whether a party had been successful in obtaining interlocutory relief; whether the party sued had acted reasonably; whether the responding party had acted reasonably in defending the proceedings; whether the proceedings terminated after interlocutory relief had been granted; and further, whether the primary judge was satisfied that the party seeking to terminate the proceedings prior to a full hearing had almost a certain chance of success.
12. While Ibrahim dealt with a claim for costs where proceedings had been discontinued, the principles are also relevant in considering the position where proceedings are settled on the day of the hearing.
13. As we stated above, the appellant did not challenge the finding of fact made by the Tribunal at [18] of its reasons. There, the Tribunal said: 18 … While the [respondent] obtain rectification in their favour, they were not to the extent sought in the original application. Further, they agreed to contribute to the cost of the home warranty insurance and the superintendent. There was no determination on the merits of the case. Given the joint Scott Schedule, the Tribunal agrees with the [respondents'] submission in paragraph 43 that had the matter run to a completed final hearing, the Tribunal is most likely to have made the order which is consent order 5 (to complete the works in the joint Scott Schedule). There can be no finding about whether the Tribunal would have made the other orders however.
14. Consent Order 5 was in the following terms: The builder will complete all the works set out in the joint scott schedule as attached to the orders noting that item 14 option 1.2 (page number 725) will be used.
15. Self-evidently, order 5 is a work order made in favour of the respondents against the appellant builder.
16. The Tribunal also found that the respondents did not engage in any conduct which would disentitle them to costs: reasons at [20].
17. Lastly, the Tribunal "took into account the parties' conduct prior to the lodgement of the application in the Tribunal, namely the rectification order of the Fair Trading Inspector which was not complied with by the [appellant]" and concluded it was "not unreasonable for the [respondents] to commence these proceedings".
18. It is clear from the submissions we have received that the proceedings were settled on the morning of the hearing. However, the Tribunal in effect found the respondents would have succeeded in respect of the matters the subject of order 5, that they had reasonably commence the proceedings and did so in circumstances where the appellant had failed to comply with its obligations under the contract and had failed to comply with rectification orders issued by the Fair Trading Inspector.
19. Having regard to these unchallenged facts and the principles in Ibrahim, in our view no relevant error is demonstrated in respect of the Tribunal's exercise of discretion to make the Costs Order. As we said above, there is a general discretion available under r 38 and, in our view, the order made was appropriate.
20. Finally, the fact that expert may have taken some time in conclave processes to resolve the precise scope of work to be undertaken to rectify any defects or incomplete work is an ordinary incident of proceedings being commenced when a builder defaults in meeting its obligations under the contract. Consequently, we do not accept that the submissions made that the course the proceedings took is a reason why an award should not be made in the present case. In reaching this conclusion, we note that an application for indemnity costs was refused, the respondents not otherwise suggesting error by the Tribunal in this regard.
21. For these reasons, the appeal should be dismissed.

Costs of Appeal

1. At the hearing of the appeal, the Appeal Panel sought submissions from the parties concerning costs of the appeal, depending on the outcome.
2. Both parties agreed that r 38 applied in determining costs in the appeal because of r 38A of the Rules and the fact that the amount of costs claimed or in dispute was greater than $30,000.
3. The appellant said it should have an order for costs in its favour if it was successful. If unsuccessful, the appellant initially made a submission that each party should pay their own costs. However, this submission was withdrawn and the appellant accepted that costs should follow the event.
4. On the other hand, the respondents initially sought an order that, if successful, their cost be paid on an indemnity basis. They relied on written offers of compromise made in accordance with the principles of Calderbank v Calderbank (1975) 3 All ER 333. The correspondence became Exhibit A in the appeal. In making this submission, the respondents accepted that they must show it was unreasonable for the offer not to have been accepted in order to obtain a special order for costs.
5. In the course of discussion with the Appeal Panel concerning the form of the offer, the respondent finally withdrew this application. This occurred in circumstances where it appeared to the Appeal Panel that the offer made and relied upon in support of the application for indemnity costs required complete capitulation and did not amount to a compromise in any relevant sense.
6. Consequently, the final position was that both parties accepted that costs of the appeal should follow the event.
7. Because the appellant has been unsuccessful, it follows that the appellant should pay the respondents' costs of the appeal.

Orders

1. The Appeal Panel makes the following orders: 1. The appeal is dismissed. 2. The appellant is to pay the respondents' cost of the appeal, as agreed or assessed on an ordinary basis.

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 February 2019