Our substantive decision, De Marco v Macey [2021] NSWCATAP 291, was published on 28 September 2021 and we made the following orders:
1. Time for filing the appeal is extended to 8 July 2020.
2. The order made by the Tribunal on 8 July 2020 is varied to substitute for the builder to pay the owners the amount of $389,184 (instead of $317,919).
3. The appeal is otherwise dismissed.
4. Order that the appellant pay the respondents' costs of the appeal on the ordinary basis as agreed or assessed, subject to any application for an alternative costs order.
5. Any application for an alternative costs order, together with evidence and submissions in support of the application, is to be filed and served within 14 days of the date of these orders.
6. Any evidence and submissions in response to an application for an alternative costs order is to be filed and served within 14 days thereafter.
We stated the following as to costs of the appeal:
"[61] Rule 38A of the Rules applies the same costs rules as applied in the Division when there is a departure under the Division rules (such as under Rule 38) from CATA s 60. Here both claims always exceeded $30,000 so the ordinary costs rules apply.
[62] The starting point for exercise of costs discretion on the usual principles is that costs follow the event. "The event" is usually the overall outcome of the proceedings; that is, did the successful party have to go to the Tribunal (in this case) to get what it achieved, rather than being offered at least that relief. If there are distinct issues on which the party seeking relief did not succeed, that may be taken into account in the exercise of costs discretion.
[63] Here there appears to be no reason not to apply the usual principle that costs follow the event. The owners are accordingly entitled to their costs of the appeal. No party has made any submission that costs should be other than on the ordinary basis or that the question of costs should be deferred. However, we have made the costs order subject to any application for an alternative costs order."
Pursuant to the orders, the respondent owners filed and served costs submissions dated 11 October 2021, seeking that their costs be paid on the indemnity basis as agreed or assessed.
The appellant builder filed and served submissions dated 26 October 2021, in response resisting the indemnity basis.
The owners consented to the issue of costs being decided on the papers. While no submissions on the issue were made by the builder, we are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering their written submission and that the parties would be put to further unnecessary costs if they were to attend the hearing in person.
Pursuant to s 60(1) of the Civil and Administrative Tribunal Act 2013 (NCAT Act), parties are to bear their own costs. Section 60(2) provides that a cost order can be made if "special circumstances" are established. Section 60(3) sets out the matters to which the Tribunal may have regard to in respect of whether "special circumstances" exist.
Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) states:
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 -
(a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or
(b) the amount claimed or in dispute in the proceedings is more than $30,000.
Rule 38A of the NCAT Rules states:
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.
Rule 38(2)(b) applies when the 'amount claimed or in dispute' is more than $30,000. This appeal involved an amount in dispute that was over $30,000 and the Tribunal is satisfied that r 38 does apply to these proceedings and that there is no requirement for the Tribunal to find special circumstances to award costs.
The owners seek indemnity costs on the basis that the appeal had no prospects of success. The owners correctly referred to the case law requirements for such a conclusion on that basis, as set out in Mendonca v Tonna [2017] NSWCATAP 176, which at [59]-[63] relevantly sets out:
"Indemnity costs are only awarded in limited circumstances. The discretion to do so must be the subject of careful reasoning (Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354) and caution should be exercised in making such an award: Leichhardt Municipal Council v Green [2004] NSWCA 341; Ng v Chong [2005] NSWSC 385 at [13].
Other than in relation to the unreasonable refusal of a genuine offer of settlement, one circumstance in which indemnity costs may be awarded is when a case is commenced or continued where there is no chance of success (Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4]), such as where the claim is "without substance", "groundless", "fanciful or hopeless" or so weak as to be futile, such as where a limitation period is obviously at an end: Hillebrand v Penrith Council [2000] NSWSC 1058. However, mere weakness of a case will not be sufficient to warrant an exercise of the discretion to award indemnity costs: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534.
…
Another circumstance which may warrant an order for costs on an indemnity basis is where the proceedings amount to an abuse of process: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362. Examples of abuse of process include where the proceedings are commenced other than in good faith or for an ulterior or collateral purpose: Palmer v Gold Coast Newspapers Pty Ltd [2013] QSC 352; Packer v Meagher [1984] 3 NSWLR 486 at 500. Regardless of whether there is in fact a residential tenancy agreement between the parties, we are not satisfied that Dr Mendonca's applications either individually or collectively were made in bad faith or amount to an abuse of process.
An award of indemnity costs may also be made for unreasonable conduct. Such conduct may include unnecessarily prolonging the proceedings, (Degmam Pty Ltd (in liq) v Wright (No 2), at 358); unfounded allegations of fraud or improper conduct (Maule v Liporoni (No 2) (2002) 122 LGERA 216 at 229); deliberate or high-handed conduct (Rouse v Shepherd (No 2) (1994) 35 NSWLR 277) and behaviour which causes unnecessary anxiety, trouble or expense, such as the failure to adhere to proper procedure (FAI General Insurance Co Ltd v Burns (1996) 9 ANZ Ins Cas 61-384). Disregard of court orders may justify an indemnity costs order (O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [35]). Perverse persistence by an unrepresented litigant with a hopeless application may also do so: Rose v Richards [2005] NSWSC 758.
…"
While each ground of appeal was unsuccessful for the reasons we have expressed in the substantive decision, the grounds that were raised by the appellant were not unarguable, untenable and/or futile.
The one exception was the bias allegation as it was originally broadly expressed and which was properly withdrawn in that broad form in the appeal hearing.
Accordingly, in our view the owners' submission to vary the basis of the award of costs is rejected and the order we have previously expressed will stand as the final costs order for costs of the appeal.
[2]
Refusal of informal stay application by appellant
In the final sub-paragraph of his submissions on costs the builder sought a stay until the outcome of an appeal of the decision of the Appeal Panel to the Supreme Court is known, for which apparently a summons for leave to appeal was filed. That was filed on the same date as the costs submissions of the builder, of the order varying the Tribunal's money order and of the costs order. This was said to be to avoid rendering the appeal to the Supreme Court otiose.
There was no proper application for a stay previously made by the builder and no proper evidence in support of the asserted basis for a stay. There was no indication that prior notice of such application had been given to the owners.
If the builder seeks to make that application then they should apply to the Registry and directions will be made for the parties to provide their materials and submissions so that the application may be considered in due course.
[3]
Orders
We accordingly make the following costs order:
1. Order that the appellant pay the respondents' costs of the appeal on the ordinary basis as agreed or assessed.
[4]
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
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Decision last updated: 09 November 2021