Dick v Buildingwise Constructions Pty Ltd

Preliminary issue

1. In the Second Appeal Decision we stated that we proposed to deal with costs "on the papers" and without a hearing. We note that in Westerweller v The Owners Strata Plan No 18482 [2023] NSWCATAP 113 the Appeal Panel stated at [85] that: [i]t is the experience of the Appeal Panel that costs decisions in the Consumer and Commercial Division and on appeal (unless dealt with at the time of the hearing) are routinely considered "on the papers", and without a hearing. The parties were given an opportunity to provide written submissions and did so. They can be presumed to have included all relevant issues in their written submissions.
2. Neither party opposed us determining costs on the papers. As we are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering their written submissions, we dispense with a hearing: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 50(2).

The Homeowners' submissions

1. The Homeowners' submissions address three issues.
2. The first issue is costs. They seek their costs of the appeal as agreed or as assessed.
3. The second issue is the lifting of the stay made by order (10) of the Appeal Panel on 11 May 2023.
4. The third issue is an amendment of the Second Appeal Decision pursuant to s 63 of the NCAT Act.

The Builder's submissions

1. No submissions were filed by the Builder.

Relevant costs rules and principles

1. The relevant costs rule is found in Pts 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules). Part 38 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.
2. Part 38A relevantly provides: 38A Costs in internal appeals … (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.
3. As was noted by the Appeal Panel in Redmyre Group Pty Ltd v Stockman (No 2) [2023] NSWCATAP 342 at [19], the general principles concerning the awarding of costs under r 38 of the NCAT Rules were considered by the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 at [28]-[30]: [28] Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9]. [29] Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11. [30] In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion: (1) the starting point is that a successful party should be entitled to an order for costs in his favour; (2) an award of costs is by way of an indemnity and not as punishment; (3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party; (4) the factors to be considered are not to be confined as to do so would constrain the general discretion; (5) the relative success of the parties on different issues and the time taken to determine them may be relevant; (6) the nature of the proceedings is relevant; (7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious."

Costs

1. The Homeowners invoke The Owners SP 89023 v AT Building Pty Ltd (No 2) [2019] NSWCATAP 215, where the Appeal Panel stated at [10]: The Tribunal has a wide discretion to make an order for costs, and rule 38 does not specify the factors the Tribunal must take into account in exercising the discretion. Where an application has been heard and determined on the merits, the appropriate starting point for the exercise of the discretion is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour: Latoudis v Casey (1990) 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.
2. We note that in Oshlak McHugh J stated at [67] (footnote omitted): The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
3. And in Latoudis v Casey (1990) 170 CLR 435 at 567 McHugh J stated: An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v. Noumenon Pty Ltd (1988) 47 SASR 182, at p 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party. In Cilli v. Abbott (1981) 53 FLR 108, Keely, Toohey and Fisher JJ. pointed out (at p 111) that "the object of costs is not to penalize; it is to indemnify the successful party in regard to expense to which he has been put by reason of legal proceedings"; see also Anstee v. Jennings (1935) VLR 144, at p 148.
4. Put simply, the Homeowners say that they were successful and, applying the compensatory principle, they are entitled to their costs.
5. We agree.
6. Given that the Builder filed no submissions on the issue, we see no reason why there should be a differential costs order on the basis that some grounds of appeal were withdrawn and others were dismissed, such that the Homeowners be deprived of some of their costs: Monie v Commonwealth of Australia (No.2) [2008] NSWCA 15 at [64].
7. Therefore, the Builder must pay the Homeowners' costs of the appeal as agreed or assessed under the applicable costs legislation.

The lifting of the stay

1. Order (1) of the orders stayed of 11 May 2023 stayed orders (1) and (2) of the Tribunal in matter HB 21/49241 "until further order of the Tribunal or finalisation of the appeal, whichever is the earlier in time".
2. If the Second Appeal Decision did not finalise the appeal, this costs decision does. In either event, an order lifting the stay is unnecessary. But for the comfort of the Homeowners we confirm that the stay is now lifted.

Section 63 amendment

1. We agree that we made an error in [18] of the Second Appeal Decision which may be corrected by application of s 63 of the NCAT Act. Accordingly, we amend that paragraph so as to read: However, we decline to set aside order (2) made on 22 May 2023. That was an order relevantly ordering the appellants to pay the Builder's costs on the indemnity basis.

Orders

1. The Appeal Panel orders: 1. A hearing is dispensed with. 2. The respondent is to pay the appellants' costs of the appeal on the ordinary basis as agreed or as assessed under the applicable costs legislation. 3. Pursuant to 3 of the Civil and Administrative Tribunal Act 2013 (NSW), we amend paragraph [18] of Dick v Buildingwise Constructions Pty Ltd (No 2) [2023] NSWCATAP 292 so as to read: However, we decline to set aside order (2) made on 22 May 2023. That was an order relevantly ordering the appellants to pay the Builder's costs on the indemnity 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: 17 January 2024