Dunn & Pilcher Constructions Pty Ltd v Woodos Australia Pty Ltd

Appellant's Submissions

1. The Appellant's submissions may be summarised as follows: 1. The Appellant accepts that the proper approach to the exercise of the discretion as to costs in this case is that costs should follow the event (ie. the event being the dismissal of the appeal) and that there are no grounds for departure from the rule that costs follow the event, meaning that the Respondent should be awarded costs of the appeal. 2. However, the Appellant opposes the application for costs to be made on the indemnity basis. 3. The Calderbank offer of settlement dated 14 June 2019 was expressed to be open for acceptance for a period of 28 days, expiring on 12 July 2019. The Calderbank offer of settlement dated 3 March 2020 was expressed to be open for acceptance for a period of 48 hours, expiring on 5 March 2020. 4. The Respondent did not renew either offer of settlement and did not make any further offer of settlement prior to the hearing of the appeal which occurred on 17 June 2021. 5. After 5 March 2020 and as at the date of the hearing of the appeal, both of the Respondent's offers of settlement were spent and there was no extant offer of settlement that the Appellant was capable of considering or accepting. 6. The sole ground on which the Respondent relies in support of its application that the Appellant pay costs on an indemnity basis is that it was unreasonable for the Appellant to reject both offers. The Appellant submits that it did not reject either offer but rather both offers expired without being accepted by the Appellant. 7. While an offer of compromise made at first instance might be relevant to the costs of the appeal it does not give rise to a prima facie presumption in favour of indemnity costs if the offer is "not bettered" in the result ultimately reached (see Gray v Hobson (No 2) [2018] NSWCA 131 at [10]). 8. In Gray v Hobson it was stated that it can be accepted that the making of an offer of compromise in the proceedings at first instance, but which is not renewed for the purposes of an appeal, constitutes a relevant consideration informing the discretion to be exercised by the court under s 98 of the Civil Procedure Act 2005 (NSW). 9. The Appellant submits that the Appeal Panel should exercise its discretion not to order that the Appellant pay the Respondent's costs of the appeal on an indemnity basis,but rather should make the alternative order sought by the Respondent that the Appellant pay the Respondent's costs of the appeal on the ordinary basis, as agreed or assessed, in the circumstances of this case. The circumstances relied upon are: 1. that the Appellant had not rejected either of the offers of settlement; 2. both offers of settlement had expired without being accepted; 3. the Respondent had not renewed either offer of settlement prior to the hearing of the appeal; 4. the Respondent had not made any further offer of settlement prior to the hearing of the appeal. 1. The Appellant consents to the question of costs of the appeal being determined on the papers, and by the Appeal Panel dispensing the hearing.

Consideration

1. We are satisfied that the question of costs of the appeal may be determined on the papers in the absence of the parties by considering their written submissions. Accordingly, we will make an order dispensing with a hearing.
2. Under s 60 of the Civil & Administrative Tribunal Act 2013 (NSW) (the NCAT Act) each party to proceedings in the Tribunal is to pay the party's own costs. However, under s 60(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. The Civil & Administrative Tribunal Rules 2014 (NSW) (the Rules) provide in rule 38 that despite s 60 the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if the amount claimed or in dispute is more than $30,000. Rule 38A provides in respect of an appeal that where rule 38 applied at first instance the provisions of rule 38 apply in respect of the appeal.
3. In short, the position is (and this is acknowledged by both parties) that in the circumstances of this matter the Tribunal may award costs of the appeal even in the absence of special circumstances if the amount claimed or in dispute exceeded $30,000. Nevertheless, there is no rule in the Tribunal that costs follow the event.
4. The issue between the parties is not whether a costs order should be made, but rather whether the order should be such as to require the Appellant to pay the Respondent's costs on the indemnity basis as opposed to the ordinary basis. Without explaining the difference between the two, it can be said that it is generally understood that the proportion of the total costs recoverable by the Respondent will be higher in the case of an order for the payment of costs on the indemnity basis than the proportion of total costs recoverable where the order is in the form of costs on the ordinary basis.
5. The last offer of compromise made by the Respondent was an offer made during the first instance proceedings in March 2020, approximately 11 months prior to lodgement of the Notice of Appeal. In our view, it is relevant that the offer of compromise was not renewed for the purposes of the appeal and it is also relevant that no offer of compromise was made during the period of the appeal. It is also relevant that at first instance the Tribunal made an order to the effect that the costs of the proceedings at first instance were payable by the Appellant to the Respondent on the ordinary basis, as agreed or as assessed.
6. Having regard to the matters described in the last paragraph, we are of the view that the just resolution of this dispute is facilitated by an order that the costs of the appeal be paid on the ordinary basis and is not facilitated by an order that the costs of the appeal be paid on an indemnity basis. We do not agree with the Respondent that we should determine that the Appellant's failure to accept either of the offers of compromise was unreasonable in circumstances where subsequently the tribunal at first instance ordered costs be paid on the ordinary basis and where there was no extant offer open for acceptance during the appeal proceedings.

Orders

1. Accordingly, the Appeal Panel makes the following orders: 1. A hearing on the question of costs of the appeal is dispensed with. 2. The Appellant is to pay the Respondent's costs of the appeal on the ordinary basis, as agreed or as assessed.

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 February 2022