This decision concerns what costs orders should be made in this appeal (if any) with respect to the costs of:
the unsuccessful appeal by Duplex Australia Pty Limited (the builder); and;
its appeal against the costs order made against it in the appealed proceedings, which we have decided to redetermine on appeal. Our reasons for doing so are set out in our appeal decision: Duplex Australia Pty Limited v Hathaway [2024] NSWCATAP 228.
A knowledge of that decision is assumed in these reasons. We do not intend to repeat in this decision matters traversed there.
The appealed proceedings concerned a home building claim the respondent homeowners made against the builder in the Consumer and Commercial Division of the Tribunal. The Tribunal determined those proceedings by ordering the builder to pay the homeowners $92,301 plus costs.
We heard the builder's appeal against that decision on 30 September 2024 and dismissed the substantive appeal in written reasons dated 13 November 2024 (cited above). The orders we made were:
(1) Leave to appeal is refused and the appeal is dismissed except in relation to the costs order numbered (2) made in Tribunal Proceedings 2023/003960620, which order is set aside and in lieu thereof the following orders made:
(a) Subject to order 1(b) below, Duplex Australia Pty Ltd is to pay Jade Hathaway's and Jacinta Harrison's costs of Tribunal Proceedings 2023/003960629 on the ordinary basis as agreed or assessed.
(b) Should Duplex Australia Pty Limited seek a different costs order in Tribunal Proceedings 2023/003960620, the directions set out in order 4 below apply.
(2) Subject to order 3 below, Duplex Australia Pty Ltd is to pay Jade Hathaway's and Jacinta Harrison's costs of the appeal on the ordinary basis as agreed or assessed.
(3) Should either party seek a different costs order in the appeal the directions set out in order 4 below apply.
(4) In respect of any such application for costs:
(a) The party applying for costs (the costs' applicant) must file and serve its written submissions on those issues only (no more than 3 pages) within 14 days of the date of these orders.
(b) The party from whom an order for costs is sought (the costs' respondent) must file and serve any written submissions in reply (no more than 3 pages) within a further 14 days of receipt of the costs' applicant's submissions.
(c) The costs' applicant may file and serve a written submission (no more than 3 pages) in response to the costs' respondent's submissions within a further 7 days of receipt of the costs' respondent's submissions.
(d) In any such submissions the parties are to address whether the Appeal Panel should dispense with a hearing on the issue of the costs of the appeal and or of the costs in Tribunal Proceedings 2023/0039062, so that the issues can be decided on the papers lodged with the Appeal Panel without a hearing.
The builder subsequently and within time on 27 November 2024, filed an application to vary the costs order together with submissions in support. The builder argued that each side should pay their own costs in accordance with s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). The homeowners filed submissions in reply on 12 December 2024 arguing that the original decision was correct. Neither party in submissions addressed the question of whether the costs issues should be determined without a hearing based on the materials provided by the parties.
Also on 12 December 2024, the builder filed submissions advising that it was appealing the Appeal Panel decision to the Supreme Court and that in the circumstances we should dispense with the hearing on costs. We understood this to be a request that we not proceed to determine the costs issues while the appeal was pending. In correspondence, dated 16 December 2024, we indicated our intention to proceed to determine the costs issues. In the absence of an order of the Supreme Court staying our deliberations pending the hearing of the appeal, there was no good reason not to do so.
[2]
Should the costs issue be determined without a hearing?
Section 50 (2) to (4) of the NCAT Act provide:
(2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal.
(3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first:
(a) afforded the parties an opportunity to make submissions about the proposed order, and
(b) taken any such submissions into account.
(4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules.
Despite being afforded an opportunity to do so, neither party has addressed the issue of whether we should determine the outstanding costs issues without a hearing. Having reviewed all the materials we are satisfied that the costs issues can be readily determined in the absence of the parties by considering the materials lodged by them. We therefore dispense with a hearing.
[3]
Costs - the applicable law
Costs in the Consumer and Commercial Division of the Tribunal are to be determined in accordance with s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) or rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules).
Section 60 provides:
(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 proceedings,
(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.
Rule 38 makes provision with respect to certain matters in the Consumer and Commercial Division. It relevantly provides:
(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) …
(b) the amount claimed or in dispute in the proceedings is more than $30,000.
Similarly, s 60 applies to internal appeals but rule 38A(2) provides that:
(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.
Rules 38 and 38A have been interpreted in numerous cases as constituting an exception to s 60. Where they apply, costs orders can be made on the ordinary basis in the absence of special circumstances justifying a costs order, as otherwise required by s 60: Bark N Purr Pets Pty Ltd v Moussad [2024] NSWCATAP 201 at [75]; Hawach v A & A Building Services Pty Ltd (No 2) [2024] NSWCATAP 234 at [13-14]; Dr N Kalokerinos Pty Ltd v Jain (No 2) [2024] NSWSC 1450 at [29]; Selkirk v The Owners Strata Plan No 26619 (No 2)[2024] NSWCATAP 44 and many others.
[4]
The builder's costs submissions.
At the heart of the builder's costs submissions is the proposition that rule 38(2) is inconsistent with the provisions of s 60, and, as such, is beyond the rule making power of the Rule Committee established by s 24 of the NCAT Act. The builder submitted:
5. S 25(1) of NCAT Act provides for Tribunal making the rules not inconsistent with the NCAT Act.
6. Rule No. 38(2) in the Civil and Administrative Tribunal Rules 2014 (the NCAT Rules") states that, "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. "
7, The Appellant submits that the very wording off (sic) the Rule 38(2) above ("Despite section 60 of the Act, …) confirms that this rule is inconsistent with the NCAT Act
8. The Appellant respectfully submits that the Rule 38 was created as a matter of convenience for the Tribunal, and, as such, defies the S 6(I) of the NCAT Act: only 2 of the guiding principles are being followed ('quick' and 'cheap'); while the third principle, critical for the outcome of any proceedings ('Just'), is being abandoned.
9. The Appellant documented that NCAT Rule 38 is inconsistent the NCAT Act and submits that the costs Should be allocated in accordance with S60 of the NCAT Act.
[5]
The homeowner's submissions.
The homeowners assert that rule 38(2) applied to the determination of the costs in the original proceedings, and by virtue of rule 38A, also applies to the issue with respect to the internal appeal.
[6]
Consideration
Section 25 provides:
(1) The Rule Committee may make rules of the Tribunal (referred to in this Act as the Tribunal rules), not inconsistent with this Act or enabling legislation, for or with respect to the following -
(a) the practice and procedure to be followed in proceedings in the Tribunal,
(b) any matter that is, by this Act or any other legislation, required or permitted to be prescribed by the Tribunal rules.
Note -
A number of provisions of this Act provide for matters to be prescribed by the procedural rules. The term procedural rules is defined in section 4(1) to include the Tribunal rules. Procedural rules that make provision as referred to in section 4(4) are not inconsistent with this Act. See section 4(5).
(2) Without limiting subsection (1)(a), the Tribunal rules may make provision for or with respect to any of the matters specified in Schedule 7.
(3) Without limiting the generality of section 42 of the Interpretation Act 1987, the Tribunal rules may also prescribe different rules for -
(a) each of the Divisions of the Tribunal, and
(b) different classes of matters.
Note -
Section 42 of the Interpretation Act 1987 provides for the matters for which statutory rules may generally make provision.
(4) The Tribunal rules may authorise or require the use of an electronic case management system established under clause 2 of Schedule 1 to the Electronic Transactions Act 2000 in relation to any proceedings in the Tribunal in respect of which the use of such a system is authorised by an order in force under clause 3 of Schedule 1 to that Act.
(5) In the event of an inconsistency between a provision of the regulations and a provision of the Tribunal rules, the provision of the regulations prevails to the extent of the inconsistency.
Note -
Section 90(2) also enables the regulations to make provision concerning matters for or with respect to which the Tribunal rules may make provision (including the matters specified in Schedule 7).
(6) This section does not limit the operation of section 78 (Rules of court) of the Interpretation Act 1987.
Procedural rules are relevantly defined in s 4(1):
procedural rules means each of the following -
(a) the Tribunal rules,
(b) the regulations in their application to the practice and procedure of the Tribunal.
…
Section 4(4) then provides that:
(4) Any provisions of this Act that are expressed to be subject to the procedural rules have effect subject to any exceptions, limitations or other restrictions specified by the procedural rules.
Schedule 7 contains matters which s 25(2) says that the Tribunal may make rules about, without limiting the general power to make rules relating to the the practice and procedure to be followed in proceedings in the Tribunal. This includes:
20. The costs in proceedings in the Tribunal (but not including any matter relating to costs that is regulated by the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014)).
The Rule Committee therefore has power to make rules with respect to costs in proceedings in the Tribunal.
Attention then needs to be drawn to the provisions of Part 4 of the NCAT Act (Practice and Procedure) which extends from s 35 to s 70 of the Act. This includes the costs provision in s 60.
Part 4 commences with s 35, which relevantly says:
Each of the provisions of this Part is subject to enabling legislation and the procedural rules.
Note -
…
Section 4(4) also provides that any provisions of this Act that are expressed to be subject to the procedural rules have effect subject to any exceptions, limitations or other restrictions specified by the procedural rules.
…
Because s 35 says that the provisions of Part 4 are subject to the procedural rules, which includes the Tribunal rules, s 4(4) has the effect of making the costs provisions of s 60, "subject to any exceptions, limitations or other restrictions specified by the procedural rules."
Both rules 38 and 38A of the NCAT Rules make provision with respect to the costs of Tribunal proceedings. These modify the general application of s 60 in proceedings that meet the criteria set by the rules, as is acknowledged in rule 38(2) by the use of the words, "Despite s 60 of the Act." This constitutes an exception, limitation or restriction to the application of s 60 provided for by the procedural rules, which s 60 is made "subject to" by s 35. The making of rules containing those restrictions is authorised by s 25(2) and item 20 of Schedule 7. This is consistent with the decision of the Supreme Court in Kaye v The Owners - Strata Plan No 4350 [2022] NSWSC 1386 where Basten AJ explained, at [83]:
Section 35 is the first provision in Pt 4, which includes s 60. Accordingly, if rr 38 and 38A are engaged, they operate to the exclusion of s 60.
As a result, the builder's submission that rule 38, and consequently rule 38A, is inconsistent with s 60 of the NCAT Act is rejected. These provisions and s 60 operate alternatively, depending on the circumstances.
We also reject the contention that the implementation of rules 38 and 38A necessarily results in an outcome that is contrary to the guiding principles of the Tribunal, because they lead to an unjust result (s 36). The effect of rule 38(2)(a) is that it applies to proceedings in the Consumer and Commercial Division where the amount claimed or in dispute is more than $30,000, a large sum to many, and usually enables costs to follow the event. This is the usual and common outcome in civil litigation in the Courts and has been said to provide a just outcome to successful claimants by protecting them from underserved expenses. In Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 at [6] McHugh J explained:
6. In most jurisdictions today, the power to order costs is a discretionary power Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In this case there was a full hearing. The Tribunal below found in favour of the homeowners and ordered the builder pay them $92,301 plus costs. The amount ordered was well in excess of the $30,000 threshold contained in rule 38(2)(a). The order for costs followed that event. It was, on its face, a perfectly proper order to make under that rule. There is no evidence before us of any Calderbank offer being made or of any conduct that should have caused the Tribunal to consider any other result in the original proceedings. In those circumstances, we are satisfied that the costs order was properly made and secured a just outcome. The appeal against the costs order made by the Tribunal will be dismissed.
With respect to the costs of the internal appeal, all the orders made by the Tribunal sitting in the Consumer and Commercial Division were challenged on appeal. The amount in dispute therefore exceeds the $30,000 threshold. The requirements of rule 38A are satisfied. No good reasons has been given by the builder as to why, in the exercise of our discretion, we should depart from the usual course under rule 38A that costs follow the event. The builder should therefore pay the homeowners' costs of the appeal.
[7]
Orders
The Appeal Panel therefore makes the following orders:
1. The Appeal Panel dispenses with a hearing with respect to the costs issues in the appeal.
2. The appeal against the costs order made by the Tribunal on 18 June 2024 is dismissed.
3. The appellant builder shall pay the respondent homeowners' costs of the appeal on the ordinary basis as agreed or assessed.
[8]
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: 13 January 2025