Dyldam Developments Pty Ltd v The Owners - Strata Plan No 85305

Whether a hearing on costs should be dispensed with

1. Section 50 of the NCAT Act relevantly provides: 50 When hearings are required (1) A hearing is required for proceedings in the Tribunal except: … (c) if the Tribunal makes an order under this section dispensing with a hearing, or … (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. …
2. The parties had an opportunity to make submissions as to whether a hearing on costs was required. The respondent submitted that the question of costs should be determined on the papers; the appellant did not provide any submissions in opposition to that course. The Appeal Panel is satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions. The parties would be put to unnecessary expense if a hearing on costs were held.
3. The order under s 50(2) of the NCAT Act has accordingly been made.

The application for costs

1. The respondent Owners seeks: 1. An order pursuant to r 38 of the Civil and Administrative Tribunal Rules 2014 (the NCAT Rules) that the appellant Dyldam pay its costs of the appeal; or 2. Alternatively, an order pursuant to s 60(2) of the NCAT Act that: 1. The appellant pay the respondent's costs of the appeal; or 2. The costs of the appeal be the respondent's "costs in the cause" in its claim against the appellant, in proceedings HB 18/42848.
2. The respondent submits that the amount of the Owners' claim in HB 18/42848 exceeds $30,000, and that by operation of r 38A of the NCAT Rules, the first instance costs provision in r 38(2)(b) of the NCAT Rules applies to the appeal, as the amount claimed or in dispute in the appeal was more than $30,000. On that basis, the Appeal Panel may award costs in the appeal proceedings even in the absence of special circumstances warranting such an award. The respondent submits that the starting point in exercising the discretion to make an order for costs is that the successful party should be entitled to an order for costs in its favour, relying on the decisions in Deacon v National Strategic Constructions Pty Ltd (No 2) [2018] NSWCATAP 31 and Dimitropoulos v Capitol Constructions Pty Ltd [2019] NSWCATAP 164. There is no reason that the ordinary rule should be displaced.
3. In the alternative, the respondent submits that there are special circumstances that warrant the making of a costs order pursuant to s 60(2) of the NCAT Act. The issues that arose for the Appeal Panel's consideration were complex and were "out of the ordinary". They required the respondent to incur the costs of engaging legal representatives to advise in respect of the grounds of appeal filed by the appellant who was also legally represented, to prepare written submissions on those complex questions, and to appear at the hearing of the appeal. On the question of "special circumstances", the primary submission is that the appellant should be ordered to pay the respondent's costs of the appeal, or that costs of the appeal be the respondent's costs in the cause in its claim against the appellant.

The appellant's submissions

1. The appellant's position is that on the basis of the orders to date, and without prejudice to the appeal to the Court of Appeal, and if the orders are not subsequently varied on appeal, costs should be the respondent's costs in the cause, for the following reasons: 1. The respondent has not articulated a basis for its claim for damages. The closest it has come is paragraph 38 in its Points of Claim, which states that the loss and/or damage suffered will include costs incurred in the investigation and identification of defective work, and either the costs and losses for rectification of defective work or the diminution in value of the Owners' interest in the common property due to the defective work; 2. Without having identified any defects which form the basis of the claim, the Tribunal cannot be satisfied that there is a claim of more than $30,000, let alone a claim that would entitle the respondent to final orders; 3. For those reasons the respondent's position is analogous to the position in respect of the successful party on an interlocutory injunction where costs are commonly awarded as costs in the cause, relying on the decision in His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor v The Macedonian Orthodox Community Church St Petka Incorporated & Anor (No 2) [2007] NSWCA 142.

Consideration

1. The general rule in relation to costs in the Tribunal is that unless special circumstances are established, the parties pay their own costs: s 60(1) of the NCAT Act.
2. However, r 38 of the NCAT Rules modifies the application of s 60 in proceedings before the Consumer and Commercial Division of the Tribunal, and r 38A modifies the position in respect of appeals.
3. Rule 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: (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.
4. Rule 38A provides: 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.
5. In Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 the Appeal Panel held at [43]: In the case of an internal appeal, the "amount claimed … in the proceedings" can be determined by considering what orders the appellant seeks on the appeal. If those orders sought include an order that the respondent pay a sum of more than $30,000, expressly or impliedly, then the Tribunal should conclude that the amount claimed in those proceedings was more than $30,000. If the substantive orders sought do not involve any express or implied claim to any amount, it is difficult to see how there is any "amount claimed" for the purposes of r 38(2)(b).
6. As noted in Dimitropoulos v Capitol Constructions Pty Ltd [2019] NSWCATAP 164 at [22], the same reasoning arguably applies when what is at stake in an internal appeal can be characterised not as an amount claimed in the proceedings but as an "amount …. in dispute".
7. The first issue to determine is whether r 38 and r 38A of the NCAT Rules displace the general provision in s 60(1) of the NCAT Act.
8. The application in proceedings HB 18/42848 was lodged on 4 October 2018, and accepted notwithstanding the absence of the investigation of the subject matter of the building claim required by Div 2 Part 3A of the Home Building Act. In lodging the application on that date, the Owners relied on paragraph 4(d) of NCAT Procedural Direction 5: Acceptance of Home Building Claims, on the basis that "the time for lodging a claim is due to expire within 3 months". The application stated that it was made for breach of statutory warranties under Part 2C of the Home Building Act in relation to various items of defective work identified and to be identified in the common property of strata scheme 85305; that work orders and money orders were sought, both ">$30,000"; and that the total value of the claim was ">$30,000".
9. On 8 November 2018 orders were made for a preliminary hearing on jurisdiction, Dyldam contending that the proceedings had been brought out of time. The decision the subject of this appeal was the decision of the Senior Member on 5 March 2019 to dismiss Dyldam's application for an order that the time limit for the Owners to have commenced the proceedings expired on 5 September 2018 with the result that the proceedings had been brought out of time. The orders made on 5 March 2019 included directions for submissions on any costs application. The Appeal Panel has not been advised whether any costs application was made in relation to the proceedings in the Consumer and Commercial Division pursuant to those directions. The internal appeal was lodged on 2 April 2019.
10. While not particularised at the time of lodging the application, the amount claimed in proceedings HB 18/42848 was above $30,000. Accordingly, r 38(2)(b) of the NCAT Rules applied to proceedings HB 18/42848, and r 38A(2) applies when deciding whether to award costs in relation to the internal appeal.
11. Rule 38 does not specify the factors the Appeal Panel must take into account in exercising the discretion to award costs. In these circumstances the appropriate starting point 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. However, there is a general discretion as to whether or not costs should be awarded: Champion Homes Pty Ltd v Guirgis [2018] NSWCATAP 54 at [83]. As the Appeal Panel noted in Thompson v Chapman [2016] NSWCATAP 6: 71. Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 88 and Kirby J at 121 - 123. 72. The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: (1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made: see for example Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304; and (2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 41 - 44.
12. In the circumstances of these proceedings, the appellant Dyldam was unsuccessful in the appeal. The issues were complex, and detailed submissions and argument were required, and provided by both parties to the appeal. However, the respondent Owners did not engage in any conduct which would disentitle it to the benefit of a costs order in its favour, and nor are there any other circumstances which would lead to the same result, which would in the ordinary course lead to an order that the appellant Dyldam pay the costs of the appeal.
13. The appellant Dyldam submits that the appropriate costs order is that costs of the appeal should be the respondent Owners' costs in the cause. It supports that submission by analogy with the principles applied in respect of a successful party on an interlocutory injunction, where costs are commonly awarded as costs in the cause. The appellant relied on the following discussion of the relevant principles in His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor v The Macedonian Orthodox Community Church St Petka Incorporated & Anor (No 2) [2007] NSWCA 142: 23. In Devereaux Holdings Pty Limited v Pelsart Resources NL (No 2) (Supreme Court of New South Wales Eq Div, 24 July 1985, unreported), an earlier decision of Young J, his Honour was concerned with the question as to the costs order that should be made when an interlocutory injunction is granted but the proceedings are dismissed on final hearing. His Honour observed (at 2) that there were not any definitive rules governing that circumstance, but that the following seemed to be "what commonly happens". Relevantly for present purposes, his Honour stated: "(a) If the material before the Judge on the interlocutory hearing discloses that there is an arguable or prima facie case and it is more or less conceded in argument that such is the case so that an interlocutory injunction is granted, then costs of the interlocutory injunction are costs in the cause, though sometimes they may be made plaintiff's costs in the cause; (b) If in the situation set out in (a), the defendant does not concede the inevitability of an interlocutory injunction being granted, then the proper order is that the plaintiff's costs be his costs in the cause, or even that the defendant pay the plaintiff's costs in any event …" (Emphasis added) 24. Young J, in determining what costs order should be made in the matter before him, stated: "… I think it follows from what I have said above that the defendant being successful in the action, it should not have to pay any of the plaintiff's costs. This is because unless there was some extraordinary factor, the appropriate order on the interlocutory motion would have been either that the costs would have been costs in the cause, or alternatively, plaintiff's costs in the cause." 25. In Ausino International Pty Limited v Apex Sports Pty Limited [2006] NSWSC 1119 Campbell J (as his Honour then was) stated: "[55] … the present proceedings before me are brought on the basis that they are an interlocutory process. The usual order which is made as to costs concerning interlocutory processes, is that if the plaintiff is the applicant, and succeeds, then the costs of the interlocutory process become the plaintiff's costs in the cause, while, if the plaintiff is the applicant, and loses, the usual order is that the plaintiff pay the defendant's costs of that application. [56] The rationale for that arises from the way that interlocutory proceedings are intended to advance the final hearing. If a plaintiff has a victory on the way to a final hearing, whether that victory is ultimately one which is fruitful will depend upon whether the plaintiff succeeds in the final hearing. However, if the plaintiff brings an interlocutory application and loses, then that interlocutory hearing is one which will, irretrievably, have cost the defendant money, and the justice of the situation is that the defendant should be indemnified for those costs, regardless of the outcome of the proceedings." (Emphasis added) 26. It is unclear from the decision in Ausino International whether there has been some mutation in the "usual order" over the last decade, or whether in Ausino International Campbell J's comments were reflecting the matters to which Young J adverted in Deveraux Holdings. This in itself may reflect a trend of greater contestability of issues once a dispute engages the court process. However, it seems to me there is force in Young J's analysis of the circumstances which justify the making of one order rather than another on an interlocutory application. It should be noted that Campbell J consistently applied that rule in the Equity Division of the Supreme Court: see Russ Australia v Benny [2006] NSWSC 1118; Glen Eight v Home Building [2005] NSWSC 907; see also the decisions of Hamilton J: Scholten v Mobilesoft Pty Ltd [1999] NSWSC 234; Ingersoll-Rand (Aust) Ltd v Industrial Rollformers Pty Ltd [2000] NSWSC 178.
14. This appeal had its origins in the application made by Dyldam in proceedings HB 18/42848 commenced by the Owners for an order that those proceedings had been brought out of time, with the consequence that the Tribunal had no jurisdiction to hear and determine them. That application was unsuccessful, and Dyldam appealed to the Appeal Panel. The proceedings before the Appeal Panel were, as explained in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25, "proceedings" separate to the proceedings commenced in the Consumer and Commercial Division: 37. These examples from the NCAT Act and the NCAT Rules demonstrate that "proceedings" refers to the process set in motion, or commenced, by lodging an application or notice of appeal. That process includes the steps taken by the Tribunal to hear and determine whether to grant the relief sought in the application or notice of appeal, as well as any interlocutory or ancillary steps. Proceedings are defined by the subject matter raised in the application or notice of appeal.
15. Having regard to that proposition, the Appeal Panel does not agree that the appeal was an "interlocutory process" amenable to application of the general principles applying to costs for an application made by a plaintiff for an interlocutory injunction in proceedings.
16. As discussed in Dyldam Developments Pty Ltd v Mewing (No 2) [2019] NSWCATAP 258 at [13], the Appeal Panel proceedings have been finalised, and the costs associated with those proceedings are distinct from and separate to the costs of the proceedings at first instance. It is preferable that the determination of costs of the appeal should be concluded, noting that any order made as to the costs of the appeal made by the Appeal Panel would in any event be subject to the ultimate determination of the outcome of the appeal from our decision to the Court of Appeal.
17. The Appeal Panel concludes that there is no basis on which the ordinary rule should be displaced, and the appropriate order is that the appellant Dyldam pay the respondent's costs of the appeal.
18. It is not necessary to consider the alternative contention raised by the respondent Owners, that there are special circumstances that warrant the making of a costs order pursuant to s 60(2) of the NCAT Act, and in the circumstances of the pending appeal to the Court of Appeal, it is preferable not to do so.

Orders

1. The Appeal Panel orders: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 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 as agreed or 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: 14 November 2019