EFC Constructions Pty Limited v Malik

PARTIES' SUBMISSIONS AND ISSUE TO BE CONSIDERED

1. The respondents filed submissions, and an affidavit of the first respondent dated 19 September 2025, in which they submitted for the appellant to pay the respondents' costs:

(1) on an indemnity basis from the date of rejected offers made on 13 February 2025 for $288,000.00 (first offer) and 5 March 2025 for $285,636.00 (second offer) or

(2) calculated on 80% of an indemnity basis; or

(3) on an ordinary basis as agreed or assessed.

1. The respondents submit that their costs ought to be assessed on an indemnity basis because:

(1) the appellant unreasonably rejected the offers; or

(2) a combination of the appellant achieving a worse outcome than it would have had if it accepted either offer, the case propounded by the appellant's being very weak with low prospect of success, and the appellant conducting the appeal in a manner that unreasonably increased the respondents' costs.

1. The appellant filed submissions on 3 October 2025 in which it:

(1) accepted that the amount in dispute was more than $30,000.00 and therefore that Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules) and therefore Rule 38A apply to the question of costs;

(2) submitted that the Tribunal should order that the appellant pay the respondents' costs of the appeal on the ordinary basis as agreed or assessed; and

(3) opposed the respondents' costs being assessed on an indemnity basis.

1. It follows that the issue for consideration is whether, having regard to the first offer and / or the second offer, or alternatively the appellant's conduct in respect of the appeal, that the respondents' costs ought to be assessed on an indemnity basis from the date of one of the offers or "on 80% of an indemnity basis".

WHETHER TO DISPENSE WITH A HEARING IN RESPECT OF COSTS

1. Section 50 Civil and Administrative Tribunal Act 2013 (the NCAT ACT) sets out the circumstances in which the Tribunal can dispense with a hearing and proceed to determine a matter, including a costs application, having regard to submissions filed with the Tribunal.
2. The Tribunal is satisfied that the parties have been afforded an opportunity to make submissions on whether a hearing on the question of costs should be dispensed with and whether the question of costs can be determined on the papers, and notes that all parties consented to the question of costs being determined on the papers.
3. Having considered the submissions filed by the parties, we are satisfied that the question of costs can be adequately determined in the absence of the parties by considering the written submissions and other documents or material lodged with or provided to the Appeal Panel.
4. Pursuant to Section 50(4) of the NCAT Act, we exercise our discretion to determine the question of costs on the papers.

PRINCIPLES RELEVANT TO A CONSIDERATION OF WHETHER INDEMNITY COSTS SHOULD BE ORDERED

1. Principles relevant to a consideration of whether an indemnity costs orders ought to be made where "Calderbank" offers have not been accepted, were set out in the reasons of the Appeal Panel in Thompson v Chapman [2016] NSWCATAP 6, where the Appeal Panel, in reliance upon authorities in the NSWCA and Supreme Court including Miwa PL v Siantan Properties PL [No 2] [2011] NSWCA 344, to which can be added (among other authority) Hazeldene's Chicken Farm PL v Victorian Workcover Authority (No 2) (2005) 13 VR 435, [2005] VSCA 298, El-Wasfi v NSW; Kassas v NSW (No 2) [2018] NSWCA 27 and Croghan v Blacktown CC [2019] NSWCA 248 and authority there discussed, said at [91]:

91 .... The following principles can be derived in respect of whether a special order for costs should be made:

(1) there must be a real and genuine element of compromise;

(2) the refusal must be unreasonable;

(3) the reasonableness in rejecting an offer must be considered at the time the offer is made, not with the benefit of hindsight;

(4) relevant factors in relation to whether the rejection was unreasonable include:

(a) the stage of the proceedings at which the offer was received;

(b) the time allowed to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for indemnity costs in the event of rejection.

1. What triggers the assessment of the offer is what one achieves in the litigation outcome compared with the terms of the offer. However, the reasonableness of conduct in rejecting the offer is assessed at the point in time the offer is made, on the knowledge the offeree then has about litigious documentation and prospects. Circumstances can arise where "it may not be unreasonable to reject an offer, notwithstanding that the amount of the offer is reasonable and, in particular, notwithstanding that the offer (in the case of an offer made by a defendant) is greater than the damages that are awarded": Commonwealth of Australia v Gretton [2008] NSWCA 117 at [81].
2. Mindful that the respondent alternatively seeks an indemnity costs order for reasons other than the non-acceptance of the offer, the Appeal Panel in Mendonca v Tonna [2017] NSWCATAP 176 (21 August 2017) said at [59] to [63] with respect to the making of an indemnity costs order (see also Asia Invest Enterprises Pty Ltd v Bircan (No 2) [2019] NSWCATAP 232 (16 September 2019) at [13]) (references to authorities omitted):

59. Indemnity costs are only awarded in limited circumstances. The discretion to do so must be the subject of careful reasoning ... and caution should be exercised in making such an award: ....

60. 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 ... 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: ... However, mere weakness of a case will not be sufficient to warrant an exercise of the discretion to award indemnity costs: ...

...

62. Another circumstance which may warrant an order for costs on an indemnity basis is where the proceedings amount to an abuse of process: .... Examples of abuse of process include where the proceedings are commenced other than in good faith or for an ulterior or collateral purpose: .... ...

63. An award of indemnity costs may also be made for unreasonable conduct. Such conduct may include unnecessarily prolonging the proceedings ...; unfounded allegations of fraud or improper conduct ...; deliberate or high-handed conduct ... and behaviour which causes unnecessary anxiety, trouble or expense, such as the failure to adhere to proper procedure ... Disregard of court orders may justify an indemnity costs order .... Perverse persistence by an unrepresented litigant with a hopeless application may also do so: ...

64. Misconduct of a serious nature, such as fraud, perjury, contempt or dishonest conduct may also justify costs being awarded on an indemnity basis: ....

1. The Notice of Appeal and stay application were filed on 24 December 2024.
2. On 15 January 2025, the order for the payment of $75,187.82, being the amount challenged on appeal, was stayed.
3. On 13 February 2025, the respondents offered that the appellant pay the respondents $238,000.00 (which would be in addition to an amount of $50,000.00 already paid), such that the offer, in effect, was that the appellant pays the respondents $288,000.00 inclusive of costs. The offer also included a table identifying what the respondents said were its costs payable on an ordinary basis for the hearing below. The identified amount was $96,300.00. It also identified its costs of a stay application of $6,098.00, and post judgment interest of $8,099.00.
4. Mindful that the total sum ordered to be paid by the Tribunal was $201,463.63, the offer therefore sought $86,536.37 on account of its costs below, costs of the stay application and post judgment interest.
5. The offer was open for acceptance until 14 March 2025.
6. On 5 March 2025, the respondents offered that the appellant pay the respondents $235,645.00 (which would be in addition to an amount of $50,000.00 already paid), such that the offer, in effect, was that the appellant pay the respondents $285,636.00 inclusive of costs. Mindful that the total sum ordered to be paid by the Tribunal was $201,463.63, the offer therefore sought $84,172.37 on account of its costs below, costs of the stay application and post judgment interest.
7. The offer was open for acceptance until 14 March 2025.
8. The respondents contend that they have now done better that what was offered and that it was unreasonable for the appellant not to have accepted either offer because:

(1) The respondents had an order in their favour for the payment of $201,463.00 plus costs;

(2) Interest was accruing on the Amount ordered, the respondents say was $4,104.93 at the time of the 13 February 2025 offer;

(3) The respondents had the benefit of a costs order in the primary proceedings that the appellant pay the respondents' costs on an ordinary basis to 8 February 2024 and thereafter on an indemnity basis;

(4) The respondents claimed costs of $96,300.00 pursuant to that order;

(5) The respondents had a costs order in their favour in respect of a stay application, in respect of which it claimed $6089.00;

(6) In that light the respondents "maximised position", which included the costs it claimed (rather than what had been agreed or assessed) at the time of the first offer was $307,956.93 plus the costs of the appeal.

(7) If the appellant had won, other than on grounds 1 or 9, it would have been based on a case not run below, in which case, the respondents contend that it is likely that no costs would have been ordered or possibly costs ordered against the appellant;

(8) If the appellant had accepted the offer, it would have reduced its liability to the compromised amount in respect of the Amount ordered, costs of the hearing before the Tribunal, interest, and costs of the stay application; and

1. For the following reasons, we are not satisfied that it was unreasonable for the appellant not to have accepted the offers.
2. First, in so far as the appeal was concerned, the offer was seeking for it to be dismissed and that some compromised amount of the costs it claimed for the stay application be paid. Given the offer was made to resolve the amount of $201,463.00 which was ordered to be paid, the costs orders below, and interest accrued since the making of the orders by the primary member, and that the costs for the hearing below and the stay application have not been agreed or assessed, it is impossible to determine the amount, if any, that the offers involved a compromise of the appeal.
3. Secondly, in so far as the offers sought to resolve everything, they included an amount for the costs of the hearing below and the stay application that had not yet been agreed or assessed.
4. Because:

(1) the costs had not been agreed or assessed and there is a dispute as to the amount the costs are to be discounted to account for a costs order made below in favour of the appellant in the proceedings before the Tribunal, and

(2) the amount to be paid inclusive of accrued interest, costs of the hearing before the Tribunal and the stay application was about $86,536.37 on the first offer and $84,172.37 on the second offer;

(3) we do not know the amount by which the costs have been compromised and given that there is not, in our view, such a significant difference between the respondents' maximum claim for costs for the hearing in the Tribunal, interest and costs of the stay application at the time of the offers of about $110,000.00 and the amounts sought of $86,536,37 on the first offer and $84,172.37 on the second offer, we are not satisfied that it was unreasonable for the appellant's not to accept the offer.

OTHER REASONS CONTENDED FOR INDEMNITY COSTS ORDER

1. The respondents alternatively contend that that an indemnity costs order ought to be made because of:

(1) the applicant being worse off from not having accepted the offers;

(2) the weakness of the appellant's case on appeal; and

(3) the appellant's unreasonable conduct on appeal,

1. In considering this further ground for an indemnity costs order, we note that:

(1) Indemnity costs are only awarded in limited circumstances;

(2) The discretion to do so must be the subject of careful reasoning;

(3) Caution should be exercised in making such an award;

(4) Other circumstances in which an indemnity costs order may be made include:

(a) when a case is commenced or continued where there is no chance of success, although mere weakness of a case will not be sufficient to warrant an exercise of the discretion to award indemnity costs;

(b) where the proceedings amount to an abuse of process;

(c) unreasonable conduct, by a party, including unnecessarily prolonging the proceedings; and

(d) misconduct of a serious nature.

1. Having found that it was not unreasonable (at the time the offers were made) for the appellant not to have accepted the offers, in our view, the respondents are not assisted by contending to the effect that having not accepted the offers and having now lost the appeal the appellant is now worse off than if it had accepted the offer because it will now be liable for the costs of the appeal, even if only on an ordinary basis.
2. Further, in our view the additional matters raised by the respondents as to the grounds of appeal including seeking to withdraw an admission and set aside a discretionary work order, are not matters that are sufficient to find that the appellant had no chance of success, or that the appeal was an abuse of process, or involved unreasonable conduct or misconduct of the appellant in the conduct of the appeal, as referred to in Mendonca v Tonna so as to justify the making of an indemnity costs order.

(1) Pursuant to s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW) a hearing in respect of costs is dispensed with.

(2) The appellant is to pay the respondents' costs of the appeal as agreed or assessed on the ordinary 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.