Fish v Kurmond Homes Pty Ltd [2025] NSWCATCD 98;

1. Both parties provided costs submissions. In making this decision the Tribunal has had regard to the following:

(1) Costs submissions by the builder dated16 February 2025;

(2) Costs submissions by the owner dated17 February 2025 with supporting documentation;

(3) Submissions in reply by the builder dated 2 March 2025;

(4) Letter from Leeds Lawyers, the builder's representative, dated 3 March 2025 confirming costs incurred;

(5) Submissions in reply by the owner dated 3 March 2025;

(6) Ten invoices filed by the builder on 14 March 2025.

1. Neither party sought a hearing on the issue of costs. The Tribunal is satisfied that it is appropriate to determine the issue of costs on the papers, and without a further hearing in accordance with its powers under s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act).
2. The owner seeks costs of $27,442.60 on an indemnity basis. His submissions are summarised as follows:

(1) A text message from Mr Kulakovski, CEO of the builder, to the owner on 30 August 2023 was intended to coerce the owner against pursuing legal proceedings and informed the owner of his intentions to 'drain him of funds';

(2) The text message evidences the builder's intention to conduct the proceedings contrary to the Tribunal's guiding principle in s 36 of the NCAT Act;

(3) As a result of the text message, the applicant chose not to engage legal representation and conducted most of the proceedings himself, including drafting pleadings and instructing experts;

(4) Special circumstances therefore exist for the awarding of costs against the builder on an indemnity basis.

1. The builder's submissions in reply are summarised as follows:

(1) Mr Kulakovski's message is not relevant to the issue of costs because punishment is not a proper purpose in an award of costs; the message is intemperate but not intimidatory; and on the owner's submission the message saved him costs;

(2) The Tribunal should not award costs associated with expert Mr Vavrica because, inter alia, the Tribunal rejected substantial portions of his report and the report did not advance the owner's case;

(3) The majority of the owner's claim failed and he is not entitled to any costs associated with the issues upon which he did not succeed.

1. The builder's submissions in support of its application for costs are summarised as follows:

(1) The proceedings were contained to 3 discreet claims, each comprising a roughly equal portion of the evidence and hearing time;

(2) The owner should pay the builder's costs of the failed claim for the brickwork, a claim that was without any proper foundation and the relief claimed was manifestly unreasonable;

(3) The owner should pay the builder's costs of the failed claim regarding the concrete slab, a claim that was not supported by appropriate evidence and was largely based on speculation by the owner's expert;

(4) The owner should pay no less than two-thirds of the builder's costs;

(5) Each party should pay its own costs referable to the damaged surface of the polished concrete slab because:

(a) The builder did not dispute that the polished concrete floor was defective; the only issue was the builder's liability for that damage;

(b) The builder did not dispute the scope of rectification which the Tribunal ultimately found to be necessary;

(c) The applicant pleaded a breach of the statutory warranties generally and failed to establish the breach which was the focus of evidence and submissions at the hearing;

(d) The owner ultimately failed to establish any fault by the builder.

1. The owner's submissions in reply are summarised as follows:

(1) The builder's expert, Mr Brook, changed his evidence during the hearing, but there 'was no notice of the changed opinion and so the case that the applicant had to respond to was different to the case the applicant prepared for.'

(2) As a result the owner's second expert report by Mr Kenneth Whyte was 'not read' at the hearing;

(3) The builder breached the Tribunal's Expert Code of Conduct;

(4) The builder did not provide evidence of costs by way of invoices or receipts and the owner has thus been prejudiced in responding to the costs application;

(5) The builder's fees for the preparation of its claim against Polycrete Pty Ltd should be distinct from its costs incurred against the owner and the 'the wasted costs' for the revised opinion of Mr Brook should be excluded;

(6) Mr Kulakovski 'exerts unfettered authority' over the conduct of the builder;

(7) The Tribunal accepted Mr Vavrica's calculations regarding remediation costs 'with provisos';

(8) The respondent's submissions on costs should not be given weight.

1. Subsequently, on 14 March 2025 the builder submitted cost invoices.

1. The amount in dispute in these proceedings exceeds $30,000 and therefore the Tribunal may award costs without reference to 'special circumstances': s60, NCAT Act; r 38, Civil and Administrative Tribunal Rules 2014 (NSW)
2. When an order for costs may be made in the absence of special circumstances, the starting point in exercising the discretion is the usual rule that a successful party should be entitled to an order for costs in their favour: see Latoudis v Casey [1990] HCA 59; [1990] 170 CLR 534 per Mason CJ at 554 and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (Oshlack) per McHugh J at 97.
3. Appropriate circumstances to depart from the usual rule include the award of proportionate costs because the successful party was unsuccessful on separable issues (Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [63]-[66]).
4. If a party fails on some issues, the circumstances may make it reasonable that he be deprived of the costs of those issues or even be ordered to pay the other party's costs of those issues (see, e.g. Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; [1986] ATPR 40-748 Toohey J, at 48,136).
5. The principles regarding the allocation of costs by reference to separable issues were outlined in McIntyre v DRW Constructions Pty Ltd; DRW Constructions Pty Ltd v McIntyre [2018] NSWCATCD 58 at [33] - [38]:

33 It is not in dispute that the Tribunal has the power to apportion costs. The general approach is to order costs in favour of the successful party based on the outcome of the proceedings as a whole, without differentiating between particular issues on which the party may not have succeeded. However, a different costs order can be made if the losing party succeeds on significant issues: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [31]-[36]; Sydney Ferries v Morton (No 2) [2010] NSWCA 238 at [10]-[12];

34 A court will generally only apportion costs where the successful party was unsuccessful in respect of an issue that was clearly dominant or separable: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38].

35 In Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) [2011] NSWCA 256; (2011) 288 ALR 385, Campbell JA (with Macfarlan JA and Young JA agreeing) held at [107] that an issue or group of issues is "clearly dominant" when it is clearly dominant in the proceedings as a whole. In that case, the approach by counsel to analysing the percentage of costs between the parties - counting the proportion of paragraphs and pages devoted to each factual topic - was held at [84] to be "a highly artificial way of proceeding" which gave "a false air of mathematical precision".

36 In relation to separable issues, a successful party's entitlement to the whole of the costs of the proceedings should not be discounted to allow for another party's success in a separate issue that played a very minor part in the proceedings as a whole: Macourt v Clark (No 2) [2012] NSWCA 411 at [7]. Further, in Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30 at [14], the Court of Appeal held that the severability of one issue on which the successful party failed is not, without more, sufficient to warrant departure from the general approach. The exercise of discretion will often depend upon matters of impression and evaluation: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [11].

37 Where costs are apportioned, the nature and extent of the apportionment is discretionary. Mathematical precision is illusory: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272.

38 Finally, where each party has had substantial success, a court or tribunal may make no order as to costs: Hogan v Trustee of the Roman Catholic Church (No 2) [2006] NSWSC 74 at [40].

1. The question of apportionment is very much a matter of discretion and depends on matters of impression and evaluation: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]. The Tribunal should seek to make an order that is fair in all the circumstances, taking account of the extent to which issues are separable, and without aspiring to the false hope of mathematical precision: DSHE Holdings Ltd (Receivers and Managers) (in liq) v Potts (No 2) [2022] NSWCA 258 at [9] (Leeming JA, Kirk JA, Basten AJA).

1. I am satisfied that there were three clearly separable issues before the Tribunal, each raising separate questions for determination and which were separately addressed in evidence and submissions:

(1) The issues relating to the uneven distribution of the aggregate in the concrete slab;

(2) The issues relating to damage to the surface of the polished concrete slab; and

(3) The issues regarding the external bricks not installed and cleaned in accordance with manufacturer's instructions, resulting in mortar smeared across the face.

1. I am satisfied that a departure from the usual rule is justified and that it would be unfair to make a general order as to costs in favour of the owner because:

(1) The owner was the successful party in relation to issue (2), the polished concrete. However, the owner was unsuccessful in relation to the other two issues; and

(2) The owner claimed $415,622.00 and received a significantly lower amount, $55,999.19.

1. Fairness dictates that the owner not be entitled to the whole of his costs, but there should be an apportionment.
2. Each of the three issues occupied substantially the same amount of time at the hearing, and each received approximately the same attention in evidence, including expert reports.
3. I am not persuaded on the basis of a single text message that the builder sought to unnecessarily protract the proceedings or drive-up costs, nor that any 'change' in expert evidence disentitles the builder to an apportionment of costs order in its favour. There was no conduct on the part of the builder of the type identified in Oshlack at [69].
4. Nor, for the same reasons, was there any "relevant delinquency" on the part of the builder that might justify indemnity costs (Oshlack at [44], per Gaudron and Gummow JJ).
5. I do not accept the builder's submission that the evidence of Mr Vavrica did not assist the Tribunal. While the Tribunal did not accept all aspects of his evidence, Mr Vavrica's evidence did assist to confirm the damage to the floor sealant, its rectification method and quantum. I am not persuaded that the owner should not recover the costs associated with Mr Vavrica.
6. I am not persuaded that there is any conduct on the part of the owner, or any other reason, that would disentitle him to an apportionment of costs in relation to the polished concrete. Ultimately, the Tribunal found in the owner's favour that the builder did breach a statutory warranty in relation to the polished finish.

1. The Tribunal therefore makes the following orders:

(1) A hearing on the issue of costs is dispensed with under s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW).

(2) Kyle Fish is to pay two thirds of the costs incurred by Kurmond Homes Pty Ltd in these proceedings, as agreed or as assessed on the ordinary basis.

(3) Kurmond Homes Pty Ltd is to pay one third of the costs incurred by Kyle Fish in these proceedings, as agreed or as 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.