Fleming v Price

The background to this application 6The plaintiffs brought an application in February 2009 in relation to defective work concerning building works at a property at 39 Berner Street, Merewether (the property). The application asserted that the defendant was responsible for construction of this property and the damages claimed were initially $169,698. The property in question had been constructed largely by owner builders, Mr and Mrs Fernleigh, the second and third respondents in the proceedings in the CTTT. Both became bankrupt in the course of the proceedings, Mr Fernleigh on 23 November 2010 and Mrs Fernleigh on 4 March 2011. 7On 22 April 2009 the defendant sent correspondence to the plaintiffs demonstrating that he was not responsible for the building works, including the quotation of 8 May 2006 which was accepted by Mr Fernleigh (Mrs Fernleigh did not sign this) on 10 July 2006. The quotation was for "materials and labour to carry out all carpentry works to the extensions at the above property as per the given plans", and included timber and labour for wall frames, floor joists and the ceiling, as well as architraves and weatherboard cladding. It did not allow for earthworks, concreting, painting, "or work other than above" (Exhibit A). 8As can be seen from this correspondence, the defendant's position from first was that he was not responsible for building works at the property, other than carpentry work, in that the quotation, and the contract entered into by the defendant with the owners, Mr and Mrs Fernleigh, was for that identified work. The plaintiffs did in fact join Mr and Mrs Fernleigh as respondents to the claim following this correspondence. 9The procedural history of the claim was as follows. On 5 August 2009 the Tribunal made orders for the filing of an expert's report for the defendant and a reply to the plaintiffs' Scott Schedule. The defendant retained an expert and, on 16 September 2009, wrote offering to undertake rectification to certain carpentry works (items 3, 13, 22, 24, 30, 52 and 103). The plaintiffs did not respond. On 6 November 2009 the defendant sent a letter pointing out that Mr and Mrs Fernleigh had admitted they were the owner/builders and asking for a release from the proceedings, on the basis that each party pay its own costs, and the relevant carpentry rectification be carried out. This letter put the plaintiffs on notice that an indemnity costs order would be sought if the offer was not accepted. Mr and Mrs Fernleigh, who were also parties to the litigation, were prepared to accept the release of the defendant but the plaintiffs did not agree either to the terms of this letter, or to a follow-up letter of 13 November 2009. As a result, they remained as parties in the litigation until they were released following their bankruptcy, in May 2011. 10The parties attended a mediation in September 2010 which was unsuccessful. The claim was then set down for hearing in 2011, apparently against all defendants, although Mr and Mrs Fernleigh had become bankrupt in the interim. The first hearing date had to be adjourned due to the unavailability of the defendant's expert. The defendant sent a letter to the plaintiffs on 18 March 2011 reiterating its offer to carry out rectification work for the 8 items listed above or offering $5,000 inclusive of costs in the alternative. The plaintiffs did not reply, nor did they amend the application or points of claim after the Fernleighs became bankrupt, even though they were removed from the proceedings on 12 May 2011. 11The defendant sent a further letter on 6 June 2011 offering to concede the 8 agreed items at the hearing and pointing out that although the parties had been before the Tribunal on 16 occasions, the plaintiffs had never asked the defendant to carry out the rectification work offered. 12When the hearing commenced before Senior Member Connelly ("the Senior Member") on 14 June, the plaintiffs sought to rely on a different application from that which was filed at the commencement of the proceedings. The plaintiffs relied on a four-point application which asserted that the defendant was liable for the defective works on the basis that the defendant, not Mr or Mrs Fernleigh, was the builder of the project, referring to the definition of "residential building work" under s 3 Home Building Act 1989 (NSW). The Senior Member (at [20]) notes that this "substantially different case" was brought without notice to the defendants, and chose this date for the commencement of the indemnity costs order. 13Essentially, what the plaintiffs were now arguing was that the defendant was liable for the defective works on the subject property for the following reasons: (a)The defendant undertook the renovation work in the contract; (b)The defendant also coordinated/supervised the tradespersons who completed work at the subject property; (c)The defendant engaged in additional work outside the contract with Mr and Mrs Fernleigh and any contractual rights in relation to the Fernleighs should therefore flow to the plaintiffs; and (d)The defendant conspired with Mr and Mrs Fernleigh to hide the fact that they have not taken out an owner builder licence but permitting them to make use of his licence, in that he allowed his certificate of insurance to be used by Mr and Mrs Fernleigh so that they could obtain an occupation certificate. 14A total of 91 items were listed as being the responsibility of the defendant on these bases. 15As the Senior Member sets out at [4] - [5], the hearing on 14 and 15 June was adjourned to enable the parties to determine the best way forward in relation to these arguments. Counsel for the defendant in the hearing before the Tribunal, Mr Ahmed, submitted that the Tribunal should make a preliminary finding on these issues because the defendant asserted he was not liable for 64 items on the basis that these did not form part of the contract he had with Mr and Mrs Fernleigh. If the Tribunal did make such a finding, then the number of items in dispute would be reduced to 25, and concessions had already been made in relation to 8 of these by the defendant. As the Senior Member notes (at [6] - [12]), the parties agreed that a hearing on this preliminary issue should take place. 16The defendant was not able to attend the adjourned hearing on 19 September 2011 due to a medical condition. The hearing was then adjourned to 1 December 2011. After two days of evidence the Senior Member made an interim finding (pages 77-79 of Exhibit B), setting out the reasons for finding in favour of the defendant in this regard. 17As the Senior Member notes in his reasons for decision (at [13]), the parties then entered into discussions to resolve or limit the outstanding matters. The Tribunal determined the defendant's liability in the sum of $16,602.00 at the conclusion of the hearing on 2 December 2011 and invited submissions on costs. The costs orders made, and the basis upon which they are the subject of appeal, are set out in a separate section of this judgment. 18The challenges that are brought in relation to the preliminary findings, for the purposes of the application before me, are as follows.

The Senior Member failed to take into account evidence of prior association of the defendant and Mr Fernleigh. 19Cross-examination of the defendant by counsel for the plaintiff in the hearing on 1 and 2 December 2011 sought to establish that there was both a prior and ongoing relationship between Mr Fernleigh and the defendant (T 63.5 - 65.5). 20Mr Price said the only contact prior to the work the subject of these proceedings was that he had been asked to look at some works carried out by Mr Fernleigh at a date he could not recall, but which turned out to be 2006. He had looked at the work and carried it out, but had never met Mr Fernleigh. Mr Fernleigh's evidence on this issue, as the Senior Member noted at T 77, was that he had never worked with Mr Price. No other evidence of prior professional or personal association was put before the Tribunal, and the Senior Member concluded that evidence of any prior association between the defendant and Mr Fernleigh was slight in the extreme. 21The Senior Member made general findings to this effect in his interim judgment, in the course of which he read out his notes as to the evidence. It is not submitted that the Senior Member overlooked relevant evidence on this issue, but that his rejection of it as evidence of a prior relationship was wrong. 22The Senior Member was entitled to accept the evidence of Mr Fernleigh and Mr Price that they have never met. The relevance of this evidence, which appears to have been relied upon as the motivation for the very serious misconduct attributed to the defendant in permitting his licence to be used in order to trick Council employees, is tenuous, and the Senior Member's refusal to do so is not an error of law. While failure to consider evidence may amount to an error of law, consideration and rejection of evidence in the manner adopted by the Senior Member was not only fairly and adequately done, but the only rational conclusion that could be drawn from such slender evidence.

The certificate of insurance and HIA correspondence 23The defendant took out homeowner warranty insurance for $68,000, this being the sum for which he had contracted to provide carpentry work at the premises in the quote and subsequent contract provided to Mr and Mrs Fernleigh. The CGU home warranty insurance document, which is at page 54 of the affidavit of Ms Floyer, which is Exhibit A in these proceedings, is for "alteration/addition" of an unspecified nature. The sum of $68,000 has been written onto this document. 24The work carried out on this house was substantial, as the plans and work in question make clear. The defendant's evidence (T 44.7) was that the total cost could have been between $300,000 to $400,000. That work was clearly for a sum much greater than the defendant's carpentry work, which was the subject of the contract price of $68,000. 25The claim before the Senior Member, on behalf of the plaintiffs, was that the defendant had permitted his homeowner warranty certificate of insurance for $68,000 to be used to deceive the Council, who had sought a copy of the homeowner's warranty insurance and builder's details (annexures to Exhibit A, pages 32 and 33). It was submitted that the Council had been misled into believing that the defendant's insurance policy was the policy of the whole of the project. 26The very substantial nature of the work to be carried out, which included demolishing a fibro-garage and replacing it with a garage and terrace, a proposed second storey to the house, substantial work to the front fence and rainwater tank, and the other alterations to transform a modest single storey cottage into a four bedroom and rumpus room home would clearly be work in excess of $68,000. 27The defendant stated during his evidence that an insurance form could be obtained for $2,000 or for $200,000, and that the wording on the form at the time would have been the same regardless of the amount. From this, I infer the figure of $68,000, which is handwritten, was added at a later stage (T 67). However, he also made it clear that there was no requirement to list the work for which the certificate had been obtained (T 68). He also said (at T 69) "that's how they do the insurance forms". The form was not provided with the words "carpentry" written on it. His evidence was that he applied for the building insurance as soon as the quotation was verbally accepted. He then used the plain English home building contract provided by the Department of Fair Trading, which he considered sufficiently explained the legal obligations of the contract (T 73). In fact, the signed contract was with Mr Fernleigh only, and not Mrs Fernleigh, with whom he never had a discussion (T 74). The defendant said that it was obvious that $68,000 would not cover the cost of such an extensive renovation. 28Prior to the Senior Member's finding, the defendant was cross-examined about allegations that he had permitted his homeowner's warranty certificate of insurance to be used so as to deceive the Council (T 51-52). His explanation is as set out above and it is clear that the Senior Member took this evidence into account (see T 79.7). 29The Council was actively seeking, from Mr and Mrs Fernleigh, a copy of the homeowner's warranty insurance which should have been taken out by them as owner/builders of the premises where the renovations were being carried out. One of the Council records shows (T 32) that a progress inspection report was sought by "David" (the same first name as the defendant) and that the contact number given was a mobile which is the defendant's. However, all other requests were made by Mr Fernleigh (see for example, pages 33-35), although one was sought from someone named "Karl" (his phone number is the same as Mr Fernleigh)). All correspondence was with Mr and Mrs Fernleigh. This one reference to the defendant's first name and mobile number was the subject of significant emphasis on the part of the plaintiffs in the Tribunal and in this appeal. 30Mr Fernleigh's evidence (T 114.6) was that he had no idea how the Council obtained the name and phone number of Mr Price. The element for inspection was the slab, not carpentry work. When inspection took place, the only other person present was "Baird", and a copy of the report was handed to him (page 32 to Exhibit A). According to the inspection notes of Council, Mr Price was never present at any of their inspections. 31In coming to his conclusions, the Senior Member was entitled to, and did, take into account all of the evidence. He clearly took into account the material before him in relation to the nature and extent of Mr Price's involvement; he read out the relevant extracts from his notes as to the evidence. 32The reference to Mr Price's name is part of a series of unsuccessful attempts by the plaintiffs to show that Mr Price, the defendant, played a far greater role in the building of the house than he had acknowledged. This claim before the Tribunal consisted of assertions that the defendant was involved in coordinating the activities which went on at the site, even though he claimed only to be the carpenter. It is in this regard that the Senior Member has referred to the first certificate of Council inspections which contains the name "David" (see T 78). The Senior Member described this evidence as follows: "That document has the name David requested by and the phone number, which we are told was Mr Price's phone number, or still is Mr Price's mobile phone number. That relates to a request made on the 9th May. Mr Price says he didn't make the request. Mr Fernleigh says he didn't know who made the request. The certificate indicates that the inspection was the for garage slab steel and relevantly one of the things that the inspector Mr Wright was concerned about was submitting a copy of the home owners warranty insurance and builder's details. Now, I don't know how Mr Price's name, or David, if that is going to be Mr Price - I don't know. It's certainly in the name David and Mr Price's phone number suggests that someone was suggesting that was Mr Price. I don't know how it got there, but I'm not sure that on the basis of that document the Tribunal can satisfy itself that Mr Price, that through his associates and through his building workers, was involved in this construction of this building and was there on the 19th May and made and appointment, and was there on the date when the inspection had occurred. Clearly, the evidence before the Tribunal is that he wasn't there on the 22nd May. The second certificate, which was the certificate given in the respect of steel - inspection date the 5th June, requested on the 2nd June, again makes reference to the missing home owners warranty certificate. And that's Item 3. Prior to any further inspection, submit copy of home owners warranty insurance. And then the next inspection is one carried out in July 2006. It requests on the 10th, carried out on the 12th and the issue of the missing home owners warranty insurance certificate is no longer raised - in that certificate, or in the subsequent two certificates. Inference to drawn as to the certificate was provided. The question is, which certificate was provided? There appears to be only one in existence. That's the one that Mr Price say he requested and was issued to with regards to the work he undertook to build. The date of that certificate is July 2006. The statement from the inspector on the inspection in June 2006 was, 'don't make any further requests until I've seen the home owners warranty insurance certificate'. The frame request was made by the reporter to the document by Mr Fernleigh on the 10th July, which is consistent with the date of the certificate and when he may have got hold of it. It would appear wholly probable then that Mr Fernleigh produced to the inspector a copy of the certificate. We don't know what he said or didn't say and it's wholly probable that the inspector accepted that the certificate was for the works. He, the inspector, not being privy to the contract entered into with the Fernleighs and Mr Price." 33The Senior Member gave careful attention to this submission by the plaintiffs when he heard their claim. He rejected the submission, but after careful analysis of the evidence. He was entitled to do so on the evidence before him. The submission before me, that these documents and submissions were not considered at all, or considered inadequately, is not made out.

Payment of $16,000 for carpentry work in respect of works quoted at $68,000 34The defendant's evidence (T 63.2) was that he had received two progress payments totalling $16,000. There was no evidence to suggest that these were the only payments, or a portion of the amount remained unpaid, as counsel for the defendant points out in his written submissions. 35Again, the submission was that the lack of evidence of full payment was evidence of a secret arrangement of some kind between the defendant and Mr and Mrs Fernleigh. This allegation does not appear to have been put to the defendant. If the defendant was not paid in full, that could have been because he was himself a victim of Mr and Mrs Fernleigh, as the Senior Member noted during the hearing.

The nature of appealable error in an appeal from the CTTT 36In Maconachie v Kullenberg and Ors [2005] NSWCA 294 McColl JA at [17] explains the nature of an appeal in relation to an issue of law pursuant to s 67 Consumer, Trader and Tenancy Tribunal Act 2001 (NSW): "[17] An appeal lay to the Supreme Court against a decision of the Tribunal with respect to a matter of law: see s 67 of the CTTT Act. Proceedings in the Common Law Division could also have been brought pursuant to s 65(3)(b) of the CTTT Act, which enables a court to grant relief or a remedy by way of a judgment or order in the nature of prohibition, mandamus, certiorari or other relief where a party had been denied procedural fairness in relation to the hearing or determination of the matter. As I later explain if the proceedings were brought pursuant to s 65(3)(b), no question of an extension of time or leave to appeal arose." 37In Edyp and Ors v Brazbuild Pty Ltd [2011] NSWCA 218 Allsop P explains the nature of a "decision" required by s 67 and the statutory purpose of s 67 is to confer jurisdiction to hear appeals, limited to legal and not factual questions. 38The first task in any appeal is to identify a question in respect of a matter of law (Edyp and Ors v Brazbuild Pty Ltd at [35]). While whether there is any evidence to support a finding may amount to a question of law (at [36]). 39The claims by the plaintiff that the Senior Member failed to take into account relevant evidence in the proceedings, in the three identified areas set out above, is clearly misconceived. The Senior Member has considered the evidence in a perfectly appropriate way. 40The grounds of appeal in the proceedings conducted before me differ from the grounds set out in the summons. The grounds set out in the summons, notably ground (c), are, in addition, inconsistent with the Senior Member's assessment of the evidence in the proceedings. 41In both the interim findings and in the decision as to costs (see particularly [35]) the Senior Member commented on the hopelessness of the case. The same may be said in relation to the grounds of appeal. The appeal on grounds (a) - (c) is dismissed.

Costs 42On 22 December 2011 a Notice of Order and reasons for decision were handed down by the Senior Member as follows: (1)The respondent to pay the sum of $16,602.00 to the applicant on or before 19 January 2012. (2)The applicants to pay the respondent's costs of and incidental to these proceedings on a party/party basis, from 6 November 2009 up to and including 13 June 2011, and then on an indemnity basis from 14 June 2011 to the conclusion of the proceedings. (3)The respondent to pay the applicants costs thrown away and arising from the application to adjourn the hearing of these proceedings previously set down for hearing on 14, 15 and 16 March 2011. (4)Costs as agreed or assessed in accordance with the Legal Profession Act 2004. 43In exercising his discretion in favour of the defendant concerning the application for indemnity costs, the Senior Member took the following into account: (a)The defendant put the plaintiffs on notice from the first (i.e. the first directions hearing on 13 March 2009) that he was not the builder of the works. The initial response of the plaintiffs was apparently to concur, in that they joined Mr and Mrs Fernleigh as second and third respondents in the proceedings (at [2] - [4] and [17]); (b)Between 16 September 2009 and 6 June 2011 the defendant made a series of offer to remedy eight items of defective work to which the plaintiffs did not reply (at [18]. There was not one approach made to the defendant to rectify any items, particularly those for which he accepted liability, during the two years and 16 attendances of the Tribunal which had occurred by 6 June 2011; (c)On 6 November 2009 the defendant had proposed settlement of the claim and put the plaintiffs on notice that indemnity costs would be sought if the matter proceeded; (d)At the hearing on 14 June 2011 the plaintiffs, without notice to the defendant, sought to argue a "substantially different" (at [6]) case; (e)The Senior Member drew, from the facts of the case, an inference that the plaintiffs were aware at the time they reframed their case that their claim against the defendant was "in desperate trouble" (at [21]); (f)The evidence of Mr Fleming that he was aware Mr Fernleigh was an owner builder. Mr Fleming agreed in cross-examination Mr Fernleigh was the person primarily responsible for the works (at [23]). The plaintiffs were aware from mid to late November 2009 that Mr and Mrs Fernleigh had accepted responsibility in relation to the defective work, apart from the carpentry work undertaken by the defendant (at [24]); (g)While the defendant was found liable for 26 items, this represented 29% of the Scott Schedule and the concessions by the defendant reduced this percentage to 18%. "More importantly" (at [27]), the total quantum of liability of $16,602.00 was about 9.8% of the total claimed for defective works ($169,698). 44The Senior Member noted that the case had been on foot for two years and nine months, occupying four hearing days with counsel and experts on both sides, and that if an estimate of the defendant's costs were put into the equation, the parties costs totalled up to six times the damages awarded. In those circumstances, the plaintiffs had not been successful in their application. 45The weakness of the plaintiffs' evidence was also a matter for comment. The Senior Member stated at [25]: "Frankly the Tribunal is at a loss to understand why this application was maintained in its entirety against the respondent." 46The Senior Member then set out a careful analysis of the relevant provisions of the Tribunal's power to award costs and the relevant cases, and made orders which included an order for costs on an indemnity basis, as set out above.

The relevant statutory provisions 47The power to award costs is set out in s 53 Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), which provides as follows: "53 Costs (1) Subject to this section and the regulations, the parties in any proceedings are to pay their own costs. (2) The Tribunal may, in accordance with the regulations, award costs in relation to any proceedings. (3) If costs are to be awarded by the Tribunal in accordance with the regulations, 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 Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (4) In this section, "costs" includes the costs of, or incidental to, proceedings. (5) This section does not apply in relation to proceedings under the Strata Schemes Management Act 1996 or the Community Land Management Act 1989." 48Regulation 20 Consumer, Trader and Tenancy Tribunal Regulation 2009 (NSW) provides: "20 Costs generally (1) This clause applies to the awarding of costs by the Tribunal as provided by section 53 of the Act. (2) The Tribunal may award costs in relation to proceedings in respect of which the amount claimed or in dispute is not more than $10,000, or in respect of which no amount is claimed or in dispute, only if the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs. (3) In any proceedings in respect of which the amount claimed or in dispute is more than $10,000 but not more than $30,000, the Tribunal may award costs in relation to the proceedings only if: (a) the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs, or (b) the Tribunal has made an order under section 30 (2) of the Act in relation to the proceedings. (4) In any proceedings in respect of which the amount claimed or in dispute is more than $30,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit. (5) Despite any other provision of this clause, the Tribunal may order: (a) that the costs of proceedings on an application for rehearing of a matter are, if the applicant fails to attend the hearing of the application, to be paid wholly or in part by the applicant, or (b) that the costs of any proceedings that the Tribunal considers to be frivolous, vexatious, misconceived or lacking in substance, or that otherwise should not be heard or proceeded with, be paid wholly or in part by the person who instituted the proceedings. (6) The amount of any costs under subclause (5) is to be substantiated in accordance with directions given by the Chairperson or, in the absence of such directions, in such manner as the Tribunal thinks fit." 49In Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 at [36] Basten JA explains the power of the Tribunal to award costs: "[36] The general rule in the Tribunal is that each party is to pay its own costs, subject to the regulations: Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) ("the CTTT Act"), s 53(1) and (2). The Tribunal referred in its second reasons to its jurisdiction under the Consumer, Trader and Tenancy Tribunal Regulation 2009 ("the CTTT Regulation"), cl 20(4). That provision permitted the Tribunal, in any proceedings in respect of which the amount claimed or in dispute was more than $30,000 to award costs "in relation to the proceedings in such circumstances as it thinks fit". A power conferred in these terms is "unfettered" in the sense that the Tribunal may make such order as it thinks appropriate, so long as it acts in accordance with the subject matter, scope and purpose of the power. In relation to the award of costs in litigation, the accepted purpose is, where costs are awarded in favour of one party, to compensate that party for the expense incurred in respect of the litigation. (In respect of smaller claims, the power of the Tribunal to award costs is constrained, for example by a requirement that there be "exceptional circumstances": cl 20(2) and (3).)"

The plaintiffs' submissions 50The plaintiffs submit that the Senior Member erred in law in finding that the first defendant was the "successful party" in proceedings, which would thereby entitle him for an order for costs against the defendant; in addition, the Senior Member erred in failing to exercise his discretion as to costs "judicially and appropriately" (written submissions 27 July 2012, paragraph 2). 51The plaintiffs submit that the Senior Member's judgment "poorly records the preliminary point" (written submissions paragraph 5), namely that liability was decided in favour of the plaintiffs, who were awarded damages in relation to the defects identified, and indeed conceded in most part, by the defendant, in the work carried out by the defendant. 52In addition, the Senior Member failed to take into account that the defendant was found liable not for the 10 items conceded early in the litigation, but for 26 items (written submissions, paragraph 6). Finally, the offers referred to related to only eight of the items, worth $1,161.10, whereas prior to the hearing it was conceded that the defendant was liable for 10 items and in fact judgment was given for 26 items totally $16,602. If the plaintiffs had in fact accepted any of the defendant's offers, the plaintiffs would have been considerably worse off. 53The plaintiffs challenge the finding of the Senior Member (at [33]) that the claim for $169,698 had no chance of succeeding, submitting that these matters required cross-examination, in that the certificate of insurance, the HIA letter and the inspection report of Newcastle Council containing the defendant's name all raised issues for cross-examination as to whether the defendant's role was more extensive than he maintained. 54The submissions of the plaintiffs do not accurately reflect the basis upon which the Senior Member made his findings. The Senior Member explained these at [33]: "Costs are compensatory. They are not meant as a punishment, they are to indemnify the successful party. In the Tribunal's view the only successful party in these proceedings is the respondent. The matter should have been resolved years ago. That the respondent was kept in these proceedings for such an inordinate amount of time, at substantial expense, (to both sides), for such a meagre result is unreasonable. That the late change to the applicants' claim that was first ventilated on the first day of the hearing (14 June 2009) was unreasonable. That the claim was pressed, even if the applicants' were innocent parties in Mr Fernley's purported fraud, and against an equally innocent party is unreasonable, and untenable. The application for $169,698.00 had absolutely no chance of succeeding against the only remaining respondent. The applicants did know or should have known this, a long long time before 2 December 2011" 55In other words, the principal matters of concern to the Senior Member were the inordinate amount of time and substantial expense for such a meagre result, the substantial change to the claim on the day of the hearing, and the lack of merits of the claim for work other than carpentry, which was a small percentage of the work done. 56As Basten JA explains in Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 at [36], the general rule for parties to pay their own costs in the Tribunal is subject to the provisions of s 53 of the Act and the Regulations. If costs are awarded, the Tribunal may determine by whom and to what extent costs are to be paid. It was not submitted to me that either the language of s 53 or r 20 excluded the possibility of awarding costs on an indemnity basis; the plaintiffs' submission is that the discretion to do so was wrongly exercised. 57The substantial part of the claim against the defendant was misconceived, and not simply the subject of evidence in dispute. The plaintiffs put forward a claim of conduct by the defendant which was at best improper, and at worst fraudulent, based on such slender evidence as a transaction between Mr Fernleigh and the defendant some years before, a strained and unreasonable interpretation of a standard phrase in a building insurance certificate, and the inclusion of the defendant's name and phone number in one council document. The plaintiffs sprang this case on the Tribunal at the hearing without prior warning, in the form of pleadings and particulars, resulting in the case having to be adjourned, in circumstances described by the Senior Member as being at a time when the plaintiffs were aware that their case against the defendant was "in desperate trouble" (at [21]). 58While the plaintiffs were successful in recovering a percentage of the sum sought, this was a Pyrrhic victory. 59The role of the offers made played only a small role in the Senior Member's judgment. It was the failure of the plaintiffs to respond to those offers, rather than their quantitative value, which appears to have been of significance. 60Although the plaintiffs were awarded $16,602.00, this is not of itself an indication of success, for the reasons explained by the Senior Member. The fact that a sum of money is payable (something the defendant conceded fairly early on in the litigation) does not entitle the opposing party to conduct proceedings in the manner in which the plaintiffs conducted their case. Amendments on the day of the hearing resulting in adjournments, failure to properly plead a case and persistence with a claim that is known to be hopeless are proper bases upon which the awarding of indemnity costs may be made: Fligg v Owners Strata Plan 53457 [2012] NSWSC 230; Catts v Shelswell (Home Building) [2011] NSWCTTT 70. 61In the course of the hearing before me, the plaintiffs submitted that some allowance should be made for the fact that the defendant's expert not being available for one date, and the defendant being too ill to attend the September hearing date. The Senior Member, who had a much better grasp of the facts of the case than I, would have known about these matters and would have taken submissions of this kind into account. It is clear, from his judgment, that the costs orders were not ones which he made lightly, or without careful consideration of the whole of the history of the proceedings. 62The CTTT performs a vital function in the hearing of disputes of this nature. The informality of its procedures and the flexibility of the pleadings should not, however, be subject to trial by ambush, misconceived claims and long drawn out proceedings of the kind which occurred here. While an indemnity costs order should be made in the Tribunal only in exceptional cases, the Senior Member correctly found that this case was an appropriate one for the making of an order of indemnity costs. Grounds (d) and (e) of the appeal are dismissed. 63I have not, however, made any order for the costs of the application before me to be paid on an indemnity basis. The subject matter of the appeal (in relation to indemnity costs) was an appropriate issue for appeal and raised an issue of law of importance for the conduct of CTTT proceedings and appeals.

Orders (1)Appeal dismissed. (2)Plaintiffs pay defendant's costs. (3)Exhibits retained for 28 days.

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: 16 August 2012