The background to the proceedings from which this cost application arises was set out in some detail in the decision of the Tribunal made on 23 July 2021. A brief summary appears below to give context to the costs application.
On or about 5 June 2018 the applicant ("Owner") and the respondent ("Builder') entered into written agreement for the provision of building and renovations work to be supplied by the Builder to the Owner.
The agreement was in the sum of $155,000.00.
On or about 7 January 2019, the Builder notified the Owner that he was unable to complete the building works. The Builder was last on the building site on 4 March 2019.
The Builder stated the building works were completed pursuant to the contract, accept for the second mid-landing. The Builder contracted to build an inclinator and landings from the Owner's house, down the hill, to his boat house near the water.
A dispute arose as to whether the Builder should have built the second mid-landing.
On 27 August 2020 the Owner commenced proceedings in this matter.
The Owners's claim for damages against the Builder was particularised as follows:
$38,445.00 for failure to complete the second mid-landing;
$3,000 additional scaffolding costs, and
$43,000.86 in liquidated damages pursuant to the agreement.
The Builder filed a cross claim, HB 20/19203, which has not been determined to date. The Builder's claim against the Owner was initially a debt recovery in the Local Court in the sum of approximately $17,000.00. The Local Court proceedings were transferred to NCAT. The Builders claim was amended at NCAT as follows:
$14,123.24 unpaid monies under contract
$2,943.60 unpaid invoice, and
$119,340.43 delay payment, loss to be proven under contract
On 13 August 2020 the Builder was directed to file and serve his evidence in reply in the Owner's claim by 5 November 2020. The matter was listed for hearing on 20 November 2021. The Builder applied for an adjournment because he did not have his Programing Expert's, Mr Grieve's report ready on time. The matter was adjourned over the Owner's objections.
The Builder filed and served his Expert's Report of Mr Grieve on 1 March 2021, four months after the hearing date 5 November 2020. The hearing was set down on 3 March 2021.
On 23 July 2021 the Owner's application was decided and the following orders were made:
The respondent is to pay applicant the sum of $4,000.00 on or before 13 August 2021.
Each party to pay their own costs of the proceedings
The cost order made was made contingent on either party seeking a different cost order within 14 days from the date of the decision.
The Owner seeks an order that his costs be paid by the Builder. The Builder sought an order that the Owner pay his costs.
Written submissions were filed and served by the parties in accordance with the directions made on 23 July 2021.
[2]
Applicant's case
The Owner commenced proceedings in November 2020 as a cross-application to the Builder's application, HB 20/19023, which was transferred from the Local Court to NCAT in April 2020.
The Owner submitted he should be entitled to costs because he was successful in his claim and the Builder was responsible for the delay in the hearing from November 2020 to March 2021 as a result of the late service of Mr Grieve's report.
The Owner submitted that he was forced to incur additional cost of retaining new counsel and its solicitors for the second hearing date.
The Owner submitted that the general rules that each party bear its own cost, (s60 of the CAT Act) does not apply here. The Owner contended that the general rule that costs follow the event should apply because the Owner's claim was for an amount of more than $30,000.00 (rule 38 of the CAT Rules) He was successful in his claim and the Builder by his conduct of having the first hearing date adjourned was responsible for the additional legal costs in the Owner's claim.
The Owner submitted that he can still be entitled to costs where he was only successful on some issues in his case, The Owners - Strata Plan No 70762 v L & C Platt Constructions Pty Ltd [2014] NSWCATCD 31.
The Owner submitted that he was forced incur unnecessary costs of a second hearing a result of the Builders delay in serving the Programing Report of Mr Grieve. The due date for the Expert's Report was 12 November 2020 the hearing date was 20 November 2020. The Builder's Expert Report was not served until 1 March 2021.
[3]
Respondent's case
The Builder stated that initially he brought a claim seeking payment of unpaid invoices for the contract works. The Owner brought a cross-claim, seeking delay and incomplete work damages for the Builder's failure to complete the contracted works by the contract completion date.
The Builder's contended that it was agreed between the parties that the Tribunal is able to make a costs order in the proceedings where the claim and the cross-claim exceed $30,000.
It was the Builder's submission that the proceedings were initially very simple. It was a claim by the Builder for unpaid invoices. The Builder stated that the claim became unduly complicated and delayed by the filing of the Owner's cross-claim. The cross-claim included elements which were totally unsubstantiated, and were dismissed. The Owner claimed $84,445.86, only $4,000 has been awarded, which is 5% of the amount claimed.
The Builder submitted that the Owner was responsible for the delay because of late filing of his Expert's report, because the Expert was refused access to attend the premises and inspect the works that had or had not been carried out.
The Builder claimed that he was not responsible for the second hearing day which had to be allocated because only one half-day was set down on 22 November 2020 for the entire proceeding, which was ultimately insufficient. The Builder submitted that neither party should be liable for costs incurred as a result of the Tribunal's scheduling.
If the Tribunal determined that a costs was to be made, it should take in to account the elements of the Owners claim which were successful and those on which the Owner failed. That is, The Owner's claim was in the sum of $84,445.86, only 4.7% of the Owner's claim was successful. The Owner, on his best case, should be entitled to a percentage of his costs.
The Builder submitted that the Tribunal ought to make a costs order in his favour. At worst, the Builder might only recover 95% of its costs, allowing for the miniscule success of the Owner.
[4]
Decision
It is common ground between the parties that rule 38 of the CAT Rules applies in this case. I do not have to find that special circumstances exist under s60 of the CAT Act, before making an order for costs in relation to the proceedings. Rule 38 is as follows:
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.
In the present case the amount claimed by each of the parties exceeds $30,000.00.
In Thompson v Chapman [2016] NSWCATAP 6 the Appeal Panel held the following in relation to the exercise of the discretion to award costs where rule 38 applied:
The starting point in exercising such discretion is that the "usual order for costs" is 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 per McHugh J at 97.
The reason for such an order is that it is appropriate for the party who incurred costs caused by the other party in litigation to be reimbursed. Further, an award of costs is by way of an indemnity to the successful party and not as punishment of the unsuccessful party: see Latoudis v Casey per Mason CJ at 543 and McHugh J at 567 and in Oshlack v Richmond River Council per Brennan CJ at 75.
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 Gummo JJ at 88 and Kirby J at 121 - 123.
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.
The applicant contends it achieved bottom line success in the proceedings, albeit in an amount substantially less than the amount sought.
The proceedings concerned the three issues which were as follows;
$38,445.00 for failure to complete the second mid-landing;
$3,000 additional scaffolding costs, and
$43,000.86 in liquidated damages pursuant to the agreement.
The applicant was awarded the sum of $4,000 in relation to the claim for liquidated damages. The balance of his claim was dismissed.
The Builder stated that the delay in serving the Expert's Report was as a result of the Owner refusing to allow the Builder and its Expert to enter the premises and inspect the works that had or had not been carried out.
The Builder stated that a second hearing was necessary because the Tribunal only allocated one half day for the hearing to this entire proceeding, which was ultimately insufficient.
I do not agree with the Builder's arguments.
That is, if the Owner refused access to the premises to the Builder's expert, the onus is on the Builder to have the matter re-listed and access order made in his favour to carry out an inspection for the preparation of the expert's report in time.
Similarly, the onus is on the parties to ensure that sufficient time is allocated for the hearing. The parties ought to make the Tribunal aware at the directions hearing as to how many witnesses would be called in the proceedings. The onus is on the parties to ensure that the Presiding Member allocates sufficient time for the hearing.
A review of the adjournment sheet shows that at the directions hearing held on 13 August 2020 there was no mention made to the Presiding Member about any witnesses being called to give evidence at the hearing in November 2020. Hence, three hours was allocated for the hearing. The parties called three witnesses, necessitating more than three hours-time to complete the hearing.
I agree with the Builder that in this matter there should be a departure from the ordinary rule that costs follow the event. The principles for governing the making of an order as to costs to reflect the time taken to determine different issues were summarised in Bostik Australia Pty Ltd v Liddiard (NO 2) [2009] NSWCA 304. The Court stated the following:
Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory.
The Owner was ultimately partly successful on the issue of liquidated damages which took up most of the hearing time. The Owner was successful in having findings made in his favour in respect of the contractual issue. The builder was found in breach of the contract in respect of second mid-landing. He was under obligation to build it, but he did not do so. However, the owner was not successful in proving a loss as a result of the breach of contract by the Builder in respect of the second mid-landing.
The appropriate way, in these circumstances to do justice as between the parties is to reduce the benefit of a costs order in favour of the Owner by a percentage. I assess that percentage as 40% and propose to order that the Builder pay 60% of the Owner's costs in these proceedings.
The Owner was successful in having an order made in his favour for a part of damages for delay. He was successful in having a finding made in his favour that the Builder breached the contract by failing to construct the second mid-landing. The Owner was successful in having a finding made in his favour that the Builder terminated and abandoned the contract.
The Builder was able to significantly test the Owner's claim for liquidated damages by being afforded an opportunity to file and serve out of time Mr Grieve's report. I have taken into account the Builder's disentitling conduct, for the late service of the Expert's report, in making the costs order in the Owner's favour.
The Builder submitted that he is entitled to his unpaid invoices, HB 20/19203, and some amount of delays attributable to the Owner in the completion of the contract works. Hence, he should be entitled to his costs in responding to the Owner's cross-claim and of having to bring its own debt collection claim.
I am not in the position to determine the Builder's substantive application, HB 20/19203, in these proceedings. I am also unable to determine the Builder's costs application for debt collection without first hearing the substantive proceedings.
The Builders claim for costs in the Owner's proceedings is without merit. The Owner was partly successful in all aspects of his claim. Findings were made against the Builder that the second mid-landing formed part of the contract and that the Builder breached the contract by failing to construct the second mid-landing. Therefore, the Builder's claim for cost in this proceedings is dismissed
[5]
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: 01 December 2021