Goncalves v Bora Developments Pty Ltd; Bora Developments Pty Ltd v Goncalves

NCAT Appeal Panel|2020-06-17

Introduction

On 20 January 2020 we published our decision in relation to appeals brought by both parties to this complex home building dispute: see Goncalves v Bora Developments Pty Ltd; Bora Developments Pty Ltd v Goncalves [2020] NSWCATAP 9. Those appeals were heard together, and both parties were successful in part, with the owner (Ms Goncalves), in our view, having a much greater degree of success on appeal than the builder (Bora Developments Pty Ltd). The original applications in the Home Building Division were remitted for rehearing of several substantial issues relating to both liability and damages.
With respect to the issue of costs issue we wrote: 139. Neither party has made submissions as to what now should happen with respect to the costs order. We will seek submissions form the parties on both the costs of the appeal and the costs of the original proceedings. We are tentatively of the view that the builder should pay the owner's costs of the appeal and that the costs order below should be set aside on the basis that the costs below should be costs in the cause.
The parties have now made submissions with respect to those issues. They consist of: 1. for the owner - 1. the owner's costs submissions dated 1 May 2020; 2. the owner's submissions in reply dated 30 April 2020; and, 1. for the builder, 1. the builder's submissions dated 29 April 2020; and, 2. the builder's submissions in reply on costs dated 22 May 2020.

Costs of the initial proceedings

A reading of the submissions reveals, with respect to the costs of the initial proceedings, that there is agreement between the parties that the costs order made by the Tribunal in HB 18/13808 (the builder's initial application) should be set aside, and that the costs in HB18/13808 and HB18/16404 (the owner's initial application) should be costs in the cause on the remittal. The Tribunal did not make an order for costs with respect to HB18/16404 and because of our conclusions on appeal, substantial parts of the owner's claims in that proceeding will now be reheard. The parties' agreement accords with our tentative view that those costs should be costs in the cause. We shall make orders accordingly, and not discuss the costs of the initial proceedings further.

The appeals

The owner conducted her appeal without legal representation, at least until the point where submissions on costs we made.
The builder has been represented throughout.
The original proceedings related to the construction of a duplex development by the builder for the owner.
In short, the builder claimed that the owner had unlawfully terminated the building contract and was seeking to recover the unpaid cost of completing the works on a quantum meruit basis. This was claimed to be $235,860.33, whereas the amount owning under the contract was $160,338.90. The Tribunal found that the owner had wrongfully terminated the contract and that the builder was entitled to recover on a quantum meruit basis. It found the amount recoverable on a quantum meruit basis was, in the circumstances, limited to the amount owing under the contract rather than the amount claimed of $235,860.33. The builder appealed against the Tribunal's assessment of damages. The builder also appealed against the Tribunal's order that the builder provide the owner with occupation certificates for the duplexes.
The owner on other hand appealed against a series of conclusions reached by the Tribunal in the course of its deliberations, which led the primary member to reach the conclusion that the owner had wrongfully terminated the contract for the construction of the duplex. On appeal, we found a series of errors by the Tribunal relating to its determination of several matters that were fundamental to the owner's argument that she had validly terminated the contract at common law: issues such as the scope of works under the contract, the commencement date of the works, and whether the works had ever reached practical completion. We found that the Tribunal had not considered whether the owner had validly terminated the contract at common law, and that if it had done so, without error, a different conclusion regarding termination might have been reached. This resulted in the owner's application being remitted for rehearing.
We also found that several issues argued by the owner were without merit, such as her claim for economic loss and her insistence that the builder was obliged to supply occupation certificates.
The builders' appeal with respect to the quantum meruit issue was substantially affected by the decision of the High Court in Mann v Paterson Constructions Pty Ltd [2019] HCA 32. It is authority for the proposition that the amount owing under a building contract constitutes a ceiling on the amount recoverable by a builder in a quantum meruit claim relating to work performed under a contract. An effect of that decision was that the builder's appeal on the quantum meruit issue was substantially undermined with respect to the amount claimed.
As the finding that the owner had wrongfully repudiated the contract was central to the builder's right to recover on a quantum meruit, we could not determine whether the builder was entitled to recover on a quantum meruit basis at all, and remitted that issue for rehearing.
While neither party was totally successful in their appeal, in our view the owner was substantially successful on both appeals when compared with to the builder. She was successful in arguing that the termination and associated issues (which was essential to the builder's success) had not been properly determined and required rehearing. The builder was successful in having the appeal panel set aside the order the it provide occupation certificates but did not retain the order that it recover on a quantum meruit. The builder's success was minor when compared to that of the owner. The amount of time and material devoted to the builder's appeal was significantly less than that devoted the owner's appeal.

The Appeal Panel's power to award costs

The general rule in the Tribunal is that costs of an appeal are only allowed where special circumstances are found - see s 60 of the NCAT Act. Section 60, however, is in Pt 4 of the NCAT Act. Section 35, which is also in Pt 4, provides: Each of the provisions of this Part is subject to enabling legislation and the procedural rules.
Therefore, s 60 is subject to the procedural rules.
Rule 38A of the Civil and Administrative Tribunal Rules 2013 (NSW) (the NCAT Rules) provides with respect to internal appeals that: (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.
Rule 38 is a first instance cost provision which applies to claims in the Consumer and Commercial Division where, among other things, the amount in dispute exceed $30,000. Rule 38 says - (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 in dispute with respect to both the owner's and builder's appeals exceeded $30,000. This was also the case with respect to their initial claims before the Tribunal.
The usual rule which therefore applies is that costs follow the event. There is no dispute about this.

The parties' submissions

The parties sent some time in their submissions joining issue on whether or not, in order for the Appeal Panel to order costs on the appeal, r. 38A(2)(b) required that the amount claimed or issue in dispute in the original application, or in the appeal, be more than $30,000. This impressed us as a fruitless debate, as there was no dispute that the all applications and appeals satisfied the requirement of s 38A(2)(b). We note that Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 an Appeal Panel after a thorough review of the applicable law said that, at [57]: The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance.
We agree with that conclusion. We see no point in taking this debate further.
The owner and the builder take issue as to whether, in awarding costs, we should treat their appeals as one, or separate them for the purposes of costs. The owner takes the position that the appeals which were heard together and proceeded together, should be treated for the purposes of costs as one and that she should receive an order for costs of the appeal.
The builder, however, correctly, says that its appeal was allowed, and that the owner was not successful with respect to all aspects of her appeal. It therefore says that separate costs orders should be made with respect each appeal.

Consideration

In James & Ors v Surf Road Nominees Pty Limited & Ors [No 2] [2005] NSWCA 29 the Court of Appeal explained that: 34 Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so-called "discrete issues", for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter. 35 In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a "rule" that where there are "discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated", an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court's opinion it is preferable not to speak in terms of "rules". However, the underlying approach to the "rule" stated by his Honour may be an available approach to the exercise of the court's discretion as to costs in a particular case, depending upon all of the circumstances.
In Markunsky v Zammit t/a Zammit Quality Constructions [2016] NSWCATAP 253 the Appeal Panel made the point, at 29, that: … in proceedings in which multiple issues are contested - a frequent occurrence in applications made under the Home Building Act 1989 (NSW) - the conventional approach is that costs will follow the event, that is, in accordance with the outcome of the proceedings as a whole without an attempt being made to differentiate between particular issues on which the successful party overall may not have succeeded: Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [32]. But a court or tribunal may make a different order, particularly if the successful party overall raises an issue unreasonably or otherwise acts in such a manner that would make it unfair for them to receive all their costs: Rozniak v Government Insurance Office (1997) 41 NSWLR 608. More usually, however, a court or tribunal will only deprive a party successful overall of costs in relation to a particular issue when that issue was a dominant issue or clearly separable: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64], [65].
In our view the issues raised in both appeals were closely linked and interconnected. Both appeals were concerned with the interpretation of the same contract and with the same underlying facts. The builder's entitlement to recover on a quantum meruit was dependant on the Tribunal's finding that the owner repudiated the contract, which finding we found could not stand. The builder's appeal regarding the damages awarded on it's quantum meruit claim ran into substantial difficulties due to the decision in Mann v Paterson Constructions Pty Ltd, although we did not determine that issue finally due to the decision to remit. While the builder was successful with respect to occupancy certificates, and the owner failed with respect to her claim for economic loss, we think it clear that both appeal and cross appeal were inter-related and that they should be treated as one when it comes to costs. The issues on which the builder was successful were not dominant, central issues. They were, however, peripheral to those issues and not easily severable. Comparatively little time was devoted to them.
It follows that we remain of the view that with respect to both AP19/277713 and AP 19/28235 the builder should pay the owners costs of the appeals.
The owner should be aware that as she was self-represented for much of the appeal the costs she can recover are limited. Campbell JA explained in Preston v Commissioner for Fair Trading [2011] NSWCA 40, that : It has been held, … that a litigant in person who is not a lawyer is not entitled to receive an order for costs to compensate him for time spent in preparing and conducting his case: Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403. However a self-represented litigant who is not a lawyer can recover an indemnity for at least some out-of-pocket expenses actually and reasonably incurred: Secretary, Department of Foreign Affairs v Boswell (No 2) [1992] FCA 629; (1992) 39 FCR 288; Lawrence v Nikolaidis [2003] NSWCA 129; (2003) 57 NSWLR 355 at [37]. It appears from Cachia v Hanes at 417 that those out-of-pocket expenses were ones of the type which would have been recoverable as disbursements if the Appellant had been legally represented. Thus such expenses include filing fees: Deva v University of Western Sydney [2008] NSWCA 137 at [82]. Though there are some English cases, and some previous Australian authority (including Boswell ) that say that under the heading of out of pocket expenses a litigant in person can get compensation for the opportunity cost of spending time on his litigation rather than on other paying work, since Cachia v Hanes those cases have not been followed in Australia: Lawrence v Nikolaidis at [37].
The Consumer and Commercial Division Guideline entitled Costs - Who pays for the costs of running a case? advises that self-represented litigants can ask for disbursements, "such as Tribunal filing fees, witness expenses and photocopying charges."
While we will make an order that in default of agreement the owner's costs be assessed, we think the calculation of the owner's disbursements a relatively simple matter and urge the parties to reach agreement on the issue.

Conclusion

The Appeal Panel makes the following orders: 1. Pursuant to s 50{2) Civil and Administrative Tribunal Act 2013 we dispense with a hearing with respect to the cost issues in these appeals AP19/277713 and AP19/28235. 2. With respect to both appeals AP19/277713 and AP19/28235, the builder should pay the owner's costs of the appeals as agreed or, in default of agreement, as assessed. 3. The costs order made by the Tribunal in HB 18/13808 is set aside. 4. The costs of the initial proceedings in HB18/13808 and HB18/16404 are costs in the cause on the remittal.

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

Amendments 19 June 2020 - Representative for Bianca Goncalves corrected. 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: 19 June 2020

Civil and Administrative Tribunal Rules 2013(NSW)

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