The appellant purchased a new "Jayco Conquest" motorhome from the first named respondent (Jayco Newcastle) on 17 March 2018 for delivery on 19 April 2018. The purchase price, with accessories, was $117,040.
The second named respondent (Dometic) was the manufacturer of the windows installed in the motorhome.
The third named respondent (Jayco Corporation) was the manufacturer of the motorhome.
The appellant experienced repeated instances of cracking in two of the windows in the motorhome.
Jayco Newcastle replaced one or other of the windows at no charge to the appellant on five separate occasions from July 2018 to October 2020, but then declined to undertake further replacements.
The appellant commenced proceedings against Jayco Newcastle in the Consumer and Commercial Division of the Tribunal on 8 November 2021, seeking an order for the "repair or replacement of [the] faulty motor vehicle". The application identified the value of the claim as $117,040, that is the full purchase price of the vehicle. We note that, by virtue of section 79S(6) of the Fair Trading Act 1987 (NSW), the jurisdiction of the Tribunal is not limited to $40,000 in respect of claims relating to the supply of a new motor vehicle used substantially for private purposes.
The appellant asserted that the vehicle had a structural defect in the frames around the windows which caused the windows to "continual[ly] crack".
Dometic was joined to the proceedings at a directions hearing. Jayco Corporation was joined at the final hearing in circumstances described below.
In the course of preparation for the hearing of the application, the appellant obtained an expert report from Mr Anthony Nikitaras dated 30 January 2022. Mr Nikitaras was "an Automotive Panel Beater Motor Mechanic with over 40 years' practical experience in assessing and repairing vehicles within the automotive industry".
Mr Nikitaras inspected the motorhome on 9 January 2022. Mr Nikitaras reported:
6. On inspection I found the Offside Front Dinning [sic] Window Blade cracked and the Near Side Rear bed area Window Blade Cracked. …
7. I also found that the main entry door was poorly fitted allowing water and dust ingress due to the frame and seal not fitted correctly larger gap at the lower section and not sitting flush to the inner seals …
8. I would also like to note that the vehicle has had little use and only travelled 6850 km that has been highway driving with no off-road use at all. This is evident to the inspectable condition of the vehicle under body and interior.
Mr Nikitaras conclusion was:
The Problem causing the cracked windows is a combination of poorly fitted window frames and excessive movement is the hinge area of the frame an incorrect fit of the stay mounts and the constant lose vibration and open and closing with excessive movement in the plastic acrylic blade. To repair this issue all windows and complete blades and stays and frame would need to be replaced with completely new products.
Mr Nikitaras expressed the opinion:
1/ A combination of the weaker window blade, excessive movements at the hinged area outer section, then large movement in the mount point on the frame, the strut pivot point holders' number 4 on the frame and the window mount and lock area number 6, all the mention factors adversely affect the products integrity. Causing hair line cracks under the window hinge and lower section to crack due to excessive pressure. …
2/ The lower section of the Window Blades on the two windows in mention have cracked due to continues pressure of the opening and closing movement and pressure exserted to the area that requires closing tension. With the weak rounded Blade and the heavy tension stay and the excessive movement the blade window will fail.
We note that Mr Nikitaras acknowledged "that I am not an expert in the manufacture of these blades or windows.".
Jayco Newcastle obtained a report from Mr Erich Kannen, a "motor vehicle inspector and valuer". Mr Kannen's conclusions were:
"68 (a) I agree with Nikitaras, that the hinges and locks are the most probable cause for the cracks that appear in the window blades.
…
69 I concur with Nikitaras that the defective window, or windows, should be replaced with complete and new windows, including hinges and locks."
At the hearing of the application which took place on 3 March 2022, the parties reached agreement on orders as follows:
By consent, the Tribunal orders that the respondent(s): Caravans & Motorhomes Pty Ltd t/as Jayco Newcastle … & Jayco Corporation Australia Pty Ltd is to carry out the following work on or before 03-Jun-2022 in a proper and workmanlike manner.
Details of Work order:
Replace the window frame, fittings, blades and perspex or glass in the two windows being the dining room window and the left side bedroom window.
AND
Replace the door frame and door and fittings for the entrance door
This work to take place after the applicant delivers the vehicle to Jayco Newcastle. The applicant also to pick up the vehicle from Jayco Newcastle after the work is done.
AND
One or other of the 2 respondent to maintain a 12 month warranty on these repairs.
The Tribunal also made an order joining Jayco Corporation to the proceedings. Jayco Corporation did not dispute that the orders joining it to the proceedings and the substantive work order were made with its consent.
The Tribunal declined to make an order for costs in favour of the appellant. The Tribunal's reasons for that decision were:
2 The applicant also pressed for some $6,460.80 in costs, being for filing fees, ASIC searches, expert report ($5,500) and photocopying. She did so on the basis that an offer similar to the current agreement had been made much earlier by the applicant and rejected by Jayco. The submissions for costs also were that Jayco had resisted doing the repairs now agreed for some years. Of course, there is no basis for, nor any submissions for, an order for costs against Dometic or against Jayco Corporation, which was only joined today. There is no Calderbank regime applicable in the Tribunal because costs are not generally payable and, unlike NSW courts, there is no equivalent rule-based costs system in the Tribunal. The resistance to settlement outside the Tribunal is not a special circumstance warranting costs under s60 of the Tribunal Act. I am not satisfied that there was any misbehaviour of Jayco in the Tribunal which would warrant a costs order under s60 of the Tribunal Act. The applicant did not point to such misbehaviour either. The application for costs is rejected.
3. I note that in this case the issues and the parties did not really come together until each party received their expert evidence, which would always have been necessary to allow a proper adjudication of this matter. Those reports only arose in the last few weeks.
Although the Tribunal recorded that additional oral reasons were given at the hearing, no party provided a transcript or recording of those additional oral reasons. We proceed on the basis that the additional oral reasons were consistent with and added nothing of substance to the written reasons set out above.
Section 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) provides:
60 Costs
(1) Each party to proceedings in the Tribunal is to pay the party's own costs.
(2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.
(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following -
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,
(f) whether a party has refused or failed to comply with the duty imposed by section 36(3),
(g) any other matter that the Tribunal considers relevant.
(4) If costs are to be awarded by the Tribunal, 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 the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis.
(5) In this section -
costs includes -
(a) the costs of, or incidental to, proceedings in the Tribunal, and
(b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
The operation of s 60 is modified in proceedings in the Consumer and Commercial Division of the Tribunal by rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) which provides:
38 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.
The appellant appeals against the Tribunal's refusal to make a costs order. A refusal to make an order is a "decision" of the Tribunal for the purposes of the NCAT Act: s 5(1)(a) of the NCAT Act.
A decision with respect to costs is an ancillary decision of the Tribunal (see the definition of "ancillary decision" in section 4 (1) of the NCAT Act). An internal appeal may be made in respect of an ancillary decision of the Consumer and Commercial Division as of right on a question of law or with the leave of the Appeal Panel on any other ground: s 80(2)(b) of the NCAT Act. Clause 12 of Schedule 4 of the NCAT Act provides that the Appeal Panel may grant leave only if it is satisfied that the appellant may have suffered a "substantial miscarriage of justice" because the decision was not fair and equitable, or was against the weight of evidence, or because significant new evidence has arisen, which was not reasonably available at the hearing.
[2]
Grounds of Appeal
The appellant sought to appeal as of right and by leave on each of the three bases upon which leave may be granted.
The appellant's expressed grounds for appeal and for leave to appeal do not clearly set out the basis upon which the appellant appeals. However, as the appellant is not legally represented, we follow the approach outlined by the Appeal Panel in Cominos v di Rico [2016] NSWCATAP 5 at [12] - [13]:
12 The Appeal Panel must give effect to the guiding principle when exercising functions under the CAT Act, which is to "facilitate the just, quick and cheap resolution of the real issues in the proceedings" (s 36(1)). This is reinforced by s 38(4) which provides that the Tribunal is required to act with "as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms."
13 It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]-[316]). Relevantly, s 38(2) provides that that Tribunal "may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice."
Following that approach, we identify the appellant's grounds of appeal as follows:
1. The Tribunal failed to take into account that the respondents' own expert did not support the respondents.
2. The Tribunal failed to apply rule 38 of the Civil and Administrative Tribunal Rules, which was applicable because the amount claimed or in dispute exceeded $30,000, as the appellant sought the replacement of the vehicle or reimbursement of the full purchase price.
3. That Jayco Newcastle compelled the appellants to obtain the report of Mr Nikitaras because it "refused all requests to investigate the structural defects of the [appellant's motorhome] prior to the application being filed".
4. That the Tribunal had failed to acknowledge (and therefore to take into account) the appellant's settlement offers made prior to the hearing.
5. That the Tribunal ought to have found there were special circumstances warranting an order for costs in that the respondents had sought to delay and prolong the proceedings, failed to investigate the cause of the cracking, and failed to accept offers by the appellant.
We note that grounds 1, 3 and 5 do not involve questions of law and the appellant would require leave to rely upon them.
The appellant submitted that the appropriate order for costs would be to order each of the respondents to pay the appellant's costs, allocated in the proportions 40:40:20 between Jayco Newcastle, Jayco Corporation and Dometic.
[3]
The respondents' submissions
Each respondent filed submissions opposing the appeal
Dometic pointed out that no order had been made against Dometic and submitted that it had not been included in any negotiation to resolve the proceedings. Dometic stated that it "never had the opportunity to prevent the requested costs of expert witnesses, photocopying etc as now claimed."
Jayco Corporation also noted that it was not a party to the proceedings until joined in order to be made subject to the consent order.
Jayco Newcastle disputed that there were special circumstances. Its written submissions maintained that the respondents were not responsible for the defects in the windows and door of the appellant's motorhome. Jayco Newcastle maintained that the respondents had concluded that the cause of the cracking was the way the windows were cleaned. Jayco Newcastle further submitted that, at a conciliation hearing, the Tribunal had instructed the parties to obtain expert reports at their own cost and submitted that the appellant was aware she would be responsible for the cost of the report.
In oral submissions at the hearing Mr Browne, the General Manager of Jayco Newcastle who appeared for Jayco Newcastle, acknowledged:
1. That the appellant's claim for a full refund was never withdrawn before the settlement of the proceedings; and
2. That the experts were in agreement that the windows and doors in the motorhome were defective.
Mr Browne stated: "that's why we agreed to replace them as set out in the terms of settlement."
[4]
Consideration
A decision concerning costs is a discretionary decision which may be subject to review on appeal only on the limited bases set out in the High Court decision in House v The King (1936) 55 CLR 499 at 504-505, that is:
It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
We consider in this case that the Tribunal did make an error of law in the House v The King sense in that it failed to consider the application of rule 38. That is, it failed to take into account a material consideration.
By reason of that failure, we consider the decision involves an error with respect to a question of law and should be set aside.
Because we have reached that conclusion, we do not need to consider the appellant's other grounds of appeal and in particular, do not need to consider whether to grant the appellant leave to appeal on grounds 1, 3 or 5. However, we note that the Tribunal's comments, that "there is no Calderbank regime applicable in the Tribunal" and that "the resistance to settlement outside the Tribunal is not a special circumstance warranting costs", are not consistent with decisions of the Appeal Panel which have held explicitly that the unreasonable failure to accept a settlement offer may constitute special circumstances for the purposes of s 60 of the NCAT Act: See, for example, Brunsport Pty Ltd v Hay [2015] NSWCATAP 152 at [21]; Jubian v Clarke (No 2) [2021] NSWCATAP 153 at [31].
Section 81(1)(d) of the NCAT Act permits the Appeal Panel, in determining an appeal, to set aside the decision under appeal and substitute a different decision. We consider that it is appropriate in this case to undertake the determination of the question of costs ourselves rather than remitting the proceedings to the Consumer and Commercial Division.
We consider that rule 38 is applicable in this case. Although the result ultimately agreed between the parties did not involve more than $30,000, the amount claimed in the proceedings, being the full purchase price of the motorhome, did exceed $30,000. Provided that claim was genuinely maintained, the requirements of rule 38 were satisfied: B&W Windows (Residential) Pty Ltd v Sibilia [No 2] [2022] NSWCATAP 7 at [68] - [69].
Accordingly, there is no requirement that there be special circumstances before an order for costs may be made in the first instance proceedings.
The usual rule in relation to costs, where section 60 of the NCAT Act is not applicable and proceedings have progressed to trial and judgment, is that the successful party is entitled to an order for costs against the unsuccessful party. However, that usual rule does not have direct application in this case, where the proceedings were settled without a hearing on the merits.
The principles applicable in such circumstances were canvassed by the Appeal Panel in Hertslet v Doherty [2016] NSWCATAP 46 at [28] - [30]:
28 The Tribunal applied the principles applicable to costs following a contested hearing rather than those applicable to costs when the proceedings have been settled. … The principles applicable when determining costs when proceedings have settled are those set out by the High Court in Re Minister for Immigration and Ethnic Affairs (Cth); Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at [6] to [9]:
6. In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
7. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
8. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
9. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.
29 The exceptions to the general rule that each party pay their own costs when proceedings have settled were expressed in the following way by Ball J in Transfield Services (Australia) Pty Limited v James Gaha [2012] NSWSC 865 at [27]:
There are, however, two exceptions to that general principle. One is where one of the parties has acted so unreasonably that the other party should obtain the costs of the action. The other is where the court is confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried: Lai Qin at 624-5. One instance where the court may be satisfied that that is the position is where the consent orders agreed by the parties amount, in effect, to capitulation by one of the parties.
30 Another Supreme Court Justice, Harrison J, recently listed the following three exceptions to the general rule in Farah v Elias [2015] NSWSC 1417 at [18]:
18. Costs will ordinarily be awarded to a party where the Court can find that:
(1) One party has acted unreasonably in prosecuting or defending the action;
(2) One party was almost certain to have won had the case been tried;
(3) One party has effectively surrendered to the other.
In our view, particularly in light of Mr Browne's concession that the evidence was all one way, it is clear that, had the matter proceeded to hearing, the appellant would have succeeded against Jayco Newcastle.
We also consider that it can fairly be said that the consent orders amounted to a capitulation by Jayco Newcastle.
We therefore consider that Jayco Newcastle should be ordered to pay the appellant's costs.
We do not consider that the same conclusion can be reached in relation to Jayco Corporation. Jayco Corporation was not a party to the proceedings until the hearing. It was only joined in order that it be made subject to the consent orders. Moreover, Jayco's liability, if any, to the appellant could have arisen only under the manufacturers' liability provisions in Division 2 of Part 5-4 of the Australian Consumer Law (NSW). The relief available pursuant to those provisions does not extend to the making of work orders.
Likewise, there is no basis for visiting liability for costs upon Dometic, against which company no orders were made.
The appellant provided a schedule of the costs incurred that included: $5000 in respect of Mr Nikitaras' report; $1333.43 paid to Officeworks, in respect of which the appellant accepted that $289.93 related to the appeal; $63.15 paid to Australia Post, of which the appellant accepted $41.35 related to the appeal; $225.08 paid to the tribunal of which $155 related to the appeal; and $34 for ASIC searches.
The costs of the appeal must be addressed separately from the costs of the application at first instance.
We consider that this is an appropriate case to fix the quantum of costs which Jayco Newcastle should be ordered to pay the appellant. In this regard we refer to the considerations spelt out in 203 Castlereagh Street Pty Ltd v Skybloo Holdings Pty Ltd [2017] NSWCATAP 29 at [37] - [42]. The amount in question is relatively modest and we consider that we can assess the costs fairly between the parties. The appellant has provided material which provides sufficient confidence that we can arrive at an appropriate sum.
Mr Browne made the submission in relation to the costs sought by the appellant that the fee charged by Mr Nikitaras ($5,000) was excessive.
However, the appellant produced Mr Nikitaras' invoices which indicated that the amount of $5000 was the cost which the appellant had incurred in obtaining Mr Nikitaras' expert report. There is no basis upon which we could conclude that those costs were unreasonably incurred.
We consider it appropriate to include, in the costs we assess, the fees paid to the Tribunal in respect of the first instance proceedings ($70.28) and the sums paid to Australia Post in the course of preparation for the first instance proceedings ($21.80). We also consider that the appellant is entitled to recover the cost of the ASIC searches ($34).
We consider that the appellant has not supplied sufficient supporting evidence to warrant the allowance of the full amount claimed in respect of sums paid to Officeworks. We accept that some photocopying was involved in preparation for the hearing before the Tribunal and allow $100.
It is not appropriate to make an order in relation to the costs of the appeal. Rule 38A of the Civil and Administrative Tribunal Rules extends the operation of rule 38 to an internal appeal where that rule was applicable at first instance. However, the amount in dispute on the appeal clearly did not exceed $30,000 and, in any event, the quantum of costs the subject of an appeal in relation to costs orders is not an "amount claimed or in dispute in the proceedings": Dimitropoulos v Capital Construction Pty Ltd [2019] NSWCATAP 164 at [28]; RBV Builders Pty Ltd v Chedra (No 2) [2021] NSWCATAP 393 at [39] - [43]. It follows that special circumstances would be necessary before we could make an order in respect of the costs of the appeal. We do not consider that there are special circumstances.
[5]
Orders
Accordingly, our orders will be:
1. Appeal allowed
2. Order Caravans and Motor Homes Pty Ltd t/as Jayco Newcastle to pay the appellant's costs of application MV 21/45998, which are assessed at $5226.08, within 7 days of the date of these orders.
[6]
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
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: 28 June 2022