GWH Build Pty Ltd v The Owners Strata Plan 96788

The nature of the appeal

1. The costs order is an ancillary decision within the meaning of s 80 (2) (b) of the NCAT Act: see s4 (1); Tang v Mawad Group Pty Ltd [2021] NSWCATAP 282 at [10].
2. Accordingly, the appellant may appeal as of right on any question of law, or with the leave of the Appeal Panel on any other grounds. Since the costs order was made in the Consumer and Commercial Division of the Tribunal, the grant of such leave is regulated by cl 12 of Schedule 4 of the NCAT Act, which, relevantly, provides: (1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because - (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
3. Even if these conditions for the grant of leave are satisfied, the Tribunal has a discretion concerning the grant of leave which it will ordinarily only exercise in the circumstances described in Collins v Urban [2014] NSWCATAP 17 at [84 (2)], namely. Ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1 issues of principle; 2 questions of public importance or matters of administration or policy which might have general application; or 3 an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4 a factual error that was unreasonably arrived at and clearly mistaken; or the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed,
4. The question whether to award costs on an indemnity basis was in the discretion of the Tribunal and, provided that the discretion was exercised having regard to the applicable principles, and the particular circumstances of the case then the exercise of the discretion will not be found to have miscarried unless the order made involves a manifest error or injustice: see Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (No 3) [2017] NSWCA 109 at [60] where the NSW Court of Appeal set out the well-known passages from the decision of Justice Shepherd in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (at 230-234) as setting out the principles applicable to an award of indemnity costs, namely : "In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice." ,

The Tribunal's decision concerning indemnity costs

1. The Tribunal recounted the procedural history of the matter and concluded that the respondent was the successful party and that the appellant should pay the respondent's costs. Following the narrowing of the issues at the hearing of the appeal to the issue concerning indemnity costs, the appeal was no longer concerned with the Tribunal's conclusion that the respondent was the successful party.
2. The procedural history that the Tribunal referred to included: 1. The respondent lodged its application for a work order to rectify defects on 25 November 2019. 2. There was no appearance by the appellant at the first directions hearing on 22 January 2020 and the matter was adjourned until 2 March 2020 for further directions. 3. On 11 May 2020, the respondent offered to settle the proceedings on the basis that the appellant carried out the rectification work identified in a report from Quest, the appellant pay for that firm to supervise and sign off on that work, with the parties to enter into a deed of release and the proceedings to be dismissed with no order as to costs. 4. On 29 May 2020, the appellant said that it did not agree with the elements of the scope of work in respect of the basement car park, but otherwise agreed to carry out the rectification work specified by Quest, but did not agree that it should pay for Quest to supervise the rectification work. 5. On 6 August 2020 (the end date of the order under appeal for the respondent's costs to be paid on an ordinary basis), the respondent proposed that the matter be resolved by the making of a work order for carrying out the rectification work identified by Quest and for the question of costs to be determined by the Tribunal on the papers, with the parties to file submissions as to costs. 6. Email correspondence from the appellant to the respondent during the period from 25 August 2020 to 24 November 2020 (some of which was without prejudice) in which the appellant made various proposals for it to carry out some or all of the rectification works identified by Quest. 7. On 24 September 2020, the respondent made a Calderbank offer to resolve the proceedings, including that it would accept a specified amount in respect of costs, which it said was less than the costs that it had incurred. 8. On 27 November 2020, the Tribunal telephoned the appellant for it to participate in a directions hearing, but the appellant's representative was unavailable. The Tribunal set the matter down for an ex parte hearing. 9. On 11 December 2020, the appellant sought an extension of time to file and serve its evidence on the basis that it had been attempting to resolve the matter rather than preparing for a hearing. An extension of time was granted. 10. The matter was listed for hearing on 17 February 2021. On that occasion the Tribunal made, by consent, a work order for the appellant to complete the rectification work in accordance with the Quest's scope of works set out in a report dated 22 September 2020. The issue of costs was reserved. It was uncontroversial that the first time the appellant consented to the making of such a work order was at the hearing on 17 February 2021.
3. In respect of the 6 August 2020 offer the Tribunal concluded (at [34]): This offer was to settle the matter on the same basis as that which was eventually agreed to by the respondent. If it was reasonable for the respondent to agree to the orders on 17 February 2021, I am satisfied that the respondent's refusal to accept the offer on 6 August 2020 was unreasonable. It led to a prolongation of the proceedings, and to the [respondent] incurring unnecessary costs from that date.
4. On appeal, there was no challenge to the accuracy of the finding in the above first sentence of paragraph [34]) of the Tribunal's reasons.
5. The Tribunal then referred to the respondent's offer of 24 September 2020, which it described as a Calderbank offer, and concluded that the respondent had achieved an outcome equal to or better than the outcome which would have resulted from acceptance of the offer and that the appellant's refusal of the offer was unreasonable.
6. We interpose here that in contrast to the Tribunal's characterisation of the 24 September 2020 offer the Tribunal did not refer to the 6 August 2020 offer as a Calderbank offer.
7. The Tribunal then said it was satisfied that the appropriate order was an order in the terms it came to make. In this regard, it said it took into account that the way in which the appellant conducted the proceedings was unreasonable. In respect of this conclusion, the Tribunal referred to a number of matters, including that it was only on the morning of the hearing that the appellant agreed to the order proposed by the respondent some 6 months previously and that the appellant had failed to comply with the Tribunal's directions for the filing of evidence, and did not appear on at least two occasions when the matter was listed before the Tribunal.

The 6 August 2020 offer

1. The 6 August 2020 offer was contained in an email sent by the respondent's solicitor to the appellant. The email attached a Scope of Works Summary by Quest, dated 3 August 2020, and stated: Please see attached Scope of Works for your review. Subject to you agreeing to the scope, we propose the parties agree to the following orders to finalise the proceedings: 1. Pursuant to section 48O of the Home Building Act, GWH are to perform the works set out in the Scope of Works within a period of 3 months from the date of the Order. 2. The Applicant is to file any submissions seeking costs of the proceedings within 7 days of the date of the Order. 3. The Respondent is to file submissions in response as to the costs of the proceedings within 7 days of receiving the Applicant's submissions. 4. The Tribunal is to consider the submissions of the parties and determine the question of costs of the proceedings on the papers.

The grounds of appeal-consideration

1. At the hearing of the appeal, Mr Carolan, who had not been involved in the preparation of the Notice of Appeal, or in the preparation of the appellant's written submissions, advanced two points in respect of the appeal against the indemnity costs aspect of the costs order. Firstly, that the Tribunal had erred in law in treating the 6 August 2020 offer as a Calderbank offer when the letter was, plainly, not an offer of compromise. Secondly, that the Tribunal had erred in finding that the appellant had unreasonably prolonged the proceedings in that it failed to find that, to the contrary, the respondent had acted unreasonably in pressing ahead with the proceedings after 6 August 2020 and incurring legal costs in circumstances where the parties had reached an enforceable agreement for the appellant to carry out the required rectification works and the only dispute between them concerned the question of costs.
2. The short answer to the first appeal point was that the Tribunal did not treat the offer of 6 August 2020 as a Calderbank offer. The terms of the offer do not suggest it was such an offer. It was not made without prejudice and its terms do not suggest any element of compromise. This is to be contrasted with the terms of the 24 September 2020 offer which stated it was without prejudice, save as to costs, contained elements of compromise (a Deed of Release instead of a work order and a reduced amount of costs from actual costs) and expressly said it was made in accordance with the Calderbank principles. The Tribunal's reasons do not suggest that it mistook the plain difference between these two offers. On the contrary, as we have already said, it described the 24 September 2020 offer as a Calderbank offer but made no such reference to the 6 August 2020 offer.
3. It was open to the Tribunal to consider whether the appellant's refusal of the 6 August 2020 offer was unreasonable and unduly prolonged the proceedings in connection with a determination of the question whether indemnity costs should be ordered. These are considerations within the principles concerning such costs to which we have referred to above.
4. The second point was in substance a challenge to the Tribunal's factual conclusion that it was unreasonable of the appellant to refuse the 6 August 2020 offer. That was a broad evaluative factual conclusion. Correctly, in our opinion, the appellant does not challenge the conclusion on the basis that there was no evidence in support of it, which would have been a contention that the Tribunal had erred in law. Rather, it seems that the appellant contends that the Tribunal erred by failing to take account of a relevant consideration, namely that the respondent should have been content with the appellant's agreement to carry out the rectification works, asked the Tribunal to determine the question of costs and refrained from proceeding to incur any further costs in the dispute.
5. Although not characterised in this way by Mr Carolan, it may be that this contention could be considered as an argument that the Tribunal's conclusion as to unreasonableness was against the weight of the evidence for the purpose of cl 12 (1) (b) of Schedule 4 (referred to above in respect of the question whether leave to appeal should be granted)
6. No matter how the alleged error might be characterised for the purpose of the appeal, there are, in our opinion, two reasons why this argument should be rejected.
7. First, as appears from the appellant's written submissions on costs to the Tribunal (see further below), it is a new point that was not raised before the Tribunal and it raised new and controversial questions of fact in respect of the question whether, at some time prior to 17 February 2021 and, if so, when, the parties had entered into an enforceable agreement for all of the rectification works to be carried out: see Hudson v Arp 1 (NSW) Pty Ltd [2014] NSWCATAP 31; Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438.
8. Secondly, and in any event, in our opinion, in view of the matters referred to below, the Tribunal's conclusion as to unreasonableness did not involve any error of law in the sense that it failed to have regard to a relevant consideration, nor was it manifestly or plainly wrong, nor was it against the weight of the evidence. On the contrary, for the reasons given by the Tribunal, in our opinion, it was a conclusion that was reasonably open to it.
9. Those matters are: 1. At best to the appellant, it was far from clear that the parties came to a complete and final agreement prior to the hearing on 17 February 2021 under which the appellant was to carry out all of the rectification work identified by Quest, let alone that they had come to an enforceable agreement for this to occur. For example, the appellant's written submissions on costs to the Tribunal stated that the appellant was always ready, willing and able to do rectification works (not specified) but "the sticking point was the legal costs…" (at (21)) and that "There was one real dispute as to the garage floor that fell away when consent to a work order was agreed and orders made accordingly" (at (38)). Furthermore, the email from Mr Craig of the appellant, sent on 3 September 2020 (referred to by the Tribunal), in which he said that the appellant would complete the defects it regarded as "genuine defects" and that the basement works were not deemed a genuine defect was inconsistent with the making of a final agreement for the appellant to carry out all of the rectification work identified by Quest. So also, were the email from Mr Craig to the respondent's lawyers on 1 September 2020 and the two without prejudice offers made by the appellant on 24 November 2020, to which the Tribunal also referred: at [27]. Consistent with the appellant's written submission, to which we have just referred, these documents indicated that the appellant's agreement to carry out all the identified rectification works was dependent upon an agreement as to costs. 2. No reasons were advanced by the appellant to the Tribunal as to why it had been prepared to agree to the work order at the hearing on 17 February 2021 but it had not been prepared to do so shortly after the offer made on 6 August 2020. The appellant did not contend before the Tribunal that some new event had occurred, or new evidence was presented, in this period that explained its change of position.
10. On appeal, the appellant stated that it was only just before the hearing on 17 February 2021 that it obtained legal representation. However, we fail to see how this could or does affect the Tribunal's conclusion as to unreasonableness. The appellant could have obtained legal representation at a much earlier point, including in respect of the position it should take in response to the respondent's offer of 6 August 2020. It would not be fair to the respondent for the assessment of unreasonableness that the Tribunal made to be altered because of the appellant's choice to defer obtaining legal representation until just before the final hearing.
11. Apart from these two points made at the hearing of the appeal by Mr Carolan concerning the indemnity costs order, we have not discerned any additional grounds of appeal concerning this order contained in either the Notice of Appeal or in the appellant's written submissions on appeal.
12. The respondent foreshadowed an application for costs of the appeal in the event that the appeal was dismissed. Accordingly, we have made provision for written submissions to be provided in respect of any such application in the orders below.

Orders

1. For the above reasons, we order as follows: 1. To the extent that it was required, leave to appeal is refused. 2. The appeal is dismissed. 3. The respondent is to serve and lodge written submissions in respect of any application as to the costs of the appeal within 14 days of the publication of these reasons and the appellant is to serve and lodge any written submissions in reply within 14 days of its receipt of the respondent's submissions. The parties' submissions are to include submissions as to whether the question of costs of the appeal should be determined on the papers.

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: 01 December 2021