On 25 February 2019 the Appeal Panel dismissed an appeal by Lloyd and Anna Hanson against the decision in the Consumer and Commercial Division of the Tribunal on 13 November 2018 in proceedings HB 16/55283 brought by Metricon Homes Pty Ltd (Metricon).
Proceedings HB 16/55283 were an application by Metricon under the Home Building Act 1989 for an order that Mr and Mrs Hanson (the Owners) pay it $169,431.15 plus interest, payable pursuant to a home building contract for residential building work carried out by Metricon on the Owners' property. The Owners had a separate application (HB 17/006192) seeking compensation for engineering and construction defects and for delay.
As explained in the earlier reasons (Hanson v Metricon Homes Pty Ltd [2019] NSWCATAP 133), both matters were listed for hearing on 12 and 13 November 2018. On the morning of the second day the Owners withdrew their application in HB 17/06192 and those proceedings were dismissed. The Tribunal proceeded to determine Metricon's claim in HB 16/55283, and ordered the Owners to pay the sum of $208,757.74.
The appeal against that decision was heard on 25 February 2019. The grounds of appeal were that the Tribunal erred in law in failing to explain the procedure about asking for an adjournment; failing to accord procedural fairness; and failing to ensure that the Owners had a reasonable opportunity to be heard or otherwise have their submissions considered. The Owners sought leave to appeal on the grounds that the decision was not fair and equitable as their legal representative withdrew at the outset of the hearing and they were not given a reasonable opportunity to ask for an adjournment or to arrange for another lawyer to represent them; and the decision was against the weight of evidence in that the Tribunal failed to consider the evidence filed on their behalf.
The grounds of appeal were amended in written submissions provided on behalf of the Owners by counsel who had been engaged shortly before the appeal hearing. The amended grounds of appeal were that the Owners were denied procedural fairness in that they were not given an adjournment, nor given a reasonable opportunity to present their case, and that the Tribunal erred in finding there was no assertion that Metricon was not entitled to payment of the amount claimed for stage 06 completion and variations, as the Owners were asserting there was work within the scope of work under the contract which was incomplete, which should have been considered in his determination in reducing the amount so owing under the contract.
In their written submissions, filed on 18 February 2019, the Owners sought an adjournment of the hearing of the appeal until after determination of a new cross claim lodged in the Consumer and Commercial Division (proceedings HB 18/49637). That course was opposed by Metricon. For reasons provided in our earlier decision, we refused the adjournment, and the hearing of the appeal proceeded on 25 February 2019.
In the earlier reasons we explained by detailed reference to the transcript of the first instance hearing why the Owners' contention that they were denied procedural fairness by the Tribunal not adjourning the hearing of the Owners' case and not allowing them more time was not established, and concluded that there was no denial of procedural fairness in the decision to proceed with the hearing.
In those reasons we explained why we were not satisfied that leave to appeal on the second amended ground of appeal should be granted, concluding that the Tribunal's conclusion that Metricon was entitled to succeed on its contractual claim was not made against the weight of evidence such that they may have suffered a substantial miscarriage of justice, as required by cl 12(1) of Sch 4 to the Civil and Administrative Tribunal Act 2013 (the NCAT Act) for a grant of leave.
Leave to appeal on grounds other than a question of law was refused, and the appeal was dismissed. The Owners' application, which was opposed by Metricon, to extend the stay of the orders in HB 16/55283 pending determination of the new claim was refused. Directions were made for the parties to provide submissions on any application for costs of the appeal, including submissions as to whether a hearing should be dispensed with.
[2]
Costs application
Metricon seeks an order that the Owners pay its costs of the appeal on the ordinary basis, and consents to the costs application being determined without a hearing.
Metricon submits that the requirement in s 60(2) of the NCAT Act for special circumstances warranting an award of costs does not apply. The amount claimed or in dispute in the Tribunal proceedings was more than $30,000, and the applicable first instance costs provision was accordingly rule 38(2)(b); the relevant costs provision on the appeal is that in rule 38A of the Civil and Administrative Tribunal Rules 2014 (the Rules).
Metricon submits that it succeeded overwhelmingly on the issues raised by the Owners on appeal. The Appeal Panel rejected the application to adjourn the hearing of the appeal; and found against the claim of denial of procedural fairness, and refused leave to appeal, thereby dismissing the appeal in its entirety; and refused to grant a stay of the order for payment. There was otherwise no reason or disentitling conduct on Metricon's part that would justify displacing the usual order for costs.
The Owners oppose an order for costs. They submit that they would not have had to appeal if the Tribunal had adjourned the hearing, or if Metricon's representative had been prepared to negotiate a settlement or resolution, including on the basis of their dispute with the expert report provided by Mr Zakos. The builder had not complied with its obligations under the contract to do work with due care and skill and provide materials that were good and suitable for purpose, and that the works comply with the Building Code of Australia. If the builder had complied with the terms of the contract there would be no dispute lodged with the Tribunal and subsequently no appeal.
The Owners submit it would be highly prejudicial to award costs to the builder, as they have substantial costs involved with the matter, which has led them to financial hardship. They have had to relodge the defects claim and request that costs not be ordered, as this would be highly unfair and prejudicial to them. They are suffering ill health and have never not complied with directions without reason or certificates.
In reply Metricon submits that the matters raised by the Owners are not relevant to the issue of costs as the submissions essentially repeat their submissions in relation to the defects claim, and repeat the submissions in the appeal proceedings. Metricon disputes the Owners' claim that it did not attempt to negotiate or settle its claim or their defects claim.
[3]
Whether a hearing should be dispensed with
Section 50 of the NCAT Act relevantly provides:
50 When hearings are required
(1) A hearing is required for proceedings in the Tribunal except:
…
(c) if the Tribunal makes an order under this section dispensing with a hearing, or
…
(2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal.
(3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first:
(a) afforded the parties an opportunity to make submissions about the proposed order, and
(b) taken any such submissions into account.
(4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules.
…
The parties had an opportunity to make submissions as to whether a hearing on costs was required. Metricon consented to determination of costs on the papers; the Owners did not provide any submissions in opposition to that course. The Appeal Panel is satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions. The parties would be put to unnecessary expense if a hearing on costs were held.
The order under s 50(2) of the NCAT Act has accordingly been made.
[4]
Whether an order for costs should be made
The general rule in relation to costs in the Tribunal is that unless special circumstances are established, the parties pay their own costs: s 60(1) of the NCAT Act. Subsection 60(3) lists the matters to which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs.
However, rule 38 of the NCAT Rules modifies the application of s 60 in proceedings before the Consumer and Commercial Division of the Tribunal. Rule 38(2)(a) provides that in proceedings where the amount claimed or in dispute is more than $30,000, the Tribunal may award costs in the absence of special circumstances.
In this case, the amount claimed or in dispute in the proceedings HB 16/55283 and in the appeal was more than $30,000. Rule 38 of the NCAT Rules therefore applies. The appeal was lodged after 1 January 2016, and the provisions applicable to determination of costs at first instance apply in the appeal: rule 38A Rules.
Rule 38 confers on the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion. However, the discretion to make such an order must be exercised judicially: Ruddock v Vadarlis [2001] FCA 1865 at [9]. Where an application has been heard and determined on the merits, the appropriate starting point for the exercise of the discretion is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour: Latoudis v Casey (1990) 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.
However, as discussed by the Appeal Panel in Thomson v Chapman [2016] NSWCATAP 6 at [71], 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, and nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party. In circumstances where there is a general discretion to award costs, the Tribunal in exercising its discretion is to have regard to the nature of the proceedings before it and all relevant factors arising in connection with those proceedings for the purpose of determining what order for costs, if any, should be made. Factors that might influence whether the usual order for costs should apply and if so to what extent, would include whether by reason of the relative success of the parties on different issues and the time taken to determine those issues, an order for costs based on the issues determined should be made; and whether by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part.
In the present appeal, Metricon was successful on every issue raised in the appeal. Metricon opposed the Owners' application to adjourn the appeal hearing, and for an extension of the stay; both applications were refused by the Appeal Panel. The Owners' contention that there had been a denial of procedural fairness was not made out. Leave was not granted for them to appeal on the ground that the Tribunal's conclusion that Metricon was entitled to payment of the amount claimed for the stage 06 completion and variations was against the weight of evidence. In their submissions resisting a costs order the Owners reassert their criticisms of the conduct of the first instance hearing, and their claim for defects and incomplete works, and point to their financial hardship. None of those matters are relevant to the question of whether the respondent to the appeal is entitled to a costs order in its favour.
There being no basis on which to depart from the usual rule that the successful party is entitled to be compensated for its costs incurred in defending the appeal, the Appeal Panel is satisfied that the usual order for costs should apply.
[5]
Orders
The orders of the Appeal Panel are:
1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013, a hearing on the question of costs of the appeal is dispensed with.
2. The appellants are to pay the respondent's costs of the appeal as agreed or assessed.
[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
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Decision last updated: 22 August 2019