Harjinder Mendiratta v Clarendon Homes

reasons for decision APPLICATION 1.The original application was the subject of orders and reasons published on 30 December 2013. In accordance with an order of the Tribunal made on the same date, the parties filed and served submissions on the issue of costs. 2.Pursuant to the relevant transitional provisions of the Civil and Administrative Tribunal Act 2013 (NSW), Schedule1, Division 3, clause 7(3), NCAT may exercise all the functions that the Consumer, Trader and Tenancy Tribunal exercised before its abolition, and apply the provisions of the Consumer, Trader and Tenancy Tribunal Act 2001 (repealed) (the "CTTTA") and the Consumer, Trader and Tenancy Tribunal Regulation 2009 (repealed) (the "CTTTR"). 3.The substantive application, the subject of this costs decision, was lodged by the applicant pursuant to the terms of s 24 of the CTTTA on 23 October 2011 seeking an unspecified award of compensation with respect to the yet to be determined cost of rendering the external brickwork of his whole house. The claim was subsequently clarified and amended by Points of Claim lodged 28 May 2012 whereby the applicant sought damages of $161,680.11 referrable to demolition of the existing brickwork and its replacement. On 30 December 2013, after a two day hearing the respondent was ordered to pay the applicant $18,023.00 immediately. 4.Relevant to the present costs application, s 53 of the CTTTA is in the following terms: 53 Costs (1) Subject to this section and the regulations, the parties in any proceedings are to pay their own costs. (2) The Tribunal may, in accordance with the regulations, award costs in relation to any proceedings. (3) If costs are to be awarded by the Tribunal in accordance with the regulations, 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 Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (4) In this section, "costs" includes the costs of, or incidental to, proceedings. (5) This section does not apply in relation to proceedings under the Strata Schemes Management Act 1996 or the Community Land Management Act 1989 5.It should be noted at this point that sub-section 53(1) of the CTTTA provides a different starting presumption, than does Reg. 42.1 of the Uniform Civil Procedure Rules 2005 which is in the following terms: 42.1 General rule that costs follow the event (cf SCR Part 52A, rule 11) Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 6.The determination of any costs entitlement does not follow the formula outlined in the UCPR as frequently enunciated by way of a general rule in Oshlack v Richmond River Council [1998] HCA 11 at [67 - 69] per comments of McHugh J with whom Brennan CJ agreed. 7.The legislative basis for awarding costs in the Tribunal is the outline set out in s 53, governed by a consideration of the criteria imposed by Reg. 20 of the CTTTR, which is in the following terms: 20 Costs generally (1) This clause applies to the awarding of costs by the Tribunal as provided by section 53 of the Act. (2) The Tribunal may award costs in relation to proceedings in respect of which the amount claimed or in dispute is not more than $10,000, or in respect of which no amount is claimed or in dispute, only if the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs. (3) In any proceedings in respect of which the amount claimed or in dispute is more than $10,000 but not more than $30,000, the Tribunal may award costs in relation to the proceedings only if: (a) the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs, or (b) the Tribunal has made an order under section 30 (2) of the Act in relation to the proceedings. (4) In any proceedings in respect of which the amount claimed or in dispute is more than $30,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit. (5) Despite any other provision of this clause, the Tribunal may order: (a) that the costs of proceedings on an application for rehearing of a matter are, if the applicant fails to attend the hearing of the application, to be paid wholly or in part by the applicant, or (b) that the costs of any proceedings that the Tribunal considers to be frivolous, vexatious, misconceived or lacking in substance, or that otherwise should not be heard or proceeded with, be paid wholly or in part by the person who instituted the proceedings. (6) The amount of any costs under sub-clause (5) is to be substantiated in accordance with directions given by the Chairperson or, in the absence of such directions, in such manner as the Tribunal thinks fit." SUBMISSIONS 8.Counsel for the applicant in his submissions asserts that the Tribunal has a power to award costs in relation to any proceedings as a matter of a very wide discretion, and further that in accordance with clause 20(4) of the CTTTR submits that "the Tribunal may award costs in relation to proceedings in such circumstances as it thinks fit". 9.It is submitted on behalf of the applicant that he was put to proving the consequences of the respondent's breach of warranty relevant to its use of the Nawkaw brick treatment, together with establishing both defects and quantum concerning alleged defects to windows, downpipes and plumbing. The application, as is evidenced by my Reasons, was hard fought on all grounds, with little concession by both parties. 10. The respondent on the other hand argues in its submissions that, even considering the applicant's alternative damages position, of claiming a sum, not based upon the demolition of external brickwork and its replacement but, related to rendering the outside surfaces at an estimated quantum of $77,191.00, it still could be construed as an extravagant claim, and in the circumstances costs should be ordered against the applicant; see Huxley v. West London Extension Railway Co. Ltd [1889] 14 AC 26 at [32] per Lord Halsbury. Further it was submitted, correctly so, that the respondent was put to the expense of defending a demolition claim, which was only withdrawn in closing submissions. The applicant relied on a clearly deficient expert opinion, in support of what turned out be an extravagant and baseless claim for a brickwork demolition and replacement solution. At paragraph 3.14 of the respondent's submissions it is correctly submitted that the applicant was successful in obtaining the relevant award of rectification by relying directly or otherwise upon evidence adduced by the respondent to the amount of just over $10,000.00 referrable to the last three items at paragraph 28 of my substantive reasons. I accept the application of the quoted principle relied on by the applicant, as referred to in Dal Pont G.E. Law of Costs 2003 Butterworths at [8.46] which states: "Where a litigant succeeds in a case not on any merits of his or her own but, say, on a technicality, it is open to the court to make no costs order in his or her favour." 11.The respondent further submits that it should be given the benefit of two Calderbank offers, the first in writing dated 14 September 2012 offering to settle for $20,000.00 inclusive of costs, the second conveyed orally on the first morning of the hearing, 29 April 2013 offered $30,000.00 inclusive of costs. The respondent did not receive a reply within the timeframe that the first offer was open. It is asserted that the second offer was peremptorily rejected. In summary the respondent says it should be awarded costs from the date of the first offer, or alternatively to pay Clarendon's costs from 29 April 2013. 12.In response to the respondent's reliance upon both Calderbank offers, the applicant does not contest the factual basis of the first offer, but correctly impugns the foundations of the second oral offer. The supporting affidavit of Mr Lo the respondent's solicitor do not provide details of the participants to the conversation, however the applicant's submissions do not submit that such conversation did not take place. I am referred by the applicant to relevant dicta on this issue, namely Gilsan v Optus [No 4] [2005] NSWSC 1073 per McDougall J at [31] and Giller v Procopets (No 2) [2009] VSCA 72 at [11]-[13]. I have had regard to these dicta, which essentially state that the principal enquiry is whether or not it was reasonable for the offeree to reject the offer. 13.The applicant correctly submits in relation to the second offer, which reliant upon the authority quoted in the previous paragraph I accept as being a valid Calderbank offer, that "at the beginning of the first hearing day, the only available solution to the (later proven) mortar defect was rendering. Mr Wearing's solution was yet to be discovered." This submission, assessed in the context of the second oral offer not disclosing the amount allowed for costs, and being made at a time at which I assume that the applicant had retained counsel for two days, persuades me that it was reasonable for the applicant to reject this offer. 14.From the first written offer, by including the details of the respondent's expert evidence, an inference can be drawn as to the amount then allowed for costs. The applicant bettered the first offer, although not by much. The circumstances relevant to both Calderbank offers do not justify an order for costs in favour of the respondent. The applicant also raises the issue of the respondent's solicitor being employed by a related entity. I accept this submission. The respondent is not entitled to a costs order. 15.I have accepted parts of the applicant's submissions, particularly noted in paragraph 9 above. The respondent's submissions however, which I have alluded to, persuade me that in the circumstances the applicant should not be entitled to a costs order. 16. For the reasons set out above, it is appropriate in the circumstances that an order be made that each party pay his or its own costs of the proceedings HB 11/51741. (signed) R Buckley Senior Member Civil and Administrative Tribunal of New South Wales 21 May 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar