Ibrahim v PERI Australia Pty Ltd

Tribunal proceedings and decision

1. At the beginning of her reasons for decision, the Member set out the procedural history of the matter before the Tribunal and noted the failure of Rockwall to comply with procedural directions of the Tribunal and the late filing of documents by it up to the day of the hearing. The Member also noted that Rockwall was legally represented throughout the Tribunal proceedings.
2. The Tribunal correctly identified that the application was properly brought as a consumer claim under Part 6A of the Fair Trading Act and that Rockwall's cause of action was in contract.
3. Rockwall argued that Ms Khoury had repudiated the contract by failing to complete the works it had contracted to perform. Rockwall claimed that the invoice for $4,250 issued by Ms Khoury was not issued in accordance with any term of the contract and was issued when no further work had occurred. For her part, Ms Khoury submitted that Rockwall had not paid her for works actually carried out and, on the basis of a conversation which took place on 16 October 2017, formed the view that Rockwall would not pay for work carried out on her behalf up until that time. Ms Khoury believed this to be as a repudiation of the contract and accepted repudiation.
4. The Tribunal, after referring to relevant authorities, found that:

• the hydraulic plans did not form part of the agreement between Rockwall and Ms Khoury;
• Ms Khoury's refusal to return and complete works that were outside the scope of the contract could not be interpreted as repudiation of the contract by her; and
• Rockwall's conduct in trying to vary the terms of the contract and refusing to pay Ms Khoury for work carried out amounted to repudiation.

1. The Tribunal therefore dismissed the application.

The Appeal

1. On 8 November 2019, Rockwall lodged a notice of appeal with the Tribunal against the decision of the Tribunal made on 10 October 2019. The grounds of appeal were that: 1. The Tribunal erred in finding that the contract between the parties provided for the respondent to undertake plumbing works in accordance with the architectural plans provided on 24 May 2016 for a contract price of $45,000; and 2. The Tribunal erred in finding that Rockwall repudiated the contract between the parties by trying to vary the terms of the contract and refusing to pay Ms Khoury for work carried out.
2. Leave to appeal was sought on the basis that the decision was against the weight of the evidence.

Parties to the appeal

1. Before proceeding, I should note that the notice of appeal named Romeo Ayoub and Minerva Khoury as respondents. Rule 29 of the Civil and Administrative Tribunal Rules 2014 (CAT Rules) provides that parties to an internal appeal are: (a) the appellant, and (b) any person or body (other than the appellant) who was a party to the proceedings before the Tribunal at first instance, and (c) if the Attorney General or another Minister intervenes in the proceedings under section 44 of the Act - the Attorney General or Minister, and (d) any other person who is made a party to the proceedings by the Tribunal under section 44 of the Act, and (e) any other person required to be joined or treated as a party to the proceedings by a Division Schedule for a Division of the Tribunal, enabling legislation or the procedural rules.
2. The parties to the original proceedings were Rockwall (the applicant) and Minerva Khoury t/as Sungary Services (the respondent). Indeed the Member made explicit findings that Romeo Ayoub was not a party to the proceedings and removed him as a respondent. No orders of the Appeal Panel have joined Mr Ayoub as a party to the appeal and r 24(c) and 24(e) do not apply.
3. The correct respondent to the appeal is therefore Minerva Khoury t/as Sungary Services and Mr Ayoub should be removed as a party. Orders will be made accordingly.

Conduct of the appeal

1. The matter came before the Appeal Panel for directions on 19 November 2019. Both parties were given leave to be legally represented, directions were made for the filing of documents and written submissions and the matter was set down for hearing on 10 February 2020. In accordance with the directions, to which it consented, Rockwall was to provide an agreed bundle including all evidence on which it intended to rely, a transcript and written submissions in support of the appeal.
2. On 11 December 2019, Rockwall sought the consent of Ms Khoury to extend time for compliance with the timetable. Ms Khoury did not consent and on 19 December 2019 Rockwall wrote to the Tribunal seeking an extension to serve the agreed bundle by 20 January 2020. The Appeal Panel extended time for the agreed bundle to be filed to 20 January 2020 and made other consequential changes to the timetable. The hearing date of 10 February 2020 was maintained.
3. Rockwall failed to comply with the revised timetable and did not file any material. On 28 January 2020, Ms Khoury filed her submissions on the appeal. She sought dismissal of the appeal pursuant to s 55 of the NCAT Act for want of prosecution and/or on the basis that the proceedings are frivolous, vexatious or otherwise misconceived or lacking in substance; and that the appeal be otherwise dismissed on the grounds that Rockwall had failed to articulate or put forward any ground of appeal.
4. On the afternoon of 7 February 2020, Rockwall emailed to the Tribunal a request to withdraw the appeal. The respondent did not object to the withdrawal subject to provision for an application for costs to be made. Orders were made that day dismissing the appeal because it had been withdrawn and vacating the hearing. The Appeal Panel also made orders requiring any submissions on costs by Ms Khoury to be filed and served within 14 days. Any submissions opposing costs were to be filed by Rockwall 14 days after that.
5. Ms Khoury filed her submissions on costs in accordance with the orders. No submissions have been received from Rockwall.

Consideration

1. Rule 38A of the CAT Rules provides that on an internal appeal the Appeal Panel is to apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
2. The proceedings were heard in the Consumer and Commercial Division of the Tribunal and the amount claimed by Rockwall exceeded $30,000. 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. Under r 38(2)(b) of the CAT Rules, however, the Tribunal may award costs if the amount claimed is over $30,000, even in the absence of special circumstances.
3. The usual principle in determining costs is that a successful party should be awarded costs in its favour (i.e. that costs "follow the event") and that the purpose of a costs order is to compensate or indemnify a successful party against the expenses to which it has been put: Latoudis v Casey (1990) 170 CLR 534; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72.
4. However, as discussed by the Appeal Panel in Thomson v Chapman [2016] NSWCATAP 6 at [71], where there is a general discretion as to 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. Several factors are relevant including: 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.
5. The relevant principles applicable to a costs application in proceedings which have not been heard on the merits are set out by the High Court in Re Minister for Immigration and Ethnic Affairs: Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6. The High Court, constituted by McHugh J, held (at 624-625): 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 … 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 … 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… 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.
6. In Ibrahim v PERI Australia Pty Ltd [2013] NSWCA 328, the Court of Appeal set out the principles applicable to dealing with a costs application made when a dispute is finalised without there being a final adjudication on the merits. At [16]-[17], the then President of the Court of Appeal, Beazley P (with whom Leeming JA agreed) said: 16 The primary judge, in determining whether a costs order ought to be made in the applicant's favour, on the discontinuance, reviewed the case law including, relevantly, Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; 44 FCR 194; Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622; ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; 101 FCR 548; Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497; and Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 32. 17 Although each of those cases related to different facts, the principles that are to be derived from them, in circumstances where a Court is requested to make a costs order, when proceedings have not been heard to termination include the following: whether a party acted reasonably in commencing the proceedings; whether a party had been successful in obtaining interlocutory relief; whether the party sued had acted reasonably; whether the responding party had acted reasonably in defending the proceedings; whether the proceedings terminated after interlocutory relief had been granted; and further, whether the primary judge was satisfied that the party seeking to terminate the proceedings prior to a full hearing had almost a certain chance of success.
7. In Transfield Services (Australia) Pty Limited v James Gaha [2012] NSWSC 865, Ball J at [27] noted that one instance where the court may be satisfied that the principles in Lai Qin are satisfied is where the consent orders agreed by the parties amount, in effect, to capitulation by one of the parties.
8. The issue is whether, in accordance with the principles set out in Lai Qin, the respondent should be awarded its costs of defending the appeal which was ultimately withdrawn. As noted in Lai Qin, there may be circumstances where a costs order is appropriate even though there has been no hearing on the merits, bearing in mind, of course, that it is not appropriate for the determining body to decide a hypothetical case.
9. We must consider whether one party acted so unreasonably that the other party should obtain the costs of the action or whether, even though both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.
10. In this matter, Rockwall failed to take any steps to prosecute its appeal. It failed to comply with directions made by the Appeal Panel - even though it consented to those directions being made. Importantly, after filing the notice of appeal, Rockwall failed to lodge any evidence, documents or submissions in support of any grounds of appeal or to properly articulate those grounds. The respondent was therefore put in a position where she was required to second guess the basis upon which the appeal was made.
11. Rockwall was represented by lawyers throughout the proceedings and no explanation for its failure to provide documents as directed has been provided. The appeal was listed for hearing on Monday, 10 February 2020. A notice of withdrawal was received on the afternoon of Friday, 7 February 2020. The respondent had prepared for the hearing and had incurred expense in attending previous directions hearings and providing written submissions for the hearing.
12. In our view, Rockwall acted so unreasonably that the respondent should obtain her costs of the application. It is also clear that, if the matter had proceeded to hearing on 10 February 2020, in circumstances where Rockwall had failed to provide any evidence or submissions, the respondent was almost certain to have succeeded.

Orders 1. A hearing is dispensed with. 2. The name of the respondent is amended to Minerva Khoury trading as Sungary Services. 3. Romeo Ayoub is removed as a party. 4. The appellant is to pay the respondent's costs of the appeal as agreed or assessed.

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: 19 May 2020