This is an application by the appellant (the builder) for two orders arising from the substantive decision, which was published on 26 June 2023 (Intelligent Building Pty Ltd v Ibrahim [2023] NSWCATAP 170).
In that decision, the builder succeeded in the appeal. The Appeal Panel exercised its powers under s 81 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) to (a) set aside the order of the Tribunal to award the owners $10,000 in damages for "overpayment" to the builder; (b) dismiss the owners' proceedings against the builder; and (c) award the builder $885 in the builder's proceedings against the owner for an unpaid amount under the first contractual progress payment claim by the builder.
This application falls into two separate categories. The first is a miscellaneous orders application. The second is a costs application. It is appropriate we deal with both applications in one decision.
The first order sought is that the first respondents (the owners) reimburse the builder $10,000.
In substance, this component of the builder's application is for miscellaneous orders arising from the Appeal Panel invoking its powers under s 81 of the NCAT Act.
The second order sought was that the owners pay the builders costs of the appeal and interest on unpaid amounts.
None of the parties in the appeal proceedings are or were legally represented.
The builder made its application for orders within 28 days of the date of the substantive decision.
After the application was made, the Appeal Panel issued procedural directions to the parties giving them the opportunity to file and serve all documents and submissions in support (and in opposition) to the builder's application.
The procedural directions included a direction that the parties indicate whether or not they sought a further oral hearing, or were content for the application to be determined on the papers and without a further oral hearing.
The builder filed and served documents and submissions. The owners dispute that they have received the builder's documents and submissions, but the email of the builder to the Registry filing documents indicated they were also emailed to the owners.
The owners also filed and served costs submissions and documents. The owners' provided documentary evidence that they had complied with the order made by the Appeal Panel to pay the builder $885.
The owners sent an email to the Registry stating that the opposed the orders sought by the builder, including that they reimburse the builder $10,000. No evidence was provided that they had reimbursed the builder that amount of money. Rather, the owners submitted that they had been poorly treated by the builder; they were in financial difficulties; and it was unfair that they have to pay any further monies to the builder.
The time period for the parties to file and serve documents and submissions has now expired.
Considering the issues in dispute are confined and are not factually or legally complex we are satisfied that an oral hearing should be dispensed with and the application determined 'on the papers' without further oral hearing under s 50 (2) of the NCAT Act.
[2]
The Application For Reimbursement of $10,000
The original order of the Tribunal was that the builder pay the owners $10,000. That was reversed on appeal.
At the appeal hearing, the builder did not make a clear submission and provide documentation to verify that the amount had been paid. Had the builder done so, we would have dealt with the issue in our decision of 26 June 2023.
The builder's documents filed with the miscellaneous orders application contain a Commonwealth Bank payment statement dated 6 March 2023 evidencing that the builder paid Mr Ibrahim $10,000 by way of electronic funds transfer.
We are satisfied that the builder paid the owners $10,000 to comply with the Tribunal order of 6 February 2023 and that amount has not been refunded by the owners.
In circumstances where that order was set aside and the Appeal Panel substituted its own order dismissing the owner's proceedings against the builder, it is appropriate by way of an ancillary order to the orders we made under s 81 of the NCAT Act to order the owners to refund the builder $10,000. There is no legal basis for the owners to retain the $10,000 paid by the builder. To do so would be a windfall to the owners; and clearly inconsistent with our orders and reasons dated 26 June 2023. The owners' protest that they cannot afford to pay that amount is not a basis for refusing to order repayment to the builder.
[3]
The Application for Costs
Under s 60 (1) of the NCAT Act, parties are to bear their own costs unless there are "special circumstances" established under s 60 (2) of the NCAT Act. Section 60 (3) of the NCAT Act sets out matter to be considered as to whether "special circumstances" are established.
However, the relevant exception to ss 60 (1) and (2) of the NCAT Act is r 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules), which states that, in proceedings in the Consumer and Commercial Division, the Tribunal may award costs without reference to "special circumstances" if the amount "claimed or in dispute" in the proceedings exceeds $30,000.
Rule 38A of the NCAT Rules applies the same principles to appeal proceedings if r 38 of the NCAT Rules applied to the proceedings at first instance. If the amount claimed or in dispute in the appeal exceeds $30,000, the Appeal Panel may award costs of the appeal proceedings without "special circumstances" being established.
However, in respect of r 38A of the NCAT Rules, the appropriate enquiry is whether the amount claimed or in dispute in the proceedings at first instance exceeded $30,000; and additionally whether the amount claimed in in dispute in the appeal exceeds $30,000 (Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [43]; Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 at [78]-[79]; Promina Design & Construction Pty Ltd v The Owners-Strata Plan No 97449 (No 2) [2023] NSWCATAP 164 at [7]). That test will be satisfied if the proceedings at first instance involved an amount claimed or in dispute exceeding $30,000; the Tribunal made an award of damages; and the outcome of the appeal may have affected that Tribunal order to an amount exceeding $30,000
In this matter, the amount claimed or in dispute in the appeal was well below $30,000 in circumstances where the builder was appealing a decision of the Tribunal to (a) award the owners $10,000 and (b) not to award the builder $885 in respect of an unpaid amount in the contractual progress claim 1.
Accordingly, for the builder to succeed in obtaining costs, the builder must establish that there are 'special circumstances' sufficient to persuade the Tribunal to make a costs order in favour of the builder.
The builder's documents and submission set out their claim for costs. The items claimed are summarised as follows:
1. Interest under the building contract between the parties on the amounts of $10,000 and $885.
2. NCAT disbursements, being (a) filing fee in the Tribunal at first instance; (b) filing fee for appeal; and (c) photocopying, postage, and binding costs.
The builder's claim for an amount of interest is misconceived for the following reasons:
1. A costs application involves the legal costs incurred in bring or defending legal proceedings. An alleged cause of action based on breach of contract is not the proper subject of a costs application.
2. The amount of $10,000 that was paid by the builder was not a payment under the terms of the contract in any event. It was an award of damages, which the Appeal Panel reversed on appeal.
3. Any interest payable under r 39 of the NCAT Rules is only payable on a judgement debt in respect of the unpaid amount calculated from the date the monies were to be paid pursuant to an order of the Tribunal. That is not an issue that arises in an application for costs; nor does it arise otherwise in the circumstances of this matter.
It is well established that a successful self-represented party can be awarded the costs of disbursements incurred in bringing or defending legal proceedings, but not reimbursement for time spent in preparation and attendance at the hearing (Cachia v Haines [1994] HCA 14; (1994) 179 CLR 403 at 411; Profitability Consulting Pty Ltd v Thorpe [2018] NSWCATAP 41 at [21]).
However, as discussed previously, the builder must establish sufficient 'special circumstances' to justify a costs order.
Section 60 of the NCAT Act states:
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 Appeal Panel of the Tribunal has considered the applicable legal principles under ss 60 (1) and (2) of the NCAT Act on many occasions.
The principles were concisely summarised in The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [6]-[15] (B & G Trading (No 2) as follows:
6. The general rule set out in s 60(1) was (citing Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107]):
'… designed to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as is practicable: Choi v University of Technology Sydney [2020] NSWCATAP 18 at [41].'
7. In Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42 the Appeal Panel said, at [8], that the discretion to award costs had to be exercised judicially:
'...having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. (See eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (No 2) [2016] NSWCATAP 168 at [16].)'
8. Section 60(2) says that the Appeal Panel may award costs to a party 'only if' satisfied there are special circumstances warranting an award of costs.
9. Section 60(3) sets out a non-exclusionary list of factors to which an Appeal Panel may have regard in determining whether special circumstances warranting an award of costs exist.
10. 'Special circumstances' are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] (Santow J); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107].
11. However, it does not follow that a costs order should be made simply because one or more of the factors in s 60(3) are made out.
12. Even if satisfied that there are special circumstances, the Appeal Panel must further be satisfied that they are circumstances 'warranting an award of costs' - Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21]; Youssef at [108].
13. The exercise of the discretion requires the Tribunal 'to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs': BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]; Obieta v Australian College of Professionals Pty Ltd (2014) NSWCATAP 38 at [81]; Khalaf v Commissioner of Police [2019] NSWCATOD 178 at [29]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35].
14. He who asserts must prove, and so the party seeking the costs order bears the onus of proving that special circumstances exist - Styles v Wollondilly Shire Council [2017] NSWCATAP 108 at [5] under the heading 'Costs'.
15. Whether special circumstances exist is a question of fact and each case must be assessed according to its circumstances: Wynne Avenue Property Ltd v MJHQ Pty Ltd (No 2) [2019] NSWCATAP 68 at [57]; The Owners - Strata Plan 20211 v Rosenthal [2019J NSWCATAP 49 at [15].
The builder submits that there are sufficient 'special circumstances' to make a costs order in its favour because:
1. The owners' case on appeal (and at first instance) was weak, misconceived, frivolous and vexatious.
2. The owner had failed to comply with procedural directions for the filing and serving of expert evidence in the proceedings at first instance.
To the extent that the builder's submission refers to the proceedings at first instance they are not of assistance in determining the issue of costs of the appeal. The owners were the successful party at first instance. The builder was the successful party in the appeal, and the power of the Appeal Panel to award costs is in respect of the costs of the appeal.
In respect of the appeal, we are not satisfied that the owners' opposition to the appeal was so weak or lacked merit or was unarguable that it falls into the category of 'special circumstances.' Further, the appeal was not conducted in a manner by the owners that caused delay or disadvantage to the builder. The appeal proceedings were not of great legal or factual complexity. The owners' arguments in opposition to the appeal were not misconceived or frivolous or vexatious. This is not an appeal that was unusual or out of the ordinary.
We are not persuaded that there are 'special circumstances' under s 60 (2) of the NCAT Act established to depart from the usual order that both parties bear their costs of the appeal under s 60 (1) of the NCAT Act.
[4]
ORDERS
1. An oral hearing is dispensed with under s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW).
2. Samwaiel Ibrahim and Martina George are to pay Intelligent Building Pty Ltd the amount of $10,000 within 28 days of the date of this decision.
3. The appellant's costs application is dismissed.
4. Each party is to bear its own costs of the appeal.
[5]
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
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: 15 August 2023