Jubian v Clark

The submissions of the parties in regard to the homeowners' appeal - AP 15/34863

The builder's submissions

1. As noted above, the builder seeks an order that the homeowners pay his costs of their appeal - AP 15/34863. In written submissions the builder noted that pursuant to section 60(1) of the Civil and Administrative Tribunal Act 2013 (the Act) each party to proceedings in the Tribunal is to pay their own costs. The builder also noted that pursuant to rule 38(2) of the Civil and Administrative Tribunal Rules 2014 (the Rules), the Tribunal may award costs in proceedings allocated to the Consumer and Commercial Division of the Tribunal if the amount claimed or in dispute in the proceedings is more than $30,000. It is unclear from the builder's submission whether it is contended that both provisions were applicable to these appeal proceedings.
2. The builder submits that the homeowners were put on notice in January 2015 that the relevant time period for the filing of their appeal expired on 2 February 2015. Despite the correspondence reminding the homeowners that the period was about to expire an appeal was not filed by the homeowners until approximately four months later, on 26 May 2015. By then the time for filing the appeal had expired.
3. The builder submits that: "[7] The Appeal Panel found that the homeowners had not provided a satisfactory explanation for the delay to warrant an extension of time to file their appeal. [8] Having regard to the Appeal Panel's findings that the homeowners were not entitled to an extension of time to file their appeal and had not established the grounds of appeal relied upon and "that there is no merit in the [homeowners'] appeal and application for leave to appeal" (see paragraph 59 of the Reasons for Decision), the [homeowners] had no success whatsoever on their application for leave to extend time that in respect of their appeal. It is submitted that it is appropriate for the appeal panel to follow the general rule that costs follow the event and as the [builder] was clearly the successful party in respect of the [homeowners'] application for leave to extend time and in respect of the [homeowner's] appeal. [9] It is submitted that it [is] appropriate for the Appeal Panel to follow the general rule that costs follow the event as the Respondent was clearly the successful party in respect of the Appellant's application for leave to extend time and in respect of the Appellants' appeal."
4. The builder went on to submit that the homeowners' rejection of his 9 July 2015 offer of settlement was such that from the date of their rejection (10 July 2015) he should be awarded his costs on an indemnity basis and prior thereto on an ordinary basis.

The homeowners' submissions

1. The homeowners submit that the usual cost order of "costs follow the cause" should not be made in their appeal. Instead, it was submitted the builder should be ordered to pay their costs of their appeal and they should be paid on an indemnity basis. In support of their contention, the homeowners relied on their offers of settlement, copies of which were attached to their submissions. The offers were said to be made on the principles set out in the well-known family law casse decided in England - Calderbank v Calderbank [1976] Fam 93.
2. In summary, the offers relied upon by the homeowners were as follows: 1. On 11 March 2015, the homeowners invited the builder to withdraw his appeal with no order as to costs. 2. On 24 April 2015, the homeowners offered to settle the builder's appeal on the basis that the builder withdraws/discontinues his appeal and each party pay their own costs. On the same day the homeowners forwarded to the builder a signed Deed of Settlement and Mutual Release (the Deed of Settlement) prepared by the builder's solicitor and originally dated 23 March 2015. Under the terms of the Deed of Settlement the builder was to pay the homeowners $142,400 (inclusive of GST) on 20 April 2015, which the homeowners amended by deleting this date and inserting "28 days" from the date of the Deed. The original date was also crossed out. 3. On 21 May 2015, the builder offered to pay the homeowners "$52,000 inclusive of all claims, interest and costs in full and final satisfaction of all claims made by [the homeowners] in the proceedings." In making the offer the builder noted he had already paid the homeowners "the undisputed amount of $8,303 relating to overpayments." 4. On 26 May 2015, the homeowners offered to settle both appeals on the basis that both parties discontinue their appeals and each party bear their own costs of the appeals. The effect of this offer the homeowners explained was that the builder was to pay to the homeowners $60,862.92 (being the original order) with the costs order to be agreed or assessed. 5. On 7 July 2015, the homeowners offered to settle their appeal on the basis the owners' discontinue their appeal and each party bear their own costs.

The builder's submissions in reply

1. The builder rejects the homeowners' submissions on the following basis: 1. The homeowners' offer of 7 July 2016 was not a genuine offer of compromise because they then rejected his offer of 9 July 2015 to dismiss the appeal with no order as to costs. 2. He put the homeowners on notice, in January that the relevant appeal period for any appeal by them expired on 2 February 2015. 3. The homeowners did not file their appeal until 26 May 2015, almost four months late. 4. In the period between 26 May and 7 July 2015 he incurred significant costs in defending the homeowners' appeal (including preparation of a Reply to a Notice of Appeal, a defence to the application for leave to extend time and for the hearing of the appeal). 5. At no stage did the homeowners make an offer to pay his costs.
2. In the circumstances, the builder submits, it was reasonable for him to have rejected the homeowners' offer of 7 July 2015.

The submissions of the parties in regard to the builder's appeal - AP 15/05271

1. The homeowners contend that in the case of the builder's appeal "costs should follow the cause." That is, as the builder was not successful in his appeal a cost order should be made in their favour. The homeowners also contend that they should be awarded costs on an indemnity basis in light of the builder's rejection of their abovementioned offers of settlement.
2. The homeowners made no reference of the relevant powers of the Appeal Panel to make an award of costs.
3. The builder rejects the homeowners' submissions. The builder is critical of the fact that the homeowners refused to enter into the Deed of Settlement and instead made amendments to an "in principle agreement" they had reached on 23 March 2015. He said that by the time the homeowners returned the Draft Deed on 24 April 2015, with proposed amendments, the builder had incurred significant further costs in progressing his appeal. He said he had made a bona fide offer to settle the appeal with a payment of $142,500 to the homeowners which was unreasonably rejected by insisting on additional terms that were not originally agreed and derailed the "in principle agreement".
4. In the circumstances, the builder submits there should be no orders as to costs in regard to his appeal.

Consideration

1. The applicable power of the Tribunal below to make orders for costs were those set out in rule 38 of the Rules. Rule 38(1) provides that the rule applies to proceedings allocated to the Consumer and Commercial Division of the Tribunal. Rule 38(2)(b) provides that despite section 60 of the Act, the Tribunal may award costs in proceedings to which the rule applies "even in the absence of special circumstances warranting such an award" if the amount claimed or in dispute in the proceedings is more than $30,000.
2. However, the Appeal Panel's power to make an order for costs in these appeals, which were lodged prior to 1 January 2016 and the commencement of rule 38A of the Rules, is that set out in section 60 of the Act and not rule 38(2)(b): see Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [7] and [8].
3. Section 60 of the Act provides as follows: "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."
4. As can be seen from the above, the starting point in these appeals is that each party pay its own costs. Subsection 60(2) gives the Tribunal a discretion to award costs if it is satisfied that there are "special circumstances warranting the award of costs." That is, even if the Tribunal is satisfied there are special circumstances, the Tribunal must also be satisfied that such circumstances warrant an award of costs.
5. The matters the Tribunal can have regard to in determining whether there are special circumstances warranting an award of costs are those set out in subsection 60(3).
6. In Megerditchian v Kurmond Homes Pty Ltd at [11], the Appeal Panel cited with approval the meaning of the expression "special circumstances" that had been given to the same expression in the former section 88 of the Administrative Decisions Tribunal Act 1997 (NSW) by the Court of Appeal in Cripps v G & M Mawson [2006] NSWCA 84 at [60]. That is, special circumstances are "circumstances that that are out of the ordinary" - they do not have to be "extraordinary or exceptional".

The homeowners' appeal

1. Neither the builder nor the homeowners have couched their submissions in terms of one or more of the circumstances set out in subsection 60(3)(a) to (g) of the Act.
2. It is the builder's claim that costs should follow the event and as the homeowners were not successful in their appeal an award of costs should be made in his favour. As noted by the Appeal Panel, in ACT Builders v Haridemos (No 2) [2016] NSWCATAP 118 at [41], the mere fact a party was unsuccessful in their appeal does not of itself give rise to special circumstances warranting an order for costs in favour of the other party. The same applies where the appealing party was successful in their appeal. That is, a successful appeal does not of itself give rise to special circumstances warranting an order for costs in favour of the successful party.
3. In regard to the builder's submissions based on our findings that the homeowners had failed to provide an adequate explanation for the delay in lodging their appeal and that their application for leave to appeal and appeal lacked merit, the builder has not identified why these findings give rise to special circumstances warranting an award of costs in his favour. It would appear the builder was at all times ready to respond to the homeowners' appeal if made and there is no evidence to indicate that the builder was delayed or prejudiced in prosecuting his appeal as a result of the homeowners' delay in lodging their appeal.
4. It is accepted in proceedings such as these, where a party unreasonably rejects an offer to compromise proceedings that turns out to be more favourable to that party than the terms of the order or orders that the tribunal subsequently makes, the opposing party may rely on this rejection when costs are being determined under subsection 60(2) of the Act: see Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [21], Torchia v Swanton (RLD) [2012] NSWADTAP 5 at [142] and Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty [2001] NSWADTAP 31 at [22]. That is, an unreasonable rejection of an offer of compromise is a matter that might fall within subsection 60(2)(g) of the Act and give rise to special circumstances warranting a cost order. As noted by the Appeal Panel, in Brunsprop Pty Ltd at [21], whether the rejection of an offer is unreasonable requires consideration of the terms of the offer made and all of the surrounding circumstance. The Appeal Panel found at [23], that in that case there had not been an unreasonable rejection of the offer that had been made. In Torchia at [145] to [153] the Appeal Panel of the former Administrative Decisions Tribunal found that it was not unreasonable for the unsuccessful party to reject the successful party's offer of compromise and hence made no order as to costs.
5. Offers of compromise are often said to have been made on the basis of the decision in Calderbank v Calderbank (supra). However, as explained by the former Administrative Decisions Tribunal, in De Costi Seafoods (Franchisees) Pty Ltd v Broadway Shopping Centre Sydney Pty Ltd [2011] NSWADT 40 at [64], in regard to a provision in similar terms to section 60 of the Act, when awarding costs under that provision the specific principles enunciated in Calderbank v Calderbank should not be mechanically applied because unlike courts the starting point is that each party pay its own costs and a cost order can only be made where the Tribunal is satisfied that there are special circumstances warranting an order for costs.
6. In this appeal, neither the builder, nor the homeowners, have contended that the rejection of their respective offers of compromise gave rise to special circumstances warranting an order for costs. Nor in our opinion, do the terms of their respective offers in regard to the homeowners' appeal give rise to such.
7. Accordingly, in the absence of a finding for special circumstances the appropriate order is to dismiss each party's application for costs with the ordinary rule continuing to apply in that each party pay its own costs of the homeowners' appeal in accordance with s 60(1).

The builder's appeal

1. In regard to the builder's appeal, the homeowners again contend a cost order should be made in their favour because the builder was unsuccessful in his claim and the cost order should be made on an indemnity basis because the builder unreasonably rejected their offer of compromise. Which offer was unreasonably rejected was not explained. Nor did the homeowners explain why the builder's rejection of their offers constituted special circumstances.
2. Accordingly, in the absence of a finding for special circumstances the appropriate order is to dismiss the homeowners' application for costs with the ordinary rule continuing to apply in that each party pay its own costs of the builder's appeal in accordance with s 60(1).

Orders

1. For the reasons set out above, the Appeal Panel orders. 1. The application of Mr Clark and Ms Loneragan that Mr Jubian pay their costs in AP 15/05271 is dismissed. 2. The application of Mr Clark and Ms Loneragan that Mr Jubian pay their costs in AP 15/34863 is dismissed. 3. The application of Mr Jubian that Mr Clark and Ms Loneragan pay his costs in AP 15/34863 is dismissed..

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: 20 July 2016