K & K Ventures Pty Ltd v Attar

NCAT Appeal Panel|2019-07-18

Introduction

This decision concerns an application made by K & K Ventures Pty Ltd (K & K Ventures) against Mr Attar for costs: 1. of proceedings HB 18/13908 brought in the Consumer and Commercial Division (CCD) of the Tribunal by Mr Attar against K & K Ventures under the Home Building Act 1989 (NSW) (the HB Act). Mr Attar initially claimed $249,700, which sum was subsequently reduced to $83,106. On 15 November 2018 the Tribunal determined at a preliminary hearing that the Tribunal had jurisdiction to hear Mr Attar's claim under the HB Act; and 2. of the appeal brought by K & K Ventures against the Tribunal's determination that the CCD had jurisdiction under the Home Building Act.
On 11 March 2019 that appeal was allowed by consent with the parties agreeing and the Appeal Panel ordering by consent that: 1. The appeal is allowed. 2. The proceedings are to be remitted to the Consumer and Commercial Division to be heard and determined as a consumer claim under the Fair Trading Act 1987. 3. Moudhi Attar is to file and serve amended points of claim by 1 April 2019. 4. K & K Venture Pty Ltd is to file and serve amended points of defence by 15 April 2019. 5. The matter to be listed for directions in the Consumer and Commercial Division upon remittal by the Appeal Panel. 6. K & K Venture Pty Ltd is to file and serve submissions on costs by 1 April 2019. 7. Moudhi Attar is to file and serve submissions on costs by 15 April 2019.
Once amended points of claim were filed the claim would then proceed in the CCD as a claim under the Australian Consumer Law, not as a home building claim.
The parties agreed that the issue of costs would be determined on the papers. We are satisfied that the costs issues can be adequately determined in the absence of the parties by considering the party's written submissions and materials lodged. Therefore, in accordance with s 50(2) of Civil and Administrative Tribunal Act 2013 (the NCAT Act), we have dispensed with a hearing on the costs issues.

Relevant legislation

Section 60 of the NCAT Act provides: 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.
Rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (the Rules) provide: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if: (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10 (2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000. 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of: (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
In the present case the amount claimed by Mr Attar has always exceeded $30,000, with the result that costs at first instance can be awarded in the absence of special circumstances in accordance with r. 38(2)(b). What was in dispute on the appeal also exceeded $30,000. Therefore, costs of the appeal can also be awarded in the absence of special circumstances in accordance with r.38A(2).
No costs order was originally sought at first instance. K & K Ventures now asks the Appeal Panel to make a costs order with respect to the first instance proceedings and on appeal, on the basis that Mr Attar has now capitulated on the jurisdictional issue which was always a central point of contention between the parties.
Both parties agree that in accordance with r.38(2) of the Rules the Appeal Panel is required to apply "the first instance costs provisions" when determining the costs of an appeal: see also Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116 at [38-39]. The qualification put on this by Mr Attar's submission was that the Appeal Panel's power to award costs is discretionary (relying on Sun v Li (No 2) [2016] NSWCATAP 205 at [19]) and that the discretion should not be exercised in this case.

Principles relevant to the exercise of the discretion to award costs

The nature of the general discretion to award cost under r. 38(2) was considered by the Appeal Panel in Bonita v Shen [2016] NSWCATAP 159: 58. Rule 38 (2)(b) of the NCAT Rules provides that the Tribunal "may" award costs. This provision confers upon the Tribunal a power which may be exercised at the discretion of the Tribunal: see s9 of the Interpretation Act. 59. In Thompson v Chapman [2016] NSCATAP 6, when dealing with r 38(2)(b), the Appeal Panel said at [69]: The starting point in exercising such a discretion is that the "usual order for costs" is that a successful party should be entitled to an order for costs in their favour. 59. The Appeal Panel in Thompson referred to the decisions of the High Court in Latoudis v Casey (1990) 170 CLR 534 and Oshlack v Richmond River Council (1998) 193 CLR 72. 60. In Latoudis McHugh J said at 567: An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v. Noumenon Pty Ltd (1988) 47 SASR 182, at p 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. 61. In Oshlack McHugh J said at 97: The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party[96]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. 62. While McHugh J was in the minority in Oshlack, (which related to an individual seeking to remedy or restrain a breach of the Environmental Planning and Assessment Act, 1979 (NSW), being proceedings authorised by s 123 (1) of that Act), the majority in that case did not disagree with the general principle but rather whether, in the particular circumstances of the case, an order for costs should be made against the unsuccessful plaintiff, Oshlack. 63. On the other hand, where there is a general discretion to award costs there is no absolute rule that the successful party must receive the costs. In Thompson the Appeal Panel said at [71]-[72]: 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 nor is there any rule that a successful party might not be ordered to be of the costs of an unsuccessful party: see Oshlack … per Gaudron and Gummow JJ at 88 and Kirby J at 121-123. 72 The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: (1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made; see for example Bostick Australia Pty Ltd v Liddiard (N0 2) [2009] NSWCA 304; and (2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack … per Gaudron and Gummow JJ at 41-44.
See also Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116 at [32-39].

K & K Venture's submissions

In short, K & K Ventures argue that their costs from the time Mr Attar commenced proceedings in the CCD, until he conceded the appeal, should be allowed. Mr Attar consistently maintained that the Tribunal had jurisdiction to hear his claim under the HB Act. This was so despite K & K Ventures writing to him advising that it did not believe that there was jurisdiction under the HB Act. K & K Ventures notes that the issue of jurisdiction was raised by Senior Member Wilson and that the parties expressly joined issue on whether or not there was jurisdiction under the HB Act in their points of claim and points of defence. K & K says Mr Attar should pay their costs from the time he filed the points of claim on 29 May 2018.
K & K Ventures' solicitors wrote to Mr Attar on 10 August 2018 and 8 October 2018 warning him that his claim was not one under the HB Act and of the costs consequences, if his claim was dismissed, as a result.
The jurisdictional issue was listed for hearing before the Tribunal on 15 November 2018 when Mr Attar was successful. K & K Ventures then appealed that decision.
At the appeal hearing on 11 March 2019, where K & K Ventures maintained its position that there was no jurisdiction under the HB Act, Mr Attar consented to the appeal being allowed. He agreed to file amended points of claim for a reduced amount under the Australian Consumer Law. K & K Ventures describe this as a complete capitulation by Mr Attar.
K & K Ventures relied on the decision of the Western Australian Court of Appeal in Watts -v- RHG Mortgage Corporation Ltd [No 2] [2016] WASCA 17, where the Court said at [7]: It is trite law that while the exercise of the discretion as to costs must be exercised judicially the discretion is otherwise unfettered. Similarly, it is trite law that ordinarily the successful party is entitled to an order for costs. While there has been no determination on the merits in this case, the appeal was allowed by consent in circumstances amounting to a capitulation by the respondent. We did not understand the respondent to press any other view.

Mr Attar's submissions

In submissions Mr Attar points out that he was successful on the jurisdictional issue at first instance. He denies that he capitulated before the Appeal Panel.
He notes that there was no application for costs below, and that in similar circumstances in Mrjana v Imagine Education Australia Pty Ltd [2016] NSWCATAP 232 the Appeal Panel had declined to go into whether special circumstances justifying a costs order had existed at first instance as no application for costs had been made. In our view that decision is of no assistance in the present circumstances, as: 1. this is not a case where special circumstances must be found to for a costs order to be made: and, 2. K & K Ventures were not in a position to seek costs below as the Tribunal had decided against it on the issue of jurisdiction. While Mr Attar is right when he says that there has never been a decision on the merits, the point of dispute, to date, has been jurisdiction.
Mr Attar argues that being put on notice that K & K Ventures would seek costs if it was ultimately successful on the issue of jurisdiction, does not mean that K & K Ventures is entitled to costs.

Consideration

We do not see a way of characterising Mr Attar's consent to K & K Venture's appeal being allowed, other than as complete capitulation on his part. Mr Attar consented to the appeal against the finding that there was jurisdiction under the HB Act being allowed, and to his claim being sent back to start again under the Australian Consumer Law. Given that the issue agitated between the parties until that time was the issue of jurisdiction this represents a complete capitulation.
As the provisions of r. 38 applied, both at first instance and on appeal, we see no basis on the material before us for not making the usual orders as to costs.
With respect to the appeal, Mr Attar should pay the K & K Venture's costs of the appeal.
With respect to the proceedings below, we agree that that Mr Attar should pay the costs of the proceedings from 29 May 2018, when he filed his points of claim asserting a claim under the HB Act, despite being alerted to the fact that there was a real dispute about jurisdiction. While he was not formally legally represented at the time, he did have access to informal legal advice. He chose to pursue his claim under the HB Act, knowing that jurisdiction was in dispute, and that he risked having his claim dismissed if there was no jurisdiction, with likely cost consequences.

Orders

The Appeal Panel makes the following orders: 1. A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013. 2. The Respondent is to pay the Appellant's costs of the appeal, including the submissions on costs, as agreed or assessed, within 28 days of the date of agreement or assessment. 3. The Respondent is to pay the Appellant's costs of proceedings HB 18/13908 from 29 May 2018 onwards, as agreed or assessed, within 28 days of the date of agreement or assessment.

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: 18 July 2019

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