Knox v Bollen; Bollen v Knox

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) NCAT Act.
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on that basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
4. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
5. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
6. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.

Background

1. The parties entered into a cost plus contract for residential building work in September 2015 and work commenced on 13 January 2016. Mr Bollen issued eight progress claims totalling $116,344.46. The last progress claim in the sum of $3651.53 remained unpaid.
2. On 19 July 2016, Mr Bollen suspended works pursuant to cl 19 of the contract. At that time the works were incomplete.

Tribunal proceedings

1. Both parties commenced proceedings in the Tribunal. In amended points of claim dated 8 November 2016, Mr Knox claimed damages for defective work in the sum of approximately $52,380.82 and repayment of approximately $32,296.95, which Mr Knox claimed he had overpaid Mr Bollen and $6,429.63, which Mr Knox claimed as damages for "payment of materials which have not been substantiated".
2. In his application, Mr Bollen sought payment of $3,651.53; that is, the unpaid eighth progress claim.
3. As a result of a conclave, seventeen of the twenty items of claimed defective work were agreed between the parties' expert witnesses. Rectification costs of $13,518.80 (including preliminaries, builder's margin and GST) were agreed. A further amount of $19,528.46 was noted as "agreed if found" and $5,000 was fully in dispute.
4. Mr Knox refused offers to settle the proceedings made by Mr Bollen in August, September and October 2016. Mr Bollen then made a further settlement offer on 26 May 2017. He offered to pay Mr Knox $30,000 within three months of acceptance of the offer, with both proceedings being dismissed with no order as to costs. Mr Knox refused to accept the offer.
5. However, at the hearing on 6 June 2017 the parties entered into binding Heads of Agreement, which were noted by the Tribunal. The essential terms of the agreement were that Mr Bollen would pay Mr Knox $31,000 in full and final settlement of all matters in dispute in both proceedings other than the question of costs. The parties agreed that the issue of costs would be determined on the papers, without a further hearing.
6. The Heads of Agreement also relevantly provided for: 1. The preparation of a Deed of Settlement at Mr Knox's expense, containing the terms of settlement, mutual releases, mutual obligations of confidentiality and mutual obligations of non-disparagement; 2. The notification by Mr Knox to the home owners warranty insurer "on a without admissions basis" that all claims between the parties had been resolved and that there were no other known claims save for the costs of the proceedings; and 3. The notification by Mr Knox to NSW Fair Trading that all pending claims between the parties had been resolved.

Tribunal decision

1. The Tribunal's reasons for decision were published on 16 August 2017. The Tribunal made the following orders: 1. Pursuant to the Civil and Administrative Tribunal Act s 50(2) a hearing on the issue of costs is dispensed with. 2. The builder, Jarrod Michael Bollen, shall pay the homeowner, Christopher Knox's costs as agreed or assessed on the ordinary basis up to and including 26 May 2017. 3. Each party shall pay their own costs thereafter.
2. The Tribunal relevantly found that:

• Mr Bollen's action in commencing and continuing his litigation was entirely reasonable.
• The question of whether or not Mr Knox would have succeeded in his initial claim for a work order valued at around $50,000 and damages of $6370 was never litigated and it was not possible to determine by conducting a hypothetical trial whether Mr Knox would have been successful in full, in part or at all.
• Mr Knox was successful to the tune of about $34,000 (if a deduction is made for Mr Bollen's successful claim) and it is "patently obvious without going through a hypothetical trial and examination of the evidence and submissions that may have been made" that Mr Knox was substantially successful and therefore acted reasonably in commencing his litigation.
• Mr Knox's refusal to accept Mr Bollen's offers to perform work, which were made in August, September and October 2016, was entirely understandable and entirely reasonable as if those offers had been accepted the parties would have remained in dispute over several significant items.
• Mr Bollen's offer of 26 May 2017 was much more certain.
• That offer was only marginally bettered by the agreement made at the hearing, except insofar as the agreement of 6 June 2017 left the costs question to be determined.
• If Mr Knox had accepted the 26 May 2017 offer, further preparation and attendance of the legal representatives and expert witnesses at the hearing would not have been necessary.
• The cost of continuing with Mr Knox's litigation after 26 May 2017 would have significantly exceeded $1000.
• Both parties acted reasonably in commencing proceedings.
• Mr Knox was substantially successful as a result of the settlement reached on 6 June 2017.
• Mr Knox would almost certainly have been substantially successful had the dispute gone to a hearing.
• On that basis, Mr Knox should be awarded costs.
• Mr Knox's refusal of the 26 May 2017 offer was unreasonable and involved the parties in further substantial expense.
• The parties should pay their own costs after 26 May 2017.

The appeals

1. Mr Knox and Mr Bollen both claim, albeit from different perspectives, that the Tribunal's discretion miscarried and that the Tribunal failed to give adequate reasons for aspects of its decision. In addition, Mr Bollen claims that the Tribunal incorrectly applied cl 38 of the Rules to his application, rather than s 30 of the NCAT Act, because his claim was for less than $30,000.
2. In his appeal, Mr Knox focuses on the Tribunal's finding that his refusal of the May 2017 offer was unreasonable in support of his argument that the Tribunal's discretion miscarried. Mr Knox also argues that the Tribunal failed to give adequate reasons for decision for its finding that the refusal of the 26 May 2017 offer was unreasonable.

Submissions and evidence

1. In determining the appeals, we have considered:

• The Notice of Appeal in Mr Knox's appeal;
• The Notice of Appeal in Mr Bollen's appeal;
• Mr Bollen's Reply to Appeal;
• Mr Knox's Reply to Appeal;
• The written submissions made on behalf of the parties;
• The oral submissions made during the appeal hearing; and
• An agreed bundle of documents filed in the appeal proceedings, consisting of documents which were before the Tribunal below in connection with the costs applications, including the Joint Expert Report which resulted from a conclave of expert witnesses and the parties' submissions on costs.

Mr Bollen's appeal

1. Mr Bollen lodged a Notice of Appeal on 17 October 2017, which is outside the 28 day time period specified in rule 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules). At call over, Mr Bollen was given until 10 October 2017 to lodge a cross-appeal. The appeal was lodged outside this period. We will deal with Mr Bollen's application for an extension of time below.
2. Mr Bollen appeals the Tribunal's decision to make a costs order in favour of Mr Knox in Mr Knox's proceedings on the basis that: 1. The Tribunal failed to apply the relevant principles of law in respect of an award of costs where there has been no hearing on the merits. 2. The Tribunal made factual findings in respect of Mr Knox's likely or substantial success in the proceedings that were not open on the available evidence. 3. The Tribunal made inconsistent findings of fact in respect of whether Mr Knox was substantially successful in the proceedings. 4. The Tribunal failed to exercise the discretion provided in rule 38 of the Civil and Administrative Rules 2014 and the decision is so unreasonable that no reasonable decision-maker would have made it. 5. The Tribunal failed to provide adequate reasons for the finding that Mr Knox would have been substantially successful in the proceedings had the proceedings been determined on the merits.
3. Mr Bollen also argues that the Tribunal erred in making any order as to costs in his proceedings on the basis that: 1. The Tribunal failed to apply or properly apply the relevant principles of law in respect of an award of costs in circumstances where there has been no hearing on the merits. 2. His application was subject to s 60 of the NCAT Act and the Tribunal erred in applying rule 38 of the NCAT Rules.
4. Mr Bollen seeks leave to appeal on the basis that the Tribunal's decision to order him to pay Mr Knox's costs up to and including 26 May 2017 was not fair and equitable and against the weight of evidence.

Issues

1. In essence, Mr Bollen argues that the Tribunal's discretion in relation to costs miscarried because the Tribunal did not properly apply the relevant legal principles in respect of the award of costs in circumstances where there has been no hearing on the merits. Mr Bollen argues that the Tribunal made findings of fact that were not available on the evidence and inconsistent findings of fact in relation to Mr Knox's success in the proceedings. He also argues that the Tribunal's reasons for decision in relation to this issue are inadequate.
2. The issues to be determined on Mr Bollen's appeal are: 1. Should time be extended for Mr Bollen's appeal? 2. Did the Tribunal apply the legal principles relevant to an award of costs where there has been no hearing on the merits? 3. Did the Tribunal make inconsistent findings or otherwise err in finding that Mr Knox was almost certain to have been successful? 4. Were the Tribunal's reasons for decision adequate? 5. Did the Tribunal err in ordering Mr Bollen to pay all of the costs of the proceedings, when his application was for payment of less than $30,000? 6. Has Mr Bollen established a basis for leave to appeal and if so, should leave be granted?

Should time be extended for Mr Bollen's appeal?

1. As noted above, Mr Bollen's appeal was lodged on 17 October 2017. This is outside the 28-day period specified in rule 25(4) of the Rules. Accepting that the reasons for decision were sent to the parties on the date of publication, as is the Registrar's usual practice, and allowing four working days for postage, Mr Bollen's appeal should have been lodged by 19 September 2017. The appeal was lodged some four weeks after that date and a week later than the date to which time was extended at the call over.
2. Under s 41 of the NCAT Act, we have the power to extend time to lodge an appeal. An Appeal Panel considered the issues to be considered and the principles to be applied in applications for an extension of time in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22, at [22]. In summary, in deciding whether to extend time, we are required to consider the length of the delay, the reasons for the delay, whether Mr Bollen has a reasonably arguable case and the extent of any prejudice that Mr Knox might suffer were time extended.
3. In relation to the length of the delay, the appeal was lodged some four weeks late, which is not insignificant. However, as time to lodge the appeal was extended to 10 October 2017, the further delay to 17 October 2017 is relatively short.
4. In relation to the reasons for the delay, Mr Bollen states in the Notice of Appeal that the appeal was not lodged by 10 October because of his Counsel's availability. We assume that this means that Mr Bollen's Counsel was unavailable to review the Notice. This is not, in our view, a satisfactory explanation for a further delay in lodging the Notice of Appeal. Given that Mr Bollen has at all relevant times been legally represented, we see no reason why the Notice of Appeal could not have been lodged without being reviewed by Counsel.
5. In relation to prejudice to Mr Knox, we are not satisfied that any prejudice has been established. Mr Knox had a full opportunity to respond to Mr Bollen's grounds of appeal.
6. As far as the merits of the appeal are concerned, we will deal with this below in considering Mr Bollen's grounds of appeal. We have reached the conclusion that Mr Bollen's appeal does not have substantial merit.
7. Despite the lack of prejudice to Mr Knox, we have concluded that in view of the unsatisfactory reason for the delay in lodging the appeal and its lack of substantial merit, time should not be extended.

Did the Tribunal apply the legal principles relevant to an award of costs where there has been no hearing on the merits?

1. In considering whether the Tribunal has applied the correct legal principles, it is helpful to set out the statutory regime that applies to costs applications in the Consumer and Commercial Division of the Tribunal, as well as the principles relevant to the determination of costs where applications have not been decided on the merits.
2. 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.
3. However, cl 38 of the Rules modifies the application of s 60 in proceedings before the Consumer and Commercial Division of the Tribunal. Clause 38(2)(a) provides that in proceedings where the amount claimed or in dispute is more than $30,000, the Tribunal may award costs in the absence of special circumstances.
4. In this case, the amount claimed in Mr Knox's application was more than $30,000. Clause 38 of the NCAT Rules therefore applies. The amount claimed in Mr Bollen's application was less than $30,000.
5. In matters where cl 38 applies, the Tribunal has a wide discretion to make an order for costs. Clause 38 does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9].
6. Where an application has been heard and determined on the merits and cl 38 applies, the appropriate starting point for the exercise of the discretion is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that "costs follow the event" and that a party who is successful is entitled to an order for costs in its favour. This principle is subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.
7. However, this principle does not apply in proceedings that are not determined on the merits.
8. In Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622; (1997) 143 ALR 1; (1997) 71 ALJR 533 (28 February 1997) (Lai Qin), McHugh J described circumstances in which the discretion to make a costs order may be exercised in the absence of a hearing on the merits (citations omitted): 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. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. 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. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. 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. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. 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. This approach has been adopted in a large number of cases.
9. One of the judgments cited in Lai Qin is that of Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194; 116 ALR 523, who examined a number of authorities (at [31]) and concluded that they supported the following propositions: (1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order: Stratford [J.T. Stratford and Son Ltd v Lindley (No. 2) (1969) 1 WLR 1547] and the SEQEB case [The South East Queensland Electricity Board v Australian Telecommunications Commission]. (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial: Stratford (supra). This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB (supra)). (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation: cf Sunday Times Newspaper Company Ltd v McIntosh [1933] NSWStRp 37; (1933) 33 SR NSW 371. (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd (In Liq.) and the Companies Act (1973) 1 NSWLR 603 at 606, a case which, however, depended upon the specific wording of the statute under consideration.
10. The issue of costs in cases where the substantive issue in dispute has been resolved without a hearing on the merits was also considered by Burchett J in ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, (ONE.TEL Ltd) who stated, at 553 [6]: …[I]t is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs….
11. In its reasons for decision, the Tribunal correctly identified that there are circumstances in which an order for costs may be made when there has been no hearing on the merits and cited Lai Qin in this regard.
12. It is clear that the Tribunal understood that in determining the parties' costs applications, a relevant consideration was whether the parties acted reasonably in commencing and continuing the proceedings. The Tribunal concluded that both parties acted reasonably in commencing the proceedings. This finding has not been disputed on appeal.
13. It is also clear that the Tribunal understood that whether one of the parties was almost certain to have been successful if the matter had proceeded to a hearing was a relevant consideration in determining costs.

Did the Tribunal make inconsistent findings or otherwise err in finding that Mr Knox was almost certain to have been successful?

1. In relation to whether Mr Knox was almost certain to have been successful, in his submissions Mr Bollen argues that the Tribunal made inconsistent findings at [44] in relation to this issue. At [44] of the reasons, the Tribunal stated: 44 Secondly, the homeowner initially sought a work order valued at around $50,000 together with damages of $6370. The question of whether or not the homeowner would succeed in that claim was never litigated and it is not possible for me to determine by conducting a hypothetical trial whether the homeowner would have been successful in full or in part, or not at all. What is not disputed is that the homeowner was successful to the tune of about $34,000 (if we allow for the deduction of the successful builder's claim). Hence it is patently obvious that without going through a hypothetical trial and examination of the evidence and submissions that may have been made, the homeowner was substantially successful and therefore acted reasonably in commencing his litigation in an attempt to recover from the builder.
2. The Tribunal appears to express conflicting views in this paragraph of the reasons. On the one hand, the Tribunal states that whether or not Mr Knox would have been successful in his claim was not litigated could not be litigated without conducting a hypothetical trial. On the other hand, the Tribunal expresses the view that Mr Knox was substantially successful, because of the settlement outcome.
3. However, the Tribunal's decision that Mr Bollen should pay Mr Knox's costs until 26 May 2017 and that the parties pay their own costs thereafter is clearly based on the Tribunal's findings at [48] to [51] of the reasons for decision that: 1. If the matter had gone to hearing, Mr Knox was "almost certain to have been substantially successful" because of the settlement reached on 6 June 2017; and 2. Mr Knox's conduct in continuing with the litigation was unreasonable because: 1. the offer that Mr Knox accepted was only "marginally bettered" by the agreement made at the hearing; 2. the cost of continuing with the litigation after 26 May would "without doubt have significantly exceeded $1000"; and 3. the refusal of the 26 May 2017 offer involved the parties in further substantial expense.
4. The reasons for decision demonstrate that the Tribunal understood that whether the parties were reasonable in maintaining the proceedings and whether one or other of the parties was almost certain to have been successful are the principles relevant to costs applications where matters have not been decided on the merits.
5. The finding that Mr Knox was almost certain to have been successful if the matter had gone to a hearing was a finding of fact. We are of the view that making that finding on the basis of the Heads of Agreement is problematic, given that parties typically decide to settle litigation for a range of reasons, which are not necessarily dependent on the merits of the case. The fact that proceedings are settled by one party agreeing to pay the other party a sum of money, even a significant sum of money, does not mean that this would have been the outcome achieved at the hearing.
6. However, the Joint Scott Schedule was before the Tribunal and it was open to the Tribunal to take that document into account in determining the likelihood of success of one or other of the parties. We note Mr Knox's submission that he would have received "at least $13,518.80 in agreed defective items", or "$9,867.27 if the Builder was entirely successful with its claim". We do not fully accept Mr Knox's submission in this regard. In relation to this, although most of the agreed items in the conclave report relate to defective work, item 3 (pad footings) and item 4 (removal of debris) are recorded as "agreed incomplete work". Item 2 (temporary timber columns) is also recorded as "agreed incomplete work", except for "saw cutting the footpath". As the contract between the parties was entered into on a costs plus basis, Mr Bollen would not necessarily have been liable for any work found to be incomplete rather than defective.
7. Had Mr Bollen been able to establish that Mr Knox was not entitled to claim for incomplete work, at least those items would have been excluded from any decision made in favour of Mr Knox. However, insofar as the parties' expert witnesses agreed that a number of the items of work undertaken by Mr Bollen were defective and required rectification, we conclude that it was open to the Tribunal to find that Mr Knox was almost certain to have been successful had his case been heard. This is so even accepting the possibility that Mr Knox may not have been able to establish his entire claim.
8. We conclude that it was open to the Tribunal to find that Mr Knox was almost certain to have been the successful party. The Tribunal's use of the expression "substantially successful" rather than "successful" does not make any difference to our conclusion in this regard. This is consistent with the view expressed by the High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; 185 CLR 259; 70 ALJR 568; 136 ALR 481; 41 ALD 1 at [30], in which Brennan CJ, Toohey, McHugh and Gummow JJ cited with approval the Full Federal Court's remarks in Collector of Customs v Pozzolanic (1993) 43 FCR 280 that a court "should not be concerned with looseness in the language ... nor with unhappy phrasing" of the reasons of an administrative decision-maker and that [t]he reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error". While those remarks were made in the context of judicial review of administrative decisions, they are equally relevant to the review of the reasons for decision of the Tribunal at first instance.
9. In such circumstances, while issue can be taken with the Tribunal's reasoning that the Heads of Agreement form the basis for concluding that Mr Knox was almost certain to have been successful had the matter gone to hearing, we conclude that such a finding was open to the Tribunal on the available evidence.
10. Accordingly, we are not satisfied that Mr Bollen has established that the Tribunal erred in its application of the relevant legal principles or its finding that Mr Knox was almost certain to have been successful had the matter been heard.

Were the Tribunal's reasons for decision adequate?

1. Mr Bollen argues that the Tribunal did not give adequate reasons for its finding that Mr Knox would almost certainly have been substantially successful if the matter had gone to a hearing.
2. The requirement that reasons for decision be adequate has been extensively considered both judicially and by the Appeal Panel.
3. In Pollard v RRR Corporation Pty Limited [2009] NSWCA 110 McColl JA, with whom Ipp JA and Bryson AJA agreed, identified the principles relevant to the issue of adequacy of reasons. Those observations were summarised as follows in Moussa Enterprises Pty Ltd v Stanford [2015] NSWCATAP 99 at [30]: (1) The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes "a sense of grievance" and denies "both the fact and the appearance of justice having been done", thus working a miscarriage of justice. (2) The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. (3) While a judge is not obliged to spell out every detail of the process of reasoning to a finding, it is essential to expose the reasons for resolving a point critical to the contest between the parties. (4) The reasons must do justice to the issues posed by the parties' cases. Discharge of this obligation is necessary to enable the parties to identify the basis of the judge's decision and the extent to which their arguments had been understood and accepted. (5) Because a primary judge is bound to state his or her reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Where it is apparent from a judgment that no analysis was made of evidence competing with evidence apparently accepted and no explanation is given in the judgment for rejecting it, it is apparent that the process of fact finding miscarried.
4. In Hernady v Raccani [2016] NSWCATAP 67 at [44] the Appeal Panel further considered the authorities concerning the extent of the requirement to give reasons for decision noting that: (1) the content and detail of the reasons for decisions to be provided will vary according to the nature of the jurisdiction which the body in question is exercising and the particular matter the subject of the decision - Wainohu v New South Wales (2011) 243 CLR 181 at [56]; (2) the administration of justice in this regard requires a pragmatic and functional approach to the obligations imposed upon decision makers at first instance - Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [46]; (3) not only is the obligation not universal in nature, but it is variable in its content and whilst transparency in decision-making is an important value, it is not cost free, and may involve separate parameters of quantity and quality - Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [48].
5. We are satisfied that the Tribunal's reasons for decision and in particular, its basis for deciding that Mr Knox was almost certain to have been successful were adequate. The basis for the Tribunal's conclusions in relation to the relevant issues is clearly expressed and the evidence on which the Tribunal based its findings is identified. In any event, we consider that it is not the adequacy of the Tribunal's reasons that is at issue in Mr Bollen's appeal, but the Tribunal's conclusion concerning Mr Knox's likely degree of success.
6. This ground of appeal fails.

Did the Tribunal err in ordering Mr Bollen to pay all of the costs of the proceedings, when his application was for payment of less than $30,000?

1. As noted above, cl 38 of the Rules only applies in circumstances where the amount claimed or in dispute in the proceedings exceeds $30,000. Otherwise, s 60 of the NCAT Act applies and special circumstances must be established warranting an order for costs of the proceedings.
2. While what was claimed and in dispute in Mr Knox's application was more than $30,000, what Mr Bollen claimed in his application was less than $30,000. In making an order for costs, the Tribunal did not distinguish between the two applications.
3. In Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 (Allen v TriCare), the Appeal Panel, in determining whether s 60 or cl 38 should apply to the costs of appeal proceedings, considered the meaning of "proceedings". The Appeal Panel found, at [37] to [38]: 37. … "P]roceedings" refers to the process set in motion, or commenced, by lodging an application or notice of appeal. That process includes the steps taken by the Tribunal to hear and determine whether to grant the relief sought in the application or notice of appeal, as well as any interlocutory or ancillary steps. Proceedings are defined by the subject matter raised in the application or notice of appeal. The participants in proceedings are limited to the parties determined in accordance with s 44 of the NCAT Act and the NCAT Rules. 38. The Tribunal may hear two or more proceedings at the same time, especially if that is conducive to the just, quick and cheap resolution of the real issues in each set of proceedings, as required by s 36(1) and (2) of the NCAT Act. Nothing in the NCAT Act or the NCAT Rules suggests, however, that when such proceedings are heard together there is only one set of proceedings rather than two or more separate proceedings, absent an order of the Tribunal in effect consolidating the different sets of proceedings into one.
4. In this case, there were two applications and no order was made consolidating the proceedings into one. However, we conclude that the present case can be distinguished from that in Allen v TriCare.
5. Allen v TriCare involved a number of applications brought by different applicants against the same respondent. The applications, while they involved the same issues, arose from separate site agreements. They were heard together as a matter of convenience to the parties and the Tribunal.
6. However, in this case, the applications involve the same parties and arise from the same contract. While the NCAT Act and the Tribunal's procedures do not provide for cross-claims, Mr Bollen's debt recovery application against Mr Knox was in the nature of a cross-claim and can be characterised as part of his defence to Mr Knox's application. Further, Mr Knox's application for payment of damages for breach of statutory warranty and breach of contract can also be characterised as a defence to Mr Bollen's debt recovery claim. In our view, this constitutes a basis for concluding that the two applications should be characterised as part of the same proceedings.
7. Furthermore, the Appeal Panel in Allen v Tricare at [57] found that whether the amount in dispute in an appeal was more than $30,000 depended on: whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000;
8. We are of the view that the same reasoning can be applied to Mr Knox and Mr Bollen's dispute before the Tribunal; that is, what was effectively in dispute in each application meant that there was a realistic prospect that the wealth of one or other of the parties could be changed by more than $30,000. In these circumstances, we do not discern any error in the Tribunal not applying s 60 of the NCAT Act to the costs of Mr Bollen's application at first instance and making an award of costs without a finding concerning special circumstances.
9. Even if we are wrong in our conclusion on this point, we have before us Mr Bollen's submissions on costs to the Tribunal below. Mr Bollen did not submit in defence of Mr Knox's application for costs or in support of his own application that an order for costs in relation to his application should only be made if special circumstances were established. In such circumstances, it would not be fair or appropriate for Mr Bollen to argue this point on appeal.
10. This ground of appeal fails.

Has Mr Bollen established a basis for leave to appeal and if so, should leave be granted?

1. Mr Bollen seeks leave to appeal on the basis that the decision was not fair and equitable and against the weight of evidence.
2. For the reasons set out above in respect of Mr Bollen's grounds of appeal, we are not satisfied that Mr Bollen may have suffered a substantial miscarriage of justice. Even if that were the case, we would not grant leave to appeal, as we are not satisfied that the principles set out by the Appeal Panel in Collins v Urban apply.

Conclusion on Mr Bollen's appeal

1. We are not satisfied that Mr Bollen has established any of his grounds of appeal. We have accordingly refused his application for an extension of time to appeal and dismissed his appeal.

Mr Knox's appeal

1. Mr Knox lodged a Notice of Appeal on 12 September 2017, which is within the 28 day time period specified in rule 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules).
2. Mr Knox appeals the Tribunal's decision on three grounds: 1. The Tribunal erred in finding that his refusal of the 26 May 2017 offer was unreasonable, as there was no evidence to support such a finding. 2. The Tribunal failed to provide adequate reasons as to why he acted unreasonably in refusing the offer of 26 May 2017. 3. In failing to award costs on an ordinary basis for the entire proceedings, the Tribunal's discretion miscarried.
3. Mr Knox also seeks leave to appeal on the basis that the decision not to award costs for the entire proceedings was not fair and equitable or alternatively against the weight of evidence.
4. In essence, Mr Knox's appeal focuses entirely on the Tribunal's finding that Mr Knox's rejection of the 26 May 2017 offer was unreasonable.

Issues

1. The issues to be determined on Mr Knox's appeal are: 1. Did the Tribunal err in finding that his refusal of the 26 May 2017 offer was unreasonable? 2. Were the Tribunal's reasons for deciding that Mr Knox's refusal of the 26 May 2017 offer was unreasonable, inadequate? 3. Has Mr Knox established a basis for leave to appeal and if so, should leave be granted?

Did the Tribunal err in finding that his refusal of the 26 May 2017 offer was unreasonable?

1. In summary, Mr Knox argues that:

• The 26 May 2017 offer was an inclusive of costs offer.
• There was no evidence before the Tribunal as to what amount of costs each party had incurred as at 26 May 2017.
• There was no evidence before the Tribunal as to what further costs Mr Knox incurred between 26 May 2017 and 6 June 2017 (the hearing date).
• The Tribunal was unable to determine whether the 26 May 2017 was equal to or better than the result obtained by Mr Knox in the Heads of Agreement.

1. In relation to the 26 May 2017 offer, we do not accept that it was an inclusive of costs offer. Rather, it was an offer that each party pay its own costs.
2. In any event, the issue for the Tribunal to decide was not whether the settlement offer was bettered. It was whether Mr Knox's conduct in refusing the offer could be characterised as unreasonable for the purpose of the application of the principles relevant to costs in matters not determined on the merits.
3. The Tribunal's findings in relation to this issue are set out at [47] to [51]. The Tribunal relevantly found:

• The offer of 26 May 2017 was only "marginally bettered" by the offer reached at the hearing, except that the Heads of Agreement left the question of costs to be determined.
• Had Mr Knox accepted the 26 May 2017 offer then further preparation and attendance of legal representatives and expert witnesses on 6 June 2017 would not have been required.
• The cost of continuing with the litigation after 26 May 201 would without doubt have exceeded $1000.
• Mr Knox's refusal of the 26 May 2017 offer was unreasonable and involved the parties incurring further substantial expenses.

1. We conclude that it was open to the Tribunal to make such findings.
2. First, Mr Knox claims that the offer he accepted was really in the amount of about $34,000 (taking into account the sum in Mr Bollen's cross-application) and that the difference between the 26 May 2017 offer and the 6 June 2017 was more than $1000. We do not accept this submission. Other than the chance to make a costs application, the net difference between the two offers was $1000, not $3000.
3. Second, it is clear to us that had the 26 May 2017 offer been accepted, the parties would have been spared additional costs they were bound to incur in connection with a hearing. We are of the view that the Tribunal could make a finding in relation to this issue without having details of the legal and witness costs before it.
4. Third, there is no evidence of Mr Knox having made a counter offer after 26 May 2017 but before 6 June 2017.
5. We conclude that it was open to the Tribunal in such circumstances to conclude that pressing on with the litigation past 26 May was unreasonable conduct that merited limiting the costs order otherwise made in Mr Knox's favour. We are satisfied that there was evidence to support such a finding.
6. This ground of appeal fails.

Were the Tribunal's reasons for deciding that Mr Knox's refusal of the 26 May 2017 offer was unreasonable, inadequate?

1. Mr Knox argues that the Tribunal did not give adequate reasons for its finding that he had unreasonably refused the 26 May 2017 settlement offer.
2. We are satisfied that the Tribunal's reasons for determining that Mr Knox's refusal of the 26 May 2017 were adequate. The principles in relation to adequacy of reasons are set out above. The Tribunal's reasons for finding that Mr Knox had unreasonably refused to accept the 26 May 2017 offer are clearly expressed. In any event, we agree with Mr Bollen's submission that Mr Knox's complaint is not directed at the reasoning process, but at the Tribunal's finding.
3. This ground of appeal fails.

Has Mr Knox established a basis for leave to appeal and if so, should leave be granted?

1. Mr Knox seeks leave to appeal on the basis that the decision was not fair and equitable and against the weight of evidence.
2. We are not satisfied that Mr Knox may have suffered a substantial miscarriage of justice because of the Tribunal's decision limiting the award of costs. In any event, even if that were the case we would not grant leave to appeal, as we are not satisfied that the principles set out by the Appeal Panel in Collins v Urban apply.

Conclusion

1. We are not satisfied that the Tribunal's discretion in relation to costs miscarried. The Tribunal understood and applied the relevant legal principles and its factual findings were open to it. While another Tribunal Member may have made a different decision on costs, we are not satisfied that either party has established that the Tribunal's discretion miscarried. We have accordingly refused an extension of time for Mr Bollen's appeal, refused leave to appeal and dismissed both appeals.

Costs

1. As both parties have been unsuccessful, our view is that the parties should pay their own costs of the appeal. However, we have made procedural directions in the event that either party seeks to make an application for costs.

Orders

1. The following orders are made in Mr Knox's appeal (AP 17/39697): 1. Leave to appeal is refused. 2. The appeal is dismissed.
2. The following orders are made in Mr Bollen's appeal (AP 17/45110): 1. The application for an extension of time is refused. 2. Leave to appeal is refused. 3. The appeal is dismissed.
3. The following orders are made in respect of the costs of both appeals: 1. Any application for costs is to be filed and served within 14 days of the date of these orders and is to be accompanied by a submission not exceeding three pages in length. 2. Any evidence or submissions in response to a costs application is to be filed and served within 14 days thereafter. 3. Any material in reply is to be filed and served within 7 days thereafter.

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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: 04 May 2018