At the conclusion of the hearing of the appeal on 21 November 2017, after a brief adjournment we indicated that the appeal would be dismissed, with reasons to be delivered in writing later. We then heard the parties on costs and received whatever evidence on costs the parties wished to tender.
These are our written reasons for dismissing the appeal followed by our decision on costs and reasons for that decision.
[2]
Reasons for dismissing the appeal
On 6 September 2017 the primary Member dismissed the appellant owners' claim for a refund of $4,950 in HB17/18956 and ordered the owners to pay the respondent builder's claim of $1,000 in HB17/25191.
The owners appealed both decisions.
The owners had said in essence that the builder had designed a granny flat inadequately so was not entitled to be paid and then had claimed further money beyond the contract sum of $4,950. The granny flat was an addition to a home in Bungaribee NSW. It was common ground there was a written contract for the design work. The primary member's finding of jurisdiction has not been disputed.
The primary member found that the design contract, not particularly clearly, provided for payment for the design work but there would be deduction of that payment from the total contract price under a building contract if the owners went ahead with the builder. A quotation for design and build had been provided to the owners by the builder. The design contract provided for agreed written variations.
The builder said in essence that the owners kept changing the plans the builder delivered under written variation, the builder invoiced them eventually for the variations an extra $1,000 (creditable against the building contract price) when in reality it had done $2,750 more work beyond what had been the original contracted work, that the builder had undertaken the variation work on the basis that it anticipated that the owners would contract with it as builder, and that the owners had gone elsewhere and were seeking to resist further payment and claiming a refund based on the plans obtained and the work done elsewhere when the comparative basis was not established.
The owners said at hearing that the builder did not perform the design contract because it only partially provided the contracted work and part of the work provided had a limited lifetime and could no longer be used.
The builder, the primary member found, had provided evidence of the contracted work as provided to the owners.
The primary member found that the owners bore the onus to establish their claim and had not satisfied her that the builder failed to comply with the contract terms. The primary member then found that the builder on its evidence had complied with the contract terms and that the design process would normally take 3 months but that the variation process continued for over 18 months before the owners terminated the contract.
The primary member then did not accept the owners' contention that they had not been able to use any of the design work carried out by the builder "as the homeowner has provided little independent evidence to support his claim."
The primary member then rejected the owners' attempt, during the hearing, to introduce into evidence finalised plans from another design contractor. The primary member said in relevant part:
"The home owner was not able to provide any reasonable explanation as to why this evidence had not been submitted prior to the day of the hearing, in accordance with Tribunal directions. The building plans were shown to [the builder] who opposed the evidence being submitted. [The builder] argued that the plans would need to be shown to its specialised design and construction experts to be able to interpret and those specialists were not available at the hearing. The Tribunal determined that it would be procedurally unfair to allow the home owner to rely on that evidence at the hearing, particularly as no reasonable explanation has been provided as to why the evidence had not been previously submitted. Even if the Tribunal was wrong in not allowing the evidence to be submitted, the fact that another builder has prepared plans that the home owner believes are more detailed than those of [the builder], does not of itself establish that [the builder has] not complied with the terms of the contract."
The Tribunal then asked the owners to provide any evidence that the builder's plans were not sufficient for development approval or any expert analysis of the builder's plans for their inadequacy. None was forthcoming.
The Tribunal went on to find that the builder performed in substance the contract, performed agreed variations for which the owners did not wish to pay, and in the alternative was entitled in restitution as there was no total failure of consideration and no severable contract. The Tribunal pointed to the evidence supporting the owners' agreement to variations.
The primary member found that the evidence supported agreement to $1,000 as the price for the agreed variations, but no more.
On the hearing of the appeal the owners stated but did not develop any of the grounds in the appeal notice beyond an error of law in alleged failure to extend procedural fairness in relation to the plans prepared by another design contractor.
Even if the grounds specified in the notice of appeal other than that limited procedural fairness ground had been developed, it seems to us that they were essentially questions of fact which would not have attracted a grant of leave. There was no demonstrated conclusion that the findings were in any of the categories in Sch 4 rule 12(1) of the Civil and Administrative Tribunal Act 2014 (NSW) nor that, as a consequence of the presence of matters within one of those categories, the owners may have suffered a substantial miscarriage of justice: Collins v Urban [2014] NSWCATAP 17 at [65]-[79].
The alleged absence of procedural fairness was extended in submissions (oral and written) well beyond the limited appeal ground on procedural fairness in the notice of appeal.
This extension was done at the last moment, as considered further below, in draft on the afternoon before the appeal hearing, and in final form together with what was said to be a typed transcript of the recording of the primary hearing, late on the morning of the afternoon appeal hearing.
Access to the recording had been provided by the builder's solicitor some 2 weeks before the owners' submissions and other material was due under directions made to prepare the appeal for hearing. As is usual, those directions imposed on the appellant owners the obligation to provide the sound recording and a transcript. Those directions contained the usual warning that non-compliance may result in the party not being allowed to rely upon the non-compliant material.
As developed in the non-compliant written and oral submissions, the appellant owners extended the complaint about procedural fairness beyond the issue of the rejection of the plans provided by another design contractor. It also was alleged that the builder had access to legal advice at the hearing and the owners did not and that the primary member failed appropriately to advise the owners of the practices and procedures of the Tribunal and the need to obtain legal advice, in contravention of s 38(5) of the Civil and Administrative Tribunal Act 2013 (NSW) (CATA).
The submission about legal advice was built on one statement by the builder which is ambiguous and went against all other indications. As said above, the transcript in which it appeared was presented to the builder's solicitor late on the morning of the appeal hearing and that solicitor had not had the opportunity to check its accuracy. The comment relied upon by the owners appeared in this context:
"[Member to builder's representative after the male owner had been affirmed prior to giving evidence] are you going to be presenting?
[builder's representative] Yeah I will be presenting. I may have some assistance from my solicitor.
[Member] I don't have any difficulty hearing evidence from more than one person but what happens is if I don't lay this ground rule down from the beginning, you will start bouncing off each other. That makes it really difficult for me to hear and understand the evidence. So what I would like is one of you give the evidence and the other checks the evidence from the other party if you want me to."
The builder's representative who had been speaking was then sworn in, so both parties' witnesses had then been affirmed or sworn.
In that context it appears that there was a choice at that point between persons present for the builder as to who was to give evidence and who was to check the other party's evidence. That suggests to us the word "solicitor" should have been transcribed "assistant" or similar, because otherwise there would not have been the choice to be made between builder's personnel as to who was to give the evidence for the builder about events where only the builder had direct knowledge.
Such becomes clearer towards the end of the transcript where another builder's representative was affirmed and gave evidence of direct knowledge about the business and variation process including how long a design normally took. In the course of that evidence he referred to the presence for the builder at the hearing of its director, construction manager and project manager.
There was no appearance by a lawyer for the builder in the hearing. There was no evidence that a lawyer was present in court for the builder. There was no reference in the transcript to participation for the builder by a lawyer in the hearing apart from the one anomalous and ambiguous statement. Neither party sought leave to be legally represented at the primary hearing. There was no grant of leave for either party to be legally represented at the primary hearing. For a dispute of this size and nature, it would be unusual to grant leave for legal representation at the primary hearing.
It should be noted that Senior Member Burton SC listened to the precise part of the transcript which is reproduced above and did not hear the words "from my solicitor"; the recording finished at "assistance", which would reinforce the foregoing conclusion. However, it is not necessary to rely on that. The other reasons we have given are sufficient to find the builder was not legally represented at the primary hearing.
As to the alleged absence of procedural fairness in relation to the alternative plans, there was no attempt by the owners to lead evidence at the primary hearing about the instructions given to the alternative plan drawer, compared with the contractual instructions, and no evidence about the compliance requirements at the point in time the contractual and the alternative plans were submitted. Without such evidence, the alternative plans did not even reach the starting gate of relevance.
As to appropriate advice to a self-represented litigant when both litigants are self-represented, in a type of hearing where leave for legal representation is required and a grant of leave depends on the nature of the case (complexity of issues, amount in question, and so on), we are not persuaded from the transcript to which the owners' advocate took us that the primary member did other than what she was required to do: cp Bauskis v Liew [2013] NSWCA 297 at [66] et seq.
This conclusion is reinforced by the fact that there is information available on the Tribunal's website to self-represented litigants which covers Tribunal processes and procedures and warns litigants to consider obtaining legal advice. The directions made to prepare a matter for hearing frequently require notice to the other party to be given if a witness is required for cross-examination. The owners' advocate did not draw our attention to any absence of such a direction in the present case.
Much of the case law cited by the owners' advocate was not directed to the current situation, where there was no imbalance brought about by one party being represented and the other not and where there was the need to obtain leave for legal representation, the grant of which is dependent on the nature of the case. The case law itself acknowledges that the content of what is required depends on the nature of the proceedings; cp Bauskis v Liew, above.
The degree of explanation about procedure, including about the opportunity to cross-examine, varies according to the nature of the evidence before the Tribunal in a particular case: Gallo v Duflou [2014] NSWCATAP 115 and authority cited therein, especially at [26]-[27] being Cheung v Yang [2013] NSWSC 1694.
It is clear that in the present case the competing claims rose or fell on the basis of whether as an objective conclusion of fact the documents in evidence that the builder had prepared met or did not meet the contract requirements, and whether or not on the documents there was agreement to written variations and the cost of those agreed variations. The primary member's findings reflected that objective analysis and the conclusions therefrom, including in the light of an absence of objective evidence from the owners.
In any event, in a passage in the transcript at the outset of the hearing to which our attention was not specifically drawn by the owner's advocate (who had submitted this typed transcript on the morning of the appeal hearing), the primary member said the following, having said shortly beforehand "I will then explain the legal process to you, then we will formally commence these proceedings":
"So this is how we're going to proceed today. I hear first from the home owner, and then the builder. I'll give you both an opportunity to reply to each other's documents as well as ask any questions that you may have of each other and then make submissions to the Tribunal before the hearing is finalised this afternoon. … It is important to understand the role of the Tribunal. I'm going to listen to what you have to say, I'm going to look at the written material you have provided, I'm going to look at the actual facts of the case are. And then I'm going to apply those facts to establish legal principle. So I'm going to apply the law to the facts of your case. … Are there any questions about how we're going to be proceeding this afternoon?" (emphasis added)
This was in a longer passage explaining the difference between subjective opinion and the evidence to which the law was applied and the benefit of alternative dispute resolution. There were no questions in response to the member's inquiry quoted above.
There was nothing out of the ordinary in the way that the primary member dealt with the late attempt to introduce the plans in non-compliance with directions. What the primary member said in her reasons was congruent with what she said as recorded in the transcript at the time the tender of the alternative plans was rejected. An adjournment in those circumstances, which was required only because the compliant party needed an opportunity to deal with late evidence sought to be introduced in breach of directions, would be highly unusual.
The foregoing does not need to delve into which written transcript of the recorded hearing was accurate where they differed. The foregoing is a clear conclusion on either version.
However, as the builder's written and oral submissions pointed out, the history of non-compliance by the owner with directions in the primary hearing continued with the preparation of the appeal. The builder received a draft of the written submissions from the owners' advocate only on the day before the appeal hearing and received the final written submissions and transcript late on the morning of the appeal hearing itself. That was a complete reversal of the directed and usual process. Apparently it also occurred in respect of the owners' failed application for a stay of the primary orders.
[3]
Costs
After our decision was announced, the builder tendered a letter dated 27 October 2017 (written after the owners' stay application had been refused on 19 October 2017), offering to give up its claim for $1,000 if the appeal was not pressed and giving reasons justifying the basis for that offer.
This offer was not accepted by the owners. These circumstances justify an award of indemnity costs from a reasonable period after the date of the offer. In the circumstances of a hearing on 21 November 2017, the offer period till 5pm on 1 November 2017 was not unreasonable for consideration of and a decision on the offer.
Accordingly, it seems appropriate to award costs on an indemnity basis as agreed or assessed for the successful builder's costs of the appeal at least from 2 November 2017 as a special circumstance under CATA s 60(3)(g).
The owners drew attention to the condition imposed, on 19 October 2017, on the grant of leave for legal representation on appeal, namely, that leave for legal representation was granted on condition that no legal costs would be payable by either party to the other.
The builder's written submissions, lodged and served on 16 November 2017 in accordance with directions, made it clear that the builder intended to apply for a variation at the appeal hearing of that interlocutory order so as to permit the costs consequences of offers to be considered.
It seems to us that leave could reasonably have been granted for legal representation in this appeal without imposition of such a condition. The matters raised in the notice of appeal justified a grant of leave for legal representation which was not opposed.
When an offer is served, there can be no real incentive for proper consideration of and response to that offer if costs are entirely precluded. That would be contrary to the guiding principles found in CATA ss 36 and 37, which impose on the parties the obligation to promote, as part of just, quick and cheap resolution, alternatives to imposed decisions to resolve disputes. .
In those circumstances, we consider it appropriate to vary the interlocutory terms of grant of leave to allow the award of costs on whatever basis is appropriate under CATA s 60.
We note that the builder's offer of 27 October 2017 acknowledged the restriction on costs in the orders of 19 October 2017 and focused on enforcement of the payment order in its favour on which a stay had been refused.
Despite that basis, in the circumstances outlined above, the fact that the builder was prepared to forego enforcement of its claim in order to end the matter, which would have saved private and public resources, in itself is a reason justifying the award of indemnity costs.
Further, it is in the interests of public policy that appeals with little prospect of success should not be brought; an absence of likely success is frequently signalled by refusal of a stay and the builder's written submissions opposing a stay, attached to its final written submissions in support of costs, focused on the misconceived nature of the appeals: CATA s 60(2), (3)(c), (e), (f), (g).
Additionally, we draw attention, as did the builder, to the chronic, indeed flagrant, history of non-compliance by the owners with procedural orders at every stage of the proceedings, which in itself would justify indemnity costs under s 60(3)(a). We reiterate that the appeal as developed on the morning of and at the hearing was a substantial departure from the appeal as stated in the notice of appeal.
In those circumstances, we consider it appropriate to extend the award of indemnity costs to the entirety of the appeal.
[4]
Orders
1. Appeal dismissed.
2. Order that the appellant is to pay the respondent's costs of the appeal as agreed or assessed on the indemnity basis.
[5]
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: 29 May 2018