Reasons for Decision in these proceedings were provided on 18 November 2020 in HB 19/36627 & HB 20/19310. The applicants were successful in both sets of proceedings.
Orders were made for the filing of submissions in the event that a party was minded to make an application for costs.
The applicants have made an application for costs and have filed submissions in support. The respondent has not filed submissions in relation to the costs issue.
The applicants state that they are content to have the question of costs determined on the basis of the parties' submissions without the need for a hearing. I will make an order to that effect.
[2]
Costs Jurisdiction
Section 60 of the Civil and Administrative Tribunal Act 2013 ('CAT' Act) creates the general rule that each party to proceedings must pay their own costs: s60(1). I may order costs only "if satisfied that there are special circumstances warranting an award of costs" (emphasis added): s60(2). Section 60(3) sets out a non-exhaustive list of factors that may be considered in deciding whether there are special circumstances warranting an award of costs.
The term "special circumstances" is not defined by the CAT Act. It has been interpreted to mean circumstances that are out of the ordinary, but not necessarily extraordinary or exceptional. The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs.
Rule 38 of the Civil and Administrative Tribunal Rules 2014 ('NCAT Rules') states:
'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.'
Part 4 of the CAT Act deals with Practice and Procedure. Section 60 of the CAT Act is in Part 4. Section 35 of the CAT Act which is also in Part 4 states:
'Each of the provisions of this Part is subject to enabling legislation and the procedural rules.'
I find that s35 of the CAT Act makes it clear that s60 of the CAT Act is subject to Rule 38.
The applicant's proceedings were brought under the Home Building Act 1989. Pursuant to section 3 of Schedule 4 of the CAT Act, proceedings under the Home Building Act are allocated to the Commercial and Consumer Division of the Tribunal.
Because the amount claimed by or put into dispute by the applicants and the respondent in each of their proceedings exceeded $30,000.00, and the proceedings were allocated to the Commercial and Consumer Division of the Tribunal, Rule 38 will apply to the applicants' costs application. As a result I am unconstrained by the need to find the existence of special circumstances in order to make a costs order.
The applicants claim for costs is uncontested. They were the successful in the proceedings and are on that basis entitled to their costs of the proceedings on the ordinary basis.
However the applicants seek their costs on an indemnity basis based on Calderbank Offers they made to the respondent on 13 December 2019 and 30 March 2020.
I find that the offer made by the applicants on 13 December 2019 was not a 'Calderbank' offer despite being characterized as such. I find that the offer was more in the nature of an offer to resolve the proceedings by a commercial solution in the form of a new contract. It was not possible to ascertain by reference to the offer whether the owners obtained a better outcome as a result of my decision on 18 November 2020.
The offer made by the applicants on 30 March 2020 was that they would accept the sum of $100,000.00 plus costs of $10,000.00 in settlement of their claim in the proceedings. I find that the offer contained all of the elements necessary to be considered as an effective 'Calderbank' offer.
I refer to the Court of Appeal decision in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344. In that case Basten JA identified two questions which are relevant to a 'Calderbank' offer and a claim for indemnity costs. They are whether:
1. there was a genuine offer of compromise, and
2. it was unreasonable for the offeree not to accept it.
In Miwa Pty Ltd v Siantan Properties Pte Ltd Basten JA (with whom McColl and Campbell JJA agreed) adopted the non-exclusive list of factors identified by the Victorian Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 at [25]:
'The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree's prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.'
I find that the 30 March 2020 was a genuine offer of compromise. In addition the applicants have secured a better outcome in the proceedings than the terms of their offer.
The next issue to resolve was whether it was unreasonable for the respondent to have rejected the offer. The applicants offer stated that they would recover the amount that was actually ordered in their favour. They also pointed out the process by which that amount would be determined which was effectively the process that I determined the amount in their favour in [73] of the Principal Decision.
The respondent had until 16 March 2020 to file and serve its evidence in the applicants' case. It did not do so stating on 26 March 2020 that it would rely on the Court Book filed for the applicant and the pleadings. In other words, that it would not tender evidence in the proceedings. I find that it should have been apparent to the respondent that its prospects of success were not great, especially since an adverse decision had been given in Singh v Roselands Services Pty Ltd [2020] NSWCATCD 19 February 2020 where many of the grounds of defence raised in these proceedings had been unsuccessful. Given that it had not filed evidence in the proceedings and its defence was based on legal/technical issues, refer [29] of the Principal Decision, a number of which had previously been rejected, I find that it was unreasonable for the respondent to have refused the applicants' 30 March 2020 offer.
I will therefore order the respondent to pay the applicants' costs in HB 19/36627 on the indemnity basis as from 30 March 2020.
I find that the 30 March 2020 offer did not relate to the respondent's proceedings which had not been commenced when the offer expired.
For the reasons provided, I will make an order that the respondent must pay the applicants' costs of and incidental to HB 20/19310 on the ordinary basis, and the applicants' costs of and incidental to HB 19/36627 on the on the ordinary basis to 29 March 2020 and on the indemnity basis as from 30 March 2020, such costs if not agreed 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.
[3]
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
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Decision last updated: 20 August 2021