In a decision dated 4 June 2021 in these proceedings (McGrath v The Owners - Strata Plan No 13631) we ordered that the appeal be dismissed.
In that decision we included directions for the filing of any application for, and submissions on, costs.
An application for costs of the appeal has been made by the respondent and submissions in support of that application were filed by the respondent and dated 18 June 2021. No submissions in opposition to that application have been received from the appellant although the solicitor who acted for him on the appeal, but no longer acts for him, has informed the Appeal Panel that the appellant is aware of the respondent's application for costs.
This decision concerns the respondent's application for costs and assumes familiarity with our decision in the substantive appeal.
The respondent consents to the costs application being determined on the papers. We are satisfied that we should make an order dispensing with a hearing on the costs issues as we are satisfied that the issues for determination can be adequately determined in the absence of the parties by considering the written material provided [Civil and Administrative Tribunal Act 2013 (NSW) (the "NCAT Act"), s 50(2)].
In its application the respondent seeks orders that the appellant pay the respondent's costs of and incidental to the appeal on a party/party basis up to 29 January 2021, and thereafter on an indemnity basis, as agreed or assessed.
The basis for the first order sought for party/party costs (or costs on the ordinary basis) is the submission by the respondent that the appellant's appeal had no tenable basis and was misconceived and lacking in substance. The basis for the indemnity costs order is an offer to settle the appeal made by the respondent made before the first day the appeal was heard.
The submission that the appellant's appeal had no tenable basis and was misconceived and lacking in substance appeals to two of the "special circumstances" referred to in s 60 of the NCAT Act, being s 60(3)(c) and (e) respectively. Subsections 60(1) and (2) provide that each party to proceedings in the Tribunal is to pay the party's own costs unless the Appeal Panel is satisfied that there are special circumstances warranting an award of costs. The respondent also relies on its offer to settle the appeal as a matter which falls within s 60(3)(g), namely being any other matter that the Appeal Panel considers relevant.
The respondent submits that s 60 of the NCAT Act is applicable in this appeal, a submission with which we agree. That is, the provisions of s 60 are not displaced by operation of rr 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW).
The respondent's submissions then turn to each of the appellant's four grounds of appeal and make submissions as to why each ground had no tenable basis and was misconceived and lacking in substance.
It is convenient to note here that the appellant's four grounds of appeal were:
1. The Tribunal had no power to make a mandatory order in the terms of Order 3 made on 7 April 2020.
2. In the alternative, the Tribunal erred in finding that Order 3 was not satisfied.
3. The Tribunal erred in construing Order 3.
4. The Tribunal erred in exercising its discretion to not admit the identified expert evidence.
It is correct, of course, that the appeal was dismissed, and that we did not agree with the appellant's submissions that the Tribunal fell into any of the errors identified in grounds of appeal.
But more is needed to be awarded costs, as the respondent recognises. The first question is whether the grounds of appeal were so hopeless, or so weak, that they could be fairly judged to have had no tenable basis and were misconceived and lacking in substance.
We do not agree with the respondent's submissions that Grounds 1, 2 and 4 met either of those descriptions, but do agree that Ground 3 did so.
Ground 1 of the appeal was a ground of substance in our view. Although, ultimately, we disagreed with the appellant's submissions in relation to that ground, the submissions advanced were cogent and persuasive, and the points raised for consideration gave us cause for thought. Some evidence in support of that proposition is the fact that there are 39 paragraphs in our substantive reasons which deal with that ground. The ground was reasonably arguable per Owners Corporation of Strata Plan 4521 v Zouk (2006) 69 NSWLR 61; [2007] NSWCA 23 per Ipp JA, with whom Beazley JA (as her Excellency then was) and Bryson JA agreed, at [45]; Feng v OzWood Australia Pty Ltd [2020] NSWCATAP 42 at [12].
Ground 2 was less convincing, and perhaps got close to being regarded as having no tenable basis and being misconceived and lacking in substance. However, in the context of this case and the fact that the appellant was not legally trained and was not legally represented before the Tribunal, there was some basis for putting that ground, at least sufficiently so that the ground could not, in our view, meet the description of having no tenable basis and being misconceived and lacking in substance.
We agree that Ground 3 had no tenable basis and was misconceived and lacking in substance. We agree with the respondent's submission that, on the plain words of Order 3 made by the Tribunal on 7 April 2020, there was no reasonable basis to argue, as the appellant did, that non-compliance with Order 3 was excused on the basis that Orders 2, 5 and 8 made on the same date were not enlivened because the respondent chose not to retain a mould expert.
As for Ground 4, the respondent submits that that ground was rejected by us on the basis that "none of the matters identified by the appellant were relevant to the proper question" and "[n]one of the matters identified by the appellant address, as a matter of substance, the basal considerations at play ... ": [86]-[87] of our substantive decision. The respondent submits that is clear that in arguing Ground 4 the appellant addressed the wrong question and the ground was misconceived and not reasonably arguable.
We do not agree. It is true that we made the observations indicated, but those observations must be read in the context of the preceding paragraphs concerning Ground 4, being [80]-[85] of our substantive decision. Absent that context those observations appear more dismissive of the appellant's submissions than was the case. Although we did not agree with the appellant's submissions, the submissions put were, in our opinion, reasonably arguable.
The respondent submitted that, as to the appeal generally, it was one that should never have been brought. The respondent said that the appeal had evolved somewhat between its institution and the final grounds of appeal ultimately argued, but this is a common occurrence both at first instance and on appeal. It merely reflects the reality of litigation that a party's thoughts about its case may develop, mature or change over time.
The respondent submits that it made an offer to resolve the appeal by its letter dated 29 January 2021 (which it submitted was a Calderbank letter) in which it informed the appellant of the respondent's views that the appeal would fail and offered to settle the appeal on the basis that the parties agree that the appeal be dismissed with each party to bear his and its own costs.
The respondent submits that this offer is a special circumstance as it is a matter which falls within s 60(3)(g) of the NCAT Act. We agree that the offer may be considered on that basis, but do not agree that the offer was a special circumstance or, even if it were, warranted an award of costs, for the same reasons we do not agree that it justifies an indemnity costs order (considered below).
To qualify as a Calderbank offer the offer must contain an element of compromise. In Dimitropoulos v Capitol Constructions Pty Ltd [2019] NSWCATAP 164 the Appeal Panel said:
"[54] In Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8] (Miwa), Basten JA identified two questions relevant to whether costs should be awarded on an indemnity basis. They are whether:
(1) there was a genuine offer of compromise; and
(2) it was unreasonable for the offeree not to accept it.
[55] In relation to the first issue, for an offer of compromise to be valid, an offer must involve "a real and genuine element of compromise": see, for example, Prosperity Advisers Pty Ltd v Secure Enterprises Pty Ltd [2012] NSWCA 192 at [109] (Prosperity Advisers); Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [9]; Barakat v Bazdarova [2012] NSWCA 140 at [51(e)].
[56] Whether a settlement offer is "real" or "genuine" does not depend on the intentions of the party making the offer. As stated by Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368:
'Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so.'
[57] Further, an offer of compromise must not be derisory, requiring capitulation by the party to whom it is addressed: Prosperity Advisers at [109]. In view of this, an offer to accept payment of the claim in full would not usually qualify as an offer of compromise: Richardson v Hough [1999] NSWSC 448."
We respectfully agree with that summary of the core principles relevant to this issue.
In our opinion the respondent offered an agreement between the parties to dismiss the appeal, which is the order we made. It then offered an agreement between the parties that each party bear his and its own costs of the appeal. That is the order we would propose to make after consideration of the other matters put by the respondent in reliance upon on s 60 of the NCAT Act. Therefore, in our view, the offer made did not contain any real element of compromise. Put another way, the result of the appeal is not more favourable to the respondent than the offer made.
Further, the offer, in substance, required the appellant to capitulate, and thus was derisory in the sense described in Dimitropoulos at [57].
For all those reasons we dismiss the respondent's application for costs.
[2]
Orders
We make the following orders:
1. A hearing on costs is dispensed with.
2. Each party is to pay his and its own costs of the appeal.
[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: 15 July 2021