This decision is concerned with the costs of an appeal the subject of our decision in MDR Design and Construction Pty Ltd v Ferguson [2024] NSWCATAP 25. The following reasons should be read in conjunction with the reasons in that decision.
In that appeal, the appellant, MDR Design and Construction Pty Ltd (the "Builder"), succeeded in obtaining orders setting aside orders by the Tribunal that it pay the respondents (the "Owners") $218,615.79 and the costs of the proceedings. On appeal it was also ordered that the issue whether the Builder should be required to pay the Owners for the cost of installation of a chemical damp proof course be remitted to the Tribunal to be determined in accordance with our reasons, the Builder pay the Owners $158,255.79 within 28 days, this being the Builder's non-disputed liability to the Owners in respect of the building contract dated 6 February 2019, and that the whole of the costs of the hearing before the Tribunal at first instance be determined after the issue remitted to the Tribunal was determined.
At the hearing of the substantive appeal, the Builder clarified that the financial impact of the issues raised by the appeal was the amount included in the money order for the chemical damp proof course, namely $60,360. Hence, given the Builder's success on appeal, the amount it was ordered to pay was reduced to the amount we have already referred to.
In our reasons we referred to our then present view about the costs of the appeal and invited written submissions from the parties about this. We stated (at [62]-[63] of the reasons):
62 In relation to the costs of this appeal, whilst the Builder has been successful, his conduct of the appeal, and, in particular, his late service of the voluminous Appeal Book, was in breach of the Appeal Panel's directions and was unsatisfactory. It resulted in the appeal hearing being conducted inefficiently and led to considerable additional work for the Appeal Panel. In the circumstances our present view is that it is appropriate for the Owners to pay one half of the Builder's costs of the appeal as assessed or agreed.
63 Our present view as to the costs of the appeal was not a matter raised with the parties in argument during the hearing of the appeal. In these circumstances we will give the parties the opportunity to make written submissions in relation to the proposed costs order.
It was common ground that Rule 38 and 38A of the Civil and Administrative Tribunal Rules 2014 applied to the question of costs. Hence, there was a discretion to award costs in the absence of special circumstances warranting such an award (s 60 of the Civil and Administrative Tribunal Act 2013 (NSW)).
In such circumstances, the usual order made both at first instance and on appeal is that costs follow the event unless there is disentitling conduct by the successful party; Bondi Builders Pty Ltd v Dennis [2022] NSWCATAP 317 at [28]-[29]; Thompson v Chapman [2016] NSWCATAP 6 at [68]-[69] and [76].
The appellant's written submissions on the costs of the appeal stated that we ought to make the proposed order that the Owners pay one half of the Builder's costs of the appeal as assessed or agreed. Leave was sought to reply to the respondent's submissions if they sought a different order.
In their submissions the respondents sought an order that the costs of the appeal be costs in the "eventual cause" such that if the Owners were successful in the remitted proceedings then the costs of the appeal should be paid by the Builder but otherwise they should be paid as to one half by the Owners, as proposed. Alternatively, the respondents sought an order that the question of the costs of the appeal be remitted to the Tribunal and determined as part of the remitted proceedings.
The respondents submitted that either of these costs orders would be in the interests of justice for the following reasons:
13. First, the purpose of grounds of appeal is to put the respondent on clear notice of the issues in the appeal, so that the respondent can make concessions obviating the costs of an appeal if necessary. The Owners in this case were not presented with that opportunity. If it had been, the Owners may, for example, have offered to agree to or consented to a remitter in the terms ordered by the Panel without the need for a hearing.
14. Second, it is inherent in the suggestion that the landscaping was relevant to whether the respondent is liable in relation to waterproofing that the landscaping was in some way that cause of water ingress. Necessarily such water ingress would be at sites other than windows. By way of illustration, paragraph 15 of the Builder's submissions dated 27 October 2023 before the Panel said this:
"In this case, there was evidence of multiple causes for the water ingress in respect of the external walls of the property, some of which the Builder was responsible for, and the landscaping, for which the Owners were responsible".
15. This is not to cavil with the Panel's finding. But it would seem to be unjust to visit on the Owners the costs consequences of the Panel's finding when the appellant's position, at least as initially expressed in the grounds of appeal and submissions, was inconsistent with that finding.
16. Third, if the order as to costs is made as suggested by the Owners, and the Builder is successful in showing that there was no water permeability at sites other than the windows, or that if there was, the cause of that permeability could be attributed to a cause other than a breach on the part of the Builder then the Builder would receive its costs of the Appeal as proposed by the Panel. If it is not successful then the Owners would receive the whole of the costs of the Appeal. This would, it is submitted, be a just outcome in the circumstances.
17. Alternatively, if the issue of costs of the Appeal (other than those costs occasioned by the late service of the Appeal Book) were to be remitted to the Tribunal, the Tribunal could make its determination in light of the eventual determination of the issue that was remitted for consideration. Again, it is submitted this would be a just outcome in the circumstances.
18. Fourth, the error found to have been made by the Tribunal could not, it is submitted, be attributed to anything that the Owners or their representatives did or did not do.
19. If the matter had been heard in the courts this is a matter which may well have justified the issue of a certificate under s 6 (1) of the Suitor's Fund Act 1951 on the basis that it could be said that it can be said that there has been a mistake made in the Court system in the disposition of the matter under appeal [authorities referred to].
20. There is no applicable procedure in the Tribunal. But an order as suggested by the Owners would, it is submitted, mitigate the hardship on the Owners that the Suitor's Fund was introduced to address.
We gave leave to the appellant to reply to the respondents' submissions. In its reply dated 10 April 2024 the appellant took issue with the respondents proposed orders and arguments. Amongst other matters, the appellants made the following submissions:
1. It was clear from the grounds of the appeal that the appellant raised error by the Tribunal in concluding that the question whether landscaping was the cause of water ingress in areas other than the windows was irrelevant. From this contention it could be readily discerned that the decision was criticised on the basis that the Tribunal should have made findings as to the cause of water ingress in areas other than the windows.
2. In relying upon the proposition that the discretion in respect of costs should be exercised in the interests of justice, the respondents had put the matter too broadly by disregarding the usual approach that an order that costs should follow the event was in the interests of justice;
3. It was resistance to the appeal that warranted the award of costs, rather than the eventual outcome following the determination of the remitted matter. Further, it was not aware of any award as proposed by the respondents pursuant to the powers conferred upon the Appeal Panel in s 81 of the Civil and Administrative Tribunal Act 2013 (NSW).
As to the first reason advanced by the respondents, earlier in their submissions it was said that the grounds of appeal did not include failure to make findings about the cause of water permeability at sites other than windows. It was said that the respondents did not cavil with the Appeal Panel's decision since the issue of water permeability at sites other than windows emerged in the course of oral argument on the appeal.
We do not accept that the respondents were not on notice of the issues in the appeal so as to be presented with an opportunity to make concessions obviating the costs of an appeal.
The context of Grounds 1 and 2 of the appeal included a dispute between the parties (reflected in the position of their experts) as to whether a chemical damp proof course was required because there was rising damp coming through the slab (see at [10] of our substantive decision). One aspect of the Builder's case in answer to the Owners claim for the cost of the chemical damp proof course was that water penetration other than at the windows was due to water ingress caused by landscaping constructed by the Owners over the finished ground level specified in the Engineering Drawings and contrary to the requirements of the National Construction Code (see at [11] of our substantive decision). Hence, the criticism in Grounds 1 and 2 of the Tribunal's conclusion that the question of water ingress resulting from landscaping was irrelevant.
Clearly enough, the appeal raised an issue as to whether the Tribunal had erred by failing to make findings as to the cause of water ingress in areas other than at the windows bearing in mind that the Tribunal did not make a finding that there was rising damp coming through the slab (see at [48]-[53] of our substantive decision).
Rather than accepting these deficiencies in the Tribunal's decision, on appeal the respondents took the position that the Tribunal had, in fact, made a finding that there was rising damp coming through the slab (see at [34] of our substantive decision). The appellant also took the position that there was no expert evidence to support a finding that the landscaping was causative (see at [32] of our substantive decision).
As to the respondents' second point, we do not discern any relevant inconsistency between the conclusion we reached in our substantive decision and the Builder's submissions dated 27 October 2023. The key issue was whether the Builder should be found liable to pay the cost of a chemical damp proof course, which, in turn, depended upon whether damp was rising through the slab, rather than bear the cost of some lesser waterproofing work which the Builder accepted it should bear. The submissions the respondents refer to are not inconsistent with this stance by the Builder.
We do not agree with the respondents' third point. It is well established that the appeal is a separate event and that, generally, costs of the appeal will follow the event on appeal rather than the ultimate outcome of the proceedings: see, Jaycar Pty Limited v Lombardo [2011] NSWCA 284 at [61]-[63] per Campbell JA.
We also do not agree with the respondents' fourth point. It is well established that an error of the nature described by the respondents, namely an error that could not be attributed to anything which the respondents did or did not do, and the operation of the Suitors Fund Act 1951 do not affect the exercise of the discretion as to the payment of costs of an appeal; see Javcar at [63] and Manca v Tullipan Homes Pty Ltd (No 2) [2022] NSWCATAP 332 at 20.
[2]
Orders
1. The respondents shall pay one-half of the appellant's costs of the appeal as assessed or agreed.
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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
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Decision last updated: 13 May 2024