Monument Building Group Pty Ltd v Kapila

Relevant law

1. The owner's application is made pursuant to s 60 of the NCAT Act. That section provides in so far as is presently relevant: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following - (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36(3), (g) any other matter that the Tribunal considers relevant. …
2. Section 60 provides that the prima facie position is that each party to proceedings in the Tribunal (including proceedings in the Appeal Panel) is to pay their own costs and that costs may be awarded only where there are special circumstances warranting an award of costs. In considering whether there are special circumstances, the Tribunal may have regard to the matters set out in s 60(3).
3. Special circumstances are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].
4. If satisfied that there are special circumstances, the Appeal Panel must further be satisfied that they are circumstances "warranting an award of costs": Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103. The exercise of the discretion requires the Appeal Panel "to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87at [9].

Submissions

1. The owner's submissions may be summarised as follows: 1. s 60(3)(e) provides that one of the matters that may be taken into account is whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance; 2. guidance as to what amounts to "frivolous or vexatious or otherwise misconceived or lacking in substance" is provided by the Appeal Panel decision in BDK v Department of Education and Communities [2015] NSWCATAP 129 and in particular at [62]-[66] and [72]; 3. these proceedings were frivolous, vexatious, misconceived and lacking in substance because: 1. the builder brought the proceedings for a collateral purpose, namely, to block or delay the owner from the substantive claim related to water ingress into her property which is currently the subject of litigation in the District Court; 2. the proceedings had no tenable basis in fact; 3. the builder lodged the Notice of Appeal without any thought as to the wording of the decision of the Tribunal below and lodged the appeal simply because it was unhappy with that decision; 4. the builder should have given consideration, after it had engaged lawyers after 10 March 2021, to withdrawing the proceedings and walking away but instead force the owner to defend the appeal; 5. it eventuated that the appeal had no prospects of success. In this regard, the owner relied upon the reasons given in Monument Building Group Pty Ltd v Kapila [2021] NSWCATAP 256 and in particular the following passages (owner's emphasis) 16 Where, as in the present case, the Tribunal considered the evidence of both parties and, having done so, concluded that it was not satisfied that an alleged agreement had been proven, there is no error of law. An appeal is not an opportunity for a party present the evidence to an Appeal Panel and ask the Appeal Panel to reach a different conclusion as to the effect of that evidence. Leave to appeal 17 The builder's Notice of Appeal indicates that leave to appeal is sought. However, the builder's submissions addressed only the two contended errors of law discussed above and did not address the question of leave to appeal. 18 Nevertheless, the Appeal Panel has considered whether leave to appeal ought be granted and declines to do so for the following reasons. … 25 As to subparagraph 12(1)(c), as noted above, some of the material filed by the builder with the Appeal Panel has been identified as "new evidence", however no explanation has been provided as to why such evidence, which appears to dated prior to the hearing date, was not available to the builder at the time of the hearing and the Appeal Panel does not take into account; 1. the above matters are sufficient to establish special circumstances and the discretion should be exercised so as to award costs in favour of the owner; and 2. the owner does not cavil with the 10 March 2021 order.
2. The builder's submissions may be summarised as follows: 1. there are no special circumstances for the purposes of s 60(2) of the NCAT Act because: 1. there is no evidence before the Appeal Panel that the builder bought the proceedings for a collateral purpose and the builder denies that it had such a purpose or that it knew that the owner intended to bring District Court proceedings; 2. the remaining matters put forward by the owner are largely grounded in the failure of the appeal and failure of itself is insufficient to demonstrate special circumstances within the meaning of s 60(3). Further, the reasons provided by the Appeal Panel do not substantiate the builder's submission that the appeal had "no tenable basis"; and 1. the effect of the 10 March 2021 order is that the owner cannot recover legal costs.

Are there special circumstances?

1. As noted above, special circumstances are circumstances that are out of the ordinary, but need not be exceptional or extraordinary, and in considering whether there are such circumstances, the Appeal Panel may have regard to the matters set out in s 60(3) of the NCAT Act.
2. The owner relies upon s 60(3)(e) and has submitted that the appeal was frivolous or vexatious or otherwise misconceived or lacking in substance.
3. The Appeal Panel is not satisfied that any of the matters relied upon by the owner demonstrate that the appeal had any of these qualities and in particular: 1. there is no evidence before the Appeal Panel capable of supporting an inference that the builder brought the appeal for a collateral purpose of blocking or delaying a claim relating to water ingress; 2. similarly, there is no evidence capable of supporting an inference that the builder lodged the appeal without any thought as to its merits; and 3. whilst the appeal was unsuccessful and may, at least in retrospect, have been considered weak, it was not so untenable that it should have never been commenced or abandoned once legal advice had been obtained; and 4. the reasons in Monument Building Group Pty Ltd v Kapila [2021] NSWCATAP 256 do not support the submission that the appeal had no prospects of success.
4. The Appeal Panel has also considered whether there are any other circumstances attending the appeal which might be considered as special circumstances and is not satisfied that there are any such circumstances. As there are no special circumstances, the discretion to award costs is not enlivened.

The 10 March 2021 order

1. In any event, if the Appeal Panel had been persuaded that there were special circumstances enlivening the discretion to award costs, and further that it was appropriate to exercise the discretion so as to award costs, the Appeal Panel would not have awarded costs to the extent that those costs are legal costs.
2. As noted above, the effect of the unchallenged 10 March 2021 order is that the owner is not entitled to recover legal costs of the appeal. It follows that any order for costs that might have been made would have excluded any entitlement to recover legal costs of the appeal.

Orders

1. The Orders of the Appeal Panel are: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW), dispense with a hearing on the question of costs. 2. The respondent's application for costs of the appeal is dismissed.

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 October 2021