Nutek Constructions Pty Ltd v Juno Australia Pty Ltd

The Scope and Nature of Internal Appeals

1. By virtue of s 80(2) of the NCAT Act, internal appeals from decisions of the Tribunal may be made as of right on a question of law, and otherwise with leave of the Appeal Panel.
2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. The decision of the Tribunal under appeal was not fair and equitable; or 2. The decision of the Tribunal under appeal was against the weight of evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
3. In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
4. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
5. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.

Grounds of Appeal

1. The grounds of appeal set out in the Notice of Appeal so far as they related to Order 3 in HB 17/06469 were as follows: 1. There was an error in law in that the Senior Member failed to provide reasons as to why costs were awarded on an indemnity basis. 2. Further, the decision was against the weight of evidence which was before the Tribunal.
2. Nutek sought leave to appeal on the ground that the decision was not fair and equitable because "it was not reflective of the proceedings in the Tribunal" and "the Senior Member failed to take into account significant matters which adversely effected the decision made".
3. Nutek also sought leave to appeal on the basis that the "decision failed to take into account the respondents' set-off defence". It is not clear from the Notice of Appeal the extent to which Nutek was seeking leave to appeal on this basis against Order 3, as opposed to Order 2 which, as noted above, has been set aside. Nutek's written submissions (both in chief and in reply) do not raise any issue concerning the respondents' "set-off defence". We will proceed on the basis that the ground referring to the set-off defence related only to order 2 and is no longer relevant in this appeal.

The decision of the Tribunal

1. By the decision under appeal, the Tribunal determined, in relation to the costs of proceedings HB 17/06469, that the amount claimed in the application was in excess of $30,000 and that therefore pursuant to rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) the Tribunal was empowered to make a costs order without finding that there were special circumstances. The Tribunal noted that proceedings HB 17/06469 were "dismissed outright".
2. The Tribunal referred (at [13]) to submissions made by Nutek that the respondents had not been successful in HB 17/06469 "as provided by Order 2(a) in matter HB 16/25001" (ie the Elite Payment Order) and that the respondents should be liable to pay the appellant's costs on the indemnity basis. The Tribunal commented: "I am quite at a loss to understand how [Nutek] can submit that a determination in one set of proceedings can affect a decision in relation to costs in the other set of proceedings in which [Nutek] was not successful".
3. The Tribunal held (at [14]): "It is the applicant's claim: the first step is to consider whether the applicant was successful rather than the respondents. In my experience, if a plaintiff or an applicant fails entirely that is interpreted as a successful outcome for the defendant or respondent. 'Costs follow the event' generally means that the unsuccessful party may be required to pay the costs of the successful party."
4. The Tribunal continued (at [15]): "On that basis, I order that [Nutek] is to pay the costs of the respondents in proceedings HB 17/06469 except as follows."
5. The Tribunal then addressed the costs of Ms Slotwinski's application to transfer both sets of proceedings to the Supreme Court and recorded that it accepted Nutek's submissions concerning the costs of the transfer application which were that the application for transfer was 'frivolous or vexatious or otherwise misconceived or lacking in substance' and 'had no tenable basis in fact or law'.
6. The Tribunal held (at [19]): "Those submissions also provide abundant support for the decision to be that the respondent is to pay those costs on an indemnity basis."
7. We note that the Tribunal's reasons dealing with proceedings HB 17/06469 at [11] to [19] of the decision clearly determined that Nutek was to pay the respondents' costs of the proceedings on the ordinary basis save that the respondent, Mrs Slotwinski, was to pay Nutek's costs of the application for transfer on the indemnity basis. Although the respondents had sought orders that Nutek pay their costs of proceedings HB 17/06469 on the indemnity basis, the Tribunal's reasons do not suggest the Tribunal accepted that submission.
8. As noted above, the formal orders of the Tribunal were relevantly: (1) The respondents are to pay [Nutek's] costs thrown away of and incidental to the respondents' application to transfer proceedings HB 16/25001 and HB 17/06469 to the Supreme Court; (2) … (3) In proceedings HB 17/06469 Nutek is to pay the respondents' costs as agreed or assessed on an indemnity basis.
9. There is no appeal against Order 1. However it appears that, in making formal orders, the Tribunal has inverted its conclusions in relation to the appropriate basis upon which costs should be ordered. We will return to this issue in due course.

The Submissions

1. As we understand Nutek's submissions, it raises three arguments in support of its appeal.
2. The first is that, in circumstances where proceedings HB 17/06469 were brought to recover what was referred to as the "Elite Payment", and Nutek recovered the Elite Payment, albeit by order in proceedings 16/25001, Nutek cannot be said to have been unsuccessful in proceedings 17/06469.
3. Secondly, Nutek submits that the respondents' conduct disadvantaged Nutek in the proceedings.
4. Thirdly, Nutek submits that there was no basis for the award of indemnity costs.
5. The third of these arguments clearly reflects Ground 1 in the Notice of Appeal set out at [24] above. Although there is not otherwise a direct correlation between the Notice of Appeal and the matters raised in Nutek's submissions, it cannot be said the matters raised in those submissions do not fall generally within the terms of the Notice of Appeal.
6. It is convenient to address in turn each of the three matters raised by Nutek's submissions. In doing so we will consider whether each issue raises a question of law and, if not, whether the criteria for the grant of leave to appeal are satisfied in respect of that issue.
7. The respondents' submissions filed on 19 August 2019 do not directly address Nutek's submissions other than by noting that Juno Australia Pty Ltd and Mariusz Slotwinksi have "been entirely vindicated in their defence and had no more role to play in these proceedings". The respondents submit that the order awarding costs to Mr Slotwinski and Juno Australia Pty Ltd on an indemnity basis "should stand, as the decision on appeal did not alter the success that these two litigants had in the first instance".
8. The respondents' submissions otherwise generally address issues which do not arise in the appeal as it now stands, being issues relating to the costs of proceedings HB 16/25001 and the costs of the substantive appeal.

First Issue: Nutek's success in recovering the "Elite Payment"

1. We do not consider that the Member's reasoning in relation to Nutek's argument, that because it succeeded in recovering the Elite Payment from Mrs Slotwinski in proceedings HB 16/25001 it could not be said to have been unsuccessful in proceedings HB 17/06469, discloses any error of law. Nor do we consider that Nutek may have suffered a substantial miscarriage of justice warranting the grant of leave to appeal.
2. In our view Nutek's argument is fundamentally misconceived. Nutek's original application in HB 17/06469 attached a detailed set of pleadings and particulars which identified the claims made in those proceedings. Those claims included allegations of breach of contract by Juno Australia, misleading representations by Mariusz Slotwinski, misleading and deceptive conduct by the second, third and fourth respondents (ie Juno Australia Pty Ltd, Mariusz Slotwinski and Mrs Slotwinski), a separate claim of misleading and deceptive conduct by Elite Australia Pty Ltd, and a claim for unjust enrichment against Mrs Slotwinksi.
3. The claim for unjust enrichment was stated to be applicable only "to the extent that [Mrs Slotwinski] is successful against the applicant in proceedings HB 17/25001". Nutek alleged that Mrs Slotwinski would be unjustly enriched if the Elite Payment was accepted in proceedings HB 16/ 25001 as payment by Mrs Slotwinski of her obligations in respect of the works performed by Elite and yet treated as a loan in proceedings HB 17/06469.
4. Although the order that Mrs Slotwinski pay Nutek the Elite payment was set aside by the Appeal Panel in the substantive appeal, it was not set aside on the basis that the payment made by the respondents to Elite was effectively payment for the work performed by Elite. Rather, as we understand the appeal decision, the order was set aside on the basis that Mrs Slotwinski potentially had a defence to that claim by way of set-off in respect of allegedly defective work, which had not been determined.
5. To the extent that proceedings HB 17/06469 were brought against Mr Slotwinski and Juno Australia Pty Ltd, it is manifestly clear that Nutek failed in those proceedings. It is also clear that Nutek failed in its claims against Mrs Slotwinski. The only claims made against Mrs Slotwinski in HB 17/06469 were a claim for misleading and deceptive conduct and the claim for unjust enrichment which was, as noted above, a contingent claim. The contingency which might have rendered that claim relevant in the proceedings did not and cannot occur. In dismissing proceedings HB 17/06469 the Tribunal determined that Nutek had not proved its case of misleading and deceptive conduct.
6. Decisions in relation to costs are a discretionary decision in respect of which the principles outlined by the High Court in House v The King (1936) 55 CLR 499 at 504-505 are applicable: The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
7. There was no basis on which it might be concluded that, in determining that Nutek should pay the respondents' costs of HB 17/06469, the Tribunal proceeded on an erroneous principle or that its discretion miscarried in any other of the ways identified in the above passage.
8. On the contrary, in our view the Tribunal was clearly correct in determining that Nutek was the unsuccessful party in proceedings HB 17/06469 and that accordingly the usual order would be that costs should follow the event, with the result that Nutek should pay the respondents' costs of that application.

Second Issue: Disadvantaging conduct

1. Nutek's submissions do not clearly identify in what respect it is said that the respondents' conduct of the proceedings disadvantaged Nutek. The entirety of Nutek's submissions in this regard appears to be set out in paragraphs [36] and [37] of its written submissions in chief which, first, submit that the respondents were responsible for Nutek bringing the proceedings because they had not identified to Nutek that the Elite Payment had been treated as a loan, and secondly, submit that: "The Respondents, or at the very least Mrs Slotwinski, conducted their case in a way that unnecessarily disadvantaged Nutek, they were responsible for unreasonably elongating the proceedings, a hearing would not have been required had the respondents been forthcoming with [Nutek] and the Tribunal in relation to the Elite Payment. The multiple points of defence filed by [Mrs Slotwinski] did not assist the proceedings and we submit that the respondents failed to co-operate with the Tribunal in providing a just, quick and cheap resolution of the real issues in dispute.
2. We find no support in the material provided with the submissions to justify the assertions made by Nutek in that passage.
3. The submission that the respondents were responsible for Nutek bringing the proceedings because they were not forthcoming in relation to the circumstances of the Elite Payment is difficult to reconcile with the Tribunal's finding that the respondents did not engage in misleading and deceptive conduct concerning that payment. Moreover, in November 2016, the respondents served their evidence and a proposed further amended points of claim. From that point there could no longer be any suggestion that Mrs Slotwinski could defend Nutek's claim in respect of the Elite Payment on the basis that the moneys had been paid directly to the sub-contractor (Elite). Nevertheless, Nutek continued to pursue proceedings HB 17/06469.
4. Moreover, we note that the proposition that the respondents' conduct of the proceedings had disadvantaged Nutek was not put to the Tribunal in Nutek's written submissions to the Tribunal concerning the costs of the initial proceedings. Nutek did make the submission in reply that the respondents had made "multiple applications" in the course of the proceedings which were said to have been "frivolous and vexatious". However that was a different proposition to that upon which Nutek now seeks to rely. It cannot be said that the Tribunal made any error either of law or of principle in not addressing an argument which was not put to it.

Third issue - failure to give reasons for the award of indemnity costs

1. As we have noted above, it is apparent from the Tribunal's reasons that the Tribunal did not conclude that it was appropriate to order that Nutek pay the respondents' costs of proceedings HB 17/06469 on the indemnity basis. In our view, it is possible that an application to rectify the orders pursuant to s 63 of the NCAT Act might have succeeded. That section provides: 63 Power to correct errors in decisions of Tribunal (1) If, after the making of a decision by the Tribunal, the President or the member who presided at the proceedings is satisfied that there is an obvious error in the text of a notice of the decision or a written statement of reasons for the decision, he or she may direct a registrar to alter the text of the notice or statement in accordance with the directions of the President or the member. (2) If the text of a notice or statement is so altered, the altered text is taken to be the notice of the Tribunal's decision or the statement of its reasons, as the case may be, and notice of the alteration is to be given to the parties in the proceedings in such manner as the President or member may direct. (3) Examples of obvious errors in the text of a notice of a decision or a statement of reasons for a decision are where: (a) there is an obvious clerical or typographical error in the text of the notice or statement, or (b) there is an error arising from an accidental slip or omission, or (c) there is a defect of form, or (d) there is an inconsistency between the stated decision and the stated reasons.
2. It seems to the Appeal Panel reasonably clear that there is an inconsistency between the stated decision and the stated reasons.
3. However no such application was made. If the Tribunal actually intended to order Nutek to pay the respondent's costs of HB 17/06469 on the indemnity basis, it has not provided any reasons for doing so. A failure to provide adequate reasons is an error of law: Prendergast v Western Murray Irrigation Ltd [2014] 69 at [13(1)]. We do not read the remarks of Bell P and Ward JA in NSW Land and Housing Corporation v Orr [2019] NSWCA 231, at [54]-[55] and [110]-[114] respectively, as suggesting that a Tribunal will not have made an error of law if it gives reasons for a decision, without a request for reasons pursuant to s 62 of the NCAT Act, and those reasons are inconsistent with the final orders.
4. Accordingly, whether or not the order that costs be assessed on the indemnity basis was intended, the order awarding costs on that basis involved an error of law and must be set aside.

Disposition of the Appeal

1. Pursuant to s 81 of the NCAT Act an Appeal Panel may vary the decision under appeal and in doing so may exercise all the functions that were conferred on the Tribunal at first instance.
2. In our view there was no basis upon which it might have been appropriate to order that Nutek pay the respondents' costs of proceedings HB 17/06469 on the indemnity basis rather than the ordinary basis. The respondents had submitted to the Tribunal that costs should be awarded against Nutek on the indemnity basis. However the foundation for that submission was directed to Nutek's conduct of the proceedings generally, without specific reference to any matter peculiar to HB 17/06469.
3. In the exercise of the power conferred on the Appeal Panel by s 81, we will vary Order 3 made by the Tribunal on 26 July 2018 by deleting the words "on an indemnity basis" so that Order 3 is to read "(3) The applicant is to pay the respondents' costs as agreed or assessed."

Orders 1. Appeal allowed in part. 2. Vary Order 3 of the orders made by the Tribunal on 26 July 2018 by deleting the words "on an indemnity basis" so that Order 3 will be "The applicant is to pay the respondents' costs as agreed or assessed."

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: 05 December 2019