Oppidan Homes Pty Ltd v Yang

Procedural History

1. The homeowner's application, HB 12/32522, was filed in the then Consumer, Trader and Tenancy Tribunal on 15 June 2012. There had been an earlier application HB 12/12522 which was discontinued or withdrawn in error.
2. The owner claimed $49,900.00 and alleged a false claim by the builder, overcharging for provisional sums and variations, and a refusal by the builder to rectify defects.
3. The builder's application, HB 12/37224 was filed on 17 July 2012 and sought payment of an amount of $116,427.00.
4. The parties filed Points of Claim and Defence in both proceedings. The number of issues identified in these "pleadings" was subsequently reduced as a result of various agreements, admissions and settlement.
5. The matters were heard over three days in June 2014 and the Tribunal delivered a decision on 20 March 2015 (the Initial Decision) including orders: 1. Dismissing the homeowner's claim; 2. In the builder's claim, that the homeowner pay it $68,097.00.
6. Both parties sought a review by the Tribunal of various items and on 12 August 2015 the Tribunal issued amended reasons pursuant to s 50 of the Consumer Trader and Tenancy Tribunal Act 2001 (CTTT Act). In those reasons, the Tribunal increased the amount that the owner was to pay the builder, $68,079.00 to $76,542.87.00.
7. Both the Owner and the Builder appealed by respectively filing: 1. Appeal AP 15/49779, which was the owner's appeal of both matters before the Tribunal; 2. Appeal AP 15/51898, which was the builder's appeal both matters before the Tribunal; (the Appeal proceedings)
8. The Appeal Proceedings were heard on 14 December 2015 and the Appeal Panel, on 28 June 2016, made the following orders: In the AP 15/49779 (the homeowner's appeal), the Appeal Panel orders: 1 The appeal is upheld for the limited purpose of reducing the amount payable by the appellant by $47.00; 2 Order 2 made on 12 August 2015 in HB 12/37224 is set aside and in its place the Appeal Panel makes order 3 below; 3 The appellant (Tao Yang) is to pay the respondent the sum of $76,495.87 within 60 days of these orders; 4 The appellant is to pay the respondent's costs of the appeal as agreed or as assessed pursuant to the provisions of the Legal Profession Uniform Law Application Act 2014 subject to the fact that the amount which the appellant is required to pay will be 80% of the amount assessed. In AP 15/51898 (the builder's appeal) the Appeal Panel orders: 1. that the appeal is dismissed. (the Appeal Decision)
9. On 18 July 2016, the Tribunal made Directions for the parties to provide submissions as to the costs of the Proceedings. The parties provided submissions and on 15 September 2016 the Tribunal determined the costs issues on the papers and made the Orders which are the subject of this appeal.
10. The present appeal concerns only the costs of both initial applications, the Appeal Panel having made costs orders in the Appeal Proceedings.

Legislation and Regulations as to Costs

1. It is accepted, as stated by the Tribunal, in par [7] of the Decision, that the Proceedings were relevantly governed by the transitional provisions of Sch 1 of the Civil and Administrative Tribunal Act 2013 (NCAT Act), pursuant to which s 53 of the Consumer Trader and Tenancy Tribunal Act 2001 (CTTT Act) and reg 20 of the Consumer Trader and Tenancy Tribunal Regulation 2009 (CTTT Reg) applied.
2. Section 53 of the CTTT Act provided: Section 53 Costs (1) Subject to this section and the regulations, the parties in any proceedings are to pay their own costs. (2) The Tribunal may, in accordance with the regulations, award costs in relation to any proceedings. (3) If costs are to be awarded by the Tribunal in accordance with the regulations, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (4) In this section costs includes the costs of, or incidental to, proceedings. (5) This section does not apply in relation to proceedings under the Strata Schemes Management Act 1996 or the Community Land Management Act 1989.
3. Clause 20 of the CTTT Reg provided: Clause 20 Costs generally (1) This clause applies to the awarding of costs by the Tribunal as provided by section 53 of the Act. (2) The Tribunal may award costs in relation to proceedings in respect of which the amount claimed or in dispute is not more than $10,000, or in respect of which no amount is claimed or in dispute, only if the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs. (3) In any proceedings in respect of which the amount claimed or in dispute is more than $10,000 but not more than $30,000, the Tribunal may award costs in relation to the proceedings only if: (a) the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs, or (b) the Tribunal has made an order under section 30 (2) of the Act in relation to the proceedings. (4) In any proceedings in respect of which the amount claimed or there in dispute is more than $30,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit. (5) Despite any other provision of this clause, the Tribunal may order: (a) that the costs of proceedings on an application for rehearing of a matter are, if the applicant fails to attend the hearing of the application, to be paid wholly or in part by the applicant, or (b) that the costs of any proceedings that the Tribunal considers to be frivolous, vexatious, misconceived or lacking in substance, or that otherwise should not be heard or proceeded with, be paid wholly or in part by the person who instituted the proceedings. (6) The amount of any costs under subclause (5) is to be substantiated in such manner as the Tribunal thinks fit.
4. The discretion applicable in the Proceedings, simply stated, is that the Tribunal may award costs … "as it thinks fit". This is clearly a wide discretion..However, it must be exercised in a legally principled manner.

The Decision

1. At par [15] of the Decision the Tribunal dealt with a contention by the home owner that the Tribunal was functus, having not addressed costs in the course of the earlier decisions and continued: 16. I find the Tribunal has jurisdiction to consider and determine the costs of the substantive hearings prior to the appeals. 17. I also find that in considering costs it is appropriate to take into account any findings made by the Internal Appeal Panel, as their decision will determine the final outcome of the original proceedings….. 18 I reject the submission of the builder to the effect that my original decision dismissing the homeowner's application and ordering the homeowner to pay a substantial amount to the builder in the builder's application, reflects a finding that the homeowner was completely unsuccessful in her application and that the builder was successful in its application………… 19. The situation is rather that the parties reached significant agreement in relation to many issues before the substantive hearings commenced in June 2016. My reasons (in the first and final decisions) make it clear that many items were agreed with the parties leaving a limited number of items to be considered in the hearing. The parties had agreed that the builder should pay the amount of $3,000 to the homeowner for defective works as part of her claim. It is apparent that my reasons took account of that amount in the builder's claim for reasons of convenience and practicality by way of a set-off. The dismissal of the homeowner's claim does not represent a failure of her claim. 20. To the extent that the parties had agreed on the disposal of various items making up the respective claims, I was not aware of the nature of those claims or rather, of how they were resolved. It is recognised generally that the Tribunal (or Court) should not conduct a "virtual hearing" in relation to costs in such circumstances. ….
2. The Tribunal did not refer in detail to the submissions of the parties and stated at par [23] that it considered that it was necessary: … to consider whether one or other of the present parties was "the "successful party". In my opinion I must consider that issue even given the words of Regulation 20.
3. At par [24] the Tribunal concluded: 24. I find that each party has enjoyed a measure of success (without, of course, considering the appeals which have been dealt with by the Internal Appeal Panel). In my opinion the appropriate order in relation to each matter is that each party pay its own costs.

Submissions of the Parties

1. The grounds of the builder's appeal from the Decision assert an error of law by the Tribunal in the exercise of the discretion on costs on the basis of the principles set out in House v R (1936) 55 CLR 499, when making the finding in par [24] of the Decision.
2. The principles to be applied in considering whether a discretion has miscarried are set out in House v The King (1936) 55 CLR 499, at pp 504-505: 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.
3. The homeowner contended that the Decision was an entirely discretionary exercise by the Tribunal with respect to costs and does not involve a question of law, an appeal from which is available as of right without leave. Further, the builder did not seek leave to appeal (s 80(2)(b) of the NCAT Act).
4. In TA & JR O'Keefe Pty Ltd v Benita Holroyd and Clarence Valley Council [2015] NSWCATAP 112 the Appeal Panel concluded that the issue of whether there had been a correct exercise of discretion in relation to costs under the transitional provisions of Schedule 1 of the NCAT Act was properly characterised as an error of law. We conclude that the builder's appeal is as of right and leave is not necessary.
5. The homeowner does not appeal from the Decision and has provided Submissions in Response to the builder's submissions.
6. The builder's submissions largely rely upon the terms of par [68] of the Initial Decision, which were referred to in pars [18] to [20] of the Decision (see par [19] above), and contend that looking at the overall outcome the builder has been the successful party. The submissions focus upon those aspects upon which the builder was successful and on which homeowner was unsuccessful. There does not, however, seem to be an acceptance that the builder, in the conduct of the Proceedings, was unsuccessful in relation to any claim, or any part of its claims.
7. The Tribunal referred in pars [18] and [19] in the Decision (see par [19] above), to the contention by the builder that because the overall result provided for a large payment to the builder then it followed that the builder was successful.
8. The homeowner's submissions refer to the fact that the Tribunal has expressly dismissed the narrow approach by the builder, that the Tribunal has conducted an investigation or assessment of the "factual matrix in respect of the conduct and nature of the claims made", and are summarised in par [14]: 14. Overall the Decision reflects an assessment of the claims, concessions, issues and successes of each of the parties determined by the person who heard the dispute. The assessment of success advanced by the builder does not reflect all of the issues considered or relevant."

Consideration

1. The assessment of whether the Tribunal erred in the exercise of its discretion is to be made in accordance with the approach set out in par [23] above.
2. The Tribunal did not explain in great detail the basis for the conclusion in par [24] of the Decision that each party had "enjoyed a measure of success". We accept that, in a matter where it is argued that there has been a "mixed result", some consideration might be given to the degree of success, or the nature of the issues upon which each party was successful, at least to ensure that the outcome in fact involves a "mixed result".
3. The Tribunal, at pars [19] and [20] of the Decision, noted that there had been agreement between the parties on a number of issues, although what was involved and whether, or to what degree, there had been success or compromise was not clear. At par 9 and (3) in the Initial Decision, respectively, the Tribunal noted that there was an agreement that the homeowner was entitled to a credit of $81,925.00 for adjustments for PC Items and Provisional Sums and the builder was entitled $56,251.00 for variations.
4. Without undertaking an extensive examination of the issues involved and the amounts in contest, we note a number of aspects which might be regarded as relevant to the issue of the parties' success, and the exercise by the Tribunal of its discretion as to costs. These include: 1. The total amount claimed by the builder was initially $116,427.00, and the amount ordered was $76,542.87.00 albeit including an allowance for defective work. 2. The builder made a claim of $64,914.90 for delay damages, which was reduced to $42,232.90; however, the amount allowed by the Tribunal was $Nil.
5. These outcomes are somewhat reflective of a "mixed result".
6. There is, however, one aspect of the proceedings which was addressed in the Appeal proceedings and which might provide some understanding of the events which preceded and possibly precipitated the commencement of the Proceedings.
7. In Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 (Aust-Homes Investments) Hill J at p 210 set out a number of propositions in support of there being no order as to costs. His Honour was dealing with the making of an order for costs in circumstances where the parties have settled and an assessment of the degree of success of either party is not immediately evident. These propositions included the following: (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB (supra)). (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation: cf Sunday Times Newspaper Company Ltd v McIntosh [1933] NSWStRp 37; (1933) 33 SR NSW 371.
8. We believe that such propositions may have some relevance in matters which involve a "mixed result."
9. The event which appears to us as having a not insignificant role in the initiation of the disputes between the parties occurred when the builder submitted progress claim 7 in the amount of $277,273.00 on January 2012.
10. The builder had submitted progress claims 1 to 6 which were paid by the owner. The owner claimed that the builder had overcharged and refused to pay. The builder suspended the work under the contract, which suspension lasted 47 days. The builder claimed in the Proceedings an extension of time for the duration of the suspension and also claimed delay damages for the period of the suspension, for delay damages, initially for $64,914.90 and reduced to $42,232.90.
11. The Tribunal at pars [5] and [6 in the of the Initial Decision noted: 1. The contract itself did not provide for progress payments, but in any case the Builder submitted progress claims from time to time and the Owner paid those claims, at least until she received Progress Claim 7 (in the amount of $277,273), at which time the Owner alleged the Builder had overcharged for the building works. 2. The dispute in relation to Progress Claim arose on 27 January 2012. It had not been resolved by 24 February 2012 when the Builder, pursuant to terms of the Contract, suspended the building works until 23 May 2012. The Owner approached the Office of Fair Trading and a mediation was arranged. On the Owner's version, on the basis of a payment of $200,000.00 in relation to Progress Claim 7, the Builder agreed to complete the building works. This payment was made on 15 March 2012. It is alleged the Builder failed to honour that agreement.
12. At par [37] of the Initial Decision, the Tribunal further referred to Progress Claim 7 as follows (part only): 37 Returning to Progress Claim 7, the owner did not pay that claim within the 5 days specified under the Contract. ………It is clear there was an error in the calculation of the claim, indeed a significant error, in the sum of approximately $44,000.00.
13. The Tribunal noted that the builder issued an Amended Progress Claim after the error was identified.
14. The Tribunal in the Initial Decision determined that the homeowner, by failing to pay a Progress Claim, was in breach, and that the builder was accordingly entitled to suspend the building works.
15. This finding formed part of the homeowner's appeal in the Appeal Proceedings and was addressed at pars [102], [103], [105] and [106] of the Appeal Decision: 102. We accept the Owner's arguments. The Member found that the contract did not provide for progress claims and the Builder does not argue otherwise. The fact that the Owner was content to receive and pay some progress claims does not, in our view, lead to the conclusion that the Builder acquired a right to suspend the works as a result of the Owner not paying progress claim 7 in full. 103 We reject the Builder's submission that the Owner was estopped from denying the Builders entitlement to make progress claims because she had paid the first six progress claims. In our view, notwithstanding the issue and payment of six progress claims to which there was no finding of a contractual entitlement, the Builder did not have an entitlement to issue and have paid progress claim 7. The Builder's right to suspend the carrying out of the building works is contained in cl 32 of the contract and may be exercised if the Owner is in breach of the contract. In this case the alleged breach is said by the Builder to arise because, as the Member found, the Owner did not pay progress claim 7. In our view, this analysis displays an error in not determining that there was a contractual obligation to pay progress claim 7. Even if the Owner waived a right to refuse to pay the progress claims, that waiver does not extend to a waiver of her right to require the Builder only to suspend in the event of her breach. For such a waiver to have arisen (entitling the Builder to suspend by reason of non-payment of progress claims), it would have been necessary for the Owner to have represented to the Builder that she accepted that the Builder had a right to issue progress claims. There was no finding and no submissions from the Builder that such a representation had occurred. 105 In our view, the omission to make findings as to the Builder's entitlement to make progress claims and be paid those claims resulted in the decision to find that the Builder was entitled to suspend the works for 47 days. That finding arose by reason of the error in finding that the Builder was entitled to suspend the works. 106. The reasoning displays an error or law and this aspect of the appeal is upheld. The consequence is that the finding that the adjusted contractual date for completion was 2 May 2012 (par [43] of the Decision) is in error. On the analysis we have provided the correct date for the adjusted contractual date of completion was 16 March 2012 (47 days prior to 2 May 2012).
16. Apart from the adjustment to the date for completion there seems to us to be an additional consequence of the above finding. That being that the suspension by the Builder, of 47 days, which seems to us was a precipitant to the commencement of the Proceedings, amounted to a breach of contract by the builder.
17. Clearly, the Tribunal did not make any such finding which, on the correct application of the law, could have been made. We consider that this consequence of the Appeal Decision is a factor which could weigh in the assessment of whether the ultimate outcome in the Proceedings amounted to a "mixed result" and, upon the exercise of the discretion as to costs. Further, in this respect, the instigation of the Proceedings by the homeowner is at least understandable.
18. Turning to the principles that are involved in cases where there is arguably a "mixed result", we note that in Thomson v Chapman [2016] NSWCATAP 6 the Appeal Panel identified the relevant principles as follows: 67. Rather, in circumstances where there is a general discretion to award costs, the correct statement of principle is that the Tribunal in exercising its discretion is to have regard to the nature of the proceedings before it and all relevant factors arising in connection with those proceedings for the purpose of determining what order for costs, if any, should be made. 68. Each of Regulation 20 of the CTTT Regulation and Rule 38 provide a general discretion in respect to the award of costs. 69. The starting point in exercising such discretion is that the "usual order for costs" is that a successful party should be entitled to an order for costs in their favour: see Latoudis v Casey [1990] 170 CLR 534 per Mason CJ at 554 and Oshlack v Richmond River Council per McHugh J at 97. 70. The reason for such an order is that it is appropriate for the party who incurred costs caused by the other party in litigation to be reimbursed. Further, an award of costs is by way of an indemnity to the successful party and not as punishment of the unsuccessful party: see Latoudis v Casey per Mason CJ at 543 and McHugh J at 567 and in Oshlack v Richmond River Council per Brennan CJ at 75. 71. Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 88 and Kirby J at 121 - 123. 72. The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: (1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made: see for example Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304; and (2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 41 - 44. …………. 76. In short, the proper exercise of the discretion requires the Tribunal to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary or capricious: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at [22] and McHugh J at 65.
19. In Johnson t/as One Tree Constructions & Ors v Lukeman & Anor [2017] NSWCATAP 45, consideration was given to the characterisation of an outcome in proceedings as a "mixed result": 23. In Grain Growers Limited v Chief Commissioner of State Revenue (No 2) [2015] NSWSC 1445 (Grain Growers) Black J considered an application for costs where the plaintiff had been partially successful. His Honour summarised the position as follows: 'It should be recognised, of course, that an order for costs is made to compensate a successful party for the expense of being put to the necessity of litigation; a wholly successful party should ordinarily receive its costs unless good reason is shown to the contrary; and the discretion to order costs must be exercised judicially and not against the successful party except for some reason connected with the proceedings: Milne v Attorney-General (Tasmania) [1956] HCA 48; (1956) 95 CLR 460 at 477; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97-98 per McHugh J, at 119-123 per Kirby J; Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234.' 24. His Honour noted that the characterisation of the result of a "mixed result" may be an appropriate characterisation of the result in that case (at [20]). Nevertheless, his Honour characterised the plaintiff as having been "substantially successful" and after applying the principles in Bostik referred to above, held that the issues upon which the plaintiff there had been unsuccessful had not taken up a significant part of the trial, and had not been clearly dominant or separable, so as to warrant a departure from the usual principles (at [25]). 25. Here too the characterisation as a "mixed result" may be appropriate. As the respondents have submitted, the appellants did not achieve everything they set out to achieve. ….

Conclusion

1. In our view, the findings by the Tribunal, along with the additional matters to which we have referred in pars [33] to [45] above, suggest that the ultimate outcome in the Proceedings should be regarded as a "mixed result" as the Decision in pars [23] and [24] suggests.
2. We do not consider that the Tribunal made an error in exercising its discretion. We do not consider that it identified a wrong principle, allowed extraneous or irrelevant matters to guide it, mistook the relevant facts, or otherwise failed to take into account some material consideration.
3. 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 March 2017