Owners Corporation SP 82076 v Taricon Pty Ltd

NCAT Consumer and Commercial|2017-07-14|Before: Mr J

reasons for decision

The substantive proceedings are a building claim made under the Home Building Act 1989 (the HB Act), lodged on 17 March 2016. On 29 September 2016 the matter was adjourned to allow the parties to seek legal advice in relation to jurisdiction, the presiding Tribunal Member noting that the application may have been lodged out of time. At a further directions hearing on 27 October 2016 the matter was adjourned for hearing on the issue of jurisdiction.
Evidence was tendered and the respondent's oral submissions were heard on 20 December 2016. The applicant subsequently provided written submissions in support of its position that the application should not be dismissed on the jurisdictional issue on 17 January 2017 and the respondent provided written submissions in reply on 3 February 2017.
On 3 May 2017 the application was dismissed on the basis that the application having been made outside the time specified in s 18E of the HB Act, the Tribunal has no jurisdiction to hear and determine the claim: Owners Corporation SP 82076 v Taricon Pty Ltd [2017] NSWCATCD 37. The orders made included, as foreshadowed at the hearing on 20 December 2017, orders providing for submissions on any application for an order for costs, including that if either party wished to be heard in person that party should notify the Registrar.
On 17 May 2017 the Tribunal received an application by the respondent for an order for its costs from the date of commencement of the proceedings, or in the alternative, from 29 September 2016 when the applicant was placed on notice of the jurisdictional issue. The applicant provided written submissions in reply on 1 June 2017, submitting that no order for costs should be made so that each party bear its own costs. Neither party requested a hearing.
Both parties' submissions were based on whether or not there were special circumstances warranting an order for costs, pursuant to s 60(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act). On 22 June 2017 the Tribunal invited the parties to make any further submissions addressing rule 38 of the Civil and Administrative Tribunal Rules 2014 (the NCAT Rules), with the respondent to provide any further submissions by 28 June 2017 and the applicant by 30 June 2017. That invitation included the statement that there having been no request for a hearing the issue of costs would be determined on the papers. The respondent provided written submissions on 28 June 2017; no further submissions have been received from the applicant.

Issues

The issues to be determined in the application are: 1. Should an order be made dispensing with a hearing in accordance with s 50(1)(c) of the NCAT Act? 2. Should an order for costs be made in favour of the respondent?

Should an order be made dispensing with a hearing, pursuant to s 50(1)(c) of the NCAT Act?

Section 50 of the NCAT Act relevantly provides: 50 When hearings are required (1) A hearing is required for proceedings in the Tribunal except: … (c) if the Tribunal makes an order under this section dispensing with a hearing, or … (2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal. (3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first: (a) afforded the parties an opportunity to make submissions about the proposed order, and (b) taken any such submissions into account. (4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules. …
I am satisfied that the parties had an opportunity to request a hearing of costs, and neither did so. I am further satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions. As noted above, the parties have made submissions on costs, and have been provided with a further opportunity to address the position under rule 38 of the NCAT Rules. The parties would be put to unnecessary expense if a hearing on costs were held.
The order under s 50(1)(c) of the NCAT Act has accordingly been made.

Should an order for costs be made in favour of the respondent?

The general rule in relation to costs in the Tribunal is that unless special circumstances are established, the parties pay their own costs: s 60(1) of the NCAT Act. Subsection 60(3) lists the matters to which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs.
However, rule 38 of the NCAT Rules modifies the application of s 60 in proceedings before the Consumer and Commercial Division of the Tribunal. Rule 38(2)(a) provides that in proceedings where the amount claimed or in dispute is more than $30,000, the Tribunal may award costs in the absence of special circumstances.
In this case, the amount claimed in the proceedings was more than $30,000. Rule 38 of the NCAT Rules therefore applies.
Rule 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion. However, the discretion to make such an order must be exercised judicially: Ruddock v Vadarlis [2001] FCA 1865 at [9]. Where an application has been heard and determined on the merits, the appropriate starting point for the exercise of the discretion is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.
However, as discussed by the Appeal Panel in Thomson v Chapman [2016] NSWCATAP 6 at [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, and nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party. In circumstances where there is a general discretion to award costs, 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. Factors that might influence whether the usual order for costs should apply and if so to what extent, would include whether by reason of the relative success of the parties on different issues and the time taken to determine those issues, an order for costs based on the issues determined should be made; and whether by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part.
The respondent submits that the proceedings were misconceived in that they were commenced out of time, and that the applicant was on notice of the jurisdictional issue from 29 September 2016. Instead of withdrawing the application the applicant opted to pursue the matter at final hearing. The respondent submits that the applicant should have appreciated the risks associated with proceeding to hearing.
The applicant submits that the applicant appeared at first instance unrepresented and its case was not advanced to the level required; the proceedings are home building proceedings which are generally complex proceedings, in particular in this instance because of the issue of the occupation certificate and the applicant's claim in estoppel and in contract; the respondent had prolonged proceedings by not complying with Tribunal orders for example non-compliance with the orders for filing of a Scott Schedule; the issue of jurisdiction was only brought up approximately 6 months into the proceedings; and the applicant has suffered considerable financial loss from building defects and legal costs, and the respondent has defended the claim purely on the issue of jurisdiction.
The dismissal of the application means that the respondent has been successful in the proceedings. However, the issue of jurisdiction was not raised by the respondent, but by the Tribunal. At a directions hearing on 29 September 2016 the Tribunal Member alerted the parties to the jurisdictional issue, noting that both parties agreed that an occupation certificate for the property was issued in January 2009, and that even if a 7 year statutory warranty period applied the application may be out of time. The matter was adjourned to allow the parties to obtain legal advice, to be next listed to ascertain the applicant's position on jurisdiction and determine future progress of the matter. At the next directions hearing on 27 October 2016, the matter was adjourned for hearing on the question of jurisdiction, with directions for provision of evidence.
In considering the matters raised by the applicant, the Tribunal file records that leave was given to the parties to be represented at the first listing on 3 May 2016, and confirmed on 29 September 2016. However, it appears from the Tribunal file that the first apparent involvement of a legal practitioner in the applicant's case was in early December 2016. While the respondent did not comply with the direction made on 3 May 2016 for filing of a response to the applicant's Scott Schedule by 23 August 2016, and the applicant sought an extension of time for provision of a reply, both parties otherwise appear to have complied with the Tribunal's procedural directions. Preparation for hearing and determination of the substantive matters in dispute has not proceeded further since the jurisdictional issue was identified. There was no undue delay in the parties' preparation for hearing and determination of the jurisdictional issue.
The respondent has been successful in the proceedings. However, the jurisdictional issue on which the decision to dismiss the application was based was identified by the Tribunal some months after the application was lodged, and after both parties had obtained expert evidence on the substantive issues in dispute, rather than having been raised by the respondent at an earlier stage in the proceedings. In these circumstances I am satisfied that the proper exercise of the discretion in relation to costs is to order that the applicant pay the costs of the respondent from the date that the parties were alerted to the jurisdictional issue, namely 29 September 2016.

Orders

The Tribunal orders: 1. A hearing on costs is dispensed with in accordance with s 50(1)(c) of the Civil and Administrative Tribunal Act 2013. 2. The applicant is to pay the respondent's costs of the proceedings from 29 September 2016, as agreed or assessed. L Pearson Principal Member Civil and Administrative Tribunal of NSW 14 July 2017 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: 06 September 2017

At a glance

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Judgment (5 paragraphs)

Parties

Cases Cited (4)