Patel v Redmyre Group Pty Limited

NCAT Appeal Panel|2021-11-08

Introduction

This is an appeal from the decision made on 1 March 2021, that the Appellants pay the Respondent's costs of and incidental to proceedings HB19/17685 and proceedings HB19/30188 on the ordinary basis as agreed or assessed on the basis set out in the legal costs legislation (as defined in s3A of the Legal Profession Uniform Law Application Act 2014 (NSW)).
The Presiding Member issued on the same day detailed written reasons for his decision.
This appeal has been the subject of various procedural orders. Relevantly, for present purposes, on 2 June 2021 the Tribunal ordered that: 1. pursuant to s50(2) of the Civil and Administrative Tribunal Act 2013, (the NCAT Act) the appeal be decided on the papers without an oral hearing; 2. the Appellants lodge their written submissions in support of the appeal by 23 June 2021; 3. the Respondent lodge its written submissions in opposition to the appeal by 7 July 2021; and 4. the Appellants lodge any written submissions in reply by 14 July 2021.
Those submissions were received by the Tribunal on, respectively, 25 June 2021, 14 July 2021 and 22 July 2021.
The underlying substantive proceedings involved: 1. A claim (proceedings HB19/17685) by the Appellants, as owners, against the Respondent, as builder, under which they sought compensation in the amount of $345,683 in respect of alleged breaches by the Respondent of certain express terms of, and statutory warranties in relation to, a contract between the Appellants and the Respondent for the performance by the Respondent of residential building work (the Contract); and 2. A counterclaim (proceedings HB19/30188) by the Respondent against the Appellants, under which it sought damages for the failure by the Appellants to pay variation claims asserted by it under the Contract with an aggregate value of $75,762, or alternatively payment on a quantum meruit basis for the works comprised in those variation claims.
In the event, on 27 November 2020 the Tribunal: 1. Dismissed the Appellants' substantive claim; 2. Dismissed the Respondent's claim for damages; and 3. Made an order allowing certain of the Respondent's quantum meruit claims.

Statutory provisions

The Appellants do not appeal against the substantive decision dismissing its application, at least in this appeal. Rather, they appeal against the award of costs only, which for convenience these reasons will refer to as the costs decision. There is, however, a separate appeal by them underway in relation to the substantive decision.
Section 4(1) of the NCAT Act defines an "ancillary decision" as follows: ancillary decision of the Tribunal means a decision made by the Tribunal under legislation (other than an interlocutory decision of the Tribunal) that is preliminary to, or consequential on, a decision determining proceedings, including - (a) a decision concerning whether the Tribunal has jurisdiction to deal with a matter, and (b) a decision concerning the awarding of costs in proceedings.
The costs decision was self-evidently one made by the Tribunal that was consequential upon the substantive decision which determined the proceedings, and in any event clearly falls within paragraph (b) of the definition of "ancillary decision". It is thus an ancillary decision within the meaning of the NCAT Act.
Section 80(2) of the NCAT Act provides as follows: Any internal appeal may be made - (a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.
What follows is that since the costs decision is an ancillary decision of the Tribunal it is one against which, subject to Schedule 4 of the NCAT Act, an internal appeal may be made as of right on a question of law or otherwise with the leave of the Appeal Panel.
Clause 12(1) of Schedule 4 of the NCAT Act limits the circumstances in which the Appeal Panel may give leave for an appeal under section 80(2)(b), if the Division of the Tribunal which made the original decision is, as is the case here, its Consumer and Commercial Division. Relevantly, that clause provides as follows: An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because - (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
Where, however, the relevant appeal concerns a question of law, those restrictions are not relevant.
While generally parties to proceedings before the Tribunal are required under section 60 of the NCAT Act to meet their own legal costs in the absence of special circumstances, rule 38 of the Civil and Administrative Tribunal Rules 2014 (the NCAT Rules) provides as follows: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if - (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000.
Both sets of proceedings were before the Tribunal's Consumer and Commercial Division, and the amounts claimed in each of them clearly exceeded the minimum amount of $30,000 provided for in Rule 38. It was thus open to the Presiding Member, consistently with Rule 38, to award costs in the original substantive application without the need for special circumstances.

Leave to appeal

In their Notice of Appeal, the Appellants do not assert that the appeal concerns a question of law. Rather, in Section 6.B.1 of the Notice of Appeal they seek leave to appeal, on the basis that they have suffered a substantial miscarriage of justice since the costs decision was not fair and equitable. In doing so, they reflect the provisions of clause 12 of Schedule 4 to the NCAT Act referred to above.
A differently constituted Appeal Panel in Collins v Urban [2014] NSWCATAP 17 summarised at [76] to [79] the principles relevant to the granting of leave for appeals from decisions of the Tribunal's Commercial and Consumer Division, referring to clause 12 of Schedule to the NCAT Act: [76] Accordingly, it should be accepted that a substantial miscarriage of justice may have been suffered because of any of the circumstances referred to in cl 12(1)(a), (b) or (c) 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. [77] As to the particular grounds in cl 12(1)(a) and (b), without seeking to be exhaustive in any way, the authorities establish that: If there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" - Hutchings v CTTT [2008] NSWSC 717 at [35], Atkinson v Crowley [2011] NSWCA 194 at [12]. The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41-42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153]. [78] If in either of those circumstances the appellant may have been deprived of a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved then the Appeal Panel may be satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or because the decision was against the weight of the evidence. [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result because of one of the circumstances referred to in cl 12(1)(a), (b) or (c), it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred - see the general discussion in Kyriakou v Long [2013] NSWSC 1890 at [32] ff concerning the corresponding provisions of s 68 of the CTTT Act and especially at [46] and [55].
The Appellants claim in their Notice of Appeal that the decision at first instance was not fair and equitable, for three reasons: 1. First argument: The substantive decision is under appeal and if they succeed in their appeal "… then it would not be fair and equitable for the costs order to remain on place". 2. Second argument: It is not fair and equitable for the costs order to require the Appellants to pay the entirety of the Respondent's costs, when the Respondent "…failed in the entirety of its cross-claim and was allowed only two small items on a quantum meruit". 3. Third argument: The costs incurred in the proceedings are "… extremely out of proportion to the outcome achieved by the Respondent. The Tribunal is supposed to be a costs effective venue to resolve disputes and has a wide discretion in apportioning costs between the parties, with the default position that each party bear its own costs A 100% costs order against the Appellants is not fair is [sic] circumstances where outcome [sic] achieved is miniscule relative to the claim".
Nowhere in the Notice of Appeal was there any suggestion that either: 1. the decision under appeal was against the weight of evidence, or 2. significant new evidence had become available relevant to the question of costs that was not reasonably available at the time of the hearing.
Accordingly, the central questions for the Appeal Panel in considering whether to give leave to appeal are: 1. Was the decision under appeal not fair and equitable? 2. If so, did the Appellants suffer a substantial miscarriage of justice as the result?
The Appellants' submissions and submission in reply, and the Respondent's submissions, consider at length these issues with copious references to decided cases, both in this Tribunal and in the courts. The Appeal Panel is appreciative of the efforts of the parties' respective legal representatives.

Consideration

The Appeal Panel does not accept the Appellant's First argument to the effect that the decision under appeal was not fair and equitable. It does so for two reasons: 1. First, as the Presiding Member at first instance noted in paragraph [16(4)] of his reasons, ".. if the [substantive] appeal is successful, the Appeal Panel in the appeal proceedings can consider the costs order made by the Tribunal and vary it as necessary"; that is to say, the costs order under appeal is necessarily provisional in nature, and its final status will be open to review having regard to the outcome of the substantive appeal. There is nothing unfair or inequitable in this position. 2. Secondly, again as the Presiding Member pointed out at [17], it is an established principle in relation to costs that: The starting point is that the judgment appealed from is assumed to be correct and a successful plaintiff is entitled to the fruits of its victory: Tzaneros Investments Pty Limited v Walker Group Constructions Pty Limited [No. 3] [2016] NSWSC 526. The decision of another Appeal Panel makes it clear that this principle should apply in the Tribunal: Bibi v NSW Land and Housing Corporation [2019] NSWCATAP 300 at [11(1)]. There was nothing unfair or inequitable in allowing that principle to operate in the present case.
Turning now to the Appellants' Second argument (which, on the Appeal Panel's reading, incorporates the second limb of their Third argument), the Appeal Panel is unconvinced: 1. The issue is not that the Member at first instance should not have made a single costs order, as the Appellants recognise in paragraph [13] of their submissions: "It is submitted that the two proceedings were significantly intertwined and that a single costs order is preferable to an order differentiating between the costs of the builder and the owners in each of these proceedings". Rather it is whether the very limited success which the Respondent enjoyed in its counter-claim, as compared to its success as defendant against the Appellants in their claim, should be reflected in the costs order in application of the principle in Hughes v Western Australian Cricket Assn Inc (1986) 8 ATPR 50-478, that where a successful party fails on certain issues circumstances may make it reasonable that it bear the expense of litigating that portion upon which it failed. 2. The Member at first instance considered this issue, as is clear from paragraphs [30] to [32] of his reasons. 3. Relevantly: 1. Applying the principles set out in Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott. [2018] NSWCATAP 97, he decided to make a single costs order covering the two interrelated proceedings; and 2. He was guided by the principles summarised in Vella v Mir (No 3) [2020] NSWCATAP 17, at [31] to [33], to conclude that since no particular issue or group of issues was clearly dominant or separable as between the two proceedings, he could not therefore appropriately differentiate between them in making a costs order. 1. The Appellants did not demonstrate any error in this approach. The simple fact that the Respondent was largely unsuccessful in its counterclaim does not, as is clear from Vella v Mir (No 3) at [31], of itself justify a departure from the general rule that costs are awarded in favour of the successful party based on the outcome of the proceedings as a whole. The Appellants did not offer any compelling reason to conclude that the member's decision to embrace this orthodoxy in the present case was wrong. He considered the options available, and made a choice between them, informed by his familiarity with the underlying controversy. In doing so, he effectively concluded that the two sets of proceedings were two sides of the same coin, and thus so intimately connected as to justify a single global costs order reflecting the overall real commercial outcome of the proceedings. 2. The Appeal Panel sees nothing unfair or inequitable in this approach.
The Appellants' Third argument appears to be that, even where Rule 38 of the NCAT Rules applies, the Tribunal's "default position" (to adopt the Appellants' own wording) is that each party bear its own costs. This, in the Appeal Panel's view, is incorrect since having: 1. jettisoned the "no costs" rule in the circumstances to which Rule 38 applies; but 2. specified no alternative criteria for awarding costs.
The inevitable conclusion must be that the traditional principles governing the award of costs apply. The Appeal Panel is fortified in this by the decision in Long v Antoun's Concrete Pumping Pty Ltd [2019] NSWCATAP 125, where a different Appeal Panel observed at [9] that: Rule 38 does not specify the factors the Appeal Panel must take into account in exercising the discretion to award costs. In these circumstances the appropriate starting point 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.
The Appeal Panel is not, therefore, convinced by the Appellants' third argument, that to apply the general principles applicable to the award of costs in circumstances where Rule 38 of the NCAT Rules apply, rather than a default "no costs" rule, is either unfair or inequitable.
Moreover, even if the Appeal Panel were inclined to the view that any element of the decision under appeal was unfair or inequitable as against the Appellants in the sense contemplated by Clause 12(1) of Schedule 4 of the NCAT Act, the very existence of the substantive appeal (with the possibility which it offers of a different outcome on both substance and costs) in any event makes it very difficult indeed to conclude that the Tribunal's decision at first instance, to make a costs order against the Appellants, visited a substantial miscarriage of justice on the Appellants.

Orders

The Tribunal orders as follows; 1. Leave to appeal is refused. 2. Appeal 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: 09 November 2021

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