Petropoulos v CPD Holdings Pty Ltd

Appeal from Tribunal's costs decision

1. We are satisfied that the issues can be determined adequately in the absence of the parties by considering their written submissions. Consequently, we have determined this application 'on the papers': NCAT Act, s 50(2).
2. In cases like this where the amount in dispute is more than $30,000, the Tribunal may award costs even in the absence of special circumstances warranting an award of costs: Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules), rule 38. Generally, costs will be awarded to the successful party.
3. Rule 38 of the NCAT Rules states as follows: (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.
4. The Appeal Panel set out the general principles in these kinds of cases in Rekrut and Scott v Champion Homes Sales Pty Ltd [2018] NSWCATAP 97 at [20] - [23]: [20] The general principles applicable to the exercise of the applicable powers under cl 20(4) of the CTTT Regulation were stated in Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 at [36] as follows: 1. power conferred by such a clause is "unfettered" in the sense that the Tribunal may make such order as it thinks appropriate, so long as it acts in accordance with the subject matter, scope and purpose of the power; 2. the accepted purpose of an award of costs is to compensate the party in whose favour costs are awarded for the expense incurred in respect of the litigation. [21] Generally, the exercise of an unfettered power to award costs involves costs "following the event" unless there are factors which militate against the successful party being awarded all of the party's costs - Oshlack v Richmond River Council (1998) 193 CLR 72 at [67] and [69]; [1998] HCA 11. [22] Generally the "event" refers to the event of the claim or the appeal, as the case may be, and may be understood as referring to the practical result of a particular claim or appeal - Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15]. [23] Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed - Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik) at [38].
5. As McHugh J observed in Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [66]: By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs.
6. The "result of the litigation" changed to some extent after the Tribunal made the costs decision. The Appeal Panel partially upheld the homeowner's appeal, set aside the Tribunal's principal decision and ordered that the builder carry out certain rectification work. This situation is similar to the facts in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 348. In that case the primary judge made a costs order just before judgment was given on the appeal. One party then applied for leave to appeal against those orders. The Court of Appeal decided to deal with the costs orders "to avoid further expenditure of costs." At [2], the Court of Appeal noted that: The costs orders made by the primary judge proceed on the basis of the primary judge's principal decision that is being set aside, and so they too should be set aside in their totality as a matter incidental to the setting aside of the principal decision.
7. In this case, because the Appeal Panel has set aside the principal decision, it is appropriate for the Tribunal's costs decision to be set aside. If the Member who originally heard the costs application is available, it is desirable for that person to re-hear any application for costs. That Member is familiar with any other considerations that may be relevant to the awarding of costs.

Homeowner's application for costs of the costs appeal

1. The homeowner has applied for the builder to pay her costs on appeal. The builder seeks an order for their wasted costs of the homeowner's withdrawn stay application.
2. We are satisfied that the issues can be adequately determined in the absence of the parties by considering their written submissions. Consequently we have determine this application 'on the papers': Civil and Administrative Tribunal Act, s 50(2).
3. The Appeal Panel must apply the first instance costs provisions when deciding whether to award costs in relation to an internal appeal: NCAT Rules, rule 38A. The first instance rule is that the Tribunal may award costs even in the absence of special circumstances: NCAT Rules, rule 38. The most important factor is the result of the litigation.
4. Dealing first with the homeowner's application, the parties have agreed that the Tribunal's costs decision should be set aside and re-determined taking into account the Appeal Panel's principal decision and remedy decision. Contrary to the homeowner's submission, it is not the case that she has clearly been successful in the costs appeal. The builder has not capitulated or agreed that the Tribunal made an error of law. Rather, there has been a "supervening event" - the Appeal Panel's principal decision and remedy decision: One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548 at [6]. In those circumstances, we should apply the following principle set out by the High Court in Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 625: If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
5. The further prosecution of the appeal became futile in this case because the Appeal Panel handed down the principal decision and the remedy decision. Nevertheless, the homeowner submits that the Appeal Panel should address her grounds of appeal - that the Tribunal had no jurisdiction to determine her costs application and that the order was unfair and inequitable - so that guidance can be given in future cases. We agree with the builder that it is futile to determine the merits of the homeowner's appeal in circumstances where there is no doubt that the decision needs to be re-determined. We should focus on resolving "the real issues in the proceedings": NCAT Act, s 36(1).
6. The builder agreed to the vacation of a directions hearing on the basis that the parties should not have to file submissions until the Appeal Panel had determined the principal appeal. The builder did not object to the Tribunal's costs orders being stayed. The builder has acted reasonably in defending the proceedings. In those circumstances, the homeowner's application for costs of the appeal is refused.

Builder's application for costs of withdrawn stay application

1. We deal next with the builder's application for their costs of the homeowner's withdrawn stay application.
2. After the builder served their November 2018 submissions responding to the costs appeal, the homeowner wrote to the Appeal Panel on 22 November 2018 applying for all costs issues to be stood over pending the resolution of proceedings which she had commenced in the Supreme Court. The appeal was listed for a directions hearing on 29 November 2018 to address this and other issues.
3. On 26 November 2018, the homeowner emailed the Appeal Panel saying that she agreed with the builder that the directions hearing is not needed because the builder agrees, "that the whole of the costs on first instance and appeal should be heard together." The builder wrote back the following day saying that he had not agreed with that proposal. Rather, the builder submitted that the costs of the proceedings before the Tribunal should be remitted to the Tribunal Member for reconsideration and redetermination. The issue of the costs of the costs appeal remained outstanding.
4. At the directions hearing on 29 November 2018, the Appeal Panel prepared draft questions including the following issue for the parties to make submissions about: "Should the Costs Appeal be stayed until the hearing of applications by each of the parties seeking leave of the Supreme Court of New South Wales to appeal the decision of the Appeal Panel in the Primary Appeal made 8 October 2018."
5. According to the builder, it is apparent from this draft question that the Appeal Panel regarded the homeowner's letter of 22 November 2018 as a 'stay' application. The homeowner later requested that the draft question be deleted. The builder characterises this request as a withdrawal of the 'stay' application and claims the costs of preparing for and attending the directions hearing. The builder submitted that it had responded to the costs appeal in the November submissions and that the homeowner now agrees with that position. By 'withdrawing' the stay application, the builder says that it has incurred unnecessary costs preparing for the 29 November 2018 directions hearing and in attending that hearing.
6. The directions hearing on 29 November 2018 was necessary to address the future conduct of the matter given that the parties had not reached agreement as to how the various outstanding applications and appeals should be resolved. The directions hearing was convened to address several issues, not just the homeowner's application for a 'stay'. There is no evidence of any costs incurred in responding to the 'stay' application. In those circumstances, there were no wasted costs incurred by the builder in attending the directions hearing. Consequently, the builder's application for the costs of the homeowner's withdrawn stay application is dismissed.

Orders 1. A hearing is dispensed with pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 2. The decision of the Tribunal made on 25 January 2018 that: 1. The homeowner must pay the builder's costs of the proceedings up to and including 9 August 2016 on the ordinary basis, and 2. The homeowner must pay the builder's costs of the proceedings as from 10 August 2016, on an indemnity basis is set aside. 1. Any application for costs is to be reconsidered and re-determined by the Tribunal as originally constituted, if that Member is available, either with or without further evidence. 2. The homeowner's application for costs of the costs appeal is dismissed. 3. The builder's application for the costs of the homeowner's withdrawn stay application 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: 13 March 2019