Petropoulos v CPD Holdings Pty Ltd

Judgment (7 paragraphs)

[1]

Introduction

These proceedings are about bathroom renovations. The issue is whether the builder should have to pay all the homeowner's costs of an appeal to the Appeal Panel.
The homeowner, Ms Petropoulos, and the builder, CPD Holdings Pty Ltd, brought proceedings against each other in the Consumer and Commercial Division of the Tribunal. The Tribunal ordered the homeowner to pay the builder $952.20 for loss of profit after the homeowner repudiated the contract. The Tribunal ordered the builder to repair a chip on the bath, but dismissed the rest of the homeowner's claim. The homeowner appealed to the Appeal Panel.
In the principal decision, Petropoulos v CPD Holdings Pty Ltd [2018] NSWCATAP 72, the Appeal Panel upheld the homeowner's appeal in part. Contrary to the Tribunal's decision, we decided that the builder had breached the statutory warranty in s 18B(1)(a) of the Home Building Act 1989 (NSW) in relation to the size of the shower recess. The contract for residential building work specified 900 mm x 900 mm for the shower recess. When the renovations were complete, the dimensions for the shower recess were 850 mm x 850 mm. We dismissed the homeowner's other grounds of appeal.
Based on the parties' written submissions on remedy, we decided that the builder should rectify the breach by increasing the size of the shower recess: Petropoulos v CPD Holdings Pty Ltd t/as The Bathroom Exchange (No 2) [2018] NSWCATAP 233. That kind of order is sometimes called a "work order": Home Building Act, s 48O(1)(c). We will refer to this decision as the remedy decision.
The homeowner submitted that as she had been successful on appeal, and she did not conduct herself in a way which would militate against awarding costs, the builder should be ordered to pay her costs. The builder submitted that the homeowner had 15% success on appeal and the builder 85% success. That outcome should result in an order that the homeowner pay the builder 70% of each respondent's costs of the appeal.

Costs rule and relevant principles

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: NCAT Act, s 35; Civil and Administrative Tribunal Rules 2014, rule 38. Generally, costs will be awarded to the successful party.
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.
Below is our summary of the relevant principles, derived from [20] - [24] of Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott [2018] NSWCATAP 97: 1. the Tribunal may make such order as it thinks appropriate as long as it acts in accordance with the subject matter, scope and purpose of the power; 2. generally costs will be awarded to the party who has been successful, without attempting to differentiate between those particular issues on which it was successful and those on which it failed; 3. a separable issue can relate to any disputed question of fact or law on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter; 4. if the appellant loses on a separable issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue; 5. where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory; and 6. there may be factors which militate against the awarding of costs to the successful party.

Should the general principle apply or are there separable issues justifying a discount or setting off approach?

The builder submitted that the homeowner had 15% success on appeal and the builder 85% success. That outcome, it was said, should result in an order that the homeowner pay the builder 70% of each respondent's costs of the appeal because: 1. the homeowner was successful on only one ground of appeal, and unsuccessful on eleven other grounds; 2. the Tribunal made a 'work order' in circumstances where the homeowner said that the remedy should be compensation of $29,871.65 and the builder said that no remedial order should be made, but if one was made, it should be a work order; and 3. the second respondent, the director of CPD Holdings Pty Ltd, was 100% successful in the appeal as no order was made against him.
Generally a court "does not attempt to differentiate between the issues on which a party was successful and those on which it failed": Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per Beazley, Ipp and Basten JJA. The circumstances in which it may decide to differentiate between those issues were summarised in the same case at [38]: 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: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). . . . If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34].
In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq set out two examples of matters involving discrete or separable issues. The first was where a plaintiff makes separate claims for different relief, or a plaintiff makes a claim and a defendant cross-claims. The second is where a respondent is successful in having an appeal against a decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. Hodgson CJ in Eq went on to say (at 13) that: . . . in general terms I accept that if an issue is raised reasonably and is not disproportionate to the whole case, then normally the successful party should get his or her costs. However, particularly in relation to severable issues, the lesser the strength of the point raised and the greater the proportion it bears to the whole case, the more likely it is that the successful party may be deprived of costs; and if the Court comes to the view that it was unreasonable to raise the issue, then the successful party may have to pay the costs of that issue.
The builder relied on the Appeal Panel's decision in Rekrut and Scott v Champion Homes Sales Pty Ltd [2018] NSWCATAP 97 where one party had appealed and the other party had cross-appealed. The owners and the builder were successful to some extent in their respective appeals. The Appeal Panel did not attempt to differentiate between particular grounds of appeal on which the owners and the builder were successful and those where they failed. The Appeal Panel concluded that each party should be entitled to the costs of their respective appeals. The Appeal Panel made one costs order in respect of the two interrelated appeals by setting off the builder's success against the success of the owners.
Nothing in Rekrut and Scott v Champion Homes Sales Pty Ltd [2018] NSWCATAP 97 supports the builder's submission because that case involved an appeal and a cross appeal.
The builder also cited Avopiling Pty Ltd v Bosevski [2018] NSWCA 146 in support of their submission. In that case the appellant failed on its challenge to liability but succeeded on some damages issues. The Court of Appeal found that the liability and damages issues were separable and that various damages issues were also separable. Liability issues occupied the most time, but the appellant was only successful in relation to the method of calculation of future economic loss. The Court of Appeal summarised its reasoning at [176]: Applying the appropriate broad bush approach based on matters of impression and evaluation, Avopiling should be assessed as having had 20 per cent success on the appeal (having obtained a reduction in damages), but having failed on the principal issue of liability and on many of the issues of damages. On the separable issues of liability and damages Mr Bosevski should be assessed to have been 80 per cent successful on the appeal. Considering the relevant "event" overall, and taking into account the success of both parties on the separable issues in this case, Avopiling should be ordered to pay 60 per cent of Mr Bosevski's costs to reflect a set-off.
The facts in Avopiling Pty Ltd v Bosevski are not analogous to the facts in this case. The homeowner was successful on the liability issue, at least in relation to one of the grounds of appeal. The homeowner was also successful on the remedy issue in the sense that the Tribunal ordered the builder to rectify the breach by increasing the size of the shower recess. The outcome was not 'mixed'.
Any disputed question of fact or law on which a party fails, notwithstanding that they may have otherwise been successful, may justify a discount or setting off approach. In this case, no particular issue was clearly dominant or separable. The homeowner failed on eleven of the twelve grounds of appeal, and many of those grounds were weak. Nevertheless, the homeowner's reliance on the failed grounds did not significantly increase the time taken to hearing the appeal. In all the circumstances, we exercise our discretion to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which she was successful and those on which she failed.

At a glance

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Judgment (7 paragraphs)

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Legislation Cited (2)

Cases Cited (8)

Cited By (3)