RBV Builders Pty Ltd v Chedra

Application of Rules 38 and 38A

We accept the respondent's submissions that, on the evidence put before us on its costs application, the builder's costs appeal sought to reduce its liability for the owners' costs by more than $30,000. We accept that the documentation produced by the owners is sufficient to establish that the costs likely to be allowed on an assessment would exceed $100,000, so that 30% of those costs would be more than $30,000. We also accept, as we found in the principal decision, that the costs at first instance were governed by rule 38, with the result that rule 38A(2) requires us to apply rule 38 in determining the costs of the costs appeal. However, the question remains whether the respondent has established that rule 38(2)(b) is satisfied in relation to the costs appeal. That issue hinges on the question whether "the amount claimed or in dispute [in the costs appeal] was more than $30,000."
The meaning of the terms "amount claimed" and "amount in dispute" were considered by the Appeal Panel in Allen v Tricare (Hastings) Ltd [2017] NSWCATAP 25 at [43]-[69]. Relevantly, at [43] the Appeal Panel held: In the case of an internal appeal, the "amount claimed … in the proceedings" can be determined by considering what orders the appellant seeks on the appeal. If those orders sought include an order that the respondent pay a sum of more than $30,000, expressly or impliedly, then the Tribunal should conclude that the amount claimed in those proceedings was more than $30,000. If the substantive orders sought do not involve any express or implied claim to any amount, it is difficult to see how there is any "amount claimed" for the purposes of r 38(2)(b).
At [48] the Appeal Panel held: The inclusion of the words "or in dispute" after "the amount claimed" in r 38 indicates that amounts may be in dispute in proceedings even if they are not the subject of a specific claim for an order for payment.
At [50] to [56] the Appeal Panel referred to the provisions of s 101(2)(r)(i) of the Supreme Court Act 1970 (NSW) which restricts the right of appeal to the Court of Appeal to "an appeal… that involves a matter at issue amounting to or of the value of $100,000 or more".
The Appeal Panel noted that the assistance in relation to the interpretation of r 38 to be derived from cases considering s 101(2)(r)(i) of the Supreme Court Act must be limited because: 1. The wording of these provisions is different from that of r 38; and 2. The provisions serve a different purpose.
The Appeal Panel referred to the principles applicable to s 102(2)(r)(i) of the Supreme Court Act as noted in Jabulani v Walkabout II Pty Ltd [2016] NSWCA 267 at [80].
At [57] the Appeal Panel held: 57. Adapting these principles to the circumstances of the present appeals and having regard to the specific wording of r 38, it appears to us that in applying r 38(2)(b): 1. The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance; 2. The phrase "in dispute" is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; 3. Whether "the amount … in dispute" in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000; 4. The fact that the value of the property the subject of any appeal exceeds $30,000 does not, of itself, mean that "the amount … in dispute" in that appeal is greater than $30,000.
In Condensing Vaporisers Aust Pty Ltd t/as RJ Tinker & Son v FDC Construction & Fit-out Pty Ltd (No 2) (2014) 86 NSWLR 360 the Court of Appeal held that costs cannot be taken into account in assessing the amount in dispute for the purposes of s 101(2)(r)(i) of the Supreme Court Act:
In that case the issue before the Court of Appeal was whether an appeal lay as of right from a decision of a single Judge of the Supreme Court, which was itself an appeal from a decision of the Local Court which included costs orders. The costs orders made by the Local Court were subject to challenge both in the first appeal to the single Judge of the Supreme Court and in the Notice of Appeal in the Court of Appeal.
Leeming JA, with whom MacFarlan and Ward JJA agreed, rejected a submission by the appellant that leave to appeal was not required because, when the costs ordered by the Local Court were added to the amount claimed by the appellant in the Local Court proceedings, more than $100,000 turned on the outcome of the appeal.
His Honour held, at [22]-[28].: 22. I would readily acknowledge that the language of s 101(2)(r)(i), if it were considered in isolation, is capable of sustaining Tinker's submission. The appeal to this Court "involves" a determination whether appellable error is disclosed in the decision of Slattery J, and the correctness of the magistrate's costs order was squarely raised before his Honour. However, three things cause me to reject Tinker's submission, and to adopt a narrower construction of s 101(2)(r). 23. First, it is not open to read s 101(2)(r)(i) afresh. Its precise words are laden with many decades of authority, including authority squarely inconsistent with Tinker's construction. Tinker needs to show a good reason why a different legal meaning should be given to the same words in essentially the same context. This it has failed to do. 24. Secondly, the fact that costs, especially costs where relatively small sums are at stake, loom large in litigation involving multiple appeals is a phenomenon centuries old. There is no reason in 2014 for any more relaxed view to be taken of the legislative restrictions upon appeals as of right. The same concerns expressed in the Privy Council in 1860 about the risk that every litigant could, "by swelling the costs", enjoy an appeal as of right, ring true today. Indeed, Tinker's construction sits ill with the command in s 60 of the Civil Procedure Act 2005 (NSW) requiring the practice and procedure of courts to be implemented with the object of resolving the issues between the parties so that costs are proportionate to the importance and complexity of the subject-matter in dispute. 25. Thirdly, Tinker's construction also sits ill with the purpose of s 101 when that section is read as a whole. Tinker says that it enjoys a second appeal as of right where what is at stake is a small claim coupled with costs. Section 101 expressly provides that small appeals require leave. Section 101 also expressly provides that appeals confined to costs require leave. This Court is instructed by s 33 of the Interpretation Act 1987 (NSW) to prefer a construction which promotes the self-evident legislative purposes of discouraging appeals in small matters, and discouraging appeals as to costs. Why ever should there be an appeal as of right where there is both a small claim and large costs? … 28. There is no sound reason to adopt a construction which would favour a doubly disfavoured category of litigation: double appeals in proceedings where the costs are disproportionate to what was originally at stake. There is nothing in the Supreme Court Act to warrant departing from decisions dealing with double appeals referred to above, and Tinker's submission collides with the important legislative purpose that costs be proportionate to what is at stake.
As the Appeal Panel noted in Allen v Tricare, the wording of s 101(2)(r)(i) is different from the wording of rule 38. The objective of rule 38 cannot be described in the same way as Leeming JA described the objective of s 101(2)(r)(i) and rule 38 does not contain any provision comparable to s 101(2)(c) which states that leave to appeal is required to appeal against a judgment or order "as to costs only which are in the discretion of the Court".
It is thus apparent that the reasons given by Leeming JA for rejecting the submission that the costs could be taken into account in assessing the amount in issue, are not applicable in respect of rule 38. In that context paragraph [22] of his Honour's decision may be said to support the proposition that, on an appeal against an order relating to costs, the amount of costs at issue in the appeal is capable of constituting an amount in dispute in the appeal.
In The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 the Appeal Panel referred to cases dealing with monetary limitations upon rights of appeal to the High Court and the Court of Appeal and noted "that the expression found in r 38(2)(b) is substantially different". The Appeal Panel stated, at [83] - [96]: 83 The language of the Judiciary Act, District Court Act and Supreme Court Act, which the courts were required to consider in the decisions to which we have referred above, concerned proceedings "that involves a matter in issue" or "involves (directly or indirectly) any claim, demand or question" (emphasis added) to or of a specified value or more than the prescribed amount. 84 The expressions are of wide import. The expressions do not speak of "the amount claimed" or "the amount in dispute". 85 The words "involves a matter at issue" and "involves (directly or indirectly) any claim, demand or question" are not limited to proceedings in which an order for an amount of money is claimed or to proceedings where an order might be made relieving a party from an obligation to pay. Nor are those words limited to proceedings where a specific amount must be found due and payable in order to establish an entitlement to the relief sought. However, the words are wide enough to include such claims. As the authorities make clear, the provisions are seeking to confine the circumstances in which a decision may be challenged as of right by applying a monetary filter. In the case where no specific amount is claimed or in dispute, the value of the property or other rights must be greater than the prescribed amount. 86 On the other hand, the expression "the amount claimed or in dispute in the proceedings" used in r 38(2)(b) suggests that the rule is concerned with the relief being directly sought in the proceedings in respect of a specific amount. It does not speak of any property or other civil right that might be at issue or any question of valuation in relation to such rights. 87 In this regard, the meaning of the rule needs to be considered in the context of the NCAT Act and the fact that r 38 operates as an exception to s 60 of the NCAT Act. Section 60 states that a party is to pay their own costs, however the Tribunal may make an order for costs if special circumstances are established: see Bonita v Shen [2016] NSWCATAP 159 at [41] and following. That is, but for r 38 (or provisions in other enabling legislation conferring power to award costs in particular circumstances), the general position under s 60 is that each party is to pay their own costs: see s 60(1) of the NCAT Act. 88 Also, the expression in r 38(2)(b) needs to be considered in light of the enabling legislation by which the Tribunal is given jurisdiction to hear and determine particular disputes. It is an expression reflective of some of the types of orders which the Tribunal might make in connection with claims brought before it. 89 For example, in dealing with a consumer claim, an applicant for relief might seek an order for the payment of money or to be relieved from an obligation to pay money in a consumer claim: see s 79N(a) and (d) of the Fair Trading Act, 1987 (NSW) (FT Act). Similarly, in a building claim, an applicant for relief might seek an order for the payment of money or to be relieved from an obligation to do so; see s 48O(1)(a) and (b) of the HB [Home Building] Act. Other examples include the order making power of the Tribunal under ss 72(1)(a) and (b) of the RL [Retail Leases] Act. 90 In cases where an amount is claimed by an applicant, an award of money may be made. In cases where an applicant seeks relief from payment, no amount is claimed as an order for payment is not sought. Rather, an order is made for relief from payment. However, "the amount in dispute" is the specific amount from which relief from payment is sought, there being a dispute about whether the applicant for relief is liable to pay the particular sum or should otherwise be relieved from the obligation to pay. In each case, "the amount" is identified and, where it is greater than $30,000, r 38(2)(b) is engaged. 91 Rule 38(2)(b) may also operate in circumstances where the Tribunal has power to make an order for the payment of a specific amount of money, despite the particular relief sought by the applicant. For example, in a building claim under the HB Act, the Tribunal may make an order for the payment of money despite the preferred outcome for a claim in respect of defective work being a rectification order (see s 48MA of the HB Act) or despite an applicant for relief claiming a different order (see s 48O(2) of the HB Act). 92 In these cases, the specific cost of the work to be undertaken can be determined by reference to the relief claimed, in order to ascertain whether the monetary threshold for engagement of the rule has been reached. However, in these cases, one or all parties to the proceedings would provide evidence of the cost of the rectification or completion so as to enable the Tribunal to make specific findings as to "the amount in dispute in the proceedings". 93 If there is no such evidence, then it could not be said there is a dispute about the amount of the cost of rectification or completion of the works. 94 Lastly, where it is necessary that the specific amount of any debt owed or payable must be determined as part of the fact finding process, in order to found any relief and establish that the specific amount in dispute is more than $30,000, it may also be said that this sum is "the amount in dispute in the proceedings" for the purpose of r 38(2)(b) and that the rule may also operate in these circumstances. An example might be where it is necessary to determine the specific amount of rent that remains unpaid for the purpose of making a termination order for non-payment of rent under the Residential Tenancies Act, 2010 (NSW). However, for the purpose of this appeal, it is unnecessary to resolve whether the rule would operate in cases where only an order for possession was being sought and not an order for the payment of rent. 95 On the other hand, it seems to us that where there is a claim for relief that may, as a consequence of that relief being granted, result in the loss of a property or other civil right to a value greater than $30,000, it could not be said that there are proceedings in which the amount claimed or the amount in dispute is greater than $30,000 within the meaning of the rule. Similarly, the fact that it is necessary to evaluate evidence about the value of particular property or determine other rights as part of determining whether there is an entitlement to relief does not mean "the amount claimed" or "the amount in dispute" in the proceedings is more than $30,000. Where the relief sought is not dependent on a finding that a particular amount is payable or not payable, it could not be said that "the amount claimed or in dispute in the proceedings is more than $30,000". 96 Rather, in such proceedings, the evaluation of the evidence of value or amount is for the purpose of determining whether to grant relief, not to ascertain the amount which is to be the subject of a specific order.
The relief being sought in the costs appeal was a reduction in the percentage of the costs of the first instance proceedings which the appellants were liable to pay the respondent. That relief did not involve any specific amount of money. Furthermore, there was not before the Appeal Panel, on the hearing of the costs appeal, evidence of the amount of costs in dispute, and such evidence was not necessary (or even relevant) to the resolution of the costs appeal.
Moreover, in Dimitropoulos v Capital Construction Pty Ltd [2019] NSWCATAP 164 at [28] the Appeal Panel stated: 28 … we do not accept the respondent's submission that legal costs incurred by a party are relevant to the determination of the amount claimed or in dispute. In relation to this, [at] the time an appeal is lodged - or indeed at the time it is heard - it would not be usual for a party against whom a costs order may ultimately be sought to know what costs the other party has incurred. Further, costs are determined after a decision is made on the substance of an appeal. Even if what is appealed against is a costs decision, it is not practical to characterise costs as an amount "claimed" or "in dispute" in the proceedings.
In that case the successful respondent to an appeal claimed that it had incurred legal costs in excess of $130,000 which were the subject of a costs order made in its favour by the Tribunal at first instance. The appellants had submitted on the appeal that they should only be liable for 53% of the respondent's costs. The respondent submitted that, if costs were assessed on the ordinary basis, the appellants had sought by the appeal to limit their liability in respect of costs to $60,000, meaning that the amount in dispute on the appeal in relation to the costs order exceeded $30,000.
The Appeal Panel held that the amount in dispute on the appeal exceeded $30,000 independently of the order for costs and therefore the Appeal Panel did not need to address the question whether the amount of the costs, which were the subject of challenge in the appeal, could be taken into account. It follows that the statement of the Appeal Panel at [28] was obiter.
Nevertheless, the statement in Dimitropoulos at [28] was a considered dictum rejecting a submission that the amount of costs put in dispute on an appeal is capable of being an "amount in dispute" for the purposes of rule 38. We see no reason to depart from that conclusion.
Accordingly, although the respondent has now put before the Appeal Panel evidence sufficient to establish that the extent to which the appellants' liability for costs would have been reduced, if the appellants had succeeded on the costs appeal, did exceed $30,000, we find that "it is not practical to characterise [those] costs as an amount 'claimed' or 'in dispute' in the proceedings".
Accordingly, we find that rule 38 does not authorise the award of the costs of the costs appeal in the absence of special circumstances. As the respondent did not submit that there were special circumstances warranting an order for costs, we find we are not empowered to make an order for the costs of the costs appeal in favour of the respondent and will not do so.
Our orders are: 1. Pursuant to s 50(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW) a hearing in respect of the costs of appeal AP 20/18109 (the costs appeal) is dispensed with. 2. The respondent's application for the costs of the costs appeal is dismissed. 3. There will be no order in respect of the costs of the costs appeal.

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