Redmyre Group Pty Ltd v Stockman [2023] NSWCATAP 342 | Case summary

NCAT Appeal Panel|2023-12-22|Before: Blake AM

Introduction

Before considering this issue, it is appropriate to summarise the Stockman costs submissions and set out the applicable statutory provisions and legal principles.

The Stockman costs submissions

In the Stockman costs submissions, Mr and Mrs Stockman made the following submissions: 1. there was no requirement to show special circumstances within s 60(2) of the NCAT Act as the quantum of the works the subject of the work order was at least $98,204.47 as agreed between the parties' experts in the Tribunal proceedings. Rule 38A of the NCAT Rules applies because as all that is required for this rule to apply is for the amount claimed or in dispute in the appeal to be more than $30,000.00; 2. the usual principles that should apply in the exercise of discretion are that costs should follow the event; 3. they were wholly successful in the appeal in circumstances in which we held: 1. Redmyre's delay in appealing against the 26 May 2023 orders and against the 22 June 2023 orders was substantial and intentional: the Appeal Decision at [58]-[59], [65]; 2. Redmyre's extension of time application was unsupported by any evidence that satisfactorily explained the reason for the substantial delay in filing the notice of appeal: the Appeal Decision at [61]-[66]; 3. Redmyre was, in any event, unable to show that its case had more substantial merit than being merely fairly arguable: the Appeal Decision at [70]-[89], [102]-[103]; 1. if they are mistaken that r 38 of the NCAT Rules applies, special circumstances (that need not be extraordinary or exceptional) exist for the reasons set out para (c) above and are such as to warrant an award of costs in their favour.

NCAT Act

Section 60(1), (2) and (5)(b) of the NCAT Act relevantly provide that each party to an appeal is to pay the party's own costs and the Tribunal may award costs in relation to an appeal only if it is satisfied that there are special circumstances warranting an award of costs.
In proceedings commenced in the Consumer and Commercial Division, by reason of the operation of s 35 when read with par (a) of the definition of "procedural rules" and the definition of "Tribunal rules" in s 4(1) of the NCAT Act, s 60 is subject to the NCAT Rules.

NCAT Rules

Rule 38 of the NCAT Rules relevantly provides: 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 - … (b) the amount claimed or in dispute in the proceedings is more than $30,000.
Rule 38A of the NCAT Rules relevantly provides: 38A Costs in internal appeals … (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.

Costs under r 38(2)(b) of the NCAT Rules

In The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite Holdings) at [3]-[5], the Appeal Panel summarised the circumstances in which r 38(2)(b) of the NCAT Rules applies: "[3] Rule 38(2)(b) applies to the following proceedings: (1) Where the relief claimed in the proceedings is for an order to pay a specific amount of money, or an order to be relieved from an obligation to pay a specific amount of money, and that amount is more than $30,000; (2) Where an order is sought in the proceedings for the performance of an obligation (such as to do work), and the Tribunal has power make an order to pay a specific amount of money, even if not asked for by the claimant, provided that (a) there is credible evidence relating to the amount the Tribunal could award; and (b) that evidence, if accepted, would establish an entitlement to an order for an amount more than $30,000. [4] Rule 38(2)(b) may also apply to proceedings where the orders sought in the proceedings depend upon the claimant proving there is a debt owed in order to establish an entitlement to the relief sought, and that amount is in dispute and is more than $30,000. [5] Rule 38(2)(b) does not apply to proceedings: (1) Where a claim for relief in the proceedings (not being a claim for an order to be paid or be relieved from paying a specific sum) may, as a consequence of that relief being granted, result in the loss of any property or other civil right to a value of more than $30,000; or (2) Where there is a matter at issue amounting to or of a value of more than $30,000 but: (a) no direct relief is sought and no order could be made in the proceedings requiring payment or relief from payment of an amount more than $30,000; or (b) the relief sought does not depend on there being a finding that a specific amount of money is owed."
The general principles concerning the awarding of costs under r 38 of the NCAT Rules were considered by the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 (Vella (No 3)) at [28]-[30]: "[28] Clause 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, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9]. [29] Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it 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, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11. [30] In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion: (1) the starting point is that a successful party should be entitled to an order for costs in his favour; (2) an award of costs is by way of an indemnity and not as punishment; (3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party; (4) the factors to be considered are not to be confined as to do so would constrain the general discretion; (5) the relative success of the parties on different issues and the time taken to determine them may be relevant; (6) the nature of the proceedings is relevant; (7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious."

Costs under r 38A(2) of the NCAT Rules

For the purpose of r 38A of the NCAT Rules the amount claimed or in dispute is the amount in dispute on appeal, not the amount in dispute in the proceedings at first instance: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57].

Costs under s 60(2) of the NCAT Act

"Special circumstances" in s 60(2) of the NCAT Act are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].
In considering whether special circumstances exist for the purposes of s 60(2) of the NCAT Act: 1. each case will depend upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [27]; 2. the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; 3. mere success (or failure) of an application does not give rise to special circumstances: The Owners - Strata Plan 5319 v Price [2020] NSWCATAP 245 (Price) at [46]; 4. where special circumstances are found to exist, the Tribunal has a discretion to exercise in deciding what, if any, order should be made. Relevant to the exercise of that discretion are those facts upon which the finding of special circumstances was based. However, those findings do not constitute the whole of the relevant matters to be considered in deciding what, if any, order for costs should be made. Rather, the principles applicable to awarding costs generally must also be taken into account: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24].

Consideration

We are satisfied that the parties' experts in their joint expert report which was in evidence in the Tribunal proceedings agreed that the reasonable cost to rectify the defective works and complete the incomplete works was $98,204.47.
Having regard to the principles in Malachite Holdings at [3(2)], we are satisfied that r 38(2)(b) of the NCAT Rules was applicable to the Tribunal proceedings as the Tribunal had power to make a money order under s 48O(1)(a) of the HB Act.
It follows that in circumstances where Redmyre in the appeal was seeking to set aside the work order, r 38A(2) of the NCAT Rules is applicable to the appeal because the amount in dispute in the appeal is more than $30,000.
Having regard to the principles in Vella (No 3) at [28]-[30], we are satisfied that costs should follow the event and that Redmyre should pay the costs of the appeal of Mr and Mrs Stockman.
In view of our finding that Redmyre should pay the costs of the appeal of Mr and Mrs Stockman pursuant to r 38A(2) of the NCAT Rules, it is unnecessary to consider their alternative submission that an award of the costs of the appeal should be made in their favour pursuant to s 60(2) of the NCAT Act.

Orders

We make the following orders: 1. A hearing of the respondent's application for vary order 3 made on 14 November 2023 is dispensed with; 2. Order 3 made on 14 November 2023 is varied by substituting the following order in its place: "The appellant is to pay the respondents' costs of, or incidental to, the appeal with such costs, if not agreed, to be assessed in accordance with the Legal Profession Uniform Law Application Act 2014 (NSW)."

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: 22 December 2023

REASONS FOR DECISION

This is an internal appeal from two decisions of the Consumer and Commercial Division of the Tribunal, the first made on 26 May 2023 and the second made on 22 June 2023, in proceedings under the Home Building Act 1989 (NSW) (HB Act) concerning a dispute between the respondents, Andrew Stockman and Hieu-Duc Stockman (Mr and Mrs Stockman) who are the owners of a property at Earlwood in New South Wales (the property), and the appellant, Redmyre Group Pty Ltd (Redmyre), which is the builder that agreed to carry out building work at the property. In the first decision, the Tribunal made a work order in favour of Mr and Mrs Stockman (the work order). In the second decision, the Tribunal made a costs order partly in favour of Mr and Mrs Stockman and partly in favour of Redmyre.
On 14 November 2023, we made a decision that the application of Redmyre to extend the time to file the notice of appeal should be dismissed, the appeal should otherwise be dismissed, and there should be no order as to the costs of the appeal (the costs order). We also made procedural orders for evidence and submissions including on the question of whether an oral hearing may be dispensing with if a party sought to vary the costs order: Redmyre Group Pty Ltd v Stockman [2023] NSWCATAP 305 (the Appeal Decision).
On 28 November 2023, Mr and Mrs Stockman applied to vary the costs order to seek the following order (the Stockman costs application): "the Appellant pay the Respondents' costs of, or incidental to, the proceedings with such costs, if not agreed, to be assessed in accordance with the Legal Profession Uniform Law Application Act 2014 (NSW)."
We have decided to vary the costs order in the manner sought in the Stockman costs application.
These reasons for decision should be read with, and use the same abbreviations as in, the Appeal Decision.

Redmyre Group Pty Ltd v Stockman

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