Reed v Brown

1. The builder applied under the costs directions for a costs order in its favour as agreed or assessed. The owner said that there should be no order as to costs on the basis that "each had a measure of success": as recorded in the primary costs reasons (PCR) at [19], [45]. Neither party sought a further hearing on costs.
2. On 8 November 2024, the primary member ordered that a further hearing on costs be dispensed with and on the papers made no order as to costs to the intent that each party bear his or her own costs.
3. After mentioning the uncontroversial provisions (expanded on below) that govern costs where the amount claimed or in dispute in the proceedings exceeded $30,000, the primary member described the chronology of offers and counter-offer in the builder's costs submissions: PCR [8]-[18].
4. The primary member then focused on the builder's last two offers, implicitly because the builder's earlier two offers and explicitly because the owner's only offer were seen as uncontroversially outside the relevant costs principles. At least the first of the earlier offers appeared to be an open offer. The second, third and fourth offers were expressed to be Calderbank offers.
5. As set out at PCR [15], the third offer, made on 27 September 2023, was $35,000 in respect of defects (just over $3,000 less than the builder's expert's costing for all items without reference to limitation issues) and $5,000 in respect of costs, plus a waiver of the outstanding amount of $4,895.20 on the final invoice dated 16 June 2021 and a waiver of contractual interest amounting (on analysis from the total offer) to $1,649.62. The total offer was $46,544.82 as money, with no work component.
6. This was just over one month after the owner filed the primary proceedings and just over two weeks after the owner amended the application to the Tribunal's jurisdictional limit for building claims under HBA s 48K(1) of $500,000 from the amount claimed in the original application of $300,000. It was after service of the owner's expert evidence. The offer was open until 5pm on 11 October 2023. It incorporated reference to an open letter from the builder's solicitors to the owner's solicitors dated 31 August 2023 in which there was mention that the alleged defects were out of time to be made.
7. At PCR [20]-[22], the primary member set out the calculation basis in the third offer and what was alleged by the builder to be the comparative value of what the owner achieved by way of limited work order. The builder calculated the comparative value of what the owner achieved by taking the net trade cost, for each item in the work order, from the relevant expert whose scope of works was used for each item. Margin and GST were excluded because the builder was ordered to do the work. The total was $23,227.56.
8. On this basis the builder's third offer was about double the calculated value of the work order ultimately achieved by the owner and included $5,000 for costs shortly after the litigation had begun but after service of the owner's expert evidence and other preparation by the owner. The primary member then said:

"The builder has not shown that at the point in time the Third Offer was made the total of the Third Offer exceeded the value of the homeowner's claim (assuming that it was correctly valued at $23,227.56) as well as the legal costs incurred up to that time by the homeowner. Consequently, I am not satisfied that at that point in time the homeowner would have been better off accepting the Third Offer, even on the assumption that the homeowner would only be able to establish the four defects as found in my decision of 13 September 2024."

1. As set out at PCR [16] the fourth offer, made on 27 December 2023 and open until 19 January 2024, was for a total of $91,033.28 comprising $61,033.28 for damages, waiver of the outstanding invoiced amount of $4,895.20 and waiver of contractual interest at that point, plus $30,000 for costs. There was no work order component. The offer was open until 5pm on 19 January 2024; the longer period was expressed to be "so that you and your counsel have an opportunity to advise your client upon it on your return from the Christmas break". The letter stated that it was being sent directly by hand and email to the owner given the closure of the solicitors' respective offices and that the builder's counsel would commence work on the matter in the week of 22 January 2024 to prepare submissions. It again incorporated reference to an open letter from the builder's solicitors to the owner's solicitors dated 31 August 2023 in which there was mention that the alleged defects were out of time to be made, but by this point the detailed points of defence had been filed at the beginning of December 2023.
2. Although the increased interest figure was not set out, the offer was three months later than the third offer so one can estimate the interest to have reached no more than $2,000; accordingly, the damages component was slightly over $54,000, an uplift of just over 50% on that component in the third offer.
3. The damages component equated to the uplifted amount accepted by the builder's expert set out in the conclave report served six days before the date of the offer. That amount included all items accepted by the builder's expert with no exclusion of defects that would be rejected if the limitation argument was accepted.
4. At PCR [23]-[31], in analysing the fourth offer the primary member repeated what was alleged by the builder to be the comparative value ($23,227.56) of what the owner achieved by way of limited work order. The owner's contention that the figure was $59,074.61 was noted but not its basis.
5. The primary member relied upon the owner's evidence of total costs at 18 January 2024, shortly before the offer lapsed. These totalled $73,108. On a conservative recovery on the ordinary basis of a costs order at 65%, recoverable costs were calculated as $47,500, which exceeded the proffered $30,000 component of the fourth offer.
6. The primary member then considered the global offer since the fourth offer totalled $91,033.28. This substantially exceeded calculated recoverable costs and the builder's basis for assessing value of the work order which totalled $70,727.56. Even if one adopted the primary member's preferred margin and uplifted for it and GST (reaching $31,937) the total of $79,500 was less than the offer.
7. Nevertheless, the primary member concluded at PCR [31]:

"In terms of pure monetary terms, the Fourth Offer was better than the value of the homeowner's claim for contractual breach and the costs incurred at that point in time. However, it was not so much greater that it was unreasonable for the homeowner to reject the Fourth Offer. I accept that at that point in time the homeowner did not have any costs order in her favour. However, the homeowner's dispute engaged rule 38 of the Rules and as at December 2023 there were some defects which were likely to be established, as ultimately occurred."

1. The primary member at PCR [32] then called in aid the owner's submission that the litigious outcome did not contain confidentiality and non-disparagement provisions as the third and fourth offers required:

"That is an advantage which was in the offers which has not been 'bettered' in comparison to the ultimate decision of the Tribunal because the homeowner is under no obligation to not comment on the builder or publish posts or material."

Principles governing appeals from the Consumer and Commercial Division

1. Section 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) states, in respect of Division decisions:

(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."

1. Paragraph 12 of Schedule 4 to the NCAT Act states:

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).

1. A Division decision is a primary decision of the Consumer and Commercial Division. The primary decision here is such a decision.
2. In summary, internal appeals may generally be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel.
3. However, certain decisions require leave for any ground of appeal whether or not it involves a question of law. Section 4(1) of the NCAT Act contains the following relevant definitions to the nature of the decision from which an appeal is brought:

"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."

"'interlocutory decision' of the Tribunal means a decision made by the Tribunal under legislation concerning any of the following -

(b) the prohibition or restriction of the disclosure, broadcast or publication of matters,

(d) the extension of time for any matter (including for the lodgment of an application or appeal),

(g) the joinder or misjoinder of a party to proceedings,

(h1) the granting of leave for a person to represent a party to proceedings,

(i) any other interlocutory issue before the Tribunal."

1. In Ericon Buildings PL v Owners SP 96597 [2020] NSWCATAP 265 at [26] the Appeal Panel, in the course of refusing leave to appeal a procedural order, focused at [9]-[10] on the required connection of an ancillary decision with a decision determining proceedings, not a decision which the party alleged should have been made to determine the proceedings. In that case, the orders under appeal noted a consent to judgment that had not been accepted by the applicant and set a timetable for a foreshadowed transfer application on which the transfer could be contested on the basis there was a tender of the maximum amount of the Tribunal's jurisdiction. Those orders were found to be interlocutory in character and therefore to require leave to appeal under s 80(2)(a) of the NCAT Act. Leave to appeal was refused at [13]-[18] because no decision that was said to be in error had actually been made; "for completeness", among other matters the Panel expressed the view at [19]-[27] that the Tribunal would be entitled to take into account the possibility that the Tribunal's jurisdiction on a work order was not limited to a value of $500,000 and at [28]-[36] that there was no tender of the Tribunal's maximum jurisdiction of $500,000 by actual payment.
2. The Ericon characterisation is consistent with the orthodox test, implicit in the statutory definitions cited above, that an interlocutory decision does not finally determine the rights of the parties in respect of the relief claimed in the proceedings: see, eg, Sanofi v Parke Davis PL [No 1] (1982) 149 CLR 147 at 152.
3. In some jurisdictions an appeal against costs alone would require leave: see Supreme Court Act 1970 (NSW) s 101(2)(c). The present appeal is such an appeal; we have not been made aware of any appeal against the substantive decision. However, the effect of s 80(2) of the NCAT Act with the definition of "ancillary decision" set out above is that this appeal is brought as of right in respect of a question of law.
4. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, more recently revisited in Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 at [25]- [40] esp at [30]-[32], the Appeal Panel set out at [13] a non-exclusive list of errors of law that can amount to questions of law on the basis of existing appellate authority:

(1) Whether there has been a failure to provide proper reasons where they are required;

(2) Whether the Tribunal identified the wrong issue or asked the wrong question;

(3) Whether a wrong principle of law had been applied;

(4) Whether there was a failure to afford procedural fairness;

(5) Whether the Tribunal failed to take into account relevant (that is, mandatory) considerations;

(6) Whether the Tribunal took into account an irrelevant consideration;

(7) Whether there was no evidence to support a finding of fact; and

(8) Whether the decision is so unreasonable that no reasonable decision-maker would make it.

1. A failure to take into account a "clearly articulated and substantial argument" is a constructive failure to exercise jurisdiction as well as an error of law and so constitutes a question of law: Alexandria Landfill PL v Transport for NSW [2020] NSWCA 165 at [8]- [11]; Prakash v Health Care Complaints Commission [2006] NSWCA 153 at [87]- [89]; Health Care Complaints Commission v Robinson [2022] NSWCA 164 at [91].
2. Taking into account an irrelevant consideration or not taking into account a relevant consideration includes not making a finding on an ingredient or central issue required to make out a claimed entitlement to relief: see CEO of Customs v AMI Toyota Ltd [2000] FCA 1343; (2000) 102 FCR 578 (Full Fed Ct), [2000] FCA 1343 at [45], applying the statement of principle in Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163 at 179.
3. A question of mixed fact and law, such as an alleged error in applying legal principle to the facts, is not a question of law unless the relevant facts are jurisdictional in nature or do not require the appellate tribunal to resolve disputed facts relevant to the matter in dispute, or the question of law does not depend on facts not found: FTB v Children's Guardian [2024] NSWCATAP 174 at [8]; O'Keefe v Integral Corporate Property PL [2020] NSWCATAP 76 at [16]; Wilson v Chan & Naylor Parramatta Pty Ltd atf Chan & Naylor Paramatta Trust [2020] NSWCA 62 at [4] and [11]; Orr v Cobar Management PL [2020] NSWCCA 202 at [48], [109]; Commissioner of Police, NSW Police Force v White [2025] NSWCATAP 30 at [21]- [23]; Damico v Secretary, Department of Customer Service [2025] NSWCATAP 109 at [43]; and authority cited in those decisions. However, as noted by Basten AJ in Donohoe v Albulario [2025] NSWSC 9 at [33], this general requirement for purity does not stand in the way of an Appeal Panel making necessary findings of fact about the composition of the primary tribunal or conduct of the primary hearing when the question of law concerns a denial of procedural fairness.
4. Adequacy of reasons will vary according to the nature of the determination and of the determining body: New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231, 100 NSWLR 578 at [65]- [77] esp at [77]. In relation to adequacy of reasons, it is essential to expose the reasons for resolving a point critical to the contest between the parties: Soulemezis v Dudley (Holdings) PL (1987) 10 NSWLR 247 (CA) at 259, 270-272, 280-281; Minister for Immigration and Multicultural and Indigenous Affairs; ex parte Palme [2003] HCA 56; (2003) 216 CLR 212 at [40]; Wainohu v NSW (2011) 243 CLR 181 at [58]; NCAT Act s 62(3).
5. In appellate review of the exercise of a discretion, a reviewing court or tribunal must be cognisant that reasonable minds may differ on the correct exercise of discretion from alternatives all of which are within the range of reason: Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541, [2018] HCA 30 at [18], [20], [26], [30]-[32], [43]-[45], [48]-[49], [55]-[56], [85]-[87], [127]-[128], [153]-[155]. That the reviewing court or tribunal may have exercised the discretion with a different outcome is not sufficient to upset the exercise of discretion: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332, [2013] HCA 18 at 367 [76].
6. In House v The King (1936) 55 CLR 499, [1936] HCA 40 at 505 there were identified errors of law in exercise of the discretion that raise a question of law in respect of the exercise:

"It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."

1. In Strang v Steiner [2019] NSWCA 143 at [77]- [79], [[101], [137]-[145], [193], the NSW Court of Appeal explained that inadequacy of reasons either constituted a further distinct error which vitiated the exercise of discretion or was within the vitiating errors of the kinds identified - wrong principle acted on, extraneous or irrelevant matters, mistaking the facts and failing to take into account a material consideration. If these were present, it was not necessary to show also a manifest error in result where it does not appear how the result was arrived at, but that was a separate basis for vitiating the exercise of discretion.
2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited by para 12(1) of Sch 4 to the NCAT Act. In such cases, as set out above, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that:

(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).

1. In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] and [79] that a substantial miscarriage of justice for the purposes of cl 12(1) in Sch 4 to the NCAT Act may have been suffered where:

"[76] ...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. ...

[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 then, 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] and following concerning the corresponding provisions of the [statutory predecessor to CATA (s 68 of the Consumer Trader and Tenancy Tribunal Act)] and especially at [46] and [55]."

1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of para 12(1) of Sch 4 to the NCAT Act, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b): Pholi v Wearne [2014] NSWCATAP 78 at [32]. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve:

(b) questions of public importance or matters of administration or policy which might have general application; or

(c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand;

(d) a factual error that was unreasonably arrived at and clearly mistaken; or

(e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed."

1. Turning to the specific grounds in cl 12(1)(a) and (b) of Sch 4 to the NCAT Act, in Collins the Appeal Panel said:

"[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:

1 If there has been a denial of procedural fairness the decision 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].

2 The decision 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] HCA 23; (1991) 173 CLR 33 at 41-42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153]."

1. The question of what constitutes significant new evidence not reasonably available at the time the proceedings under appeal were being dealt with under the ground in para 12(1)(c) of Sch 4 to the NCAT Act was considered by an Appeal Panel in Owen v Kim [2017] NSWCATAP 26. There the Appeal Panel stated at [37]-[39]:

"37 In Owners - SP 76269 v Draybi Bros Pty Ltd [2014] NSWCATAP 29 the Appeal Panel stated at [109] in connection with cl 12(1)(c) of Schedule 4 to the Civil and Administrative Tribunal Act:

'In order to fall within this paragraph the appellant must be able to point to evidence which:

(2) has arisen and is new in the sense that it was not reasonably available at the time the proceedings below were being heard.'

38 In Leisure Brothers Pty Ltd v Smith [2017] NSWCATAP 11 the Appeal Panel stated at [40 ]:

'The meaning of this clause was considered by the Appeal Panel in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111. At [23] - [24] the Appeal Panel said:

'23 Unlike the WIM Act, the expression "reasonably available" is not qualified by the words "to the party". This difference suggests that the test of whether evidence is reasonably available is not to be considered by reference to any subjective explanation from the party seeking leave but, rather, by applying an objective test and considering whether the evidence in question was unavailable because no person could have reasonably obtained the evidence. For example, in Owners SP 76269 v Draybi Bros [2014] NSWCATAP 20 at [114] the Appeal Panel refused leave because, although the appellant may not have been aware of the evidence (being an email), it could have obtained the evidence by summons. In Prestige Auto Centre Pty Ltd v Apurva Mishra [2014] NSWCATAP 81 at [17] the Appeal Panel granted leave because the respondent to the appeal had fraudulently altered evidence. The party seeking leave under cl 12(1)(c) could not reasonably have had available to them the evidence that the report in question had been fraudulently altered at the time the proceedings were being dealt with by the Tribunal. That fact was not known to the appellant at the time of the hearing and could not reasonably be known due to fraud.

24 Each of these cases illustrates that something more than a party's incapacity to procure evidence is necessary to satisfy the requirements of cl 12(1)(c).'

39 As stated at [27] in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown:

'the issue is whether, objectively, the evidence has arisen since the hearing and was "not reasonably available" at the time of the hearing.'"

1. In Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 an Appeal Panel stated at [10]:

"An appeal does not provide a losing party with the opportunity to run their case again except in the narrow circumstances which we have described. Mr Ryan has not satisfied us that those circumstances apply to his case and we refuse permission for him to appeal."

1. It is reasonable to infer from their presentation that the grounds of appeal were drafted with professional legal representation.
2. This made it unnecessary to crystallise or distil the grounds as the Appeal Panel explained in Cominos v Di Rico [2016] NSWCATAP 5 at [13]:

"It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]- [316]). Relevantly, s 38(2) provides that that Tribunal 'may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice'."

The appeal grounds must be reasonably discernible from the material before an Appeal Panel rather than the result of an artificial construct imposed on the material by the Panel: Damico at [45].

1. The builder in the notice of appeal filed 5 December 2024 identified four alleged errors of law not requiring leave (thereby constituting questions of law) in the PCR. In summary, these were as follows:

(1) Constructive failure to exercise jurisdiction by not dealing with the argument that the builder had "won" the proceedings.

(2) Alternatively, inadequate reasons to deal with that ground.

(3) Erroneous exercise of discretion in respect of the third offer by finding that the onus was on the builder to establish the amount of the owner's costs at that time, being a matter peculiarly within the owner's knowledge.

(4) Alternatively to the third error, failure to take into account a material consideration that the third offer provided $14,607.82 in excess of the work order which if allocated to costs was reasonably proportionate to what costs would have been incurred at that early stage of the litigation.

1. The builder identified alleged errors of fact (either separate or cumulative) in the primary costs reasons that justified a grant of leave to appeal on the basis that an unjust or unreasonable outcome resulted. The primary exercise of discretion was said to have miscarried and also to have been unjust or unreasonable where the builder was in substance the successful party in the litigation and/or the builder "had made offers, both prior to and after the close of evidence, that were, or could reasonably be inferred to be, in excess of the value of the work order made, taken together with the homeowner's reasonable costs of the litigation".
2. The "Orders Sought" in the notice of appeal, in addition to setting aside the existing costs order, relevantly were:

"2. The respondent pay the appellant's costs of the substantive proceedings from 27 September 2023 on the indemnity basis, alternatively the ordinary basis, as agreed or assessed.

3. Each party pay their own costs of the proceedings up to 27 September 2023."

1. The builder's grounds of appeal did not challenge the reasoning at PCR [35]-[44] on the absence of special circumstances to justify the costs order it sought. We have accordingly not considered that aspect of the PCR nor summarised that aspect above.
2. Pursuant to grant of leave during the appeal hearing the builder relied on a sixth ground of appeal as an error of law, that in determining the rejection of the third and fourth offers the primary member took into account an irrelevant consideration, being the requirement of confidentiality in the third and fourth offers.
3. The owner's written submissions in effect challenged the competency of the appeal in several respects. It is convenient to deal with them here after summarising them.
4. First, the House v The King basis of challenge was said to have been formulated only in the builder's written appeal submissions and was not part of a ground of appeal. We disagree. Each of the first four grounds and the additional sixth ground encapsulated an error of law on which exercise of discretion was said to have miscarried, constituting a question of law as expounded in House and analysed in Strang v Steiner. The fifth ground expressly followed a further basis for miscarried discretion, being an unjust or unreasonable result that constituted a manifest error and miscarriage of discretion as expounded in House and analysed in Strang v Steiner.
5. Secondly, the owner said that the builder had not sought to challenge the "finding of mixed fact and law" at PR [233] and was out of time to do so, namely: "I will permit the parties a short period of time to consider these reasons and to make submissions as to costs. However, I note that each party has had a significant measure of success which the parties should consider in their submissions".
6. We again disagree. There was no conclusion in that passage about the costs implications of the observation, which remained to be the subject of the costs submissions. Even if it was a finding, it was limited in its scope and left the argument open on its implications - indeed, it was repeated in that form at PCR [45] where the primary member accepted the owner's submission as to its cost effect without saying that was unnecessary since such effect had been determined. Further, the observation was so broadly expressed that it invited contention (as appeared to have been intended) as to the meaning of the phrase as applied to the primary substantive findings. In particular, it did not preclude the builder from contending that its measure of success was so significant that it "won" the proceedings.
7. Thirdly, the owner submitted that the builder had insufficient primary findings for some submissions. We disagree. The builder took the primary findings in the PR relied upon by the primary member and challenged the conclusions drawn from them in the PCR.

1. Section 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), together with rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules), provide that the ordinary costs rules apply, even in the absence of special circumstances required by s 60 of the NCAT Act, where "the amount claimed or in dispute in the proceedings is more than $30,000".
2. In Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [37]- [38], the Appeal Panel found that "'[P]roceedings'" refers to the process set in motion, or commenced, by lodging an application or notice of appeal. That process includes the steps taken by the Tribunal to hear and determine whether to grant the relief sought in the application or notice of appeal, as well as any interlocutory or ancillary steps. Proceedings are defined by the subject matter raised in the application or notice of appeal. The participants in proceedings are limited to the parties determined in accordance with [s 44 of the NCAT Act and the Rules]".
3. In Owners SP 63341 v Malachite Holdings PL [2018] NSWCATAP 256 at [3]- [5] the Appeal Panel summarised the operation of r 38 as follows, from the detailed discussion at [86]-[111]:

"[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.

(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."

1. In Hanave PL v Wine Nomad PL [2022] NSWCATAP 361 at [40]- [42] the Appeal Panel expounded aspects of the above summary which were not the subject of findings in the partly-successful appeal to the Supreme Court on aspects of the substantive decision [2023] NSWSC 265:

"[40] As made clear in Malachite at [75] and following, r 38 is not concerned with the value of rights that might be in issue or any change in wealth. Unlike s 101(2)(r) of the Supreme Court Act 1970 (NSW), r 38 does not require consideration of whether the proceedings:

(1) involve a matter at issue amounting to or of a value of $30,000 or more, or

(2) involve (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $30,000 or more.

[41] Rather, r 38(2)(b) applies where "the amount claimed or in dispute in the proceedings is more than $30,000".

[42] The questions to be determined are what is the amount "claimed", what is the amount "in dispute" and what are "the proceedings" in circumstances where there are two applications, the second in the nature of a cross-application ("cross application").".

1. Here it is clear that the threshold amount was exceeded on the test as explained in Allen, Malachite and Hanave. The cost or value of the works the subject of the owner's claim clearly exceeded $30,000: Kaye v Owners SP 4350 [2022] NSWSC 1386 at [79]; Redmyre Group PL v Stockman [No 2] [2023] NSWCATAP 342 at [25].
2. The starting point for the exercise of costs discretion on the usual principles is that costs follow the event. "The event" is usually the overall outcome of the proceedings - did the successful party have to go to the Tribunal (in this case) to get what it achieved, rather than being offered at least that relief prior to commencement of the proceedings.
3. If there are distinct, separate or dominant issues on which the party seeking relief did not succeed, that may be taken into account in the exercise of costs discretion, either as an award of costs of those issues to the party who had success on them or as a discount of the costs of the overall successful party, or some other appropriate exercise of principled discretion.
4. The exercise of the discretion involves impression and evaluation.
5. There may be no order as to costs made (to the intent that each party pays its or their own costs of the appeal) where there has been a measure of success on both sides_: Johnson t/as One Tree Constructions v Lukeman_ [2017] NSWCATAP 45 at [25]- [29]; applied in Oppidan Homes PL v Yang [2017] NSWCATAP 67.
6. Rather than constituting a head of damages, costs will include the assessed or agreed amount for the expenses on expert reports prepared for the purposes of the proceedings or, if prepared for other purposes, sufficiently connected with the proceedings to be "costs of, or incidental to, proceedings" within the meaning of s 60 of the NCAT Act since they have been incurred in the preparation for litigation and were preparatory steps reasonably connected to the proceedings: Cominos v Di Rico [No 2] [2016] NSWCATAP 138 at [54-[57]; Owners SP 21563 v Rutherford [2023] NSWCATAP 326 at [52], [67]-[68], [95]-[96].
7. Costs are usually ordered on the ordinary basis as agreed or assessed, unless the parties tender material and/or make submissions that justify an award of costs on the indemnity basis as agreed or assessed, in whole or part.
8. For an award of costs on other than the ordinary basis, a party's conduct of the proceedings themselves, or the nature of the proceedings themselves (for instance, misconceived), or unreasonable refusal of an offer (often when an outcome less favourable than an offer is achieved in the litigation), are considered.
9. The above principles are authoritatively explored in Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 and followed and applied in this Tribunal in Thompson v Chapman [2016] NSWCATAP 6 and Bonita v Shen [2016] NSWCATAP 159, citing earlier consistent authority, and more recently in Vella v Mir [No 3] [2020] NSWCATAP 17 at [28]- [31].
10. The principles on indemnity costs have resonance with at least some of the "special circumstances" in s 60(3) of the NCAT Act that are required to justify a costs order when rule 38 does not apply; special circumstances means out of the ordinary but not necessarily extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. If special circumstances are required to be found to justify a cost order, it is logical that such an order would be on the ordinary basis unless there is something in extent or type beyond what justifies the finding of special circumstances in order to award costs on the indemnity basis. Otherwise the anomaly could arise that any special circumstance justified indemnity costs being ordered for the same reason as special circumstances were found.
11. The principles governing Calderbank offers were set out in the reasons of the Appeal Panel in Thompson v Chapman [2016] NSWCATAP 6 at [91] in reliance upon authority in the NSWCA and Supreme Court there cited including Miwa PL v Siantan Properties PL [No 2] [2011] NSWCA 344, to which can be added (among other authority) Hazeldene's Chicken Farm PL v Victorian Workcover Authority (No 2) (2005) 13 VR 435, [2005] VSCA 298, El-Wasfi v NSW; Kassas v NSW (No 2) [2018] NSWCA 27 and Croghan v Blacktown CC [2019] NSWCA 248 and authority there discussed. The effect of legal representation was discussed in Bajic v Paraskevopoulos [2018] NSWCATAP 205 at [27].
12. In summary: the offer must constitute a real and genuine compromise; rejection must be unreasonable in the circumstances; reasonableness of rejection is to be assessed at the time the offer is made, not with the armchair of hindsight; relevant factors in assessing unreasonableness include the stage of the proceedings when the offer was made, time allowed to consider the offer, extent of compromise in the offer, the offeree's prospects in the litigation at the time the offer was made, clarity of terms of the offer, whether an application for indemnity costs was foreshadowed in the event of rejection and whether there was legal representation for the party considering the offer.
13. What triggers the assessment of the offer is what one actually achieves in the litigation outcome compared with the terms of the offer. However, the reasonableness of conduct in rejecting the offer is assessed at the point in time the offer is made, on the knowledge the offeree then has about litigious documentation and prospects. Circumstances can arise where "it may not be unreasonable to reject an offer, notwithstanding that the amount of the offer is reasonable and, in particular, notwithstanding that the offer (in the case of an offer made by a defendant) is greater than the damages that are awarded": Commonwealth of Australia v Gretton [2008] NSWCA 117 at [81].
14. Absent submissions showing authority compelling the contrary, and consistent with the requirement of adequate time to consider the offer, any special costs orders made when an offer in a Calderbank letter is taken into account ought logically to date from the expiry of the offer period, or from the date of the offer being rejected if that occurs within the offer period, rather than from the date of the offer itself; nevertheless, the date of the offer itself seems often to be used. In respect of the fourth offer in particular, the terms expressed in it (set out earlier in these reasons) strongly infer that the offer should be taken into account from the end of the offer period, being 19 January 2024. The offer was in fact rejected and a counter-offer made on 19 January 2024.
15. The principles governing Calderbank offers, as with formal processes in court rules for offers of compromise, operate generally in relation to disputes, including those ultimately determined by consent (where departure from the usual outcome of each party paying its own costs is justified on this or other bases) as well as those determined after contest.
16. The formal offer of compromise process within some Court rules (see, eg, Uniform Civil Procedure Rules UCPR 23.26 and Pt 42 Div 3) expressly provides the costs consequences of accepting or rejecting the substantive relief amount offered.
17. Unlike the general position in the formal offer of compromise rules, the Calderbank offer process does permit consideration of the reasonableness of costs-inclusive offers and offers which specify an amount for the substantive relief and an amount for costs. The inclusion of costs within the amount offered will be an element in the overall assessment, for the purposes of a special costs order, of whether it was unreasonable or otherwise to reject the offer: Elite Protective Personnel PL v Salmon [2007] NSWCA 322 at [136]- [150].
18. The offeree will need to calculate or at least estimate its costs incurred at time of offer. This is to know the net amount of substantive relief out of the global amount offered that the offeree will effectively receive. It is also to estimate (with the assistance of its legal representatives) what amount of its costs it is likely to recoup under a costs order if it succeeds in the litigation. These matters are in order to decide whether or not to accept the offer, taking also into account the other factors already mentioned such as prospects. The information to make that calculation or estimation will be within the offeree's knowledge or control (usually via the offeree's legal representatives): Elite at [143] and [144]:

"[143] If a party in receipt of an offer wishes to know how far the sum offered will go in meeting its costs up to that time, all it has to do is ask its lawyers. In an age where lawyers are required to provide advance estimates of their fees and in circumstances where commercial services are billed on a monthly basis, it is unrealistic to suggest that the recipient of an inclusive offer will be confused or otherwise unable to assess the financial risk of proceeding with litigation. In any event, the offeree is likely to be liable for legal fees exceeding the costs recoverable from the other party. Most litigants, in considering offers, will want to know from their own lawyers, how much they will receive in the hand.

[144] ... Such an inclusive offer will not cause the plaintiff embarrassment: its value will be that amount remaining to him or her after deducting costs already incurred, which the plaintiff's lawyer should be readily able to quantify."

1. Information about an offeree's costs, able to be ascertained from the offeree's lawyers (including likely outcome on a costs assessment if successful in the proceedings), is centrally relevant to what is the focus of a later costs ruling in respect of the effect of the Calderbank offer, namely, the assessment whether the rejection of the offer was unreasonable at the time of offer. A determination whether rejection was unreasonable does not require resolution of the amount of costs at time of offer by a formal process (such as having costs as at that point assessed): Elite at [142]-[145], [148], [150].
2. While it is sometimes suggested that a plaintiff can act reasonably in refusing an offer at an early stage in proceedings, before evidence (especially expert evidence) and interlocutory preparation processes have given the basis for a real appreciation of prospects on liability and amount, as said in Elite at [146] and [147]:

"[146] ... it does not follow that where the plaintiff is uncertain as to the likely outcome, he or she can reject an offer without being at risk as to costs if the offer proves fair and reasonable. ... Accordingly, the fact that a defendant's offer is made early in the proceedings should not by itself be given significant weight in assessing the reasonableness of the plaintiff in rejecting it. Nor should significant weight usually be given to what the plaintiff did or did not know at that stage. Were it otherwise, the more complex the litigation the less likely that the rejection of an early offer which proves to have been fair and reasonable, will have costs consequences. That tendency would diminish rather than enhance the purpose to be discerned from the Calderbank offers and court rules.

[147] Greater sympathy may be accorded to a defendant who receives an offer early in proceedings where there has been no reasonable opportunity for it to assess its questions of liability or its likely exposure in damages. Such matters must be assessed on a case by case basis. Usually litigation will not be the first that the defendant hears of the claim. However, a defendant which receives an offer of settlement in circumstances where it reasonably requires more time to consider its position would no doubt be advised to respond to that effect and, if necessary, make a counter-offer in due course."

1. Applying the foregoing, the primary costs decision is discretionary in the sense described earlier in these reasons. The builder must therefore establish an error or errors in the manner of exercise of discretion of the types described earlier. Some of those errors will give rise to questions of law as explained earlier.
2. It was not suggested to us that the third and fourth offers were not a genuine compromise of the builder's position in respect of the owner's claim, and they clearly were. It was also not suggested that time allowed to consider the offer was inadequate, nor that the owner with her advisers could not reasonably assess her prospects on material then available (which varied between the times of the third and fourth offers), nor that the offers were unclear. An application for indemnity costs if the offer was not accepted was foreshadowed on the face of each offer.
3. We have summarised earlier in these reasons the parties' respective states of preparation at the date of each offer period on the documents that have been provided on appeal. Much of the owner's case (points of claim and at least some expert evidence) had apparently been served by the time of the third offer. The core of the builder's case (at least points of defence and some expert evidence) and the crystallisation of the expert evidence in the conclave report were available by a week before service of the fourth offer. The hearing was imminent at that point in early February 2024. There is a strong basis for concluding that at the time of each offer, particularly the fourth offer, the owner was well-advanced in evidence and other preparation to assess prospects and offers with the assistance of their legal representatives, or that such was the case at least by the time of the fourth offer.
4. In effect, the primary member found that the builder did not prove that the owner acted unreasonably in rejecting the third offer because it was not established that the owner's costs shortly after the litigation began were less than $23,317.26, being the difference between the net trade cost of the items on which the owner succeeded ($23,227.56) and the amount of the offer which totalled $46,544.82 inclusive of costs.
5. Although it is up to the offeror to show ultimately that on the balance of probabilities the offeree unreasonably rejected the third offer at the time it was made, as between the parties, the amount that at the time of the third offer had been expended by the owner on costs was, as recognised in the passages cited above from Elite, a matter specifically within the knowledge of the owner or the ability of the owner to obtain and the owner did not lead it on costs before the primary member.
6. This has the forensic consequence stated historically (but equally applicable in modern forensic times) in Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63, (1774) 98 ER 969 per Lord Mansfield LCJ:

"[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted".

1. The strong inference in the absence of the owner providing such contrary evidence within her knowledge or control was that the owner's costs, at that point and despite the work done on her case to that point, did not reduce the amount offered on substantive relief below the value of the substantive relief ultimately achieved by the owner, and did not raise the value of what the owner could reasonably expect at that point to achieve as her overall outcome including on costs.
2. The primary member did not take into consideration these matters as expressed in the primary reasons. In our view this constitutes an error of law. The primary reasons did not deal with the legal principles just enunciated and the primary member consequently acted on a wrong legal principle. Further, these matters constituted clear material considerations that were not taken into account. For these reasons the exercise of costs discretion in respect of the third offer miscarried in a manner, as explained in authority cited earlier, on a question of law.
3. Even if these errors were in application of legal principle and so constituted an error of fact, we would have granted leave to appeal and made that finding of error. There was a clear injustice in the outcome and an apparent error with the prospect of a different outcome favourable to the builder if the discretion had been exercised in a proper application of principle on a matter central to the primary member's conclusion. In those circumstances, it would be unjust to allow the exercise of discretion to stand.
4. Before us the owner sought leave to lead affidavit evidence from her solicitor on her costs at the time of the period to consider the third offer between 27 September and 11 October 2023. Those costs totalled $23,330.45 which, in substance and when added to the net trade cost referred to by the primary member, totalled $46,558.01 and in substance equalled the outcome achieved by the owner of $46,544.82. The builder opposed reception of the affidavit.
5. We do not grant leave to lead the further evidence on the appeal. On the legislative test and case law set out earlier in these reasons it does not qualify for a grant of leave. It was clearly available at time of preparation for the primary costs decision, as the solicitor's affidavit setting out costs at the time of the fourth offer (later than the third offer) demonstrated. The issue of proof of costs at the time of the third offer was clearly in contest for the primary costs decision. The builder has had no opportunity to test it.
6. The owner further contended that the builder accepted, for the purposes of assessing whether it was unreasonable to reject the third and/or fourth offers, that the found margin of 25% and GST needed to be added to the net trade cost. This would bring the value of the substantive component of the offer from $23,227.56 to $31,937 (rounded from $31,937.89 and an increase on the rounded figure of $8709.44) and reduce the amount available in the total for costs from $23,317.26 to $14,606.92. We were pointed to that acceptance in the builder's written submissions on this appeal.
7. On the basis of this re-calculation the owner submitted that the evidence before the primary member of the amount of preparation of the owner's case at the time of the third offer sufficiently grounded an inference that the cost of such preparation would clearly exceed the reduced amount for the costs component of the offer. The result was that the total offer did not exceed what might reasonably be expected as the substantive and costs outcome at the time that the third offer was assessed. The owner made the point in her submissions that the primary member worked on the net trade figure of $23,227.56 put forward by the builder to analyse the builder's costs contentions on the third offer for the purpose of testing and rejecting them. On a challenge to the correctness of that rejection it was necessary to go further.
8. There was no process before us (equating to a notice of contention) that raised the point as an error by the primary member. However, there was the opportunity in reply submissions to deal with it and we can see nothing raised in that respect.
9. We consider that the owner's submission does not meet or remove the errors that we have identified. The owner had within her knowledge or control the ready, clear and easy means of establishing her costs at the point of offer and did not do so. The uncertainty of what was charged for the amount of work described in the evidence of preparation of the owner's case before the primary member did not fill the evidential gap or displace the principle in Blatch v Archer.
10. The owner submitted that there was no basis for the criticism of the PCR because there were no primary findings as to the costing of the remedial works the subject of the work order on which the comparative assessment could be made. We disagree. The primary member made further findings, beyond those necessary for his conclusions in the primary substantive decision, in the PCR. It is those findings that are the subject of this appeal. Those findings were built on acceptance, for the purpose of assessing whether rejection of the third and/or fourth offers was unreasonable, of contentions of the builder about the net trade cost of the remedial works ordered in favour of the owner to be undertaken by the builder.
11. As said already, the primary member did not need to go further than such acceptance because of the conclusions that he reached that rejection of the third and fourth offers by the owner was not unreasonable. The error we have found is within the conclusions and the process of reasoning from the factual assumptions or acceptance on which that process was based, which requires the process (including the assumptions or acceptance) to be undertaken afresh. That will include a review of the assumptions or acceptance if they are put in contention. The primary member implicitly recognised that in what was said at PCR [20] and [28], namely, that the owner's contention as to the value of the found defects on the found scope of works to remedy them was $59,074.61, not the builder's figure of $23,227.56. We consider that point on re-determining the costs of the primary proceedings, below.
12. The errors identified in respect of the third offer are sufficient to allow the appeal. However, we should deal with other errors in the PCR that would lead to the same conclusion since they are germane to what should happen on allowance of the appeal.
13. There is no reasoning exposed in the PCR to found the conclusion that the owner was justified in not accepting the fourth offer, beyond the phrase in PCR [31] that the further offer was "not so much greater that it was unreasonable for the homeowner to reject" it, on calculations set out in the primary reasons.
14. In our view this constitutes a further error of law that constitutes a question of law. On the calculations by the primary member there was a proportionately significant margin between, on the one hand, the amount of the offer less the amount of the owner's costs at the point the offer was made and, on the other hand, the value of the final relief achieved by the owner. That is the case even if one accepts the addition, to the calculated amount of the offer, of margin and GST as discussed above.
15. It is not explained in the PCR why that proportionately significant margin of about 27% (including margin and GST) to 47% (excluding margin and GST) was "not so much greater that it was unreasonable for the homeowner to reject" the offer. This constituted an inadequacy of reasoning that also did not take into account a material consideration and raised a question of law that the exercise of discretion consequently miscarried.
16. The introduced sixth ground of appeal was "that in determining the rejection of the third and fourth offers the primary member took into account an irrelevant consideration, being the requirement of confidentiality in the third and fourth offers".
17. Confidentiality and non-disparagement requirements can be taken into account in assessing whether the refusal of a Calderbank offer was unreasonable, even though they ordinarily cannot be obtained as a litigated outcome. The party asserting a costs consequence in its favour from a Calderbank offer, as part of its onus of showing that rejection of the offer was unreasonable and that accordingly it should have a favourable costs order, is required to establish that such clauses did not have any relevant effect on the offeree's consideration of the offer and were otherwise not adversely relevant to exercise of discretion, although that may be "a difficult onus to discharge and it is likely that in accordance with ordinary principles, a court may [be] relatively undemanding in in the manner in which it could be discharged": Commonwealth v Gretton, above, at [92]-[95]. The degree of proof required should be "relatively undemanding" in the absence of evidence of their importance or value to one party more than another.
18. It is not clear (at [PCR [32]) what weight in respect of each of the third and fourth offers that the primary member gave to the confidentiality and non-disparagement provisions in the third and fourth offers. He said that there was "some substance" to the owner's submission about their presence in the offers, that they were terms which the builder "sought presumably to protect his reputation" - without referring to the evidence supporting that statement - and that it was an advantage which was not "bettered" in an open decision of the Tribunal (which is the usual position for such provisions).
19. There was no consideration of evidence (if any) to support such conclusions. There was no taking into consideration whether the presence of such requirements affected the money offered to the owner. There was no consideration what would be a logical inference that, if such requirements were important to the builder, their inclusion would be likely to increase the money offered as an inducement to accept their inclusion. There was no consideration of whether the owner regarded such provisions as important in her refusal of the offer and, if so, why, so as to assess the rationality of the basis for refusal. This constituted an inadequacy of reasoning that also did not take into account a material consideration and raised a question of law that the exercise of discretion consequently miscarried.
20. We have not relied on the first two grounds of appeal as a basis for our decision on the appeal, given our conclusions on the third and fourth grounds. We can see the force in the builder's submission that the reasoning at PCR [45] to support the conclusion of no order as to costs was inadequate. Indeed, if the builder is correct that the paragraph was directed to concluding the argument that there were no special circumstances justifying an award of costs to either party (a finding that was not challenged on appeal), then the issue of costs on the ordinary costs rules apart from the third and fourth offers was not addressed at all.
21. In particular, the primary member did not address the builder's close analysis of issues and resulting contentions on costs that focused on having "won" the proceedings.
22. However, as will be clear from our decision on re-hearing below, we accept the primary member's conclusion (subject to the effect of the third and fourth offers) that there should be no order as to costs, for reasons we provide that we trust deal sufficiently with the builder's analysis and contentions.
23. We also do not rely on the first two grounds of appeal because of a curious inconsistency that we have pointed to when setting out earlier in these reasons the grounds of appeal. The builder relied on detailed submissions on appeal on the first two grounds of appeal but the "Orders Sought" in the notice of appeal said "3. Each party pay their costs of the proceedings up to 27 September 2023" in conjunction with order 2 which sought costs on an indemnity basis, alternatively the ordinary basis, from 27 September 2023.

Appropriate relief on appeal and re-determination

1. Section 81 of the NCAT Act provides as follows:

"(1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following -

(b) the decision under appeal to be confirmed, affirmed or varied,

(c) the decision under appeal to be quashed or set aside,

(d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it,

(e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel.

(2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance."

1. In our view it would be contrary to the guiding principle in s 36 and the objective in s 3(d) of the NCAT Act, having set aside the costs order appealed against, not to re-determine the question of the costs of the primary proceedings. To do otherwise would require the parties to return to the Tribunal to argue a costs order, however sophisticated the competing contentions, in a matter where the costs, although likely to be proportionate to the owner's original claim, may now significantly exceed the actual outcome in the proceedings. Neither party sought to put before us, as required by directions made for preparation of the appeal on 15 January 2025 (see in particular note 8(3)), further evidence that would be relied on if this course we propose to adopt was taken apart (we assume) from the owner's solicitor's new affidavit on costs at the time of considering the third offer. The builder's submissions invited us to re-exercise the discretion in respect of costs of the primary proceedings.
2. We accordingly shall determine the primary costs order on the material before us and substitute that for the current primary costs being Order 2 made on 8 November 2024. In that respect we have mainly relied upon the findings in PR and PCR. That in our view is the distillation of the primary decision-maker's analysis and impressions concerning the factual matters that inform a conclusion on costs. We have applied those findings in coming to a different conclusion on costs that takes into account what has been said in these reasons for allowing the appeal. We have not repeated the figures for values in offers set out above but have drawn conclusions from them.
3. It is clear that the parties had mixed success. It is also clear that the owner had to come to the Tribunal to get the success that she achieved on the items on which she succeeded, which differed from the builder's first and second offers that, as to the first, preceded the litigation by about eight months and, as to the second, was substantially the same with an uplift of about $6,544.82 a week after the litigation launched.
4. However, as strongly pointed out in the builder's primary and appellate costs submissions, the owner's success was very significantly less than her total claim, the majority in number of items were excluded on a global basis as out of time and some individually significant items did not succeed on the facts.
5. If there had been no offers then the need for a very significant allowance for the builder's success on many issues against the owner's need to come to the Tribunal to obtain the relief that she obtained (including concessions after she brought the proceedings) justified the primary exercise of discretion to make no order as to costs of the entire proceedings. It is consistent with what should still be the order outside of any further exercise of discretion by reason of the third and/or fourth offers.
6. In support of that conclusion, the builder succeeded on a significantly larger number and value of issues in the proceedings than did the owner, but the issues in the litigation in both preparation and presentation were sufficiently intermingled that they did not meet the criteria for separability or divisibility on all aspects of the issue (for instance, no separability in report or evidence preparation but to some extent in hearing time). However, what the builder succeeded on was sufficient in outcome to require significant recognition and modification of the owner's success obtained as a result of the proceedings: Tonna v Mendonca [No 2] [2020] NSWSC 306 at [170]- [172]; Illawarra Retirement Trust v Denham Construction PL [No 2] [2015] NSWSC 1032.
7. In the third offer the builder offered a numerically small but proportionately greater (about 10%) margin of relief, by way of money order as the owner originally sought, over what the owner achieved by way of work order in final relief. (In that comparison the removal of the progress claim is treated as neutral since the builder had no cross-application for it, only a set-off in its defence, and therefore at best it could operate as a credit in a money order.)
8. However, if the new affidavit of the owner's solicitor is taken at face value (since there has been no opportunity to test it), the owner's costs to be taken into account at the time of assessing the third offer were substantially greater than the $5,000 costs allowance and the total value to the owner of the offer did not exceed what the owner achieved.
9. Further and in any event, the offer was made when, although the owner had served her expert evidence, the builder's case was not formalised in points of defence and evidence, particularly responsive expert evidence. The limitation issue had not been specified in relation to particular alleged defects.
10. Accordingly, it was not unreasonable for the owner not to accept the builder's third offer.
11. By the time of the builder's' fourth offer the issues were defined by points of defence and expert evidence. Areas of significant risk on liability, amount and time limitation ought to have been very clear to the owner from the conclave report, the builder's expert evidence that informed it and legal advice on the limitation issue. If they were not, there had been significant opportunity to seek clarification.
12. For the reasons given earlier the fourth offer exceeded the owner's substantive and costs outcome that could reasonably be expected at time of the offer, whether or not margin and GST were added to the net trade figure contended for by the builder. In coming to that conclusion, we have accepted as correct the net trade cost of $23,227.56 assumed by the primary member and the methodology (described earlier in these reasons) which produced it. As was evident earlier in these reasons, we consider that the proportionate difference between offer and result on the fourth offer of 22% or 40% whether or not margin and GST are included made it unreasonable not to accept that offer at the time it was made.
13. We do not accept the owner's contention for a net trade cost of $59,074.61. The closest figure to that which we can find in the owner's evidence and submissions, being $58,259.79, is for the items the subject of the work order but with the owner's expert's costings and the owner's expert's margin, plus GST. The owner's expert's costings were not accepted by the primary member as a result of the builder's scope of works being accepted for all but one of the items in the work order. The owner's expert's opinion on margin also was not accepted, nor on preliminaries, as described earlier in these reasons.
14. It followed from what the primary member accepted that the builder's expert's costings for his scope of works were correctly accepted by the primary member. The primary member applied his own finding on margin which was not challenged by either party before us.
15. Other than the logical inference that the confidentiality and non-disparagement requirements were likely to have increased the builder's money offer if it wished to obtain such provisions, there was no evidence pointed out to us that such requirements influenced the owner's refusal of the third and fourth offers and, if it did, why. That was a matter specifically within the knowledge of the owner or the ability of the owner to obtain and the owner did not lead it, with the forensic consequence referred to above and stated in Blatch v Archer earlier cited.
16. We therefore conclude that it was unreasonable for the owner not to accept the builder's fourth offer. That enlivens the discretion to make a different costs order from each party paying its own costs after 19 January 2024, being the date on which the offer lapsed and was in any event rejected.
17. In exercising that discretion we consider that the builder is entitled to his costs of the primary proceedings on an indemnity basis after 19 January 2024. The fact that, absent the offer, neither party would have recovered its costs does not change that conclusion. In one sense it reinforces it since the same conclusion is frequently reached where a defendant's offer is rejected unreasonably and the defendant is awarded indemnity costs after the lapse of the offer but is ordered to pay costs on the ordinary basis up to that point: cp UCPR 42.15.
18. Accordingly, the builder is entitled to an exercise of discretion in his favour for indemnity costs from after 19 January 2024.

1. Leave to all parties to be legally represented in the appeal proceedings was granted on 15 January 2025.
2. Neither party sought a further hearing on costs of the appeal and each was content to have such costs determined on the papers. We shall make an order dispensing with the costs of the appeal
3. Rule 38A of the NCAT Rules applies the same costs rules as applied in the Division when there is a departure under the Division rules (such as under Rule 38) from s 60 of the NCAT Act, as explained in Malachite and Hanave discussed earlier. The ordinary costs rules accordingly apply to the costs of the appeal.
4. The builder has substantially succeeded in the appeal and in the notice of appeal had sought costs of the appeal as agreed or assessed. No application for a special basis for a costs order was made. The owner made a similar application if it was successful on the appeal.
5. The builder is accordingly entitled to an order for its costs of the appeal on the ordinary basis as agreed or assessed. Those costs will include the costs of re-determining the costs of the primary proceedings which formed part of the appeal proceedings.

(1) Leave to appeal (to the extent that leave is required) is granted.

(2) Appeal allowed.

(3) Set aside Order (2) made on 8 November 2024 in proceedings 2023/00379309.

(4) On re-hearing of the costs of proceedings 2023/00379309 order that the applicant Jenni Brown pay the respondent Richard Thomas Reed's costs of the proceedings on the indemnity basis on and after 19 January 2024 and otherwise make no order as the costs of the proceedings not the subject of an existing, unvacated costs order.

(5) Order that the appeal respondent pay the appellant's costs of the appeal on the ordinary basis as agreed or assessed.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

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.

09 October 2025 - Decision under appeal details re-imported.