Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott

Background

1. Both appeals were from orders in proceedings in the Consumer and Commercial Division (file number HB 13/66604) arising out of home building work carried out by the builder for the owners. These proceedings were originally commenced on 23 December 2013 in the former Consumer, Trader and Tenancy Tribunal (CTTT). Under the transitional provisions in cl 7 of Sch 1 to the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act), this Tribunal was empowered to hear and determine those proceedings. Proceedings HB 13/66604 were decided on 23 December 2016. The owners' appeal was lodged on 31 January 2017 and the builder's appeal on 27 February 2017.
2. The two appeals were heard on 24 May and 19 June 2017 and the principal decision was handed down on 13 September 2017.
3. The subject matter of the proceedings at first instance had been distilled into the 18 separate claims (some of which included sub-claims) listed in [40] of the principal decision. Each of those claims related to a different aspect of the works carried out, or to be carried out, by the builder. In both appeals, each of the grounds of appeal related to a specific claim made at first instance (see [47] and [53] of the principal decision).
4. The claims which were and were not the subject of the two appeals can be summarised as follows (using the itemisation of the original claims in [40] of the principal decision and having regard to the outcomes set out at [7]): 1. there was no appeal in respect of the following original claims 1(b), 3(b), 6, 9, 10, 13, 16 and 17(a), (b) and (c); 2. the owners' appeal concerned claims 1(a), 2, 3(a), 4, 5(a), (b) and (c), 7, 11, 15 and 18 - see [47] of the principal decision. The appeal in respect of claim 12 was not pressed before the beginning of the hearing - see [46] of the principal decision in relation to ground 7; 3. the builder's appeal concerned claims 8, 14 and 15 - see [53] of the principal decision.
5. Both the owners and the builder were successful in their respective appeals in respect of some claims but not all. As summarised at [7] of the principal decision: 1. the owners were successful in their appeal in respect of claims 1(a), 5(a), (b) and (c), 7, 11 and 18 and unsuccessful in respect of claims 2 and 3(a). It was not necessary to address claim 4 as the basis of appeal fell away at the hearing of the appeal. 2. the builder was successful in their appeal in respect of claim 8 and unsuccessful in respect of claim 14. 3. the owners and the builder both appealed in respect of claim 15 and we held that the award by the Tribunal at first instance in respect of that claim had to be set aside for the reasons given at [371] to [389] and [416] - [418] of the principal decision. Essentially, the problem was that the Tribunal below had mistakenly conflated two separate claims and had not considered either properly. Accordingly, the decision in this regard could not stand.

Applicable Costs Provisions

1. The parties agreed that costs were to be determined in accordance with r 38A(2) of the Civil and Administrative Tribunal Rules 2014 (the NCAT Rules).
2. Rule 38A(2) provides: "(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."
3. The parties also agreed that the relevant first instance costs provisions are to be found in cl 20 of the Consumer, Trader and Tenancy Tribunal Regulation 2009 (NSW) (CTTT Regulation) (because the first instance proceedings were commenced before 1 January 2014 and were covered by cl 7 of Sch 1 to the NCAT Act). Clause 20 relevantly provided: "(3) In any proceedings in respect of which the amount claimed or in dispute is more than $10,000 but not more than $30,000, the Tribunal may award costs in relation to the proceedings only if: (a) the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs, or (b) the Tribunal has made an order under section 30 (2) of the Act in relation to the proceedings [No such order was made in the present appeals]. (4) In any proceedings in respect of which the amount claimed or in dispute is more than $30,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit."
4. Since the amount in issue in the owners' appeal was in excess of $30,000, the Appeal Panel is required to apply cl 20(4) in relation to the costs of that appeal.
5. As to the builder's appeal, it was argued that the amount in issue was more than $30,000. The builder submitted that, properly understood, the three claims, 8, 14 and 15, which were the subject of the appeal, totalled more than $30,000. This was because: 1. claims 8 and 14, which were the subject of the builder's first and third grounds of appeal, were for $8,000 and $8,600 respectively; 2. claim 15, which was the subject of the builder's second ground of appeal, involved the Tribunal below mistakenly conflating two claims (one for $8,832.02 and one for $9,632.43) and only awarding $8,832.02 without clearly explaining why and without dealing separately with the two claims, which had a total value of $18,464.44 (see principal decision at [374] - [375], [389] and [416] - [418]); 3. thus, the claims which were the subject of the builder's appeal had a value in excess of $30,000.
6. We think that this approach to the builder's appeal is correct. The builder's second ground of appeal concerned claim 15. As we understood that ground, it was to the effect that the Tribunal at first instance, "by limiting its enquiry to 'install the firefighting service' had not considered all the evidence in the proper light" and, as a result, the decision to award $8,832.02 for "Water supply to Fire fighting hose" was against the weight of the evidence and not fair and equitable. The builder can thus be seen to be challenging all of the Tribunal's decision in respect of claim 15 described by the Tribunal below as "Water supply to Fire fighting hose". We have explained at [371] - [389] of the principal decision that the Tribunal at first instance conflated in claim 15 two separate claims, summarised by the experts as "Water supply to original existing house" in the sum of $9,632.42 and "Water supply - fire fighting" for $8,832.02. Since the Tribunal below confused the two claims and did not deal with them separately and distinctly, there was strictly no decision to award or not to award the claimed $9,632.42 against which the builder could appeal. Further, the reasons for decision were very confusing as to the purpose of the award of $8,832.02. Having regard to these matters, we accept that the builder put all aspects of claim 15 (which included claims for $8,832.02 and $9,632.42) in issue in its appeal. The builder sought, by its appeal, to have claim 15 determined, on appeal or on remitter, in its favour.
7. In these circumstances, we think it is correct to say that the amount in issue in the builder's appeal was greater than $30,000. Consequently, the costs of the builder's appeal also fall to be dealt with under cl 20(4) of the CTTT Regulation.
8. We now turn to consider the general principles concerning the awarding of costs.

General Principles concerning Costs

1. The general principles applicable to the exercise of the applicable powers under cl 20(4) of the CTTT Regulation were stated in Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 at [36] as follows: 1. power conferred by such a clause is "unfettered" in the sense that the Tribunal may make such order as it thinks appropriate, so long as it acts in accordance with the subject matter, scope and purpose of the power; 2. the accepted purpose of an award of costs is to compensate the party in whose favour costs are awarded for the expense incurred in respect of the litigation.
2. Generally, the exercise of an unfettered power to award costs involves costs "following the event" unless there are factors which militate against the successful party being awarded all of the party's costs - Oshlack v Richmond River Council (1998) 193 CLR 72 at [67] and [69]; [1998] HCA 11.
3. Generally the "event" refers to the event of the claim or the appeal, as the case may be, and may be understood as referring to the practical result of a particular claim or appeal - Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15].
4. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed - Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Bostik) at [38].
5. Where there are separable issues, the Court of Appeal summarised the relevant principles in Bostik at [38] as follows: "• If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). • A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. • Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272."
6. These principles must be applied having regard to the particular circumstances before us.

Application of the principles

1. Both the owners and the builder were each successful to some extent in their respective appeals.
2. If we adopt the approach that we should not attempt to differentiate between particular grounds of appeal on which the owners and the builder were successful and those where they failed, each of the owners and the builder being to some extent successful, they should be entitled to the costs of their respective appeals.
3. The owners sought the costs of both their appeal and the builder's appeal. They submitted that "[i]t is clear that the homeowners have been the successful party on the appeals set out above. There is nothing in the conduct of the appeal proceedings, which would preclude or otherwise disentitle the homeowners from the usual orders as to costs."
4. While we accept that, in respect of the appeals, there was no conduct of the owners, or for that matter the builder, which would amount to disentitling conduct, we do not accept that the owners should be awarded the costs of the builder's appeal. The builder was successful on its ground 1. Ground 2 concerned claim 15, which was the claim that involved the Tribunal below mistakenly conflating two claims. The decision in respect of claim 15 was required to be set aside in any event. The builder was unsuccessful on ground 3. We do not accept that the practical result or "event" of that appeal was in the owner's favour. Accordingly, we do not agree that the owners should be awarded the costs of the builder's appeal.
5. The builder submitted that both the owners and the builder had achieved some success in their appeals but overall "the outcome of both appeals is very much in the nature of a mixed result and the appropriate orders to be made is that there are no costs orders with the effective outcome being that each party pay its own costs of the respective appeals."
6. Adopting the builder's proposed outcome would involve implicitly accepting that the costs incurred in respect of each appeal should be seen as roughly equivalent. We do not think that this is correct. The owners' appeal was much more substantial than the builder's appeal in terms of the number of grounds, the amounts in issue, the volume of submissions and the time taken in the hearing. Indeed, taking a broad brush approach and without attempting to be mathematically precise, we are of the view that about 90% of the grounds, hearing time and submissions were devoted to the owners' appeal and about 10% to the builder's. Thus, we do not accept the premise that the costs in each appeal should be seen as approximately equivalent.
7. There is, however, a deal of common sense in making one costs order in respect of these interrelated appeals that involves, in effect, setting off the builder's success against the success of the owners. This is appropriate because all the submissions, the hearing and the decision effectively dealt with both appeals together. This type of approach was adopted by the Court of Appeal in Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 2) [2018] NSWCA 40 where the Court said at [20]: "We accept, as the respondent submitted, that a single costs order is preferable to an order differentiating between the costs of the Amended Summons and the Amended First Cross-Summons because the issues in each were "significantly intertwined" and a discount could be incorporated into a single costs order. Again, any mathematical precision in the appropriate order is illusory. ..."
8. In the circumstances, we have formed the view that an order that the builder pay 80% of the owners' costs of the appeals would be a fair assessment of how the costs incurred should be borne so as to reflect the overall circumstances and outcomes of the two appeals, without attempting to achieve any mathematical precision.
9. In the alternative, if it were appropriate to take the approach of attempting to determine costs by reference to time taken and extent of submissions made on the issues in both appeals upon which the parties were successful, we think that more than 80% of the hearing time and submissions were devoted to those grounds on which the owners achieved an order in their favour or had a claim for an amount payable to the builder remitted for redetermination. The time spent only on the issue on which the builder was successful was not extensive in comparison. On this basis, an order requiring the builder to pay 80% of the owners' costs of the appeals should also be seen as appropriate.
10. For these reasons, we believe that an order that the builder is to pay 80% of the owners' costs of the appeals in proceedings AP 17/04738 and AP 17/09469 is a fair and just outcome in the circumstances.

Orders

1. Accordingly, the Appeal Panel orders: 1. A hearing in respect of these costs applications is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 2. Champion Homes Sales Pty Ltd is to pay 80% of the costs of Adam Rekrut and Sandra Scott of and incidental to proceedings AP 17/04738 and AP 17/09469 as agreed or assessed on the basis set out in the legal costs legislation (as defined in section 3A of 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

Amendments 23 April 2018 - Typographical error corrected at paragraph 4 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: 23 April 2018