On 5 July 2018 we allowed the appellants' (owners') appeal from a cost decision of the Tribunal, in the Consumer and Commercial Division: see Rekrut v Champion Homes Sales Pty Ltd [2018] NSWCATAP 162. The decision of the Tribunal at first instance arose from claims the appellants had made against the respondent (builder) under the Home Building Act 1989 (NSW) (HB Act).
As we explained in our earlier decision, on 23 December 2016, the Tribunal at first instance determined the appellants' claim by ordering the respondent to pay the appellants $63,586.59. The appellants and the respondent both appealed that decision, which was determined by the Appeal Panel on 13 September 2017: see Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott [2017] NSWCATAP 187 (Rekrut v Champion Homes [2017] 187). Subsequent, to that decision, on 12 February 2018, the Tribunal at first instance determined an application for costs in regard to the substantive proceedings before it. The appellants appealed this decision on 1 March 2018. As we have noted, we allowed that appeal on 5 July 2018. In allowing the appeal we made the following orders:
"1) …
2) The appeal in AP18/10975 is allowed.
3) The Orders made on 12 February 2018 by Senior Member Boyce in proceedings HB 13/66604 are set aside.
4) Any claim for costs in respect of proceedings HB 13/66604 is remitted to the Consumer and Commercial Division to be determined in conjunction with the remittal ordered by the Appeal Panel on 13 September 2017 in AP 17/09469 and AP 17/04738.
5) If either party seeks an order for costs of the appeal, the following directions apply:
a) The applicant for costs ("costs applicant") must file and serve any costs application, including submissions and any evidence in support, within 7 days of the date of these orders.
b) The respondent to the costs application is to file and serve any submissions and evidence in reply within 14 days from the date of these orders.
c) The costs applicant is to file any submissions in reply within 21 days from the date of these orders.
d) Any submissions are to include submissions on the issue of whether an order should be made pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW), dispensing with a hearing of the costs application."
On 11 July 2018, the appellant filed and served an application for its costs in regard to the appeal. The respondent builder has not filed or served any submissions in reply.
In our opinion, the issues for determination in the appellants' application for costs can be adequately decided in the absence of the parties by considering the written material that has been filed and served, including the material filed and served in the substantive appeal to which this application for costs relates. In the absence of any objections by the parties to having the matter determined on the papers we have decided to make an order, under s 50 (1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), dispensing with a hearing of the appellants' application for costs.
For the reasons set out below, we have also decided that it is appropriate to make an order that the respondent pay the appellants' costs of the appeal and that those costs be paid, in part, on an indemnity basis.
[2]
Applicable costs provision
In Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott [2018] NSWCATAP 97 (Rekrut v Champion Homes [2018] 97), at [12] to [15], the Appeal Panel dealt with the applicable costs provision in so far as they related to the costs of the appeals by the parties from the substantive decision of the Tribunal at first instance. The same provisions apply to the costs arising from the appellants' appeal from the cost decision of the Tribunal at first instance.
In summary the applicable provisions are:
1. the appellants' appeal from the cost decision at first instance having been lodged after 1 January 2016 means that rule 38A(2) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) applies; namely the applicable costs provisions that applied to the proceedings at first instance continue to apply to the appeal from the cost decision below; and
2. the appellants having commenced brought their claim in December 2013, before the former Consumer Trader and Tenancy Tribunal, the applicable cost provision is cl 20 of the former Consumer Trader and Tenancy Regulation 2009 (NSW) (CTTT Regulation), as: see Rekrut v Champion Homes [2018] 97, at [15]. That clause 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.
(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."
In this case, the amount in dispute in the first instance costs decision exceeded $30,000. In their written submissions the appellants state that their costs at first instance were in the region of $140,000. They went on to say that the order as to costs at first instance (i.e. an order that the respondent pay 50% of the appellants' costs as agreed or assessed) also exceeded $30,000.
Hence, the applicable cost provision is cl 20(4) of the CTTT Regulation.
For completeness, we note that the appellants' appeal from the substantive proceedings at first instance also exceeded $30,000 and the same costs provision in cl 20(4) of the CTTT Regulation was applied at first instance and on appeal: see Rekrut v Champion Homes [2018] 97, at [15].
[3]
Consideration
In Rekrut v Champion Homes [2018] 97, at [20] and [21], the Appeal Panel set out the general principles applicable to the exercise of the discretion in cl 20(4) of the CTTT Regulation as follows:
"20 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.
21 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."
In this case, the appellants were successful in their appeal and as there are no factors that militate against an award for costs, it is appropriate to make an order that the respondent pay their costs of this appeal.
The question is whether that award for costs should be made on an indemnity basis. In this regard the appellants rely on a letter, dated 14 March 2018, they sent to the respondent in which they made an offer to settle this appeal. The offer was made in accordance with the principles of Calderbank v Calderbank [1976] Fam Law 93; 3 All ER 333; 3 WLR 586. In their letter of settlement, the appellants explained the basis on which they would be successful in their appeal and why the arguments put forward by the respondent would not succeed. The appellants' went on to explain the terms of their offer as follows:
"Our offer to settle both the appeal cost issue and the Appeal of Member Boyce costs decision to (sic) for both parties to consent to have all costs determined by Member Goldstein following the remittal.
We note the remitter proceedings are set down for 26 March 2018. That being the case, this offer is open until the close of business 23rd March 2018. …."
As noted by the Appeal Panel in Deacon v National Strategic Constructions Pty Ltd: National Strategic Constructions Pty Ltd v Deacon (No 2) [2018] NSWCATAP 31, at [17], Calderbank offers are a well-established means of parties seeking to compromise proceedings in circumstances where, provided that the offer is a genuine offer of compromise and the opposing party unreasonably rejects the offer, the court may, in the exercise of its discretion, make a special costs order in favour of the offeror: see Singapore Airlines Cargo Pty Ltd v Principle International Pty Ltd (No 2) [2017] NSWCA 340, at [30].
However, a Calderbank offer of itself does not entitle the successful offeror to an order for indemnity costs: Jones v Bradley (No. 2) [2003] NSWCA 258. In Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344, at [12], Basten JA (with whom McColl and Campbell JJA agreed) adopted the following non-exclusive list of factors as being relevant to the determining whether the rejection of an offer was unreasonable:
"(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree's prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it."
In this case, appellants clearly stated in their letter of settlement that the offer foreshadowed an application for indemnity costs.
We are satisfied that the appellants' offer of settlement was genuine and made early in the proceedings before the Appeal Panel. It was made the day after the first call-over directions date of the appeal (i.e. 13 March 2018) where orders were made for the filing and serving of evidence and submissions in regard to the appeal. If accepted, nether party would have incurred any further costs in prosecuting the appeal.
We are satisfied that, in the circumstances, there was ample time allowed for the respondent to consider the offer. The decision of the Appeal Panel in respect of the substantive proceedings at first instance had been published on 13 September 2017: see Rekrut v Champion Homes [2017] 187. In those proceedings the Appeal Panel made orders remitting specified claims of the appellants for reconsideration by the Tribunal, differently constituted, in the Consumer and Commercial Division. As noted in the appellants' letter of settlement, the hearing of those remitted claims were listed for hearing before Senior Member Goldstein on Monday 26 March 2018. An acceptance of the appellants' offer by Friday 23 March 2018 meant that the issue of costs at first instance would also be remitted for reconsideration by Senior Member Goldstein, without a need for the parties to file and serve evidence and written submissions in the appeal.
We are also satisfied the appellant adequately explained the basis on which the offer of settlement was made and in the circumstances, given the appellants' success on appeal from the substantive decision at first instance, its appeal from the costs decision at first instance was likely to succeed. That is, as explained by the appellants in their letter of settlement, the appellants were likely to succeed in their appeal and there was little, if any, basis to the respondent's arguments in seeking to have the decision at first instance upheld.
The respondent did not respond to the appellant's offer. Hence, there was a rejection of the offer by the respondent. As the appellants succeeded in their appeal, in our opinion, taking into account the matters listed above, the respondent's rejection of the appellants' offer was unreasonable in the circumstances. Hence, we find it is appropriate to make the order sought. However, the order should only apply from the date on which the offer was rejected; namely 23 March 2018.
[4]
Orders
1. A hearing on costs is dispensed with under s 50(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW).
2. Champion Homes Sales Pty Ltd is to pay Adam Rekrut and Sandra Scott's costs of the appeal, on an ordinary basis until 23 March 2018 and on an indemnity basis thereafter.
[5]
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
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Decision last updated: 10 September 2018