Riman v Smith [2023] NSWCATAP 205 | Case summary

NCAT Appeal Panel|2023-07-28

Summary

On 14 March 2023, the appellant builder consented to an order that he pay the respondent home owner the sum of $356,031.55 for reparation of defective building work and ancillary expenses, including legal costs in a fixed sum of approximately $47,000.
On 5 May 2023, the appellant lodged the appeal, significantly out of time. The appeal challenged the appellant's liability for the judgment sum in its entirety.
The matter came before me for directions and to hear an application for a stay. I gave directions and, by consent, varied the order to provide for payment of the judgment sum less the legal costs in the fixed sum, but that the appellant pay the respondent's costs as assessed or agreed. I did so without prejudice to the appellant's rights to appeal the decision in its entirety, and to resolve a concern of the appellant that he had agreed to costs in a fixed sum when he had not properly satisfied himself the sum was appropriate.
The appellant was thereafter directed to lodge and serve his material in support of the appeal by 31 May 2023. He did not do so. Only when pressed by the respondent did he then seek to withdraw the appeal. The respondent consented, but only on the basis she sought costs. That application was supported by evidence in the form of an affidavit by her solicitor including written submissions.
I made directions with a timetable for the filing of evidence and submissions in respect of costs, noting that the Appeal Panel may dispense with a hearing and deal with the issue on the papers. The parties were directed to address that issue in their submissions, should they wish to, however the respondent had already consented to a hearing being dispensed with.
The appellant made no response. Nor did he apply for an extension of time or oppose me dispensing with a hearing. As I am satisfied that the issues for determination can be adequately determined in the absence of the parties by considering the written submissions and other material lodged with the Tribunal, I will make an order dispensing with a hearing: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 50(2).

Principles relating to costs of the appeal

The primary provision governing costs in relation to proceedings in the Tribunal is s 60 of the NCAT Act. Pursuant to that section, each party to proceedings is generally to pay their own costs in appeals of this nature. However, that general rule may be displaced in respect of decisions of the Consumer and Commercial Division, and appeals from such decisions, by rr 38 & 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules). In that regard, where the amount claimed or in dispute in the proceedings at first instance is more than $30,000, the general rule in those proceedings is modified by r 38(2)(b) of Rules and the Tribunal in those proceedings may award costs even in the absence of special circumstances. It is undisputed that this is the case here.
In an appeal from a decision in such proceedings it is then necessary to consider r 38A of the rules, which provides: 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of - (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (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.
Where r 38 is engaged in the proceedings at first instance, r 38A(1) is engaged in an appeal from a decision in those proceedings. However, that is not the end of the enquiry as to whether s 60 of the Act applies to costs in such an appeal. Rule 38A(2) commands that the first instance costs provisions apply in such an appeal, not that the effect of the application of such provisions in those proceedings be carried over to the appeal. As a result, s 60 of the Act will apply in the appeal unless the amount claimed or in dispute in the appeal is also more than $30,000: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25. Again, though, that was the case here.
As a result, the usual considerations as to costs, unconstrained by s 60 of the NCAT Act, are applicable.
Each application for costs must be determined on its own merits and the central and overriding principle in any order as to costs is that of doing justice between the parties in each particular case: Moseley v AB (No 2) [2017] NSWSC 1812 at [65] - [66]. Costs usually follow the event, but where proceedings have been brought to an end without a decision on the merits, there is no relevant event by which to gauge that outcome.
In Re The Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin [1997] HCA 6, a decision of McHugh J, his Honour said: In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule, the successful party is entitled to his or her costs. Success in the action or on issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or not it will make a costs order. In an appropriate case, a court will make an order for costs, even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the cost of the litigated action which by settlement or extra curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.
Later in the judgment, his Honour said: If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
The principles in Lai Quin have been adopted as being apposite to decisions in the Appeal Panel.
However, one circumstance which may justify consideration of an order for costs is where a party, in effect, capitulates or surrenders to the other. In those circumstances, where the rules as to costs are not constrained by the terms of s 60 of the NCAT Act, the usual order is that the capitulating party pays the costs.
Capitulation can take different forms. Depending on the circumstances, withdrawing proceedings may be a form of capitulation.
In Khanna v Bond Realty Pty Ltd [2019] NSWCA 128, Bell P (as his Honour the Chief Justice then was) and Gleeson JA said at [31]: The 26 October notice of motion which was dismissed was a notice of motion which Mr Khanna sought to withdraw in the course of the hearing and it was reasonable that the First Respondent be awarded its costs in relation to that notice of motion. There was and is no good reason why a party that has prepared to meet a notice of motion should be deprived of its costs if a party that has filed it withdraws it in the course of argument. Whilst costs will not always be ordered in such circumstances (see Re Minister for Immigration & Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 624-625; see also Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84), that is not an invariable rule and there was no error of principle in the primary judge's decision to award costs in relation to the 26 October 2018 notice of motion."
Relevant principles were summarised in Kiama Council v Grant [2006] NSWLEC 96 at [80], a decision later approved by the Court of Appeal in Hunter Development Corporation v Save Our Rail NSW Incorporated (No 2) [2016] NSWCA 375 at [78], [81] and [82].
In Kiama, after a review of the authorities, Preston CJ said at [80]: The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.

Respondent's submissions

The respondent submits, in substance, that there has been a capitulation by the appellant and that her consent to discontinuance of the appeal was subject to her seeking an order for costs. She notes the comments of a differently constituted Appeal Panel in Arambewela v Castle Projects Pty Ltd [2018] NSWCATAP 14 at [19] that: … in the ordinary course, absent some compelling reason, the discontinuing party should pay the costs of the discontinued proceedings.

Determination

In the absence of some other explanation by the appellant, I am satisfied that the discontinuance of the appeal can properly be characterised as a capitulation. Whilst the appellant gained some success by variation of the order in respect of costs at first instance, there is no suggestion that the appeal against the balance of the judgment was not otherwise intended to be pressed. Further, where the variation to the order was by consent, it could have been achieved by variation under regulation 9(1)(a) of the Civil and Administrative Tribunal Regulation 2022 (NSW), without the need for an appeal.

Orders

I am satisfied that the appropriate orders are: 1. A hearing of the Respondent's application for costs of the appeal is dispensed with. 2. The Appellant is to pay the Respondent's costs of the appeal.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 July 2023

Riman v Smith

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Judgment (6 paragraphs)

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Legislation Cited (3)

Cases Cited (9)

Cited By (2)