Roseland Projects Pty Ltd v Jiadong Yang

NCAT Appeal Panel|2020-02-10

Introduction

This is an appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) of a decision made in the Consumer and Commercial Division of the Tribunal (the CCD) on 29 May 2019.
For the reasons set out below, we have decided to refuse leave to appeal and dismiss the appeal.

Background

On 19 April 2018 the respondent (the owner), filed an application in the Consumer and Commercial Division of the Tribunal (the CCD) against the appellant (the builder). The owner alleged various breaches of the statutory warranty provisions of the Home Building Act 1989 (NSW) (the HB Act) under a contract for residential building work performed at the owner's premises at a Sydney suburb.
The owner claimed damages of $53,371.82 for defective works and $41,080 for delay costs. The builder claimed a quantum meruit of $6000 for additional building works undertaken by it and claimed that by way of a set off.
On 28 May 2019 the application came on for hearing before a Senior Member of the Tribunal.

The Tribunal's decision

In reasons for decision dated 29 May 2019 (the reasons), the Tribunal dismissed the claim for delay damages and found that the cost of rectifying defective building work was $10,697.52. The Tribunal determined that the builder was liable to the owner for $4,697.52 after setting off $6000 it awarded to the builder for the additional items of work claimed on the quantum meruit.
The Tribunal ordered that there be "no order as to the costs of the proceedings."

The Notice of Appeal

The Notice of Appeal was filed on 19 September 2019. In it the builder stated that the reasons were not received until 23 August 2019. At the appeal hearing the parties agreed that the Tribunal had communicated its decision on the day of the hearing, although the parties were told that reasons for decision would be provided subsequently.
It is clear to us that the Tribunal published reasons for decision on 29 May 2019. What is not clear is why reasons were subsequently sent to the parties in a document dated 23 August 2019. There is nothing on the Tribunal's file to explain why this happened.
On balance, we accept that the Tribunal did not deliver oral reasons for decision on the day of the hearing. We further accept that for whatever reason the appellant did not receive the Tribunal's reasons for decision until 23 August 2019.
If the Tribunal gives oral reasons for decision, time to appeal runs from the date on which the Tribunal delivers the reasons: Taylor v Peslak [2018] NSWCATAP 57 at [45]. However, if oral reasons are not given, time to appeal runs from the date on which written reasons for decision are provided. As we accept that the Tribunal did not give oral reasons for decision and as we further accept that the parties did not receive written reasons for decision before 23 August 2019 even though the reasons were published on 29 May 2019, we are satisfied that the appeal was lodged in time. This is so even though we raised the issue of time with the parties during the appeal hearing. An extension of time in which to appeal is not required.

Grounds of appeal

The ground of appeal which the builder pressed at the appeal hearing was that the Tribunal erred in deciding that there would be no order as to the costs of the proceedings.
The builder's position is that the Tribunal should have ordered the owner to pay its costs on an indemnity basis and, in the alternative, on the ordinary basis. The builder also seeks costs of the appeal.

Statutory Basis of the Appeal

Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) NCAT Act.
The builder claimed in the Notice of Appeal that the appeal was of right as the appeal involved a question of law and that "to the extent that leave is required, leave is applied for". At the appeal hearing, the builder formally sought leave to appeal.
The owner opposed leave to appeal being granted.
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the CCD are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
Even if an appellant from a decision of the CCD has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (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.

Issues on Appeal

The issue which arises on this appeal is whether the Tribunal erred in exercising the discretion in respect of costs.

The Builder's Submissions

The builder submitted that it was substantially successful in the Tribunal proceedings because the owner only succeeded in being awarded the amount of $4,697.52 from a total claim of $130,760.38, representing a success rate of only 4.96% of his claim.
The builder further contended that the claim was conducted "in terrorem" and denied the builder "any reasonable opportunity to settle the proceedings" because the owner continued to press such a sizeable claim.
The builder submitted that the Member erred in the exercise of his discretion by failing to apply "the usual rule that costs follow the event."
Although there was some suggestion in the Notice of Appeal that the Tribunal either did not hear submissions on costs or did not receive into evidence the Calderbank letters of settlement, that submission was not pressed at the hearing of the appeal.

The Owner's Submissions

The owner submitted that the Tribunal's exercise of discretion on the question of costs did not constitute an error within the principles established in House v King (1936) 55 CLR 499.

Consideration

For the reasons that follow, we reject the builder's submission that the Tribunal's discretion in respect of costs miscarried.
First, the Tribunal had regard to s 60 of the NCAT Act with respect to costs. The Tribunal set out that provision together with r 38 of the Civil and Administrative Tribunal Rules 2014 (the Rules) which concerns costs in proceedings in the CCD in proceedings in which what is claimed or in dispute is more than $30,000. In such cases, the Tribunal may make an order for costs in the absence of special circumstances. The Tribunal correctly found that r 38 (2) applied to the proceedings. The Tribunal did not err in its finding concerning the basis on which it could award costs.
Second, the Tribunal had regard to the parties' submissions and the builder's Calderbank letter of offer of $2,500 (plus GST). We are of the view that Tribunal had regard to relevant factors in exercising the costs discretion, including the following at [49] of the reasons: "The owner did not conduct proceedings in a way which unnecessary [sic] disadvantaged the builder. While the owner with draw [sic] some claims for defective work he pressed other claims for which the builder accepted liability. Contrary to the builder's submission, the builder was not ready to proceed on 11 February 2019 as the proceedings were adjourned on the builder's application, the owner's claim for damages for delay was not untenable and in any event occupied little time at the hearing, and the proceedings were not frivolous or vexatious. Further, the builder did worse than the offer of $2,500 plus GST contained in the letter dated 16 April 2019 ... [from the builder's solicitors to the owner's solicitors]".
Third, there was no error in the exercise of the Tribunal's discretion in the sense required in House v King (1936) 55 CLR 499; namely some error in exercising the discretion from which we may infer, having regard to the facts, that the exercise of the discretion was wrong in principle, unreasonable or unjust. To the contrary, we find that the conclusions and findings of the Tribunal were open on the evidence and the facts.
Fourth, the builder did not obtain a result more favourable than the offer contained in its Calderbank letter to warrant an award of indemnity costs. Further, we agree with the Tribunal's conclusion that "when the various claims are examined" it was not correct "to characterise the builder as having been substantially successful in the proceedings".
Fifth, there is no "rule" that costs must follow the event. The "event" in this case was a breach of a statutory warranty under the HB Act. The owner obtained an outcome which resulted in a payment of damages (albeit relatively small when compared to the original claim) from the builder in respect of that breach.
As stated by Barrett J (as his Honour then was) in Golding v Vella (No 2) [2001] NSWSC 731 at [8]: "... it is unwise to be too technical about what it mean by "event" or "issue" in this context ... In particular one does not look at issues as if they were pleaders' issues, but approaches the matter with a broad brush."
Sixth, we reject the builder's submission that the Tribunal erred based upon what the builder described as the overall success of its defence - that is, 96.41% of the maximum claim advanced by the owner or 95% of the owner's lesser claim. That of itself does not constitute a sufficient reason to establish "success" in the proceedings or to displace the Tribunal's discretion based on an overall impression that the owner was "substantially successful."
In Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272, cited and quoted by Ward CJ in Eq in Galati v Deans (No 3) [2018] NSWSC 1861 at [25], Justices Gummow, French and Hill held in the context of mixed outcomes in proceedings (and which is no less pertinent in considering the issues in this appeal): "Mathematical precision is illusory in the exercise of the discretion will often depend upon matters of impression and evaluation."
We are not satisfied that the Tribunal's exercise of the costs discretion constitutes an error of law or that it may have caused any substantial miscarriage of justice on the basis that it was either not fair or equitable or against the weight of the evidence. Even if we had been satisfied that the builder may have suffered a substantial miscarriage of justice, we would not grant leave to appeal because we are not satisfied that the criteria for the granting of such leave set out in Collins v Urban at [84] are established.

Costs

Both parties sought costs of the appeal.
As noted above, r 38 applied in the Tribunal proceedings. What is in dispute in the appeal proceedings is costs - specifically the builder's costs - and not the quantum of the substantive claim in the Tribunal proceedings. If the costs incurred by the builder in the Tribunal proceedings exceed $30,000, the operation of r 38A means that r 38 also applies in the appeal proceedings: The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 at [109] to [110]. However, if the builder's costs did not exceed $30,000, then special circumstances need to be established to warrant an order for costs of the appeal. During the appeal hearing the parties did not dispute r 38 applies to costs of the appeal. However, the quantum of costs in dispute was not specifically addressed.
The owner is the successful party on appeal and we consider it likely that costs in fully contested proceedings before the Consumer and Commercial Division would exceed $30,000. If the builder's costs exceed $30,000 and r 38 applies in the appeal proceedings, then we conclude from the submissions made during the appeal hearing that the owner would be entitled to costs of the appeal. We have made that order on a contingent basis.
If the builder's costs of the Tribunal proceedings did not exceed $30,000, special circumstances would need to be established to warrant an order for costs of the appeal. We have therefore made procedural directions in the event that either party contends for a different costs order, including in the event that costs of the Tribunal proceedings did not exceed $30,000 and that special circumstances must be established before an order for costs can be made,

Orders 1. Leave to appeal is refused. 2. The appeal is dismissed. 3. Subject to order 4 below, the appellant is to pay the respondent's costs of the appeal, on the ordinary basis, as agreed or assessed. 4. Order 3 above ceases to have effect if either party contends for a different costs order, in which case the following procedural directions apply. 1. The party seeking the different costs order is to file and serve submissions not exceeding five pages in length not later than 14 days after the date of publication of these reasons for decision. 2. The other party is to file and serve submissions not exceeding five pages in length not later than 14 days thereafter. 3. Any submissions in reply are to be filed and served 7 days thereafter.

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: 13 March 2020

At a glance

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Judgment (13 paragraphs)

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Cases Cited (7)