These reasons deal with the question of costs following the Tribunals principal judgment in the matter given on 10 November 2022.
The successful applicant seeks an order for costs.
Having considered the submissions of the applicant dated 16, 22 and 28 November (including attachments) and the respondent dated 13 December for the reasons set out below, I have determined that the respondent is to pay the applicants costs of their building expert witness, Bournelis of City Wide Building Consultants in the amount of $4400.00 within 28 days.
[2]
Background
The dispute concerned the removal of an existing driveway and side path and the construction of a new driveway and side path (the Work) by the respondent builder (the Builder) for the applicant homeowners, (the Homeowners) at 40 Munmorah Circuit, Woodcroft, New South Wales (the Property).
Although there was no formal written contract and identification of the price to be paid and work to be performed was attended to in a relatively informal manner, the parties agree that the Homeowners contracted the Builder to do the Work and paid $19,500.00 to the Builder and that no further money is being claimed by the Builder.
The Work was performed in about October 2021 and the Application filed 21 March 2022. The Application alleged that that the Work was defective and breached warranties implied under s18B Home Building Act (NSW)1989 (HBA) and claimed $38,394.88 as the cost to remedy the alleged defective work.
I ordered that:
1. The Respondent is to rectify the defects as agreed or found, by demolishing and replacing the driveway and side path in accordance with the scope of works provided by Mr Bournelis at Items No's 1, 2, 3 and 4 of the Scott Schedule attached to Joint Report (the Rectification Work).
2. The Rectification Work is to be carried out in a proper and workmanlike manner.
3. The Rectification Work is to be completed within 3 months of these orders.
4. If any party wishes to make an application for costs, submissions in support of that application including the orders sought, the reasons for the orders sought and whether the application can be dealt with on the papers is to be filed with the Tribunal and served within 7 days of these Consideration
The applicants seek an order for the following:
1. the costs of their building expert, Mr Bournelis of city Wide Building Consultants of $5500.00 including GST to" inspect and report", "attend conclave" and "attend hearing";
2. legal costs of "One Law", Mr Shokouhi of $2581.51;
3. future costs of inspections by Mr Bournelis of $880.00 per inspection for three inspections, being $2640.00;
4. the cost to remove an air-conditioning to allow remedial work to be performed and unit and then reconnect it after wards;
5. handyman costs of $120.00 "to remove an aluminium angle from garage side of house".
[3]
Whether to dispense with a hearing in respect of costs
Section 50 Civil and Administrative Tribunal Act 2013 NSW (the NCAT ACT) sets out the circumstances in which the Tribunal can dispense with a hearing and proceed to determine a matter, including a costs application, having regard to submissions filed with the Tribunal.
Neither party submitted that the costs should not be determined on the papers.
The Tribunal is satisfied that the parties have been afforded an opportunity to make submissions on whether a hearing on the question of costs should be dispensed with and whether the question of costs can be determined on the papers.
Having considered the submissions filed by the parties, I am satisfied that the question of costs can be adequately determined in the absence of the parties by considering the written submissions and other documents or material lodged with or provided to the Tribunal.
Pursuant to Section 50(4) of the NCAT Act, the Tribunal exercises its discretion to determine the question of costs on the papers.
[4]
Costs in the Tribunal
Section 60 of the NCAT Act provides that each party to proceedings in the Tribunal is to pay the party's own costs, save that the Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.
Section 60 further provides that if costs ( being costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be 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) or on any other basis, and that costs includes " the costs of, or incidental to, proceedings in the Tribunal…"
Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules) provides that in respect of proceedings in the Consumer and Commercial Division of the Tribunal, that despite s 60 of the NCAT Act, the Tribunal may award costs in the absence of special circumstances, if the amount claimed or in dispute in the proceedings is more than $30,000.00.
The effect of the above provisions is that, unless Rule 38 applies or there are special circumstances, each party should pay their own costs. If Rule 38 applies, the Tribunal can award costs in the absence of special circumstances.
Further, pursuant to subsection 60 (5), Costs includes "costs" relevantly includes - "(a) the costs of, or incidental to, proceedings in the Tribunal…"
The applicant claimed $38,394.88 as the cost to remedy the alleged defective work.
I am satisfied that the amount in dispute was more than $30,000.00 and that the Tribunal has a general discretion in respect of the awarding of costs.
In Thompson v Chapman [2016] NSWCATAP 6 the Appeal Panel held the following in relation to the exercise of the discretion to award costs where rule 38 applied:
67 Rather, in circumstances where there is a general discretion to award costs, the correct statement of principle is that the Tribunal in exercising its discretion is to have regard to the nature of the proceedings before it and all relevant factors arising in connection with those proceedings for the purpose of determining what order for costs, if any, should be made.
68 Each of Regulation 20 of the CTTT Regulation and Rule 38 provide a general discretion in respect to the award of costs.
69 The starting point in exercising such discretion is that the "usual order for costs" is that a successful party should be entitled to an order for costs in their favour: see Latoudis v Casey [1990] HCA 59; [1990] 170 CLR 534 per Mason CJ at 554 and Oshlack v Richmond River Council per McHugh J at 97.
70 The reason for such an order is that it is appropriate for the party who incurred costs caused by the other party in litigation to be reimbursed. Further, an award of costs is by way of an indemnity to the successful party and not as punishment of the unsuccessful party: see Latoudis v Casey per Mason CJ at 543 and McHugh J at 567 and in Oshlack v Richmond River Council per Brennan CJ at 75.
71 Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at 88 and Kirby J at 121 - 123.
72 The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include:
(1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made: see for example Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304; and
(2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at 41 - 44.
…
76 In short, the proper exercise of the discretion requires the Tribunal to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary or capricious: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at [22] and McHugh J at 65.
Although I did not make a money order, the making of the work order means that the applicants are the successful party.
The starting point then is that the applicants should be entitled to an order that the respondents pay the applicants costs of and incidental to the proceedings.
The applicants seek fixed amounts of costs.
Relevantly:
In The Owners Strata Plan No 82306 v Anderson [2018] NSWCATCD 1 (5 February 2018), the Tribunal considered whether to make a fixed costs order. Referring to various authorities, it noted the following.
23 In 203 Castlereagh Street Pty Limited v Skybloo Holdings Pty Limited [2017] NSWCATAP 29 (13 February 2017) the Tribunal considered the following cases concerning whether a fixed sum costs order should be made: Hamod v State of New South Wales [2011] NSWCA 375 at [813] and [816]; elnduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [8] and [30]; Kostov v Zhang (No 2) [2016] NSWCA 279 at [19] and [22]. The factors that were taken into account, in determining whether a fixed sum costs order or an assessment would be more appropriate, included the following …
(1) A fixed sum costs order involves a departure from the usual process by which costs are assessed in accordance with the statutory procedures now relevantly found in the Legal Profession Uniform Law Application Act 2014 (NSW) and the Legal Profession Uniform Law (NSW).
(2) Fixed sum may be appropriate where:
(a) The sum of costs in question is relatively modest.
(b) The party obliged to pay would not be able to meet liability resulting from assessment.
(c) Assessment would be protracted and expensive.
(d) The relevant responsibility of the parties for the costs incurred.
(e) The degree of any disproportion between the issue litigated and the costs claims.
(f) The complexity of the proceedings in relation to their costs.
(3) Calculation should be based on an informed assessment of the actual costs e.g. costs estimates and bills. The approach should be logical, fair and reasonable;
and in Bechara trading as Bechara and Company v Bates [2016] NSWCA 294, the following points were highlighted by Beazley P, Meagher JA and Payne JA at [12] - [15]:
(1) The power to award a lump-sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials.
(2) The same detail as a formal assessment is not required.
(3) The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate as a result of the proceedings.
(4) The courts typically apply a discount when determining a fixed sum.
Turning to the costs claimed by the applicants;
The future costs of inspections by Mr Bournelis at $880.00 each, the costs to remove an air-conditioning unit to allow remedial work to be performed and then reconnect it after wards of $600.00 and the handy man costs of $120.00 cannot be costs of and incidental to the proceedings and are rejected.
Other than a trust statement for One Law identified as "Building and Construction Dispute" identifying transfers of $2196.50, $20.00 and $365.01 there is no evidence of what the amount claimed of $2581.51 was for. I also note that the applicants represented themselves in the proceedings. I am not satisfied to what extent the One Law costs are costs of and incidental to the proceedings and if they are, the extent to which they are reasonably incurred. I therefore also reject the claim for a fixed costs order in respect of the costs of One Law
I am however satisfied that the costs of Mr Bournelis are costs of and incidental to the proceedings and have been paid and that given it is for a relatively small amount, it is appropriate that I order they be paid as a fixed amount.
Mindful that when making a fixed sum costs order a discount is typically applied, and hat the reports also included evidence in support of the applicants' compensation claim which was unsuccessful , I propose to apply a discount of 25 percent to the costs of Mr Bounelis.
In respect of the applicants' application for costs, the Tribunals order will be that the respondent is to pay the applicants' costs fixed in the amount of $4400.00 within 28 days.
[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
[6]
Amendments
23 August 2023 - Formatting amendments.
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 August 2023