SCC (Sam Construction Company) Pty Ltd v Wingate

NCAT Appeal Panel|2017-11-30

Background

This decision concerns an application by the respondents to the appeal to have their costs paid by the appellant. The appeal was dismissed on 10 October 2017 pursuant to s 55(1)(a) of the Civil and Administrative Tribunal Act 2013 (NCAT Act). That section provides that the Tribunal may dismiss proceedings if the applicant or appellant withdraws the application or appeal.
In addition to the above order dismissing the appeal, the Appeal Panel also made the following directions on 10 October 2017: 3. On or before 13 October 2017 the respondents are to file and serve any submissions and evidence in support of their costs application, including whether an order should be made dispensing with a hearing under s.50(2) of the NCAT Act. 4. On or before 20 October 2017 the Appellant is to file and serve evidence and submissions in reply including in relation to whether an order should be made dispensing with a hearing. 5. On or before 25 October 2017 the respondent is to file and serve submissions in reply.
Prior to the directions made on 10 October 2017, the Appeal Panel made directions on 14 September 2017 for the appellant to file and serve its evidence and submissions in support of the appeal and a sound recording of the first instance hearing on or before 29 September 2017.
No submissions have been received from the appellant responsive to the directions made on 14 September or those made on 10 October 2017.
A brief chronology will help to further understand the background to this appeal: 1. On 20 July 2017 the Tribunal at first instance made directions concerning exchange of evidence in proceedings brought by the appellant against the respondents. On that occasion, the Tribunal made an order (order 4) that the builder (the appellant) "pay $440.00 costs of an incidental to attending today's directions hearing for the reasons given orally". The order went on to say that the builder was to pay the $440.00 costs to the homeowners (the respondents to this appeal) by 27 July 2017. 2. On 12 August 2017 the appellant filed a Notice of Appeal challenging order 4 summarised above; 3. On 4 September 2017 the respondents filed a Reply to Appeal; 4. On 14 September 2017 there was a call over of the appeal at which directions were made as described above. The appeal was listed for hearing on 9 October 2017; 5. On 4 October 2017 the appellant notified the respondent that the appellant was withdrawing the appeal. On 6 October 2017 the appellant filled a request for withdrawal of application by which the appeal was withdrawn; and 6. On 10 October 2017 the appeal was dismissed. The directions referred to above were made concerning costs of the appeal.

Respondents' Submissions

The respondents' submissions may be summarised as follows: 1. As the appeal was against an award of costs, leave is required. The respondents submit that leave would not have been granted but in the event that leave was granted, the appeal, having regard to the merits should have been dismissed; 2. As the appeal had no merits and the appellant applied to withdraw the appeal at a late stage, an order as to costs should be made in favour of the respondents. Had the appellant withdrawn the appeal on a date in proximity to 14 September 2017, then the costs incurred by the respondents would have been limited to the preparation and filing of a Reply to Appeal and not the significantly additional costs incurred in complying with the directions made on 14 September 2017. It was reasonable for the respondents to continue to prepare for the hearing of the appeal listed for 10 October 2017 and to appear on that day as the appellant could have withdrawn its application to withdraw the appeal at any time up to the hearing of the appeal and the appellant could have appeared to prosecute the appeal on the hearing day. There was no guarantee provided to the respondents that the appellant's application to withdraw the appeal would be accepted; 3. The respondents rely upon s 60(3)(a), (c) and (e) of the NCAT Act in support of their application that they be awarded costs incurred of an incidental to prosecuting the Reply to Appeal. The respondents have incurred counsel's fees in the sum of $1,500.00 inclusive of GST and solicitors costs in the sum of $2,440.00 inclusive of GST up to the date of hearing. A further $440.00 including GST was incurred by the respondents in having legal representation at the hearing on 10 October 2017. Solicitor costs do not include costs incurred by the respondents in preparing, filing and serving these submissions; 4. The submissions give some further detail of the amount of time spent by the respondents' legal representative in preparing, filing and serving the Reply to Appeal, attending the directions hearing on 14 September 2017 and preparing, filing and serving submissions for the hearing of the appeal; 5. The total costs which the respondents seek is $4,184.00. The respondents submit that a "gross costs order" should be made in favour of the respondents for the sum of $4,184.00 on the basis that the appeal should not have been brought and the respondents ought not to have been put to the expense of having the costs assessed in addition to the monies already expended by them in reply to Appeal; 6. It is submitted that the question of costs in favour of the respondent may be dealt with in accordance with s 50(4) as pursuant to s 50(3) of the NCAT Act, the Tribunal has afforded the parties an opportunity to make submissions about the proposed cost order and will take any submissions into account; and 7. Attached to the respondents' submissions is counsel's invoice for $1,500.00 (inclusive of GST) and an invoice from the solicitors acting for the respondents in the sum of $2,684.00 (inclusive of GST). These two figures add up to $4,184.00.
In addition, the Tribunal has received a copy of the respondents' solicitors' outline of submissions and lists of documents which was filed with the Tribunal on or about 5 October 2017.

Consideration

I am satisfied that the parties have been afforded an opportunity to make submissions about whether an order should be made dispensing with a hearing. The respondents submitted that it is appropriate for the Tribunal to make an order dispensing with a hearing. I have taken the respondents' submissions into account and am satisfied that the issues for determination can be adequately determined in the absence of the parties by considering written submissions. Accordingly, I propose to make an order dispensing with a hearing.
The original application sought an order that the respondents pay to the applicants (now the appellant) $28,578.00. Accordingly, on that basis r 38 of the Civil and Administrative Tribunal Rules 2014 (the Rules) does not operate to displace s 60 of the NCAT Act. Similarly, r 38A does not operate in the circumstances of this appeal to displace s 60.
However, notwithstanding the above paragraph, the material supplied to me includes points of claim filed by the respondents in which there are claims made totalling well in excess of $30,000.00. On that basis, r 38 may apply and therefore r 38A may apply. The respondents did not make submissions concerning the applicability of rr 38 or 38A. No reliance has been placed upon them. Accordingly, I will deal with this application for costs upon the basis of considering whether special circumstances exist.
Section 60(1), (2) and (3)(a), (c) and (e) provides as follows: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) 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. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance
As the appeal has been dismissed following withdrawal, there has been no determination of the merits of the appeal.
A decision concerning the awarding of costs in proceedings is an ancillary decision (see s 4 of the NCAT Act). It is clear from s 4 that an ancillary decision cannot be an interlocutory decision.
Accordingly, s 80(2)(a) of the NCAT Act does not apply but s 80(2)(b) applies and that means that the appeal may be brought as of right on any question of law, or with leave on any other grounds. The provisions of cl 4 of Sch 12 of the NCAT Act modify the leave grounds.
Here, the respondents submitted that special circumstances warranting an award of costs exist and in particular, as stated above, the respondents rely upon s 60(3)(a), (c) and (e).
Dealing with s 60(3)(a), in my view, there is substance in the submission that the appellant has unnecessarily disadvantaged the respondents in that the appellant put the respondents to the expense of preparing a Reply to Appeal, attending the call over on 14 September 2017 and preparing for the hearing set down for hearing on Tuesday 10 October 2017. The appellant withdrew the appeal as late as Friday 6 October 2017. It was not unreasonable for the respondents to prepare submissions for the appeal hearing even though the appellant had not complied with the direction made on 14 September 2017 to file and serve material in support of the appeal by 29 September 2017. The late withdrawal of the appeal has disadvantaged the respondents in that the respondents have been put to expense.
On 27 September 2017 the Tribunal received a letter via email from the solicitors for the appellant advising that they no longer hold instructions to act on behalf of the appellant. In the absence of other evidence from the appellant, it is reasonable to infer that the appellant's decision not to continue with the appeal was made on or before 27 September 2017. This inference is based on the appellant withdrawing the solicitors' instructions and the failure to serve the appellant's material by 29 September 2017. Had the appellant promptly advised the respondent and the Tribunal of its decision not to prosecute the appeal, the respondent may have avoided those costs incurred after 29 September 2017.
In my view, the late withdrawal of the appeal has disadvantaged the respondents unnecessarily in that the respondents have been put to expense in responding to the Notice of Appeal and complying with the Tribunal's directions. The question to be decided is whether this conclusion constitutes "special circumstances".
As Senior Member Sarginson stated in The Owners-Strata Plan No 20775 v BCS Strata Management Pty Ltd and Ors (unreported): 23 Special circumstances" are circumstances which are unusual, or out of the ordinary, but do not have to be exceptional or extraordinary (CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21; Augustus v Mohammed (No 2) [2016] NSWCATAP 165). 24 Further, the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. Each situation must be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs (Augustus v Mohammed at [7]).
I find that the circumstances of this appeal involve special circumstances warranting an order for the award of costs in favour of the respondents. In particular, I find that the respondents have made out their case under s 60(3)(a) of the NCAT Act, namely that the appellant's conduct of the appeal has unnecessarily disadvantaged the respondents.
I do not think the respondents have made their case out under s 60(3)(c). The merits of the appeal have not been determined and it is not possible to conclude that the appeal had no tenable basis, despite the respondents' assertion that the appeal had no merit. Nor do I think that the respondents may rely upon s 60(3)(e). There is no evidence of the appeal being vexatious or misconceived and it is not possible to say that the appeal lacks substance. On the other hand, the appeal being over an order to pay $440.00 borders on the frivolous.
The purpose of an award of costs is to indemnify the successful party (see Oshlack v Richmond River Council (1998) 193 CLR 72, [1998] HCA 11 per McHugh at [67]). In that decision, Kirby J said that the general purpose of an order for costs is to provide compensation in the form of partial indemnity for the costs incurred (par [135]).
Although an award of costs may be framed so as to provide partial indemnity, it is also the case that costs actually incurred (known as indemnity costs or solicitor client costs) may be awarded. The practical effect of the respondents' application for an order that the appellant pay the actual amount of costs incurred is that the respondents seek indemnity costs. The circumstances in which indemnity costs may be awarded were discussed in Mendonca v Tonna [2017] NSWCATAP 176: see pars 59 to 64. The ground referred to in that decision which has relevance to the facts of this appeal is that appearing in par 63, namely that indemnity costs may be awarded for unreasonable conduct. I do not think that the appellants conduct can be categorised as "unreasonable". The appellant was entitled to appeal despite the amount in issue being very small. This is to be distinguished from the conduct (described earlier) that the appellant's conduct in withdrawing the appeal very late unnecessarily disadvantaged the respondents.
A further consideration in not making the order requested by the respondents is that a question arises as to whether the amount incurred by the respondents was reasonable and proportionate. In this matter, an order to pay $440.00 has had the consequence that there is now an application for an order in an amount 10 times that originally awarded.
In the circumstances, the appropriate order is that the respondents should have their costs in an amount agreed or if not agreed, as assessed. An order will be made accordingly.

Orders

The Appeal Panel makes the following orders: 1. Pursuant to section 50(2) of the Civil and Administrative Tribunal Act, a hearing is dispensed with; and 2. The appellant is to pay the costs of the respondents in the appeal in an amount agreed or as assessed.

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: 30 November 2017

At a glance

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Judgment (5 paragraphs)

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Cases Cited (5)

Cited By (5)