[2025] NSWCATAP 310
General information, not legal advice.
NCAT Appeal Panel
2025-12-11
S Westgarth, Deputy PresidentD Goldstein, Senior Member
Original judgment source is linked above.
(1) The claim by the Appellant (as applicant) was for an amount exceeding $30,000 and therefore r 38 of the Civil & Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules) applied and the successful party was entitled to an order for costs.
(2) Where proceedings are resolved without a hearing on the merits there is no successful party, save for three exceptions, citing Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 (Lai Qin).
(3) One exception concerns where both parties have acted reasonably, but a court or tribunal can be confident of the outcome or that a party would "almost certainly succeed". This case falls into that category.
(4) Alternatively, a costs order may be justified pursuant to s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) independently of the Lai Qin principles. Where s 60 applies the Lai Qin principles "must give way to s 60 where they conflict with s 60 or where s 60 imports additional considerations or principles, citing Roberts v The Owners - Strata Plan no 4393 [2023] NSWCATAP 119.
(5) The second exception under the Lai Qin principles is where one party has acted unreasonably, as a result of which "the Tribunal may have regard to known circumstances, not in dispute between the parties, without reviewing large swathes of evidence": Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84.
(6) The Appellant commenced the proceedings due to the failure of the Respondent to address issues raised by the Appellant in relation to water ingress to the property the subject of the contract for certain building works to be undertaken.
(7) The Appellant filed and served a report prepared by Emilio Calandro and the Respondent did not file any evidence nor participate in the proceedings, resulting in the orders made on 19 February 2024.
(8) As a result of the Respondent's application to have the February orders set aside, the Tribunal made further directions for the Respondent to file and serve expert material. There was a direction that upon the Respondent filing such material the parties were to provide a joint report.
(9) The joint report identified seven individual areas to be remedied.
(10) The Appellant (then applicant) submitted that the Respondent's conduct had been unreasonable and taken as a whole engaged the provisions of s 60(3)(b), (f) and (g) or the Tribunal's general discretion in s 60(2)-(3).
(11) The Appellant's submissions identified three reasons why the Respondent's conduct had been unreasonable. The first was that the Respondent had refused to undertake any works to the property. The second was that the Respondent had unreasonably prolonged the time taken to complete the proceedings by failing to appear at the hearing on 19 February 2024. The third was that the Respondent had unreasonably defended the proceeding.
(12) The Appellant's submissions included reliance upon s 60(3)(c) of the NCAT Act which provides that the Tribunal may have regard to the relative strengths of each parties' claims. The submissions also referred to the statement by McHugh J in Lai Qin that costs may be awarded where, although both parties have acted reasonably, one party was almost certain to succeed if the matter had been fully tried.
(13) The Appellant submitted that the Respondent had mounted no defence and that the expert report filed by the Respondent acknowledged the defective work. The Appellant maintained that the significant difference between the two experts was in respect to the methodology for repair and the costs involved. The Appellant submitted that because the experts agreed that there were seven areas of defects requiring rectification the Appellant was inevitably going to succeed if the matter had not been resolved by consent.
(14) The Appellant submitted that the Respondent had effectively capitulated.
(1) The Respondent pay the Applicant's costs thrown away by reason of the setting aside of the orders made on 19 February 2024, including the costs of and incidental to the hearing on that date, and the costs of and incidental to the Respondent's application to set aside those orders.
(2) The Applicant's application for costs is otherwise dismissed.
(1) The Tribunal made an error of fact in its interpretation of the agreed consent orders relating to the scope of work.
(2) The Tribunal incorrectly stated that the Appellant capitulated as the Appellant's expert report showed over 45 defects whilst the agreement in the consent orders was for 7 defects to be remedied. This is not correct because the 7 defects included individual defect items in the Appellant's defects list and this occurred because the Appellant's expert had itemised all of the defects whereas the Respondent's expert bundled all the defects together.
(3) The decision to dismiss the balance of the costs was ill-conceived and against the evidence of the parties.
(4) The consequence of the error is that the Tribunal failed to properly exercise its jurisdiction in relation to costs, thereby denying the Applicant a "rightful costs order".
(5) In addition, the Notice of Appeal contended that the Decision was not fair and equitable. The Notice of Appeal states that the Appellant "was successful in the majority of their claim" whereas the Tribunal incorrectly stated that the Appellant had alleged 45 defects, but only 7 were the subject of the consent order.
(6) The Notice of Appeal also stated that the Decision was against the weight of evidence.
(1) The consent orders entered into on 22 August 2024 incorporated all of the defects claimed by the Appellant grouped into seven categories. The Tribunal erred in its finding of fact and, as a consequence, failed to apply the relevant legal principles in determining the Appellant's entitlement to costs.
(2) The correct conclusion should have been that the Appellant had established the whole of his case, as reflected in the consent orders, that the Respondent had capitulated by agreeing to the consent orders and that the Respondent had acted unreasonably by agreeing to the consent orders at such a late stage in the proceeding.
(3) The discrepancy between seven defects as opposed to 45 defects arose because the Appellant's expert provided a detailed itemisation of each defect, whereas the Respondent's expert consolidated numerous items into broader categories. The submissions contain a table being an extract from page 4 of the Respondent's expert report (the AWESIM Report) that demonstrates how the AWESIM Report grouped the 45 items identified by the Appellant's expert into seven groupings.
(4) The Tribunal's finding that the Appellant did not contest the Respondent's position that only seven of the 45 items were agreed, is unfounded and inconsistent with the evidence. This misapprehension of fact led to the Tribunal drawing an erroneous conclusion that the scope of rectification was limited.
(5) The submissions acknowledge that r 38 of the NCAT Rules applies and that therefore the Tribunal has a general discretion to award costs.
(6) 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. We divert to make the comment that this submission is contrary to the conclusions of the Appeal Panel in the Roberts case referred to earlier.
(7) One of the factors that the Tribunal should take into account when exercising the discretion to award costs is whether by reason of the relative success of the parties on different issues an order for costs should be made.
(8) The submissions appeared to rely upon the principles set out in Lai Qin namely, that where there has been no determination on the merits, costs are generally not awarded but there are exceptions. The exceptions include where a party has litigated for a period and then surrenders or capitulates, where one party has acted so unreasonably as to justify an award for costs or where both parties have acted reasonably but a court or tribunal can be confident of the outcome or that one of the parties would "almost certainly" succeed.
(9) The Decision involved a material error of fact based upon a misunderstanding of the evidence and as a consequence the Tribunal failed to properly exercise its discretion in relation to the awarding of costs. The outcome in fact represented success of the Appellant's case.
(1) With reference to the Appellant's assertion that the seven groupings of defects set out in the joint experts report encapsulated "most" of the defects claimed by the Appellant's expert, the Respondent says that that submission is not sustainable. This is so for several reasons. The first is that there is no evidence before the Appeal Panel supporting the assertion or the table set out in the submission. The second is that the orders made ex parte on 19 February 2024 required the Appellant to prepare further evidence of water ingress which was referred to in six numbered items of the Appellant's expert report. It was not until the joint expert report was prepared that the various claims made by the Appellant were confined into seven groups. It follows that the input of the expert engaged by the Respondent was influential in forming the joint experts' report which led to resolution of the claims by the Appellant. The third reason is that, as observed by the Tribunal in the Decision the Appellant did not in reply submissions take issue with the Respondent's proposition that only seven of 45 defects were agreed. The fourth reason is that when the application was filed there were only three defects identified and the Appellant's claim was later considerably expanded.
(2) The Respondent submitted that the consent orders contained an agreed scope of works and that fact does not indicate that the Tribunal was bound to accept that had the matter proceeded to hearing matters would not have been contested and a similar outcome would have been reached. This was a statement of the principle set out in Bulloch.
(3) The Appellant initially provided two expert reports and after the second report, a joint expert report was prepared which narrowed the alleged 45 defects down into seven main groups. The Respondent submits that it was not possible to assess the nature and extent of the claim by the Appellant until the more detail expert report was provided by the Appellant which in turn led to the preparation of the joint experts' report.
(4) Given the way the expert's reports were prepared it cannot be said that the Respondent acted so unreasonably in the circumstances as to satisfy the requirements of Lai Qin.
(5) Where both parties have acted reasonably costs may be awarded where the Tribunal can be confident of the outcome or that one party would almost certainly have succeeded. This is not such a case.
(6) The Respondent does not oppose the orders made by the Tribunal at first instance.
(1) The Appellant disputed the Respondent's assertion that there was no evidence to support the fact that the seven grouped defects correspond with the 45 individual defects. The Appellant submitted that the relevant evidence is contained in the table (incorporated into the Appellant's submissions in chief) and that the table is an extract from the Respondent's expert report.
(2) The Appellant submits that the outcome of the consent orders was precisely the relief sought in the application filed by the Appellant.
(3) The Appellant's submissions state that the consent orders demonstrated a significant resolution in favour of the Appellant as those orders addressed "the majority if not all of the defects claimed".
(4) The Tribunal failed to consider the reports filed in the proceedings and to accept that the grouping of the orders into seven separate headings did not in any way mean that the remaining items claimed in the Appellant's expert report, were not included in the works to be undertaken and the Tribunal erred in making an assumption that the Appellant was not successful in the claim.
12 Limitations on internal appeals against Division decisions
(1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because-
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence, or
(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
Note : Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds.
(2) Despite section 80(2)(b) of this Act, an internal appeal against a Division decision may only be made on a question of law (as of right) and not on any other grounds (even with leave) if--
(a) the appellant is a corporation and the appeal relates to a dispute in respect of which the Tribunal at first instance had jurisdiction because of the operation of Schedule 3 to the Credit (Commonwealth Powers) Act 2010 , or
(b) the appeal is an appeal against an order of the Tribunal for the termination of a tenancy under the Residential Tenancies Act 2010 and a warrant of possession has been executed in relation to that order.
84 The general principles derived from these cases can be summarised as follows:
1 In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
2 Ordinarily it is appropriate to grant leave to appeal only in matters that involve:
1 issues of principle;
2 questions of public importance or matters of administration or policy which might have general application; or
3 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;
4 a factual error that was unreasonably arrived at and clearly mistaken; or
5 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,
BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and the authorities cited there, SAB v SEM [2013] NSWSC 253 at [8] and [9] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
3 In relation to an application for leave to appeal relating to a question of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21] and the authorities cited there.
(1) Appeal dismissed.
(2) If the Respondent seeks costs of the appeal, then the Respondent must file and serve submissions in support of an order for costs of the appeal to be paid by the Appellant within 14 days.
(3) Within 14 days thereafter, the Appellant must file and serve submissions concerning costs of the appeal in opposition to the Respondent's submissions.
(4) The submissions on costs should address whether the Tribunal may make an order dispensing with a further hearing concerning costs of the appeal and whether the Appeal Panel may determine costs of the appeal on the papers.
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.
Schach
Dowdy Constructions Pty Limited [2025] NSWCATAP 310;
(1936) 55 CLR 499
(1997) 186 CLR 622