SD Portfolio Holdings Pty Ltd v Todd (No 2)

1. Neither party opposed us determining costs on the papers. As we are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering their written submissions, we dispense with a hearing: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 50(2).

1. The appellants seek an order that the respondents pay their costs of the appeal as agreed or as assessed, and from the indemnity basis from 9 October 2025. In summary, the appellants say they are entitled to costs because:

(1) they were entirely successful in their appeal;

(2) the effect of the Appeal Panel's orders was to directly relieve the appellants of the requirement to pay the respondents $43,482.25;

(3) the sum in dispute is more that $30,000 for the purposes of r 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules);

(4) in those circumstances, the "usual order" is that the successful party should be entitled to an order for costs in its favour: Long v Antoun's Concrete Pumping Pty Ltd [2019] NSWCATAP 125 at [9];

(5) there is no need to show special circumstances in accordance with s 60 of the NCAT Act;

1. As to their request for indemnity costs, the appellants rely on a "Calderbank" offer made by the respondents' solicitor dated 2 October 2025. In that letter, the appellants offered to pay the respondents the sum of $23,901, with a discontinuance of the appeal and each party bearing their own costs. The appellants say that the respondents never responded to the offer, in circumstances where their prospects of succeeding on the appeal were high, relying on [44] and [45] of the Appeal Decision.

1. The respondents' primary position is that the Appeal Panel ought to exercise its discretionary powers and make no order for the costs of the appeal.
2. In the alternative, the respondents submit that the question of costs should await the conclusion of the redetermined proceedings.
3. The respondents accept that the relevant costs rule are those found in rr 38 and 38A of the NCAT Rules. However, the respondents emphasise that even when those rules apply, the Tribunal retains a broad unfettered discretion whether to award costs. In the exercise of that discretion, the respondents submit that the Tribunal may consider factors including whether there has been "disentitling conduct" by the "winning party" that disentitles that party to an award of costs.
4. The respondents submit that in awarding costs, the Tribunal must act judicially: Thompson v Chapman [2016] NSWCATAP 6 at [71]- [72].
5. The respondents submit that, because of the appellants; disentitling conduct, they would be unjustly punished were the appellants to be awarded costs.
6. The respondents' submissions then address the Calderbank offer. Those submissions will be discussed below.

1. The appellants' reply submissions may be summarised as follows:

(1) allegation of an abuse of process is in substance wrong and inappropriate to be made by solicitors against other solicitors. This is a reference to the sixth claim of conduct of the appellants constituting disentitling conduct claimed by the respondents, namely that the appellants improperly agitated matters outside the Tribunal's jurisdiction;

(2) the parties were given a hearing date at the first directions hearing, and the hearing took place on that date; there was no slippage in the timetable;

(3) any amendments to the appeal grounds were technical, and in substance remained the same;

(4) it was apparent from the appellants' outline of submissions that appeal ground 6 was not pressed

(5) the respondents were not cooperative in enabling compliance with the Appeal Panel directions. The appellants wrote to the respondents on two occasions to invite discussion on the tender bundle but received not response.

1. The following issues fall to be determined. We state a summary of our conclusion in italics.

(1) What is the relevant costs rule? Rules 38 and 38A of the NCAT Rules.

(2) Is the respondent entitled to costs? Yes.

(3) Should costs be awarded on the indemnity basis from 9 October 2025? Yes.

1. Both parties agree, and we accept, that the relevant costs rules are those found in rr 38 and 38A of the NCAT Act. Those Rules relevantly state:

38 Costs in Consumer and Commercial Division of the Tribunal

(1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal.

(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if--

(a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or

(b) the amount claimed or in dispute in the proceedings is more than $30,000.

1. That means that the relevant costs rule in the proceedings at first instance was that found in r 38.
2. Rule 38A then 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.

1. As the Appeal Panel noted in Leo and Fang v Conrad Homes Pty Ltd (No 2) [2025] NSWCATAP 302:

14 Rules 38 and 38A have been interpreted in numerous cases as constituting an exception to s 60.

15 Where they apply, costs orders can be made on the ordinary basis in the absence of special circumstances justifying a costs order, as otherwise required by s 60.

16 The starting position is that costs follow the event so that a successful party is entitled to an order for costs in their favour (Thompson v Chapman [2016] NSWCATAP 6) on the ordinary basis.

17 The making of a costs of is discretionary, but where the usual course is not followed the reasons for doing so ought to be clearly explained.

1. As noted, the respondent submits that no order ought to be made in favour of the appellant because of its disentitling behaviour. The respondent submits that there were seven matters constituting disentitling conduct.
2. The first matter constituting disentitling conduct is said to be the failure of the appellant to comply with Order (1) of the orders of the Appeal Panel of 10 August 2025 (Stay Orders).
3. Order (1) was that:

By consent, the operation of orders 1 and made on 23 June 2025 in proceedings 2024/00127036 are stayed:

(1) until 5.00 PM on 10 August 2025 or finalisation of the appeal, whichever is the earlier in time, on condition that the Appellants pay $43,482.00.53 into the trust account of the Appellants' Solicitors and the Appellants' Solicitors notify the Respondents of the receipt of the payment by 5.00 PM on 10 August 2025; and then

(2) until further order of the Tribunal or finalisation of the appeal, whichever is the earlier in time, if the condition in (1) is satisfied; to be released on the order of the Tribunal or by the written consent of the Appellants and the Respondents.

1. The appellants do not address this issue in their reply submissions.
2. We know nothing further about this matter. No evidence was filed to support the submission. We note that in our directions for submissions as to costs, we indicated that, where necessary, evidence was to be filed.
3. In our view, in and of itself, this matter does not warrant a departure from the usual order as to costs.
4. The second matter constituting disentitling conduct is said to be the filing of a "flawed" Notice of Appeal that was required to be amended as reflected in Order (5) of the Stay Orders.
5. The respondents submit that it was noted by the Appeal Panel that the basis of the appellants' appeal was fundamentally lacking specificity in identifying the questions of law or questions of law. The respondents say they were forced to address the appellant improper grounds of appeal in the first instance.
6. As noted above, the appellant in reply submits that any amendments to the appeal grounds were technical, and in substance the appeal grounds remained the same.
7. In Order (5), the Appeal Panel stated:

The Appellant is to lodge with the Appeal Registry and give to the Respondent a copy of the amended Notice of Appeal by 06 August 2025. If the Appellant is contending that the Appeal is on one or more questions of law, then the Appellant in their amended Notice of Appeal should specify the question of law or questions of law. The Appeal Panel has addressed the meaning of the expression "question of law" in s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) in decisions including Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 at [25]- [40].

1. In our view, this submission is overstated and lacks substance. In and of itself, this matter does not warrant a departure from the usual order as to costs.
2. The third matter constituting disentitling conduct is said to be that the appellants did not press certain grounds of their appeal at the appeal hearing.
3. By way of example, the respondents submit that ground 6, being "(The Deck): Mitigation of Loss" was abandoned by the appellants, yet they were still put to the task and expense of responding to that ground of appeal.
4. The appellants submission in reply is set out above,
5. We consider that this submission lacks substance. In and of itself, this matter does not warrant a departure from the usual order as to costs.
6. The fourth matter constituting disentitling conduct is said to be the appellants including two additional grounds of appeal on about 6 August 2025. The respondents submit that they did not have the prior benefit of considering at the time of the Stay Application.
7. We consider that submission, in so far as it the appellants rely on it as a reason why the appellants should not be awarded their costs, is misconceived.
8. The fifth matter constituting disentitling conduct is said to be the appellants' failure to comply with the Stay Orders, resulting in a request on 1 September 2025 for an extension of the time for to comply with the Stay Orders.
9. The respondents submit that the basis of the appellants' request for an extension was purportedly because of its inability to obtain a transcript of the Tribunal hearing in time. The respondents submit that, despite this, no reasonable explanation was given as to why the appellants waited some eight weeks after the Tribunal's decision was available to the parties before they took steps to obtain a transcript. They respondents say that "[s]uch conduct has undoubtedly delayed the outcome of the proceedings and disadvantaged" them.
10. In reply, the appellants submit that the parties were given the hearing date on the first return, and the hearing occurred on that date. Any slippage in the timetable had no impact on the appeal being heard.
11. Again, we consider that this submission lacks substance. In and of itself, this matter does not warrant a departure from the usual order as to costs.
12. The sixth constituting disentitling conduct is said to be that the appellants improperly agitated matters outside the Tribunal's jurisdiction which amounts to an abuse of "purposes". Presumably the respondents mean "process", and this is how the submission was interpreted by the appellants).
13. By way of example, the respondents submit that the appellants made an application to the Appeal Panel by letter dated 1 September 2025 requesting that "the Tribunal make an order that the sum to be held in the trust account of Takchi and Associates be reduced by $10,000 on the basis that the respondent's conveyancer hold another sum of $10K in trust in the conveyancer's account".
14. The respondents submit that that this application was not pressed at the appeal hearing "as it was entirely irrelevant to the issues the subject of the appeal", and that the application "wasted the parties and Tribunal's time and resources".
15. The appellants submit that an allegation of an abuse of process is wrong inappropriate for solicitors to flippantly make such an allegation in this case and no less against other solicitors, and that it is a serious allegation for which the respondents bear a significant onus: William v Spautz [1992] HCA 34 at [42]; Royal v Nazloomian, in the matter of Royal [2019] FCA 555 at [37]. The appellant submits that this allegation asserts that the appellants and their solicitors have used the Appeal Panel's process for a collateral or improper purpose. The appellants submit that this is "a high charge without basis".
16. We consider there is substance in the appellants' position.
17. This sixth matter raised by the respondents does not found any proper basis for the Appeal Panel not making the usual order as to costs.
18. The seventh matter constituting disentitling conduct is said to be the undertaking provided the director of the first appellant in its evidence in support of the Stay application, found in par [12] of the statement of Mr Shashanth Shankar dated 23 July 2025, which stated: "The Company further undertakes to prosecute the appeal diligently and consent to an expedited hearing to minimise any delay to the respondents"
19. The respondent submits that, "[c]learly", the examples provided above demonstrates a wilful disregard to this undertaking, which was disingenuous".
20. In reply, as already noted, the appellants submitted that the parties were given the hearing date on the first return date, and the hearing occurred on that date. Any slippage in the timetable had no impact on the appeal being heard.
21. In our view, the respondents' submission lacks substance, and provides no proper basis for the Appeal Panel not making the usual order as to costs.
22. In conclusion, the respondents submit that all this claimed disentitling conduct should be considered by the Appal Panel, noting that disentitling conduct in this context may be constituted by any conduct "calculated to occasion unnecessary expense" and need not necessarily amount to misconduct (Keddie v Foxall [1955] VicLawRp 44; [1955] VLR 320 at 323-324; Lollis v Loulatzis (No 2) [2008] VSC 35 at [29], nor even amount to "a most exceptional case, or a strong or exceptional case" (G R Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263 at [20].
23. It is our view that none of the matters relied on the respondents individually, or even when considered cumulatively, warrant the Appeal Panel departing from the usual rule that, where rr 38 and 328A of the NCAT Rules apply, costs should follow the event.
24. In conclusion, r 38 provides that despite s 60, in matters in the Tribunal's Consumer and Commercial Division the Tribunal may make an order for costs even in the absence of special circumstances where the amount claimed or in dispute in the proceedings exceeds $30,000.00.
25. By reason of r 38A, that rule applies to the costs of the appeal.
26. 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: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94.
27. Clause 38 does not specify the factors the Tribunal must take into account in exercising its discretion. We are satisfied that, in the absence of any disentitling conduct by the appellants, noting the well-established position at common law that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings, the appellants having been successful are entitled to an order for costs in their favour: Latoudis v Casey [1990] HCA 59; [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.

Should costs be awarded on the indemnity basis from 9 October 2025?

1. The basis for the claim for costs on the indemnity basis from 9 October 2025 is the service of a "Calderbank" offer of letter made by the respondents' solicitor dated 2 October 2025. In that letter, the appellants offered to pay the respondents the sum of $23,901, with a discontinuance of the appeal and each party paying their own costs.

1. The Calderbank offer, which is headed "Without Prejudice", relevantly states:

We advise that we are instructed on behalf of our client to make the following offer to resolve this matter prior to the hearing of the appeal.

1. Our clients pay the Homeowners the sum of $21,239.00 in full and final payment of the claim relating to the Deck and the sum of $2,662.00 in full and final settlement of the electrical claim in proceedings No 2024/0063633.

2. Payment is to be made within fourteen (14) days of acceptance.

3. All appeals be withdrawn with no order as to costs in respect to the appeal and each party pay its own costs in relation to proceedings no 2024/0063633.

4. The above amount to include the $10,000.00 in the trust account of the homeowner's conveyancer.

Our clients consider their offer to be a genuine compromise, particularly in circumstances where they have taken into serious consideration the findings of the expert in relation to the Deck.

To Prevent either party incurring further costs and ongoing litigation, we would be obliged if your client would take this offer into serious consideration.

1. The appellants submits that the respondents never responded to the offer, and at the time the offer was made the respondents had the benefit of the appellants submissions filed in the appeal,
2. As noted, appellants submit that their prospects of the appellants succeeding on appeal were high, and that the errors with the Tribunal's reasoning were obvious, noting our conclusion at [44] of the Appeal Decision.

1. The respondents' submissions can be summarised as follows:

(1) it is amiss [sic - remiss?] of the appellants to submit that they "beat" their offer in circumstances where they offered to accept $23,901 as a resolution of the entire proceedings which is yet to occur; this cannot be disputed;

(2) the offer was not put as "Calderbank Offer" as it contains no reference whatsoever to the applicable case or requisite principles;

(3) the offer did not specify any timeframe for acceptance, and certainly not "7 days" as submitted by the appellants; such a submission is without merit and mischievous;

(4) the offer is incapable of being relied on in support of any application for costs, indemnity or otherwise; the offer attempted to incorporate the $10,000 retention that was already held in trust under the respondents' Contract for Sale as security for satisfactory completion of the deck pursuant to the terms of the Contract for Sale. This amount is the respondents' money, held pursuant to the contract, and it is not a contractual retention as though it were a concession within a settlement proposal. In those circumstances, the respondents submit that the appellants overstated what they were offering and introduced an issue that falls outside the Tribunal's jurisdiction;

(5) the statement that no response was made to the appellants' offer is factually incorrect, being responded to on 10 October 2025 by letter and counteroffer. The respondents expressly rejected the offer. This was on the basis that it did not represent a genuine compromise, that the monetary component was largely comprised of the $10,000 contractual retention which the appellants had no right to offer, and that the proposed figures substantially undervalued the rectification works.

Because the appellants rely on an alleged non-response to support an indemnity costs claim, it maybe important to correct this directly. Their assertion mis-states the procedural history and undermines their argument that the Respondent's refusal of the offer was unreasonable. Although the point may ultimately be immaterial given the above submissions, the Appellants' erroneous submissions must be noted notwithstanding.

1. In response to the entirety of the respondents' submissions on these issues, the appellants submit in reply that:

plainly, a Calderbank offer need not state the principles in Calderbank or even refer to the case of Calderbank. The question is whether in substance it is a genuine offer to compromise the case and whether rejection was unreasonable. Both are satisfied here. The reference to seven days is a measure of reasonable time for rejection in the circumstances given that the respondents didn't respond to the offer at all.

1. Calderbank letters or offers were discussed in great detail by Beazley JA, as Her Excellency the Governor then was, in two papers: Calderbank Offers, Australian Lawyers Alliance Hunter Valley Conference 14-15 March 2008 and Calderbank 2", Without Prejudice" Offers and Offers of Compromise 26 September 2012, Sydney) [2012] NSWJSchol 33.
2. Her Honour noted that the genesis[End] of Calderbank offers is the English decision of Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586, and that there is both a public policy and a private interest in encouraging offers of compromise so as to settle legal proceedings: Computer Machinery Co Ltd v Drescher [1983] 3 All ER 153; [1983] 1 WLR 1379; Cutts v Head [1983] EWCA Civ 8; [1984] 1 All ER 597; [1984] 2 WLR 349; [1984] Ch 290 at 311. The same policy and purpose underlie offers of compromise made in the form of Calderbank offers: Leichhardt Municipal Council v Green [2004] NSWCA 341; Elite Protective Personnel Pty Ltd v Salmon: [2007] NSWCA 322.
3. A Calderbank offer of itself does not entitle the successful offeror to an order for indemnity costs: Jones v Bradley Pty Ltd (No. 2) [2011] NSWCA 344. In that decision, Basten JA (with whom McColl and Campbell JJA agreed) identified two questions which are relevant to a 'Calderbank' offer and a claim for indemnity costs, namely whether:

(1) there was a genuine offer of compromise, and

(2) it was unreasonable for the offeree not to accept it.

1. As to the first factor, Basten JA stated at [9]:

There is authority for the proposition that both an offer of compromise under the rules and an informal offer must involve "a real and genuine element of compromise": The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; 67 NSWLR 706 at [8]. While this terminology is not entirely apposite, it has been described as "serviceable": Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [25] (Spigelman CJ, Beazley and McColl JJA). To characterise an offer by reference to epithets such as "real" or "genuine" adds little to the requirement of compromise, and may imply (wrongly) that the appropriate inquiry is as to the subjective intentions of the offeror: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 at [23] (Ipp, McColl and Basten JJA); Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 at [17]- [18]. As explained by Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368:

"Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so."

1. The Court then went on to say at [10] that most cases will turn on the second element, namely whether there has been an unreasonable refusal by the offeree.
2. In our view, this was a genuine offer of compromise. That is because the major substantive issue in dispute between the parties was the cost to complete and rectify the deck. The parties' evidence on that matter ranged from $8,357.00 by the appellants' expert witness to $40,820.95 from the respondents' expert witness. Those figures had emerged after a conclave between the parties' experts. The legal issue in dispute between the parties at the time of the offer involved whether or not the appellant's appeal was likely to succeed.
3. In making the offer, the appellants were offering substantially more, in relation to the deck, than what their expert witness was proposing, and a figure closer to that which the respondents' expert witness had supported. We do not agree that $10,000.00 of the $23,901.00 can be treated as being money already "owned" by the respondents. The $10,000.00 was held pursuant to a trust and legal and beneficial ownership of the money was only going to be determined once the issue of what 'satisfactory completion of the deck' involved, was determined. In making the offer, the appellants were also offering a means to resolve the legal issue in dispute at the time the offer was made.
4. In our view, it was unreasonable for the respondents to reject the offer. When the offer was made, the appellants had good prospects of succeeding on the appeal. In accepting the offer, the respondents would have received an amount for the deck that was closer to the amount that the respondents' expert witness had supported when compared to the amount that the appellants' expert witness had supported and the respondents would have saved the costs of paying their lawyers to prepare for and appear at the appeal hearing. Further, the respondents would have reduced the risk that the appeal would succeed and the matter remitted to the Tribunal for further hearing for redetermination of the issue of compensation in relation to the deck. Such a process would not only involve additional cost for the respondents, but further delay and the anxiety and stress of ongoing litigation.
5. The fact that the offer did not refer specifically to Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586 or stipulate a time for acceptance are not matters that mean the offer cannot be relied upon for the purposes of the offeror obtaining an indemnity costs order. The offer was clearly an attempt to resolve the issues in dispute between the parties by a genuine compromise, and would be understood by the recipient as potentially generating costs consequences were the offer to be rejected. In this respect, we note that the respondents were represented by lawyers in the appeal, the hearing was imminent at the time the offer was made, and therefore the respondents must have had, at the time the offer was made, an awareness of what all the evidence was and all the other material relevant to the issues in the appeal.
6. We accept that it is not correct to say that the respondents failed to respond the offer, as the respondents did make a response on 10 October 2025. However, in rejecting the offer in their 10 October 2025 response, the respondents did not appear to take into account the context of the offer, being the imminent appeal hearing, the cost that the appeal hearing would involve, the appellants' prospects of success on the appeal, and the risk that following the appeal, there might be a remitted hearing involving further cost, delay and strain for the respondents.
7. We are satisfied that an award of indemnity costs is merited.
8. As to the appellants' claim that indemnity costs should be awarded from 9 October 2025, our impression, doing the best we can in all the circumstances and taking into account that the respondents did make a response to the offer on 10 October 2025, is that eight days, rather than seven days, was a reasonable time for the respondents to have considered the offer that had been made on 2 October 2025.

(1) A hearing is dispensed with.

(2) The respondents are to pay the appellants' costs of the appeal for the period up and until 10 October 2025 as agreed, or as assessed in accordance with the applicable costs legislation , and for the period after 10 October 2025, on the indemnity basis.

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.

05 February 2026 - Coversheet - Respondents' legal representation , amended.

12 February 2026 - Paragraph 17(3) amended from 'No' to 'Yes'