Shankar v Lotus Constructions Pty Limited

(1) The appellants to file and serve an amended notice of appeal by 28 May 2025,

(2) The respondent to file and serve a reply to the appeal by 11 June 2025;

(3) The appellants to file and serve an agreed bundle of documents to be relied on in the appeal by 18 June 2025;

(4) The appellants to file and serve written submissions in support of the appeal by 18 June 2025;

(5) The respondent to file and serve written submission in reply by 16 July 2025;

(6) The appellants to file and serve any submissions in reply by 30 July 2025;

(7) The appeal be listed for hearing on 4 August 2025 at 2.15PM.

1. The appellants filed submissions on 26 June 2025. The respondent did not file any documents or submissions in reply. Nor did the respondent contribute to the preparation of the agreed bundle.
2. The hearing of the appeal took place on 4 August 2025. The appellants were represented by Counsel with an instructing solicitor; the respondent did not attend the appeal hearing.
3. We gave our decision at the conclusion of the hearing on 4 August 2025 allowing the appeal and made orders published in writing to the parties that day. We also gave oral reasons for our decision.

1. On 18 August 2025 the appellants filed an application for indemnity costs of the appeal against the respondent pursuant to Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW)(NCAT Rules).
2. We issued directions to the parties on the appellants' costs application on 8 September 2025 as follows:

(1) The respondent to file and serve any response to the costs application by 22 September 2025;

(2) The appellants to file and serve any reply to the respondent's response by 29 September 2025;

(3) The parties to address whether a hearing on the issue of costs could be dispensed with under s 50 of the NCAT Act and for it to be determined on the papers.

1. The appellants have provided submissions attached to the application for costs and further submissions dated 26 September 2025, which were also served on the respondent.
2. No submissions were filed by the respondent on the costs application.

1. The appellants' submissions are summarised as follows:

(1) The Appeal Panel may dispense with a hearing under s 50(2) of the NCAT Act to determine the application of costs;

(2) The respondent has demonstrated a lack of engagement in the proceedings by failing to appear at the hearing of the appeal on 4 August 2025 and failed to file any submission in reply to the appeal;

(3) The applicable costs regime to the appeal is Rule 38 of the NCAT Rules as the application before the Tribunal sought a money order in excess of $30,000 (Rule 38A of the NCAT Rules);

(4) The starting position is that costs follow the event so that a successful party is entitled to an order for cots in their favour (Thomspon v Chapman [2016] NSWCATAP 6);

(5) The Appeal Panel should apply the usual rule and grant the appellants' application that the respondent pay their costs of the appeal as the appellants have been successful on appeal;

(6) The principles in Mendonca v Tonna [2017] NSWCATAP 176 at [59] and [63] apply, as there has been unreasonable conduct on the part of the respondent and as such, indemnity costs ought be awarded;

(7) The principles of Fisk v Gold [2021] NSWSC 1465 at [26] apply, which are that to justify an award for indemnity costs there should also be some "sufficient or unusual feature" also described as a "relevant delinquency";

(8) The respondent has been delinquent because:

(a) at every step of the appeal the respondent has refused to participate in the proceedings;

(b) the respondent has breached the Appeal's Panel's orders to appear at the directions hearing and at the final hearing;

(c) the respondent has failed to file and serve a reply to the appeal;

(d) the respondent has filed to file and serve any written submissions;

(e) the respondent has failed to cooperate in the preparation of an appeal book.

(f) the respondent has failed to give effect to the guiding principle of s 38 (sic) of the NACT Act, to facilitate the just quick and cheap resolution of the real issues in dispute between the parties (s 36 of the NCAT Act).

1. The appellants submit that the respondent has unnecessarily prolonged the proceedings and in the circumstances an order for costs on an indemnity basis is justified.

1. We have considered the materials filed by the appellants on the cost's application. As noted above, the respondent has not filed any submissions on the cost's application.
2. We are satisfied that the question of costs of the appeal may be determined on the papers in the absence of a hearing attended by the parties, by considering the written submissions filed. Accordingly, we make an order dispensing with a hearing under s 50(2) of the NCAT Act and consider the materials provided by the appellants.
3. Under s 60 of the NCAT Act, each party to proceedings in the Tribunal is to pay the party's own costs. However, under s 60(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.
4. Rule 38 of the NCAT Rules provides, despite s 60, that the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award, if the amount claimed or in dispute is more than $30,000. Rule 38A provides in respect of an appeal that where rule 38 applied at first instance the provisions of rule 38 apply in respect of the appeal.
5. Rule 38 is clearly the applicable costs regime of the proceedings before the Tribunal as the amount of the claim and in dispute before the Tribunal was substantially in excess of $30,000.
6. Consistent with the authority of Thompson v Chapman, we are satisfied that as the appellants were wholly successful on appeal that costs should follow the event and be awarded in their favour, at least on the ordinary basis. The question then becomes whether the order should be such as to require the respondent to pay the appellants' costs on an indemnity basis as opposed to the ordinary basis.
7. It is generally understood that the proportion of the costs recoverable by a party will be higher in the case of an order for costs on the indemnity basis than the proportion of costs recoverable where the order is on the ordinary basis.
8. The appellants submit in support of an application for indemnity costs that:

(1) The conduct of the respondent in the appeal was unreasonable;

(2) There has been a delinquency on the part of the respondent by its failure to comply with the callover directions on 14 May 2025, failure to file any submissions or reply to the appeal and failure to attend the appeal hearing, all without explanation.

1. The Appeal Panel held in Mendonca v Tonna at [59] and [63}:

[59] Indemnity costs are only awarded in limited circumstances. The discretion to do so must be the subject of careful reasoning (Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354) and caution should be exercised in making such an award: Leichhardt Municipal Council v Green [2004] NSWCA 341; Ng v Chong [2005] NSWSC 385 at [13].

....

[63] An award of indemnity costs may also be made for unreasonable conduct. Such conduct may include unnecessarily prolonging the proceedings, (Degmam Pty Ltd (in liq) v Wright (No 2), at 358); unfounded allegations of fraud or improper conduct (Maule v Liporoni (No 2) [2002] NSWLEC 140; (2002) 122 LGERA 216 at 229); deliberate or high-handed conduct (Rouse v Shepherd (No 2) (1994) 35 NSWLR 277) and behaviour which causes unnecessary anxiety, trouble or expense, such as the failure to adhere to proper procedure (FAI General Insurance Co Ltd v Burns [1996] NSWCA 177; (1996) 9 ANZ Ins Cas 61-384). Disregard of court orders may justify an indemnity costs order (O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [35]). Perverse persistence by an unrepresented litigant with a hopeless application may also do so: Rose v Richards [2005] NSWSC 758.

As to a claim for indemnity costs, again, the discretion to award indemnity costs must be exercised judicially (see Mead v Watson (2005) 23 ACLC 718; [2005] NSWCA 133 at [8]) and with caution (see Leichhardt Municipal Council v Green [2004] NSWCA 341 at [47]; Ng v Chong [2005] NSWSC 385 at [13]). There is no fixed rule or rationale as to when an indemnity order might be made, except that it requires a "sufficient or unusual feature" (Harrison v Schipp [2001] NSWCA 13 at [139] referring to Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801 at 232-234). Such an order may be appropriate where a party wantonly or recklessly causes the other party to incur costs. It is recognised that this will often be the case where the party liable is guilty of some "relevant delinquency" (see Oshlack at [44] per Gaudron and Gummow JJ).

1. The appellants have prosecuted their appeal with legal representation, and the appeal was successful. The appellants have not submitted that they would not have engaged legal representation for the appeal or reduced that representation in some way, had they known that the respondent would not be defending the appeal.
2. Nor have the appellants been able to satisfy us that the respondent's absence in the appeal in some way delayed the appeal or caused the appellants to incur additional unnecessary legal costs which would not have been incurred but for the respondent's failure to appear in the appeal.
3. Accordingly, we are not satisfied that there has been unreasonable conduct or some form of delinquency on the part of the respondent to justify a costs order on an indemnity basis.
4. We therefore conclude that the proper exercise of the cost's discretion is for costs to be awarded on the ordinary basis and not an indemnity basis.

1. Accordingly, the Appeal Panel makes the following orders:

(1) Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) a hearing on the question of costs of the appeal is dispensed with.

(2) The respondent is to pay the appellants' costs of the appeal on the ordinary basis as 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.