Shaw v Rawson Homes Pty Ltd

1. The applicants' oppose the Tribunal making an order for costs and argue that the application for costs should be dismissed. On 05 November 2025 they provided written submissions in response to the costs application. As with the respondent, it is convenient to summarise key aspects of those submissions briefly. They argue that:

(1) They have lodged an appeal in relation to the Substantive Decision, and that appeal is pending;

(2) The offer made by the respondent was subject to conditions, including a release, which were contrary to law and which it was otherwise reasonable for the applicants to refuse to accept;

(3) The applicants needed to file proceedings in the Tribunal because the respondent refused to produce evidence to establish that the replacement driveway was free of defects (e.g. an as-built survey);

(4) The applicants sought to compromise, and conducted the litigation in manner that complied with the guiding principle in s 36 of the NCAT Act; and

(5) The respondent has been misleading or deceptive, for example by falsifying evidence, and its solicitor has directed the Tribunal to disregard such conduct.

1. The applicants argue that the respondent has failed to establish special circumstances, and they argue that it in order for the Tribunal to have power to make a costs order, there must be special circumstances within the meaning given in s 60 of the NCAT Act. They accept that Rule 38 applies, but argue that this does not displace s 60 of the NCAT Act.
2. The applicants also argue:

Here, the Respondent cannot be characterised as the "successful party" in any meaningful sense. The Tribunal expressly found that the driveway was defective and in breach of the statutory warranties, but declined to order rectification or broader damages. That outcome reflected errors of law, misrepresentation of evidence, and procedural unfairness - not a vindication of the Respondent's position. The applicants' claims were grounded in substantial evidence, pursued in good faith, and directed to genuine defects that the Respondent itself ultimately acknowledged.

1. On 13 November 2025, the respondent provided submissions in reply. By and large, the respondent relies on the already filed submissions but in addition they make arguments including that:

(1) the fact of a pending appeal has no bearing on the Substantive Decision;

(2) the application for costs must be determined on the basis of the conduct of the parties and the facts and circumstances of the case as found by the Tribunal, without regard to errors the applicants seek to argue (those properly being a matter for appeal);

(3) the respondent has not, prior to or during the litigation, engaged in any disentitling conduct which would justify a departure from the ordinary rule as to costs;

(4) indemnity costs are not, as submitted by the applicants, reserved for cases of high-handed or hopeless conduct, or of wilful disregard for the law; and

(5) various matters raised by the applicants are fundamentally inconsistent with the findings of the Tribunal.

1. The respondents emphasis that the relevant test where an offer of compromise has been made is whether the applicants' failure to accept that offer was unreasonable.

1. The issues for determination by the Tribunal are:

(1) Should an order be made dispensing with a hearing on the costs application in accordance with s 50(2) of the NCAT Act?

(2) Is the pending appeal a bar to determination of the costs application?

(3) What are the relevant principles in determining the present costs application?

(4) Has the respondent established an entitlement to an order for costs and, if so, on what basis?

Should an order be made dispensing with a hearing on the costs application in accordance with s 50(2) of the NCAT Act?

1. The directions made on 25 September 2025 put the parties on notice that the Tribunal was considering determining any costs application on the papers.
2. Neither party has objected to this course of action, and I consider that I can adequately determine both costs applications in the absence of the parties without a further hearing. I consider it appropriate to make an order dispensing with a hearing on the respondent's costs application pursuant to s 50(2) of the NCAT Act.

Is the pending appeal a bar to determination of the costs application?

1. The applicants have lodged an appeal against the Substantive Decision. At the time of finalising this costs decision the appeal is yet to be heard. While no orders made by the Appeal Panel have been put before me, neither party has indicated that any aspect of the Substantive Decision has been stayed.
2. Section 43(2) of the NCAT Act provides:

A pending general application or appeal does not affect the operation of the decision to which the application or appeal relates, or prevent the taking of action to implement the decision, unless the Tribunal makes an order staying or otherwise affecting the operation of the decision.

1. The Substantive Decision is still binding on the parties unless and until any order by the Appeal Panel to the contrary. In those circumstances, the fact of an appeal on its own is not, in my view, a sufficient basis to deprive the respondent of the opportunity to have their costs application considered promptly.

What are the relevant principles in determining the present costs application?

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,

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete 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,

(d) the nature and complexity of the proceedings,

(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(f) whether a party has refused or failed to comply with the duty imposed by section 36 (3),

(g) any other matter that the Tribunal considers relevant.

(4) If 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.

(5) In this section:

costs includes:

(a) the costs of, or incidental to, proceedings in the Tribunal, and

(b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.

(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. The respondents argue and applicants concede that Rule 38 applies. I am satisfied that this is the case. The proceedings plainly involve an amount in dispute in excess of $30,000.
2. Because Rule 38 applies, the Tribunal has jurisdiction to award costs without there being special circumstances (see: Bonita v Shen [2016] NSWCATAP 159 at [38]). In this regard, the applicants' submission to the contrary is incorrect as a matter of law and is inconsistent with the text of Rule 38.
3. BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 at [67] sets out a non-exhaustive set of principles relevant to the exercise of the discretion to make an order for costs in the following terms:

(1) the starting point is that a successful party should be entitled to an order for costs in his favour;

(2) an award of costs is by way of an indemnity and not as punishment;

(3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party;

(4) the factors to be considered are not to be confined as to do so would constrain the general discretion;

(5) the relative success of the parties on different issues and the time taken to determine them may be relevant;

(6) the nature of the proceedings is relevant; and

(7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious.

1. Principles relating to the award of indemnity costs in circumstances where there has been a refusal of an offer of compromise are helpfully summarised in N & T Buildings Pty Ltd v Grozdanov; Grozdanov v N & T Buildings Pty Ltd [2016] NSWCATCD 48 at [32] - [35]:

[32] The Tribunal has power to award costs on an indemnity basis: s 60(4) of the Act. However, the Tribunal must exercise caution when making orders such orders: Leichhardt Municipal Council v Green [2004] NSWCA 341; Ng v Chong [2005] NSWSC 385 at [13]. There is no fixed rule concerning when the discretion to order costs on an indemnity basis might be exercised: Harrison v Schipp [2001] NSWCA 13 at [139]. However, it requires a "sufficient or unusual feature" (Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233-234), or some "relevant delinquency": Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; that is delinquency bearing a relevant relation to the conduct of the case.

[33] The decision of Colgate Palmolive Co and Another v Cussons Pty Limited [1993] FCA 536; 118 ALR 248 is authority for the proposition that costs on an indemnity basis may be awarded because of 'an imprudent refusal of an offer of compromise' per Sheppard J. at page 257.

[34] In the Court of Appeal decision in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344, Basten JA identified two questions which are relevant to a Calderbank offer and a claim for costs on an indemnity basis. They are whether there was a genuine offer of compromise and whether it was unreasonable for the offeree not to accept it.

[35] The determination of whether the rejection of an offer was reasonable is an evaluative judgment requiring a consideration of the facts and circumstances specific to the case: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [19]. Further, reasonableness is not to be determined with hindsight. Rather, the strength or otherwise of the applicant's claim should be considered as at the time of the offer: see Gretton v Commonwealth of Australia [2007] NSWSC 149.

Has the respondent established an entitlement to an order for costs and, if so, on what basis?

1. Having considered the submissions and evidence provided by the parties, I find that it was unreasonable for the applicants to refuse the First Settlement Offer put to them on 27 May 2024 and, noting that this offer was made prior to the proceedings, consider that it is appropriate to exercise my discretion to make an order for costs in favour of the respondent on an indemnity basis.
2. In my view, the submissions made by the applicants do not persuade me that their decision not to accept the Settlement Offer was reasonable, nor do they persuade me that there is another basis to exercise my discretion to depart from the usual order as to costs.
3. In reaching this conclusion, it's first necessary to consider the terms of the First Settlement Offer and to decide, in the circumstances of the case, whether the applicants' decision not to accept that offer was unreasonable.
4. The First Settlement Offer is set out at TS-2 of the respondents' submissions. It describes an offer to pay $22,360 (inclusive of a payment of $2,200 towards survey costs). This offer was made in response to a demand by the applicants' solicitors for $40,600 (said to be inclusive of an unspecified sum of interest). The First Settlement Offer addresses each part of the relief sought by the applicants (including loss of a childcare subsidy) and explains the respondents position in relation to the same. The offer is said to be "Subject and conditional upon [the applicants] entering into a deed of settlement and release on terms acceptable to [the respondent]."
5. The applicants' response to the First Settlement Offer is set out at TS-3. The response is very lengthy but in general terms it sets out submissions which are consistent with those advanced by the applicants in the substantive proceedings. The response sets out the applicants' position in relation to each part of the claim. It introduces significant new allegations of damage, including regarding a loss of property value in the amount of $50,000. They make a counter offer for $100,000 (the amount ultimately claimed).
6. In the applicants' response to the First Settlement Offer, they argue that there has been falsification of documents by the respondent and other irregularities in the processes involving the local council.
7. Having read this exchange and considered the other material and submissions advanced by the parties, I am satisfied that the respondent put to the applicants an offer of compromise which (on its text) represents a material concession from the position the respondent considered they could achieve if the dispute were to proceed to litigation. This was a reasonable offer in circumstances where the applicants had not, at that time, provided evidence to quantify or otherwise support the losses they claimed.
8. Conversely, the applicants have not offered any such compromise. Their response to the claim was to almost double the amount sought, without providing any evidence to support the identified loss. I accept that their response does provide some evidence in relation to some of the smaller items claimed (for example, electricity and water usage charges) but the argument that a property valuer has told them their property value would have been $50,000 were it not for the driveway does not go beyond a mere assertion.
9. The applicants' counteroffer includes significant costs said to be associated with their own time and effort. They describe aspects of their claim (for example time to prepare a design) as being an estimate. At the time of responding to the First Settlement Offer, the applicants had the benefit of legal advice but they did not have any independent expert evidence to support their views about defects they considered were present in the build. They did not have evidence about, for example, rectification costs. They made the decision to rely on their own analysis and expertise at the final hearing.
10. Having considered the circumstance, I am satisfied that the First Settlement Offer was a genuine offer of compromise and that the refusal of that offer was unreasonable.
11. I do not accept that the applicants submissions that the respondent has engaged in any misleading or fraudulent conduct. Nor do I accept that the respondent has engaged in any other disentitling conduct which might justify the Tribunal refusing to exercise its discretion to make an order for costs in favour of the respondent.
12. I do not accept the suggestion that the respondent cannot be characterised as the "successful party." Part of the applicants' argument in this regard is a matter for their appeal but it's difficult to understand how the applicants would consider themselves successful in the substantive proceedings. The only point of success enjoyed by the applicants was in relation to survey costs. This was something that the respondent offered to pay prior to commencement of the proceedings. Proceedings where there is mixed success are common, but the applicants' success here has been only slight. In the context of the respondent offering to pay the claimed survey costs, the limited success enjoyed by the applicants does not justify an order apportioning costs.
13. I do not accept that anything turns on the condition in the First Settlement Offer of a deed of settlement with provision for a release. This is, as with the rest of any such deed, plainly a matter for negotiation or discussion and to the extent that the applicants argue this is also inconsistent with s 18G of the Home Building Act 1989 (NSW) (HBA), this is an entirely speculative argument because no draft deed was prepared. It's difficult to accept that a term which hasn't been drafted could be offensive to s 18G of the HBA.

1. For the above reasons, the Tribunal orders that:

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

(2) The applicants are to pay the costs of the respondent, on an indemnity basis, as agreed or 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.