For ease of reference, the Appellants will be referred to as the homeowners and the Respondent as the builder.
On 16 October 2015 the Appeal Panel handed down a decision allowing the appeal from the homeowners in respect of a failure by the Tribunal to give the parties an opportunity to address it in relation to costs. The matter was remitted to the Tribunal for reconsideration on the issue of costs of that hearing: Smeaton v Valerius [2015] NSWCATAP 223 ("the Appeal").
The only remaining matter outstanding is a decision in respect of what, if any, costs order ought be made by the Appeal Panel arising from the Appeal.
[2]
Submissions by the Parties
The homeowners initially brought the Appeal on three grounds. First, that the decision to dismiss their application was not fair and equitable and against the weight evidence and that they should have been reimbursed $2,467.38 from the builder for additional works they were forced to undertake as a result of unauthorised works done by the builder. Second, that the Tribunal failed to give sufficient reasons for the costs order and that the Tribunal failed to give the parties an opportunity to address it in relation to costs. The homeowners succeeded on the last of those matters. The Appeal Panel, given the homeowners' success on the final matter, did not determine the second ground.
At the hearing of the Appeal, the homeowners quite properly accepted that the first ground relating to the weight of the evidence could not be maintained and was withdrawn.
The homeowners in their written submissions on costs dated 19 November 2015 contended that the amount of the claim, the subject of the ground of appeal that failed (or more accurately was withdrawn), was "fairly insignificant" and that once they appreciated the problems associated with the ground to be argued, they immediately withdrew that part of the Appeal. They also contended that the failure to have available the recording of evidence before the Tribunal (resulting in the Appeal being unsustainable on that ground) was not the fault of the homeowners. The homeowners further contended that the builder had the opportunity of consenting to an order for the matter to be remitted for reconsideration on the issue of costs, but chose to oppose the orders sought on that issue. The homeowners referred to the fact that they and their legal representative were required to travel from Binalong and Cowra respectively for the hearing, involving substantial costs for the homeowners. The homeowners also pointed to the substantial costs involved in the preparation of the notice of appeal, and the supporting affidavit to provide "the best alternative evidence as to what had happened at the hearing" before the Tribunal. The homeowners also referred to the character of the evidence given by the builder and of the failed settlement negotiations before the Tribunal.
The homeowners contended that the Appeal was brought because the costs of the appearance in the Tribunal had exceeded the amount in dispute and, it follows that the homeowners contended that the issue of the costs of the Tribunal hearing was a significant one.
Section 60(2) of the Civil and Administrative Tribunal Act 2013 provides that the Tribunal may award costs if it is satisfied that there are special circumstances warranting an award of costs. The homeowners rely on s.60(3) and contend that:
1. in the builder presenting false evidence before the Tribunal, the proceedings were conducted in a way that unnecessarily disadvantaged the homeowners;
2. the offer of settlement in the Tribunal was "pathetic" in light of the false evidence;
3. the expert report prepared by the builder did not comply with the expert witness code and was based on incorrect information, and was as such of no probative value before the Tribunal;
4. the homeowners' expert report did comply with the code and he was not required for cross-examination at the hearing. That report itself resulted in significant costs being expended;
5. the builder made a totally unrealistic offer of settlement at the hearing before the Tribunal and unreasonably prolonged the time taken to complete the proceedings before the Tribunal;
6. the builder's claim in the Tribunal had no tenable basis in fact or law;
7. the builder attempted to deceive the Tribunal and failed to call relevant evidence;
8. the manner in which the renovation work proceeded, the subject of the claim, created complexity in the proceedings before the Tribunal;
9. the builder's claim before the Tribunal was frivolous, based on a lie, and lacked substance and merit; and
10. the only way for the homeowners to remedy the costs situation in the Tribunal was to file the Appeal.
The builder filed written submissions in respect of costs on 4 December 2015, also relying on s.60(2), in which he contended that the homeowners ought pay the builder's costs of the Appeal (on an indemnity basis from 31 March 2015), notwithstanding the homeowners' partial success in the Appeal, or alternatively that each party ought bear its own costs of the Appeal. In doing so, the builder relies on the following matters:
1. The vast majority of the matters pointed to by the homeowners are irrelevant to the question of costs of the Appeal and are directed to matters before the Tribunal;
2. The Appeal was decided on a basis not put by the homeowners in their notice of appeal or in the written submissions, but in the hearing of the Appeal, the matter having been raised by the Appeal Panel;
3. The Appeal ground, in respect of the weight of the evidence, was not withdrawn until during the hearing before the Appeal Panel. The parties knew of the lack of transcript from the outset and in particular prior to the written submission in the Appeal being filed. That part of the Appeal could have been withdrawn at a much earlier time;
4. The substantial costs, said to have been incurred by the homeowners, were incurred unnecessarily as they contained largely irrelevant material relating to the conduct of the parties before the Tribunal. Any conduct of the Tribunal is only relevant on the remittal to the Tribunal to determine the costs of the hearing before the Tribunal;
5. The submissions as to costs themselves are irrelevant and overly voluminous, adding to the costs of the Appeal;
6. The notice of appeal was expansive and addressed matters which were not the basis upon which the Appeal was ultimately determined;
7. The way that the homeowners conducted the Appeal, both in the substance of the matters put and procedurally, greatly extended the scope and complexity of the Appeal. The builder put before the Appeal Panel correspondence between the parties, where it is said that the builder attempted to limit the matters to the relevant matters and where the homeowners sought to put before the Appeal Panel voluminous and largely irrelevant material; and
8. The builder made a "Calderbank" offer on 31 March 2015. That offer invited the homeowners to withdraw their appeal, with each party to bear its own costs. That offer was rejected the following day and no counter offer was put. It is on that basis that the builder seeks an indemnity costs order from 31 March 2015.
[3]
The decision in relation to costs of the Appeal
The applicable costs rule is that each party is to pay its own costs unless the Tribunal is satisfied that there are 'special circumstances' warranting an award of costs. Special circumstances means out of the ordinary: see Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].
Section 60 of the NCAT Act sets out the relevant test:
(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.
The Appeal Panel finds that the builder was put to the unnecessary expense of having to respond to grounds of appeal in circumstances where the homeowners did so in a way that unnecessarily disadvantaged the builder and that there were other relevant matters justifying an award of costs.
The following matters can be observed about the way in which the matter proceeded before the Appeal Panel:
1. The Appeal was conducted on a significant matter ultimately not argued by the homeowners before the Appeal Panel and which was specifically abandoned at the hearing;
2. The matter abandoned, resulted in voluminous submissions being made and evidence being tendered before the Appeal Panel, which were not ultimately relied on. Those matters were re-ventilated in the costs submissions and were, again, irrelevant to the conduct of the hearing before the Appeal Panel and as such were irrelevant to the question of costs;
3. One repeated submission was in respect of the allegedly false evidence given by the builder before the Tribunal, a matter which is tantamount to an allegation of fraud on the Tribunal, which has serious consequences (see for example, Markisic v AEA Ethnic Publishers Pty Ltd & Ors [2006] NSWCA 378 (20 December 2006) at [158] per Tobias J.) and which was not ultimately supported by appropriate evidence. It is noted, however, that this was not a matter raised by the builder directly in submissions on costs as including special circumstances, which of itself or in combination justifies a special order for costs, and accordingly the Appeal Panel has not taken this matter into account in determining what order ought be made in respect of the Appeal;
4. The lack of the transcript itself is not a matter that would have necessarily rendered the grounds abandoned futile. It did however make it incumbent on the homeowners to prove by appropriate evidence as to what occurred before the Tribunal (and meet if necessary any evidence in response by the builder). That was not done;
5. The lack of transcript was known to the homeowners well before the matter proceeded to hearing before the Appeal Panel, and indeed prior to the date required for the filing of evidence;
6. In advance of the hearing, the builder appeared to appropriately seek to narrow the matters to be put before the Appeal Panel, with little success.
As to the homeowner's submissions, all of the submissions, bar one, are directed to allegations of the builder's conduct in the Tribunal, not on Appeal and are, for the purposes of determining what costs order ought be made by the Appeal Panel, irrelevant.
In particular, the homeowners ultimately did not press the ground regarding the allegation of false evidence, but rather continued, inappropriately in the Appeal Panel's view, to rely on it in seeking costs. Even if made out, whilst it would undoubtedly be relevant to the question of costs in the Tribunal, to be determined, it was irrelevant to the question of costs on the Appeal.
Similarly, the time taken to complete the proceedings before the Tribunal, any offer of settlement in the Tribunal and the cogency of any expert report put before the Tribunal, is irrelevant to the question of costs of the Appeal.
The complexity of the case before the Tribunal, whether or not the builder's claim in the Tribunal has any merit, and whether or not the builder gave false evidence, are also matters to be determined by the Tribunal in respect of what costs order ought be made there and are not matters relevant to the question of costs on the Appeal.
The final submission is directed to whether or not the Appeal was the only way for the homeowners to remedy the costs situation in the Tribunal. This is a matter relevant to determining costs on Appeal. However, it is a matter that is most usual to almost any appeal, which is to remedy error in the Tribunal. And whilst the homeowners have had success on an issue which renders it possible to remedy the costs orders made in the Tribunal, it is not a matter in respect of which it is appropriate to deviate from the ordinary course or which would otherwise entitle them to a costs order in their favour.
In those circumstances, had the homeowners not partially succeeded in the Appeal, the Appeal Panel would have ordered that the homeowners pay the builder's costs of the Appeal. The matter was in the Appeal Panel's view conducted by the homeowners with little focus on the relevant issues and they continued to raise matters that were utterly irrelevant to the matters that were ultimately pursued before the Appeal Panel. Many of those irrelevant matters were propounded even on the issue of costs before the Appeal Panel. The overriding purpose of s.60(2) is to ensure that matters proceed before the Appeal Panel in a timely fashion and with due regard to the relevant issues.
However, the homeowners have had success on a substantial matter in the Appeal in the sense that the issue of the significant costs before the Tribunal can now be properly ventilated. Whilst the Appeal Panel has come to no view about whether or not that endeavour will ultimately be successful in the Tribunal, consideration must be given to the submission made by the homeowners that that was a matter that the builder could properly have conceded. Whilst this might not of itself justify an order for costs in the homeowner's favour, it does not justify an order for costs being against them in respect of that issue. It is noted by the Appeal Panel that the majority of the costs in the Appeal however appear to have been expended on matters in respect of which the homeowners did not ultimately pursue due to a lack of evidence, a matter which was known at a much earlier time or which could have been remedied by appropriate evidence from those who had been present at the hearing before the Tribunal.
In those circumstances, the Appeal Panel is of the view that the appropriate order is that the homeowners pay half of the builder's costs of the Appeal, as agreed or assessed. The Appeal Panel is of the view that the offer for settlement made by the builder on 31 March 2015 has no relevant bearing on the issue of costs as the builder has done no better than the offer that was put and rejected. Accordingly those costs will be on the ordinary basis.
The Appeal Panel orders that the Appellants pay half of the Respondent's costs of the Appeal.
[4]
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
[5]
Amendments
04 May 2016 - Corrected clerical error on coversheet
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Decision last updated: 04 May 2016