Southern Pacific Builders Pty Limited v Kelly [2026] NSWCATAP 124 | Case summary

NCAT Appeal Panel|2026-04-20|Before: Blake AM

In this costs decision the respondents, who were successful on appeal, have applied for an order that the appellant pay their costs of the appeal.
The appeal was from one order only of orders made in the Consumer and Commercial Division (CCD) of the Tribunal on 11 February 2025 in relation to a home building application made under the Home Building Act 1989 (NSW). The appellant challenged the work order made in relation to the flooring in bathrooms outside the enclosed shower areas, requiring the flooring to be graded to the installed floor waste in the bathroom.
At the appeal hearing, the appellant conceded that if they were unsuccessful on their first ground of appeal, centered around the interpretation of clause 3.3 of AS 3720-2010, then the second ground of appeal, a procedural fairness ground would fall away and the appeal should be dismissed.
The Appeal Panel made the principal decision in Southern Pacific Builders Pty Limited v Kelly [2025] NSWCATAP 194 (the principal decision) on 13 August 2025.
In the principal decision, the appellant is referred to as the Builder and the respondents are referred to as the Owners. We will continue to use this terminology for the parties.

Materials before the Appeal Panel in the costs application

The Owners application for costs dated 20 August 2025.
The Owners submissions dated 30 September 2025.
The Builders submissions dated 15 October 2025.
The Owners submissions in reply dated 20 October 2025 including the Expert Witness Report of Craig Barry of 17 September 2024
The Builders further submissions in reply dated 24 October 2025.

As is uncontroversial, the starting point in relation to costs is s60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) under which each party is to pay their own costs unless special circumstances are established warranting departure from this position. In considering special circumstances, the Owners refer to Megerditchian v Kurmond Homes Pty Lts [2014] NSWCATAP 120; Sahade v Owners SP 62022 [2015] NSWCATAP 225; Flat Glass Industries Ltd v MCS Builders Pty Ltd [2015] NSWCATAP 148; Gaynor v Burns [2015] NSWCATAP 150, where the term special circumstances was found to mean circumstances which are out of the ordinary but not necessarily extraordinary or exceptional.
Incorrectly, the Owners submitted that special circumstances existed because the amount claimed by the Owners at first instance exceeded $30,000 and, therefore, by rule 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules), s60 of the NCAT Act did not apply. It was said that this was the situation that applied at first instance and the same should apply with respect to the costs of the appeal, having regard to rule 38A of the NCAT Rules.
However, rule 38 (2) (b) is distinct form the issue of special circumstances - it, relevantly, provides that in proceedings in the Consumer and Commercial Division special circumstance are not required where the amount in dispute exceeds $30,000.
A second error in this submission by the respondents is to ignore the requirement that in applying rule 38 (2) (b) to costs of an appeal the question is whether the amount in dispute on appeal exceeded $30,000.
In reply submissions, the Owners came to submit that the amount in dispute on appeal did exceed $30,000. As to this, they relied upon their expert's report in the primary proceedings (Craig Barry, 17 September 2024) who gave a figure of $64,269.40 for the bathroom rectification costs.
Incorrectly, the Owners also submitted that special circumstances existed soley because they had been entirely successful on appeal. However, that is not sufficient in itself to establish special circumstances.
The Owners also submitted in reply that there was no requirement for the respondent on the appeal to set out in their Reply to Appeal or submissions their intent to seek costs should the Builder fail in its appeal and that rule 38A and 38 of the NCAT Rules are applicable.

The Builder contends that Rule 38(2) of the NCAT Rules does not apply to these proceedings, as the amount in dispute on appeal was not in excess of

$30,000. The Builder refers to Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [11], referring to Allen v TriCare at [37] where it was said:

The "proceedings" that are the subject of the application for an award of costs, and thus the focus of our consideration as to whether there are special circumstances warranting such an order, are the proceedings commenced when the appellant lodged his Notice of Appeal [...]

Correctly, the Builder points out that the appeal proceedings were confined to a challenge to only one work order and to a conclusion reached concerning a specific single defect, being the lack of fall to certain installed floor wastes in the general bathroom area.
As to the value the Owners have attached to the work order the subject of appeal the Builder contends that the Owners expert's method of rectification, and therefore it's value, was rejected at [144] - [145] of the original decision. Therefore, it cannot form the basis of the valuation of the works concerned. The Builder's expert's method of rectification was preferred by the Tribunal, being only the removal of required tiles to rectify the graded fall of the floor, as opposed to the Owners proposed full tile removal and relaying of the floor. The Builder's experts' method of rectification was valued at $13,610.72 ($10,080 + 10% site preliminaries + 10% site loading + HBCF of 1.5% - see the Tribunal's costs decision at [30(8)])
The Builder contends, therefore, "special circumstances" must be established.
The Builder contends that success of the appeal alone cannot meet the burden of special circumstances. The Builder refers to the decision in Hammond v Ozzy's Cheapest Cars Pty Ltd t/as Ozzy Car Sales [2015] NSWCATAP 65 relied upon by the Owners and says that there were three factors in that matter that resulted in special circumstances being found, of which the outcome of the appeal was only one. The Builder contends that there are no other factors identified in this matter.
Finally, the Builder contends that the respondents have failed to comply with the Tribunal Guideline - Internal Appeals by failing to identify in the Reply to Appeal or submissions that they intended to seek costs and there are no particulars for the costs sought.

Neither party has opposed the costs application being heard on the papers. We are satisfied that it is appropriate to dispense with an oral hearing in accordance with s 50(2) of the NCAT Act.

The starting point for any costs proceedings is that each party is to pay their own costs and that the Tribunal may only award costs if it is satisfied that there are special circumstances warranting a costs order. This is set out in ss 60(1) and 60(2) of the NCAT Act.
Rule 38 of the NCAT Rules states:

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-

...

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

38A Costs in internal appeals

...

(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.

There is no dispute that in the proceedings at first instance there was more than $30,000 in dispute. However, that is not the issue. The question is, what is the amount in dispute on appeal.
We accept the Builders submissions that the Tribunal rejected the works proposed by the Owners in relation to the issues under appeal being the floor gradient rectification works. Therefore, the appropriate valuation of the amount in dispute is he cost of the rectification works preferred by the Tribunal's findings. There was no evidence presented to us to suggest that this cost exceeds $30,000 or to contradict the cost below $30,000 presented by the Builder's expert in the proceedings at first instance.
Accordingly, the issue is whether or not we are satisfied that there are special circumstances warranting an order for costs and if so, whether the Appeal Panel should exercise its discretion to award costs: see Diaspora Holdings Pty Ltd v Owners SP 68608 [2019] NSWCATAP 250.

In CEU v University of Technology Sydney [2017] NSWCATAD 280 it was stated at [4]:

As the section makes plain, costs in the Tribunal do not follow the event. To justify an order for costs, an applicant must first satisfy the Tribunal that there are 'special circumstances' warranting it. To establish special circumstances, 'it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional': Gaynor v Burns [2015] NSWCATAP 150 (overturned on different grounds in Burns v Corbett; Gaynor v Burns [2017] NSWCA 3, but remaining a useful guide to the section); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].

In Ung v Golden Century Property Investments Pty Ltd [2018] NSWCATCD 56 at [16], the Tribunal noted:

Being successful in proceedings is not, of itself, a special circumstance. There must be some additional factors present in the case to justify an award of costs: Citadin Pty Ltd (No. 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd [2001] NSWADTAP 31 at [6].

We accept the Builders submissions that although the Builder was unsuccessful in this claim, which is a factor to be considered toward establishing special circumstances, it does not alone establish special circumstances.
The Owners point to the acceptance that the second ground would fall away, and ultimately did fall away, on the failure to establish the first ground of appeal.
We accept that while the Builder was ultimately unsuccessful in this instance, there was no suggestion that the contentions of the Builder on the construction of clause 3.3 were untenable or without reasonable prospects of success. We are not satisfied that the unsuccessful appeal, including the second ground being reliant on the first ground of appeal, establish special circumstances.
As we have said, the Owners have not identified any other grounds or factors that go toward the consideration of special circumstances.

(1) A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013

(2) The respondents' application for costs of the appeal is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

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.

Administrative Tribunal Act 2013

Administrative Tribunal Rules 2014

Southern Pacific Builders Pty Limited v Kelly

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