Staniland v Integrity New Homes Pty Ltd

Notice of Appeal and history of appeal proceedings

1. The appellants identified three grounds of appeal in the Notice of Appeal filed 19 January 2017. However, only two grounds were pursued at the hearing of the appeal. These grounds were: 1. The Tribunal erred in reducing the appellants' costs to 65% of the costs on the usual basis -a miscarriage of justice. 2. The Tribunal erred in accepting that r 38 of the Civil and Administrative Tribunal Rules, 2014 (NCAT Rules) requires that the amount "in dispute" be more than $30,000 -a question of law.
2. During the hearing of the appeal, the Appeal Panel noted that the proceedings have been commenced in 2013, that is prior to the establishment of the Civil and Administrative Tribunal (NCAT) on 1 January 2014 pursuant to the Civil and Administrative Tribunal Act, 2013 (NCAT Act). The proceedings had been commenced in the Consumer Trader and Tenancy Tribunal under the Consumer Trader and Tenancy Tribunal Act, 2001 (CTTT Act).
3. Consequently, the Appeal Panel identified a further issue in the appeal, namely whether the Tribunal was correct to conclude that the provisions of the NCAT Act relating to costs applied to the renewal proceedings or whether s53 of the CTTT Act and reg 20 of the Consumer Trader and Tenancy Regulation, 2009 (CTTT Reg) apply because the proceedings were pending proceedings and the provisions of Sch 1 of the NCAT Act apply.
4. At the conclusion of the hearing of the Appeal, the parties were given leave to provide written submissions about this issue and appropriate directions were made. The Appeal Panel has considered these submissions in determining this appeal.

Submissions

1. In relation to the relevant legislation for awarding costs in respect of the renewal proceedings, both parties accepted that s 53 of the CTTT Act and cl20 of the CTTT reg applied, not the NCAT Act and NCAT Rules: see appellants' Submissions dated 5 May 2016 at pars [3] and [16] and respondent's submissions dated 5 May 2017 at par [2].
2. Nonetheless, the appellants said that their primary submissions concerning the wrongful exercise of discretion under the NCAT Act equally apply in the context of the CTTT legislation.
3. First, the appellants say that cl 20(4) of the CTTT reg provides an unfettered discretion to award costs because the amount claimed is greater than $30,000.
4. Relying on their submissions in respect of r 38, the appellants say: 1. All that is required is that the amount claimed must be greater than $30,000 at some stage of the proceedings. 2. At the final hearing the amount claimed was $34,000 and the fact the appellants were awarded less does not mean that they fall outside the costs provisions applicable to claims more than $30,000. 3. The usual rule applies, that is costs follow the event; 4. The decision of Glover v Buckton Building Ltd [2015] NSWCATCD 146 has no application to the present case as there was no finding the amount claimed by the appellant was unreasonable and the fact the appellants did not recover the full amount set out in their expert's report did not justify a reduction of costs to 65%. 5. There have been three sets of hearings and the appellants have been entirely successful. 6. The matters identified by the Tribunal, namely the issue concerning AS1428 and what was meant by "set to sill" nor the fact that the appellants' claim was ultimately quantified at $34,000 and not $47,000, did not justify the reduction made. 7. The award of $$26,902.17, being less than the amount claimed, was not a proper basis to otherwise reduce the award of costs. The costs assessed by the appellants' expert "were only marginally reduced as a result of a reduction of some hours , and a change in Cordell's guide to construction hourly rates over 3 years the matter was in the Tribunal": see 9 March submissions (March submissions) at [26].
5. In making these submissions, the appellants accepted at [45] of the submissions "that they haven't been entirely successful in being awarded the whole amount of their claim".
6. Alternatively, the appellants say that in so far as the amount claimed or in dispute is less than $30,000, it was nonetheless more than $10,000 and cl(20)(3)(a) applies as there were exceptional circumstances. Consequently, the exercise of discretion to only allow 65% of the appellants' costs miscarried.
7. Unlike the appellants, the respondent in its submissions concerning the applicability of the CTTT Act and CTTT Reg and its acceptance that costs are to be determined in accordance with this legislation did not expressly adopt its earlier submissions concerning the exercise of discretion and the need for leave.
8. At [8] of the respondent's submissions dated 5 May 2017, the respondents said: Assuming the builder's position is correct, the issue as to "the amount claimed or in dispute" is still ripe for decision. If the builder is correct on its submission and Member Ringrose's decision is not upset on this point then it would fall on the home owners to show exceptional circumstances, something they have not done and therefore, the homeowners should be denied the costs. If the issue of the quantum of the amount claimed or in dispute is as per the homeowners' submission and the CTTT regime applies, the homeowners' submissions that Member Ringrose miscarried his section 60 discretion becomes logically unsupportable, because of the homeowners' submissions the Member applied an unfettered discretion which clause 20 allows.
9. However, it seems from this paragraph the respondent was maintaining its position concerning the meaning of the expression "amount claimed or in dispute" and that any error, if it occurred, was "a peripheral consideration that did not affect the Costs Order made by Member Ringrose".
10. Otherwise, the respondent maintained the discretion had not miscarried. Further, the respondent said in its primary submissions that any challenge required leave of the Appeal Panel and having regard to the principles set out in Collins v Urban [2014] NSWCATAP 17 leave should be refused.

Consideration

1. This appeal involves a challenge to the exercise of a discretion by the Tribunal in awarding the appellants, as successful party is in the renewal proceedings, costs limited to 65% of their costs as agreed or assessed on the usual basis, that is on a party/ party basis.
2. It is common ground that the applicable cost provisions are those contained in the CTTT Act and the CTTT Reg, the renewal proceedings having been commenced in 2013, prior to the establishment of NCAT on 1 January 2014. In this regard, the provisions of cl 7(3) of Sch 1 of the NCAT Act provide the provisions of the CTTT legislation continue to apply as the renewal proceedings were pending proceedings within the meaning of Sch 1.
3. In the Costs decision, the Tribunal applied the provisions of s60 of the NCAT Act, and concluded that r38(2)(b) of the NCAT Rules did not apply because the amount in issue was less than $30,000.
4. The Tribunal said at [45]: The applicants argue that the amount claimed was in excess of $30,000.00 and accordingly the Tribunal has jurisdiction to award costs. This submission must be considered in light of the fact that a sum of $20,000.00 was claimed until August 2014. From August 2014 until February 2016 the claim was increased to $47,541.00 and from February 2016 until the Hearing the amount claimed was $38,130.00. If the Tribunal was to consider the amount claimed then the amount in dispute would have no work to do. At the start of the hearing the amount in dispute was the difference between the amount claimed by the applicants and the amount considered by the respondent, namely a sum of $24,435.72. The amount recovered was $26,902.17 being the amount found to be owing in the proceedings. I am not satisfied that this result will enliven r 38(2)(b) in favour of the party who was responsible for initiating the claim as the interpretation proposed by the applicants would enable any party to qualify for an for costs simply by claiming an amount in excess of $30,000.00 in circumstances where the sum actually in dispute or likely to be recovered was less than $10,000.00. I accept the submissions of the respondent in this regard and I am not satisfied that r 38 can allow the applicant to overcome the restriction in this case. The position may be different where a successful respondent is obliged to defend a claim in excess of $30,000brought by an ultimately unsuccessful applicant but I am not required to determine this issue at the present time.
5. Rule 38(2)(b) provides: Despite section 60 of the (NCAT) 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.
6. While the parties have agreed that this rule does not apply, reg 20 of the CTTT Act uses the same expression "claimed or in dispute". Reg 20(4) provides: In any proceedings in respect of which can amount claimed or in dispute is more than $30,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit.
7. Consequently, it is necessary to determine whether reg 20(4) operates in the present circumstances or whether reg (20)(3) otherwise operates to limit the circumstances in which a costs order can be made in the present case.
8. In our view, the interpretation of r 38(2)(b) proposed by the Tribunal in the Costs decision is not correct. Rather, where the amount claimed by a party exceeds $30,000, the relevant cost rule is enlivened.
9. In Allen v Tricare (Hastings) Ltd [2017] NSWCATAP 25, the Appeal Panel said at [43]: In the case of an internal appeal, the "amount claimed … in the proceedings" can be determined by considering what orders the appellant seeks on the appeal. If those orders sought include an order that the respondent pay a sum of more than $30,000, expressly or impliedly, then the Tribunal should conclude that the amount claimed in those proceedings was more than $30,000. If the substantive orders sought do not involve any express or implied claim to any amount, it is difficult to see how there is any "amount claimed" for the purposes of r 38(2)(b).
10. Equally, the statement in Allen applies to the similar expression found in Reg 20(4) of the CTTT Reg.
11. It is clear from the Tribunal's decision that the applicant had in fact claimed more than $30,000, at least from August 2014. In this regard, the Tribunal found at [45] the claim was increased to $47,541 in August 2014 although the claim was reduced in February 2016 until the hearing to an amount of $38,130.
12. It follows that the power to award costs under reg 20(4) of the CTTT Reg was enlivened in the present case and the Tribunal was entitled to award costs in relation to the proceedings in such circumstances as it thinks fit.
13. As to the conclusion by the Tribunal that the amount in issue in the proceedings was less than $30,000, we disagree. Further, we disagree with the Tribunal's view that the general discretion under r 38(2)(b) (or in this case reg 20(4) of the CTTT Reg) is restricted to prevent a party who has initiated a claim recovering costs because "the sum actually in dispute or likely to be recovered was less than $10,000".
14. In Allen, the Appeal Panel examined what was meant by the expression "amount in dispute" and its relevance in determining whether r 38(2)(b) is enlivened. At [48] the Appeal Panel said: The inclusion of the words "or in dispute" after "the amount claimed" in r 38 indicates that amounts may be in dispute in proceedings even if they are not the subject of a specific claim for an order for payment.
15. That is, the expression "in dispute" was relevant in circumstances where no amount was claimed because of the nature of the proceedings which had been brought.
16. Having considered the decision of the Court of Appeal of the Supreme Court of New South Wales in Jabulani Pty Ltd v Walkabout II Pty Ltd [2016] NSWCA 267 and the authorities referred to by the Court concerning the expression "matter in issue" found in s 101(2)(r)(i) of the Supreme Court Act, 1970, the Appeal Panel in Allen continued at [57]: Adapting these principles to the circumstances of the present appeals and having regard to the specific wording of r 38, it appears to us that in applying r 38(2)(b): 1 The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance; 2 The phrase "in dispute" is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; 3 Whether "the amount … in dispute" in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000; 4 The fact that the value of the property the subject of any appeal exceeds $30,000 does not, of itself, mean that "the amount … in dispute" in that appeal is greater than $30,000.
17. That is, Appeal Panel concluded that where: 1. no amount is claimed; or 2. there is an appeal which, if successful, might alter the position of a party from that determined in the proceedings at first instance, it is necessary to identify the matters in issue or the prejudice suffered by the claimant which is the subject of the particular dispute and determine the value of the rights or the prejudice suffered if that is capable of assessment. In the absence of an amount actually claimed, it is the amount that is "in issue" that is determinative of whether the particular cost rule applies.
18. In the Costs decision, Tribunal suggested the above interpretation should be rejected because: 1. a party could exaggerate their claim and thereby obtain the benefit of the cost rule and avoid the limitations otherwise imposed by the legislation on the award of costs; and 2. the amount in issue represented the difference between what the appellants were claiming at the hearing (then $38,130) and what the respondent was asserting was the proper award of damages (namely $24,435.72)..
19. There are several answers to this proposition.
20. First, to the extent there was any inappropriate exaggeration or any cost consequences arising from an inflated claim, these are matters that would be relevant to the exercise of any general discretion in the award of costs. However, that does not provide a basis for construing the provisions of r38(2)(b) or reg 20(4) in the way suggested by the Tribunal.
21. Second, this construction involves accepting that a cost rule operates differently depending on whether the person entitled to costs is the person making the claim or the respondent.
22. Thirdly, on the Tribunal's construction, the engagement of the costs rule is dependant upon the outcome of a case, rather than the claims made and the circumstances in which a claim was advanced.
23. Finally, having regard to what the Appeal Panel said in Allen and what we have said above, in fact the amount in issue was the amount by which, if successful, the wealth of the appellant might have been increased.
24. In this regard, there is a dichotomy between the amount which a claimant is entitled as an award for damages and the value of particular items that remain in dispute where experts offer competing opinions.
25. In the present case, there was, on the Tribunal's findings, an amount of $38,130 claimed by the appellants for which they sought a money order as damages. Although the respondents expert may have conceded an amount of $24,435.72 was properly payable, as opposed to the $38,130 claimed by the appellants, until this amount was paid the appellants remained entitled to claim an order for the full amount. It is the amount of $38,130 which, if successful, was the amount by which the "wealth" of the appellants may have been increased if they were successful.
26. That is not to suggest that the fact of a minor difference between experts as to the value of any claim is not a factor relevant in determining what costs order should be made. However, in the present case, that fact is relevant to the exercise of the discretion of what order should be made, not to whether the particular cost rule has application.
27. Having regard to the above, the Tribunal incorrectly determined the basis of its jurisdiction to award costs in the present case. In that sense there was an error of law.
28. Despite these errors, the Tribunal did determine it had power to make a costs order and exercised a discretion to reduce the appellants' costs to 65% of those costs agreed or assessed. In doing so, the Tribunal refused to make any special order for costs.
29. The appellants did not contend in the appeal that a special order for costs, for example on an indemnity basis, should be made in the present case. Rather, the order sought in the Notice of Appeal was that the respondent pay the whole of the appellants' costs as agreed or assessed.
30. In Thompson v Chapman [2016] NSWCATAP 6 at [68]-[72] the Appeal Panel set out some of the principles relevant to the exercise of discretion. We adopt those statements.
31. Having regard to the fact the Tribunal found at [62] "the respondent failed completely on every count of the preliminary (and) interlocutory proceedings" and having regard to the respondent's concession recorded at [63] "that the applicants were successful in relation to the scope of works and in respect of the need to remove and replace the stack of doors", there is no doubt that the appellants were entitled to an order for costs in their favour.
32. The question is whether the assessed reduction was appropriate and whether the Appeal Panel should now re-exercise the discretion in a different manner.
33. In allowing the appellants only 65% of the costs, the Tribunal made the following findings relevant to the conduct of the appellants which would justify a reduction in the costs awarded: 1. there had been conduct by both parties which could be regarded as having unnecessarily disadvantaged the other party: Costs decision at [60]; 2. the appellant maintained they were entitled to $47,000 in damages in spite of the fact this amount exceeded the rectification costs set out in the expert report of February 2016: Costs decision at [66); 3. the applicant contended that compliance with AS1428 was required despite it being a standard for commercial buildings related to disability access, a matter which was "pursued for some time and only abandoned in Mr Shepherd's last report": Costs decision at [66]; 4. a substantial period of time was occupied by the appellants in examining the respondent's witnesses in the assessment claim.
34. The Tribunal also noted that the appellant and sought an order that the Tribunal fix their cost in the sum of $140,617.35.
35. These findings were not challenged by the appellants in this appeal.
36. It is evident from the Tribunal's reasons that it balanced these factors against the countervailing conduct of the respondent. It assessed what was an appropriate award in the context of proceedings which had commenced in 2013, had many hearing days and where the amount claimed by the appellants ranged from $20,000 when the application was first filed, up to $47,000 during the course of the proceedings and finally $38,130 at the final hearing.
37. Having done so, and with the benefit of full knowledge of what occurred throughout the history of the proceedings, particularly at the hearings, the Tribunal determined that the appellants should not be entitled to all the cost, but only 65% of those costs as agreed or assessed.
38. While the Appeal Panel was provided with the parties' submissions in respect of costs, it does not have the benefit of the transcript of proceedings nor the benefit of the observations made by the presiding Member during the course of the proceedings. The exercise of discretion often requires the evaluation of each party's conduct to determine what costs order is appropriate. As with the case here, that evaluation involves the identification of issues, time spent on those issues and whether a particular party is entitled to compensation for the whole of costs incurred.
39. Presently, those factual matters had been resolved on the basis the Tribunal has concluded that the costs award should be reduced by about one third. It did so be reference to the material we have identified.
40. While the Tribunal proceeded on an incorrect view of the power which authorised it to make an order for costs, it ultimately found it did have power to award costs and exercised its discretion. We are not satisfied that the ultimate assessment to allow 65% of the appellants' costs should be displaced or that the order made would not provide proper compensation for costs in the present case. In our view, the facts identified by the Tribunal justified a conclusion that the costs should be reduced and this finding should not be disturbed.
41. Accordingly, the appeal is dismissed.

Costs

1. In relation to costs of the appeal, our preliminary view is that each party should pay their own costs.
2. This is because neither party identified the issue of whether the Tribunal was correct to apply s 60 of the NCAT Act and Rules rather than the provisions of the CTTT Act and CTTT Reg. While the appeal ultimately failed, the matter was disposed of in a manner different to the parties' primary submissions.
3. Should either party contend for a different order, directions will be made to deal with such an application.

Orders The Appeal Panel makes the following orders: 1. Appeal dismissed. 2. Each party is to pay their own costs of the appeal. 3. In the event either party contends a different costs order should be made to that in order 2, the following directions apply: 1. the party contending for a different costs order (costs applicant) is to file and serve any submissions within 7 days after the date of these orders; 2. the cost respondent is to file and serve any submissions in response 14 days after the date of these orders; 3. the costs applicant is to file and serve any submissions in reply 21 days after the date these orders; 4. the submissions are to include submissions as to power to award costs and whether an order should be made dispensing with a hearing of any cost application pursuant to s 50(2) of the Civil and Administrative Tribunal Act, 2013. 5. Order 2 ceases to have any effect upon the cost applicant making any application in accordance with order 3 (a).

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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 July 2017