Sydney Building Defects Inspections and Reports Pty Ltd v Thomas

NCAT Consumer and Commercial|2018-11-01

Introduction

These reasons for decision relate to the respondents' application for costs following my decision on 23 August 2018 to dismiss the applicant's claim.
For the reasons set out below, I am not satisfied that the respondents have established that special circumstances warrant an order for costs, or that a costs order is permissible under clause 38(2)(a) of the Civil and Administrative Tribunal Rules 2014 (the "NCAT Rules").

Submission in support of the application

In support of their application for costs, the respondents submit that there are a number of special circumstances in this case warranting an order for costs. These can be summarised as follows:

The applicant's conduct, both prior to and during the hearing, has caused unnecessary disadvantage to the respondents. The respondents refer to the applicant having "made threats, used disgusting language and harassed the Respondents" both in text messages and emails and during the hearing on 23 August.
The application has no merit. The respondents make reference to the fact that the application was dismissed by the Tribunal because the Tribunal found that it lacked jurisdiction. The respondents also allege that the application was filed before the applicant's invoice became due and payable, and that the building defects report prepared by the applicant was "in breach of the engagement to provide a professional, factual and accurate report".

Response to costs application

In response to the costs application, the applicant submits that special circumstances do not exist. The applicant's submissions can be summarised as follows:
The respondents' solicitor did not inform the applicant prior to the hearing that NCAT lacked jurisdiction to determine the dispute.
The respondents were not entitled to legal representation without the leave of the Tribunal.
If NCAT has no jurisdiction to determine the dispute it also has no jurisdiction to award costs.
The applicant decided to collect the debt earlier "because there were 6 days of non-communication on behalf of the Thomas' and … they obtained another consultant's report they paid him not me which was a very well represented report some 450 pages long on my part."

Law

Section 60 of the NCAT Act applies in respect of the respondents' costs application.
This section relevantly provides: 60 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. …
Clause 38 of the NCAT Rules modifies the application of s 60 in proceedings before the Consumer and Commercial Division of the Tribunal. However, cl 38 only applies to matters where: 1. the amount claimed or in dispute is between $10,000 and $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the NCAT Act; or 2. the amount claimed or in dispute in the proceedings is more than $30,000.00.
As the amount claimed in this application $9861.25 (i.e. less than $10,000), neither clause 38(a) nor clause 38(b) of the NCAT Rules have any application in these proceedings.
In any event, clause 38(a) of the NCAT Rules refers to clause 10(2) of Schedule 4 to the NCAT Act. That clause applies in circumstances where the Tribunal is of the opinion that a party is conducting the proceedings in such a way that unreasonably disadvantages another party in the proceedings. In such circumstances clause 10(2)(a) provides that the Tribunal may: "if the party causing the disadvantage is the applicant - order that the proceedings (or part of the proceedings) be dismissed or struck out." Clause 10(3) sets out the matters the Tribunal is required to consider before making any such order.
In this case the Tribunal dismissed the proceedings due to a lack of jurisdiction. There was no suggestion by the Tribunal that the proceedings were dismissed under clause 10(2) of schedule 4. Accordingly even if the respondents were correct that the amount claimed was more than $10,000, clause 38(a) of the NCAT Rules would have no application in this matter.
For the purposes of s 60(2) of the NCAT "special circumstances" are circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], citing Cripps v G & M Mawson [2006] NSWCA 84 at [60].
Section 50 of the NCAT Act relevantly provides: 50 When hearings are required (1) A hearing is required for proceedings in the Tribunal except: … (c) if the Tribunal makes an order under this section dispensing with a hearing, or … (2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal. (3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first: (a) afforded the parties an opportunity to make submissions about the proposed order, and (b) taken any such submissions into account. (4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules.

Issues

The issues to be determined are: 1. Should an order be made dispensing with a hearing, pursuant to s 50(1)(c) of the NCAT Act? 2. Have the respondents established that there are special circumstances warranting an order for costs in her favour?

Should an order be made dispensing with a hearing, pursuant to s 50(1)(c) of the NCAT Act?

The parties have had an opportunity to make submissions as to whether the issue of costs be determined on the papers. The respondents have not made submissions in this regard.
The applicant has stated "if NCAT does seem fit to award costs for a non-event hearing then I would like the hearing undertaken with all parties in attendance so the NCAT Appeal and Supreme Court Action process can take its natural course."
The applicant's submissions do not provide any explanation as to why the issue of costs cannot be adequately dealt with on the papers. I am satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions. In my view, the parties would be put to unnecessary expense if a hearing on costs were held.
An order dispensing with a hearing under s 50(1)(c) of the NCAT Act has accordingly been made.

Have the respondents established that there are special circumstances warranting an order for costs in its favour?

The starting point for consideration of this matter is to recognise that parties to proceedings in the Tribunal are not entitled to be represented by any person without the leave of the Tribunal: section 45(1) of the NCAT Act.
The respondents attended the first (and only) NCAT hearing on 23 August with their solicitor, despite having been informed in an email from Registry prior to the hearing that leave is not "automatically granted". At no stage were the respondents granted leave to be legally represented in the proceedings.
The respondents assert that the applicant's behaviour caused unnecessary disadvantage to the respondents. I understand that the behaviour of the applicant towards the respondents both during and prior to the hearing has been distressing and worrying for the respondents, and has been the subject of separate police complaints.
However, I am not satisfied that this behaviour caused the respondents unnecessary disadvantage vis a vis these proceedings. The Tribunal has in place procedures to deal with threatening or anti-social behaviour. To this end a Sheriff's officer was present throughout the hearing on 23 August. Other Sheriff's officers arranged for the respondents to be escorted out of the building. The respondents were notified before the hearing that representatives of the Office of the Sheriff would be at the hearing. The Tribunal provides this service specifically for the purpose of dealing with difficult behaviour by parties. I do not see how the attendance of a solicitor at the hearing was necessary in such circumstances.
The respondents also say that the application has no merit, and that it was vexatious and lacking in substance.
The application was dismissed due to a lack of jurisdiction. When making the decision to dismiss the application I did not consider, or provide a view as to, the merits or substance of the case and indeed doing so would have been inappropriate given that the Tribunal lacked jurisdiction to determine the claim. I noted in my reasons that the decision to dismiss the application "does not preclude the applicant from commencing a claim in a court of competent jurisdiction."
In any event it is common in Tribunal proceedings, particularly where parties are unrepresented, for applicants to misunderstand the nature of the Tribunal's powers and to seek orders which fall outside the scope of the Tribunal's jurisdiction. Determining the Tribunal's jurisdiction involves an understanding and analysis of the underlying legislative framework. This can be a difficult and technical legal exercise and the Tribunal would not expect unrepresented parties to do this easily. Indeed, in this instance it appears that that the respondents' solicitor also did not identify the jurisdictional issue, or at least bring it to the applicant's attention.
The issue can be particularly confusing to parties in a matter such as the present which involves debt recovery. The Tribunal does have limited powers to make orders for debt recovery in certain circumstances which arise under the Home Building Act 1989 (NSW). It is understandable that the applicant's understanding of the issue may have been clouded given that the applicant works in the construction industry.
A lack of jurisdiction is not a special circumstance for the purpose of a costs application. It also does not have bearing on the underlying merits of a claim. It would be inappropriate for the Tribunal to comment on the merit or substance of the underlying claim in circumstances where the Tribunal has no jurisdiction to determine the application and the applicant may wish to commence proceedings elsewhere.
The respondents also say that the applicant has failed to comply with the duty imposed by section 36(3) of the NCAT Act which requires the parties to co-operate with the Tribunal in giving effect to the Tribunal's guiding principle, which is to facilitate the quick, just and cheap resolution of the real issues in the proceedings.
Again, whilst I recognise that the applicant's behaviour towards the respondents has been offensive and upsetting, I do not think this of itself amounts to a failure to comply with the Tribunal's guiding principle. At the first group list hearing the application was dismissed due to a lack of jurisdiction. This is not an unusual occurrence in the Tribunal. The applicant left the hearing soon after this issue was explained to him. As far as I am aware no further issues have been raised by the applicant in the Tribunal.
Despite the offensive language and conduct it has been patently clear at all times that the applicant was seeking recovery of an alleged debt. The applicant's conduct has not obscured this issue. It was open to the applicant to express his view as to the merits of the respondents' costs application. Expressing such a view, whether correct or not and whether or not done in polite terms, cannot be said to obstruct the Tribunal's guiding principle.
For these reasons no special circumstances have been established and the application for costs is dismissed.

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: 30 January 2019

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