These reasons deal with an application for costs brought by Metricon Homes Pty Limited the successful respondent in appeal proceedings brought by the appellant Kashif Syed from a first instance decision of this Tribunal. On 8 April, 2019 the respondent filed an application in the Consumer and Commercial Division of this Tribunal seeking, inter alia, payment of the sum of $106,591.17 as a final progress payment claimed to be due under a home building contract with the appellant. On 22 May 2019 the appellant filed a Home Building application in the same Division seeking an order inter alia that certain building defects be rectified.
Both applications came on for hearing on 25 March 2020 before a Member of this Tribunal who dismissed the appellant's claim and ordered the appellant to pay the respondent the sum of $12,253.47 on the respondent's claim (the appellant having by then paid the final progress payment claim). The Member reserved costs.
On 27 April 2020 the appellant through solicitors retained by him filed a Notice of Appeal from the decision of the Member and an application to stay that decision. Pursuant to orders made by the Tribunal the call over of the appeal proceedings and the stay application were both listed for hearing on 7 May, 2020. The appellant was also required to file evidence and submissions in support of the stay application by 1 May 2020 which he failed to do. The solicitor for the appellant did not appear on 7 May 2020. Orders were then made for the parties to file and serve evidence. The stay application was adjourned on the basis that it could be relisted on the appellant's application.
The respondent filed a Reply to the appeal on 20 May 2020 and directions were issued by the Tribunal to facilitate the preparation of the stay application and the appeal. The appeal was listed for hearing on 20 July 2020.
On 2 June 2020 the appellant then acting for himself filed a request for withdrawal of the appeal. On the same day solicitors for the respondent wrote to the Tribunal stating that the respondent had received no prior notice of the appellant's intention to withdraw his appeal and sought a costs order against the appellant.
On 5 June 2020 a Deputy President of this Tribunal dismissed the appeal on the basis that it had been withdrawn and gave directions for the filing of submissions on costs.
In their written submissions on costs, both parties have agreed that this matter may be determined on the papers without the necessity for any oral hearing, and we have proceeded accordingly.
It is also necessary to refer to one other factual matter. In his application the appellant asserted that there were building defects which had been discovered, the cost of rectification of which was not then known. When the hearing commenced before the Member on 25 March 2020 the appellant sought an adjournment because he wished to prepare further evidence with respect to the cost of the rectification works. Having ascertained that the appellant was a solicitor by profession and was aware of the need to comply with directions previously issued for the preparation of the proceedings the Member determined to refuse the application for adjournment. The Member also noted that the defect was identified after the appellant had paid the final contract payment and had taken possession of the premises. As such he was entitled to maintain a separate claim for rectification of the defects if they were not attended to by the respondent.
[2]
The respondent's submissions
The respondent referred us to the statutory basis for the determination of this costs' application. In general terms, the parties to proceedings before this Tribunal are to pay their own costs except in "special circumstances" as provided for in section 60 of the Civil and Administrative Tribunal Act. However, this general principle is displaced in proceedings before the Consumer and Commercial Division of the Tribunal where the amount claimed or in dispute exceeds $30,000. This is the effect of the provisions of Rule 38 of the Civil and Administrative Tribunal Rules which are in the following terms
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 -
(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.
By Rule 38A of those Rules, the same costs regime as applied to the proceedings from which the appeal is brought will also apply to these appeal proceedings
38A Costs in internal appeals
(1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of -
(a) enabling legislation, or
(b) the Division Schedule for the Division of the Tribunal concerned, or
(c) the procedural rules.
(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.
In essence, the respondent submitted that it had at all times complied with the procedural directions of the Tribunal for the preparation of the appeal, it had not conducted itself in any manner which would have inappropriately caused the costs incurred to be increased, and that in all the circumstances there was no particular feature concerning the proceedings which would displace the ordinary rule that where a court or tribunal is invested with a costs power, costs will normally be awarded in favour of the successful party.
We observe that this "ordinary rule" is encapsulated in the well-known extract from the judgement of McHugh J in the High Court of Australia in Latoudis v Casey [1990] HCA 59. At [3] of his judgment, McHugh J said
3. An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v. Noumenon Pty Ltd (1988) 47 SASR 182, at p 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party. In Cilli v. Abbott [1981] FCA 70; (1981) 53 FLR 108, Keely, Toohey and Fisher JJ. pointed out (at p 111) that "the object of costs is not to penalize; it is to indemnify the successful party in regard to expense to which he has been put by reason of legal proceedings"; see also Anstee v. Jennings [1935] VicLawRp 27; (1935) VLR 144, at p 148.
The respondent also sought an order that its costs be paid on an indemnity basis having regard to an offer that it had made to the appellant to resolve the underlying proceedings and the appeal proceedings on 19 May 2020. It was said that this offer constituted a genuine compromise on its part, that the appellant had inappropriately failed to accept it, and that indemnity costs should be payable as and from the date of the refusal of the appellant to accept it.
The offer of 19 May 2020 required payment by the appellant to the respondent of $56,666.15 by 2 June 2020. That amount was said to be comprised of $12,253.47 payable by the appellant to the respondent pursuant to the original Tribunal order of 25 March, 2020 together with $44,412.68 claimed as the respondent's costs pursuant to a costs order in its favour made by the Tribunal on 7 May, 2020 with respect to the underlying proceedings. In making this offer the respondent said that it would forego its costs of the appeal stated to be "approaching $10,000", it would be entitled to recover costs and disbursements in the underlying proceedings of "at least $46,000 excl GST" and would also be entitled to claim interest on the amount ordered to be paid. The respondent said that this offer thus represented a genuine compromise on its part.
We note, however, that although the respondent has a costs order in its favour with respect to the underlying proceedings, there is no evidence that those costs have been quantified either by agreement of the appellant or pursuant to an assessment process.
[3]
The appellant's submissions
The appellant submitted that in the alternative we should make orders that each party pay their own costs of the appeal, or alternatively he be ordered to pay the reasonable costs of the respondent, the amount of which should be fixed by us, and that we should assess the costs payable by him under the underlying proceedings.
In support of his submissions the appellant said that he had engaged a solicitor to represent him with respect to the stay application and the appeal. He annexed to his submissions copies of email communications with this solicitor. Without traversing the contents of those emails in any detail we observe that as at 30 April, 2020 the solicitors retained by him were seeking from the appellant details of the evidence which he wished to have filed on his behalf, and the appellant replied that he would leave that matter to the solicitors. The solicitors then responded that they would assess what evidence would be relevant, but required documents from the appellant. This "stand-off" appears to have persisted until the appellant terminated their retainer on 14 May, 2020. The appellant said that he withdrew the appeal "Due to the costs implications and in the fashion that then solicitor conduct (sic) of the Stay and Appeal."
The appellant submitted that if an adverse costs order was made against him we should require the solicitors retained by him to pay those costs.
Furthermore, in his submissions the appellant complained that the Member had declined to adjourn the proceedings at the hearing on 25 March 2020 in circumstances where there was then a serious defect in the building works.
[4]
Consideration
The power to award costs in these appeal proceedings is clearly governed by Rules 38 and 38A which we have set out above. The amount in issue in the underlying proceedings exceeded $30,000 and the costs regime applicable to those proceedings applies to the appeal proceedings.
The appellant has not made any submission or brought to our attention any matter which would justify displacement of the ordinary rule that following his withdrawal of the appeal and its dismissal, that costs will follow the event. There is no disentitling conduct on the part of the respondent nor are there any other circumstances which would justify a displacement of that ordinary rule.
It is inappropriate for the appellant to rely upon the refusal of the Member to grant him an adjournment in the underlying proceedings. The orders made by the Member must be given full force and effect, particularly in circumstances where the appellant's appeal has been dismissed consequent upon his withdrawal of the appeal.
Prima facie the respondent is entitled to a costs order in its favour concerning these appeal proceedings.
The appellant invited us to make an order against the solicitors formerly retained by him, presumably on the basis that they were, in some fashion, negligent in the manner in which they had represented him. There are a number of reasons why we would reject this submission. Firstly, as we have pointed out the only evidence of communications between the appellant and the solicitors is equivocal in terms of any lack of attention on their part. Secondly, we would need to be persuaded that this Tribunal is empowered to make an order against solicitors retained by a party that those solicitors be responsible for the costs of another party. Whilst such orders are made from time to time by courts, they are based on rules of court in common form empowering the making of such an order in appropriate circumstances, but subject to the solicitors concerned being afforded an opportunity of showing cause why such an order should not be made. The appellant has not provided us with any reference to any statutory or other basis which would bestow a power of this kind on this Tribunal. It is not necessary that we pursue this particular matter further because, for the reasons which we have set out above, there is insufficient information or evidence provided by the appellant which would provide any prima facie basis which would justify consideration of such a course of action.
This leaves outstanding the application for indemnity costs made by the respondent. The offer of compromise contained in its letter of 19 May 2020 is predicated upon the basis that it will recover an amount of not less than $44,412.68 for its costs of the underlying proceedings. However, there is no evidence that those costs have been agreed to by the appellant or have been assessed in that amount with the result that the respondent is entitled to recover them. In these circumstances there can be no certainty that the offer made by the respondent represents a compromise such that a failure to accept it would justify an order that costs be payable on an indemnity basis. We reject the respondent's application for the payment of costs on an indemnity basis.
We conclude for the reasons set out above that the respondent is entitled to an order for its costs of these appeal proceedings. We reject the appellant's submission that we should fix the amount of those costs. The determination of the quantum of costs payable in proceedings of this kind is more appropriately undertaken pursuant to the statutory basis for the assessment of costs which applies throughout New South Wales. In default of agreement those costs should 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.
[5]
Order
1. The appellant is to pay the costs of the respondent of these appeal proceedings in an amount 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 in default of agreement.
[6]
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
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Decision last updated: 21 July 2020