The Owners - Strata Plan No 70762 v L & C Platt Constructions Pty Ltd - [2014] NSWCATCD 31 - NSWCATCD 2014 case summary

Judgment (10 paragraphs)

[1]

Introduction 1The applicant seeks an order that its costs be paid by the respondent, or in the alternative, that there be no order as to costs (meaning that each party should bear their own costs). The respondent seeks an order that the applicant pay its costs. 2Both applications for costs arise out of a decision (the Decision) of this Tribunal dated 10 January 2014 in these proceedings in which the relevant substantive order (the Order) made was that the respondent is to pay the applicant $47,296.00. The breakdown of that amount is described in paragraph 129 of the Decision, namely as follows:

$1,075.00 is constituted as an amount agreed between the parties at a conclave held between them prior to the hearing.
$6,000.00 constitutes an amount found by the Tribunal to be due by the respondent in favour of the applicant in respect of incomplete work.
Two amounts (one for $6,500.00 and the other for $33,721.00) being amounts which the respondent conceded after the hearing ought to be paid to the applicant. I will refer to these two amounts as the deposit /excess claim.

[2]

Jurisdiction 3The proceedings were conducted in the Consumer Trader and Tenancy Tribunal and the Decision was delivered after that Tribunal had been abolished. The provisions of the Civil and Administrative Tribunal Act 2013 (NSW) (the Act) provide for proceedings which span both the abolished Tribunal and the new Tribunal to be conducted in the new Tribunal in the manner described in schedule 1 of the Act. In particular schedule 1 of the Act provides that part heard proceedings in a former Tribunal are to continue in the new Tribunal and that the new Tribunal has and may exercise all the functions that the relevant existing Tribunal had immediately before its abolition (see clause 7, subdivision 2, division 3 of schedule 1 of the Act), and that the provisions of any Act that would have applied had the Act and relevant amending Acts not been enacted continue to apply. 4The CTTT Act provides in section 53 that the Tribunal may, in accordance with the regulations, award costs in relation to any proceedings. The CTTT regulations deal with costs in regulation 20. Regulation 20 provides that the Tribunal may award costs in any proceedings in respect of which the amount claimed or in dispute is more than $30,000.00. In particular, regulation 20 (4) provides that in such circumstances the Tribunal may award costs in relation to the proceedings as it thinks fit. 5Accordingly, these are proceedings to which regulation 20(4) applies and it is the task of the Tribunal to deal with costs having regard to the submissions before it.

Respondent's submissions 9The respondent makes four arguments as to why it should have a costs order in its favour. The first argument is that almost all of the order was obtained by a late amendment. The second is that the respondent has been the successful party in the two sets of proceedings (ie these proceedings and other proceedings commenced by the respondent in the Tribunal). The third is that the applicant was wholly unsuccessful on a major issue in these proceedings and the fourth is that the applicant refused an offer more favourable than the result obtained. 10The respondent argues that the bulk of the amount awarded to the applicant (comprising the deposit /excess claim) totalling $40,221.00, arose out of an amendment to the applicants claim made at "the last possible moment". The respondent described the history of the proceedings for the purposes of supporting this contention that the deposit /excess claim was introduced by a late amendment. In particular the respondent relies upon a "Statement of Facts and Contentions (the "Statement")" filed by the applicant in May 2013 in response to an order made by the Tribunal on 5 April 2013 for the parties to file such a document. The respondent contends that the Statement did not include the deposit / excess claim. 11The respondent contends that on Friday 23 August 2013 (4 days before the hearing which commenced on 27 August 2013) the applicant's solicitors sent a letter to the respondent's solicitor foreshadowing that the applicant would seek leave to amend the Statement to include the deposit /excess claim. At the hearing the applicant sought and obtained leave to amend the Statement. This was the first time, the respondent contends, that the deposit /excess claim had been clearly made in the proceedings. The respondent contends that the component of the orders made by the Tribunal comprised of the deposit / excess claim should not be taken into account when considering whether the applicant was a successful party in the proceedings. 12The second argument of the respondent requires some reference to proceedings HB 09/18897 before the Tribunal which were commenced by the respondent (the "respondent's proceedings"). 13On 16 November 2011 terms of settlement were filed in the respondents proceedings (exhibit 5). Those terms provide for the making of consent orders without admission that the respondent (Platt) was entitled to a money order in the sum of $58,980.26 against the applicant (The Owners- Strata Plan No 70762) and that the applicant was to pay the respondent's ordinary costs of the respondent's proceedings. Order number 3 allowed a set off of any money orders or costs obtained in these proceedings. Order 4 was of a similar nature. 14The respondent invites the Tribunal to conclude that when the present proceedings and the respondent's proceedings are considered together the overall result of the two sets of proceedings has been a result in favour of the respondent. If the two proceedings had been heard together the respondent would have been the successful party. The respondent describes the reasons why the two proceedings, which were initially proposed to be heard together, were subsequently separated. 15The third submission of the respondent is that the applicant was wholly unsuccessful on a major issue in the proceedings. The respondent refers to the decision of the Court of Appeal in James and Ors v Surf Road Nominees Pty Ltd and ORS [2][2005] NSWCA296 where the court quoted a decision of Mahoney JA in the earlier case of Waters v PC Henderson (Aus) Pty Ltd [unreported decision of the Court of Appeal of NSW] where his Honour Mahoney JA said: "Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed". The respondent argues that these proceedings involve two issues. The first concerns the claim that the respondent breached and repudiated the Building Contract causing the applicant to engage another builder and thereby incur a sum in excess of $ 1.5million (the contract issue), and the claim for the cost of rectification of defects caused by the respondents breach of statutory warranties in the sum of $261,175.00 (the statutory warranties claim). 16The respondent argues the applicant was wholly unsuccessful on the contract issue and that that issue was the major issue in the proceedings. The respondent argues that the size of the claim made pursuant to the contract issue required a substantive response by the respondent. It involved the hearing in considering in some detail the events of 2008 and 2009 and in particular the invoices rendered and the respondent's notice of suspension as well as the parties' conduct throughout this period. 17The Tribunal agrees with the respondents submission that the contract issue was the major issue and that it occupied a very substantial portion of the hearing before the Tribunal. 18The respondent also argues that with respect to the statutory warranties claim the applicant obtained a trivial sum. The quantum of the statutory warranties claim finally ordered by the Tribunal was the sum of $7,075.00 which was very substantially less than the amount which the applicant had sought. That sum was essentially awarded with respect to incomplete rather than defective works. The respondent argues that it has in reality been the successful party in its defence of the statutory warranties claim. 19The respondent also relies upon a decision of the NSW Court of Appeal in Arian v Nguyen [2001] NSWCA5 in which Ipp J considered the authorities in regard to circumstances where the court may depart from the usual costs order and award costs against a successful party. In that case His Honour stated that the making of an order that a successful party pay his or her opponents costs requires strong justification and exceptional circumstances must exist before a party will not only be deprived entirely of costs but also required to pay part of the opponent's costs. His Honour referred to a party raising issues or allegations improperly or unreasonably. The respondent argues the applicant unnecessarily protracted the proceedings and refers to difficulties which were experienced in concluding conclave reports conducted under the supervision of the Tribunal. In particular, the respondent argues that the applicant unnecessarily protracted the proceedings by not accepting the outcome of the third conclave. Instead, it conducted the hearing on the basis of the change of position by its expert, Mr Taber. The respondent correctly makes the point that much time was spent at the hearing dealing with the oral evidence of Mr Taber which was contrary to the agreements he had apparently reached in the third conclave report. The respondent also states that the applicant unnecessarily protracted the proceedings because it overstated the claim for defective work. The claim was in order of $261,000.00 but the actual result was an order for $7,075.00. That amount was largely with respect to one item in dispute. 20Fourthly and finally the respondent argues that the applicant refused an offer more favourable than the result it obtained. The respondent sets out a chronology of offers and responses constituting attempts to settle the proceedings. On 14 June 2013 the applicant made an offer to the respondent's solicitors to the effect that the applicant would accept $100,000.00 in full and final settlement of the matter. The offered sum includes the existing orders made in the respondent's proceedings for the approximate sum of $59,000.00 and costs orders. The respondent states that such an offer required the respondent to forego $59,000.00 and pay $100,000.00 to the applicant and forego existing costs orders in the respondents favour. The respondent says that rather than obtaining that offered position the applicant has achieved an order for approximately $7,000.00 and still owes money on the settlement of the respondent's proceedings. The respondent states that on 20 August 2013 the respondent made an offer to the applicant for the respondent to pay the applicant the sum of $20,000.00 and each party to bear its own costs. The respondent argues that this offer, and its refusal should form the basis of an order for the applicant to pay the respondents costs from 27 August 2013 which include the cost of the hearing and written submissions thereafter. 21In conclusion the respondent's argues that its various arguments should lead to a determination that the applicant pay the entirety of the respondents costs of these proceedings. In the alternative, the respondent argues that the Tribunal may consider making an order for the applicant to pay part of the respondents costs expressed as a percentage and the respondent submits that in all the circumstances that percentage should be in the range of 80% to 90% of the respondent's costs of these proceedings.

Findings 28I agree with the respondent that the hearing involved two dominant issues: the contract issue and the statutory warranties claim. In the Tribunal's decision dated 10 January 2014 (the Decision) in these proceedings I held that the contract was abandoned by the parties (paragraph 116 of the Decision) and that what flowed from that was the applicant was entitled to a return of the deposit and excess or to have those two amounts set off against the respondent's outstanding invoices (paragraph 123). 29In my view the fate of the deposit and excess was always an issue between the parties in these proceedings. The respondent contended that the contract had not been repudiated by the respondent but rather that the contract had been abandoned. A feature of that contention was that the deposit and excess had to be returned to the applicant or set off as I concluded at paragraph 123 of the Decision. Although it may be said that the deposit /excess claim was raised by the applicant in explicit terms late in the proceedings the fate of the money constituting the deposit and the excess was always an issue between the parties. 30The applicant contends it achieved bottom line success in the proceedings. The proceedings concerned the two issues identified by the respondent, namely the contract issue and the statutory warranties issue. The applicant failed entirely on the contract issue. The statutory warranties issue concerned a number of items. The applicant obtained success on one which was conceded and on the other in circumstances where the respondents expert considered the relevant work was not complete. The amount awarded to the applicant was $7,075.00. In respect of the balance of the statutory warranties issue the applicant failed. A considerable portion of the hearing was devoted to the applicant's unsuccessful attempt to resile from positions taken by the applicant's expert in the third conclave report. 31In short it is my view that the applicant succeeded in respect of issues which occupied a very small proportion of the proceedings and failed in substance on the two major issues which occupied the major proportion of the proceedings. 32In my view the principles considered by Mahoney JA in Waters v PC Henderson (Aust) Pty Ltd (CANSW - unreported) and by Toohey J in Hughes v Western Australia Cricket Association (1986) ATPR40-478 are relevant and applicable. Relevantly Mahoney JA (as recorded earlier in these reasons) said that where proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Toohey, said that "a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party's costs of them". 33This is a case where the circumstances outlined by Mahoney JA and Toohey J ought to be applied with the consequence that the applicant should pay the major proportion of the respondent's costs. Having regard to the fact that the applicant was successful on the deposit / excess claim and on two very small amounts concerning the statutory warranties claim the whole of the respondent's costs ought not be paid by the applicant. The appropriate way, in these circumstances to do justice as between the parties is to reduce the benefit of a costs order in favour of the respondent by a percentage. I assess that percentage as 20% and propose to order that the applicant pay 80% of the respondent's costs in these proceedings. 34In coming to the conclusion outlined above I have considered and rejected the other arguments put by the respondent. Specifically, I do not think it appropriate to assess the relative success of the parties in these proceedings by reference to the other proceedings (ie the respondent's proceedings), which were settled. To consider both proceedings as a whole may involve working an injustice as one does not know what considerations influenced the parties to reach a compromise settlement in the respondent's proceedings. 35The respondent also argued that the applicant refused an offer more favourable that the result obtained in these proceedings. That offer was made on 20 August 2013, a few days prior to the hearing. In my view it was not unreasonable for the applicant to not accept that offer and given the timing of the offer it would not be reasonable to award the respondent indemnity costs generally or in part.

The Owners - Strata Plan No 70762 v L & C Platt Constructions Pty Ltd

At a glance

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Judgment (10 paragraphs)

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Legislation Cited (1)

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