Tom v Jenkins

Does the Tribunal have the jurisdiction to make a costs order in the circumstances

1. The applicant has referred me to the decision of the Appeal Panel in The Trust Company Ltd v Diamond Certification Laboratory of Australia Pty Ltd [2016] NSWCATAP 63 and the respondent has relied on the decision in its submissions.
2. In The Trust Company Ltd v Diamond Certification Laboratory of Australia Pty Ltd an Appeal Panel determined that the Tribunal at first instance did not have the jurisdiction to entertain the respondent's claim. Applications for costs followed that decision.
3. On the application for costs the Appeal Panel stated at [27] - [32]: The question is whether, in the circumstances of a proceeding being dismissed for want of jurisdiction, NCAT has a broad power to award costs. Significantly NCAT is invested with a broad power to award costs: s 60(2) of the Civil and Administrative Tribunal Act provides: The Tribunal may award costs in relation to proceedings before it only if it is satisfied there are special circumstances warranting an award of costs. It should be observed that the power to award such costs arises "in relation to proceedings before it". Both the COM proceedings and the Appeal proceedings were proceedings before the Tribunal. Further, it should be observed that the general power to award costs provided by s 60(2) expanded by the provisions of s 60(5) which provides: In this section: Costs includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal. Section 60(4)(a) provides that if costs are to be awarded by the Tribunal it may "determine by whom and to what extent costs are to be paid". The costs power granted to the Tribunal is accordingly broad, and the Appeal Panel is satisfied the power to award costs is not dependent upon whether or not the Tribunal finds that it has jurisdiction to grant any relief: rather, the power arises because proceedings have been brought before the Tribunal. This fact of itself is the criteria upon which court is empowered to make an order for costs. For further consideration see Doula Spirit Pty Ltd v Andrew Argyrou [2014] NSWCATAD at [227]. The terms of the Civil and Administrative Tribunal Act distinguishes this matter from Vigden v Byron Shire Council and Plumb Comcare. In each case the particular legislation was not sufficiently wide to permit a costs order. Accordingly the Appeal Panel finds that it has power to award costs although it has found that it had no jurisdiction to grant the relief claimed by DCLA.'
4. I find based on the decision in The Trust Company Ltd v Diamond Certification Laboratory of Australia Pty Ltd that I have the jurisdiction to make a costs order and that the applicant's submissions on this point raise no issue which persuades me that the reasoning in that case should not be followed in these proceedings. I find that I have the jurisdiction to make a costs order in these proceedings because they were before me at all times and required determination.

The respondent did not raise section 48K(3)

1. The applicant submits because the respondent did not raise this section of the Home Building Act but raised limitation defences and participated in the hearing, the appropriate order is that each party should bear its own costs.
2. The fact that the applicant instituted proceedings in circumstances where the Tribunal had no jurisdiction under section 48K(3) of the Act indicates in my view that the applicant was always at risk the proceedings being dismissed and an adverse costs order being made.
3. In addition the respondent did raise time issues in response to the claim brought against him, which if accepted would have defeated the applicant's claim.
4. I have decided to approach the issue of whether the respondent should obtain a cost order in his favour despite the fact that he did not raise section 48K(3) of the Act on the basis that a successful party will usually be denied his costs if there are special circumstances which would justify such an approach.
5. At [69] and [70] in Oshlack v Richmond River Council McHugh J. stated, footnotes excluded: 'The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [97], Devlin J formulated the relevant principle as follows: "No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct." "Misconduct" in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute. Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct'
6. I find that the respondent has not on the evidence before the Tribunal been guilty of any misconduct relating to the proceedings, as that term is to be understood as explained by McHugh J. in the passage cited above, which would operate to deprive him of a costs order in his favour. Specifically not raising section 48K(3) of the Act when he had raised other time related defences does not in my view constitute special circumstances or disentitling conduct.

Calderbank offer

1. The respondent's letter of 18 May 2017 was not marked 'Without Prejudice Except as to Costs' as is often done when a 'Calderbank' offer is made. Nonetheless it was stated to be sent in accordance with the 'provisions' of Calderbank v Calderbank. The applicant does not make a submission that the letter was without prejudice and therefore should not be submitted to the Tribunal for consideration in the costs issue.
2. I have no doubt that the offer in the letter was made in a genuine attempt to settle these proceedings and was based on the respondent's solicitor's analysis of the state of the then part heard proceedings. That analysis indicated that it was the respondent's view that the home owner would not be successful in obtaining a 'demolish and reconstruct' order, but that it was likely that an underpinning order might be made. Views were also advanced as to what the costs orders might be. The offer to settle of $20,000.00 on the basis each party would pay their own costs was made on as a consequence of the respondent's solicitor's analysis of the state of the proceedings as at the time of the offer. It is having regard to these facts that I find that the respondent's offer was genuine.
3. The letter pointed out that if the outcome of the proceedings was equal to or better than the offer, then the respondent would not have incurred additional costs had the offer been accepted. It was that point that the respondent's solicitor referred to the case of Calderbank v Calderbank, indicating in my view that there were costs consequences associated with the offer.
4. The applicant submits that it is significant that the 18 May 2017 letter did not mention that the respondent would rely on the offer to support a submission for indemnity costs. I would add that the reference to the decision in Calderbank v Calderbank does not of itself indicate that an application for indemnity costs is foreshadowed, since that case did not involve such an application, being primarily concerned with the admissibility of a settlement communication which was stated to be 'Without Prejudice Except as to Costs' and the effect that the terms of such a communication had on the court's discretion regarding costs.
5. In Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344, Basten JA identified two questions which are relevant to a 'Calderbank' offer and a claim for indemnity costs. They are whether: 1. there was a genuine offer of compromise, and 2. it was unreasonable for the offeree not to accept it.
6. In Miwa Pty Ltd v Siantan Properties Pte Ltd Basten JA (with whom McColl and Campbell JJA agreed) adopted the non-exclusive list of factors identified by the Victorian Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 at [25]: 'The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.'
7. As stated in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority, it is a relevant consideration in considering whether the applicant unreasonably rejected, or failed to accept, the respondent's 18 May 2017 Calderbank letter to have regard to the fact that it did not foreshadow an application for indemnity costs.
8. The applicant submitted that there were a number of other factors relevant which should lead to a finding that it was not unreasonable for the applicant to have rejected the offer, or not to have accepted it. The most substantial basis advanced was that as at 18 May 2017, despite the respondent's solicitor's optimistic view of the state of the litigation, there remained the potential for the applicant builder to face an adverse result in excess of $300,000.00, and if he accepted the offer for $20,000.00 he would be unable to pursue the respondent engineer to recover any part of that liability.
9. A calderbank offer is an effective mechanism or device for a respondent to protect itself, as regards costs, from a decision against it for an amount less than the applicant's claim. In those circumstances a submission may be made for a costs order in its favour as from the date of the offer or when the offer closed, on the basis that if the applicant had accepted the offer there would have been no need to litigate the proceedings past the date when the offer closed.
10. However since an order for indemnity costs is a special costs order, it is desirable in my view and as stated in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority, for the offer specifically to draw to the recipient's attention that the offer or will, if the offer is not accepted and a better result obtained, make an application for indemnity costs based on the refusal to accept the offer.
11. Having regard to the fact that if the offer was accepted the applicant was at risk of a substantial money order against him in circumstances where he had foregone the opportunity to make a claim against the respondent I do not consider that it was unreasonable for the applicant to have rejected the offer by failing to accept it. If I am wrong about that I would not in any event make an order for indemnity costs in favour of the respondent because of the failure of the 18 May 2017 letter specifically to foreshadow an application for indemnity costs.
12. Finally, no party submitted that this costs application could not be adequately dealt with on the papers and I am satisfied that they can be adequately determined on the papers and without a hearing. Accordingly, an order will be made under section 50(2) of the Act dispensing with a hearing.
13. In the exercise of my discretion under Rule 38 of the Civil and Administrative Tribunal Rules for the reasons provided, I will make an order that the applicant must pay the respondent's costs of and incidental to these proceedings on the ordinary basis, such costs if not agreed to 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.

Civil and Administrative Tribunal of New South Wales

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: 25 September 2018