Walsh v Sandeberg

Reasons for Decision

The Appeal Panel determined the Appeal in these proceedings on 23 February 2017.
The appeal was disposed of by orders that the appellant's application for an extension of time to apply for leave to appeal against the Tribunal's interlocutory decision given on 20 January 2016 was refused. Leave to Appeal on Ground 1 was refused and the Appeal was dismissed on all other grounds.
The Appeal Panel also made orders concerning the filing of written submissions in the event that there was an application for costs.
The respondents have filed submissions seeking costs orders in their favour. The appellant has not filed costs submissions as he was entitled to do.
The respondents seek orders that the appellant pay their costs of, and incidental to, the appeal: 1. On the ordinary basis up until 5 July 2016 and on an indemnity basis thereafter; or 2. Alternatively on the ordinary basis.

Costs jurisdiction

Section 60 of the Civil and Administrative Tribunal Act 2013 (the 'Act') provides that: 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. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs 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) or on any other basis. (5) 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.
Rule 38A of the Civil and Administrative Tribunal Rules 2014 states: 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.
Part 4 of the Act deals with Practice and Procedure. Section 60 of the Act is in Part 4. Section 35 of the Act which is also in Part 4 states: Each of the provisions of this Part is subject to enabling legislation and the procedural rules.
The effect of Section 35 of the Act makes it clear, in our view, that section 60 of the Act is subject to Rule 38A.
The appeal in these proceedings was lodged on 28 June 2016. The procedural rule which applied to the proceedings at first instance was Rule 38 of the Civil and Administrative Tribunal Rules 2014 which states: 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.'
The proceedings at first instance were brought under the Home Building Act 1989. Pursuant to section 3 of Schedule 4 of the Act, proceedings under the Home Building Act are allocated to the Commercial and Consumer Division of the Tribunal. The amount claimed by the appellant in the proceedings at first instance was $98,848.00.
By reason of the matters stated in the preceding paragraph, Rule 38 applied to the proceedings at first instance. The provisions of Rule 38 are different to the content of section 60 of the Act. By reason of this fact, pursuant to Rule 38A(2) we must apply Rule 38 when deciding whether to award costs in relation to this Appeal.
By reason of the foregoing the appeal Panel is not constrained by the need to find special circumstances when making a costs order in this Appeal. The position is as stated by the Appeal Panel in Thompson v Chapman [2016] NSWCATAP 6 at [76]: In short, the proper exercise of the discretion requires the Tribunal to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary or capricious: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at [22] and McHugh J at 65.
The respondents were the successful party in the Appeal proceedings. We accept that as stated in Thompson v Chapman the starting position should be that they are entitled to recover their costs of, and incidental to, the Appeal proceedings in circumstances where there has been no submission that there is disentitling conduct on their part to cause the discretion to award costs in their favour not to be exercised.
However the respondents seek a costs order in their favour on an indemnity basis. Their indemnity costs application rests upon their submission that the appellant unreasonably refused to accept a 'Calderbank' offer dated 5 July 2016 made on their behalf.
The offer made by the respondents was that the Appeal be settled on the following terms: 1. the appellant pay them $45,000.00 in lieu of the orders made by the Tribunal Member at first instance in settlement of the proceedings; 2. the parties abide by any costs decision made in the proceedings at first instance; and 3. each party should pay their own costs of the Appeal.
As at 5 July 2016 the effect of the orders made by the Tribunal Member at first instance was as stated at [6] of the Appeal decision: 'The Tribunal Member found the owners liable to the builder in the sum of $75,804.75 in the builder's application. In the owners' application the Tribunal Member found in their favour in the sum of $132,283.80. After setting off the amount found in favour of the builder against the amount found in favour of the owners, on 31 May 2016 the Tribunal Member found in favour of the owners in the sum of $56,479.05 and dismissed the builder's application.'
The effect of the offer was that the appellant would receive a discount of $11,479.05 on the decision of the Tribunal Member if he accepted the offer.
The making of a 'Calderbank Offer' that is bettered by the offeror does not in itself entitle the offeror to an order for indemnity costs. That was decided in Jones v Bradley (No. 2) [2003] NSWCA 258.
We refer to the recent Court of Appeal decision in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344. In that case Basten JA identified two questions which are relevant to a 'Calderbank' offer and a claim for indemnity costs. They are whether: there was a genuine offer of compromise, and it was unreasonable for the offeree not to accept it.
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]: '(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.'
We accept that the respondents' Calderbank offer was genuine. It allowed the appellant a discount on the amount he was required to pay under the Tribunal's order then in force. Their offer regarding the disposition of costs at first instance and in connection with the Appeal proceedings was we find, fair. The offer was made early in the appeal proceedings and thereby offered the appellant the opportunity to avoid incurring substantial legal fees in the Appeal. In addition the offer was open for 28 days which we consider to be a reasonable and adequate period of time for the appellant to consider his position as regards the Appeal.
In addition the respondents' offer was admirably clear as to its terms and made it plain that if the offer was not accepted the respondents reserved the right to make an application for indemnity costs.
The question is whether the appellant was unreasonable in rejecting the offer as submitted by the respondents.
In considering the appellant's prospects of success as at 5 July 2016 we are not persuaded that his case was unarguable or had no prospects of success. While a number of his grounds of Appeal may be seen in that light, his main ground of Appeal regarding the Tribunal Member's finding on the damages arising from his failure to construct the slab without the rebate shown on the contract drawings was in our view arguable and also, generally speaking, the main issue in the Appeal. In addition, this ground of Appeal although unsuccessful, was based on the decision of the Court of Appeal in Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2006] NSW CA 361.
As a result we find that the appellant's rejection of the respondents' Calderbank offer was not unreasonable.

At a glance

Court

Decision date

Before

Source

Judgment (5 paragraphs)

Parties

Cases Cited (5)