Washington Gray v Johannes Toroian & Ors [2003] NSWSC 763 | Case summary

JUDGMENT 1 MASTER: The plaintiff is a builder. The first defendants are the owners of property at Oxford Falls. The parties entered into a contract for the building of two houses on the property. For purposes of convenience, the houses have been referred to as house 1 and house 2. 2 Disputes arose between the parties and in March 2000 the plaintiff brought proceedings (there were two applications, one in respect of each house) in the Consumer, Trader and Tenancy Tribunal (the Tribunal). Each of the applications was defended and in each the first defendants responded with a Cross-Claim. Issues of defective work were raised and a claim for liquidated damages was made. 3 The first defendants were legally represented throughout the proceedings. The plaintiff was so represented for part thereof. 4 The proceedings have had a long history and they came before the Tribunal on a number of occasions. It suffices for present purposes just to mention some of those occasions. On 22 August 2000, after 3½ hours, a partial agreement was reached and directions were made. The parties were encouraged to continue settlement discussions. On 31 January 2001, after 3 hours, orders were made after agreement. Further agreement was reached on 30 May 2001. However, the Tribunal considered that such agreement was too uncertain. Further agreement was reached on 30 August 2001 after 2 hours. The parties agreed as to the work to be rectified and that if the work was not rectified the experts were to agree upon the value of that work. The work was not carried out and the experts reached agreement that the sum of $7,250 should be a credit in favour of the first defendants. A final hearing took place on 15 November 2002. Largely, this hearing dealt with the Cross-Claims of the first defendants (which had been amended on 11 April 2002 to add a claim for diminution in value). 5 The Tribunal has produced written Reasons for Decision. The Determination was in the following terms:- " DETERMINATION On all the evidence adduced and all its findings thereon and for the reasons given the Tribunal holds that: 1. The respondents Johannes & Rose Toroian shall pay the sum of five thousand and eighty dollars and eighty nine cents ($5,080.89) to the applicant Washington Gray Pty Ltd 2. The Applicant Washington Gray Pty Ltd shall pay the sum of twelve thousand eight hundred and fifty dollars ($12,850.00) to the respondents Johannes & Rose Toroian 3. The above two orders are to be set-off against each other so that the applicant Washington Gray Pty Ltd shall pay the sum of seven thousand seven hundred and sixty nine dollars and eleven cents ($7,769.11) to the respondents Johannes & Rose Toroian. 4. The applicant shall pay all of the respondents legal costs and the costs of their experts' consultancy fees as agreed or as assessed." 6 The plaintiff brings these proceedings by way of appeal pursuant to s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (the Act). The appeal is maintained only in respect of the order made as to costs. 7 On the question of costs, the Tribunal said:- "The Tribunal finds that under the legislation it has an obligation to exercise its discretion to decide whether the circumstances of the case justify an award of costs being made. The Tribunal is satisfied that on all the evidence presented that: (a) The applicant building contractor, in the course of building these two houses committed numerous breaches of the Home Building Act , S18B implied warranties that work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications and that the work be done with due diligence in the stipulated time. (b) The applicant has been slow and at time (sic) quite recalcitrant in carrying out and competing rectification works in compliance with the Tribunal's interim orders. (b)(sic)The respondents have established a just claim for an award of costs. Costs which may be awarded include both costs of or incidental to proceedings in the Tribunal, and the costs of or incidental to the application. The Tribunal is sensitive both to the distinction between an award of costs on an ordinary party and party basis and an award of costs on an indemnity basis and the guiding general principle enunciated in Ohn v Walton that costs must, above all, be just and reasonable. (c) The Tribunal has decided that it is fair and equitable, in all the circumstances of these proceedings to order that the applicant shall pay all of the respondents legal costs and the costs of their experts' consultancy fees as agreed or as assessed." 8 Section 67 enables an appeal to be brought where the Tribunal decides a question with respect to a matter of law. The scope of an appeal that may be brought under this provision was given some consideration in Eather & Anor v Rawson Homes & Anor [2003] NSWSC 439. 9 At the commencement of the hearing, the grounds of appeal relied on by the plaintiff were those set forth in the Amended Supplementary Notice of Appeal filed in court on 12 August 2003. During the course of the hearing the new ground which appears in paragraph 6 thereof was abandoned. 10 In support of the appeal, counsel for the plaintiff has prepared a written outline of submissions together with a chronology. The written material was supplemented by detailed oral submissions. 11 By way of general comment I will at this stage observe that I have carefully considered the grounds of appeal and the submissions made in support of them. I am not satisfied that any of the grounds that were argued have been made out. 12 Before proceeding further, I should digress to observe that this was yet another one of those cases where the task of the court and the parties was made more difficult by reason of a lack of transcript. A considerable time was thrown away pursuing disputes relating to what transpired during the course of the various hearings. 13 I should also observe that, these days, it seems to be disturbingly a frequent occurrence, that appeals are launched in respect of questions of costs only. In the present case, the costs are said to be of a large order (about $100,000). 14 The Reasons for Decision are both lengthy and detailed. They contain a comprehensive narrative of the proceedings leading up to the final hearing in November 2002. Up to that time, the court had at least largely been concerned with questions of rectification of defective work in respect of which the plaintiff maintained a denial of liability. Agreements were made as to performance of defective work. Orders were made as to the performance of such work. The plaintiff failed to comply with both the agreements and orders made against it. Between 11 September 2002 (when the Tribunal issued notice of final hearing) and 15 November 2002 the experts reached the agreement which determined the value of the defective work. This was said to then enable the first defendants to quantify their diminution claim. 15 All claims were heard together. The reasons identify the disputes that were resolved on 15 November 2002. In relation to both houses 1 and 2 the plaintiff made claims under various invoices. Some of these invoices were disputed by the first defendants and it made a claim for credits. The first defendants also claimed for liquidated damages and for diminution in value. The reasons also refer to evidence adduced and findings made. 16 In respect of the disputed invoice claims, the first defendants were successful in being allowed certain credits. They had success in respect of the claim for liquidated damages. They had success in the claim for diminution in value. The plaintiff was unsuccessful on a claim for interest. 17 Section 53 of the Act is the statutory provision that deals with costs. Primarily, it provides that subject to the section and the regulations, the parties are to pay their own costs. It enables the Tribunal, in accordance with the regulations, to award costs in relation to any proceedings. 18 The relevant regulations are to the found in cl 20 of the Consumer, Trader and Tenancy Tribunal Regulation 2002. 19 It was common ground that cl 20 (4) had application to the proceedings. The amount claimed or in dispute was more than $25,000. In such a case, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit. 20 It is common ground that the Tribunal had a discretionary power to award costs. It is a power to award costs in such circumstances as the Tribunal thinks fit. The exercise of the discretion is not trammelled by any other provisions in the regulations. 21 I shall briefly deal with certain of the arguments that were stressed during oral submissions. In so dealing with those arguments, it is not intended to be exhaustive. 22 It is not disputed that there were breaches of the Home Building Act 1989. In my view, the finding made concerning such breaches was indisputable. There has been a major attack on the finding that the plaintiff had been slow and at times quite reluctant to carry out and complete rectification works in compliance with interim orders. This was a finding of fact and there was material before the Tribunal to support the finding. Indeed, there was ample material to support it. The Tribunal was entitled to take the view that the first defendants were the successful party in the proceedings. It is not disputed that this is a circumstance to which regard should have been had. The Tribunal was entitled to take the view that the proceedings had been protracted by the conduct of the plaintiff and that this conduct had brought about the incurring of the large costs and fees which the plaintiff is now liable to pay. I am not satisfied that any irrelevant consideration was taken into account. 23 It is said that the Tribunal failed to take into account the plaintiff's participation in the efforts made by the Tribunal to encourage the parties to resolve issues by agreement. In my view, the Tribunal did take these matters into account. I should add that whilst there was participation, the failure of the plaintiff to inter alia perform agreements frustrated the efforts of the Tribunal and added to the costs of the proceedings. 24 It was also said that the Tribunal failed to identify the evidence relied on in making the findings on the costs question. It was also said that the reasons were in breach of s 49 (3) (c) in that they did not refer to the evidence or other material on which the findings of fact were based. I was not addressed on the consequences that may flow from any breach of such provisions. Be that as it may, it seems to me that the lengthy and detailed reasons sufficiently identify the evidence or other material relied on by the Tribunal to make its findings. 25 It was also said that the costs order was perverse or manifestly unreasonable. I do not accept that contention. 26 To the extent that it was argued, I do not accept that there was denial of procedural fairness. Defective work had been an issue until its value had been resolved by the experts. Written submissions were made on the question of costs. The reasons reveal that the conduct of the plaintiff was an issue raised on that question. 27 The hearing of this appeal has proceeded on the assumption that the subject of the appeal had the potential to fall within the ambit of s 67. At the commencement of the hearing, I raised concerns as to that question. It was not subsequently argued by the parties. 28 Because it has not been argued I do not propose to dwell on the matter. It raises questions which are perhaps best left for another day. It suffices to merely repeat the concern I have had as to whether or not a decision on a question of costs can be regarded as the deciding of a question with respect to a matter of law. 29 The plaintiff bears the onus of satisfying the court that the decision appealed against should be disturbed. In my view, that onus has not been discharged. 30 I dismiss the Summons. The plaintiff is to pay the costs of the Summons. The Exhibits may be returned.

Washington Gray v Johannes Toroian & Ors

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Judgment (8 paragraphs)

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Cases Cited (1)