The respondent's costs applications are each pursuant to s 60(2) of the NCAT Act. The determination of this issue involves answering the following two questions:
1. whether there are special circumstances warranting an award of costs in favour of the respondent in respect of which the respondent relies on s 60(3)(b), (f) and (g) of the NCAT Act;
2. if so, whether the discretion should be exercised to award costs.
For proceedings HB 21/45097 there is a threshold question of whether the respondent's costs application has been made out of time.
[2]
Whitehouse v Paradise Pools & Solar Pty Ltd [2022] NSWCATCD 161 | Case summary | Zoe
Whether the respondent's costs application has been made out of time
I reject the applicants' submission that the respondent's costs application has been made out of time for the following reasons:
1. it was not an application within s 39 of the NCAT Act as the HB Act does not provides for costs of a person making a building claim to be brought to the attention of the Tribunal for a decision, and so r 23(3) of the NCAT Rules does not apply;
2. the Tribunal was not functus officio for the reasons set out in Shoal Bay Developments at [54]-[61]. Section 61 of the NCAT Act does not have the effect that subsequent to the 7 April Tribunal decision the Tribunal could not entertain the respondent's costs application.
[3]
Whether there are special circumstances warranting an award of costs in favour of the respondent
[4]
Section 60(3)(b) of the NCAT Act
I am not satisfied that the applicants were responsible for prolonging unreasonably the time taken to complete the proceedings. While there is no explanation by the applicants as to why there was no response to the 25 February 2022 email, the 8 March 2022 at 8.31am email, the 14 March 2022 email, the 16 March 2022 email, and the 22 March 2022 email until the 1 April 2022 email, the period that elapsed of 35 days was relatively short. Further, in circumstances where as set out in the 22 March 2022 email the respondent was aware that the applicants were relying on the McElroy report, there was no explanation by the respondent as to why it delayed in giving notice of an inspection by its expert until the 23 March 2022 email.
[5]
Section 60(3)(f) of the NCAT Act
I note the finding of the Tribunal in the 8 June 2022 Tribunal decision at [13] that the applicants and the applicants' solicitors failed to comply with the duty imposed upon them by s 36(3) of the NCAT Act.
[6]
Section 60(3)(g) of the NCAT Act
I am not satisfied that the matters relied upon by the respondent should be regarded as special circumstances.
[7]
Conclusion
Having regard to the finding of the Tribunal in the 8 June 2022 Tribunal decision at [13], I am satisfied that there are special circumstances warranting an award of costs in favour of the respondent within s 60(2) of the NCAT Act.
[8]
If so, whether the discretion should be exercised to award costs
I am not satisfied that I should exercise the discretion to award costs in favour of the respondent because the principles governing an application for costs in a case which has been resolved without a hearing on the merits in Nichols at [25] are applicable. It follows that pursuant to s 60(1) of the NCAT Act the applicants and the respondent are to pay their own costs of the proceedings.
[9]
A postscript
I am satisfied that pursuant to s 35 when read with the definitions of procedural rules and Tribunal rules in s 4 of the NCAT Act r 38(2)(b) of the NCAT Rules applies to the proceedings because the amount claimed by the applicants exceeded $30,000, and the position of each party paying their own costs specified in s 60(1) of the NCAT Act is not applicable to the proceedings.
Even if the respondent's costs application had been made under r 38(2)(b) of the NCAT Rules, I would not have applied the principles in Vella (No 3) at [28]-[30]. On the contrary, I would have dismissed the application by reason that the principles governing an application for costs in a case which has been resolved without a hearing on the merits in Nichols at [25] are applicable.
[10]
Whether there are special circumstances warranting an award of costs in favour of the respondent
[11]
Section 60(3)(b) of the NCAT Act
I am not satisfied that the applicants were responsible for prolonging unreasonably the time taken to complete the proceedings. There is no evidence of any delay by the applicants in prosecuting proceedings HB 22/20505.
[12]
Section 60(3)(f) of the NCAT Act
I am not satisfied that the applicants that the applicants and the applicants' solicitors refused or failed to comply with the duty imposed upon them by s 36(3) of the NCAT Act in prosecuting proceedings HB 22/20505.
[13]
Section 60(3)(g) of the NCAT Act
I am satisfied that proceedings HB 22/20505 had no prospects of success. As it clear from s 55(2) of the NCAT Act the reinstatement of proceedings is limited to circumstances where there has been a dismissal of the proceedings pursuant to s 55(1)(c) of the NCAT Act. As set out in the 7 April Tribunal decision, the dismissal of the proceedings was based on the factors in both s 55(1)(c) and (d) of the NCAT Act. In these circumstances, there was no possibility of reinstatement of the proceedings.
However, I am not satisfied that the applicants' application for renewal of proceedings caused great psychological harm to Mr Stanfield. There is no evidence in the form of a medical report that Mr Stanfield suffers from great psychological harm and its cause. Even if the respondent had adduced such evidence of great psychological harm to Mr Stanfield being caused by the applicants' application for renewal of proceedings, I would not have considered this evidence to be relevant to the respondent's costs application.
[14]
Conclusion
Having regard to the finding of the circumstances, I am satisfied that there are special circumstances warranting an award of costs in favour of the respondent within s 60(2) of the NCAT Act.
[15]
If so, whether the discretion should be exercised to award costs
I am satisfied that I should exercise the discretion under s 60(2) of the NCAT Act to award costs in favour of the respondent.
[16]
Orders
I make the following orders:
1. the application of the respondent for an order that the applicants are to pay its costs of proceedings HB 21/45097 is dismissed;
2. the applicants and the respondent are to pay their own costs of proceedings HB 21/45097;
3. the applicants are to pay the costs of the respondent of proceedings HB 22/20505 as agreed or assessed.
[17]
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
[18]
Amendments
20 September 2023 - Formatting amendments.
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: 20 September 2023
Whether the Tribunal becomes functus officio when it does not deal with costs at the time of making a decision
In Shoal Bay Developments Pty Ltd v Community Association DP 270468 [2020] NSWCATAP 115 (Shoal Bay Developments) at [54]-[61] the Appeal Panel considered the question of whether the Tribunal becomes functus officio when it does not deal with costs at the time of making a decision:
"[54] The Lot Owners submitted in their submissions in chief that since section 61 of the CAT Act provides that a "decision" (as defined in section 5(1)(a)) "takes effect on the date on which it is given", the jurisdiction of the Tribunal was "exhausted" from the date it dismissed the proceedings on 8 November 2019 under section 55(1)(a), after the Lot Owners withdrew their application.
[55] We accept that an order made under section 55(1)(a) is a "decision" coming within the definition of section 5(1)(a) of the CAT Act. We do not agree that such a decision by reason of section 61 of the CAT Act necessarily renders a decision-maker functus. Section 61 provides no more than the decision has effect from the date on which it is made. Section 61 does not seek to remove or limit the jurisdiction or powers of the Tribunal consequent upon the making of a "decision" and only concerns itself with when such a decision takes effect.
[56] Further, even though the dismissal takes "effect" at the time the decision is made, section 60 preserves the Tribunal's power to award costs. The power to award costs properly only arises when a proceeding is determined which may include a dismissal. This is clear from the factors for a Tribunal's consideration in section 60(3) of the CAT Act. These factors can only be properly ascertained and considered in the Tribunal's exercise of its discretion with respect to costs after a decision is made, including an order dismissing proceedings.
[57] In our opinion, Section 61 should not be taken to limit or curtail the power of the Tribunal to award costs under section 60 consequent upon an order dismissing a proceeding under section 55(1)(a) of the CAT Act. To do so would distort and obstruct the sensible conduct of proceedings in the Tribunal.
[58] Further, there is nothing in the CAT Act to suggest that the legislature intended limiting the Tribunal's powers in the manner contended by the Lot Owners. Section 61 does not expressly or implicitly purport to prevent a Tribunal from dealing with costs of proceedings consequent upon a withdrawal and a dismissal of proceedings. As always, when applying the principles of statutory construction, regard must be had to the majority judgment in Project Blue Sky Inc v Australian Broadcasting Authority I1998] HCA 28; (1998) 194 CLR 355. As stated by McHugh, Gummow, Kirby and Hayne JJ at [69], (omitting citations and endnotes):
"The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed."
[59] In The Owners Corporation of Strata Plan 4521 v Zouk & Anor [2007] NSWCA 23 Ipp JA (with whom Beazley and Bryson JJA agreed), considered section 192 of the former Strata Schemes Management Act 1996 (NSW) and held (at [28]-[29]):
"28. Section 192 does not require an order for payment of costs to be made contemporaneously with the dismissal of the appeal. The power is to make an order for the payment of costs "in relation" to an order dismissing an appeal. Logically, such an order can only be made after an order has been made dismissing the appeal.
"29. Section 192 does not provide expressly that a costs order may only be made "when" ... the appeal is dismissed... s 92 circumscribes the Tribunal's power to order costs. But neither such a policy nor the words of s 192 supports a construction that limits the time at which the Tribunal is empowered to make costs orders. Moreover, there is no practical reason or policy that is derived from the general interests of justice to limit the Tribunal's power in this regard."
[60] As always, these matters depend on the nature and effect of the decision that has been made.
[61] There is no tension or inconsistency in the operation of section 55 in dismissing the proceedings and section 60 which empowers the Tribunal to award costs "in relation to proceedings before it". There is no temporal limitation requiring a decision with respect to costs to be made before a proceeding is dismissed. These were proceedings that were "before" the Tribunal. The costs orders were made "in relation to" those proceedings consequent upon the Tribunal dismissing the application. We do not accept the Lot Owner's submission that the proceeding has to be "before it" (ie the Tribunal) in the sense that this must be prior to the proceedings being dismissed."
Costs under r 38(2) of the NCAT Rules
The general principles concerning the awarding of costs were considered by the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 (Vella (No 3)) at [28]-[30]:
"[28] Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9].
[29] Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.
[30] In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion:
(1) the starting point is that a successful party should be entitled to an order for costs in his favour;
(2) an award of costs is by way of an indemnity and not as punishment;
(3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party;
(4) the factors to be considered are not to be confined as to do so would constrain the general discretion;
(5) the relative success of the parties on different issues and the time taken to determine them may be relevant;
(6) the nature of the proceedings is relevant;
(7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious."
General principles
"Special circumstances" in s 60(2) of the NCAT Act are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].
In considering whether special circumstances exist for the purposes of s 60(2) of the NCAT Act:
1. each case will depend upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [27];
2. the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48];
3. mere success (or failure) of an application does not give rise to special circumstances: The Owners - Strata Plan 5319 v Price [2020] NSWCATAP 245 (Price) at [46];
4. where special circumstances are found to exist, the Tribunal has a discretion to exercise in deciding what, if any, order should be made. Relevant to the exercise of that discretion are those facts upon which the finding of special circumstances was based. However, those findings do not constitute the whole of the relevant matters to be considered in deciding what, if any, order for costs should be made. Rather, the principles applicable to awarding costs generally must also be taken into account: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24].
Proceedings without a hearing on the merits
In Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 (Nichols) Payne JA at [25] (Meagher JA at [13] agreeing) considered the principles governing an application for costs in a case which has been resolved without a hearing on the merits:
"[25] The relevant principles governing an application for costs in a case which has been resolved without a hearing on the merits were summarised by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6:
"In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs.
Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, [6] the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission [7] where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases." (footnotes omitted)
The circumstances set out in Nichols at [25] in which an award of costs is made in a case which has been resolved without a hearing on the merits may constitute special circumstances within s 60 of the NCAT Act: Price at [39]-[44].
In ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 (ONE.TEL) at [6] Burchett J observed:
"[6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party."
The principles in ONE.TEL at [6] have been applied in the Tribunal: Knox v Bollen; Bollen v Knox [2018] NSWCATAP 106 at [47].