This matter involved appeals by the appellants ("the home owners") against two decisions of a Senior Member in the Consumer and Commercial Division of the Tribunal. By the first decision (in proceedings HB 16/42636) the home owners were ordered to pay the respondent ("the builder") the sum of $40,920 being the final payment due on practical completion under the building contract between the parties. By the second decision (in proceedings HB 17/52751) the builder was directed to carry out certain work to rectify what were described as "drainage issues". In that decision the Senior Member rejected claims by the home owners in respect of water tanks, an air conditioner, the builder's failure to remove a pile of excavation spoil, allegedly defective concrete and a claim for loss of enjoyment of the premises arising from the alleged loss of usable space caused by what the home owners claimed was the incorrect siting of the house.
By their appeal the home owners challenged both the order that they pay the final payment and the dismissal of their claims in respect of water tanks, the air conditioner, the excavation spoil, defective concrete and loss of enjoyment. The home owners made two claims in respect of water tanks. First, they argued that the contract required the supply and installation of two 120,000 litre water tanks and that the builder had supplied only one tank. The home owners' second claim arose from the fact that the tank the builder had installed had a capacity of 111,000 litres rather than 120,000 litres as specified in the contract.
In our principal decision in this matter, delivered on 25 July 2018, we dismissed the appeal against the first decision: Woodward v D J & T L Mellross Pty Ltd [2018] NSWCATAP 179. We upheld the appeal against the second decision insofar as it had declined to award any remedy in respect of the installation of a water tank of less than the contracted capacity, but otherwise dismissed the appeal against the second decision.
We made orders varying the orders made at first instance to require, at the homeowners' election, either the installation of a further tank of at least 10,000 litre capacity or payment by the builder to the home owners of the amount of $1,320 being, on the evidence, the difference in price between the 111,000 litre tank installed by the builder and the next largest standard size water tank.
At the conclusion of our decision we addressed the question of costs in the following terms (at [89]-[91]):
"[89] … We have allowed the appeal in part. Neither party was legally represented at the appeal hearing and neither party made an application for costs. As this is an appeal from the Consumer and Commercial Division of the Tribunal and the amount in issue both at first instance and on appeal was greater than $30,000, by virtue of rules 38 and 38A of the Civil and Administrative Tribunal Rules, we would not need to find special circumstances before making an award of costs.
[90] As the appeal has succeeded in one respect but was otherwise dismissed we would be minded not to award costs in relation to the appeal to either party. However we will give either party an opportunity to make an application for costs of the appeal and provide an opportunity, if such an application is made, for the other side to respond.
[91] If neither party makes such an application there will be no order as to costs.
We made orders to give effect to that part of our reasons as follows:
(6) Either party may file written submissions within 14 days seeking an order in relation to the costs of the appeal.
(7) If either party files submissions in accordance with order (6), the other party may file submissions in response within a further 14 days.
(8) Any submissions filed in accordance with orders (6) and (7) should address whether the question of costs may be determined on the papers and without a hearing pursuant to s50(2) of the Civil and Administrative Tribunal Act.
(9) If no submissions are filed in accordance with orders (6) and (7), there will be no order in relation to the costs of the appeal.
On 7 August 2018 the home owners filed a one page submission seeking an order that the builder pay their costs which they quantified in the sum of $999 being $414 filing fee, $405 for accommodation and parking and $180 fuel costs for travel to the hearings.
The home owners did not proffer any reasons why they should be awarded the costs of the appeal. We infer that the home owners seek costs on the basis that they were successful in the appeal.
The builder filed submissions in response on 13 August 2018. The builder submitted that the total value of the claims made by the home owners on the appeal exceeded $78,000 and that all claims had been dismissed save for a work order "which totals $1,320". The builder submitted:
"On that basis the Appellants have failed to successfully prosecute their appeal and should not be entitled to an award for costs."
In their respective submissions both parties agreed that the Appeal Panel should determine the question of costs on the papers and without a hearing. Pursuant to s 50 of the Civil and Administrative Tribunal Act 2013 (NSW) which relevantly provides:
"(2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal.
(3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first:
(a) afforded the parties an opportunity to make submissions about the proposed order, and
(b) taken any such submissions into account."
We are satisfied that the issues for determination can be adequately determined in the absence of the parties by considering the parties' written submissions and accordingly we make an order pursuant to s 50(2) dispensing with a hearing.
[2]
Consideration
Section 60 of the Civil and Administrative Tribunal Act provides:
60 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 unreaso0nably 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.
Rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 provide:
38 Costs in Consumer and Commercial Division of the Tribunal
(1) 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.
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.
As we noted in the principal decision at [89], by reason of the fact that the amount in issue both at first instance and on the appeal exceeded $30,000, we do not need to find special circumstances before making an order for costs in this appeal.
In Nguyen v Perpetual Trustee Company Ltd [2015] NSWCATAP 264 an Appeal Panel of this Tribunal held, at [95]:
While the discretion to award costs under rule 38 is unfettered, in our view costs should generally "follow the event", recognising however that factors may exist that militate against the successful party recovering all of its costs: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [134]. Fairness dictates that the unsuccessful party typically bears the liability for costs unless it is demonstrated that some other order is appropriate: Currabubula and Paola v State Bank NSW. Currabubula v State Bank NSW [2000] NSWSC 232. We find no reason to depart from the "usual rule" in this case.
In Sabah Yazgi v Permanent Custodians (No 2) [2007] NSWCA 306 the NSW Court of Appeal held, at [24]:
"It may be appropriate to order that a successful party be deprived of costs or a portion of the costs if the matters upon which that party is unsuccessful took up a significant part of the trial, either by way of evidence or argument. This proposition is well established and does not require any discussion of the caselaw, which is conveniently contained in the annotations to r 42.1 in Ritchie's Uniform Civil Procedure (NSW): paras 42.1.5; 42.1.10; 42.1.15."
The following propositions are set out paragraph 42.1.15 of Ritchie's Uniform Civil Procedure (NSW) with numerous authorities cited in support:
1. A court should ordinarily award the costs of the proceedings to a successful party without attempting to differentiate between the issues on which the party succeeded and any issues on which the party failed.
2. The 'general rule' that costs follow the event does not limit the [court or tribunal's discretion which] must be exercised with due regard to the particular circumstances, and an awareness that the 'general rule' is capable of unfair operation and is not always appropriate.
3. Separate costs orders may be made in relation to issues that a party unreasonably pursued. They may also be made in relation to issues where a party behaved improperly in the conduct of the proceedings.
4. The discretion to make separate costs orders is not limited to instances of unreasonable behaviour or improper conduct.
5. Separate costs orders may be made where an otherwise unsuccessful party failed on matters that were either the dominant issue in the contest, or which were clearly separable from the matters on which the party succeeded.
In this case the home owners clearly failed on the dominant issues in the appeal, both in respect of the order that the home owners make the final payment to the builder and in respect of the dismissal of the home owners' claims in respect of: the second water tank, the air conditioner, the excavation spoil, the concrete and the loss of enjoyment. The issue on which the home owners did succeed was minor in comparison to the other issues and took up very little time at the hearing of the appeal.
The appeal hearing extended over two half days. The first half day hearing was taken up with the home owners' challenge to the order in respect of the final payment and the issue of the excavation spoil. The remaining issues were dealt with on the second half day. The issue in respect of the capacity of the water tank which was installed was not whether the installation of a 111,000 litre tank was a breach of the contract but rather whether the home owners should have a remedy in respect of the undisputed breach. That issue was clearly separable from the other issues raised by the appeal.
In our view, the home owners having failed on every issue except one minor separable issue, the just result is that there should be no order as to costs. It is not irrelevant to note that, had the home owners appealed on the one issue on which they succeeded and no other issues, the amount in dispute would not have exceeded $30,000 and the home owners would have been required to establish that there were special circumstances in order to obtain an order for costs.
Although not necessary to our decision, we also note, in passing, that there is authority that travel and accommodation costs incurred by a party in attending a hearing of the Tribunal are not "costs" within the meaning of s 60 of the Civil and Administrative Tribunal Act: Profitability Consulting Pty Ltd v Thorpe [2018] NSWCATAP 41. Accordingly, even if we had been minded to make an order for costs, we could only have ordered the builder to pay the home owners the amount of the filing fee and not the amounts claimed by the home owners in respect of travel and accommodation costs.
[3]
orders
The orders of the Appeal Panel are as follows:
1. The Appellants' application for an order for the costs of the appeal is refused.
[4]
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: 28 August 2018