Xpertise Construction Pty Ltd v Orantia

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: NCAT Act, s 80(2).
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast) the Appeal Panel set out at [13] listed of questions of law as: (1) Whether there has been a failure to provide proper reasons… (2) Whether the Tribunal identified the wrong issue or asked the wrong question… (3) Whether a wrong principle of law had been applied… (4) Whether there was a failure to afford procedural fairness… (5) Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations… (6) Whether the Tribunal took into account an irrelevant consideration… (7) Whether there was no evidence to support a finding of fact… (8) Whether the decision is so unreasonable that no reasonable decision-maker would make it…
3. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in s 12(1) of Sch 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: (a) the decision of the Tribunal under appeal was not fair and equitable; or (b) the decision of the Tribunal under appeal was against the weight of evidence; or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
4. In Collins v Urban [2014] NSWCATAP 17 (Collins), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
5. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
6. In Collins, at [84], the Appeal Panel stated that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed…
7. In the NCAT Act, s 41 provides that the Tribunal may grant an extension of time. The relevant considerations as to the exercise of the discretion were set out in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 (Jackson) at [22] and they are as follows: (1) Is there proof that strict compliance with the rules will work an injustice on the applicant? (2) In the context of a pending appeal, the expiration period for the appeal gives a vested right to retain the decision in question with the consequence that the time for appealing should not be extended unless the proposed appeal has prospects of success. (3) It will usually be necessary to consider: (a) the length of the delay, (b) the reason(s) for the delay, (c) the applicant's prospects of success, i.e. whether there is a fairly arguable case, and (d) the extent of any prejudice suffered by the opponents. (4) If the explanation for the delay is less than satisfactory and/or if the opponent has a substantial case of prejudice, it may be necessary for the applicant to show substantial merit, not just that it is fairly arguable.

Documents

1. The appellants have lodged the Notice of Appeal, received on 20 October 2022, and documents received on 15 December 2022. The respondent has lodged a Reply to Appeal, received on 22 November 2022, and documents received on 9 January 2023. At the outset of the hearing of the appeal, it was confirmed that those were the documents upon which the parties relied and that each party has received a copy of the other party's documents.

Notice of Appeal

1. Orders were made and reasons published on 7 July 2022. Since the effect of r 25 of the Civil and Administrative Tribunal Rules 2014 is that the Notice of Appeal should be lodged within 28 days, that provision required the Notice of Appeal to be lodged on or before 4 August 2022 if the orders were notified to the appellants on date of publication. In fact, the Notice of Appeal was received by the Tribunal on 20 October 2022. As a result, the appeal appears to be out of time by 77 days which is 11 weeks. In other words, the appellants took 15 weeks to do what should have been done in 4 weeks.

Grounds of Appeal

1. In the Notice of Appeal, in addition to a claim that there was an error on a question of law, the appellants included requests for leave to appeal on the grounds that the decision was not fair and equitable, was against the weight of the evidence and that significant new evidence was now available that was not reasonably available at the time of the hearing.
2. The grounds of appeal, as set out in the Notice of Appeal, are quoted below: 1. the decision did not claim $161,548.28 in the proceedings HB 22/08184 2. the decision was not fair & equitable 3. tribunal made an error of legal principle 4. tribunal made an error of fact 5. tribunal took into account an irrelevant matter 6. tribunal arrived at an unreasonable and unjust decision
3. Similar grounds were specified in support of the subsidiary matters required to be established for grant of leave to appeal but there it was sought to be made plain that the appellants had made no claim in the proceedings for $161,548.28. In summary, the appellants sought to contend that the Tribunal made an error in finding that the respondent did not have to pay $161,545.28 on the primary ground that the appellants did not make any claim for that sum in the proceedings and neither party led any evidence in relation to such a claim.
4. In support of the claim that there was significant new evidence now available that was not reasonably available at the time of the hearing, the appellants wished to adduce evidence in support of a claim for that amount and that the evidence was not available because the appellants did not claim that amount.

Appellants' oral submissions

1. Mr Livers indicated that he relied on the submissions which had been filed. On the question of the Notice of Appeal being lodged out of time he referred to Jackson. The written material on which he relied contained a signed witness statement dated 28 November 2022 by Mr Hussein, who was one of the appellants personally, and the sole director of the other appellant. In that witness statement, Mr Hussein said that the Tribunal's decision was sent to the email address of his business partner on 25 July 2022 and was not given to him by his business partner until 10 August 2022 "and I then had to obtain legal advice which I did on the [blank]". In that respect, 28 days from 10 August would have been 10 September 2022, which was 40 days earlier than the actual date of receipt by the Tribunal of the notice of appeal. The Tribunal decision sent on 25 July 2022 was marked amended (under s 63 of the NCAT Act). The amendment to the orders was to add "immediately" as the time for payment of the $15,000.
2. It was pointed out to Mr Livers during his oral submissions that, with some apparent inconsistency with the witness statement relied upon by the appellants but no criticism of him personally being intended, there had been an application by the appellants to set aside the Tribunal's decision that was signed by Mr Livers on behalf of the appellants and dated 12 July 2022, five days after the Tribunal's orders were originally made and reasons were originally published. In response, Mr Livers said that the appellants' solicitors had been given instructions to lodge the set-aside application but at that point Mr Hussein had not read the decision "word for word".
3. On the topic of the appellants having the opportunity, it seemed, to obtain the benefit of legal advice from Mr Livers within five days after the original decision and reasons, Mr Livers said that advice can be given to clients, but they may not heed the warnings provided.
4. On the absence of participation in the primary proceedings, the appellants' case was that they did not receive notice of the directions or the hearing from their accountant (the relevant notices and orders had apparently been sent to the first appellant's registered office) and Mr Hussein was overseas from 16 March to 17 June 2022.
5. The appellants expressed a desire to pursue a claim for the $161,545.28 which had been demanded in a letter dated 15 February 2022 which had been in evidence in the primary proceedings.
6. It was submitted finally that the respondent would not be prejudiced if there was an extension of time.
7. No submissions were made in reply to the submissions for the respondent.

Respondent's oral submissions

1. Mr Young referred to the orders made at first instance and indicated (as stated earlier) that the amount of $15,000 had been paid in compliance with the first order with the remaining issue being the status of the second order. It was submitted that there were findings that the appellants were not entitled to the amount now claimed, that Mr Hussein was not licensed to do the subject building work and that the question of whether the appellants made a claim was irrelevant because the respondent could and did seek relief from paying an amount under s 48O(1)(b) of the Home Building Act 1989 (NSW) (the HBA). Reference was also made to HBA s 48O(2) which entitles the Tribunal to make an order even if that order is not sought by either party.
2. In short, it was contended that the Tribunal had dealt with the claim which the appellants now expressed a wish to pursue.
3. On the question of whether an extension of time should be granted, it was noted that an application to set aside the first instance decision was lodged within one week of that decision which was contrasted to the claim of Mr Hussein that he did not receive the reasons until 25 July 2022. It was noted that the pivotal questions in relation to an extension of time were (1) whether there was an adequate explanation for the delay, and (2) the merits of the appeal, and that the question of prejudice was only normally given consideration if one or both those matters was of sufficient strength. It was contended that, in this case, there was no adequate explanation for the delay and no legal merit in the appeal. As to prejudice, it was suggested the respondent should not have been subject to this appeal and should not be subjected to a further hearing.

Submissions on costs

1. Mr Young indicated that the respondent sought an order for costs on an indemnity basis from 13 December 2022, 14 days after the 29 November 2022 Calderbank letter that was sent to the solicitor for the appellants. Costs were sought on two bases: first, the contended lack of merit of the appeal which we take to be for the entirety of the costs of the appeal given that issue did not relevantly change; secondly, the Calderbank letter which was marked for identification (MFI 1).
2. No submissions were made in response on the question of the costs of the appeal.

Consideration

1. It is important to note that an appeal to the Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. Likewise, the Tribunal's Guideline 1, Internal Appeals (which can be found on the Tribunal's website) relevantly states: "an appeal is not an opportunity to have a second go at a hearing". The focus of an appeal is the first instance decision and whether the appellant has identified either an error on a question of law or a matter which warrants granting leave to appeal.
2. In the HBA, s 48O sets out the powers of the Tribunal. So far as is relevant to this appeal, that section provides: (1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate: (a) an order that one party to the proceedings pay money to another party … (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person …
3. The application, lodged on 23 February 2022, clearly indicated that the order now challenged was sought and that was also clear from the directions hearing on 15 March 2022 when Mr Hussein was added as a party. An ASIC search revealed Mr Hussein to be the sole director and secretary of the company that was named in the application.
4. It is clear from the reasons published on 7 July 2022, when the orders were made, that there was no attendance or appearance by or for either of the appellants at the first instance hearing and that hearing was found to be able to proceed ex parte since copies of the notice of hearing had been sent to the appellants at the registered office of the company and nothing had been returned.
5. The reasons reveal findings that the contract price was $150,000, that a deposit of $30,000 was sought and paid, and that, together with variations, a total of $181,000 was paid by the respondent. In December 2021, the respondent and his wife raised matters of incomplete and defective work. Shortly thereafter, the building work ceased. It was not until shortly after 12 January 2022 that an invoice for $289,502.93 was sent to the respondent which, after allowing for payments totalling $181,000, alleged an amount of $108,502.32 was owing.
6. Subsequently, a claim was made for a total price of $305,302 which only allowed for payments totalling $179,000. A further, formal letter of demand was later made, dated 15 February 2022, on the letterhead of the first appellant, signed by the second appellant, claiming $161,545.28.
7. There was no evidence of variations or any other basis for any claim for the amounts put forward by the appellants beyond the amount paid by the respondent. That evidence ought to have been led, if it existed, to meet the claim under HBA s 48(1)(a) properly put forward by the respondent.
8. The Tribunal found as follows, at [47]: The basis on which Mr Hussein made those claims is unclear. What is clear, however, is that neither Mr Hussein nor anyone on behalf of [the first respondent] performed any works that could conceivably justify the claims for additional payment demanded in that correspondence. I find that the [respondent] and his wife are not liable on any basis to make any payment in respect thereof.
9. In a written submission, the second appellant contended that the orders and reasons were sent to the wrong address, but they were sent to the address indicated on an ASIC search which means that if the address was incorrect then that was because the appellants did not update their address details with ASIC. He also indicated that he was overseas from 16 March to 17 June in 2022. However, he referred to his business partner which suggests there was someone available to receive documents for the appellants while the second appellant was overseas. There was also no evidence that the second appellant could not be contacted by email by his business partner while he was overseas.
10. As already stated, the documents before us revealed that, on 20 July 2022, the appellants lodged an application to set aside the Tribunal's decision which was signed by their solicitor on 12 July 2022, five days after the date of the primary decision. That set-aside application referred to the orders made on 7 July 2022. The appellants' explanation of delay rings hollow.
11. In the reasons given when that set aside application was dismissed on 24 August 2022, it was noted that the appellants had failed to comply with procedural directions and "at no stage have filed and presented any documents in response to the [respondent's] claim(s)."
12. Simply stated, on the merits of the appeal which is a factor to be considered in the prior issue of leave to extend time to appeal, the appellants have not demonstrated any error on a question of law, nor have they provided a sufficient basis to warrant granting leave to appeal, in respect of the primary decision. The grounds of appeal appear to be entirely unmeritorious.
13. When the Tribunal is weighing up the considerations set out in Jackson, the most important aspects are the explanation of the delay and the prospects of the appeal. If either of those matters is strong, an extension of time is commonly granted. However, in this case, neither of those aspects is strong.
14. By reference to what was said in Jackson, there are three reasons that the time for lodging the Notice of Appeal should not be extended. First, the mere suggestion that the appellants were obtaining legal advice does not adequately explain why it took about 3½ months to lodge an appeal. The appellants were able to lodge a set-aside application on 20 July 2022 that was signed by their solicitor on 12 July 2022 which was only five days after the reasons were published on 7 July 2022. This appears to be contrary to their claim that the notice of appeal was received by Mr Hussein only on 10 August 2022 and renders inadequate the alleged explanation that the time was needed to obtain legal advice. Secondly, as already said, the grounds raised in the appeal are unmeritorious and are not reasonably arguable. Thirdly, on 4 August 2022, when the period for an appeal from the termination order made on 7 July 2022 expired, the owner acquired a right to retain the decision in question and there is no adequate basis to disturb that position.
15. We are not persuaded that the time to appeal should be extended which means that there is no appeal. Even if we were to extend time, there is no basis upon which the appeal could be allowed.

Costs

1. In first instance proceedings, costs are either governed by s 60 of the NCAT Act, in which case it is necessary to demonstrate there are special circumstances warranting an order for costs, or by rule 38, the effect of which is that s 60 does not apply when the amount claimed or in dispute exceeds $30,000. When rule 38 applies, costs follow the event unless there is disentitling conduct on the part of the successful party.
2. The effect of rule 38A of the NCAT Act is that, in relation to costs, the provision which applied at first instance also applies on appeal to the matters that ground the appeal.
3. Here, the amount claimed or in dispute on the appeal clearly exceeded $30,000 with the result that the starting point is that the respondent is entitled to an order for costs. Even if it could be said that s 60 of the NCAT Act now applies, we are satisfied that the appellants made a claim that has no tenable basis in fact or law, which is one of the examples of special circumstances given in s 60, and that there are special circumstances that warrant an order for costs.
4. No order for costs was made at first instance, which is not surprising as the respondent was self-represented. However, with the prospect of a claim for $161,545.28, it is not surprising either that the respondent retained a solicitor or that counsel was briefed.
5. We deal first with the principles governing an award of indemnity costs.
6. In Mendonca v Tonna [2017] NSWCATAP 176, the Appeal Panel set out the principles applicable to awarding of costs on an indemnity basis, at [59]-[60]: 59 Indemnity costs are only awarded in limited circumstances. The discretion to do so must be the subject of careful reasoning (Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354) and caution should be exercised in making such an award Leichhardt Municipal Council v Green [2004] NSWCA 341; Ng v Chong [2005] NSWSC 385 at [13]. 60 Other than in relation to the unreasonable refusal of a genuine offer of settlement, one circumstance in which indemnity costs may be awarded is when a case is commenced or continued where there is no chance of success (Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4]), such as where the claim is "without substance", "groundless", "fanciful or hopeless" or so weak as to be futile, such as where a limitation period is obviously at an end: Hillebarnd v Penrith Council [2000] NSWSC 1058. However, mere weakness of a case will not be sufficient to warrant an exercise of the discretion to award indemnity costs: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534.
7. Whether an order should be made for indemnity costs was also considered in Harrison v Schipp [2001] NSWCA 13 at [132-139]. While there does not appear to be any all-encompassing definition, it appears for an order for costs to be made on an indemnity basis there needs to be a relevant delinquency, some special or unusual feature in the case or some conduct by a party in connection with the litigation which is deserving of criticism.
8. After referring to two unreported decisions which suggested that the categories in which the discretion to award indemnity costs are not closed, in Colgate-Palmolive Pty Ltd v Cussons [1993] FCA 801 at [24] Sheppard J listed circumstances which have been found to warrant an order for indemnity costs: 1. Making an allegation of fraud, knowing it to be false. 2. Misconduct which causes loss of time to the tribunal and the parties. 3. Proceedings being commenced or continued for an ulterior motive. 4. Wilful disregard of known facts or clearly established law. 5. Making allegation which ought never to have been made. 6. The undue prolongation of a case by groundless contentions. 7. An imprudent or unreasonable refusal of an offer of compromise.
9. While each case depends on its own circumstances, the examples just given do assist in the assessment whether the 'line' between costs on the ordinary basis and the indemnity basis has been crossed in this instance.
10. The basis of the application for indemnity costs in this instance is twofold.
11. The first applies to the entirety of the proceedings and is that the appeal had no tenable basis in fact and law. For the reasons already given, we accept that basis.
12. In the event that we are later found to be incorrect in finding indemnity costs for the entire proceedings, we also consider the alternative basis for indemnity costs for only part of the proceedings. That alternative basis is said to have been the unreasonable refusal of the offer of settlement contained in the letter from the respondent's solicitors to the appellants' solicitors dated 29 November 2022.
13. That letter followed the practice established in the UK by the decision in Calderbank v Calderbank [1975] 3 All ER 333 which revealed a strategy employed in Family Court proceedings, as an alternative to paying money into court, of conveying an offer of settlement in writing to the other party, indicating an intention to rely on that letter to seek an order for costs if a better outcome was not subsequently obtained at the hearing.
14. It is important to note that a Calderbank letter does not automatically result in an indemnity costs order: Jones v Bradley (No 2) [2003] NSWCA 258, Old v McInnes and Hogkinson [2011] NSWCA 410. The principles that need to be considered, as established by cases such as SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323, Miwa Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 and Nu Line Construction Group Pty Ltd v Fowler [2012] NSWSC 816, are: 1. There must have been a real and genuine element of compromise. 2. The refusal must have been unreasonable. 3. The unreasonableness in rejecting an offer must be considered at the time the offer is made and not with the benefit of hindsight.
15. Matters relevant to whether rejection of the offer was reasonable include: 1. the stage of the proceedings when the offer was made, 2. the time that was allowed for the offer to be considered, 3. the extent of the compromise offered, 4. the recipient's prospects of success at that time, 5. the clarity of expression of the offer, and 6. whether the offer foreshadowed a request for indemnity costs if it was not accepted and the offeror "beat the offer" in the litigated outcome.
16. While there was no element of compromise amount in the subject letter, it provided a clear opportunity for the appellants to discontinue the appeal without risk of an adverse costs order. If done, both parties would have saved the legal costs subsequently incurred but the respondent would have given up the opportunity to obtain a costs order in his favour for costs to date. The offer was made a month after the appeal was commenced and about two months prior to the hearing. At the time of the letter, the position of each party was clear.
17. A period of 14 days was allowed for the offer to be considered. The appellants' prospects at the time of receipt of the letter were negligible. There was nothing unclear about the letter and the appellants were put on notice that, if the appeal was not discontinued, a request would be made for costs to be paid on the indemnity basis.
18. Having regard to the circumstances of this appeal and the matters listed above, as an alternative to our finding on another basis for complete indemnity costs, we would have been satisfied that the refusal of the appellants to accept the offer contained in the letter from the respondent's solicitor dated 29 November 2022 was unreasonable in that the appellants could and should have discontinued this appeal after receiving that letter.
19. Since the 29 November 2022 letter gave the appellants 14 days to consider the offer it contained, which is 13 December 2022, indemnity costs should be ordered from 14 December 2022 if this was the basis for award of indemnity costs.

Orders

1. For the reasons set out above, the orders that will be made are as follows: 1. The application to extend time to appeal is dismissed. 2. The appellants are to pay the respondent's costs of the appeal including the application to extend time to appeal, as agreed or assessed, on the indemnity basis.

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: 01 February 2023