Zafiropoulos v Director General, NSW Fair Trading [2015] NSWCATOD 104 | Case summary

Brief Chronology

The application dated 27 January 2015 for an owner-builder permit was received by the Respondent on 2 February 2015. The application related to construction of a new dual occupancy and included the statement "We (my wife and kids and I) intend on living in one and selling the other to pay the cost of the build." The application included a Statement of Qualifications dated 27 January 2015 obtained by the Applicant in respect of a course in owner builder compliance; a development consent dated 17 December 2014 in relation to the Property being demolition of existing structures and construction of a dual occupancy with two (2) lot Torrens Title subdivision.
By letter dated 2 February 2015 (the Refusal Letter) the Respondent informed the Applicant that his application had been assessed and refused. The reasons given for the refusal decision (the Decision) included: "…the legislation provides that an application for an owner-builder permit must be refused if the residential building work subject to development consent relates to a dual occupancy… The information provided with your application does not demonstrate special circumstances that that (sic) justify that an owner-builder permit is required to construct the dual occupancy. In determining if special circumstances exist, consideration is given to whether the worker is on an existing dual occupancy, the applicant's specific circumstances demonstrate a compelling reason for the dual occupancy and whether the development is considered to be a secondary dwelling."
The Refusal Letter also informed the Applicant that construction may proceed under the authority of a licensed contractor and that he could apply for an internal review of the Decision. If the Applicant disagreed with the decision following from that review he may apply for a further review to be carried out by the Tribunal.
There is no evidence that the Applicant applied for an internal review. Instead, on 10 February the Applicant filed the Application with the Tribunal seeking a reconsideration of the Decision. The Application incorrectly stated that the Decision was made after the Respondent had conducted an internal review.
On 16 March 2015 the Respondent filed a bundle of documents pursuant to s. 58 of the ADR Act. On 17 March 2015 the Applicant satisfied the Tribunal that it was necessary for the Tribunal to hear the Application without a review by the Respondent in order to protect the Applicant's interests. The matter was set down for hearing on 1 June 2015.
The Applicant was directed to file and serve his evidence and submissions by 7 April and the Respondent was directed to file and serve the balance of its documents by 21 April. The Applicant filed no documents and the Respondent filed documents on 22 May. The only other document received by the Tribunal before 1 June was a letter received from the Applicant by facsimile at 4:34 p.m. on Friday, 29 May 2015, the last business day before the date scheduled for the hearing.

Consideration

The general procedure of the Tribunal is set out in s. 38 of the CAT Act which relevantly states: 38 Procedure of Tribunal generally (1) The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision. (2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.
I observed above that at the substantive hearing on 1 June 2015 the Application was dismissed as the Applicant failed to appear. Although no substantive evidence was tendered as to the issues in dispute the s. 58 documents had been filed and the Respondent had filed submissions and a bundle of exhibits to the submissions. The bundle included the explanatory note to the Home Building Amendment Bill 2014 (the Bill), the second reading speech in respect of the Bill and two certificates of insurance taken out by a builder in respect of two separate addresses at the Property each of which described the work as "new multi-dwelling (<=3 stories)".
At the date of the hearing the Tribunal also held the original Application including a letter from the Applicant dated 4 February 2015. The Application includes a statement by the Applicant that "our intention was for me to be the owner builder of our duplex. Once completed, we intended to live in one with our 2 small children and to sell the other and pay back the bank loan." The Application also stated: "On Monday, 25 January 2015 I went to NSW Services Hurstville Branch. My permit was denied as I was 10 days late. They stated that the rules had changed and that as of 15th January I could not be an owner builder for a duplex. I asked whether I could take it further for consideration and was told by the staff there not to bother as they will not issue the permit either way. I felt as though nobody cared either way."
After 1 June the Applicant was informed that the Respondent had sought that the Applicant pay the Respondent's costs and the Respondent's submissions and other documents were served on the Applicant. The Tribunal received no communication from the Applicant regarding the costs application.
In Karina Boscola (Applicant);Axciom Australia Pty Limited (respondent) [2015] NSWCATAD 28, Lucy SM said at [13] and [14]… 13. The Tribunal notes that section 88 of the ADTA previously nominated "special circumstances" as the basis for the award of costs. This later changed in 2009 to a test of where it was "fair to do so". The new and current costs section 60 CATA, again picks up the wording of "special circumstances" as the basis for the award of costs. The Tribunal notes that in the matter of AT v Commissioner of Police 2010 NSWCA 131, Basten J remarked that the test of what is fair, is a low bar. In the matter of Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 in dealing with a costs application under section 60 of CATA, the Deputy President of NCAT O'Connor noted at paragraph 78: 78. The exception ('special circumstances') is, arguably, narrower than the exception at s 88(1A) of the ADT Act ('fair to do so'). 14. This Tribunal infers that the test of "special circumstances" is a harder test for its proponent to satisfy than the previous where "it is fair to do so".
I prefer the reasoning of O'Connor DP and Lucy SM that the s. 60 test of 'special circumstances' is a harder and narrower test to satisfy than the Respondent's submission, made without the benefit of supporting authority that the tests are 'substantially similar'.
I have had regard to s. 36 of the CAT Act, which relevantly provides: 36 Guiding principle to be applied to practice and procedure (1) The "guiding principle" for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it: (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal: (a) a party to proceedings in the Tribunal, (b)… (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.
Section 36(3) requires parties to co-operate with the Tribunal to give effect to the guiding principle and to participate in the Tribunal's processes.
The Applicant did not contest the accuracy of the Respondent's record as to the details of the telephone discussion said to have taken place with the Applicant on 29 May including the statement attributed to him that he might or might not 'fight' the matter at the hearing on 1 June.
I find that the Applicant was aware that the Respondent might seek costs in relation to the matter and that when the Respondent did seek costs and provided submissions in support of the costs application the Applicant did not contest those submissions and made no relevant submission to the Tribunal.
I now turn to the matters to which the Tribunal may have regard in s. 60 to the extent that the Respondent made submissions.
In relation to s. 60(3)(c) (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,
The Bill introduced the following into the Home Building Act 1989 (the HBA Act) after s. 32(1): (1A) An owner-builder permit must not be issued to authorise its holder to do residential building work that relates to a dual occupancy unless the Chief Executive is satisfied that special circumstances exist that justify the owner-builder permit authorising its holder to do that work. The Chief Executive may issue guidelines as to the circumstances that will be considered to be special circumstances for the purposes of this subsection.
The Minister's second reading speech included: Currently, owner-builders are only permitted to undertake work relating to a single dwelling or a dual occupancy. There are concerns that some commercially orientated, unlicensed people may be using the permit system in order to undertake dual occupancy work on land with a view to subdividing the land and on-selling it at a profit. The owner-builder permit system is not intended for such commercial development work. Owner-builders will not be able to obtain a permit for work on a dual occupancy unless the Commissioner is satisfied that special circumstances exist, such as where a family could demonstrate legitimate non-commercial reasons for the work or where refusing the permit could cause family hardship."
At [8] in the Respondent's written submissions to the substantive issue the Respondent said that no guidelines had yet been issued pursuant to subsection 32(1A). This by itself does not necessarily mean that special circumstances could not exist. However no evidence was presented to the Tribunal as to any relevant special circumstances. Without a hearing where findings of fact are made and legal argument is presented it is not normally appropriate for the Tribunal to draw a conclusion as to the merits of the parties' cases and I do not do so for the purposes of this costs application.
I turn now to sections 60(3) (e) and (g): (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance; (g) any other matter that the Tribunal considers relevant.
The Respondent submitted that its letter of 21 May 2015 to the Applicant showed that a licensed builder had been engaged to carry out the building work and had commenced building work and that having regard to the contents of the Respondent's website a permit cannot be issued retrospectively. I observe that the mere fact that an agency's website may contain a statement does not by itself prove that the statement represents relevant law. I made no finding as to the merits of the parties' cases, accordingly I make no finding as to whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance.
However, the documents tendered with RS include at Tab 4 two certificates of insurance issued on 7 April 2015 to a licensed builder in respect of the building work at the Property which was the subject of the owner-builder application. The documents also include an email dated 14 May 2015 from a Senior Building Investigator from the Building Investigations Branch of Fair Trading referring to two attached photographs showing that construction work appears to have commenced in the form of demolition and excavation of footings at the Property. The name of the builder on the certificates of insurance is the same as the name on signage at the Property.
I observe that the Applicant's letter of 4 February setting out his grounds for review included: If we cannot proceed with the project as an owner builder license (sic) then we can not proceed at all. We are unable to pay a builder as our budget does not allow for this.
I also observe that in accordance with an application by the Applicant, the Tribunal made a decision in favour of the Applicant on 17 March to review the Decision prior to any internal review by the Respondent as it was necessary to protect the Applicant's interests.
No explanation has been provided by the Applicant regarding the contrast in the documents at Tab 4, the Applicant's letter of 4 February, and the Applicant's submission to the Tribunal on 17 March. This issue has not been put to the Applicant and I make no considered finding in that regard. However I have regard to the unexplained contrast together with the fact that the Applicant has not contested the costs application.
In addition to the provisions relied on by the Respondent, the Tribunal may have regard to paragraph 60(3)(f) "whether a party has refused or failed to comply with the duty imposed by section 36(3)".
The Applicant made no submissions and provided no evidence other than: 1. the documents which accompanied the Application: 2. asserting at the directions hearing on 17 March 2015 that it was necessary to protect his interests for the Tribunal to deal with the dispute rather than proceeding in the normal path to request an internal review by the Respondent; and 3. late in the afternoon of the last business day before the hearing providing a one-page letter which ends by stating: "Please do not waste anymore of our time. If you have no intention of granting this permit please make clear as we work 3 jobs between us and have 2 small children." There is no indication as to whether or not the Applicant intended appearing at the hearing to contest the Decision.
I have had regard to the diary note made by an officer of the Respondent on the morning of 29 May and the statements in that note that: 1. The Applicant's wife had said to an officer of the Respondent on 26 May that the matter would be withdrawn. 2. The Applicant said to the Respondent's officer that morning that he might or might not fight the Respondent in the hearing (on the following Monday). 3. The Respondent's officer who spoke with the Applicant on 29 May advised the Applicant that "if he did want to withdraw, he should e-mail NCAT and advise them asap. I said he should say in the e-mail that he has advised us". I am aware of no reason why I should not accept the accuracy of that uncontested diary note.
The Applicant acknowledged that the law had changed prior to his application for the permit being made and expressed an expectation that the Respondent would "allow some leeway for recently approved DA applications". In that regard I note that the permit application contains a DA Quote Estimate issued on 3 September 2014 and a DA issued on 17 December 2014.The application itself indicates that the Applicant had been involved in a five-year process to build on his block of land. The explanation he provided for various delays may explain delays of several months but does not explain a five-year delay.
Section 36(3) requires parties to proceedings before the Tribunal to co-operate with the Tribunal to give effect to the guiding principle that the Tribunal is to facilitate "the just, quick and cheap resolution of the real issues in the proceedings" and is to participate in the processes of the Tribunal.
The Applicant obtained the assistance of the Tribunal to bring the matter on for an early hearing in order to protect his interests. However it appears from the documents filed with the Tribunal that between the date of the directions hearing on 17 March and 1 June, when the Applicant was aware that the substantive matter was to be heard, the Applicant engaged the services of a builder and commenced building work on the Property notwithstanding his submission to the Tribunal in his letter of 4 February set out at [35] above.
I find that although having been informed of the application for costs by the respondent the Applicant made no submissions to the Tribunal and neither challenged nor agreed to the Respondent's application.
Having regard to the events directly involving the Applicant referred to above at [25], [26], [34] - [37], [39(3)], [40], [41] and [43] - [44] above, the Applicant's unexplained failure to appear at the hearing, and the development of the Property between 17 March and 1 June I find that the Applicant has not complied with the duty imposed by s. 36(3).
In the circumstances having regard to my above findings and the provisions of s. 60(3) of the CAT Act referred to above, I find that there are special circumstances which justify an award of costs in favour of the Applicant.
I observe that s. 60(5) provides an inclusive definition of costs. I determine that costs be paid by the Applicant to the Respondent in respect of work carried out by the solicitor for the Respondent as follows: 1. on 29 May 2015 in attending the officer of the Respondent who spoke with the Applicant on that date and perusing that officer's file note of the discussion and perusing correspondence dated 29 May 2015 from the Applicant, 20 minutes; 2. on 29 May and 1 June 2015 in reviewing the s. 58 documents and the Respondent's submissions, considering issues and preparing for the hearing, limited to one hour; and 3. on 1 June 2015 attending the Tribunal on the hearing of the Application and reporting to the Respondent as to the outcome of the hearing, 45 minutes.
I observe that paragraph 60(4)(b) both at the time of the hearing and at the date of this decision provides that the Tribunal may order costs to be assessed on either certain statutory bases "or on any other basis".
Having regard to: 1. the relatively small amount of costs sought by the Respondent; 2. the failure by the Applicant to appear at the hearing and to make any submissions in relation to the Respondent's costs application; and 3. the guiding principle in s. 36 (1) and the obligation on the Tribunal in s. 36 (2) to seek to give effect to the guiding principle; I do not make the usual order that costs be as agreed or as assessed in accordance with the relevant statute.
It seems to me that the Applicant is unlikely to agree to pay any costs and if the usual order were to be made the Respondent would be put to the expense of going through a formal assessment. This would not be in accordance with the guiding principle.
The rate of costs sought by the Respondent is that based on the Crown Solicitor Office's hourly rate applicable to a solicitor grade 1-3 of $297 per hour. There being no objection by the Applicant to this rate I determine that costs be assessed at the hourly rate of $297.00. I calculate that the amount of costs payable at that rate for the work referred to at [47] above is $618.75. However I observe that the Respondent has limited the costs sought to 2 hours in the sum of $594.00.
Having regard to my above findings the correct and preferable decision of the Tribunal is that the Applicant pay the Respondent the sum of $594.00.

Zafiropoulos v Director General, NSW Fair Trading

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Judgment (6 paragraphs)

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Cases Cited (2)

Cited By (1)