Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Slotwinski v Nutek Constructions Pty Ltd [2021] NSWCATAP 113 Hearing dates: On the papers Date of orders: 5 May 2021 Decision date: 05 May 2021 Jurisdiction: Appeal Panel Before: S Westgarth, Deputy President G Curtin SC, Senior Member Decision: In appeal 2019/00409603 (AP 19/52825): (a) A hearing is dispensed with. (b) The respondent is to pay the appellant's costs of the appeal in the sum of $2,542.15. (c) Orders 2 and 3 made by the Tribunal dated 6 January 2020 are set aside. (d) In lieu thereof the respondent is to pay the appellant's costs of the First Nutek Proceedings and the Remitted Proceedings as assessed or agreed on the ordinary basis other than the Transfer Application Costs referred to in Order 3. (e) Order 1 made by the Tribunal on 21st August 2018 in the First Nutek Proceedings (HB 16/25001) so far as it concerns the Transfer Application Costs is confirmed. In appeal 2020/00370940 (AP 20/32176): (a) The appeal is dismissed with no order as to costs. Catchwords: COSTS – party/party – successful defence by way of equitable set-off which extinguished the respondent's claim – costs should follow the event Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), s 81 Cases Cited: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 Badge Constructions Pty Ltd v Penbury Coast Pty Ltd [1999] SASC 6 Bonita v Shen [2016] NSWCATAP 159 Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 Nutek Constructions Pty Ltd v Slotwinski [2021] NSWSC 274 Slotwinski v Nutek Constructions Pty Ltd; Nutek Constructions Pty Ltd v Slotwinski [2019] NSWCATAP 158 Slotwinski v Nutek Constructions Pty Ltd [2020] NSWCATAP 216 The Owners – Strata Plan No 80412 v Vickery (Costs) [2020] NSWCATAP 48 Texts Cited: Nil Category: Costs Parties: Julia Slotwinski (Appellant) Nutek Constructions Pty Ltd (Respondent) Representation: Appellant (Self-Represented) Harrington Lawyers (Respondent) File Number(s): 2019/00409603 (AP 19/52825); 2020/00370940 (AP 20/32176) Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 13 November 2019 Before: G Blake AM SC, Senior Member File Number(s): HB 16/25001; HB 19/30971 REASONS FOR DECISION 1. This is an application for costs of the appeal which we determined - Slotwinski v Nutek Constructions Pty Ltd [2020] NSWCATAP 216 – and an appeal from the Tribunal's order for costs in relation to its principal decision from which the appeal we determined was brought. Background 1. The detailed history of the case is set out in our decision referred to above and need not be repeated. 2. Suffice to say that the respondent commenced two proceedings in the Tribunal (referred to by the Tribunal as the First and Second Nutek Proceedings). The First Nutek Proceedings were the respondent's claim on a quantum meruit basis for payment for work done and materials supplied. 3. The Tribunal heard the First and Second Nutek Proceedings together and delivered its principal decision on 2 May 2018. The Tribunal dismissed the First Nutek Proceedings and awarded the respondent $36,600 in the Second Nutek Proceedings. 4. It is relevant to note that the Tribunal said (at [80] of its reasons) that the First Nutek Proceedings took up the majority of the evidence, the hearing and submissions. 5. The Tribunal also made certain orders as to costs in a subsequent costs decision dated 26 July 2018. 6. Both parties appealed from the Tribunal's principal decision. 7. In a decision dated 28 June 2019 - Slotwinski v Nutek Constructions Pty Ltd; Nutek Constructions Pty Ltd v Slotwinski [2019] NSWCATAP 158 - the Appeal Panel decided that the Tribunal had erred in its principal decision of 2 May 2018. Relevantly the Appeal Panel determined that the Tribunal erred in dismissing the respondent's quantum meruit claim and erred in holding that the appellant had not relied on a set-off defence in relation to that quantum meruit claim. 8. The Appeal Panel remitted the proceedings: "… to the Consumer and Commercial Division of the Tribunal for further determination of Nutek's claim in quantum meruit (being the First Nutek Proceedings), and Mrs Slotwinski's defence by way of set-off on such further evidence as the Tribunal may consider appropriate". 1. On 4 July 2019, the Appeal Panel also set aside the costs orders in the First Nutek Proceedings (made on 26 July 2018) and remitted the issue of costs to the Tribunal save for the "Transfer Application Costs Order". The Transfer Application Costs Order concerned the costs incurred in relation to a failed application by the appellant to transfer the Tribunal proceedings to the Supreme Court. The appellant does not seek to disturb that order and so it shall remain. 2. The Tribunal heard the remitted proceedings and determined the issues in dispute in its principal decision dated 13 November 2019. 3. In that decision the Tribunal determined that the respondent was entitled to damages by way of quantum meruit in the sum of $242,045 and the appellant was entitled to an equitable set-off in the sum of $186,487 for damages arising from the respondent's repudiation of the building contract. The net result was an order that the appellant pay the respondent $55,558 (being the Tribunal's Order 1). 4. The appellant filed a Notice of Appeal from those orders on 25 November 2019. 5. In terms of costs, the Tribunal was required to determine the costs of the proceedings before it (referred to as the Remitted Proceedings) and the costs of the proceedings before the earlier Tribunal (referred to as the First Nutek Proceedings) whose decision had been set aside by the Appeal Panel on 28 June 2019. 6. On 6 January 2020, in its costs decision, the Tribunal ordered the appellant to pay the respondent's costs of both the Remitted and the First Nutek Proceedings. In basal terms, the Tribunal found that costs should follow the event in accordance with established principles. As the respondent had succeeded to the extent of $55,558, the Tribunal held that the "event" favoured the respondent and awarded it costs. 7. On 10 July 2020, we heard the appeal from the Tribunal's principal decision of 13 November 2019. 8. On 24 July 2020, the appellant filed a Notice of Appeal from the Tribunal's costs decision of 6 January 2020. That appeal is being determined in this decision. 9. On 20 October 2020, we published our decision on the appeal from the Tribunal's principal decision of 13 November 2019 - Slotwinski v Nutek Constructions Pty Ltd [2020] NSWCATAP 216. 10. In short, and relevantly, we decided that the Tribunal had erred in assessing the quantum of the appellant's claim for damages (raised as a defence by way of equitable set-off and not as a separate application for damages) against the respondent. 11. In our opinion the proper quantum of the appellant's claim was $323,320 (and not $186,487 as found by the Tribunal). The net result was that that sum exceeded the sum found owing to the respondent (being $242,045). 12. As we have said earlier, the appellant's claim was raised as a defence by way of equitable set-off. The practical difference between a defence by way of equitable set-off and a cross-claim (or claim) for damages was explained in our reasons as follows: "[48] … (an equitable set-off can) only defeat the respondent's claim in the Tribunal, in part or in full. Should her claim exceed the claim of the respondent, the appellant could not, in the Tribunal, receive an order in her favour for that excess. "[49] That is because a defence of equitable set-off is distinctly different from a counter-claim (or cross-claim), and the defence of equitable set-off (if established) absolves the appellant, wholly or partially, from liability to the respondent (Meagher, Gummow & Lehane at [37-005]). Or, as the authors say in Young, Croft and Smith, On Equity, LawBook Co, 2009 at [15.430] put it: 'Substantive equitable set-off, in this sense, does not operate by providing a balance of cross-claims; rather, it has the effect of extinguishing and eliminating the basis of the claim against which it is raised.' 1. Because the appellant's claim for damages was raised as a defence by way of equitable set-off, and because the assessment of her "damages" exceeded those of the respondent, the result was that the respondent's claim was entirely extinguished or eliminated. We therefore set aside Order 1 of the Tribunal dated 13 November 2019 and in lieu thereof ordered that the respondent's proceedings be dismissed. 2. We also made directions for the filing and service of any application for costs, and any submissions and evidence to be relied upon in support of or in opposition to any application for costs. 3. In accordance with those directions, we received written submissions from the appellant dated 1 November 2020 together with some supporting material, and written submissions from the respondent dated 5 February 2021. Both parties consented to an order that a hearing on costs be dispensed with and we will make that order as we are satisfied that the issues for determination can be adequately determined in the absence of the parties by considering their written submissions and other documents lodged with to the Tribunal. 4. The appellant sought an order for costs of the appeal AP 19/52825 (which we had determined) in the sum of $2,542.15 and sought orders for costs in respect of the four Tribunal proceedings and five appeal proceedings in the Tribunal which were listed in the submissions (which included the appeal determined by us). 5. The respondent submitted that if we were to find that r 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the "Rules") applied (which we do find applies to the appeal we determined) then the appellant should be awarded her costs of the appeal and should be awarded the sum sought by her. Accordingly, we shall make that order in due course. 6. Rule 38 of the Rules does apply because the amount claimed or in dispute on the appeal was greater than $30,000 and thus costs were at large – see rr 38 and 38A of the Rules. 7. The respondent opposed the appellant's applications for costs orders in the other proceedings identified by the appellant. 8. Meanwhile the appellant's appeal from the Tribunal's costs orders of 6 January 2020 (AP 20/32176) was listed for hearing before a differently constituted Appeal Panel on 1 March 2021. 9. On that day the Appeal Panel made the following orders: 1 The hearing is vacated. 2 Subject to any order of the Appeal Panel constituted to hear this Appeal, an order is made pursuant to s.50(2) of the Civil and Administrative Tribunal Act 2013, dispensing with a hearing. 3 The issues for determination include: a) Whether time to appeal should be extended. b) whether a lump sum costs order should be made; and c) whether an order should be made against the lawyers for the respondent and, if so, should the lawyers be joined as party. 4 On or before 8 March 2021 the respondent is to file and serve any further submissions in reply. 5 On or before 15 March 2021 the Appellant is to file and serve any submissions in response. 1. In that appeal the parties filed submissions, and each tendered a volume of material relied upon in support of their respective positions. 2. That appeal came before us to be determined on the papers per Order 2 referred to at [30] above. 3. Subject to being granted an extension of time for that appeal, which was lodged more than 28 days after the day the Tribunal's costs decision was published or received by the appellant, whichever was the latter, the appellant seeks the same orders as she sought in her application for costs made in the appeal (referred to at [25] above with the exception of the costs of the appeal determined by us). 4. The respondent opposes the granting of an extension of time for the lodgement of that appeal, and opposes the orders sought by the appellant. The Costs Issues 1. The proceedings in which costs issues are raised in the various submissions may be conveniently separated into the following categories: 1. the appeal heard by us; 2. the First Nutek and the Remitted Proceedings; and 3. the other Tribunal and Appeal Panel proceedings referred to in the appellant's submissions. 1. As for the appeal heard by us, and as we have already indicated, we shall order the respondent to pay the appellant's costs of $2,542.15. 2. The costs of the First Nutek and the Remitted Proceedings may be dealt with by us either as part of deciding the appeal which came before us - The Owners – Strata Plan No 80412 v Vickery (Costs) [2020] NSWCATAP 48 - or on the appeal brought by the appellant from the Tribunal's costs orders of 6 January 2020. 3. We shall deal with the costs issues before us on the former basis because it is more appropriate to do so in this case. That is because the costs issues now before us arise because our decision changed the Tribunal's decision, and so the factual basis for the Tribunal's costs decision was now altered. 4. Had we been required to consider the costs issues as part of that costs appeal, we would have granted an extension of time in the circumstances where no prejudice was alleged to have been suffered by the respondent. 5. We shall treat the parties' submissions on costs in one appeal as submissions on costs in the other given the identical issues for consideration. The Appellant's Submissions 1. In essence the appellant submits that she has been compelled by the respondent (who originally commenced the proceedings in the Tribunal against her) to defend herself, and she has been vindicated because the respondent's claims against her in the Tribunal have completely failed. She submits that costs should follow the event, and as the respondent's claims against her have failed she should be awarded costs, particularly of the Remitted and the First Nutek Proceedings. 2. The appellant provided a table marked "Table 1" which she said presented a global view on the costs incurred by both parties in the entire set of related NCAT proceedings. That Table is reproduced below at [45]. 3. The appellant submitted that the primary purpose of a costs order is to compensate the successful party for having to pursue or defend their rights in court. The appellant, who was the respondent in the proceedings at first instance, did not choose this course of action, but was compelled to it. Put another way, if the litigation had not been brought, the appellant would not have incurred the expenses she did. 4. She submitted that for her to be fully compensated in the proceedings originating with the First Nutek Proceedings, she required a cost order in her favour of $339,194.36 in accordance with a calculation she provided in a table marked "Table 2" which we have set out at [46] below. 5. The appellant's Table 1 was as follows: 6. 7. The appellant's Table 2 was as follows: 8. 9. The appellant submitted that even if the Appeal Panel were to award her entire costs in the First Nutek and Remitted Proceedings ($196,847.69), she would fall short of being fully compensated. It would be unjust, she submitted, with the proceedings now dismissed, that she should be left with these large uncompensated costs. 10. The appellant submitted that she found herself the victim of a Catch-22 situation with respect to the costs awarded for the First Substantive Appeal (AP 18/21961 and AP 18/2359). She submitted that although she was not submitting that the Appeal Panel erred in its decision to remit the proceedings for further determination of the respondent's claim in quantum meruit and her defence by way of set-off, she was submitting that that "win" by the respondent before the Appeal Panel ultimately led to the dismissal of their proceedings in their entirety. 11. The appellant submitted that, to add further complexity to determining what is just, in the respondent's presently extant appeal to the Supreme Court (from our decision of 20 October 2020), the respondent contends that we erred in our construction of clause 1 of Attachment 2 of the Nutek Contract. In the Supreme Court the respondent contends that that clause is to the effect that the Nutek contract price included a release by the appellant of a debt owed to her and that we erred in failing to include that sum ($250,000) in our calculations. 12. However, that contention has been summarily dismissed by Garling J in Nutek Constructions Pty Ltd v Slotwinski [2021] NSWSC 274 because the respondent had not raised that issue previously either before us or the Tribunal at first instance and had "at all times contended in the hearings at NCAT that the contract price was $1.65M (inclusive of GST)" (per Garling J at [34]). 13. The appellant submitted that the respondent has not acted in a manner consistent with its responsibility to facilitate the just, quick and cheap resolution of the real issues in dispute. 14. The appellant submitted that it is implausible that the respondent was in a financial position to support this lengthy and extremely cost litigation and that it is far more likely that the respondent's legal team were the real plaintiff. This, the appellant submitted, would represent a conflict of interest, with a clear motivation to delay and extend proceedings, accrue unnecessary costs, and a relentless pursuit of the appellant to satisfy these. 15. It was no doubt because of this submission that the Appeal Panel made the order it did (see [30] above) that on this appeal we were to determine, amongst other issues, whether an order should be made against the lawyers for the respondent and, if so, should the lawyers be joined as party. 16. The appellant sought the following orders: 1. Order that the respondent pay the appellant the lump sum of $340,000. 2. In the alternative (a+b, or a+c, or a only), 1. order that the respondent pay the appellant's costs in both the First Nutek Proceedings, other than in respect of the Transfer Application, and the Remitted Proceedings, as agreed or assessed; 2. order that the respondent pay the appellant the lump sum of $81,846.95 (to offset award to respondent from AP 18/21961 + AP 18/23592). 3. in the alternative, order that each party be responsible for their own costs with respect to all appeal proceedings in the Tribunal (AP 18/21961, AP 18/23592, AP 18/36620, AP 19/52825, and AP 20/32176). 1. Order that the respondent's legal representative pay 50% of the awarded costs. The Respondent's Submissions 1. The respondent submitted the appellant should pay its costs of the First Nutek Proceedings because she, without prior notice until the hearing, elected not to prosecute the extensive case she ran by way of set off and caused unnecessary costs to be incurred by the respondent. 2. We reject this submission as it is factually incorrect. In its decision of 28 June 2019, the Appeal Panel said, at [62]: "In the Appeal Panel's view, it is apparent from the various iterations of Mrs Slotwinski's points of defence that she sought to set-off against her liability (if any) to Nutek in relation to the proceedings before the Tribunal claims against Nutek for: (1) incomplete and defective works (which form the subject of the SC Proceedings), and (2) economic loss resulting from delay in renting the property 1. The respondent submitted the appellant should pay its costs of the Remitted Proceedings because she claimed damages in a much greater sum that she was awarded, and she claimed for loss of rent and council fines which were later abandoned. The respondent says wasted time and expense were occasioned to it by these factors. 2. We reject this submission. The general principles applicable on an issue such as this was set out by the Court of Appeal in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] where the Court said: "The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows: • Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). • In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. • If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). • A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. • Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272." 1. Although the respondent claimed that the identified issues were clearly dominant or separable, or took up a significant part of the hearings, it made no effort to prove those assertions nor is it apparent to us that that was the case. The respondent did not identify by reference to the transcript, submissions, points of claim or defence, documentary tender bundles or any other material how the identified issues were dominant or separable, or how it could be said that those issues took up a significant part of the hearings. Therefore, we reject this submission. 2. The respondent submits, correctly, that we should not address costs issues in proceedings which are not before us, and so we should (and we do) put aside the appellant's application for costs in the various proceedings identified in her Table 1 other than the costs of the appeal we determined, and the First Nutek and the Remitted Proceedings. 3. Our powers on costs are not at large, and do not empower us to make costs orders in proceedings which are not before us or interfere with orders made by a differently constituted Appeal Panel in separate proceedings - The Owners – Strata Plan No 80412 v Vickery (Costs) [2020] NSWCATAP 48 at [8]. 4. The only proceedings before us are the appeal we determined and the First Nutek and the Remitted Proceedings [the latter are proceedings in which we may make costs orders by reason of s 81 of the Civil and Administrative Tribunal Act 2013 (NSW)]. 5. The respondent also correctly submits that we should not award the lump sum sought by the appellant simply on the basis submitted by her i.e. to even the financial ledger. Costs are only awarded to compensate parties for monies actually expended or for which they are liable to pay for the assistance provided in their case. 6. The respondent submits we should not accede to the appellant's claim that a portion of costs should be paid by the respondent's solicitors. 7. We agree with this submission, but not for the reasons advanced by the respondent. We should pause to note that these submissions were made in the name of the respondent whereas they concerned the private interests of the respondent's solicitors. Be that as it may, the solicitors have not been joined as parties to the application for costs and that, as a minimum, would need to have been done if the appellant was to pursue that claim. That raises the question of whether we should join them as a party. We are of the view that there is insufficient material to justify finding that the respondent's solicitors have been engaged in conduct that would make it appropriate to have them pay the costs of the appellant otherwise payable by the respondent. Therefore, we decline to join the solicitors. 8. The respondent sought the following orders: 1. appeal AP 20/32176 be dismissed for being out of time; 2. the appellant pay the respondent's costs of that appeal; 3. in the alternative: 1. the appellant is awarded costs in HB 19/30971, except for any costs in respect of Order 1 made in HB 16/25001 on 26 July 2018 and except for any costs associated with the abandoned claims for delay, loss of rent, council fines and defects; 2. the respondent is awarded its costs in HB16/25001; 3. the respondent is awarded its costs thrown away in HB19/30971, in relation to any costs associated with the abandoned claims for delay, loss of rent, council fines and defects. Decision 1. The amounts claimed or in dispute in the First Nutek and the Remitted Proceedings were greater than $30,000. Accordingly, there is no need for the parties to establish special circumstances to receive an order for costs - Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25. 2. Costs of the First Nutek and the Remitted Proceedings are therefore governed by r 38 of the Rules. 3. As to r 38 and the discretion to award costs, the Appeal Panel said: in Vickery at [10]: "Clause 38 of the NCAT Rules gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal may take into account in exercising the discretion. When courts and tribunals have a discretion to award costs, in the absence of any disentitling conduct, costs are usually awarded in favour of the successful party. But that is not an absolute rule: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [67] and [134]." 1. In relation to the discretion to award costs the Appeal Panel said Bonita v Shen [2016] NSWCATAP 159: "[59] In Thompson v Chapman [2016] NSCATAP 6, when dealing with r 38(2)(b), the Appeal Panel said at [69]: 'The starting point in exercising such a discretion is that the "usual order for costs" is that a successful party should be entitled to an order for costs in their favour.' [60] The Appeal Panel in Thompson referred to the decisions of the High Court in Latoudis v Casey (1990) 170 CLR 534 and Oshlack v Richmond River Council (1998) 193 CLR 72. [61] In Latoudis McHugh J said at 567: 'An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v. Noumenon Pty Ltd (1988) 47 SASR 182, at p 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings.' [62] In Oshlack McHugh J said at 97: 'The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party[96]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.' [63] While McHugh J was in the minority in Oshlack, (which related to an individual seeking to remedy or restrain a breach of the Environmental Planning and Assessment Act, 1979 (NSW), being proceedings authorised by s 123 (1) of that Act), the majority in that case did not disagree with the general principle but rather whether, in the particular circumstances of the case, an order for costs should be made against the unsuccessful plaintiff, Oshlack. [64] On the other hand, where there is a general discretion to award costs there is no absolute rule that the successful party must receive the costs. In Thompson the Appeal Panel said at [71]-[72]: '[71] Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to be of the costs of an unsuccessful party: see Oshlack … per Gaudron and Gummow JJ at 88 and Kirby J at 121-123. [72] The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: (1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made; see for example Bostick Australia Pty Ltd v Liddiard (N0 2) [2009] NSWCA 304; and (2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack … per Gaudron and Gummow JJ at 41-44.'" 1. In relation to the discretion to award costs in building cases, such as the present case where there is a defence by way of equitable set-off, Debelle J said in Badge Constructions Pty Ltd v Penbury Coast Pty Ltd [1999] SASC 6: "[9] The reasoning of the arbitrator is unobjectionable up to and including the proposition that exceptional circumstances are required to justify a departure from the usual order that costs follow the event. However, it is apparent from the reasons of the arbitrator that he has misunderstood or at least incorrectly applied the well settled principles relating to awards of costs where there is both a successful claim and a successful counter-claim. [10] The principles are well established. They are set out in a number of texts. Shortly stated, the rule is that, where there are cost claims, the successful party is the party who secures a judgment for the balance. In his reasons, the arbitrator referred to both Hudson's Building and Engineering Contracts (10th edition) and to Berry et al, Legal Costs - South Australia (Butterworths). In the latter work the principles are set out in these terms: 'Where there is both a claim and a counter-claim the order for costs should be framed so as to give a just result: Chell Engineering Ltd v Unit Tool and Engineering Co Ltd [1950] 1 All ER 378; Childs v Blacker [1954] 2 All ER 243. In the ordinary course if both the claim and the counter-claim succeed the plaintiff and the defendant are each entitled to the costs incurred on their claim and counter-claim respectively: Provincial Bill Posting Co v Low Moor Iron Co [1909] 2 KB 344. In taxing such costs the claim is treated as if it stood alone and the costs are awarded for maintaining it. As to the counter-claim the only amounts awarded are for the increased costs occasioned by it: Medway Oil and Storage Co Ltd v Continental Contractors Ltd [1929] AC 88; Smith v Madden (1946) 73 CLR 129; Millican v Tucker [1981] 1 All ER at 1083. Where neither party is wholly successful the court in its discretion may order one party to have a percentage of its costs only: Foti v Banque Nationale de Paris (1989) 149 LSJS 401. Where the counter-claim is really in the nature of a defence or set-off, the court may give the defendant the costs, or where the plaintiff obtains a balance judgment, the court may give the plaintiff costs on the scale appropriate to the amount of balance judgment.' Lowe v Holme (1883) 10 QBD 286; Childs v Blacker [1954] 2 All ER 243; Hanak v Green [1958] 2 QB 9. The arbitrator referred to the last sentence in the passage just quoted but, quite curiously, in his reasons for deciding to depart from the general rule. Had he considered the whole passage, he might not have fallen into error. [11] The overriding principle is that the order for costs is fair and just in all the circumstances. The arbitrator has a broad discretion to ensure such a result. Thus, it will be appropriate when considering what award should be made as to costs to have regard to the conduct of the parties. So, a party may not be entitled to costs if he has advanced an inflated claim or counter-claim with the apparent purpose of frightening the other party by the fear of the costs of proceedings to drop the claim or accept less than the claim: Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyds Rep. 642. [12] The reasoning underlying the principles so far as they apply to cases arising out of building contracts are expressed in these terms in Hudson: 'It should be remembered that in building and engineering cases the issue between the parties is almost invariably financial, and that the machinery of the sealed offer is available to protect the position on costs. Though there may be many issues, in legal pleading terms, of claim, set-off, and counterclaim, the parties' eyes will always have been fixed on the final balance owing one way or another. Whoever secures or avoids paying that balance in effect has won. Only in the case of wildly exaggerated claims, or separate and costly issues on which the successful party has failed and which it was wholly unreasonable for him to raise, can there be, it is submitted, any justification for departing from the rule that the party ultimately successful on a final balance of claim and counterclaim should be paid his costs. There are cases in other situations where separate orders for costs on claim and counterclaim are appropriate, but counterclaims on building and engineering contracts arise out of the same transaction and are equitable set-offs, and the basic commercial realities, in the vast majority of cases argue very strongly, it is submitted, for a single award of costs in favour of the party ultimately successful on balance, unless the balance is so small as to justify the view that a party responsible for initiating the litigation and obtaining such a balance can be regarded as having been effectively unsuccessful.' In this context it is relevant to note that in cases under a building contract, where both the claim and the cross-claim arise under the building contract, the cross-claim constitutes an equitable set-off: Hanak v Green [1958] 2 QB 9 at 25-26 and at 29. That principle will usually have important consequences in respect of costs since, if the cross-claim exceeds the amount of the claim, the claim will be treated as having failed: Hanak v Green (supra) and see also the discussion in Hudson (11th edition) para 8.118. 1. In our opinion there is no evidence of any relevant disentitling conduct by the appellant, and no other principle or discretionary factor has been identified or which is apparent to us which persuades us to alter the application of those principles in this case. 2. Although it is true that the appellant's initial claimed quantum for her claim against the respondent was well over $1m, there is no evidence that that claim was inflated for the apparent purpose of frightening the respondent by the fear of the costs of proceedings to drop the claim or accept less than the claim (per Badge Constructions at [11]). 3. Accordingly, and in accordance with the authorities cited above, costs should follow the event. 4. In our opinion the appellant was successful in the First Nutek and in the Remitted Proceedings as a result of our decision and should therefore have costs orders made in her favour in relation to those proceedings (in addition to the order in her favour on the appeal). 5. The appellant was successful because she entirely defeated the respondent's claim, and the respondent's proceedings were dismissed. In that sense the "event" was in the appellant's favour. Orders 1. We make the following orders. 1. In appeal AP 19/52825: 1. A hearing is dispensed with. 2. The respondent is to pay the appellant's costs of the appeal in the sum of $2,542.15. 3. Orders 2 and 3 made by the Tribunal dated 6 January 2020 are set aside. 4. In lieu thereof the respondent is to pay the appellant's costs of the First Nutek Proceedings and the Remitted Proceedings as assessed or agreed on the ordinary basis other than the Transfer Application Costs referred to in Order 3. 5. Order 1 made by the Tribunal on 21st August 2018 in the First Nutek Proceedings (HB 16/25001) so far as it concerns the Transfer Application Costs is confirmed. 1. In appeal AP 20/32176: 1. The appeal is dismissed with no order as to costs. ********** 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: 05 May 2021