Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Tang v Mawad Group Pty Ltd (No 2) [2021] NSWCATAP 345 Hearing dates: On the papers Date of orders: 09 November 2021 Decision date: 09 November 2021 Jurisdiction: Appeal Panel Before: K Ransome, Senior Member S Goodman SC, Senior Member Decision: (1) Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW), dispense with a hearing on the question of costs. (2) The builder's application for costs of the appeal since 16 March 2021 is dismissed. Catchwords: COSTS – costs on appeal – special circumstances – exercise of discretion Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Cases Cited: BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 Tang v Mawad Group Pty Ltd [2021] NSWCATAP 282 Texts Cited: Nil Category: Costs Parties: Yi Min Tang (First Appellant) Sima Podgoetsky (Second Appellant) Mawad Group Pty Ltd (Respondent) Representation: Solicitors: Keystone Lawyers (Appellants) Reuben George Lawyers (Respondent) File Number(s): 2020/00371261 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Citation: N/A Date of Decision: 18 November 2020 Before: DAC Robertson, Senior Member File Number(s): HB 19/42059 HB 20/31291 REASONS FOR DECISION Introduction 1. On 20 September 2021, following a hearing on 10 May 2021, the Appeal Panel made orders and published its Reasons For Decision in Tang v Mawad Group Pty Ltd [2021] NSWCATAP 282. The orders made on that day included an order that if either party wished to make submissions as to costs, then written submissions were to be provided to the Appeal Panel in accordance with a timetable set out in those orders. The parties were also directed to indicate whether they consented to the Appeal Panel making an order dispensing with a hearing of the issues concerning the costs. 2. The Appeal Panel subsequently received written submissions from the respondent ("builder") dated 1 October 2021 in support of its application for an order that the appellant ("owners") pay the builder's costs of the appeal incurred since 16 March 2021. 3. The builder consented to the Appeal Panel making an order dispensing with a hearing of the issues concerning the costs of the appeal. The owners, as noted above, have not provide any submissions and have not otherwise indicated whether they consent to such a course. The Appeal Panel is satisfied, for the purposes of s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act"), that the builder's application can be adequately determined in the absence of the parties, by reference to written submissions and other materials already before the Appeal Panel. Background 1. In September 2019, the builder commenced proceedings in the Tribunal against the owners. 2. On 10 August 2020, at the commencement of the final hearing of the builder's application, the Tribunal acceded to an application by the owners to transfer the builder's proceedings, together with proceedings that the owners had commenced in late July 2020 for an amount exceeding the Tribunal's jurisdiction, to the Supreme Court of New South Wales. 3. The orders made by the Tribunal on that day included an order that the owners pay the builder's costs "thrown away by reason of the transfer, including the costs of preparing for today's hearing, such costs to be determined by the Tribunal on the papers and without a further hearing on the basis of further submissions to be filed ..."; and directions for the filing and service of evidence and submissions concerning the costs incurred by the builder. 4. On 18 November 2020, following the receipt of evidence and submissions on the question of costs, the Tribunal made an order requiring the owners to pay $23,529 to the builder ("18 November 2020 Costs Order"). 5. On 16 December 2020, the owners filed a Notice of Appeal against the 18 November 2020 Costs Order. 6. On 13 January 2021 at 1:42pm, the builder made an offer to the owner ("13 January 2021 Offer") in the following terms: "We note that the Tribunal ordered the Appellants to pay the sum of $23,529 to the Respondent on 18 November 2020. We note that amount is comprised in Counsel and solicitor fees in respective amounts of $12,375 and $11,154. We propose that the Appeal proceedings be settled, on a full and final basis, on the following terms:- 1. The Appellants pay the Respondent the sum of $20,000 in respect of costs thrown away by reason of the transfer of the proceedings to the Supreme Court within 7 days, such payment to be made to the Respondent's solicitor trust account; 2. The Appeal proceedings are adjourned for a period of 14 days to allow payment of the settlement sum; 3. In the event that payment is received in the sum of $20,000 in accordance with paragraph 1 above, the parties to file consent orders to the effect that:- a. The appeal proceedings are dismissed; b. No order as to costs. We submit that the following offer is a genuine compromise by virtue of the Respondent discounting its costs in the sum of $3,529, and also in relation to the costs of the appeal. Furthermore, we submit that the Appellants prospects of success in relation to the appeal are, respectfully, hopeless. This position is adopted having regard to:- 1. The Appellants had previously conceded that the Tribunal could make a fixed sum gross costs order. However the quantum was less than the amount ordered. Regardless, the Respondent intended to rely on this concession; 2. The Appellants have failed to demonstrate that the Tribunal's exercise of discretion was wrong and misapplied, and/or unjust. In circumstances where the Appellant has conceded that the Tribunal had the necessary discretion to award fixed costs, the Appellant is effectively estopped from now suggesting otherwise. Finally, the Respondent has incurred significant expense to meet the Tribunal's orders in relation to submissions for the appeal and the stay application. Our WIP for such work is presently in the sum of $5,000 plus GST. We expect that our costs will only increase as we approach the hearing of this matter. In the event we expect that our costs for preparing and appearing with Counsel at the hearing to be in the vicinity of a further $5,000 to $12,000 plus GST. We confirm that this offer is made in accordance with the well-known principles of Calderbank v Calderbank. In the event that the Respondent is successful in the Appeal proceedings, or should the Appellant obtain a decision no better than the terms of the offer above, the Respondent shall seek costs assessed on an indemnity basis and shall rely on the contents of this email." 1. The 13 January 2021 Offer was expressed to be open until 3pm that day. The time for acceptance was subsequently extended to 4pm on Monday 18 January 2021. 2. On 16 March 2021, at the first hearing of the appeal, the owners sought and were granted leave to amend their Notice of Appeal. The Appeal Panel (as then constituted) ordered that: 1. the owners have leave to file an Amended Notice of Appeal limited to the following two grounds of law: 1. the miscarriage by the Tribunal in the exercise of its discretion in determining that there be a gross sum costs order within the principles of House v R (1936) 55 CLR 499; 2. the adequacy of the reasons for determining that there be a gross sum costs order; 1. the hearing of the appeal be adjourned; 2. the owners pay the builder's costs of the appeal to date including the builder's costs of the hearing on 16 March 2021, as agreed or assessed ("16 March 2021 Costs Order"); and 3. the builder have leave to seek a variation of the 16 March 2021 Costs Order, to the effect that the owners pay the builder's costs on an indemnity basis. 1. On 18 March 2021, the builder's solicitors wrote to the owners' solicitors making a further offer in the following terms (emphasis in original), ("18 March 2021 Offer"): "1. We refer to the Proceedings and note the orders by the Appeal Panel in respect of your clients' application to amend their notice of appeal on the day of hearing. Your clients were ordered to pay our client's costs of the appeal to date, including the hearing on 16 March 2021. 2 In our view, our client's costs to date in the appeal on a party-party basis including Counsel's fees are $24,712.50 incl GST. 3. The Appeal Panel also ordered that the Respondent be given leave to apply for an order that your clients pay their costs of the entire appeal to date on an indemnity basis. 4. We are reasonably confident that our client will be successful in persuading the Appeal Panel, based on well settled authority and in the circumstances of this case, that an order that your clients pay costs assessed on an indemnity basis is entirely appropriate. Without limitation, our client intends to make submissions that the grounds of appeal were hopeless and doomed to fail; Rose v Richards [2005] NSWSC 758, Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353, and that your clients' conduct has unnecessarily delayed the Proceedings. There was no explanation, or at least no reasonably explanation, provided as to why there was a failure to properly consider your clients' appeal grounds prior to the day of the appeal hearing. 5. Our client's costs in the appeal on an indemnity basis including Counsel's fees will exceed the figure recorded at [3] above. 6. Irrespective of the outcome of your clients' appeal (or indeed the Supreme Court proceedings), your client is liable to pay our client's costs associated with the order made on 17 March 2021 (sic), whether assessed on an indemnity basis or not. This is in addition to the costs that have already been awarded against your clients on a gross sum basis and paid into our trust account, in the sum of $23,529.00. 7. In our view, even if your clients persuade the Appeal Panel that the Senior Member miscarried in the exercise of his discretion within the principles of House v R , the prospects of your clients achieving a different result in the Proceedings is hopeless as the Appeal Panel would re exercise the discretion under s81(2) of the Civil and Administrative Tribunal Act 2013 (NSW) the same way as the Senior Member in the circumstances of the case below. 8. In those circumstances an order that costs follow the event will be made in our client's favour, subject to any application for indemnity costs. 9. In an effort to resolve the Proceedings before the parties incur further significant costs, we are instructed to make the following in principle offer in full and final settlement of the Proceedings: a. The Proceedings are discontinued; b. The Appellants pay our client $20,000 within 14 days in relation to the costs order made on 16 March 2021; c. The sum referred to in [b] above is in addition to the sum of $23,529.00 currently held in our trust bank account. The sum of $20,000 is to be released from trust with the Appellants' consent to the respondent, with the balance in the sum of $3,529.00 to also be released to the Respondent and deducted from the further $20,000 to be paid by the Appellants to the Respondent; and d. There be no further orders as to costs in the Proceedings. 12. This offer is open for acceptance until 4pm on Friday, 26 March 2021. The acceptance of this offer must be in writing. This offer is made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333. Should your client reject this offer, or allow it to lapse, and achieve no better result at a final hearing, our client reserves its right to rely on this letter in support for an application for costs, including indemnity costs." 1. On 23 March 2021, the owners filed an Amended Notice of Appeal. 2. On 26 March 2021, the 18 March 2021 Offer expired. 3. On 10 May 2021, the Appeal Panel heard the owners' appeal, together with an application by the builder for a variation of the 16 March 2021 Costs Order, in which it sought an order that the owners pay the builder's costs on an indemnity basis ("builder's application"). 4. On 20 September 2021, the Appeal Panel dismissed the appeal and the builder's application: Tang v Mawad Group Pty Ltd [2021] NSWCATAP 282. Relevant law 1. The builder's application for costs of the appeal incurred since 16 March 2021 is made pursuant to s 60 of the NCAT Act. That section provides in so far as is presently relevant: 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 unreasonably 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. … 1. Section 60 provides that the prima facie position is that each party to proceedings in the Tribunal (including proceedings in the Appeal Panel) is to pay their own costs and that costs may be awarded only where there are special circumstances warranting an award of costs. In considering whether there are special circumstances, the Tribunal may have regard to the matters set out in s 60(3). 2. Special circumstances are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]. 3. If satisfied that there are special circumstances, the Appeal Panel must further be satisfied that they are circumstances "warranting an award of costs": Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103. The exercise of the discretion requires the Appeal Panel "to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]. Submissions 1. The builder's submissions may be summarised as follows: 1. it relies upon s 60(3)(c), (e) and (g); 2. s 60(3)(c) and (e) are engaged because the owners' appeal was a weak claim and one lacking in substance and in particular: 1. the submissions made by the owners were rejected; 2. the builder was wholly successful; 3. the builder should not bear its costs in those circumstances; and 1. s 60(3)(g) is engaged because of the correspondence passing between the parties and in particular the failure of the owners to accept the 13 January 2021 Offer, which the builder contends was unreasonable in all the circumstances. Consideration Are there special circumstances? 1. As noted above, special circumstances are circumstances that are out of the ordinary, but need not be exceptional or extraordinary, and in considering whether there are such circumstances, the Appeal Panel may have regard to the matters set out in s 60(3) of the NCAT Act. 2. The builder submitted that the owners' appeal raised weak arguments. However, those arguments were not so untenable that on their own, they provide special circumstances. 3. However, the making of the 13 January 2021 Offer and the 18 March 2021 Offer and the owners' non-acceptance of both of those offers are circumstances out of the ordinary. Thus, the Appeal Panel is satisfied that there are special circumstances. Exercise of discretion 1. Thus, the discretion in s 60 of the NCAT Act is enlivened. 2. The appropriate exercise of that discretion is to refuse the builder's application for costs incurred after 16 March 2021, for the following reasons. 3. First, the application is limited to costs of the appeal incurred after 16 March 2021. As noted above, the builder already has the benefit of 16 March 2021 Costs Order which entitles it to the costs of the appeal up to and including 16 March 2021. 4. Secondly, on 23 March 2021, the owners filed their Amended Notice of Appeal, which was limited in the manner described in the orders made by the Appeal Panel on 16 March 2021. The Amended Notice of Appeal was considerably more focused than the Notice of Appeal the subject of the 13 January 2021 Offer. 5. Thirdly, each of the offers were made prior to the service of the Amended Notice of Appeal on 23 March 2021 (albeit that the 18 March 2021 Offer remained open until 26 March 2021) and neither of those Offers addressed the Amended Notice of Appeal. 6. Fourthly, whilst it is true that if the owners had accepted the 13 January 2021 Offer, no further costs would have been incurred, it does not follow that the builder should be awarded costs beyond 16 March 2021. As noted above, the builder has the benefit of the 16 March 2021 Costs Order and the shape of the appeal changed when the Amended Notice of Appeal was filed on 23 March 2021. 7. Fifthly, whilst the 18 March 2021 Offer was open after the Amended Notice of Appeal was filed and until 26 March 2021, the owners' non-acceptance of that offer was not unreasonable in circumstances where part of that offer required payment of costs of $20,000 against an asserted amount of costs incurred of $24,712.50 in satisfaction of the 16 March 2021 Costs Order, in circumstances where a previous estimate of the builder's costs incurred had been discounted by the Tribunal by approximately 50 per cent - in making the 18 November 2020 Costs Order, the Tribunal discounted the amount claimed by the owners from $46,108.83 plus GST to $23,529. 8. Finally, as noted above, whilst the owners' appeal raised weak arguments those arguments were not untenable. The arguments raised were not so weak as to justify an award of costs. Orders 1. The orders of the Appeal Panel are: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW), dispense with a hearing on the question of costs. 2. The builder's application for costs of the appeal since 16 March 2021 is dismissed. ********** 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: 09 November 2021