Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Mullally v Lucien [2022] NSWCATAP 258 Hearing dates: 18 February 2022 Date of orders: 4 August 2022 Decision date: 04 August 2022 Jurisdiction: Appeal Panel Before: S Thode, Senior Member AR Boxall, Senior Member Decision: 1. Leave to appeal refused. 2. Appeal dismissed. Catchwords: APPEALS - RESIDENTIAL BUILDING – Home Building Act 1989 – appeal against cost decision – whether discretion to award costs miscarried Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Regulation 2013 Category: Principal judgment Parties: Nerida Mullally (Appellant) Anthony Allan Lucien (Respondent) Representation: Counsel: J Hyde (Appellant) M Fraser (Respondent) Solicitors: Wilkinson Building & Construction Lawyers Pty Ltd (Appellant) MBA Lawyers (Respondent) File Number(s): 2021/00362358 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: 2022 NSWCATCD [*] Date of Decision: 25 November 2021 Before: G Blake SC, Senior Member File Number(s): HB19/48969 REASONS FOR DECISION 1. This is an appeal against the Tribunal's decision to order the owner to pay the builder's costs of application HB 19/48969. The costs decision was made in respect of two applications that were heard together arising out of a contract to do alterations and additions at a property at Newtown between the owner, Nerida Mullally, and the builder Anthony Allen Lucien. For ease of reference we shall refer to the appellant as the owner and the respondent as the builder. 2. On 4 October 2017 the parties executed the contract which was in the form of a New South Wales Fair Trading Home Building Contract for work over $20,000. The contract specified a price of $812,770 inclusive of GST and comprised plans and specifications. 3. On 31 October 2019 the builder commenced proceedings HB19/48969 against the owner by filing a home building application in which he claimed $142,030.73 in debt being the total of outstanding invoices and in quantum meruit together with interest or damages for repudiation of the contract (the builder's proceedings). 4. On 19 December 2019 the owner commenced proceedings HB 19/56785 against the builder by filing a home building application in which she claimed $127,516.07 as damages for breach of the contract being the cost of completing the works or alternatively the diminution in value of the property due to the defects in the works and the loss from the delay in completing the works (the owner's proceedings). 5. The applications were heard on 29 April 2021, 21 May 2021 and 15 September 2021 respectively. The parties filed approximately 4000 pages of evidence and submissions. 6. On 25 November 2021 the Tribunal published its decision ordering the builder to pay the owner the sum of $31,660.65. The builder appealed against the decision. The appeal by the builder was unsuccessful. 7. The Tribunal published a separate decision in respect of costs on 18 February 2022 (Mullally v Lucien No (2)) (the costs decision). The Tribunal made the following orders: 1. The owner to pay the costs of the builder of proceedings HB 19/48969 as agreed or assessed on the basis set out in the legal costs legislation as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 (NSW). 2. The builder to pay the costs of the owner of proceedings HB 19/56785 as agreed or assessed on the basis set out in the legal costs legislation as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 (NSW). 1. It is against order one (1) that the owner appeals. 2. The builder did not appeal the costs decision. The Tribunal's decision on costs 1. The costs decision was published on 18 February 2022. In paragraphs [24] [25] of the decision the Tribunal found as follows: [24] I am satisfied that the builder was successful in proceedings HB 19/48969 and that the owner was successful in proceedings HB 19/56785, and having regard to the principles in Vella (No 3) at [28] – [33] that there is no reason why the usual rule as to costs should not apply to each of the two proceedings. I do not accept that any of the submissions advanced by the builder warrant a departure from the usual rule as to costs. While the owner did not recover as much as originally claimed, she nonetheless recovered a substantial sum against the builder in proceedings HB 19/56785 I also do not accept that any of the submissions advanced by the owner warrant a departure from the usual rule as to costs in respect of proceedings HB 19/48969. Contrary to the submissions of the owner, the builder was successful in proceedings HB 19/48969. [25] It follows that under rule 38 (2) (b) of the NCAT Rules that: (1) the owner shall pay the costs of the builder of proceedings HB 19/48969 as agreed or assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 (NSW) (LPULA Act) (2) the builder to pay the costs of the owner of proceedings HB 19/56785 as agreed or assessed on the basis set out in the legal costs legislation (as defined in section 3A of the LPULA Act). The Scope and nature of internal appeals 1. Internal appeals may be made as of right on a question of law, and otherwise with permission (that is, the "leave") of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NCAT Act). 2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 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; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it. 1. 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 cl 12(1) of Schedule 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: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), 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. 1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 2. In Collins v Urban, the Appeal Panel stated at [84] 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. Submissions and evidence 1. In deciding the appeal on the question of costs, we have had regard to the following: 1. The Notice of Appeal lodged on 17 March 2022 and attachments constituting 1. an appeal bundle; 2. application for stay of the original decision pending appeal dated 17 March 2022; 3. amended decision of Senior Member Blake dated 25 November 2021; 4. costs decision of Senior Member Blake dated 18 February 2024. 1. The appellant's written submissions filed and served on 19 April 2022 2. The respondent's written submissions dated on 2 May 2022; and 3. The appellant's outline of submissions in reply to the respondent submissions dated 10 May 2022. Notice of Appeal filed in time 1. The Notice of Appeal was lodged on 17 March 2022, which is within the time prescribed by cl 25(3) of the Civil and Administrative Tribunal Rules 2014 (the Rules). Grounds of Appeal 1. The appellant sets out her singular ground of appeal as follows: The Tribunal's discretion as to costs miscarried. On no reasonable view could the Builder's case be said to have succeeded. The Owner's defence of set off succeeded so that the builder's case failed in its entirety. 1. The appellant alleges that this constitutes an error of law being a miscarriage of the Tribunal's discretion. 2. The appellant also seeks leave to appeal. 3. Under the section "describe in detail why the decision was not fair and equitable" the appellant states as follows: "the only reason given for the cost decision was the Builder was successful in the proceedings, but the Owner succeeded in her defence so that the builder's claim failed in its entirety. To deprive the owner of the costs is not fair or equitable." Reply to Appeal 1. We have had regard to the Reply to Appeal filed on 17 January 2022. The builder states as follows: "The respondent supports the original orders made by the Tribunal for the reasons given and for other reasons identified in the respondent's submissions to the Tribunal regarding the circumstances of termination of the contract." The appellant's submissions 1. We refer to written submissions filed 6 May 2022. 2. The appellant appeals the Tribunal's orders requiring her to pay the builder's costs of HB 19/48969. The ground of appeal is that the Tribunal's discretion miscarried. It is submitted that the miscarriage of the discretion to award costs is an error of law and that leave to appeal is not required. 3. It is further submitted that, even if the Appeal Panel takes the view that leave to appeal is required, the error that caused the Tribunal's costs discretion to miscarry will cause a substantial injustice to the appellant. The builder has advised that his costs of the proceedings at first instance, excluding expert fees, are in excess of $479,000 including GST. The owner's costs are approximately $288,000. 4. The builder commenced proceedings HB 19/48969 in October 2019 claiming the amount of $142,031. It is submitted that the builder's claim comprised the balance of the contract sum plus variations. The builder did not account for work, including variations for work, he had not done. The builder's alternative claim in quantum meruit was not supported by evidence. 5. In her defence the owner disputed that money was owed under the contract and claimed a set off for incomplete and defective work and for money she had expended on the builder's behalf while the contract was on foot. 6. It is submitted that the owner's defence and set off was wholly successful. The owner was awarded $31,726 on her cross-application. It is submitted that the Senior Member found in the costs decision that the builder was "successful" in proceedings HB 19/48969 and therefore should have his costs of the proceedings. It is submitted that on no reasonable view it could be said that the builder's case succeeded. The owner's defence succeeded so that the builder's case failed in its entirety. 7. It is submitted that the error constitutes an error within the meaning of House v R (1936) 55 CLR 499; HCA 40, Evatt and McTiernan JJ. 8. Further, or in the alternative, the owner submits that the finding is unreasonable or plainly unjust. The builder succeeded on only one contested item of his claim, that is, Item 30 Variation 13, in the amount of $600. It is submitted that the Tribunal should not have made an award of costs in the builder's favour. 9. The owner seeks an order that the orders made on 18 February 2022 in proceedings under HB 19/48969 be set aside and in lieu thereof the Appeal Panel make an order that the builder pay the costs of the owner of proceedings HB 19/48969 as agreed or assessed on the basis set out in the legal costs application as defined in section 3A of the LPUA Act. 10. In addition, the owner seeks an order that the builder pay the costs of the appeal. The respondent's submissions 1. We refer to written submissions received on 4 May 2022. It is the builder's position that the Tribunal's order on costs was correct. 2. The builder submits that the disclosure of the parties' respective costs is improper because it is disclosing without prejudice communication and ought to be disregarded. The respective amounts of costs incurred by each party was not disclosed to the Tribunal below. 3. It is submitted that the contract was wrongfully terminated by the owner and that deprived the builder of an opportunity to complete the works and obtain full payment (and the builder appealed the Tribunal's decision). The builder's claim was for the balance of the contract price and the amount of $110,955.79, plus variations performed in the amount of $9856.41 and for interest payable to the builder on his claim. 4. It is submitted that the applicant's claim, as set out in her initial points of claim, was for $541,892.08 for 88 alleged defective and incomplete work items, many of which the builder conceded the value of, to reduce the hearing time required on the basis that the contract had been wrongfully terminated by the owner [an issue that was ultimately decided in favour of the owner]. 5. The owner also claimed $151,000 in damages for alleged lost rental income and the claim for lost rent was dismissed in its entirety. The owner only recovered $31,726 of her $541,892.08 claim and the builder was always to be awarded the balance of the agreed contract price by way of credit. It is submitted that the builder succeeded in his claim which offset the $541,892.08 which was claimed by the owner. 6. It is submitted that the Tribunal came to the correct conclusion in relation to the costs given the minor success the owner had on her claim and the significant success the builder had on his claim which are best summarised as follows: 1. the builder claimed $127,516.07 and was awarded $120,746.20 or 94% of the amount claimed. 2. The owner claimed $541,892.08 and was awarded $142,615.95 or 26% of her total claim. 1. It is submitted that the finding of the Tribunal that the builder was somewhat successful was just and reasonable because the builder succeeded in his claim for the balance of the agreed contract price, namely $110,955.75 as found by the Tribunal at paragraph [575] of the decision. 2. It is submitted that the orders on costs should be upheld and there is no basis to depart from those orders. 3. The builder seeks an order that the owner pay the costs of this appeal on a party/party basis The owner's submissions in reply 1. We have had regard to the owner's written submissions in reply to 6 May 2022. 2. It is submitted that the owner's case has been wrongly quantified by the builder. The owner during opening submissions quantified her claim at $204,583.23. 3. It is submitted that the builder's position that he was awarded monies is incorrect. The builder lost his case completely. The builder should not be entitled to rely on a position that he did not present before the Tribunal below namely that he succeeded in his claim for $110,905, or any other amount, and the builder should not be heard in support of this submission now. Consideration 1. As the award of costs was discretionary, for a successful appeal the appellant needed to persuade us that the Tribunal had committed at least one of the errors listed in House v R [1936] HCA 40; (1936) 55 CLR 499 at 504-505. 2. That is, the appellant needed to persuade us by reference to the Tribunal's reasons and the evidence before the Tribunal that the Tribunal had: 1. made an error of legal principle; 2. made a material error of fact; 3. took into account some irrelevant matter; 4. failed to take into account, or gave insufficient weight to, some relevant matter; or 5. arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning. 1. On balance we are not of the view that the exercise of the Tribunal's discretion miscarried. 2. The builder commenced proceedings first, seeking a debt outstanding under the contract and in the alternative a claim for restitution or quantum meruit. The builder was wholly successful on that issue, and it is immaterial that no "order" was made in his favour, the debt to the builder was found and accounted for as a significant set-off to the owner's claim. In addition, the builder claimed a series of variations for work he claimed he performed with the consent of the homeowner. The builder therefore was somewhat successful in his claim. The owner, in her notice of appeal or submissions did not set out the critical findings made in favour of the builder. We consider the following findings were made in favour of the builder. 3. First, a part of the claim made by the builder was conceded by the owner: (2) as to variations and additional works (items 19-37 of the amended Scott schedule from which variation # 9 been omitted): (a) they agreed that the builder is entitled to claim items 19, 20, 22, 23, 24, 25, 26, and 27 (variations # 1, # 2, # 4, # 5, #6, # 7, # 8, and #10) as a variation and the total amount due is $14,727.21 exclusive of GST; 1. Secondly, as set out above, the builder was successful as to a significant part of his claim which is payment outstanding under the contract in the sum of $110,889.79, which in the event was accounted for by way of defence or set off to the owner's claim: I am satisfied that the owner is entitled to an order that the builder pay her $31,660.65 inclusive of GST calculated as follows: contract sum: $812,770.00; plus variations (# 1, #2, #4 to # 8, #10, #11 and #13): $9,856.41; less payments made by the owner to the builder: $711,670.62; = amount owing to the builder: $110,889.79; less defects: $64,229.35 less incomplete works: $54,462.70; less payments made by the owner on behalf of the builder: $23,923.90. I make the following orders: the builder is pay the owner the sum of $31,660.65 immediately; 1. The builder was successful on the variations, which were partly conceded and partly as found by the Tribunal. The critical findings are contained at page 208 paragraph [574] of the reasons for decision. [574] Having regard to the agreed position of the parties and my findings I am satisfied that: the builder is entitled or liable to a variation of the contract for items 19, 20, 22 to 28, and 30; the total of the agreed amount and reasonable amount for these items is $8,960.37 exclusive of GST and $9,856.41 inclusive of GST. It follows that the sum $9,856.41 inclusive of GST needs to be added to the contract price payable by the owner to the builder. 1. We infer that the findings as to variations and the outstanding sum under the contract gave rise to the Senior Member's critical conclusion in the costs decision that "the builder was successful in proceedings HB 19/48969". We agree that the builder was, to a degree, successful in his claim. 2. The owner's singular ground of appeal is that "the owner's defence and set off was wholly successful …[and] [t]he owner was awarded $31,726 on her cross-application." The submissions invite the Appeal Panel to consider only the owner's successful defence and to disregard the builder's successful defence, or alternatively to have regard only to the net outcome of both applications. The owner submitted that the Tribunal erred in finding that the builder was successful in both proceedings. We disagree. The builder was successful in respect of two out of three, readily discernible, separate aspects of his application. The owner also enjoyed some success in her defence and her application. On any view of the matter, when considering both applications, the builder was somewhat successful in his application as was his defence to the owner's claim. 3. Costs decisions are discretionary decisions. In Yu v Cao [2015] NSWCA 276 McColl JA, with whom Sackville AJA and Adamson J agreed, said at [157]: "It was common ground that as the costs order involved the exercise of the s 98 costs discretion, the success of the appeal depended on demonstrating error in the House v R sense. Such error may be demonstrated if the primary judge acted upon a wrong principle, mistook the facts or failed to have regard to material considerations or reached a conclusion which was, on the facts, 'unreasonable or plainly unjust'." 1. Accordingly, error in the House v R (1936) 55 CLR 499; [1936] HCA 40 sense must be established. 2. The last-mentioned type of error, the unreasonable or plainly unjust ground, was further explained in Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61. In that case it was said that the unreasonable or plainly unjust ground only applied where the reasons did not disclose why the impugned orders were made – see at [8] – [11] per Bathurst CJ and Leeming JA. 3. Their Honours also emphasised, at [13], that deference must be shown to the discretionary decisions of the decision maker at first instance. Their Honours said: "On the one hand, appellate intervention in the exercise of a discretion may be available where insufficient weight has been given to something relevant. On the other hand, it is fundamental that deference is to be given by an appellate court to the discretionary decisions of judges at first instance, insofar as it is insufficient for the appellant merely to persuade the appellate court that it would have decided the matter differently. Statute has given a right of appeal to a disappointed litigant, and committed a process known as an appeal to the appellate court. Statute has not conferred a right to a hearing de novo. This is the point made by Heydon JA in Micallef immediately following his Honour's observation that it is insufficient that the appellate court might itself exercise the discretion differently: 'The law committed the exercise of the discretion to Garling DCJ.'" 1. The appellant seeks leave to appeal. It is submitted that even if it is established that the discretion miscarried, the Appeal Panel should nonetheless make an order that the builder pay the owner's costs of the proceedings as not to do so would cause an injustice. For the reasons that follow we are not satisfied that leave to appeal should be granted. It is our view that the appeal on the question of costs has arisen because the parties, rather than being ordered to pay their own costs, were ordered to pay the other sides' costs. 2. It was subsequently disclosed that the builder's costs exceed $479,000 and the owners' costs are approximately $288,000. Although much may be said concerning the appropriateness of costs in such an amount being incurred in a case before the Tribunal, we consider that the amount of costs incurred by each side is an irrelevant consideration for the disposition of the appeal. The costs were not disclosed to the Tribunal and it is insufficient for the appellant to suggest to the Appeal Panel, that with the knowledge of the costs incurred by each side, it should come to a different conclusion or decide the matter differently. At the level of principle, there seems nothing unreasonable in the proposition that one party should pay the other party's costs in circumstances where each party was somewhat successful in its application. The value of one party's costs cannot detract from this principle. Further, in considering the Tribunal's reasons for decision it is important to note that the owner did not argue before the Tribunal, or before the Appeal Panel, that the owners should only be awarded a proportion of their costs having regard to their success on discrete issues, nor was it argued that in light of the amount of costs each party should pay its own costs. These orders are not sought and their absence does not form grounds of appeal. 3. We are not satisfied that the Tribunal erred in finding that the builder was successful in his application for the purpose of exercising the discretion in relation to costs. We have not been asked to consider the apportionment of costs on any other basis. The only ground of appeal to be determined is whether the Tribunal's discretion miscarried. 4. As the Appeal Panel stated in Thompson v Chapman [2016] NSWCATAP 6 at [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 (No 2) [2009] NSWSCA [sic] 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 v Richmond River Council per Gaudron and Gummo[w] JJ at 41 – 44. 1. In Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 the Court of Appeal noted at [38] that 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 in Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373. We note the Court of Appeal's summary of the relevant principles: inter alia, 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) at [38], citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272. We are not satisfied, based on singular ground of appeal as pleaded, that the Tribunal's assessment of the matters of impression and or evaluation with which it was presented miscarried. 2. The applications before the Tribunal were matters where both parties achieved a measure of success. On the one hand, the owner was successful in her claim for defects and incomplete work. On the other hand, the builder was successful in his claim for debt and variations. We find no error of law in the Tribunal's finding that the builder was successful. More particularly, we are not persuaded that the Tribunal's decision involved any of the categories of error set out in House v The King. Nor are we persuaded that the owner may have suffered a substantial miscarriage of justice. We do not consider that the Tribunal's conclusion was against the weight of evidence or not fair and equitable. Orders 1. The Appeal Panel makes the following orders: 1. Leave to appeal is refused. 2. The appeal is dismissed. Costs 1. The respondent seeks an order for the costs of the appeal. The appellant was not successful in the appeal. Costs ordinarily follow the event. 2. The appellant is to pay the respondent's costs of the appeal as agreed or assessed on the ordinary basis set out in the legal costs legislation as defined in s3A of the Legal Profession Uniform Law Application Act 2014 (NSW). 3. If either party seeks a different order as to costs of the appeal order 64 ceases to have effect. 4. The parties are to file submissions in chief within seven days of this decision being published and submissions in response within 14 days of the publication of this decision. ********** 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: 04 August 2022