Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Whitehouse v Paradise Pools & Solar Pty Ltd [2022] NSWCATCD 161 Hearing dates: On the papers Date of orders: 07 September 2022 Decision date: 07 September 2022 Jurisdiction: Consumer and Commercial Division Before: G Blake AM SC, Senior Member Decision: (1) The application of the respondent for an order that the applicants are to pay its costs of proceedings HB 21/45097 is dismissed. (2) The applicants and the respondent are to pay their own costs of proceedings HB 21/45097. (3) The applicants are to pay the costs of the respondent of proceedings HB 22/20505 as agreed or assessed. Catchwords: COSTS – whether there are special circumstances warranting an award of costs Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 4, 35, 36, 39, 55, 60, 61 Civil and Administrative Tribunal Rules 2014 (NSW), rr 23, 38 Home Building Act 1989 (NSW) Cases Cited: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 Knox v Bollen; Bollen v Knox [2018] NSWCATAP 106 Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 Shoal Bay Developments Pty Ltd v Community Association DP 270468 [2020] NSWCATAP 115 The Owners – Strata Plan 5319 v Price [2020] NSWCATAP 245 Vella v Mir (No 3) [2020] NSWCATAP 17 Category: Costs Parties: Scott Raymond Whitehouse, Melinda Kaye Whitehouse (Applicants) Paradise Pools & Solar Pty Ltd (Respondent) Representation: Solicitors: Conroy Stewart Spagnolo (Applicants) Glaser Lawyers (Respondent) File Number(s): HB 21/45097; HB 22/20505 Publication restriction: Nil REASONS FOR DECISION Overview 1. On 30 June 2022, I made an order that a hearing of the respondent's costs applications be dispensed with, and procedural directions in relation to the respondent's costs application. 2. I have decided that the respondent's costs application for proceedings HB 21/45097 should be dismissed, and the applicants should pay the costs of the respondent of proceedings HB 22/20505 as agreed or assessed. The hearing on the papers 1. The respondent relies on the following submissions on costs: 1. the letter of its solicitors dated 17 June 2022 (the respondent's 17 June 2022 costs submissions); 2. the letter of its solicitors dated 4 August 2022 (the respondent's 4 August 2022 costs submissions). 1. The applicants rely on their submissions on costs in the letter of their solicitors dated 21 July 2022 (the applicants' costs submissions). 2. Before determining the respondent's costs applications, it is appropriate to set out the factual background, the applicable statutory provisions and the relevant legal principles, and summarise the evidence and the submissions of the parties. The factual background The building contract 1. On 29 October 2020, the applicants, Scott Raymond Whitehouse and Melinda Kaye Whitehouse, as the owners and the respondent, Paradise Pools & Solar Pty Ltd, as the contractor entered into a contract whereby the respondent agreed to build a swimming at the property of the applicants at Yamba for $44,141.21 (the building contract). Proceedings HB 21/45097 1. On 1 November 2021, the applicants commenced proceedings HB 21/45097 against the respondent by filing a home building application in which they sought relief under the Home Building Act 1989 (NSW) (HB Act), being an order that they did not have to pay $12,153.65 to the respondent and a money order for $134,555.19 for breach of statutory warranty, and attached documents including the building contract, a statement of the applicants (the Whitehouse statement) and the expert report dated 27 October 2021 of Stephen McElroy (Mr McElroy), a structural engineer (the McElroy report). 2. On 16 December 2021, the Tribunal relevantly granted leave to the parties to be legally represented, made an order that the applicants grant reasonable access to their property to the respondent on 48 hours' notice, and made procedural directions for the filing of the documents on which they intended to rely at the hearing by the applicants by 15 February 2022 and by the respondent by 15 March 2022 (the 16 December 2021 orders). 3. On 2 March 2022, the Registrar sent notice of a directions hearing by telephone on 7 April 2022 to the parties. 4. On 7 April 2022, the Tribunal as set out in its decision (the 7 April Tribunal decision): 1. dismissed the proceedings pursuant to s 55(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) because of the non-appearance of the applicants; 2. dismissed the proceedings pursuant to s 55(1)(d) of the NCAT Act for the following reasons: "the homeowners did not comply with any of the orders made on 16 Dec 2021, did not appear at the hearing today, did not grant the builder access as ordered on 16 Dec 2021: see affidavit of Roan Stanfield sworn 5 April 2022. Did not seek extensions of time, an adjournment or take any steps to properly prosecute their claim which has been on foot now for five months." Proceedings HB 22/01213 1. On 27 July 2021, the respondent as the plaintiff commenced proceedings 2021/00214231 in the Local Court of New South Wales at Maclean (the Local Court) against the applicants as the defendants by filing a statement of claim in which it claimed $12,153.65 for work done and costs (the Local Court proceedings). 2. On or shortly after 29 October 2021, the defendants filed a defence in which they denied liability by reason that the work done was defective and incomplete. 3. On 16 December 2021, the Local Court transferred the Local Court proceedings to the Tribunal. 4. On 12 January 2022, the Registrar allocated the number proceedings HB 22/01213 to the Local Court proceedings. Proceedings HB 22/20505 1. On 13 April 2022, the applicants commenced proceedings HB 22/20505 against the respondent by filing an application for renewal of proceedings in which they sought the reinstatement of proceedings HB 21/45097. 2. On 1 June 2022, the respondent filed its submissions in opposition to the proceedings which included an application for costs. 3. On 8 June 2022, the Tribunal dismissed the proceedings and relevantly provided the following reasons for its decision (the 8 June 2022 Tribunal decision): "6 Section 55(2) permits the Tribunal to reinstate proceedings only in circumstances where the proceedings "have been dismissed under subsection (1)(c)". It does not permit the Tribunal to reinstate proceedings that have been dismissed on other grounds. 7 In this instance the proceedings were dismissed for a variety of grounds which were not confined to the applicants' non-attendance at the directions hearing. 8 In such circumstances s 55(2) of the NCAT Act does not empower the Tribunal to reinstate proceedings and for this reason the application to reinstate the proceedings under s 55(2) must be dismissed. 9 I would add that even if I am wrong in this regard, I would not in any event have reinstated the proceedings for the following reasons. 10 Firstly, I am not satisfied that the applicants have provided a reasonable explanation for their failure to attend the directions hearing. Although I accept that the applicants' solicitor Mr Spagnolo failed to attend the hearing due to a genuine administrative oversight within his office, there is nothing in the reinstatement application or the witness statements provided by the applicants which addresses whether Mr and Mrs Whitehouse knew about the directions hearing and why they themselves did not attend the hearing. 11 Secondly, in the exercise of my discretion I would have refused to reinstate the proceedings because the applicants have not complied with the Tribunal's procedural directions made on 16 December 2021 and have not provided an adequate explanation for this failure. In this regard the applicants were required to file and serve documents on which they intended to rely or before 15 February 2022. The applicants say they only wished to rely on the documents they had previously lodged together with their application and did not wish to rely on any additional documents. However, the applicants have submitted nothing to show that this position was explained to the Tribunal or to the respondent prior to the due date for the documents (such as a transcript of the 16 December hearing, or correspondence with the Tribunal registry or the respondent). The respondent in contrast has submitted evidence of numerous emails sent to the applicants' solicitors in February and March 2022 in relation to the applicants' failure to comply with the Tribunal's procedural directions, which were not answered by the applicants' solicitor until 1 April 2022, some six weeks after the applicants' documents were due. 12 Moreover, the respondent's evidence, including the affidavit of Mr Rowan Stanfield and the respondent's solicitor's email correspondence, establishes that the applicants' solicitors have not cooperated with the respondent's solicitor to arrange for the respondent's expert to gain access to the premises for the purpose of preparing his report. In addition, the Tribunal's directions made on 16 December 2021 required the parties to arrange for their experts to meet and prepare a joint report in the form of a scott schedule no later than 29 March 2022. This order was not complied with. There is nothing before me to explain why the applicants did not comply with this order, whether the applicant's solicitor took any steps to engage with the respondent regarding this order, or why the applicants' solicitor did not respond to the respondent's solicitor's numerous requests for access. 13 The parties and their legal practitioners are under a statutory duty to co-operate with the Tribunal to give effect to the guiding principle of the Tribunal which is to facilitate the just, quick and cheap resolution of the real issues in 7 the proceedings: s 36 NCAT Act. The circumstances outlined above demonstrate a failure by the applicants and their representatives to comply with this statutory duty. 14 For these reasons even if s 55(2) of the NCAT Act applied in this case, I would have dismissed the application for reinstatement in any event. 15 I would add that it appears that the applicants are still within time for bringing a claim under the Home Building Act 1989. As the proceedings have not been determined on their merits it is open to the applicants to consider making a fresh application in relation to the matters the subject of this application. Alternatively, although s 55(2) does not apply in this case, it may be open to the applicants (subject to the applicable time limits) to appeal the Tribunal's decision to dismiss the application if they say that the Tribunal made an error on a question of law, or that there is a basis for seeking leave to appeal." The applicable statutory provisions NCAT Act 1. Part 1 (ss 1-6) contains preliminary provisions relating to the Tribunal. Section 4 contains definitions, and relevantly provides: 4 Definitions (1) In this Act— … application to the Tribunal—see section 39. … procedural rules means each of the following— (a) the Tribunal rules, … Tribunal rules means the rules of the Tribunal made by the Rule Committee. … 1. Part 4 Division 1 (ss 35-38) contains introductory provisions relating to the practice and procedure of the Tribunal. Section 35 deals with the application of Part 4, and relevantly provides: 35 Application of Part Each of the provisions of this Part is subject to enabling legislation and the procedural rules. 1. Section 36 deals with the guiding principle to be applied to the practice and procedure of the Tribunal, and 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. … (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) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. … 1. Part 4 Division 2 (ss 39-43) contains provisions dealing with the commencement of proceedings. Section 39 deals with the constitution of an application, and provides: 39 What constitutes an application For the purposes of this Act, an application to the Tribunal includes a complaint, referral or other mechanism (however expressed) by means of which enabling legislation provides for a matter to be brought to the attention of the Tribunal for a decision. 1. Part 4 Division 4 (ss 49-55) contains provisions dealing with the conduct of proceedings. Section 55 deals with the dismissal of proceedings, and relevantly provides: 55 Dismissal of proceedings (1) The Tribunal may dismiss at any stage any proceedings before it in any of the following circumstances— … (c) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) has failed to appear in the proceedings, (d) if the Tribunal considers that there has been a want of prosecution of the proceedings. (2) The Tribunal may reinstate proceedings that have been dismissed under subsection (1)(c) if the Tribunal considers that there is a reasonable explanation for that failure. 1. Part 4 Division 5 (ss 56-63) contains provisions dealing with the determination of issues and proceedings. Section 60 deals with costs, and relevantly provides: 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— … (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, … (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. (4) If costs are to be awarded by the Tribunal, the Tribunal may— (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be 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) or on any other basis. (5) In this section— costs includes— (a) the costs of, or incidental to, proceedings in the Tribunal, and … 1. Section 61 deals with the question of when a decision determining proceedings takes effect, and relevantly provides: 61 When decision determining proceedings takes effect A general decision or a decision determining an external or internal appeal takes effect on the date on which it is given or such later date as may be specified in the decision. … NCAT Rules 1. Part 6 (rr 23-26) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) contains provisions dealing with the commencement of proceedings. Rule 23 deals with general applications, and relevantly provides: 23 General applications … (3) Unless the Tribunal grants an extension under section 41 of the Act, an application must be made— (a) in the case where enabling legislation specifies the period within which the application is to be made—within the period specified, or (b) in any other case—within 28 days from the day on which the applicant became entitled under the enabling legislation to make the application. … 1. Part 9 (rr 37-40) contains provisions dealing with the determination of proceedings. Rule 38 deals with costs in the Consumer and Commercial Division of the Tribunal, and relevantly provides: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if— … (b) the amount claimed or in dispute in the proceedings is more than $30,000. The relevant legal principles Whether the Tribunal becomes functus officio when it does not deal with costs at the time of making a decision 1. In Shoal Bay Developments Pty Ltd v Community Association DP 270468 [2020] NSWCATAP 115 (Shoal Bay Developments) at [54]-[61] the Appeal Panel considered the question of whether the Tribunal becomes functus officio when it does not deal with costs at the time of making a decision: "[54] The Lot Owners submitted in their submissions in chief that since section 61 of the CAT Act provides that a "decision" (as defined in section 5(1)(a)) "takes effect on the date on which it is given", the jurisdiction of the Tribunal was "exhausted" from the date it dismissed the proceedings on 8 November 2019 under section 55(1)(a), after the Lot Owners withdrew their application. [55] We accept that an order made under section 55(1)(a) is a "decision" coming within the definition of section 5(1)(a) of the CAT Act. We do not agree that such a decision by reason of section 61 of the CAT Act necessarily renders a decision-maker functus. Section 61 provides no more than the decision has effect from the date on which it is made. Section 61 does not seek to remove or limit the jurisdiction or powers of the Tribunal consequent upon the making of a "decision" and only concerns itself with when such a decision takes effect. [56] Further, even though the dismissal takes "effect" at the time the decision is made, section 60 preserves the Tribunal's power to award costs. The power to award costs properly only arises when a proceeding is determined which may include a dismissal. This is clear from the factors for a Tribunal's consideration in section 60(3) of the CAT Act. These factors can only be properly ascertained and considered in the Tribunal's exercise of its discretion with respect to costs after a decision is made, including an order dismissing proceedings. [57] In our opinion, Section 61 should not be taken to limit or curtail the power of the Tribunal to award costs under section 60 consequent upon an order dismissing a proceeding under section 55(1)(a) of the CAT Act. To do so would distort and obstruct the sensible conduct of proceedings in the Tribunal. [58] Further, there is nothing in the CAT Act to suggest that the legislature intended limiting the Tribunal's powers in the manner contended by the Lot Owners. Section 61 does not expressly or implicitly purport to prevent a Tribunal from dealing with costs of proceedings consequent upon a withdrawal and a dismissal of proceedings. As always, when applying the principles of statutory construction, regard must be had to the majority judgment in Project Blue Sky Inc v Australian Broadcasting Authority I1998] HCA 28; (1998) 194 CLR 355. As stated by McHugh, Gummow, Kirby and Hayne JJ at [69], (omitting citations and endnotes): "The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed." [59] In The Owners Corporation of Strata Plan 4521 v Zouk & Anor [2007] NSWCA 23 Ipp JA (with whom Beazley and Bryson JJA agreed), considered section 192 of the former Strata Schemes Management Act 1996 (NSW) and held (at [28]-[29]): "28. Section 192 does not require an order for payment of costs to be made contemporaneously with the dismissal of the appeal. The power is to make an order for the payment of costs "in relation" to an order dismissing an appeal. Logically, such an order can only be made after an order has been made dismissing the appeal. "29. Section 192 does not provide expressly that a costs order may only be made "when" ... the appeal is dismissed... s 92 circumscribes the Tribunal's power to order costs. But neither such a policy nor the words of s 192 supports a construction that limits the time at which the Tribunal is empowered to make costs orders. Moreover, there is no practical reason or policy that is derived from the general interests of justice to limit the Tribunal's power in this regard." [60] As always, these matters depend on the nature and effect of the decision that has been made. [61] There is no tension or inconsistency in the operation of section 55 in dismissing the proceedings and section 60 which empowers the Tribunal to award costs "in relation to proceedings before it". There is no temporal limitation requiring a decision with respect to costs to be made before a proceeding is dismissed. These were proceedings that were "before" the Tribunal. The costs orders were made "in relation to" those proceedings consequent upon the Tribunal dismissing the application. We do not accept the Lot Owner's submission that the proceeding has to be "before it" (ie the Tribunal) in the sense that this must be prior to the proceedings being dismissed." Costs under r 38(2) of the NCAT Rules 1. The general principles concerning the awarding of costs were considered by the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 (Vella (No 3)) at [28]-[30]: "[28] Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9]. [29] Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11. [30] In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion: (1) the starting point is that a successful party should be entitled to an order for costs in his favour; (2) an award of costs is by way of an indemnity and not as punishment; (3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party; (4) the factors to be considered are not to be confined as to do so would constrain the general discretion; (5) the relative success of the parties on different issues and the time taken to determine them may be relevant; (6) the nature of the proceedings is relevant; (7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious." Costs under s 60(2) of the NCAT Act General principles 1. "Special circumstances" in s 60(2) of the NCAT Act are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]. 2. In considering whether special circumstances exist for the purposes of s 60(2) of the NCAT Act: 1. each case will depend upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [27]; 2. the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; 3. mere success (or failure) of an application does not give rise to special circumstances: The Owners – Strata Plan 5319 v Price [2020] NSWCATAP 245 (Price) at [46]; 4. where special circumstances are found to exist, the Tribunal has a discretion to exercise in deciding what, if any, order should be made. Relevant to the exercise of that discretion are those facts upon which the finding of special circumstances was based. However, those findings do not constitute the whole of the relevant matters to be considered in deciding what, if any, order for costs should be made. Rather, the principles applicable to awarding costs generally must also be taken into account: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24]. Proceedings without a hearing on the merits 1. In Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 (Nichols) Payne JA at [25] (Meagher JA at [13] agreeing) considered the principles governing an application for costs in a case which has been resolved without a hearing on the merits: "[25] The relevant principles governing an application for costs in a case which has been resolved without a hearing on the merits were summarised by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6: "In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, [6] the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission [7] where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases." (footnotes omitted) 1. The circumstances set out in Nichols at [25] in which an award of costs is made in a case which has been resolved without a hearing on the merits may constitute special circumstances within s 60 of the NCAT Act: Price at [39]-[44]. 2. In ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 (ONE.TEL) at [6] Burchett J observed: "[6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party." 1. The principles in ONE.TEL at [6] have been applied in the Tribunal: Knox v Bollen; Bollen v Knox [2018] NSWCATAP 106 at [47]. The evidence of the parties The evidence of the respondent 1. The evidence of the respondent consisted of the documents in [36] to [45] below which are annexures to the respondent's 17 June 2022 costs submissions and the respondent's 4 August 2022 costs submissions. 2. On 24 November 2021, Mark Spagnolo (Mr Spagnolo) of the applicants' lawyers, Conroy Stewart Spagnolo (CSS) sent an email to the respondent's lawyers, Glaser Lawyers (GL), in which he advised that the applicants would not agree to pay the respondent's costs in the Local Court proceedings. 3. On 25 February 2022, an administrative staff member of GL sent an email to Mr Spagnolo, in which they referred to the 16 December 2021 orders and requested advice by 28 February 2022 as to when he expected to serve the applicants' evidence (the 25 February 2022 email). 4. On 8 March 2022 at 8.31am, the applicants sent an email to Charlotte Evans of GL, in which they requested information about notification by the respondent of completion of stages four and five in the schedule of progress payments (the 8 March 2022 at 8.31am email). 5. On 8 March 2022 at 9.18am, an administrative staff member of GL sent an email to Mr Spagnolo, in which they referred to the 25 February 2022 email, noted that they had not received either a reply to, nor the professional courtesy of an acknowledgement of, the 25 February 2022 email, and requested an acknowledgement of the email and the 25 February 2022 email (the 8 March 2022 at 9.18am email). 6. On 14 March 2022, an administrative staff member of GL sent an email to Mr Spagnolo, in which they referred to the 25 February 2022 email and the 8 March 2022 at 9.18am email, noted that they still had not received either a reply to, nor the professional courtesy of an acknowledgement of, the 25 February 2022 email, and advised that they assumed that the applicants do not intend to rely upon any documents at hearing (the 14 March 2022 email). 7. On 16 March 2022, an administrative staff member of GL sent an email to Mr Spagnolo and CSS, which included the 25 February 2022 email, the 8 March 2022 at 9.18am email and the 14 March 2022 email as part of the email chain, noted that they had not had the courtesy of a reply, and advised that they would now write directly to the applicants in an attempt to get a response (the 16 March 2022 email). 8. On 22 March 2022, an administrative staff member of GL sent an email to the applicants, to which was attached a letter dated 22 March 2022 of Mark Glaser (Mr Glaser) of GL to the applicants in which he advised GL had not received any communications from CSS since 25 November 2021, referred to the 25 February 2022 email, noted GL had not been served with any evidence except the McElroy report, requested their advice as to whether they intended to serve any other evidence by 29 March 2022, and advised that if they did not hear from them by 29 March 2022 he would assume that they have abandoned their Tribunal claim and he would write to the Tribunal accordingly (the 22 March 2022 email). 9. On 23 March 2022, Mr Glaser sent an email to the applicants, in which he advised that the respondent's expert intended to attend and inspect the pool between 10am and 2pm on 25 March 2022, and requested confirmation of access by 5pm that day to enable the inspection to proceed (the 23 March 2022 email). 10. On 1 April 2022, Mr Spagnolo sent an email to GL, in which he asserted that the McElroy report which had been served with the home building application did not need refiling, referred to the Whitehouse statement which had been served with the home building application, and requested their advice as to whether they required more time for their client's expert or the respondent agreed with Mr McElroy (the 1 April 2022 email). 11. On 5 April 2022, Rowan Stanfield (Mr Stanfield), the director of the respondent affirmed an affidavit in which he referred to the order for access in the 16 December 2021 orders, exhibited the 25 February 2022 email, the 8 March 2022 at 8.31am email, the 8 March 2022 at 9.18am email, the 14 March 2022 email, the 16 March 2022 email, the 22 March 2022 email and the 1 April 2022 email, and stated that as a consequence of the applicants failing to respond to communications and particularly his request for his expert to attend the subject property, his expert had not had the opportunity to view the property or commence working on an expert report. The evidence of the applicants 1. The evidence of the applicants consisted of the transcript of the hearing on 7 April 2022 (the 7 April 2022 transcript) which is attached to the applicants' costs submissions. The submissions of the parties The submissions of the respondent 1. The respondent made the following submissions in relation to proceedings HB 21/45097: 1. it accepted that no application for costs was made on 7 April 2022 and that the costs application was first made in the respondent's 17 June 2022 costs submissions; 2. there are special circumstances warranting an award for costs against the applicants pursuant to s 60(2) and (3)(b), (f) and (g) of the NCAT Act; 3. as to s (3)(b) of the NCAT Act, the applicants were responsible for prolonging unreasonably the time taken to complete the proceedings because they failed or refused to prosecute their claim which had been on foot for in excess of five months; 4. as to s (3)(f) of the NCAT Act, the applicants refused or failed to comply with the duty imposed by s 36(3) to facilitate the just, quick and cheap resolution of the real issues in the proceedings, participate in the process of the Tribunal and to comply with directions and orders of the Tribunal; 5. as to s (3)(g) of the NCAT Act, the applicants failed to appear on 7 April 2022 and provided no satisfactory explanation for their non-attendance, did not comply with the 16 December 2021 orders, did not seek an extension of time or an adjournment, and did not take any steps to properly prosecute their claim which hah been on foot for five months. 1. The respondent made the following submissions in relation to proceedings HB 22/20505: 1. as to s (3)(b) of the NCAT Act, it relies on the adverse findings in the 8 June 2022 Tribunal decision at [5], [11], [12] and [13]; 2. as to s (3)(f) of the NCAT Act, it relies on the adverse findings in the 8 June 2022 Tribunal decision at [5], [11], [12] and [13]; 3. as to s (3)(g) of the NCAT Act: 1. it relies on the adverse findings in the 8 June 2022 Tribunal decision at [5], [11], [12] and [13]; 2. (b) the applicants filed the application for renewal of proceedings despite having no prospect of success to reinstate the proceedings and were wholly unsuccessful; 3. the applicants' application for renewal of proceedings caused it to incur legal expenses and financial pressure to make submissions regarding their extensive failures and refusals throughout proceedings HB 21/45097; 4. the applicants' application for renewal of proceedings caused great psychological harm to the respondent, which was subsequently altered to Mr Stanfield, due to the untimely and extended duration of proceedings HB 21/45097. The submissions of the applicants 1. The applicants made the following submissions in relation to proceedings HB 21/45097: 1. the respondent's application for costs is out of time and was not made until 17 June 2022 some 72 days after the proceedings were dismissed; 2. a party may apply for costs when they lodge an application, another party has failed to comply with a Tribunal order, or at a final hearing or immediately after a decision is made; 3. the enabling legislation the HB Act is silent on time and therefore r 23(3)(b) of the NCAT Rules applies and the cost application was required to be lodged within 28 days; 4. in the circumstances where no directions nor notations were made by the Tribunal on 7 April 2022 for submissions as to costs, the application was lodged 72 days after the proceedings were dismissed, the application was filed in breach of r 23(3)(b) of the NCAT Rules, the respondent's application for costs should be dismissed. 1. The applicants made the following submissions in relation to proceedings HB 22/20505: 1. as to s (3)(b) of the NCAT Act, the application for renewal of proceedings provided reasons for the non-attendance and further disputed the denial of access to the applicant's expert to the property; 2. as to s (3)(f) of the NCAT Act, they concede that costs were incurred to respond to the application to reinstate, but noting it is limited to a short submission, partly dealing with proceedings HB 21/45097, the submissions are signed and submitted by a junior solicitor admitted on 23 August 2021, and would concede 2 hours of professional time at $200.00 per hour, namely $400.00 in costs would have been incurred, if the Tribunal was so minded; 3. as to s (3)(g) of the NCAT Act, the submission that the reinstatement application caused the respondent great psychological harm should be rejected; 4. the respondent's costs application should be dismissed and each party pay their own costs in accordance with the general rule in s 60(1) of the NCAT Act. Consideration and determination Introduction 1. The respondent's costs applications are each pursuant to s 60(2) of the NCAT Act. The determination of this issue involves answering the following two questions: 1. whether there are special circumstances warranting an award of costs in favour of the respondent in respect of which the respondent relies on s 60(3)(b), (f) and (g) of the NCAT Act; 2. if so, whether the discretion should be exercised to award costs. 1. For proceedings HB 21/45097 there is a threshold question of whether the respondent's costs application has been made out of time. Proceedings HB 21/45097 Whether the respondent's costs application has been made out of time 1. I reject the applicants' submission that the respondent's costs application has been made out of time for the following reasons: 1. it was not an application within s 39 of the NCAT Act as the HB Act does not provides for costs of a person making a building claim to be brought to the attention of the Tribunal for a decision, and so r 23(3) of the NCAT Rules does not apply; 2. the Tribunal was not functus officio for the reasons set out in Shoal Bay Developments at [54]-[61]. Section 61 of the NCAT Act does not have the effect that subsequent to the 7 April Tribunal decision the Tribunal could not entertain the respondent's costs application. Whether there are special circumstances warranting an award of costs in favour of the respondent Section 60(3)(b) of the NCAT Act 1. I am not satisfied that the applicants were responsible for prolonging unreasonably the time taken to complete the proceedings. While there is no explanation by the applicants as to why there was no response to the 25 February 2022 email, the 8 March 2022 at 8.31am email, the 14 March 2022 email, the 16 March 2022 email, and the 22 March 2022 email until the 1 April 2022 email, the period that elapsed of 35 days was relatively short. Further, in circumstances where as set out in the 22 March 2022 email the respondent was aware that the applicants were relying on the McElroy report, there was no explanation by the respondent as to why it delayed in giving notice of an inspection by its expert until the 23 March 2022 email. Section 60(3)(f) of the NCAT Act 1. I note the finding of the Tribunal in the 8 June 2022 Tribunal decision at [13] that the applicants and the applicants' solicitors failed to comply with the duty imposed upon them by s 36(3) of the NCAT Act. Section 60(3)(g) of the NCAT Act 1. I am not satisfied that the matters relied upon by the respondent should be regarded as special circumstances. Conclusion 1. Having regard to the finding of the Tribunal in the 8 June 2022 Tribunal decision at [13], I am satisfied that there are special circumstances warranting an award of costs in favour of the respondent within s 60(2) of the NCAT Act. If so, whether the discretion should be exercised to award costs 1. I am not satisfied that I should exercise the discretion to award costs in favour of the respondent because the principles governing an application for costs in a case which has been resolved without a hearing on the merits in Nichols at [25] are applicable. It follows that pursuant to s 60(1) of the NCAT Act the applicants and the respondent are to pay their own costs of the proceedings. A postscript 1. I am satisfied that pursuant to s 35 when read with the definitions of procedural rules and Tribunal rules in s 4 of the NCAT Act r 38(2)(b) of the NCAT Rules applies to the proceedings because the amount claimed by the applicants exceeded $30,000, and the position of each party paying their own costs specified in s 60(1) of the NCAT Act is not applicable to the proceedings. 2. Even if the respondent's costs application had been made under r 38(2)(b) of the NCAT Rules, I would not have applied the principles in Vella (No 3) at [28]-[30]. On the contrary, I would have dismissed the application by reason that the principles governing an application for costs in a case which has been resolved without a hearing on the merits in Nichols at [25] are applicable. Proceedings HB 22/20505 Whether there are special circumstances warranting an award of costs in favour of the respondent Section 60(3)(b) of the NCAT Act 1. I am not satisfied that the applicants were responsible for prolonging unreasonably the time taken to complete the proceedings. There is no evidence of any delay by the applicants in prosecuting proceedings HB 22/20505. Section 60(3)(f) of the NCAT Act 1. I am not satisfied that the applicants that the applicants and the applicants' solicitors refused or failed to comply with the duty imposed upon them by s 36(3) of the NCAT Act in prosecuting proceedings HB 22/20505. Section 60(3)(g) of the NCAT Act 1. I am satisfied that proceedings HB 22/20505 had no prospects of success. As it clear from s 55(2) of the NCAT Act the reinstatement of proceedings is limited to circumstances where there has been a dismissal of the proceedings pursuant to s 55(1)(c) of the NCAT Act. As set out in the 7 April Tribunal decision, the dismissal of the proceedings was based on the factors in both s 55(1)(c) and (d) of the NCAT Act. In these circumstances, there was no possibility of reinstatement of the proceedings. 2. However, I am not satisfied that the applicants' application for renewal of proceedings caused great psychological harm to Mr Stanfield. There is no evidence in the form of a medical report that Mr Stanfield suffers from great psychological harm and its cause. Even if the respondent had adduced such evidence of great psychological harm to Mr Stanfield being caused by the applicants' application for renewal of proceedings, I would not have considered this evidence to be relevant to the respondent's costs application. Conclusion 1. Having regard to the finding of the circumstances, I am satisfied that there are special circumstances warranting an award of costs in favour of the respondent within s 60(2) of the NCAT Act. If so, whether the discretion should be exercised to award costs 1. I am satisfied that I should exercise the discretion under s 60(2) of the NCAT Act to award costs in favour of the respondent. Orders 1. I make the following orders: 1. the application of the respondent for an order that the applicants are to pay its costs of proceedings HB 21/45097 is dismissed; 2. the applicants and the respondent are to pay their own costs of proceedings HB 21/45097; 3. the applicants are to pay the costs of the respondent of proceedings HB 22/20505 as agreed or assessed. ********** 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 Amendments 20 September 2023 - Formatting amendments. 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: 20 September 2023