Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Casey v Renfay Projects Pty Ltd; Casey v The Owners – Strata Plan No 586 (No. 2) [2024] NSWCATAP 52 Hearing dates: On the papers Date of orders: 08 April 2024 Decision date: 08 April 2024 Jurisdiction: Appeal Panel Before: D Charles, Senior Member D Fairlie, Senior Member Decision: (1) Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 NSW, a hearing of the applications in respect of costs is dispensed with. (2) The applications of The Owners – Strata Plan No 586, and the appellant, respectively, to vary the Appeal Panel's order 4 made on 20 February 2024 in Appeal Nos 2023/00308743, 2023/00336006, and 2023/00335992, are dismissed. (3) Order 4 made on 20 February 2024 in Appeal Nos 2023/00308743, 2023/00336006, and 2023/00335992, is reinstated with the intent that Anne Casey is to pay Renfay Projects Pty Limited and The Owners – Strata Plan 586's costs of the appeals on the ordinary basis as agreed or assessed in accordance with the applicable costs' assessment legislation. Catchwords: COSTS – no real and genuine element of compromise in a Calderbank letter sent prior to the appeal hearing – indemnity costs refused – exercise of discretion under r 38A where one party largely successful in the appeals – no disentitling conduct or other factors to warrant a departure from the principle that costs follow the event. Legislation Cited: Home Building Act 1989 NSW Civil and Administrative Tribunal Act 2013 NSW Civil and Administrative Tribunal Rules 2014 NSW Strata Schemes Management Act 2015 NSW Cases Cited: Calderbank v Calderbank (1975) 3 All ER 333 Paraskevopoulos v Bajic (No 2) NSWCATCD 40 Ashton v Stevenson; Stevenson v Ashton (No 2) [2019] NSWCATAP 238 Skiller v NSW Slate Roofing Pty Ltd [2022] NSWCATAP 90 Hawkesbury District Health Service Limited v Chaker (No 2) [2011] NSWCA 30 Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 Williams v Lewer [1974] 2 NSWLR 91 Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Nguyen v Perpetual Trustee Co Ltd; Perpetual Trustee Co Ltd v Nguyen [2015] NSWCATAP 264 Texts Cited: None Cited Category: Principal judgment Parties: Anne Casey (Appellant) Renfay Projects Pty Ltd (First Respondent) The Owners – Strata Plan No 586 (Second Respondent) Representation: Counsel: P Horobin (Appellant) M Hamdan (Second Respondent) Solicitors: ITC Law (Appellant) Renfay Projects Pty Limited (Agent) (First Respondent) Holman Webb (Second Respondent) File Number(s): 2023/00308743, 2023/00335992, 2023/00336006 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: n/a Date of Decision: 31 August 2023 Before: G Blake AM SC, Senior Member File Number(s): HB 22/22490, SC 22/23241 REASONS FOR DECISION Applications to Vary the Appeal Panel's Costs' Order. 1. On 20 February 2024, following an appeal hearing on 18 December 2023, we dismissed three (3) appeals brought by the appellant and applicant at first instance, Ms Casey. The first appeal related to two (2) contested proceedings in the Tribunal involving respondents at first instance and on appeal, Renfay Projects Pty Ltd (Renfay) and The Owners – Strata Plan No 586 (Owners Corporation). In the first proceeding in the Tribunal, orders were made under the Home Building Act 1989 NSW, and in the other proceeding in the Tribunal, the application of Ms Casey for orders under the Strata Schemes Management Act 2015 NSW, was dismissed (both referred to as the Primary Decision). 2. The other appeals related to second and third decisions of the Tribunal, which were made 'on the papers', pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 NSW (NCAT Act). The second Tribunal decision related to a work order made in consequence of the Primary Decision (referred to as the Work Order Decision). In the third decision, the Tribunal made orders in relation to the costs of the Primary Decision (referred to as the Costs Decision). 3. Because Ms Casey had been largely unsuccessful in her 3 appeals, our preliminary view was that the costs of the appeal proceedings 'followed the event', and that in the exercise of our discretion as to costs under r 38A of the Civil and Administrative Tribunal Rules 2014 NSW (NCAT Rules), Renfay and the Owners Corporation would be entitled to their costs of the appeals on the ordinary basis. 4. Our preliminary view as to the costs of the appeals was expressed as order 4 made on 20 February 2024, but that order 4 was subject to any other costs' application(s) which may be made by the parties after publishing our orders and reasons for decision in the appeals (Appeal Decision). In the event of an application by a party to vary order 4 of the Appeal Decision, we made orders and directions for the parties to file and serve their written submissions as to costs and directed that order 4 ceased to have effect pending our consideration of any costs' application(s). 5. In fact, the Appeal Panel has received applications from the Owners Corporation, and Ms Casey, respectively, to vary the costs' order made on 20 February 2024. 6. On 27 February 2024, the Owners Corporation lodged written submissions in support of an application for its costs of the appeals on the indemnity basis from 22 November 2023, and otherwise (i.e., prior to 22 November 2023) on the ordinary basis. That application is supported by an Affidavit of Perry Danico Peralta (Mr Peralta) sworn 26 February 2024, which attaches a letter dated 22 November 2023 from the Owners Corporation's solicitors to Ms Casey's solicitors, marked 'Without Prejudice Save as to Costs', and said to be an offer made in accordance with the principles in Calderbank v Calderbank (1975) 3 All ER 333 (Calderbank Offer). 7. On 5 March 2024, Ms Casey, by her legal representatives, filed and served written submissions in response to the Owners Corporation's application for its costs of the appeal on an indemnity basis from 22 November 2023. In support of those written submissions, there is an Affidavit of James Clancy (Mr Clancy) sworn 5 March 2024, which attaches, among other documents relating to the appeal proceedings, a copy of an email marked 'Without Prejudice', sent on 6 December 2023 by Ms Casey's solicitors in response to the Calderbank Offer. 8. There is an 'In Reply' submission dated 18 March 2024 (received by the Appeal Panel Registry on 19 March 2024), which refers to Ms Casey's written submissions of 5 March 2024 and Mr Clancy's Affidavit. The 'In Reply" submission also attaches an Affidavit of Mr Peralta sworn 1 December 2022, and an Affidavit of Marianne Coates also sworn 5 March 2024, each relating to the Owners Corporation's conduct of the first instance proceedings under appeal, as well as a further Affidavit of Mr Peralta sworn 14 March 2024, relating to the Owners Corporation's conduct of the appeal proceedings. 9. Furthermore, on 5 March 2024, Ms Casey lodged written submissions in support of her own application to vary order 4 made on 20 February 2024 in the appeals, to there being no order as to the costs of the appeals (with the intent that all parties to the appeals pay their own costs of the appeal proceedings). 10. In answer to Ms Casey's application to vary order 4 made on 20 February 2024, the Owners Corporation, by its legal representatives, filed and served written submissions dated 18 March 2024 (received 19 March 2024), supported by the Affidavits of Mr Peralta sworn 22 December 2022 and 14 March 2024 (referred to, above). 11. On 26 March 2024, Ms Casey by her legal representatives, filed and served her written submissions in reply to the Owners Corporation's response to her application to vary order 4 made on 20 February 2024. Attached to those submissions is a further Affidavit of Mr Clancy affirmed on 26 March 2024 which annexes copies of email exchanges between Ms Casey and the Owners Corporation's solicitors between 11 September 2023 and 15 September 2023. 12. As regards the other respondent (Renfay) in the appeal proceedings, we note that there is some email correspondence referring to a document bearing date 11 October 2023, with an attachment headed 'Costs Table & Invoices' and itemising the costs said to have been incurred by Renfay in the first instance proceedings; however, there is no formal application (supported by a written submission) received by the Appeal Panel Registry from Renfay, to vary order 4 made on 20 February 2024 in the appeal proceedings. 13. In that context, we now consider the costs' applications in the appeal proceedings of the Owners Corporation and Ms Casey, respectively (Appeal Costs Decision). 14. The Appeal Costs Decision must be read with the Appeal Decision. Order Dispensing with a Hearing on Costs. 1. The Owners Corporation and Ms Casey each accept in their written submissions to the Appeal Panel, that their respective applications to vary order 4 made in the Appeal Decision, can be adequately addressed in written submissions. 2. Both consented to an order dispensing with a hearing (NCAT Act, s 50(2)), so that the issue as to the costs of the appeals is decided 'on the papers'. We agree. Determining the costs' applications of the Owners Corporation and Ms Casey 'on the papers' is entirely consistent with the Tribunal's guiding principle in s 36 of the NCAT Act and it would avoid the parties being put to the unnecessary expense of an oral hearing on the question of costs. 3. Accordingly, we make an order dispensing with a hearing on costs, pursuant to s 50(2) of the NCAT Act, so that the question of costs is decided on the papers (i.e., written submissions and affidavits, as referred to above) lodged by the legal representatives for Ms Casey and the Owners Corporation in respect of those parties' applications to vary order 4 made on 20 February 2024. The Owners Corporation's Costs' Application. 1. To support its application that the costs' order in the appeal proceedings should be varied to indemnity costs from 22 November 2023, the Owners Corporation relies upon the Calderbank Offer, which is stated, relevantly, in this way (including the parts where emphasis is added by the Owners Corporation's solicitors): On the basis that only defects (1) and (6) were established, we are instructed to put an offer in the form of a work order accepted by the Tribunal in its [Work Order Decision]. This work order is attached. Furthermore, the Appellant was ordered to pay the [Owners Corporation's] costs in SC 22/23241 and the [Owners Corporation] was only ordered to pay 50% of [Ms Casey's] costs in HB 22/22490. Currently, the [Owners Corporation's] costs stand at $127,000. In respect to this, [Ms Casey's] unit in Rose Bay is unencumbered and as such it is not accepted that she does not have the financial capacity to satisfy the cost orders. In the spirit of compromise, we make as part of this offer for [Ms Casey] to pay $83,000 towards the [Owners Corporation's] costs, including a reasonable deduction for [Ms Casey's] costs (50%) in HB 22/22490. … Acceptance of the Offer is conditional upon the appeals being withdrawn against the [Owners Corporation]. Should the Offer not be accepted, the [Owners Corporation] will be forced to vigorously defend the claims on appeal, undoubtedly incurring significantly more costs in circumstances where the claim against it is tenuous. This offer is made in accordance with the principles set out in Calderbank v Calderbank [1975] All ER 333 and Messiter v Hutchinson [1977] NSWLR 525 and will be open for acceptance until 4:00 pm, 6 December 2023, that is, a period of two weeks. Should this offer not be accepted, our client reserves their right to tender this letter in an application for indemnity costs should a more favourable outcome not be achieved by you at the hearing. 1. In an email response to the Calderbank Offer sent on 6 December 2023 at 4:06 pm (see annexure B to the Affidavit of Mr Clancy sworn 5 March 2024), Ms Casey's solicitors said: We refer to your correspondence of 22 November 2023. Your client's offer is not a genuine compromise as there is no breakup or detail of various costs. Further your client has not modified the work order nor attempted a genuine settlement in any way whatsoever. Accordingly, our client is not able to accept your client's offer under the current circumstances. Our client reserves her rights as necessary. 1. We accept the statement of the relevant principles to be applied on the question of indemnity costs, as set out in Paraskevopoulos v Bajic (No 2) NSWCATCD 40 at [17] – 19], [21], and [26] – [28] (which has been adopted by other appeal panels in Ashton v Stevenson; Stevenson v Ashton (No 2) [2019] NSWCATAP 238 at [28], and Skiller v NSW Slate Roofing Pty Ltd [2022] NSWCATAP 90 at [45]), as follows: [17] As the Appeal Panel has observed, the Tribunal's discretion to award indemnity costs is exercised in limited circumstances and it must be the subject of careful reasoning: see Mendonca v Tonna [2017] NSWCATAP 176 at [59] – [60], [62] – [64] and the cases cited therein by the Appeal Panel. [18] When costs follow the event, as I have decided they should in the three proceedings, then usually they are awarded on the ordinary basis. In Oshlack at [44], Gaudron and Gummow JJ stated that before the Court can order indemnity costs, it is necessary to find what their Honours described as: "some relevant delinquency on the part of the unsuccessful party". As McHugh J explained in the same case at [67], the indemnity costs order is made not to punish the unsuccessful party but because "[a]s between the parties, fairness dictates that the unsuccessful party" should bear those additional costs. [19] Where Indemnity costs are ordered based upon a "relevant delinquency" it is normally a case of misleading a court or tribunal, or bringing proceedings for collateral or ulterior purposes and not for the purposes of having a court or tribunal adjudicate on the issues to which they give rise, or if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless: Wentworth v Rogers [1999] NSWCA 403; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; Cultus Petroleum v OMV Australia [1999] NSWSC 435. … [21] However, a further basis (other than as stated above) on which an order for costs on the indemnity basis may be made is where during the course of proceedings an offer of compromise was made which was no worse than the result ultimately achieved by the party against whom the indemnity costs order is sought. … [26] The general function of a letter containing a Calderbank offer is to promote settlement of disputes, in addition to its more particular application in claims for indemnity costs: Rickard Constructions v Rickard Hails Moretti [2005] NSWSC 481, [12]. I find that the amount ($86,431.52) ultimately awarded by the Tribunal in the proceedings constituted by File Nos. HB 17/21112 & HB 17/40804 was considerably higher than the settlement sums, $25,000.00 and $65,000.00, respectively, contemplated by the January Calderbank offer in the proceedings constituted by File Nos. HB 17/21112 and 17/40804, and the February Calderbank offer, and further that the settlement sums represented significant compromises on the home owners' part. [27] Nevertheless, the making of a Calderbank offer does not automatically result in a favourable costs order, even if the ultimate judgement of the Tribunal is more favourable to the party making the offer than the terms of the offer. The party making a Calderbank offer still carries the onus of satisfying the Tribunal that it should exercise the discretion as to costs in that party's favour: Jones v Bradley (No 2) [2003] NSWCA 258, [5]; Old v McInnes and Hodgkinson [2011] NSWCA 410, [22]. [28] Furthermore, in determining whether to make an indemnity costs order pursuant to a Calderbank offer, the Tribunal is to have regard to the relevant principles identified in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323, Miwa Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344, and Nu Line Construction Group Pty Ltd v Fowler [2012] NSWSC 816. Such principles are: (i) There must be a real and genuine element of compromise; (ii) The refusal must be unreasonable; (iii) The reasonableness in rejecting an offer must be considered at the time the offer is made, not with the benefit of hindsight; (iv) Relevant factors in relation to whether the rejection was reasonable include the stage of the proceedings at which the offer was received, the time allowed to consider the offer, the extent of compromise offered, the offeree's prospects of success (assessed at the date of the offer), the clarity with which the terms of the offer were expressed and whether the offer foreshadowed an application for indemnity costs in the event of rejection. 1. Applying those principles, we find that the Owners Corporation's Calderbank Offer does not have a real and genuine element of compromise. There was no compromise in the terms of the work order proposed by the Owners Corporation. The attachment to the Calderbank Offer was in the same form of as found by the Tribunal in the Work Order Decision, which was the subject of an appeal. 2. Similarly, we are not persuaded that there was any real or genuine attempt on the Owners Corporation's part, to compromise the impact upon Ms Casey of the Tribunal's costs orders at first instance, which were also the subject of an appeal by her. In its Costs Decision, the Tribunal had ordered each of Ms Casey and the Owners Corporation, respectively, to pay costs some costs in the first instance proceedings to the other party, as agreed or as assessed, i.e., Ms Casey was ordered to pay the Owners Corporation's costs in SC 22/23241, and the Owners Corporation was ordered to pay 50% of Ms Casey's costs in HB 22/22490. With no detail or break-up of the amounts of $127,000 and $83,000, the Calderbank Offer lacked transparency. It was very difficult to assess whether there was any element of compromise in it and specifically whether the Owners Corporation's offer to accept $83,000 in fact included a reasonable reduction (or set-off) of Ms Casey's entitlement to 50% of her costs in HB 22/22490. 3. In the circumstances, we find that Ms Casey's refusal to accept the Calderbank Offer was not unreasonable. For those reasons we dismiss the Owners Corporation's application to vary order 4 made on 20 February 2024 in the appeal proceedings. Ms Casey's application that there be no order as to costs in the appeals. 1. In the exercise of the Appeal Panel's discretion as to costs under r 38A of the NCAT Rules, the usual position is that costs 'follow the event'. In Hawkesbury District Health Service Limited v Chaker (No 2) [2011] NSWCA 30 at [10] - [11], the Court of Appeal said that the substance and the reality of the outcome of a proceeding is the key consideration as to who is the successful party 'in the event'. 2. Ms Casey was largely unsuccessful in her appeals. All her appeals were dismissed. In our Appeal Decision, we found that her appeals based upon procedural unfairness grounds were either unfounded or that they did not have a material bearing on the outcome of the decisions at first instance. 3. We recognise that our discretion to award costs in the appeals while broad and unfettered, must be exercised on a principled and judicial basis, avoiding arbitrariness and serving the need for consistency: see, for example, Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 at [24], and also "according to rules of reason and justice, not according to private opinion … or even benevolence … or sympathy": Williams v Lewer [1974] 2 NSWLR 91 at [95]. As the Appeal Panel's observed in respect of the power under r 38A in Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 at [36]: A power conferred in these terms is "unfettered" in the sense that the Tribunal may make such order as it thinks appropriate, so long as it acts in accordance with the subject matter, scope, and purpose of the power. In relation to the award of costs in litigation, the accepted purpose is where costs are awarded in favour of one party, to compensate that party for the expense incurred in respect of the litigation. 1. Importantly, an award of costs is made, not for the benefit of a losing party, but for the successful party. In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, McHugh J (in dissent but with the tacit agreement on this issue with other members of the Court) said at [67]: The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended by, the unsuccessful party the successful party would not have incurred the expenses which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. 1. There may be occasions where an appeal panel does not award costs even in circumstances where costs ordinarily follow the event: see Nguyen v Perpetual Trustee Co Ltd; Perpetual Trustee Co Ltd v Nguyen [2015] NSWCATAP 264 where the Appeal Panel in that case stated at [95]: While the discretion to award costs under Rule 38 is unfettered, in our view costs should generally 'follow the event' recognising however that factors may exist that militate against the successful party recovering all of its costs: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [134]. Fairness dictates that the unsuccessful party typically bears the liability for costs unless it is demonstrated that some other order is appropriate… 1. Most of the matters put on behalf of Ms Casey to support her submission that there be no order as to costs in the appeal proceedings, in fact, relate to the conduct of the first instance proceedings. These matters were considered and dealt with in the Tribunal's Costs Decision. They have no bearing upon an order for costs in the appeal proceedings. 2. To the extent Ms Casey's representatives put matters in their written submissions that are in any way relevant to the Owners Corporation's conduct of the appeal proceedings, we find that they do not support a submission that the Appeal Panel should exercise its discretion and depart from the general rule that costs 'follow the event'. 3. We are satisfied that the Owners Corporation complied with the case management orders of the Appeal Panel made on 13 and 26 October 2023: see the Affidavit of Mr Peralta sworn 14 March 2024 at [4] – [5]. The Owners Corporation filed its Reply to Appeal in appeal proceeding 2023/00308743 by 27 October 2023, as it had been directed to do by the Appeal Panel's order 5 made on 13 October 2023. The Owners Corporation filed its Replies to Appeals in appeal proceedings 2023/00335992 and 2023/00336005 on 1 November 2023, and within the time required by the Appeal Panel order made on 26 October 2023. The Owners Corporation filed and served its evidence and written submission in the appeal proceedings by 24 November 2023, as it had been directed to do by the Appeal Panel's order 7 made on 13 October 2023. 4. In the circumstances, we can be satisfied that consistent with s 36 of the NCAT Act, the appeals were conducted, justly, quickly, and cheaply, and that there was no default or inaction by the Owners Corporation. We find that it cannot be said the Owners Corporation conducted the appeal proceedings in a manner that unnecessarily disadvantaged Ms Casey, or that the Owners Corporation unreasonably prolonged the time taken to complete the appeal proceedings. 5. For those reasons, we are not persuaded that there are any factors in the Owners Corporation's conduct of the appeals, or that of its legal representatives, which warrant a departure from the usual position that the successful party in an appeal should have its costs on the ordinary basis. Conclusion and Orders 1. Neither the Owners Corporation nor the appellant, Ms Casey, have made out cases to vary order 4 made on 20 February 2024 in the appeal proceedings. 2. As indicated, the Appeal Panel Registry did not receive a formal application from the other party to the appeals, Renfay, to vary the said order 4. In any event, there is no proper basis for awarding indemnity costs to Renfay, if that was the intent of it providing to the Registry a further copy of the document dated 11 October 2023 annexing a 'Costs Table & Invoices'. 3. Accordingly, in respect of the applications of the appellant and the Owners Corporation, the Appeal Panel's orders are: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 NSW, a hearing of the applications in respect of costs is dispensed with. 2. The applications of The Owners – Strata Plan No 586, and the appellant, respectively, to vary the Appeal Panel's order 4 made on 20 February 2024 in Appeal Nos 2023/00308743, 2023/00336006, and 2023/00335992, are dismissed. 3. Order 4 made on 20 February 2024 in Appeal Nos 2023/00308743, 2023/00336006, and 2023/00335992, is reinstated with the intent that Anne Casey is to pay Renfay Projects Pty Limited and The Owners – Strata Plan 586's costs of the appeals on the ordinary basis as agreed or assessed in accordance with the applicable costs' assessment legislation. ********** 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: 08 April 2024