New South Wales Supreme Court CITATION : IPM Pty Ltd v Consumer Trader and Tenancy Tribunal [2008] NSWSC 130 HEARING DATE(S) : 22 February 2008 JUDGMENT DATE : 28 February 2008 JUDGMENT OF : Malpass AsJ DECISION : Summons dismissed; plaintiff to pay the costs of the Summons. CATCHWORDS : APPEAL - costs - construction of regulation - ordinary rule - discretion and avenue of appeal Consumer Trader and Tenancy Tribunal Act (2001) LEGISLATION CITED : Consumer Trader and Tenancy Tribunal Regulation (2002) Home Building Act 1989 CATEGORY : Principal judgment CASES CITED : Newcastle Wallsend Coal Co Pty Limited v Industrial Relations Commission of NSW [2006] NSWCA 129 Stollznow v Calvert (1980) 2 NSWLR 749 IPM Pty Ltd (Plaintiff) Consumer Trader & Tenancy Tribunal (First defendant) Owners Corporation of Strata Plan 63856 (Second defendant) John Torrisi (Third defendant) Jane Torrisi (Fourth defendant) John William Young (Fifth defendant) Beverly May Young (Sixth defendant) Ian Arthur Wilson (Seventh defendant) Pamela Anne Wilson (Eighth defendant) Ivan Meeke (Ninth defendant) PARTIES : Catherine Meeke (Tenth defendant) Shuet Fond Yeung NG (Eleventh defendant) Kowk Wah NG (Twelfth defendant) Helen Margaret Trent (Thirteenth defendant) Robert Earle Trent (Fourtheenth defendant) Robery Dye (Fifteenth defendant) Susan Patricia Dye (Sixteenth defendant) Linda Joyce Miners (Seventeenth defendant) Margaret Ellen Fearn (Eighteenth defendant) Kerry Anne Maskell (Nineteenth defendant) Robin Tung Keun Poon (Twentieth defendant) Mei Tun Chueng Poon (Twenty-first defendant) FILE NUMBER(S) : SC 30097/07 COUNSEL : JS Drummond (Plaintiff) M Dolenec (Second - Twenty-first defendants) Michael Atkinson & Associates (Plaintiff) SOLICITORS : IV Knight (First defendant) Baker McDonnell (Second - Twenty-first defendants) LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW LOWER COURT FILE NUMBER(S) : HB 04/36583 LOWER COURT JUDICIAL OFFICER : Mr J Bordon, Senior Member LOWER COURT DATE OF DECISION : 7 August 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINSTRATIVE LAW LIST Associate Justice Malpass Thursday 28 February 2008 30097/07 IPM Pty Ltd v Consumer Trader and Tenancy Tribunal & Ors JUDGMENT 1 HIS HONOUR: The plaintiff is a builder. It entered into a contract with a developer to construct 11 units on land at Abbotsford Cove ("the premises"). 2 Disputes arose concerning defects in what was constructed on the premises. On 29 July 2004, the second defendant brought proceedings in the Consumer Trader and Tenancy Tribunal ("the Tribunal"). In February 2005, certain arrangements were reached between the parties and a document erroneously entitled "Consent Orders" was executed by them (no orders were ever made). Disputes then arose concerning performance of the "Consent Orders". 3 Paragraph 1 of the "Consent Orders" required defects listed in a schedule to be rectified, in a manner as approved by the expert of the second defendant, upon the conditions noted in the schedule. The contents of the schedule commenced with the words "Carry out the following works where necessary". By reason of those words alone the emergence of disputation was inevitable. 4 In 2006 directions were given which required that the parties proceed by way of pleading. As a consequence a Statement of Claim and Defence were filed. At this stage, the unit owners also became parties and the proceedings involved claims for rectification both to the common property and the 11 units. Hereafter, when referring to both of them, I shall refer to the owners corporation and the unit holders as the second defendants. 5 Both sides had retained experts. The respective views of the experts raised substantial dispute. Mr Radcliffe (the expert for second defendants) put the costs of rectification in the order of $240,000. Mr Iskowicz (the expert for the plaintiff) put the costs in the order of $16,000. 6 In October 2006, the second defendants lodged with Vero Insurance Ltd ("Vero") a claim under their Home Warranty Insurance. 7 By about 27 January 2007, the proceedings before the Tribunal were ready to receive a hearing date. 8 By 19 February 2007, the second defendants had decided to accept benefits under the policy with Vero (what they were is unknown) and to discontinue the proceedings. The Tribunal was so advised and a hearing for the question of costs was arranged. 9 Written and oral submissions were made to Tribunal regarding this question. The primary stance taken by the plaintiff was that the second defendants should pay its costs. Its fall-back position was that each party should bear their own costs. The second defendants took the approach that they were entitled to an order for costs. 10 The plaintiff's submissions looked both to the Tribunal's costs regime and what has been described as the ordinary rule where there has been a discontinuance. The second defendants' submissions contended that they had achieved a successful outcome and so should be entitled to a costs order. 11 A tribunal member (Mr Bordon) made a decision on 7 August 2007. He made the following orders:- "1. The respondent is to pay the applicant's costs as agreed or as assessed up to the filing of the 'consent orders'; costs incidental to the re-listing of the application including expert costs following 30 June 2006 and costs necessarily incurred in making the application for costs. 2. The parties are otherwise to bear their own costs." 12 The Tribunal member gave written reasons for his decision. 13 In reaching his decision, he had regard to regulation 20 of the Consumer, Trader and Tenancy Tribunal Regulation (2002) ("the Regulation"). 14 In the reasons he made the following observation:- "The application which was lodged on 30 July 2004 was a claim for damages for defective work resulting from a breach of statutory warranties. The claim was not of the character envisaged in 20(5)(b) in my view. In circumstances where according to the terms of the 'consent orders' the respondent had agreed to a substantial program of rectification the owners had a substantial complaint about the defective works against the respondent. … However, to summarise, the owners had a strong and substantial claim for breach of statutory warranties against the respondent. It had a concurrent right to seek an indemnity from Vero. It was not unreasonable to discontinue proceedings against the respondent where the insurer had agreed to provide a practical remedy for the complaint about defective works. In those circumstances the owners, in my view, were entitled to the costs of bringing and maintaining their claim against the respondent up to the 'consent order' agreement and to the legal and expert expenses for preparing for and continuing proceedings before the Tribunal immediately following 30 June 2006 following non compliance by the respondent. Having been successful in the costs application the applicant is also entitled to the costs necessarily incurred in making the application for costs. To the extent that costs other than those referred to above have been incurred in relation to differences between the parties on quantum each party is to bear its own costs." 15 The Tribunal has its own unique costs regime. Where there is a power to make an order for costs it is a discretionary one. The making of an order for costs in the Tribunal is governed by s 53 of the Consumer, Trader and Tenancy Tribunal Act (2001) ("the Act") and r 20 of the Regulation. 16 Subject to the section and the regulations, the parties in any proceedings are to pay their own costs. The regime enables an award of costs which may be made "in accordance with the regulations". I consider that these words are of significance. 17 Regulation 20(4) confers a power to award costs in any proceedings in which the amount claimed or in dispute is more than $25,000. In this case, it is common ground that there was power to make an award for costs under this provision. The provision is as follows:- "In any proceedings in respect of which the amount claimed or in dispute is more than $25,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit." 18 For present purposes, r 20(5)(b) is a relevant provision and it is convenient to look at it first. It is as follows:- "(5) Despite any other provision of this clause, the Tribunal may order: (a) … (b) that the costs of any proceedings that the Tribunal considers to be frivolous, vexatious, misconceived or lacking in substance, or as otherwise not to be heard or proceeded with, be paid wholly or in part by the person who instituted the proceedings." 19 A party seeking an order pursuant to that provision bears the onus of satisfying the Tribunal that the proceedings are "frivolous, vexatious, misconceived or lacking in substance or as otherwise not to be heard or proceeded with". The collocation of words sets up a threshold requirement which has to be met before a costs order may be made. One of the six categories has to be made out. 20 It is not a particularly happy collocation of words. There would seem to be similarity (or at least overlapping) in relation to certain categories. 21 The meaning to be given to certain of them (such as "as otherwise not to be heard" or "proceeded with") is somewhat unclear. Presumably, the concept of lack of merits is involved in more, if not all, of the categories. 22 The term "discontinuance" does not appear in either the Act or the Regulations. The term "withdrawn" appears in s 48(1) of the Home Building Act 1989. This section enables a building claim to be withdrawn by the claimant at any time. The section does not mention any matter of costs. 23 On 5 September 2007, the plaintiff filed a Summons in this Court. Relief is sought pursuant to s 67 of the Act. Such relief is available where the Tribunal decides a question in respect of a matter of law. 24 As the appeal is brought by way of challenge to the decision made by the Tribunal member on a question of costs, the appeal may be made only with leave of the Court. 25 For the purposes of considering the question of leave, I shall first look at the question of the merits of the appeal. 26 There are a number of appeal grounds. They relate to how the Tribunal member applied r 20(5)(b). 27 Essentially what was argued by the plaintiff fell into two areas. Firstly, it was said that the Tribunal member erred in his approach to r 20(5)(b). Secondly, it is said that he erred in not applying the ordinary rule. 28 There was some debate between the parties as to how the Tribunal member came to make the orders that he made. Different contentions were advanced by the parties. 29 One approach was that he came to the view that r 20(5)(b) had no application in the circumstances of the case. In my view, that is what he did and he did so correctly. It has been freely conceded that these were live issues and substantial dispute. In these circumstances, I do not consider that the Tribunal member could properly come to a conclusion that any one of the threshold requirements had been satisfied. 30 The plaintiff has argued that the words "or as otherwise not to be heard or proceeded with" contemplated a discontinuance and that the Tribunal member was thereby empowered to order that the costs of the proceedings be paid wholly or in part by the second defendant. 31 By reason of what has been earlier said, I do not accept that contention. The words comprise two separate limbs. One is "not to be heard". The other is not to be "proceeded with". It seems to me that both limbs contemplate proceedings which are on foot (as opposed to proceedings that have been discontinued) and that they are governed by the language that precedes them in the provision (there has to be a consideration to the effect of either limb by the Tribunal before an order can be made). 32 The ordinary rule may be expressed in terms to the effect that a party who discontinues usually will be ordered to pay the other party's costs of the discontinued claim. It is a judge made rule. The cases demonstrate that there may be circumstance in which it will be appropriate to make a different costs order (such circumstances have been referred to as exceptions to the rule). 33 Both before the Tribunal and in this Court the plaintiff relied on what was said in Newcastle Wallsend Coal Co Pty Limited v Industrial Relations Commission of NSW [2006] NSWCA 129. The plaintiff argued that this case did not fall within the circumstances where the ordinary rule should not be applied. It complains that despite its urgings the Tribunal member did not even refer in his reasons to Newcastle. 34 It must be borne in mind that a discretion as to costs is to be exercised judicially. The task of the Tribunal was to have regard to the relevant circumstances of the particular case before it and to exercise the discretion so that the dictates of justice were best served. What has been said in other cases provides useful guidance only and the exercise of a judicial discretion should not be trammelled by judge made rigid formulae (Stollznow v Calvert (1980) 2 NSWLR 749 at p 751 – 2). 35 In this case, the second defendants had achieved some success. An agreement was reached for the performance of rectification work. Whilst it became undisputed that certain work had to be done, there was substantial dispute as to other rectification claims advanced by the second defendants. 36 As the proceedings were approaching the obtaining of a hearing date, the second defendants chose to accept insurance benefits rather than continue with the proceedings. It does not seem to me that in these circumstances it could be concluded that the continuation of the proceedings had become futile. 37 What it did do was to spare the parties what may have been a lengthy and costly hearing. This was a case that had its own distinguishing features (it was not discontinued because it was hopeless) and it was open to the Tribunal to not take the usual approach. 38 For completeness, I should mention one other matter. Subsequent to the decision of the Tribunal member, new proceedings were commenced in the name of the second defendants advancing the same or a similar claim. It could not have been taken into account by the Tribunal member and it presently may be of no significance. What has happened is consistent with Vero exercising its rights of subrogation. 39 Although the Tribunal member does not make any express reference to r 20(4), it seems that this was the only power he had to award costs in this case. I consider that the failure to refer expressly to that provision is of no significance. His approach to the question was consistent with an exercise of that power and it was available for exercise by him. 40 In this appeal, it is unnecessary to consider whether or not he erred in the exercise of the discretion (and I should not be taken as suggesting that there was error). In the circumstances of this case, I do not consider that any error would assist the plaintiff. The appellate avenue provided by s 67 is a narrow one. It has been said to be restricted to error concerning a pure question of law. In my view, the avenue is not available to the plaintiff in this case. 41 Accordingly, there is no utility in a grant of leave. Leave is usually restricted to those cases where manifest error has been demonstrated. 42 I should add that nothing was said by counsel for the plaintiff in support of the application for leave. Leaving that aside, there were other factors which would have made a successful application more difficult. Whilst the monetary sum in dispute is of significance to the parties, it would not be regarded as a large one (the claim for costs was said to be in the order of $30,000). Public interest considerations have no application (inter alia, the appeal gave rise to no novel question of law). 43 Even if a different view had been taken on the question of merit, I would not have been persuaded that this was an appropriate vehicle for leave. 44 Accordingly, the appeal fails. The Summons is dismissed. The plaintiff is to pay the costs of the Summons. 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