New South Wales Supreme Court CITATION : Rushby & Anor v CTTT & Anor [2007] NSWSC 480 HEARING DATE(S) : 7 May 2007 JUDGMENT DATE : 15 May 2007 JURISDICTION : Common Law Division - Administration List JUDGMENT OF : Associate Justice Harrison DECISION : (1) The decision of Tribunal Member Moore dated 7 September 2006 is affirmed; (2) The summons filed 6 October 2006 is dismissed; (3) Costs are reserved. CATCHWORDS : Costs order - denial of natural justice LEGISLATION CITED : Consumer Trader & Tenancy Tribunal Act 2001 (NSW) - ss 35, 53, 65, 67 Consumer Trader & Tenancy Tribunal Regulations 2002 (NSW - Clause 20(4) Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456 Kalokerinos & Anor v HIA Insurance Services P/L & Anor [2004] NSWCA 312 Kioa v West (1985) 159 CLR 550 CASES CITED : Italiano v Carbone & Ors [2005] NSWCA 177 Naff v Minister for Immigration & Multicultural & Indigenous Affairs & Anor (2004) 221 CLR 1 Re Minister for Immigration & Multicultural Affairs; ex parte Lam (2003) 214 CLR 1 Judicial Review of Administrative Action, 2nd ed 180-181 Craig Rushby & Kathryn Rushby - Plaintiffs PARTIES : Consumer, Trader & Tenancy Tribunal - First Defendant Gavin Jon Burns - Second Defendant FILE NUMBER(S) : SC 30134/2006 COUNSEL : Mr T Daine - Plaintiffs Mr M Gollan - Second Defendant Peter Merity - Plaintiffs SOLICITORS : Submitting Appearance, Crown Solicitor - First Defendant P J Duffy & Associates Lawyers - Second Defendant LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW LOWER COURT FILE NUMBER(S) : HB 05/19172; HB 05/02761 LOWER COURT JUDICIAL OFFICER : Tribunal Member Moore LOWER COURT DATE OF DECISION : 7 September 2006 LOWER COURT MEDIUM NEUTRAL CITATION : Rushby & Anor v Burns & Anor [2006] NSWCTTT 485 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST ASSOCIATE JUSTICE HARRISON TUESDAY, 15 MAY 2007 30134/06 - CRAIG RUSHBY & ANOR v CONSUMER, TRADER AND TENANCY TRIBUNAL & ANOR JUDGMENT (Costs order – denial of natural justice) 1 HER HONOUR: By summons filed 6 October 2006, the plaintiff claims orders that (i) the orders made by the Consumer, Trader and Tenancy Tribunal (CTTT) in relation to costs of proceedings HB 05/19172 and HB 05/02761 on 7 September 2006 be set aside; (ii) that the question of costs be remitted to the CTTT for rehearing; (iii) that the first and second defendants pay the plaintiff's costs of this appeal and (iv) that there be an order for payment of the plaintiff's costs, that such costs be payable out of the suitor's fund. The plaintiffs are Craig Rushby and Kathryn Rushby. The first defendant is the CTTT which has filed a submitting appearance. The second defendant is Gavin Jon Burns. Mr Burns is a builder and the Rushbys are homeowners. The relevant statutory provisions 2 The summons does not articulate which provision is relied upon by the plaintiffs. It could be either s 65 or s 67 or both. 3 Section 65(1) of the Consumer Trader and Tenancy Tribunal Act 2001 (NSW) (the Act) provides: "(1) Except as provided by this section, a court has no jurisdiction to grant relief or a remedy by way of: (a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or (b) a declaratory judgment or order, or (c) an injunction, in respect of any matter that has been heard and determined (or is to be heard or determined) by the Tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such a matter." 4 Section 65(3) however provides: "(3) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the Tribunal has made an order if the ground on which the relief or remedy is sought is that: (a) the Tribunal had no jurisdiction to make the order, or (b) in relation to the hearing or determination of the matter, a party had been denied procedural fairness." 5 Section 67 of the Act allows for an appeal to be made to this court on a question with respect to a matter of law. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal. The onus lies on the plaintiff to demonstrate that there has been an error with respect to a matter of law. 6 The width of s 67 was discussed in Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456. Hodgson JA (with whom Beazley and Tobias JJA agreed) stated succinctly [at para 33]: "…in my opinion, to establish an error of law by the Senior Member, it was necessary to show that he applied a wrong principle of law. That could be shown either from what he said, or because the ultimate result, associated with the facts that he expressly or impliedly found, indicates that he must have applied the wrong principle of law". 7 See also Kalokerinos & Anor v HIA Insurance Services P/L & Anor [2004] NSWCA 312 at paragraphs [39], [40], [41], [47] and [59]. 8 Section 67(3) of the Act provides that, after deciding the question the subject of an appeal, the court may affirm the decision of the Tribunal, or it may make an order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or may remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal. Grounds of appeal 9 The plaintiffs' grounds of appeal are (i) a breach of natural justice by the CTTT in determining the question of costs without hearing submission as to costs from the parties; (ii) a denial of procedural fairness by the CTTT in failing to give the plaintiffs a reasonable opportunity to make submissions on the questions of costs; (iii) a denial of procedural fairness by the CTTT in not allowing submissions on the effect of the offer of settlement in the letter of the second defendant dated 21 February 2006. The Tribunal generally 10 At the outset, it is helpful to set out some of the provisions of the Act. The functions of the Tribunal are to adjudicate disputes between consumers and commercial disputes between landlords and tenants. The Tribunal is not constrained by the rigour of the courtroom. Its objects are to ensure that the Tribunal is accessible, its proceedings are efficient and effective, its decisions are fair and to enable proceedings before the Tribunal to be determined in an informal, expeditious and inexpensive manner. The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (s 28). 11 Evidence must be given on oath or statutory declaration (s 39(1)) but the Tribunal is not bound by the rules or practice of evidence and the Tribunal may inform itself on any matter in such manner as it considers appropriate (s 28(2)). The Tribunal must conform to the rules of natural justice, but broadly speaking, has control of and responsibility for its own procedures (s 28(1) and (2)). Its business is conducted in public (s 33). Normally, a party to the proceedings has carriage of his or her own case and is not entitled to be legally represented (s 36(1)). The Tribunal has the power to award costs (s 53), but usually each party bears its own costs. Pursuant to s 54 of the Act, the Tribunal is obliged to use its best endeavours to bring the parties to a settlement before making an order. The Tribunal has a power to correct its decision (s 50) and the Registrar can issue a certificate, which operates as a judgment (s 51). Section 35 provides that the Tribunal must ensure that each party in any proceedings is given a reasonable opportunity to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise); and to make submissions in relation to the issues in the proceedings. I will refer in more detail to ss 35 and 53 later. Proceedings in the Tribunal 12 By statement of claim issued on 21 October 2004 in Camden Local Court, Aberfoyle Homes Pty Limited (later the name of the plaintiff was determined to be Gavin John Burns) sought payment of the sum of $58,460.12 against Craig and Kathryn Rushby (the Rushbys). On 14 January 2005, by consent, the proceedings were transferred to the CTTT. On 7 December 2005 the builder filed a further amended points of claim. On 22 December 2005 a defence to the further amended points of claim and cross claim was filed. On 21 February 2006 the defendant made an offer to the plaintiff to discontinue the proceedings with no order as to costs. On 24 February, 16 and 17 May 2006 the matter was heard. On 7 September 2006 the Tribunal Member's written reasons were forwarded to the parties. 13 In relation to costs Tribunal Member H E Moore in his written reasons stated: "The builder commenced the proceedings. The major part of the hearing was involved in dealing with the builder's claim that he was entitled to an additional $51,490.00. In this, he was unsuccessful. The Tribunal, but for the matter which follows, would have been of the view that the builder should pay a significant proportion of the owner's costs. On 12 February 2006 the builder's solicitors made a 'without prejudice save as to costs' offer that the proceedings be settled on the basis of each party withdrawing its claim and paying its own costs. This offer was rejected by the owners' solicitors. In view of the ultimate determination, it would normally follow that the owners pay the builder's costs, possibly on an indemnity basis, from that date. Each party would thus be both entitled to the benefit, and subject to the burden, of any costs order. In these circumstances, the Tribunal orders each party to pay its own costs." 14 The Tribunal Member ordered: " HB 05/19172 (the owners' application) 1. Application dismissed. 2. Each party to pay its own costs. HB 05/02761 (the builder's application) 1. The applicant to pay the respondents the sum of $1,943.00 on or before 30 September 2006. 2. Each party to pay its own costs." 15 It is necessary to reproduce the exchange between the Tribunal Member and the parties legal representatives which occurred at the conclusion of the hearing on 17 May 2005 in relation to costs. It is as follows: "MEMBER: I don't know what this final outcome will be but I would have thought that since this is a very large quantum meruit claim that the builders' claim is the one that's in difficulty because I think the builder has the difficult task of establishing that, the bulk of these of these additional items over and above those which I've identified are outside the contract. So, if I come to that conclusion that on balance that is he outcome then why should the builder pay the owner's costs? GOLLAN: Well could I…? MEMBER: Yep. BOLAND: It's difficult to do this is these… MEMBER: Did you make an offer without prejudice save as to costs? GOLLAN: Yes. MEMBER: Okay let's have a look. GOLLAN: Okay I'll also hand up an offer, was this in response? MEMBER: That was contemporaneous. GOLLAN: Which was by my friend's… MEMBER: Yep. Okay well that's two positions but I don't know where it will end up but unless it ends up in that position, or near to, then I can't see that that would help I mean if there is an order that the builder has to refund an amount to the owners, I think they're entitled to some amount I mean I don't really know until we get to that point. GOLLAN: Makes it difficult for us to… CAIRNS: Sir I'd ask you not to consider it much further you haven't arrived at a conclusion and you're having figures presented to you. MEMBER: Yes, yes. I think, if I just hold these two letters if I am in doubt following the calculations of the determination of the quantum in the two claims then I'll get you to make some further written submissions. CAIRNS: Thank you sir. MEMBER: Would you like that opportunity? Well I'll do that in any event no matter what's the outcome I'll give you. CAIRNS: If it's not clear cut, if it's clear cut. MEMBER: Yes, if it's clear cut you'd like me just to simply, if it all goes one way…making an order for costs if they don't if they… CAIRNS: If those offers aren't crystallising in any way to effect well then sir I'd simply ask for an opportunity to make submissions. MEMBER: Yes. CAIRNS: Only if there's some confusion as a result of those officers. MEMBER: You agree that Mr Gollan? Otherwise I can deal with the question of costs in accordance with the normal rules. GOLLAN: Yes. CAIRNS: Yes." 16 Section 35, which relates to costs, reads: "Opportunity for parties to present case The Tribunal must ensure that each party in any proceedings is given a reasonable opportunity: (a) to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise), and (b) to make submissions in relation to the issues in the proceedings." 17 Section 35 of the Act provides that the Tribunal "must ensure" that each party is given "a reasonable opportunity" to present its case. There are provisions which allow the Tribunal a significant degree of flexibility in adapting its procedures to the exigencies of the case in determining the manner in which the proceedings will be conducted. Nevertheless, those provisions should not be construed so as to derogate from other provisions cast in obligatory language which constitute core elements of procedural fairness - see Italiano v Carbone & Ors [2005] NSWCA 177 at [105] and [106]. 18 Section 53 of the Act reads: "Costs (1) Subject to this section and the regulations, the parties in any proceedings are to pay their own costs. (2) The Tribunal may, in accordance with the regulations, award costs in relation to any proceedings. (3) If costs are to be awarded by the Tribunal in accordance with regulations, 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 Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (4) In this section, costs includes the costs of, or incidental to, proceedings. …" 19 Clause 20(4) of the Consumer Trader & Tenancy Tribunal Regulations 2002 (NSW) provides: "In any proceeding 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." 20 Thus the making of a costs order is discretionary. Denial of natural justice 21 In relation to natural justice, Professor S A de Smith, Judicial Review of Administrative Action, 2nd ed., 180-181 has stated: "Natural justice generally requires that persons liable to be directly affected by proposed administrative acts, decisions or proceedings be given adequate notice of what is proposed, so that they may be in a position: (a) to make representations on their own behalf; or (b) to appear at a hearing or inquiry (if one is to be held); and (c) effectively to prepare their own case and to answer the case (if any) they have to meet." 22 In Kioa v West (1985) 159 CLR 550 the High Court held that the duty to accord natural justice is a duty to act fairly. In the normal course, a party to judicial proceedings (as are those in a tribunal) could expect to be apprised of the nature of the case sought to be made against it, and of the date and time fixed for hearing such as to give it a reasonable opportunity to meet that case and to advance its own. These statements are similar to those expressed by Professor de Smith and referred to earlier. Brennan J (as he then was) at 628 stated: "A person whose interests are likely to be affected by an exercise of power must be given an opportunity to deal with relevant matters adverse to his interest which the repository of the power proposes to take into account in deciding upon its exercise..." 23 In relation to procedural fairness, Mason J stated in Kioa that the law had now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention. Procedural fairness as a notion is a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case (at 585). 24 In Re Minister for Immigration & Multicultural Affairs; ex parte Lam (2003) 214 CLR 1 the High Court discussed the manner in which procedural fairness cases are approached by the courts (and I would include Tribunals). Gleeson CJ said, at [37]: "…Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice." 25 The plaintiffs referred to Naff v Minister for Immigration & Multicultural & Indigenous Affairs & Anor (2004) 221 CLR 1 at [32] where the High Court stated: "It is possible that the reason why the Tribunal member failed to send the promised questions was that, on reflection, she thought that everything she required had in fact already been put before her, or that a resolution of the perceived inconsistencies in the appellant's statements was not crucial in deciding the review against him. If either of these explanations, or any other explanation, existed, it is to be expected that the Tribunal member would have advanced it, either by a letter to the appellant or in her detailed reasons for decision. She did not do so. It is probable, when the workload under which the Tribunal labours is borne in mind, that the Tribunal member did not send the promised questions because she had forgotten or overlooked the fact that she had made the promise to send them. Her failure to give any indication otherwise suggested that her original impression that the review process was incomplete had not altered on reflection, and was soundly based. It would not be complete until the steps which she had thought could remedy its defects had been carried out. The failure to complete the review process was a failure to comply with the duty imposed by s 414(1) to conduct the review and the duty under s 425(1) to hear from the appellant." 26 Whether there is a denial of procedural fairness depends on the circumstances in each case. 27 The plaintiffs submitted that the builder's letter on costs was received on the basis and only the basis that the parties would have the opportunity to make submissions as to costs unless the "normal rules" applied, that is, costs to follow the event. 28 The plaintiffs further submitted that the Tribunal should not have taken into account offers in relation to costs before determining the substantive issue. Having done so according to the plaintiff, practical fairness required that the Tribunal Member give the parties the opportunity to make submissions as to costs before determining the issue of costs. The plaintiffs also submitted that the order that should have been made is that costs follow the event on the basis that the plaintiffs were successful and costs usually follow the event, the builder's letter was in effect a capitulation, but with no offer to pay the plaintiffs and the plaintiffs did better than the offer. The plaintiffs submitted that they should have been entitled, in any event, to a special order for costs in relation to the issue of the identification of the contract, and the parties. 29 In order to determine whether the plaintiffs were denied natural justice or procedural fairness it is necessary to focus on what was said by the Tribunal Member and the parties in relation to costs. Two letters of offers (one from each side) were handed up at the conclusion of the hearing. 30 Mr Cairns for the homeowners requested that the Tribunal Member not consider the letters of offer until he [the Tribunal Member] arrived at a conclusion. The Tribunal Member agreed to follow this procedure. 31 The Tribunal Member stated that if there was an order that the builder had to refund an amount to the owners, he thought that they were entitled to some amount [for costs] but he would not know until they got to that point. Before the Tribunal Member could arrive at a conclusion he was obliged to undertake calculations of the various sums referred to by both sides during the hearing. (After the Tribunal Member had performed those calculations, the homeowners' offer fell outside the parameters of the Tribunal Member's decision and became relevant). 32 Next the Tribunal Member stated that if he was in doubt following the calculations of the determination of the quantum in the two claims that he would need further written submissions. When the Tribunal Member asked whether the parties would like that opportunity to make submissions on costs, Mr Cairns (for the homeowners) replied "It is not clear cut, if its clear cut." This answer is confusing but on a literal interpretation it means that either way he wished to make submissions. 33 The Tribunal Member sought to clarify the previous answer by saying that if the result is clear cut then he would proceed to make the costs orders. Mr Cairns then expressed his concluded view which was "If these offers aren't crystallising in any way, then I'd ask for the opportunity to make submissions." 34 The Tribunal Member then clarified the parties' position when he asked "You agree with that Mr Gollan (Mr Gollan is wrongly referred to in the transcript as "Bolland"). Otherwise I can deal with the question of costs in accordance with the normal rules." Both counsel replied "Yes". The plaintiffs' Counsel availed himself of the opportunity to articulate what procedure should be adopted for the determination of the costs issue. The Tribunal Member retained the discretion as to whether to list the matter for further submissions as to costs. The Tribunal Member considered that the builder's offer crystallised the issue of costs and there was no confusion so dealt with the matter in accordance with s 53. As the Tribunal Member considered the awarding of costs clear cut and that there was no confusion he did not seek further submissions from the parties as to costs. 35 The plaintiffs had an opportunity to make submissions as to costs. The issue is whether they should have been afforded a further opportunity to make further submissions constituted a denial of procedural fairness. I do not think so. It is my view that the parties had agreed on the procedure to be adopted once the Tribunal Member had undertaken the calculations and arrived at a decision. If it was clear to the Tribunal Member what the order for costs was to be he was not obliged to relist the matter for further submissions as to costs. That was the approach adopted by the Tribunal Member. In these circumstances, the plaintiffs were not denied procedural fairness or natural justice. This case differs from Naff in that the Tribunal Member retained a discretion to relist the matter for further submissions if after the calculations were done there was some confusion as a result of those offers. In Naff, the Tribunal Member promised to do something and did not do it. Nor did she offer any explanation in her judgment as to why she did not do so. That is not the case here. 36 The plaintiffs' claim fails. The plaintiffs' application whether it be an appeal under s 65 or under s 67 (or both) is dismissed. The decision of Tribunal Member Moore dated 7 September 2006 is affirmed. The summons filed 6 October 2006 is dismissed. 37 Costs are reserved. The Court orders: (1) The decision of Tribunal Member Moore dated 7 September 2006 is affirmed. (2) The summons filed 6 October 2006 is dismissed. (3) Costs are reserved. ********** 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.