Huxley Homes Pty Ltd (In liquidation) v Guenther [2017] NSWCATCD 1

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Huxley Homes Pty Ltd (In liquidation) v Guenther [2017] NSWCATCD 1 Hearing dates: Heard on the papers Decision date: 04 January 2017 Jurisdiction: Consumer and Commercial Division Before: D. Goldstein, Senior Member Decision: 1. Heidi Guenther and Mark Trowell must pay Huxley Homes Pty Ltd's (In Liquidation) costs of and incidental to these proceedings, such costs if not agreed to be assessed pursuant to the provisions of the Legal Profession Uniform Law Application Act 2014. Catchwords: COSTS - Calderbank offers Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Home Building Act 1989 Legal Profession Uniform Law Application Act 2014 Cases Cited: Jones v Bradley (No. 2) [2003] NSWCA 258 Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 Oshlack v Richmond River Council [1998] HCA 11, 193 CLR 72 Thompson v Chapman [2016] NSWCATAP 6 Category: Costs Parties: Applicant: Huxley Homes Pty Ltd (In Liquidation) Respondents; Heidi Guenther and Mark Trowell Representation: Mahony Law for the applicant Turnbull Bowles for the respondent File Number(s): HB 15/36836 Publication restriction: Nil

Reasons for Decision 1. In these proceedings an order was made in the applicant's favour on 10 October 2016 requiring the respondents to pay to it the sum of $61,204.03. Orders were made for the filing of a costs application and exchange of submissions in the event that either one of the parties wished to make an application for costs. 2. The respondents filed their costs submissions on 31 October 2016. 3. On 21 November 2016 the applicant filed its costs application and submissions in support in the Tribunal. 4. In these Reasons for Decision I will refer to the applicant as the builder and to the respondents as the owners. 5. Section 60 of the Civil and Administrative Tribunal Act 2013 (the 'Act') provides that: '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: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (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 (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.' 1. I only have the jurisdiction to award costs under section 60 if I am satisfied that there are special circumstances warranting an award of costs. 2. Rule 38 of the Civil and Administrative Tribunal Rules 2014 provides: '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: (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10 (2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000.' 1. By reason of Rule 38 above, I have the discretion to award costs in these proceedings because pursuant to section 3 of Schedule 4 of the Civil and Administrative Tribunal Act, proceedings under the Home Building Act 1989 are allocated to the Commercial and Consumer Division of the Tribunal and the amount originally claimed in these proceedings was $84,605.27. 2. The owners' costs submissions which were the first to be filed state that the builder has no entitlement to a costs order in its favour and in fact that the owners should be paid their costs associated with the builder's application in which the builder was successful. 3. There is no authority cited in support of this novel proposition. The owners do however point out that the builder's application took limited time at the hearing. I agree with that assertion. 4. The builder's submissions is that the owners should pay its costs of the proceedings because it was substantially successful and that those costs should be payable on an indemnity basis because of clause 37.1 of the contract. 5. Clause 37.1 of the contract states: 'The owner must pay to the builder any debt collection costs, including any legal fees and costs associated with recovering or attempted recovery of an amount under this contract.' 1. I find that there is nothing in the drafting of clause 37.1 that would entitle the builder to indemnity costs. It simply refers to legal fees and costs and does not disclose an intention to allow the builder to recover costs on an indemnity basis. I reject the builder's submission that it ought to be awarded costs on an indemnity basis. 2. The general law position is that a successful party has a 'reasonable expectation' of being awarded costs against the unsuccessful party. Oshlack v Richmond River Council [1998] HCA 11, 193 CLR 72 at [67] and at [134]. 3. At [67] of the judgement, Gaudron and Gummow JJ. stated: ''The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. 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 expense 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. At [134(2)] of the judgement, Kirby J. stated: '2. Notwithstanding the width of the statutory language by which the discretion was conferred on the trial court, it came to be said in civil non-jury trials that a successful party, in the absence of special circumstances, had a reasonable expectation of obtaining an order for costs in its favour unless "for some reason connected with the case" a different order was specially warranted. Any departure from this expectation would require that there should be material upon which the adverse discretion could be properly exercised. It could not be exercised by reference to idiosyncratic notions or to facts and circumstances irrelevant to the case. Yet, until the discretion had been exercised and a costs order made in favour of a successful party, that party had no right to the order of costs, notwithstanding its success in the litigation' 1. The Appeal Panel in Thompson v Chapman [2016] NSWCATAP 6 considered the discretion to award costs as contained in Rule 38 of the Civil and Administrative Tribunal Rules. At [66 – 70] of that decision the Appeal Panel stated: `Each of Regulation 20 of the CTTT Regulation and Rule 38 provide a general discretion in respect to the award of costs. The starting point in exercising such discretion is that the "usual order for costs" is that a successful party should be entitled to an order for costs in their favour: see Latoudis v Casey [1990] 170 CLR 534 per Mason CJ at 554 and Oshlack v Richmond River Council per McHugh J at 97. The reason for such an order is that it is appropriate for the party who incurred costs caused by the other party in litigation to be reimbursed. Further, an award of costs is by way of an indemnity to the successful party and not as punishment of the unsuccessful party: see Latoudis v Casey per Mason CJ at 543 and McHugh J at 567 and in Oshlack v Richmond River Council per Brennan CJ at 75. Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at 88 and Kirby J at 121 – 123. The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made: see for example Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304; and Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at 41 – 44.' 1. At paragraph 76 The Appeal Panel stated in conclusion: 'In short, the proper exercise of the discretion requires the Tribunal to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary or capricious: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at [22] and McHugh J at 65.' 1. In the conduct of these proceedings by the builder, I find that there has been no conduct by it that would in my view disentitle it to the usual order for costs given that it has been successful in bringing the proceedings and obtaining an order to recover the sum of $61,204.03 from the owners.