Civil and Administrative Tribunal New South Wales Medium Neutral Citation: D&K Developments Pty Ltd v Tchetchenian [2019] NSWCATAP 47 Hearing dates: 18 February 2019 Date of orders: 26 February 2019 Decision date: 26 February 2019 Jurisdiction: Appeal Panel Before: M Harrowell, Principal Member D Fairlie, Senior Member Decision: (1) The appeal is dismissed. (2) The appellant is to pay the respondents' cost of the appeal, as agreed or assessed on an ordinary basis. Catchwords: ADMINISTRATIVE LAW – denial of procedural fairness – directions for service of submissions on costs application – no submissions filed – no steps taken to comply with directions or seek an extension of time. Legislation Cited: Civil and Administrative Tribunal Act, 2013 (NSW) Civil and Administrative Tribunal Rules, 2014 (NSW) Cases Cited: Calderbank v Calderbank (1975) 3 All ER 333 Glover v Buckton Building Pty Ltd [2015] NSWCATCD 146 Ibrahim v PERI Australia Pty Ltd [2013] NSWCA 328 Texts Cited: Nil Category: Principal judgment Parties: D&K Developments Pty Lty (Appellant) John Alan Tchetchenian (First Respondent) Rita Mary Tchetchenian (Second Respondent) Representation: Solicitors: HWL Ebsworth (Appellant) Reuben George Lawyers (Respondent) File Number(s): AP 18/53562 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 3 December 2018 Before: L Wilson, Senior Member File Number(s): HB 17/36629 reasons for decision Introduction 1. This appeal is against a costs order made on 3 December 2018 (Costs Order) in favour of the respondents who were applicants in home building proceedings HB 17/36629 (original application). 2. The appellant, who was the respondent in the original application, is a builder who had contracted with the respondents to do residential building work. The dispute related claimed breaches of that contract. 3. The Costs Order was made in circumstances where the proceedings had been settled on the day the proceedings were originally fixed for hearing. On that day, namely 5 October 2018 in consequence of which the Tribunal made consent orders (Consent Orders). The settlement did not resolve the question of costs. Rather, paragraph 5 of the Consent Orders made provision for the parties to file submissions on the issue of costs. 4. The detail of these orders and the directions made in connection with the cost application is relevant to the resolution of this appeal. However, for present purposes it is sufficient to note that the appellant did not file any submissions concerning the question of costs. 5. On 3 December 2018 the Tribunal proceeded to determine the costs application of the respondents, which was dealt with on the papers, and made an order that the appellant pay the respondents' costs of the proceedings as agreed or assessed on an ordinary basis. The Tribunal provided written reasons (reasons). 6. The appellant appealed this decision by notice of appeal lodged 17 December 2018. 7. For the reasons that follow, we have determined that the appeal should be dismissed and the appellant should pay the costs of the respondents in respect of the appeal as agreed or assessed on an ordinary basis. Notice of Appeal and submissions 1. There is a single ground of appeal recorded in the Notice of Appeal. This ground was that the appellant did not have an opportunity to provide submissions in reply to the respondents' costs application before the order for costs was made. 2. The appellant contends that, subsequent to the directions made on 7 November 2018, the respondents failed to provide a copy of the costs application which had been filed on 30 October 2018. This was despite a request made by the appellant to the respondents to provide a copy of the application, which the appellant says which remained unanswered. 3. Both parties provided evidence concerning the issue of whether or not the requested submissions had been provided. This evidence was contained in two affidavits filed by the respondents indicating that the submissions had been sent by post to the appellant and an affidavit from the appellant's director Mr Ratnam, stating no documents were received. The affidavits were read in the appeal. There was no cross examination requested by any party. 4. The short point which the appellant raises is that it never received the submissions which had originally been filed by the respondents. Consequently, it never had an opportunity to respond. This, the appellant contends, constituted a denial of procedural fairness in consequence of which the Costs Order should be set aside and the matter remitted for rehearing. 5. In response, the respondents point to the history of the proceedings, the directions which were made and the fact that the appellant never filed any submissions. The original directions made as part of the consent orders on 5 October 2018 contemplated the parties would simply file submissions on costs. The respondents say that while directions were subsequently made on 7 November 2018 for the respondents to provide a copy of their submissions to the appellant, they complied with these directions. 6. Further, even if the submissions were not received by the appellant, no request was made for an extension of time nor was any advice provided to the Tribunal or the respondents concerning the non receipt of the documents. 7. In oral submissions at the hearing of the appeal, the appellant, through its solicitor Mr Pan, accepted the following facts: 1. No submissions were filed by the appellant in consequence of the orders made on 5 October 2018; 2. Notwithstanding that its request for a copy of the respondents' submissions remained unanswered, no request was made to the Tribunal to extend the time for the appellant to file and serve any submissions by reason of any alleged full of the respondents; 3. No request was made to the Tribunal to access the Tribunal file to review a copy of the submissions which the Tribunal had received from the respondents. 1. The submissions originally filed by the appellant did not deal with the substantive question of what costs order should be made. Rather, the Notice of Appeal simply sought an order that the cost decision be set aside and the proceedings remitted for rehearing. However, the Appeal Panel determined that it should hear submissions concerning the substantive issue about what costs order should be made, if any, and why. 2. This was because a determination of this issue may affect what relief is granted if the Appeal Panel is satisfied there has been a denial of procedural fairness and because the Appeal Panel would then be in a position to make final orders as permitted by s 81 of the Civil and Administrative Tribunal Act, 2013 (NSW) (NCAT Act), rather than remitting the proceedings for rehearing. 3. The parties were given an opportunity to provide oral submissions on the issue of what costs order, if any, should be made. 4. The appellant's submission on this aspect was that each party in the original proceedings should pay their own costs. 5. The appellant accepted that r 38 of the Civil and Administrative Tribunal Rules, 2014 (NSW) (Rules) applied to the proceedings because the amount claimed or in dispute was greater than $30,000. Consequently, there was no dispute that the Tribunal had a general power to award costs. 6. The appellant contended that it was ready willing and able to complete the works, the subject of the dispute and that the respondents had changed their position in that the claim presented in evidence was different to the claim as articulated in the original application. The appellant said delays in the proceedings had been caused by experts and conclave processes as part of the directions made by the Tribunal for the preparation for hearing. 7. The appellant summarised its position as follows: 1. The costs incurred were not caused by the fault of the appellant; 2. the respondents' case changed over time; 3. the dispute settled on the morning of the hearing with no determination on the merits. 1. In making these submissions, the appellant expressly did not challenge the finding made by the Tribunal in its reasons at [18] in relation to the matters which were the subject of order 5 in the Consent Orders. 2. In reply, the respondents submitted that the Costs Order was properly made, the Tribunal having concluded that the respondents would have been successful in the litigation. The respondents noted that the relevant findings of the Tribunal in its reasons were not challenged. Consequently, the submissions which the appellant has might have made would not have resulted in a different outcome. 3. The respondents said there had been no challenge to the exercise of the discretion and, in reference to the decision in Glover v Buckton Building Pty Ltd [2015] NSWCATCD 146, the Tribunal had correctly identified the principles to be applied in determining costs and, having regard to the facts as found, properly made an award in favour of the respondents. Consideration 1. There is a right of appeal on a question of law, including in relation to a cost decision. This is because a cost decision is an ancillary decision within the meaning of the NCAT Act to which the rights of appeal found in s 80(2)(b) apply. The ground of appeal raises a question of law. 2. The issue of whether there has been a denial of procedural fairness requires an examination of the orders made by the Tribunal and the opportunities afforded to the parties to make submissions on costs. 3. In respect of any cost application, the directions made by the Tribunal on 5 October 2018, contained in order 14, were in the following terms 14. The parties are to make written submissions to the Tribunal on costs by 30 October 2018. Both parties submitted that the Tribunal should determine the question of costs on the papers. 1. The appellant did not provide any submissions on costs as permitted by this direction. 2. On 7 November 2018, the Tribunal made additional directions in consequence of the material filed by the respondents, who were the applicants for costs. These directions included the following: If the [respondents'] have not already done so, they must provide a provide a copy to the respondent (sic). While Order 14 did not contemplate a further date for reply submissions, given the length and detailed in the [respondents'] cost submissions the Tribunal considers it appropriate to ensure the [appellant] has a chance to be heard on the costs application. The Tribunal therefore allows the [appellant] to provide its submissions in reply to the costs application made against it by Monday, 26 November 2018 attention Senior Member Wilson. Submissions must be filed in the Tribunal and served on the applicant by 26 November in hardcopy. 1. In relation to what occurred following the orders made 7 November 2018, we make the following findings: 1. Mr Ratnam was aware of the directions which had been made on 7 November 2018, despite his former solicitors HWL Ebsworth, having ceased to act: see affidavit of Mr Ratnam the firm 31 January 2019 (Ratnam affidavit) para 6. Consequently, we are satisfied the appellant knew the date by which its submissions were due to be filed consequent upon the orders made on 7 November 2018. 2. The appellant sent an email requesting a copy of the costs application on 7 November 2018. 3. As directed by the Tribunal, the respondents served by post a copy of the application for costs and submissions. The evidence of these matters is found in the affidavit of Eric Cheng sworn 12 February 2019 and Gabriel Vesic sworn 12 February 2019 (Vesic affidavit). The documents were sent to the office of the appellant at Suite 6, Level 6. Century Circuit Bella Vista by ordinary post. This occurred on 8 November 2018: see Vesic affidavit para 3 and following. 4. The documents were not received by the director of the appellant, Mr Ratnam. This evidence is found in the affidavit of Mr Ratnam affirmed 31 January 2019 (Ratnam affidavit). 5. There is no evidence that Mr Ratnam made any inquiries within the company to see whether any documents had been received and, despite being aware of the direction, the appellant took no steps to apply for an extension of time or communicate with the respondents lawyers after an initial email was sent requesting a copy of the costs application to which the orders of 7 November 2018 referred. 6. There is no evidence the appellant followed up in respect of the lack of response to the email request for the costs application despite knowing of its existence and the need to file submissions by the date specified in the directions of 7 November 2018. 1. In our view, the respondents complied with the directions of the Tribunal in respect of service, there being no challenge to the evidence provided. 2. While we accept Mr Ratnam did not actually receive the documents personally, we are not satisfied they were not otherwise received by the appellant. Further, and in any event, we are satisfied that the appellant failed to take necessary steps to follow up when it had not received a copy of the application and that it failed to take any steps to seek an extension of time or obtain a copy of the application from the Tribunal so that it could otherwise comply with the directions and file any submissions. 3. In our view, there has been no relevant denial of procedural fairness. A party cannot sit idly round when under an obligation to provide submissions to the Tribunal and take no action to follow-up and obtain necessary information in order to comply with such obligations. This is so even if an opponent is in default. As stated in s 36(3) of the NCAT Act, both parties (and their legal representatives) are under an obligation to cooperate with the Tribunal to give effect to the guiding principle and to participate in the processes of the Tribunal and to comply with the directions and orders of the Tribunal so as to facilitate the just, quick and cheap resolution of the real issues in dispute. 4. It follows that the appeal should be dismissed. 5. Even if we had come to a different view and determined there had been a denial of procedural fairness, we would not have reached a different conclusion concerning costs to that reached by the Tribunal. In this regard it is sufficient to refer to the decision of the Court of Appeal of the Supreme Court of New South Wales in Ibrahim v PERI Australia Pty Ltd [2013] NSWCA 328 which sets out the principles applicable to dealing with a costs application made when a dispute is finalised, without there being a final adjudication on the merits. At [16]-[17], the President of the Court of Appeal (with whom Leeming JA agreed) said: 16 The primary judge, in determining whether a costs order ought to be made in the applicant's favour, on the discontinuance, reviewed the case law including, relevantly, Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; 44 FCR 194; Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622; ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; 101 FCR 548; Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497; and Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 32. 17 Although each of those cases related to different facts, the principles that are to be derived from them, in circumstances where a Court is requested to make a costs order, when proceedings have not been heard to termination include the following: whether a party acted reasonably in commencing the proceedings; whether a party had been successful in obtaining interlocutory relief; whether the party sued had acted reasonably; whether the responding party had acted reasonably in defending the proceedings; whether the proceedings terminated after interlocutory relief had been granted; and further, whether the primary judge was satisfied that the party seeking to terminate the proceedings prior to a full hearing had almost a certain chance of success. 1. While Ibrahim dealt with a claim for costs where proceedings had been discontinued, the principles are also relevant in considering the position where proceedings are settled on the day of the hearing. 2. As we stated above, the appellant did not challenge the finding of fact made by the Tribunal at [18] of its reasons. There, the Tribunal said: 18 … While the [respondent] obtain rectification in their favour, they were not to the extent sought in the original application. Further, they agreed to contribute to the cost of the home warranty insurance and the superintendent. There was no determination on the merits of the case. Given the joint Scott Schedule, the Tribunal agrees with the [respondents'] submission in paragraph 43 that had the matter run to a completed final hearing, the Tribunal is most likely to have made the order which is consent order 5 (to complete the works in the joint Scott Schedule). There can be no finding about whether the Tribunal would have made the other orders however. 1. Consent Order 5 was in the following terms: The builder will complete all the works set out in the joint scott schedule as attached to the orders noting that item 14 option 1.2 (page number 725) will be used. 1. Self-evidently, order 5 is a work order made in favour of the respondents against the appellant builder. 2. The Tribunal also found that the respondents did not engage in any conduct which would disentitle them to costs: reasons at [20]. 3. Lastly, the Tribunal "took into account the parties' conduct prior to the lodgement of the application in the Tribunal, namely the rectification order of the Fair Trading Inspector which was not complied with by the [appellant]" and concluded it was "not unreasonable for the [respondents] to commence these proceedings". 4. It is clear from the submissions we have received that the proceedings were settled on the morning of the hearing. However, the Tribunal in effect found the respondents would have succeeded in respect of the matters the subject of order 5, that they had reasonably commence the proceedings and did so in circumstances where the appellant had failed to comply with its obligations under the contract and had failed to comply with rectification orders issued by the Fair Trading Inspector. 5. Having regard to these unchallenged facts and the principles in Ibrahim, in our view no relevant error is demonstrated in respect of the Tribunal's exercise of discretion to make the Costs Order. As we said above, there is a general discretion available under r 38 and, in our view, the order made was appropriate. 6. Finally, the fact that expert may have taken some time in conclave processes to resolve the precise scope of work to be undertaken to rectify any defects or incomplete work is an ordinary incident of proceedings being commenced when a builder defaults in meeting its obligations under the contract. Consequently, we do not accept that the submissions made that the course the proceedings took is a reason why an award should not be made in the present case. In reaching this conclusion, we note that an application for indemnity costs was refused, the respondents not otherwise suggesting error by the Tribunal in this regard. 7. For these reasons, the appeal should be dismissed. Costs of Appeal 1. At the hearing of the appeal, the Appeal Panel sought submissions from the parties concerning costs of the appeal, depending on the outcome. 2. Both parties agreed that r 38 applied in determining costs in the appeal because of r 38A of the Rules and the fact that the amount of costs claimed or in dispute was greater than $30,000. 3. The appellant said it should have an order for costs in its favour if it was successful. If unsuccessful, the appellant initially made a submission that each party should pay their own costs. However, this submission was withdrawn and the appellant accepted that costs should follow the event. 4. On the other hand, the respondents initially sought an order that, if successful, their cost be paid on an indemnity basis. They relied on written offers of compromise made in accordance with the principles of Calderbank v Calderbank (1975) 3 All ER 333. The correspondence became Exhibit A in the appeal. In making this submission, the respondents accepted that they must show it was unreasonable for the offer not to have been accepted in order to obtain a special order for costs. 5. In the course of discussion with the Appeal Panel concerning the form of the offer, the respondent finally withdrew this application. This occurred in circumstances where it appeared to the Appeal Panel that the offer made and relied upon in support of the application for indemnity costs required complete capitulation and did not amount to a compromise in any relevant sense. 6. Consequently, the final position was that both parties accepted that costs of the appeal should follow the event. 7. Because the appellant has been unsuccessful, it follows that the appellant should pay the respondents' costs of the appeal. Orders 1. The Appeal Panel makes the following orders: 1. The appeal is dismissed. 2. The appellant is to pay the respondents' cost of the appeal, as agreed or assessed on an ordinary basis. ********** 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: 26 February 2019