Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Dimitropoulos v Capitol Constructions Pty Ltd [2019] NSWCATAP 164 Hearing dates: On the papers Date of orders: 04 July 2019 Decision date: 04 July 2019 Jurisdiction: Appeal Panel Before: K Rosser, Principal Member G Blake AM SC, Senior Member Decision: 1. A hearing on costs is dispensed with in accordance with s 50(1)(c) of the Civil and Administrative Tribunal Act 2013. 2. The appellants are to pay the respondent's costs of the appeal as agreed or assessed, on the ordinary basis until 31 March 2019 and on an indemnity basis from 1 April 2019. Catchwords: APPEAL – Costs – r 38 – r 38A – indemnity costs Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Home Building Act 1989 Cases Cited: Alexander James Pty Ltd v Pozetu Pty Ltd (No. 2) [2016] NSWCATAP 75 Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 Barakat v Bazdarova [2012] NSWCA 140 Collins v Urban [2014] NSWCATAP 17 Danidale Pty Ltd v Abigroup Contractors Pty Ltd [2007] VSC 553 Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435 Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 Latoudis v Casey [1990] 170 CLR 534 Leichhardt Municipal Council v Green [2004] NSWCA 341 Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 Oshlack v Richmond River Council (1998) 193 CLR 72 Prosperity Advisers Pty Ltd v Secure Enterprises Pty Ltd [2012] NSWCA 192 Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 Richardson v Hough [1999] NSWSC 448 Ruddock v Vadarlis [2001] FCA 1865 Thompson v Chapman [2016] NSWCATAP 6 Texts Cited: N/A Category: Costs Parties: Spiro Dimitropoulos and Anna Dimitropoulos (Appellants) Capitol Constructions Pty Ltd (Respondent) Representation: S Dimitropoulos and A Dimitropoulos (Applicants self-represented) D Hand (Respondent) Solicitors: Adams & Partners (Respondent) File Number(s): AP 19/10949 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 20 February 2019 Before: T Simon, Senior Member File Number(s): HB 18/19978 reasons for decision Introduction 1. This is an application for costs of an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act), which was brought against a decision made in the Consumer and Commercial Division of the Tribunal on 20 February 2019. The Tribunal made its decision after proceedings between the parties were previously remitted by the Appeal Panel. 2. On 27 May 2019, we refused leave to appeal and dismissed the appeal, both in respect of the substantive decision and the costs decision. We made procedural directions in respect of the respondent's application for costs. 3. For the reasons set out below, we have decided that the appellants should be ordered to pay the respondent's costs of the appeal, on the ordinary basis until 31 March 2019 and on an indemnity basis from 1 April 2019. Background 1. The dispute between the parties arises from a contract for the performance of residential building work. Both parties brought proceedings in the Tribunal under the Home Building Act 1989: HB 14/44611 and HB 14/56781. 2. In the original Tribunal proceedings, the Tribunal found that the amount owing to the respondent by the appellants was $92,134.04, and the amount owing to the appellants by the respondent was $18,165.08. Therefore, the total amount owing by the appellants to the builder was $73,698.96. Both parties appealed the Tribunal's decision. 3. The Appeal Panel allowed both appeals in part. It set aside the Tribunal's money order, as well as its order in relation to costs. It remitted the proceedings to the Tribunal as originally constituted to determine what, if any, amount was payable to the respondent in consequence of it terminating the contract with the appellants, with such assessment "to be limited to the amounts due to the builder up to termination of the contract and to exclude any claim for loss of profits". The Appeal Panel also ordered the Tribunal to re-determine costs: AP 16/31203 and AP 17/24463. 4. The remitted proceedings were registered with file number HB 18/19978. When it re-determined the remitted proceedings, the Tribunal made an order in favour of the respondent in the sum of $65,739.35. The Tribunal's reasons for decision were published on 18 February 2019. 5. The appellants lodged an internal appeal on 5 March 2019. 6. On 9 May 2019, the Tribunal re-determined costs and ordered the appellant to pay the respondent's costs of the proceedings. The costs decision was also dealt with in the appeal proceedings. 7. As noted above, on 27 May 2019 we refused leave to appeal and dismissed the appeal, both in respect of the substantive decision and the costs decision. We gave oral reasons for our decision. 8. The respondent sought an order for costs. We made procedural directions for the filing and serving of submissions on costs. Neither party has sought a hearing of the costs application. Submissions and evidence 1. In making a decision in relation to the costs application, we have considered: 1. The respondent's submissions on costs dated 29 May 2019; 2. The affidavit of the respondent's solicitor, Mr Peter Adams, dated 29 May 2019, together with annexures; 3. The appellants' submissions on costs dated 11 June 2019; 4. The respondent's submissions in reply dated 14 June 2019; and 5. The material that was before us on the internal appeal against the substantive decision. Issues 1. The issues to be determined on the costs application are: 1. Should a hearing on costs be dispensed with? 2. What provisions apply to the costs application? 3. What legal principles apply to the costs application? 4. Should the respondents be ordered to pay the appellants' costs of the appeal? 5. If so, on what basis should the costs order be made? Consideration Should a hearing on costs be dispensed with? 1. Section 50 of the NCAT Act relevantly provides: 50 When hearings are required (1) A hearing is required for proceedings in the Tribunal except: … (c) if the Tribunal makes an order under this section dispensing with a hearing, or … (2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal. (3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first: (a) afforded the parties an opportunity to make submissions about the proposed order, and (b) taken any such submissions into account. (4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules. … 1. The parties were given an opportunity to make submissions concerning whether costs could be determined on the papers. Neither party objected to that course of action. 2. We are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions. The parties would be put to unnecessary expense if required to argue the costs application at a hearing. The order under s 50(1)(c) of the NCAT Act has accordingly been made. What provisions apply to the costs application? 1. The general rule in relation to costs in the Tribunal is that unless special circumstances are established, the parties pay their own costs: s 60(1) of the NCAT Act. 2. However, r 38 of the Civil and Administrative Tribunal Rules 2014 (the Rules) modifies the application of s 60 in proceedings before the Consumer and Commercial Division of the Tribunal and r 38A modifies the position in respect of appeals. 3. Rule 38 provides: 38 Costs in Consumer and Commercial Division of the Tribunal (1) 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. Rule 38A provides: 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of: (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal. 1. In Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 the Appeal Panel found at [43]: In the case of an internal appeal, the "amount claimed … in the proceedings" can be determined by considering what orders the appellant seeks on the appeal. If those orders sought include an order that the respondent pay a sum of more than $30,000, expressly or impliedly, then the Tribunal should conclude that the amount claimed in those proceedings was more than $30,000. If the substantive orders sought do not involve any express or implied claim to any amount, it is difficult to see how there is any "amount claimed" for the purposes of r 38(2)(b). 1. The same reasoning arguably applies when what is at stake in an internal appeal can be characterised not as an amount claimed in the proceedings but as an "amount …. in dispute". 2. The respondent submits that the amount in dispute on the appeal exceeds $30,000 and that r 38 therefore applies for a number of reasons: 1. At page 7 of their written submissions on the appeal, the appellants state a position that in substitution for the orders made by the Tribunal, they should be ordered to pay the builder $6,495.37, which means that the appellants disputed $59,244.38 of the amount awarded to the respondent. 2. The respondent incurred legal costs of $138,532.30, which are the subject of the costs order the Tribunal made on 9 May 2019. The appellants submitted to the Tribunal that they should only be liable for 53% of the respondent's costs in the Tribunal below. If costs are assessed on the ordinary basis, this means that the appellants submit that they should only have to pay the respondent $60,136.51 in respect of costs. This also means that the amount in dispute exceeds $30,000. 1. The appellants claim that r 38 does not apply. In relation to this, the appellants relevantly submit: In the Homeowner's submissions dated 15 April 2019, they stated that the amount that should be payable to the builder was $6,495.27. The Homeowners relied on the joint expert's Scott Schedule with regards to the value of the incomplete works to support the amount payable to the Builder. In the findings of the proceedings of HB 18/19978, at paragraph 14, Senior Member Simon in fact found that the joint expert's findings did not include the costs to complete, despite a joint expert's Scott Schedule filed in the remitted Tribunal clearly setting out the value of the incomplete works. Despite the Homeowners stating that the Builder was entitled to $6,495.37, the Builder clearly failed to mention in their submissions that the Homeowners had also made three offers to the Builder to finalise and settle the dispute without the requirement of a hearing early in the appeal proceedings. On 19 March 2019, the Homeowners offered to pay the Builder $35,000 (exclusive of costs) to settle the appeal proceedings…. Then three days later on 22 March 2019, the Homeowners further increased their offer to pay the Builder $53,000 (exclusive of costs) to settle the proceedings…. The amount that was finally awarded to the Builder was $65,739.75. Whilst the Builder stated in paragraph 8 & 9 of their submissions that the amount disputed was $59,244.38 and therefore "the amount in dispute" was in excess of $30,000, this statement is was misleading & incorrect. The enclosing documents clearly indicate that the Homeowners were prepared to pay the Builder $53,000 (exclusive of costs) to settle the dispute & finalise the matter early in the appeal proceedings without the requirement of a hearing. Therefore, the amount in dispute was only $12,739.75 ($65,739.75 - $53,000) & substantially less than $30,000. 1. From the section of the appellants' cost submission set out above, it appears that the appellants' position on the appeal was as set out in their appeal submission; that is, that the respondent was entitled to be paid $6,495.37. This is surprising, given that at [9] of the reasons for decision of the Tribunal below, the Tribunal set out the appellants' position in relation to what was owed to the respondent as follows: 9 The homeowner's claim that they only owe the figure of $37,516.32. They make the following calculations (1) They say that the adjust original contract price which is 80% completed ($442,689 .53 x 80%) is $354,151.62 (2) Less variation credits to the homeowner as determined by the Tribunal in the first instance $8,853.08 (3) Less defect rectification costs $ 12,291.84 (4) Less total amount paid by homeowners of the original contract price (progress payments I , 1 A, 2 and 3) $278,894.42 (5) Less amount previously paid by the homeowners for variation 9 which the experts agreed was not carried out $2,919.46 (6) Sub-Total $51,192.82 (7) Less additional variation credits $13,676.50 Total owing to builder $37,516.32 1. The amount sought by the respondent (and awarded by the Tribunal) less the amount the appellants told the Tribunal they owed the respondent is $28,223.43; that is, less than $30,000. This was the basis for our suggestion to the respondent during the appeal hearing that the amount in dispute appeared to be less than $30,000. 2. However, it is indeed the case that in their submissions on the appeal, the appellants submitted that the total amount payable to the respondent was $6,495.37. The appellants appear to have abandoned the position they took before the Tribunal. In these circumstances, we find that that the amount in dispute on the appeal exceeded $30,000. 3. In reaching this conclusion, we do not accept the respondent's submission that legal costs incurred by a party are relevant to the determination of the amount claimed or in dispute. In relation to this, the time an appeal is lodged – or indeed at the time it is heard – it would not be usual for a party against whom a costs order may ultimately be sought to know what costs the other party has incurred. Further, costs are determined after a decision is made on the substance of an appeal. Even if what is appealed against is a costs decision, it is not practical to characterise costs as an amount "claimed" or "in dispute" in the proceedings. 4. We also do not accept the appellants' submission that a settlement offer made by one or other of the parties prior to a hearing is a relevant factor in determining the amount claimed or in dispute in the proceedings. That is so whether the proceedings are first instance proceedings or appeal proceedings. A settlement offer – assuming that it is genuine – represents a compromise position and not the position that the party making the offer will take in the proceedings. The difference between what is claimed and what is offered, or the difference between two offers cannot be characterised as the amount in dispute in the proceedings. 5. Rule 38A therefore applies to the present appeal because: 1. The appeal was lodged after 1 January 2016; and 2. The first instance cost provisions differ from those set out in s 60 because of the operation of the "procedural rules" in that: 1. the proceedings in the Tribunal were for the exercise of functions under the Home Building Act 1989; 2. Schedule 4, cl 3 of the NCAT Act allocates such proceedings to the Consumer and Commercial Division; 3. In those proceedings "the first instance costs provisions" included r 38 of the NCAT Rules, which modifies the operation of s 60 (1). 1. In the present appeal, r 38A(2) requires us to apply the first instance costs provisions, which is s 60 as relevantly modified by r 38(2), when deciding whether to award costs of the appeal. 2. Rule 38(2) relevantly allows us to award costs in the absence of special circumstances as the amount in dispute in the proceedings was more than $30,000. What legal principles apply to the costs application? 1. Rule 38(2)(b) gives us a wide discretion to make an order for costs. It does not specify the factors we must take into account in exercising the discretion, although the discretion must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9]. 2. In circumstances where an order for costs may be made in the absence of special circumstances, the starting point in exercising the discretion 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 (1998) 193 CLR 72 per McHugh J at 97. The exercise of the discretion in this manner results in what is referred to as "the usual order for costs". 3. In Thompson v Chapman [2016] NSWCATAP 6, the Appeal Panel discussed the exercise of the discretion in this manner, stating at [70] to [72]: 70. 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. 71. 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 Gummow JJ at 88 and Kirby J at 121 – 123. 72. 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: (1) 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 (2) 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. Should the appellants be ordered to pay the respondent's costs of the appeal? 1. The appellants submit that each party should pay their own costs of the appeal because: 1. The appellants made genuine attempts to settle the dispute. The difference between the parties' offers was only $4000. 2. The difference between the amount offered by the appellants ($53,000) and the amount awarded to the builder ($65,739.75) was only $12,739.75, significantly less than $30,000. 3. The respondent has not established special circumstances in accordance with s 60(3) of the NCAT Act. 4. The Appeal Panel advised the respondent at the end of the appeal hearing that the amount in dispute was less than $30,000. No special circumstances were raised by the respondent or suggested by the Appeal Panel during the hearing. 5. The respondent's counsel falsely stated that the appellants' "prospects of success on the appeal were very poor, a matter that had been drawn to their attention in the offer", despite their being no evidence provided to the Appeal Panel to support that statement, which was only made up to advance the respondent's costs application. 1. We have determined that the usual order for costs should be made in this case. 2. First, the respondent was clearly the successful party and the appellants were clearly the unsuccessful party on the appeal. Leave to appeal was refused and the appeal was dismissed. The grounds of appeal were sufficiently straightforward and lacking in merit that we were able to give ex tempore reasons for decision. 3. Second, there is nothing in the submission provided by the appellants to suggest that the respondent should be deprived of its costs because of misconduct. We are satisfied that an order for costs in favour of the respondent is consistent with applicable legal principles in that it would provide compensation to the respondent for the expense it has been put to in defending an unsuccessful appeal. 4. Third, we accept that the parties engaged in settlement discussions and genuinely attempted to resolve the appeal without a hearing. We also accept that the final positions of the parties after the last settlement offers were made was very close indeed; as submitted by the appellants, $4000 exclusive of costs. However, this does not mean that the respondent was any less the successful party on the appeal. 5. We see no reason why the usual rule in relation to costs should be displaced either in whole or in part. Accordingly, we find that the discretion to make an order for costs should be exercised in favour of the respondent. Are there special circumstances that would warrant an order for costs? 1. In the event that we are wrong in our conclusion that the amount in dispute in was more than $30,000, we have also considered whether special circumstances warrant an order for costs. 2. Section 60(3) of the NCAT Act states that in determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: 1. whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings; 2. whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings; 3. 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; 4. the nature and complexity of the proceedings; 5. whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance; 6. whether a party has refused or failed to comply with the duty imposed by section 36 (3); and 7. any other matter that the Tribunal considers relevant. 1. The inclusion of "any other matter that the Tribunal considers relevant" in the list of factors set out in s 60(3) demonstrates that that list is not an exclusive list. 2. The term "special circumstances" is not defined in the NCAT Act. It has been interpreted to mean circumstances that are out of the ordinary but not necessarily extraordinary or exceptional. The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. 3. In Alexander James Pty Ltd v Pozetu Pty Ltd (No. 2) [2016] NSWCATAP 75 at [14] the Appeal Panel stated: 14. An assessment whether circumstances are "special" involves the exercise of a value judgement carried out by way of comparison between what is not "special", and what is special. There are no scientific means by which the former can be ascertained. The evaluative process is necessarily one of impression informed by the particular provisions of section 60, which by sec 60(3)(f) incorporates also a consideration of section 36(3) of the Act. 1. We conclude that the weakness of the appellants' case, demonstrated by the fact that no question of law arose on the appeal and no basis for leave to appeal was established, constitutes special circumstances in this case. While a weak case on appeal will not necessarily constitute special circumstances warranting an order for costs, we are satisfied that it does so in this case. 2. In relation to this, this was the second occasion on which the appellants had appealed the Tribunal's decision and the appellants were put on notice of the lack of strength of the grounds of appeal in a Calderbank letter from the respondent's solicitor dated 20 March 2019. In that letter, the respondent's solicitor relevantly stated that "the [b]uilder is of the opinion that the Grounds of Appeal in the Second Appeal Proceedings are not strong". The fact that the appellants rejected a settlement offer that was only $4000 more than the last settlement offer they had made to the respondent, and persisted with a second appeal having been given notice that their grounds of appeal were not strong also constitutes special circumstances warranting an order for costs. (The content of the settlement offers made by the parties is discussed further below). On what basis should the costs order be made? 1. The respondent seeks an order that costs be paid on an indemnity basis from 23 March 2019, being the date on which a settlement offer made by the respondent on 20 March 2019 was rejected. 2. In general terms, a successful party who makes a valid "Calderbank offer" can use the rejection of that offer as a basis to obtain costs on an indemnity basis. 3. Settlement offers made prior to the appeal hearing are contained in Annexure B to the affidavit of Mr Peter Adams, the respondent's solicitor, dated 29 May 2019. The offers are summarised as follows: 1. The first offer was made by the appellants in an email dated 19 March 2019 from Mr Dimitropoulos to Ms Daniela Ceccattini of Adams & Partners. In that email, the appellants made settlement offer in the sum of $35,000 exclusive of costs. 2. The appellants' offer was rejected in a letter dated 20 March 2019 from Adams & Partners to the appellants. The respondent made a settlement offer in the sum of $60,000, with the appeal to be dismissed, the parties to pay their own costs of the appeal and the costs of the proceedings in the Tribunal below to be determined by the Tribunal. The offer was open for 14 days. The letter stated that the offer was made "pursuant to the principles expressed in Calderbank v Calderbank [1975] 3 All ER 333". 3. The appellants refused this offer in a letter dated 22 March 2019. They made a settlement offer in the sum of $52,000, with the appeal to be dismissed, the parties to pay their own costs of the appeal and the Tribunal to determine costs of the proceedings below. The offer was open for 14 days. The appellants' letter also stated that their offer was made "pursuant to the principles expressed in Calderbank v Calderbank [1975] 3 All ER 333". 4. In response to the appellants' offer, in a letter dated 27 March 2019, the respondent relevantly put to the appellants a revised settlement offer for $58,000. The offer was said to be in accordance with the offer made on 20 March 2019, with the exception of the settlement sum being reduced. The offer was expressed to be open for seven days. 5. In an email dated 27 March 2019, the appellants rejected the respondent's offer of settlement and submitted a revised settlement amount in the sum of $53,000. That offer was said to be in accordance with the 22 March 2019 offer, except for the increase in the settlement amount. The correspondence contained the same reference to Calderbank as the previous correspondence. The offer was open for 14 days. 6. On 1 April 2019, the respondent's solicitor sent an email to the appellants, notifying that he had instructions to make an offer reducing the amount to be paid by the appellants to $57,000. The email noted that the other conditions of the offer remained the same; that is, that each party was to pay its own costs of the appeal and the costs of the Tribunal proceedings would be determined. The email stated that the respondent was not prepared to make or accept any further offers and that the offer was open for 14 days. 1. The appellants submit that they should not be ordered to pay costs on an indemnity basis because: 1. The respondent's offers were made early in the proceedings. The second offer was amended only five days after the first offer and the third offer was amended only four days after the second offer. 2. The offers dated 27 March 2019 and 1 April 2019 did not mention that they were made in accordance with the principles of Calderbank v Calderbank. 3. The appellants also made genuine offers to settle the dispute. The extent of their compromise was substantially greater than the amount the respondent was prepared to compromise. 4. The claim that the appellants were advised that their prospects of success were very poor and that this was made plain by the respondent's solicitor is false and is not supported by any evidence before the Appeal Panel. 5. The respondent did not state in any of its offers that it sought indemnity costs. If the respondent was seeking indemnity costs, it was essential that this was clearly relayed to the appellants, who were self-represented and have no legal qualifications. In relation to this issue, the appellants relied on Danidale Pty Ltd v Abigroup Contractors Pty Ltd [2007] VSC 553 per Habsberger J at [17] and Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 249-250. 1. As their appeal was dismissed, the appellants did not obtain a more favourable outcome than the lowest offer made by the respondent. While this is a basis for the respondent to seek indemnity costs, there is no presumption that a party who rejects an offer of compromise and does not obtain an outcome more favourable than the offer will be ordered to pay indemnity costs: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA, Stein AJA agreeing). 2. In Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 at [8] (Miwa), Basten JA identified two questions relevant to whether costs should be awarded on an indemnity basis. They are whether: 1. there was a genuine offer of compromise; and 2. it was unreasonable for the offeree not to accept it. 1. In relation to the first issue, for an offer of compromise to be valid, an offer must involve "a real and genuine element of compromise": see, for example, Prosperity Advisers Pty Ltd v Secure Enterprises Pty Ltd [2012] NSWCA 192 at [109] (Prosperity Advisers); Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [9]; Barakat v Bazdarova [2012] NSWCA 140 at [51(e)]. 2. Whether a settlement offer is "real" or "genuine" does not depend on the intentions of the party making the offer. As stated by Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368: Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so. 1. Further, an offer of compromise must not be derisory, requiring capitulation by the party to whom it is addressed: Prosperity Advisers at [109]. In view of this, an offer to accept payment of the claim in full would not usually qualify as an offer of compromise: Richardson v Hough [1999] NSWSC 448. 2. In this case, as noted above, the Tribunal awarded the respondent $65,739.35. The respondent's initial settlement offer was for a sum of $60,000 and the final proposed settlement sum was $57,000. We do not consider that the respondent's initial offer or its final offer were derisory or required capitulation by the appellants. We conclude that the respondent's settlement offers represented a genuine offer of compromise. 3. In relation to whether it was unreasonable of the appellants to reject the respondent's offer, this must be assessed at the time the offer was made, and not with the benefit of hindsight: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [33] (Spigelman CJ, Beazley and McColl JJA). 4. Relevant factors in assessing whether a refusal to accept a settlement offer is unreasonable were set out by Basten JA in Miwa at [11], citing the Victorian Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435, in which Warren CJ, Maxwell P and Harper AJA) identified the factors relevant to determining whether the rejection of an offer was unreasonable as including: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it. 1. We have considered these factors in determining whether the appellant's refusal to accept the respondent's offer was unreasonable. In relation to the stage at which the offer was received, the respondent offered to settle for $60,000 on 20 March 2019, well prior to the appeal hearing on 27 May 2019. The final offer was made on 1 April 2019, which was also well prior to the appeal hearing. In each case, the appellants were given sufficient time to consider the offer. The initial settlement sum proposed by the respondent represented a compromise of more than 7% of the value of the respondent's claim as reflected in the Tribunal's order and the final sum represented a compromise of more than 10%. The amount of the compromise offered by the appellants was therefore not insubstantial. 2. We consider that as at 20 March 2019 and thereafter, the appeal had poor prospects of success. The Grounds of Appeal set out in the Notice of Appeal disclosed no error of law. It was clear from the Grounds of Appeal that the appellants took issue with factual findings made by the Tribunal. The respondent's Reply to Appeal, which was filed on 19 March 2019 (that is, before the respondent's offer to settle for $60,000 was made) drew to the appellants' attention that their appeal challenged findings of fact made by the Tribunal that were open to the Tribunal on the evidence. In the Reply to Appeal, the respondent submitted that the appellants could not establish that they had suffered a substantial miscarriage of justice and that leave to appeal should be refused, consistent with the principles set out in Collins v Urban [2014] NSWCATAP 17 at [80] to [84]. The Reply to Appeal should have alerted the appellants to their poor prospects of success. As noted above, the respondent's opinion that their appeal lacked strength was also set out in the offer dated 20 March 2019. 3. The offer made by the respondent to the appellants was clear, both in the 20 March 2019 letter and in subsequent amendments to the amount of the offer. In each case, the settlement sum was specified. The parties were in agreement in relation to other parts of the settlement offer: that is, that the appeal would be dismissed, that the parties would pay their own costs of the appeal and that the Tribunal would determine the costs of the proceedings below. The appellants were given ample time in which to consider the settlement offer, on both the first occasion the offer was made and when the offer was varied by amendment to the settlement sum. 4. The respondent's 20 March 2019 letter stated that the offer was made was headed "Without Prejudice Save as to Costs" and was expressed to be made "pursuant to the principles expressed in Calderbank v Calderbank [1975] 3 All ER 333". The letter of 27 March 2019 in which the proposed settlement sum was amended referred back to the earlier letter. The email dated 1 April 2019 made it clear that while there was an offer to reduce the settlement sum, "the other conditions" of the offer (that is, the offer of 20 March 2019) remained the same. While the correspondence dated 27 March 2019 and 1 April 2019 did not specifically refer to Calderbank principles, we are satisfied that the reference to Calderbank in the 20 March 2019 letter equally applied to the subsequent correspondence. 5. The respondent's correspondence dated 22 March 2019 and 27 March 2019, was also headed "Without Prejudice Save as to Costs" and the offers made in that correspondence were said to be made "pursuant to the principles expressed in Calderbank v Calderbank [1975] 3 All ER 333". Even though the appellants were self-represented, we consider it unlikely that the appellants would have headed their correspondence "Without Prejudice Save as to Costs" and referred to Calderbank principles, if they were unaware of the meaning of these terms. We are of the view that the appellants could not have been in any doubt that the respondent intended to use its settlement offer for the purposes of a costs application, any more than the respondent could not have been in any doubt that the appellants intended to use their settlement offer for the same purpose. 6. We are not satisfied that the failure of the respondent to specifically warn the appellants of an intention to seek indemnity costs in the letter dated 22 March 2019 or subsequently of itself means that the appellants' rejection of the offer of settlement made was reasonable. The cases the appellants cite in their submissions are not authority for this proposition. In Danidale, the Court was considering offers that were not in the form of a Calderbank offer and stated, at [17]: Failing to warn the offeree that indemnity costs would be sought if it went ahead and sued and obtained a less favourable result is one matter to take into account in deciding whether the rejection of the offers was reasonable. [Emphasis added] 1. Further, Huntsman Chemical is authority for the proposition that a formal warning of an intention to claim indemnity costs will make the awarding of indemnity costs more likely, rather than authority for the proposition that refusal of an offer that does not contain a warning can never result in the award of indemnity costs. 2. In any event, correspondence between parties relating to settlement does not need to be in a set form or adopt a set formula. What is relevant is the content of the correspondence: Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 at [7]. In this case, we are satisfied from the content of the correspondence that both parties made settlement offers that they knew would be relevant to the issue of costs. 3. We conclude that it was unreasonable for the appellants to refuse the respondent's settlement offer and that making an order for indemnity costs is appropriate in the circumstances of the case. The respondent seeks indemnity costs from the date the appellants initially refused the offer; that is, 22 March 2019. In our view, as the parties were still engaged in negotiations at that stage, this is not the appropriate date from which indemnity costs should be awarded. In our view, costs should be awarded on an indemnity basis from 1 April 2019. The appellants were aware from the respondent's correspondence dated 1 April 2019 that the respondent considered it had made a final offer. The appellants were also aware that the difference between the respondent's offer and their own previous offer was only $4000. Orders 1. We make the following orders: 1. A hearing on costs is dispensed with in accordance with s 50(1)(c) of the Civil and Administrative Tribunal Act 2013. 2. The appellants are to pay the respondent's costs of the appeal as agreed or assessed, on the ordinary basis until 31 March 2019 and on an indemnity basis from 1 April 2019. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar 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: 04 July 2019