Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Nutek Constructions Pty Ltd [ACN 603 941 564] v; Slotwinski; Slotwinski v Nutek Constructions Pty Ltd; [ACN 603 941 564] [2019] NSWCATAP 303 Hearing dates: On the papers Date of orders: 24 December 2019 Decision date: 24 December 2019 Jurisdiction: Appeal Panel Before: AR Boxall, Senior Member Decision: The Tribunal orders that Julia Charlotte Slotwinski pay 87% of the costs of Nutek Constructions Pty Ltd in appeals AP 18/21961 and AP 18/23592 as assessed or agreed. Catchwords: Appeal – application for costs – applicable principles in appeals from decisions of the Consumer and Commercial Division – costs order made. Legislation Cited: Civil and Administrative Tribunal Act 2013 ss 24, 25, 36, 52, 60, Schedule 7 Civil and Administrative Tribunal Rules 2014 (NSW), rr 38, 38A Home Building Act 1989, s94 Cases Cited: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72; 152 ALR 83; 72 ALJR 578 Category: Costs Parties: AP 18/23592: Nutek Constructions Pty Ltd (ACN 603 941 564) (Appellant) Julia Charlotte Slotwinski (First Respondent) Mariuz Slotwinski (Second Respondent) Juno Constructions Pty Ltd (Third Respondent) Elite Concrete Pumping Services (Fourth Respondent) AP 18/21961: Julia Charlotte Slotwinski (Appellant) Nutek Constructions Pty Ltd (ACN 603 941 564) (Respondent). Representation: DP O'Connor instructed by Lou Baker and Associates for the Appellant/Respondent, Ms Slotwinski IGA Archibald instructed by Harrington Lawyers for the Appellant/Respondent, Nutek Constructions Pty Ltd [ACN 603 941 564] File Number(s): AP 18/21961AP 18/23592 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 02 May 2018 Before: G Meadows, Senior Member File Number(s): HB 16/25001 HB 17/06469 REASONS FOR DECISION Introduction 1. On 28 June 2019 an Appeal Panel constituted by F Corsaro SC, Principal Member, and AR Boxall, Senior Member, made certain orders in relation to two internal appeals from a decision of the Tribunal's Consumer and Commercial Division. The appeals concerned two applications in that Division which arose out of a residential building contract for the construction of 3 residential units on a site in Balgowlah, in suburban Sydney. 2. The appeals were: 1. Julia Charlotte Slotwinski v Nutek Constructions Pty Ltd (AP 18/21961); and 2. Nutek Constructions Pty Ltd v Julia Charlotte Slotwinski (AP 18/23592). 1. The Appeal Panel's orders were as follows: The Appeal Panel: 1.Grants leave to Nutek to amend its Notice of Appeal in the form submitted on 16 July 2018; 2.Grants leave to Nutek to appeal the Quantum Meruit Order and First Application Dismissal Order of the Tribunal on 2 May 2018 in proceedings HB 16/25001, to the extent that leave is required, and allows the appeal in respect of both of those orders; 3.Grants leave to Mrs Slotwinski to appeal against the Elite Payment Order of the Tribunal made on 2 May 2018 in proceedings HB 16/25001, to the extent that leave is required, and allows the appeal in respect of that order; 4.Sets aside: the Quantum Meruit Order; the First Application Dismissal Order; and the Elite Payment Order of the Tribunal made on 2 May 2018; 5.Remits the proceedings to the Consumer and Commercial Division of the Tribunal for further determination of Nutek's claim in quantum meruit, and Mrs Slotwinski's defence by way of set-off on such further evidence as the Tribunal may consider appropriate; 6.Orders that any application in respect of the costs of the appeal to be made by written submissions filed and served within 14 days of the date of publication of this decision. Such submissions should address the question whether the application for costs can be dealt with on the papers and without a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act; 7.Orders that if either party files submissions in accordance with order 6 above the other party may file and serve submissions in response within a further 14 days. Such submissions should address the question whether the application for costs can be dealt with on the papers and without a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act. 1. On 17 July 2019, in response to Order 6 set out above, Nutek Constructions Pty Ltd (Nutek) filed an application for costs in the appeals, with supporting submissions. 2. No application for costs, submissions in support of any such application or submissions in response to Nutek's submissions have been received from Mrs Slotwinski. 3. In its submissions, Nutek submitted that the costs application can be dealt with on the basis of written submissions only, without the need for a formal hearing. It said that to proceed in this way would be more consistent with the Tribunal's statutory guiding principle under section 36(1) of the NCAT Act, of seeking "….. the just, cheap and quick resolution of the real issues in the proceedings", by saving the parties the expense of a hearing on the question of costs. The Appeal Panel agrees with this approach and has decided to proceed with the costs application without a hearing. 4. On or about 26 November 2019 the Appeal Panel was reconstituted by the Acting President of the Tribunal in accordance with section 52 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act). Legislative position 1. The starting point is section 60 of the NCAT Act, which provides relevantly as follows: 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. 1. Sub-section (3) then proceeds to set out a non-exclusive of considerations which the Tribunal is authorised but not required to have regard to in determining "…whether there are special circumstances warranting an award of costs". 2. Section 24 of the NCAT Act constitutes a Rule Committee of the Tribunal, and section 25 of that Act confers on the Rule Committee authority to make rules for the Tribunal, including pursuant to section 25(2) rules concerning certain matters prescribed in Schedule 7 of the NCAT Act. Paragraph 20 of Schedule 7 authorises the making of rules concerning "The costs in proceedings in the Tribunal". 3. The Civil and Administrative Tribunal Rules 2014 (the NCAT Rules) are the rules made pursuant to section 25 of the NCAT Act. They provide relevantly as follows: 1. In Rule 38, that in " … proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal", which clearly the original proceedings were: (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) ……….., or (b) the amount claimed or in dispute in the proceedings is more than $30,000; and 1. In Rule 38A, entitled Costs in Internal Appeals, that in internal appeals lodged on or after 1 January 2016 (as both of these appeals clearly were) the Appeal Panel is to apply the particular costs rules, if any, applicable in the Division of the Tribunal from which the appeal originates, rather than the general rule set out in section 60 of the NCAT Act: (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. The net result of these provisions is that, since: 1. the present appeals concern proceedings for the exercise of functions of the Tribunal that are allocated to the Tribunal's Consumer and Commercial Division, 2. the appeals were lodged after 1 January 2016, and 3. the amount claimed or in dispute in the original proceedings exceeded $30,000, the Appeal Panel is authorised to award costs in relation to the appeals "even in the absence of special circumstances warranting such an award", to adopt the formulation in Rule 38. Nutek's submissions 1. In relation to Appeal AP18/21961 Nutek's submission were as follows: 1. Special circumstances exist to support an award of costs against Mrs Slotwinski in this appeal. 2. These special circumstances were: 1. Mrs Slotwinki's grounds of appeal were not properly articulated and in the event not all were pressed, although Nutek still had to prepare responses to all of them. 2. Apart from the Appeal Panel's decision setting aside the Elite Payment Order, Mrs Slotwinski's appeal failed in all respects. 3. The decision to set aside the Elite Payment Order was not the result of the success of Mrs Slotwinski's arguments (namely, that because of Nutek's failure to obtain Homeowner's Warranty Insurance (HOWI) Nutek was not entitled to recover that amount), but rather it was the logical consequence of Nutek's success in its appeal. Hence Mrs Slotwinski should properly be considered to have failed in her appeal concerning the Elite Payment Order, even though the outcome was consistent with that which she sought. 4. The grounds of appeal argued by Mrs Slotwinski, to the effect that: 5. Nutek had repudiated the underlying contract, and 6. Nutek was not entitled to a quantum meruit claim as a consequence of its failure to obtain HOWI, 7. were rejected, and the appeal was conducted in a way which resulted in excessive costs. 8. The overall effect is to give rise to special circumstances which justify an award of costs. 9. Moreover: 10. the untenable nature of Mrs Slotwinski's appeal, coupled with 11. the multiplicity of proceedings commenced by Mrs Slotwinski, 12. justify the award of costs on an indemnity basis. 1. In relation to Appeal AP18/21961 Nutek's submission were as follows: 1. Its appeal was essentially against the Tribunal's decisions: 1. That there was inadequate basis to quantify Nutek's quantum meruit claim; 2. That Mrs Slotwinski did not seek to rely on a set-off defence; and 3. Not to consider and determine Mrs Slotwinski's set-off defence. 1. Mrs Slotwinski's persistence in opposing the quantum meruit claim unnecessarily prolonged the appeal and increased its cost. 2. Similarly, Mrs Slotwinski's opposition to the Tribunal hearing the set-off defence unnecessarily prolonged the appeal and increased its cost. 3. These are special circumstances which support a costs order in Nutek's favour. 4. The conduct of Mrs Slotwinski in relation to this appeal warrants an award of costs on an indemnity basis. Underlying principles 1. In view of the provisions of the NCAT Act and NCAT Rules referred to above, it is clear that, in this case at least, the question whether or not there are special circumstances within the meaning of section 60 of the NCAT Act is irrelevant to the determination of this application. This is explained in paragraphs [8] to [12] above. 2. The effect of these rules is to confer on the Appeal Panel in circumstances which include the present appeals a discretion as to the award of costs in connection with appeals from decisions of the Tribunal's Consumer and Commercial Division. 3. The High Court of Australia in Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72; 152 ALR 83; 72 ALJR 578 has made certain observations which are directly relevant to the exercise of this discretion: 1. Per McHugh J at [65], with Brennan CJ agreeing at [3]: Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation. In this manner, the law has gradually developed principles to guide the proper exercise of the discretion and, in some cases, to highlight extraneous considerations which, if taken into account, will cause the exercise of the discretion to miscarry. 1. Gaudron and Gummow JJ at [36] to [40] adopt the same approach, as does Kirby J at [134]. 2. Per McHugh J at [66], with Brennan CJ agreeing at [3]: By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. 1. Gaudron and Gummow JJ at [35] agree that there exists an expectation that the costs of the successful party will typically be awarded against the unsuccessful party, while emphasising at [40] that there is: no absolute rule …. that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. 1. Kirby J agrees at [134] that: …. that legal costs will usually be ordered in favour of the successful party. Absent special statutory provisions, Australian law has followed this English rule. But the compensatory principle cannot be treated as an absolute rule. 1. McHugh J at [67], again with Brennan CJ agreeing at [3], expands on his observations in [66]: 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. Nothing in the judgments of the other Justices detracts from or qualifies this proposition in a way which is relevant to the costs application in the present appeals. 1. The conclusion is that in the present case the Appeal Panel is required to exercise a statutory discretion concerning the award of costs, in circumstances where the normal approach to the exercise of that discretion is to award costs in favour of the successful party, absent disentitling conduct of some kind on the part of the successful party. This requires that two questions be answered: 1. Who is the successful party? 2. Was there any disentitling conduct on its part? Who is the successful party? 1. In three important respects Nutek was successful in the appeals: 1. The Appeal Panel upheld the Tribunal's finding that Nutek was able to recover against Mrs Slotwinski on the basis of a quantum meruit claim, even despite its failure to obtain HOWI (and its consequent inability by reason of section 94 of the Home Building Act 1989 to recover against her on the basis of a contractual claim); 2. The Appeal Panel set aside the Tribunal's dismissal of Nutek's quantum meruit claim on the basis that it was unproven; and 3. The Appeal Panel found that the Tribunal had jurisdiction to hear Mrs Slotwinski's set-off defence, even though its quantum exceeded the monetary limit on the Tribunal's jurisdiction. 1. In one respect Mrs Slotwinski was successful in the appeals, namely the Elite Payment Order made against her was set aside. Nutek says that although this result was what Mrs Slotwinski sought in the appeals, the basis for setting it aside was not that for which she argued. She sought to have it set aside on the basis that Nutek was not entitled to recover the relevant amount because of its failure to obtain HOWI cover. Both the member at first instance and the Appeal Panel dismissed this argument, and in that sense, Mrs Slotwinski's appeal could be considered unsuccessful at an intellectual level. On the other hand, she obtained, at a practical level, one of the orders she sought. This however was as the logical consequence of the Appeal Panel's wider decision, that the matter be remitted to the Consumer and Commercial Division "…. for further determination of Nutek's claim in quantum meruit, and Mrs Slotwinski's defence by way of set-off on such further evidence as the Tribunal may consider appropriate", rather than the force of the arguments made on her behalf. 2. Nothing in Nutek's conduct in connection with the appeals has, in the Appeal Panel's view, been of a kind which might disentitle it from an award of costs. Its general approach to the appeals has been consistent generally with that which the Tribunal would expect to see from a responsible party in proceedings before it. 3. Whatever the basis of the Appeal Panel's decision setting aside the Elite Payment Order, the fact remains that it is one of the orders which Mrs Slotwinski sought. Accordingly, to that extent at least, she can be considered to have been successful. 4. What follows is, in the Appeal Panel's view, that it is appropriate to make a costs order against Mrs Slotwinski, but in doing so to recognise that the Appeal Panel's order setting aside the Elite Payment Order was in conformity with the outcome which Mrs Slotwinski sought in her appeal against that order. In relation to all other aspects of the appeals, however, Nutek has been successful. In the Appeal Panel's assessment, it is thus appropriate to order that Mrs Slotwinski pay the costs of the appeals, subject to a reduction which recognises her success – albeit fortuitous - in relation to the Elite Payment Order. 5. In the absence of any more scientific method of doing so, the Appeal Panel proposes to use the relative values of the Elite Payment Order and the total amount in dispute in order to set the amount of this reduction. The Elite Payment Order was for $36,500, while the total amount claimed by Nutek was $278,930. The former represents approximately 13% of the latter. Accordingly, the Appeal Panel proposes that a reduction of 13% be applied to recognise the successful outcome for Mrs Slotwinski of her appeal against the Elite Payment Order. 6. There is one further issue to be considered. Nutek has sought costs from Mrs Slotwinski on an indemnity basis. Its basis for doing so appears to be that: 1. Her approach to the appeals has not been consistent with the Tribunal's statutory guiding principle, namely the just, quick and cheap resolution of the real issues in dispute. 2. More particularly, had Mrs Slotwinski taken a more realistic and pragmatic approach to the appeals, she would have: 1. allowed the real issues in dispute to be whittled down to a more focussed list, 2. accepted what Nutek considers to be the indisputable proposition, that it was entitled to recover on a quantum meruit basis, and 3. approached the issues inherent in the set-off defence in a different way which was more economical of the parties' time and effort. 1. The Appeal Panel does not accept that an award of indemnity costs against Mrs Slotwinski is warranted. Something more than faulty legal analysis, misconceived arguments or a stubborn and uncompromising approach to litigation is required in order to justify such an award. Nutek has failed to demonstrate the necessary additional element. 2. Finally, it should be made clear that the order set out below relates only to the costs of the appeals. It has nothing to do with the costs – whether historical or future - of the principal proceedings which have been remitted back to the Consumer and Commercial Division for rehearing. Costs in the remitted proceedings are a matter for that Division. Orders 1. The Tribunal orders that Julia Charlotte Slotwinski pay 87% of the costs of Nutek Constructions Pty Ltd in appeals AP 18/21961 and AP 18/23592 as assessed or agreed. *************** 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: 24 December 2019