Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Robust Builders Pty Ltd v Bhardwaj (No 2) [2020] NSWCATAP 61 Hearing dates: On the papers Date of orders: 17 April 2020 Decision date: 17 April 2020 Jurisdiction: Appeal Panel Before: S Thode Senior Member JS Currie Senior Member Decision: (1) A hearing on costs is dispensed with pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013. (2) The appellant must pay the respondents' costs of the Appeal proceedings on the ordinary basis, as agreed or assessed as set out in the legal costs legislation as defined in section 3A of the Legal Profession Uniform Law Application Act 2014. (3) The stay granted on 24 October 2019 is lifted. (4) The monies paid into the Registry pursuant to Order 1(a) of the stay orders and held by the Registrar are to be paid to the respondents Madhu Bhardwaj and Nisha Bhardwaj immediately. Catchwords: COSTS- Costs of appeal from Consumer and Commercial Division- costs order- refusal to order costs on indemnity basis. 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: Oshlack v Richmond River Council [1998] HCA 11, 193 CLR 72 Northern Territory v Sangare [2019] HCA 25 Thompson v Chapman [2016] NSWCATAP 6 Texts Cited: None cited Category: Costs Parties: Robust Builders Pty Ltd(Appellant) Madhu Bhardwaj (First Respondent) Nisha Bhardwaj (Second Respondent) Representation: Counsel: M Horobin (Respondent) Solicitors: Legal Vision (Appellant) Rivera Legal (Respondent) File Number(s): AP 19/47109 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 24 September 2019 Before: D, Goldstein, Senior Member File Number(s): HB 17/42149; HB 17/52179 REASONS FOR DECISION 1. An application to the Tribunal was brought by Mr and Mrs Bhardwaj (the owners) against the builder for damages for breach of statutory warranty. The builder filed a cross-application seeking damages for loss of profit and unpaid variations. The builder was ordered to pay to the owners the sum of $154,463. 2. The builder appealed. 3. On 24 October 2019 the Appeal was listed for a Call Over and Stay Application. The Appeal Panel constituted by Deputy President Harrowell granted the stay and ordered the appellant to pay instalments of $7500 per fortnight into the Tribunal. The appellant was also ordered to notify the respondents within 24 hours of becoming aware of any substantial change in its financial position and not to dispose of any assets of the company other than in the ordinary course of business. 4. On 21 February 2020 Appeal Panel dismissed the appeal by the builder. 5. On 6 March 2020 the Appeal Panel received an Application for miscellaneous matters filed by Michael Rivera solicitor, on behalf of the owners. The orders sought are as follows: 1. that the stay granted by Deputy President Harrowell on 24 October 2019 be lifted forthwith; 2. that the monies paid into the Tribunal pursuant to order 1 (a) of the stay orders and held by the Registrar be paid to the Respondents; 3. That the appellant pay the Respondents' costs of the Appeal (AP 19/47109). 1. Under a separate heading "grounds for application" the homeowners specified the following: "On 24 October 2019, Deputy President Harrowell made orders, pending the determination of the appellant's appeal, staying orders 1 and 2 of Senior Member Goldstein made on 24 September 2019 in which the appellant was ordered to pay the respondent's $154,463.76 immediately. On 21 February 2020, the Appeal Panel dismissed the Appellant's appeal and the Respondents wish to have the stay lifted and monies currently held by the Tribunal paid out to them in partial satisfaction of the amount payable pursuant to order 2 of Senior Member Goldstein's orders of 24 September 2019". 2. The Tribunal received a further Application for miscellaneous matters. The builder sought orders that the stay granted on 24 October 2019 be maintained until such time as the period for lodging an appeal to the New South Wales Supreme Court has expired; and that the monies paid pursuant to order 1(a) of the stay be retained by the Registrar until such time as the period for lodging an appeal to the New South Wales Supreme Court has expired. 3. The parties also sought orders for costs. This is the decision of the Appeal Panel determining first, the question of costs, and secondly, whether the stay should be lifted. Costs Costs jurisdiction 1. Section 60 of the Civil and Administrative Tribunal Act No.2, 2013 (NSW) ("CAT Act") creates the general rule that each party to proceedings must pay their own costs: s60(1). The Appeal Panel may order costs "if satisfied that there are special circumstances warranting an award of costs" (emphasis added): s60(2). Section 60(3) sets out a non-exhaustive list of factors that may be considered in deciding whether there are special circumstances warranting an award of costs. 2. Rule 38 of the Civil and Administrative Tribunal Rules ("CAT Rules") 2014 states: '(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. The parties' respective proceedings were brought under the Home Building Act 1989. Pursuant to section 3 of Schedule 4 of the CAT Act, proceedings under the Home Building Act are allocated to the Commercial and Consumer Division of the Tribunal. 2. If the amount claimed by or put into dispute by an applicant exceeded $30,000.00, then because the proceedings were allocated to the Commercial and Consumer Division of the Tribunal, Rule 38 will apply to the relevant costs application and the Appeal Panel will be unconstrained by the need to find the existence of special circumstances in order to make a costs order. 3. We are satisfied that the amount claimed by the parties or put into dispute exceeded $30,000.00 and that as a result, Rule 38 of the CAT Rules applies and the parties' cost submissions must be considered on the basis of Rule 38. The general law position 1. 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]. 2. At [67] of the judgement, McHugh J. 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 judgment, 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. A more recent High Court decision which is substantially to the same effect as the position stated in Oshlack v Richmond River Council is Northern Territory v Sangare [2019] HCA 25 at [25] when the court stated at [24] –[25] (footnotes excluded): 'It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion "cannot be narrowed by a legal rule devised by the court to control its exercise", the formulation of principles according to which the discretion should be exercised does not "constitute a fetter upon the discretion not intended by the legislature". Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power. A guiding principle by reference to which the discretion is to be exercised – indeed, "one of the most, if not the most, important" principle – is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour. There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense", that might have been taken into account to justify refusing the appellant an order for its costs.' 1. In Thompson v Chapman [2016] NSWCATAP 6 at [76] an Appeal Panel stated: '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 per Gaudron and Gummow JJ at [22] and McHugh J at 65.' Determination of the costs application 1. The solicitor for the builder, Mr Timothy Mak made the following submissions on the question of costs dated 27 March 2020. Rather than paraphrasing we have set out the submissions as follows: In relation to the question of costs we note that in general each party should pay their own costs in any NCAT proceedings. Refer to NCAT cost guidelines:… This was a standard building dispute with genuine claims on both sides. The mere fact that the building appellant lost should not automatically justify the application of the special circumstances exemption to apply. This was not a frivolous appeal (as indicated by the length of the Panel decision and the complexity of the issues). We suggest that the standard NCAT guideline should apply and each party should bear their own costs. If not, at the very least the Building Appellant should only be required to pay the costs of the appeal and on a party– party basis. 1. The builder relies on the affidavit of Ravi Mehndiratta deposed on 27 March 2020. 2. Mr Mehndiratta, a director of the builder, states as follows: "I have had extraordinary difficulties operating my business and dealing with these proceedings in recent weeks. My father died on 4 January. I have had to care for my mother as a consequence and deal with funeral arrangements. This has substantially impacted on my ability to operate the business.… I provided an offer of settlement on 11 March 2020 expecting the offer to be accepted or at least to have a counter offer proposal which I could consider. I received no response to my offer from the other side until approximately 17 March 2020 by which time I had lost valuable time exploring appeal options whilst expecting the offer to be accepted.… The sudden economic downturn caused by Covid-19 has been like nothing I have experienced in my lifetime.… I would like to have additional time to explore my options… I arranged home owners warranty insurance for this work and believe that the owners are covered for the costs awarded regardless what happens to my business as the insurance is covered by iCare if I was not to arrange payment to them. 1. It is further deposed that the builder has made regular payments into the Registry in accordance with the stay orders totalling $75,000. The owners' submissions 1. The Tribunal received written submissions on behalf of the owners dated 1 April 2020. It is the owners' submissions that the discretion to award costs is intended to be compensatory in nature and should follow the principles set out in Oshlak v Richmond River Council (supra). 2. It is submitted that the appealed order of Senior Member Goldstein required the builder to pay the owners the sum of $154,463. It is submitted that the owners were obliged to defend the appeal and there can be no doubt that the owners have been entirely successful in the appeal proceedings. The Appeal Panel dismissed the builder's appeal and preserved the decision of the Senior Member of 24 September 2019. It is submitted that the owners, being the successful parties in these proceedings ought to have their costs paid by the builder. 3. It is submitted that there are "special circumstances" in this case which warrant an order for costs on an indemnity basis. 4. The owners rely on a number of principles that govern the making of an award of indemnity costs including that there be a "sufficient or unusual feature", or some "relevant delinquency" of the proceedings. 5. It is submitted that the builder, legally advised, should have known that it had no prospects of success on the appeal. It is submitted that the builder filed an appeal on grounds that were ill-conceived and were bound to fail not least because none of the grounds sought to raise errors of law. The grounds of appeal merely sought a re-hearing of the original proceedings. 6. It is submitted that the original grounds of appeal dated November 2019 were largely abandoned in the amended appeal filed 17 December 2019 and that the builder's outline of submission failed to make any reference to the grounds listed in the amended appeal. Rather, the written submissions raised 5 new grounds of appeal. The most glaring of the departures was the builder's contention that the first contract (8 August 2016) should be set aside as "void for uncertainty" or "vagueness", which was raised for the first time at the internal appeal. This contention was in stark contrast to the builder's case in the original proceedings in which it accepted that the parties had validly entered into the first contract, which was supplanted by a second contract and then a third contract. 7. It is submitted that the builder exacerbated these problems by failing to acknowledge its new and additional grounds in submissions but without any effort to seek leave which was a necessary prerequisite pursuant to s 80(2)(b) of the Act. The owners submitted that all of the builder's grounds of appeal required the Tribunal to revisit findings of fact. It was therefore necessary to seek the Tribunal's leave for each and every ground of appeal, a submission with which the appeal panel ultimately agreed. 8. It is submitted by the owners that the builder's appeal was so misconceived that it had little prospect of obtaining leave to appeal at the outset, which was exacerbated when those grounds and amended grounds were abandoned at the hearing. 9. For those reasons the owners seek an order that the builder pay the owners' costs on an indemnity basis Consideration 1. Given that the builder's appeal was dismissed we find that the owners were the successful parties in the proceedings and are entitled to the costs of the appeal in accordance with established principles, as stated in the authorities above. 2. However we find that no delinquency can be attributed to the builder such as to warrant a costs order on an indemnity basis. We cannot agree that the appeal was misconceived. Further, the appeal panel is not bound by strict pleadings, and the mere failure by the builder to distinguish between errors of law, and those for which leave is required, whilst it might be considered unfortunate, cannot in our view, give rise to an order for indemnity costs. In the absence of any other conduct and/or offers of compromise and/or Calderbank letters which would support an application for indemnity costs we are not minded to make such an order. 3. In respect of the stay application, in the absence of any other submissions from the builder and/or any evidence that an appeal has been filed with the Supreme Court there are no reasons advanced why the stay should be maintained. The owners were entirely successful in the appeal. Pursuant to rule 50.3 of the Uniform Civil Procedure Rules 2005 the builder had 28 days from 21 February 2020 to lodge a summons seeking leave to appeal to the Supreme Court namely by 20 March 2020 and the period for lodging an appeal to the New South Wales Supreme Court has now expired. The owners are now entitled to the full amount of the judgment sum and there is no reason why they should continue to be deprived of the payments made to the Registry to date. 4. Accordingly we have decided to lift the stay order and we make the orders in paragraphs 1 to 4 above Orders 1. A hearing on costs is dispensed with pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013. 2. The appellant must pay the respondents' costs of the Appeal proceedings on the ordinary basis, as agreed or assessed as set out in the legal costs legislation as defined in section 3A of the Legal Profession Uniform Law Application Act 2014. 3. The stay granted on 24 October 2019 is lifted. 4. The monies paid into the Registry pursuant to Order 1(a) of the stay orders and held by the Registrar are to be paid to the respondents Madhu Bhardwaj and Nisha Bhardwaj immediately. ********** 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 Amendments 21 April 2020 - Decision under appeal added to coversheet. 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: 21 April 2020