Mullally v Lucien

1. [1]

   By Summons filed on 1 September 2022, Ms Nerida Mullally, the applicant on this application, seeks leave to appeal a decision of the New South Wales Civil and Administrative Tribunal Appeal Panel (the Appeal Panel), refusing leave to appeal and dismissing the appeal against the decision of the New South Wales Civil and Administrative Tribunal (the Tribunal) ordering the applicant to pay the respondent’s costs of application HB 19/48969.

2. [2]

   The applicant seeks leave pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). Section 83(1) provides that:

Background

1. [3]

   The background to the application involves two proceedings that commenced before the Tribunal which were heard together. The proceedings involved disputes arising out of a contract concerning alterations and additions at a residential property in Newtown. The subject contract was entered into on 4 October 2017. Given that the proceedings before the Tribunal were heard together, and the parties were respectively both plaintiffs and defendants, I intend to refer to the parties in this judgment as the “applicant” or “owner”, and the “respondent” or “builder”.

2. [4]

   On 4 October 2017, the parties executed the contract. The contract was in the form of the New South Wales Fair Trading, “Home building contract for work over $20,000”, and specified a contract price of $812,770, inclusive of GST. By 1 March 2018, the builder commenced work under the contract. A number of claims for variations of the contract were made by the builder.

3. [5]

   Following payment of the deposit, the builder made seven claims for progress payments. The plaintiff paid a total of $711,620.62, inclusive of GST, for progress claims numbered 1–6, and disputed progress claim number 7. The sum of money owed to the builder under the contract for progress claim number 7 was $111,192.27.

4. [6]

   On 14 December 2018, the owner, following an altercation with the builder, called the police who instructed the builder to leave the site. The locks on the site were changed. On 17 December 2018, the parties agreed that the builder would return to the site and complete the works.

5. [7]

   Between 18 January 2019 and 24 April 2019, there was correspondence between the builder’s lawyers and the owner’s lawyers, which included the following.

6. [8]

   On 31 October 2019, the builder commenced proceedings HB 19/48969 (the HB 19/48969 proceedings). The builder filed a home building application against the owner, in which he claimed $142,031.73 in debt. The debt was the total of the outstanding invoices, and in quantum meruit together with interest under the contract and damages for repudiation of the contract.

7. [9]

   The builder filed points of claim in which he relevantly claimed the following.

8. [10]

   On 19 December 2019, the applicant filed points of defence. She claimed that she was not liable for the balance of progress claim number 7, nor was she liable for some of the variation claims. The applicant denied that she wrongfully terminated or repudiated the contract.

9. [11]

   On 19 December 2019, the applicant commenced proceedings HB 19/56785 against the respondent. She claimed $127,516.07 as damages for breach of the contract, being the cost of completing the works, or alternatively, the diminution in value of the property due to the defects of the works, and the loss from the delay in completing the works.

10. [12]

    On 19 December 2019, the applicant filed points of claim (which were amended in minor respects by an amended points of claim, filed on 14 October 2020) in which she relevantly claimed the following.

11. [13]

    On 22 September 2020, the respondent filed points of defence as follows:

12. [14]

    The applications were heard on 29 April 2021, 21 May 2021, and 15 September 2021 respectively. The parties filed approximately 4000 pages of evidence and submissions.

13. [15]

    On 25 November 2021, the Tribunal published its decision, ordering the respondent to pay the applicant the sum of $31,660.65. The Tribunal’s calculation was as follows:

    1. (1)

       contract sum: $812,770.00;

    2. (2)

       plus variations (# 1, #2, #4 to # 8, #10, #11 and #13): $9,856.41;

    3. (3)

       less payments made by the owner to the builder: $711,670.62;

    4. (4)

       = amount owing to the builder: $110,889.79;

    5. (5)

       less defects: $64,229.35

    6. (6)

       less incomplete works: $54,462.70; and

    7. (7)

       less payments made by the owner on behalf of the builder: $23,923.90.

14. [16]

    The respondent appealed against the decision. The appeal was unsuccessful: see Lucien v Mullally [2022] NSWCATAP 257.

15. [17]

    The Tribunal published a separate decision in respect of costs on 18 February 2022: see Lucien v Mullally; Mullally v Lucien (No 2) [2022] NSWCATCD. The Tribunal made the following orders.

    1. (1)

       The owner to pay the costs of the builder regarding proceedings HB 19/48969, as agreed or assessed, on the basis set out in the legal costs legislation (as defined in s 3A of the Legal Profession Uniform Law Application Act 2014 (NSW)).

    2. (2)

       The builder to pay the costs of the owner of proceedings HB 19/56785, as agreed or assessed, on the basis set out in the legal costs legislation (as defined in s 3A of the Legal Profession Uniform Law Application Act 2014 (NSW)).

16. [18]

    The applicant appealed against order 1. The respondent did not appeal against order 2.

17. [19]

    On 4 August 2022, the Appeal Panel published its decision refusing leave to appeal and dismissed the appeal: see Mullally v Lucien [2022] NSWCATAP 258 (the Appeal Panel Decision). This is the decision the subject of the present proceedings.

18. [20]

    The Appeal Panel set out the scope and nature of internal appeals and the circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial division: see cl 12(1) of Schedule 4 of the NCAT Act. The Appeal Panel referred to Collins v Urban [2014] NSWCATAP 17 at [84], where it was stated that ordinarily, it is appropriate to grant leave to appeal only in matters that involve:

19. [21]

    The singular ground of appeal before the Appeal Panel was as follows:

20. [22]

    The Appeal Panel was satisfied that the builder was “wholly successful” in the proceedings instituted by him, claiming an outstanding debt under the contract and, in the alternative, a claim for quantum meruit. It was held to be immaterial that no “order” was made in his favour. The Appeal Panel was satisfied that:

21. [23]

    The Appeal Panel noted a number of findings that were made in favour of the builder as follows.

22. [24]

    The respondent was successful on the variations, which were partly conceded and partly found by the Tribunal. In addition, the Appeal Panel noted that the respondent was successful “…as to a significant part of his claim which is payment outstanding under the contract in the sum of $110,889.79, which in the event was accounted for by way of defence or set off to the owner’s claim”.

23. [25]

    The findings as to variations and the outstanding sum under the contract were findings that underpinned the critical conclusion in the decision to award costs against the applicant in respect of proceedings HB 19/48969.

The Appeal to this Court

1. [26]

   The Summons sets out five appeal grounds as follows.

   1. (1)

      The appeal panel erred in law in dismissing the applicant’s appeal against a costs order in the respondent’s favour, in proceedings HB 19/48969, in the following circumstances:

   2. (2)

      The Appeal Panel erred in failing to find that the characterisation of the defendant’s failed case as “successful” was a miscarriage of discretion amounting to an error of law.

   3. (3)

      Alternatively, to the extent that leave was required to appeal the costs order in proceedings HB 19/48969, the Appeal Panel erred in refusing leave in circumstances where the costs decision in respect of those proceedings was not fair, equitable, and would cause substantial injustice to Mullally.

   4. (4)

      The Appeal Panel erred in providing their own reasons for the costs decision in the HB 19/48969 proceedings when such reasons did not appear in the primary judgment.

   5. (5)

      The Appeal Panel failed to engage with Mullally’s case and failed to give adequate or proper reasons for their orders.

Submissions on this Appeal

1. [27]

   Although the Summons identifies five grounds of appeal, the primary complaint is that the Appeal Panel made several factual errors: namely, a statement that the builder had been “somewhat successful”; and the outcome was supported by a “clearly erroneous finding” that the builder’s case was successful. It was contended that the clear error was the conclusion that the builder was ‘successful’, and the absence of reasoning which explained that conclusion.

2. [28]

   The applicant contended that the respondent was not awarded $110,889.79 or any other amount, the respondent’s case was defeated in its entirety, and he was awarded nothing. In support of the contention that the respondent “lost both cases”, the applicant pointed to the fact that the respondent failed, in the proceedings commenced by him, to obtain an award in his favour. In the second proceedings, commenced by the applicant, the respondent was ordered to pay the applicant $31,660.

3. [29]

   It was submitted that the Appeal Panel erred in adopting a conclusion that the respondent was successful in his claim for debt and variation. Rather than correct the erroneous conclusion of the Tribunal, that the respondent was successful in his proceedings, the Appeal Panel “…sought to engraft onto that conclusion findings that are inconsistent with the substantive judgment at first instance”.

4. [30]

   The Appeal Panel’s decision was said to be infected by error. By failing to reject the characterisation of the respondent’s failed case as “successful”, a miscarriage of discretion occurred, amounting to an error of law. In the alternative, to the extent that leave was required to appeal the costs order, the appeal panel erred in refusing leave in circumstances where the costs decision (HB 19/48969) was not fair and equitable and would cause substantial injustice to the applicant.

5. [31]

   Ultimately, the applicant submitted that the Senior Member, at first instance, applied the “costs follow the event approach”. However, he applied the approach to a mistaken view of the facts, that is, the respondent did not succeed in his case either because he was not entitled to damages or because his claim was defeated by a set-off: see Slotwinski v Nutek Constructions Pty Ltd [2021] NSWCATAP 113.

6. [32]

   The respondent submitted that there is no error in the Appeal Panel’s decision and leave should be refused, the appeal dismissed, and costs ordered against the applicant.

7. [33]

   The respondent further submitted that the Appeal Panel correctly concluded that the applications before the Tribunal were matters where both parties achieved a measure of success, including the respondent’s success in his claim for debt and variations. The success enjoyed by the respondent is said to be demonstrated by the decision that he was owed $110,889.79.

8. [34]

   The exercise of discretion to award costs depends upon matters of impression and evaluation. The respondent pointed to the comprehensive judgment delivered by Senior Member Blake (the primary judgment) as demonstrating a careful assessment of the evidence and the issues which were litigated at first instance. Notwithstanding the fact that some of the findings in that judgment were favourable to the applicant, the Senior Member and the Appeal Panel concluded that the respondent enjoyed some success, namely a debt owed under the contract and some variations. It was submitted that there is therefore nothing “…unjust or unreasonable about the exercise of the discretion on costs…” [1]

Legal Principles

1. [35]

   The success of this appeal depends on demonstrating error in the sense contemplated by the Court in House v R (1936) 55 CLR 499 at 504–505; [1936] HCA 40 (House) Namely, demonstrating that there has been the application of a wrong principle; a mistake of facts or a failure to have regard to material considerations; or a conclusion which was, on the facts, “unreasonable or plainly unjust”.

2. [36]

   The principal controversy is whether the Appeal Panel erred in adopting an erroneous conclusion that the respondent was successful in his claim for debt and variations, and finding that the respondent, “was successful as to a significant part of his claim which is payment outstanding under the contract in the sum of $110,889.79”.

3. [37]

   Section 83 of the NCAT Act relevantly provides:

4. [38]

   In Nutek Constructions Pty Ltd v Slotwinski [2021] NSWSC 832 at [36]–[39], Davies J set out the principles to be considered in deciding whether leave to appeal should be granted:

5. [39]

   More recently, in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 (Thomas and Naaz Pty Ltd), the Court considered the conferral of jurisdiction pursuant to s 83 of the NCAT Act. There is no appeal as of right, but rather it is necessary for the applicant to make a case for leave. Importantly, the appeal in this Court is confined to being “[an] appeal on a question of law”. It is not sufficient merely to assert that the Tribunal or Appeal Panel erred in law in order to satisfy the limited conferral of jurisdiction: see Thomas and Naaz Pty Ltd at [32]; Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13]; Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378 at [6], [22].

6. [40]

   In Booth v Fourmeninapub Pty Ltd [2020] NSWCA 57 at [21] (Leeming JA, with Bell P (as his Honour then was) and White JA agreeing), it was said that “[a]n appellant cannot convert a challenge which is wholly or partly factual to one which is on a ‘point of law’ merely by including those words in the formulation of the ground”. The purported error must give rise to a question of law.

7. [41]

   The distinction between what is, or is not a question of law, has been said to be “vexed and context dependent”: see Thomas and Naaz Pty Ltd at [52]; Da Costa v The Queen (1968) 118 CLR 186 at 194; [1968] HCA 51.

8. [42]

   In Thomas and Naaz Pty Ltd, Leeming JA stated, at [53]:

9. [43]

   It is clear from the line of authority that the applicant must establish a case for leave. Unless error, giving rise to a question of law, can be established in the Appeal Panel’s decision to refuse leave and dismiss the appeal, this Court cannot intervene.

Consideration

1. [44]

   The Civil Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) rr 37–40 deal with the determination of proceedings. Rule 38 deals with costs in the Consumer and Commercial Division of the Tribunal, and relevantly provides:

2. [45]

   The general principles concerning the awarding of costs were considered by the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 at [28]–[38]:

3. [46]

   It is accepted that the usual order as to costs is that costs follow the event. The applicant submitted that the discretion regarding costs has not been exercised judicially, but rather in a “…capricious and arbitrary manner, and without regard to the positions adopted by the parties”. The question as to whether the discretion to award costs to the respondent miscarried is a matter of public interest because, if found to be infected by error and uncorrected, it has the potential to cause confusion and uncertainty in cases where costs are an issue.

4. [47]

   In determining whether error has been established, it is necessary to consider whether it was open to find that the respondent was successful, either entirely or in part, in his proceedings (HB 19/48969). In his judgment on costs, the Senior Member concluded at [24]:

5. [48]

   The ground of appeal before the Appeal Panel was that the Tribunal’s discretion miscarried, constituting an error of law. Further, or in the alternative, the applicant submitted that the finding as to costs was unreasonable or plainly unjust given the builder succeeded on only one contested item of his claim, that is, Item 30 Variation 13, in the amount of $660.

6. [49]

   The respondent’s claim included the balance of the contract price in the amount of $110,955.79, plus variations performed in the amount of $9856.41.

7. [50]

   The Appeal Panel, in adopting the Tribunal’s finding that the respondent had been successful, stated:

8. [51]

   The Appeal Panel referred to the variations which were agreed to, and the “amount owing to the builder” which was accounted for “by way of defence or set off to the owner’s claim”. The Appeal Panel refused leave and dismissed the appeal, holding that the builder was successful in respect of two out of three “readily discernible” separate aspects of his application. The builder was somewhat successful in his application, as was his defence to the owner’s claim.

9. [52]

   The Appeal Panel inferred that the findings as to variations and the outstanding sum owing under the contract (which were sums taken into account in the calculation that ultimately led to the order that the respondent pay the applicant the sum of $31,660.65), gave rise to the Senior Members “critical conclusion in the cost’s decision that ‘the builder was successful in proceedings HB 19/48969’”. It was on that basis that the Appeal Panel agreed that the builder was “…to a degree, successful in his claim”. That inference was available on the material before the Appeal Panel.

10. [53]

    In order to determine whether there was a miscarriage of discretion amounting to an error of law, it is necessary in my view, to consider the findings in respect of the respondent’s claim (HB 19/48969) as set out in the primary judgment. In order to determine whether it was open to find that the respondent was “successful”, justifying a costs order in the “usual way”.

11. [54]

    The respondent, in proceedings HB 19/48969, relevantly claimed an amount of $111,192.27, being the total of the balance of the final progress claim (progress claim # 7). He also claimed a sum of $16,323.80, on a quantum meruit basis for all works done at the owner’s request. The points of claim included a claim for damages for the wrongful termination and repudiation of the contract by the owner arising from the 24 April 2019 notice.

12. [55]

    The Senior Member identified 12 issues for determination, which were issues relevant to both proceedings. In respect of the proceedings brought by the applicant (HB 19/56785), a number of favourable findings were made in her favour. Relevantly, the Senior Member made the following findings.

13. [56]

    In respect of proceedings HB 19/48969, the Senior Member rejected the claim that the applicant had “wrongfully terminated” and “repudiated” the contract, as claimed by the respondent.

14. [57]

    The Senior Member concluded:

15. [58]

    However, the respondent was successful in his claim for the sum owed under the contract for the last progress claim. He was also successful (either by way of agreement or, in one instance, a positive finding) with respect to some of the variations.

16. [59]

    The Appeal Panel agreed with, and adopted, the finding that the respondent was successful in his claim. I do not accept the contention that the Appeal Panel failed to engage with the applicant’s case or failed to give adequate proper reasons for the orders. The Appeal Panel properly applied the relevant principles as enunciated in House.

17. [60]

    Costs decisions are discretionary decisions. In Yu v Cao [2015] NSWCA 276, (McColl JA, Sackville AJA and Adamson J agreeing), the Court said at [157]:

18. [61]

    Given the discretionary nature of costs decisions, I am not persuaded that the applicant has established that the appeal raises a “question of law”. The respondent’s proceedings included a claim for the sum owing under the contract for the disputed progress claim #7, and for some variation. The respondent was successful to that extent. It was open to the Appeal Panel to find that the respondent did succeed in his claim for the sum owing under the contract for disputed progress claim #7.

19. [62]

    The Appeal Panel also applied the correct principle in respect of the unreasonable or plainly unjust ground, noting that it is insufficient that the appellate court might itself exercise the discretion differently: see Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61.

20. [63]

    As stated earlier, the appeal to this Court is confined to being “[an] appeal on a question of law”. Those constraints are elements of the limited grant of jurisdiction conferred by the statutes creating the rights of appeal: see Thomas and Naaz Pty Ltd at [31]. The exercise of discretion with respect to the award of costs depends upon matters of impression and evaluation. I am not persuaded that the questions raised by the applicant are in fact questions of law which engage this Court’s limited appellate jurisdiction.

21. [64]

    Accordingly, I make the following orders.