Hoare v Taylormade Residential Pty Ltd

1. [1]

   By a second further amended summons filed in Court on 19 May 2022, the plaintiffs, Matthew and Jodie Hoare, seek leave to appeal a decision of Senior Member Molony (“SM Molony”) sitting as the Appeal Panel of the New South Wales Civil and Administrative Tribunal (“the Appeal Panel”) (“NCAT”) on 24 June 2021: Taylormade Residential Pty Ltd v Hoare [2021] NSWCATAP 182 (“the Appeal Panel decision”). The plaintiffs seek an order that this decision be set aside and, alternatively, that the appeal to the Appeal Panel be dismissed. As well, the plaintiffs seek orders that the defendant pays the plaintiffs’ costs of the earlier proceedings in the Consumer and Commercial Division of NCAT and the proceedings before the Appeal Panel, as well as the costs of these proceedings.

Factual background

1. [2]

   The plaintiffs (“the homeowners”) engaged the defendant builder (“the builder”) to construct a residence in Bensville on the Central Coast, pursuant to a contract dated 15 August 2015. On 22 August 2016, the builder advised practical completion. A dispute arose as to whether certain building works had been completed satisfactorily. The homeowners retained consultants who provided an expert report detailing defective work. On 2 August 2017, the Department of Fair Trading issued a Rectification Order of 30 items to be completed by the builder by 8 September 2017. However, prior to that date, the homeowners informed the Department that they did not want the builder to carry out any further works on the site. On 7 September 2017, the Department of Fair Trading advised the homeowners that it was no longer able to assist and advised them that they may take their dispute to NCAT.

2. [3]

   The homeowners commenced proceedings in NCAT on 24 July 2018. The homeowners sought orders in accordance with the Rectification Order issued previously that “The builder rectify certain works pursuant to the [homeowners’] home … Pursuant to an order of the New South Wales Fair Trading dated 2 August 2017”. The total amount “as claimed” on the application form was the nominal value of $1.

3. [4]

   On 28 July 2018, the homeowners amended the claim, seeking an amount for the value of the work “in excess of $100,000”. On 9 November 2018, NCAT Senior Member Ross made orders which included an order by consent for the work in the Rectification Order to be done and completed on or before 21 December 2018. He also allowed an amendment to the application to claim “in addition an amount of approx $21500 as consequential loss for legal costs and report fees incurred in an amount to be advised”.

4. [5]

   On 1 February 2019, Senior Member Ross acceded to a request by the homeowners for legal representation, since “The claim is a claim which exceeds $30,000. Legal representation is appropriate in these circumstances”.

5. [6]

   On 4 March 2019, General Member Hanstein made orders which included a note that the builder had “undertaken work in purported compliance” with the consent order of 9 November 2018 and that the parties disputed whether this work rectified the defects. Member Hanstein also noted that the hearing would address the issues of “what compensation, if any, the [homeowners] should receive for defective or incomplete work carried out by the [builder] including for any consequential loss”.

6. [7]

   On 1 November 2019, the parties attended a mediation facilitated by General Member Briggs (“GM Briggs”), after which consent orders were made (“the Consent Orders”). The Consent Orders directed the builder to rectify “18 windows and a ... timber deck” in accordance with specified conditions and a Schedule annexed to the orders. The Consent Orders also provided for inspections and a timeline for the filing of submissions for a determination of costs by NCAT on the papers, “on completion of the works”. On 9 December 2019, the timetable was amended by GM Briggs under the power to correct errors in NCAT decisions set out in s 63 of the Civil and Administrative Tribunal Act 2013 (NSW) (“the Act”).

7. [8]

   The homeowners were dissatisfied with the work done by the builder pursuant to the Consent Orders and sought to have the matter returned to NCAT but did not make a renewal application. On 24 April 2020, Principal Member Rosser made directions ordering the parties to file and serve evidence and submissions. One of the issues in dispute was whether, in the absence of a Renewal Application, the proceedings could be renewed under cl 8 of Sch 4 of the Act.

8. [9]

   On 15 May 2020, the matter was again listed for directions. Senior Member Thode (“SM Thode”) determined that in the absence of a Renewal Application, NCAT was functus officio but for the question of costs. The parties agreed the question of costs should be determined by NCAT on the papers.

Law and legal principles

1. [10]

   Section 60 of the Act provides that parties to NCAT proceedings are to pay their own costs, except in certain circumstances, as follows:

2. [11]

   Rule 38(2) of the Civil and Administrative Tribunal Rules 2013 (NSW) (“the NCAT Rules”), which applies to proceedings allocated to the Consumer and Commercial Division of NCAT, sets out an additional exception to the general principle in s 60 of the Act concerning an award of costs. Rule 38 provides as follows, the relevant part for these proceedings being r 38(2)(b) (“r 38(2)(b)”):

3. [12]

   On 29 September 2020, SM Thode handed down her decision (“the Tribunal decision”). In my judgment, I will refer to SM Thode in her capacity as the first instance decision-maker as “the Tribunal”. Order 2 required the builder to pay the homeowners’ costs of the proceedings, as follows:

The Tribunal Decision

1. [13]

   The Tribunal made the following observations about the dispute concerning the work to be done pursuant to the Consent Orders in its summary of the procedural history:

The NCAT Appeal

1. [14]

   On 27 October 2020, the builder lodged an internal appeal with NCAT, seeking leave to appeal Order 2; that it be vacated and in its stead, there be “no order as to costs to the intent that [the parties] each pay their own costs of proceedings”. The builder also sought a stay of Order 2 and costs of the internal appeal.

2. [15]

   On 10 November 2020, the matter was listed for directions before Deputy President Westgarth. The Deputy President ordered the stay of Order 2. Orders were also made for the appeal to occur on the papers and setting a timetable for the hearing and filing of evidence and submissions.

3. [16]

   The Appeal Panel, constituted by SM Molony, determined the builder’s appeal on the papers and made orders on 24 June 2021. The Appeal Panel granted leave to appeal and allowed the appeal, setting aside Order 2 and in lieu ordering that there be “no order as to costs, with the intent that each party bear their own costs of the proceedings”. There was no order as to the costs of the internal appeal.

The Appeal Panel decision

1. [17]

   The Appeal Panel, at [11], set out a summary of the relevant conclusions of the Tribunal, as follows:

2. [18]

   The grounds of appeal, which were advanced by the builder as errors of law, were summarised by the Appeal Panel, as refined in the builder’s submissions:

3. [19]

   The Appeal Panel dealt with the first and second grounds jointly. The builder had submitted that the Tribunal erred by considering “what the [homeowners] intended to claim at the commencement of the proceedings, and in the subsequent amendment of the claim to $100,000 four days later”. The Appeal Panel noted the Tribunal referred to Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 (“Allen v Tricare”), which is a decision of the Appeal Panel that considers r 38(2)(b) in appeal proceedings. The Tribunal had relied upon [37] of Allen v Tricare, which is to the effect that the term “proceedings”, as it appears in r 38(2)(b), refers to the process set in motion, or commenced, by lodging an application or notice of appeal. The Tribunal stated, in a passage which was quoted at [40] of the Appeal Panel decision:

4. [20]

   The Appeal Panel observed that Allen v Tricare also considered the meaning of “the amount claimed” and “the amount … in dispute” as those terms appear in r 38(2)(b), quoting [57] of that decision:

5. [21]

   The Appeal Panel found, by an application of those principles, that the Tribunal erred, observing:

6. [22]

   Similarly, the Appeal Panel dealt with the third ground together with the builder’s alternative submission. The alternative submission was that if a costs order could be made “irrespective of the settlement”, the Tribunal had erred by “finding no delinquency on the [homeowners’] part” when the homeowners refused to allow the builder access to their property so that it could comply with the Rectification Order issued by the Department of Fair Trading.

7. [23]

   The Appeal Panel noted that the Tribunal had regard to principles in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 per McHugh J and Kiama Council v Grant (2006) 143 LGERA 441; [2006] NSWLEC 96 per Preston CJ of LEC, which concern “exceptions to the usual course that follows where proceedings have been resolved without a hearing, which is that both parties bear their own costs”. The Appeal Panel also considered the comments of Payne JA in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 with respect to the effect of reasonable or unreasonable conduct by a party on whether a costs order is made.

8. [24]

   The Appeal Panel summarised the relevant legal principles, at [57]:

9. [25]

   The Appeal Panel observed that the “requirement that the party surrender the case” is central to the formulation in Kiama, and found that:

10. [26]

    The Appeal Panel continued, at [62], addressing the builder’s argument concerning unreasonable conduct by the homeowners:

11. [27]

    The Appeal Panel concluded, at [63], in respect of the third ground of appeal:

12. [28]

    The Appeal Panel concluded that the Tribunal’s “discretion to award costs miscarried” in the House v The King sense. [1]

13. [29]

    Finally, the Appeal Panel determined whether, to the extent that it was necessary, the builder should be granted “leave to appeal against the Tribunal’s finding that ‘the amount claimed or in dispute’ in the proceedings exceeded $30,000”, based on an argument that this was “against the weight of the evidence”. To enliven the Appeal Panel’s discretionary power to grant leave, the Appeal Panel must have been satisfied that “the appellant may have suffered a substantial miscarriage of justice” on various grounds, including that “the decision of the Tribunal under appeal was against the weight of evidence”: the Act, Sch 4, cl 12(1)(b). The Appeal Panel referred to Collins v Urban [2014] NSWCATAP 17, which elaborates on this requirement.

14. [30]

    The Appeal Panel concluded that this finding was “against the weight of the evidence and may have resulted in a substantial injustice”. The Tribunal had erred by finding that the material provided by the builder addressing the actual costs of rectification (which identified that these would total $11,737.02 on completion based on evidence of “actual expenditure” and “quotes for the uncompleted part of that work”) was “not determinative” and irrelevant to her determination of the amount claimed. The Tribunal had instead relied on an expert report provided by the homeowners “claiming the costs of rectification was in excess [of] $55,000”; there was a “significant difference” between the amount claimed by the homeowners and the actual costs of rectification identified by the builder.

15. [31]

    The Appeal Panel observed:

16. [32]

    As such, the Appeal Panel granted the builder leave to appeal. There was no order as to the costs of the appeal.

17. [33]

    The Appeal Panel’s ultimate findings in the Appeal Panel decision were as follows, at [80]:

Principles governing the appeal

1. [34]

   This appeal proceeds under s 83 of the Act, which only permits an appeal on a question of law with the leave of the Court. Section 83 relevantly provides as follows:

2. [35]

   In Taylor Construction Group Pty Ltd v Strata Plan 92888 t/as The Owners Strata Plan 92888 [2021] NSWSC 1315, at [90], Henry J summarised the principles applicable to an appeal under s 83 of the Act:

3. [36]

   As McCallum J (as her Honour then was) observed in Corcoran v Far [2019] NSWSC 1284, at [25], an applicant is obliged to identify in the summons the relevant question or questions of law so as to permit a determination of whether leave should be granted. It is insufficient to merely specify alleged errors of law.

Grounds of appeal

1. [37]

   The homeowners were granted leave to file the second further amended summons in Court; the builder neither consented to nor opposed this filing.

2. [38]

   The homeowners advanced four grounds of appeal, which are as follows:

3. [39]

   The homeowners’ appeal is underscored by the proposition that the Tribunal rejected the application of r 38(2)(b) and proceeded to find for the homeowners on the basis that special circumstances had been established, pursuant to s 60(2) of the Act. The Appeal Panel then reversed that basis, finding instead that r 38(2)(b) applied and finding for the builder. That being so, it is appropriate to first consider the second ground.

Ground 2A

1. [40]

   The first aspect of ground 2A concerns the relevance of r 38(2)(b) to the dispute between the parties, subsequent to The Owners Corporation Strata Plan No 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (“Malachite”). The second aspect of ground 2A concerns what constitutes “special circumstances” in s 60(2) of the Act, in light of the decision of Saravinovska v Saravinovski [2020] NSWSC 1232; in particular, whether the Appeal Panel failed to “properly apply” the decision of Saravinovska v Saravinovski to the “default of the consent orders by the [builder]”.

2. [41]

   The homeowners relied specifically on Malachite at [91] and [95]-[97]. Those paragraphs, set out along with their surrounding paragraphs for context, are as follows:

3. [42]

   The Appeal Panel in Malachite concluded:

4. [43]

   Based on Malachite, the homeowners submitted that r 38(2)(b) does not apply to these proceedings because there was no express finding as to the amount involved by GM Briggs, who made the Consent Orders of 1 November 2019. Further, “none of those orders are dependent on any actual quantification of a money amount” and no such finding is required for the orders to be made or entered. The homeowners submitted that:

5. [44]

   The homeowners relied on two cases that applied Malachite: GWH Build Pty Ltd v The Owners - Strata Plan 96788 (No 2) [2022] NSWCATAP 73, at [31]; and Ding v Sanli Design & Construction Pty Ltd [2021] NSWCATCD 116, at [84] to [95].

6. [45]

   The homeowners submitted that the builder’s conduct in not finishing the works the subject of the Consent Order amounted to a special circumstance within the meaning of s 60(2) of the Act. The homeowners relied upon Saravinovska v Saravinovski, in which Ward CJ in Eq (as her Honour then was) found that “where a party had refused to perform an order of the court this amounted to a ‘contempt’ which gave rise to an entitlement to costs”, which was in a context of there not having been a hearing on the merits. The builder’s failure to fulfil an order of NCAT, the homeowners submitted, was a special circumstance for the purposes of s 60 of the Act. The Appeal Panel’s failure to consider Saravinovska v Saravinovski constituted an error of law.

7. [46]

   The homeowners submitted that, assuming that they were correct in submitting that r 38(2)(b) does not apply to these proceedings because of the decision in Malachite, “the original order of [Senior Member] Thode was appropriate”.

8. [47]

   The homeowners submitted that the appropriate basis of the award of costs in their favour was by an application of s 60(2) of the Act, namely, that “there are special circumstances warranting an award of costs”. The failure by the Appeal Panel to consider its discretion pursuant to s 60(2), constituted error which “would also amount to a failure to properly exercise [the Appeal Panel’s] jurisdiction”.

9. [48]

   The builder submitted that the homeowners had failed to identify a question of law in respect of either aspect of ground 2A. In the alternative, as to the first aspect of ground 2A, the builder noted references in the Appeal Panel decision to Malachite which indicated that he had regard to that decision. The builder submitted that there had been no error on the part of the Appeal Panel in concluding that r 38(2)(b) was not enlivened because the amount in dispute was not more than $30,000.

10. [49]

    In relation to the second aspect of ground 2A, the builder noted that the Appeal Panel, at [54], had expressly acknowledged the judgment of Ward CJ in Eq in Saravinovska v Saravinovski. The homeowners had not indicated in what manner the Appeal Panel had misapplied that decision.

11. [50]

    In my view, the homeowners’ submission that the Tribunal found for them on the basis of s 60(2) of the Act and not r3 8(2)(b) is incorrect. In written submissions to the Tribunal, which have been submitted to this Court, the homeowners relied upon both s 60(2) of the Act and r 38, submitting that the latter was “relevant” to the Tribunal’s determination. In its decision, the Tribunal expressly noted, at [11], that the homeowners submitted that r 38(2)(b) applied.

12. [51]

    The Tribunal did not expressly identify the basis of its finding for the homeowners, however, a reading of its decision makes clear that it was on the basis of r 38(2)(b). At [26], it noted that if the threshold of $30,000 is established, “the Tribunal will be unconstrained by the need to find the existence of special circumstances in order to make a costs order”. At [27], it noted that the builder submitted that the amount in dispute was less than $30,000 and therefore r 38 was not enlivened. Between [28] and [31], the Tribunal considered the competing claims as to whether the threshold of $30,000 was established, and concluded that it was, so that r 38(2)(b) applied. There was no further consideration of whether the alternative basis of s 60(2) of the Act was established.

13. [52]

    The homeowners continued to rely upon r 38(2)(b) before the Appeal Panel, submitting that the Tribunal “had not fallen into error, but rather came to a conclusion that the [builder] did not like”. Further, “[t]he Tribunal did not err when it found that the dispute involved rectification issues in excess of $30,000 when the [homeowners] commenced the action”. The homeowners expressly relied upon r 38(2)(b) in seeking from the Appeal Panel “costs of these appeal proceedings pursuant to sections 35 and 60(2) [of the] Act, rule 38(2)(b) … and the general principle that costs follow the event”.

14. [53]

    Accordingly, the position adopted by the homeowners before this Court as to the relevance of r 38(2)(b) is contrary to their position before both the Tribunal and Appeal Panel.

15. [54]

    The homeowners’ submission to this Court that r 38(2)(b) was inapplicable is based on Malachite, which was raised by the builder in submissions to the Tribunal and distinguished by the Tribunal in its decision, at [22], as not relevant because it concerned a reallocation of unit entitlements “with no amount in dispute” or “as claimed”. It could not be said, therefore, that the homeowners only became aware of Malachite subsequently to the Appeal Panel decision.

16. [55]

    In oral submissions, counsel for the homeowners stated that their solicitor had raised their contention in respect of Malachite that r 38(2)(b) was not relevant, in written submissions before the Appeal Panel. However, the written submissions that the Court was taken to were in fact those on behalf of the builder.

17. [56]

    In my view, the reasoning of the Appeal Panel as to why the “amount claimed” by the homeowners was not determinative of whether the threshold of $30,000 was reached, in order for it to be open to the Appeal Panel to exercise its discretion to apply r 38(2)(b), was not inconsistent with Malachite. On examination, the passages from Malachite that the homeowners rely upon, extracted at [41] above, are not at odds with the Appeal Panel’s reasoning or determination.

18. [57]

    The question at the heart of the dispute between the parties before the Appeal Panel was whether the Tribunal had misinterpreted or misapplied the concepts from r 38(2)(b) of “the amount claimed or in dispute in the proceedings”. The homeowners submitted that it was the quantum of their original claim ($100,000) or at least the amount identified in their expert building report (approximately $55,000), whereas the builder submitted it was the actual value of the work in dispute. The Appeal Panel determined, at [43], that the Tribunal’s conclusion that it was “the amount claimed or the value of the work order sought when the application was lodged” was incorrect, since:

19. [58]

    The Appeal Panel’s note of caution in Malachite at [100], extracted at [42] above, to not permit r 38(2)(b) to inappropriately avoid the constraints of s 60 of the Act, albeit in a different context, is to similar effect.

20. [59]

    In any event, it is apparent from ground 2A that the homeowners’ submission does not extend beyond the contention that the Appeal Panel misapplied Malachite. The homeowners have not identified a question of law in respect of this aspect of ground 2A.

21. [60]

    I am satisfied that the Appeal Panel had regard to Saravinovska v Saravinovski. No error of law is disclosed. In relation to both aspects of ground 2A, I refuse leave to the homeowners to appeal against the Appeal Panel decision, as there is no identified question of law.

Ground 1

1. [61]

   The homeowners’ submissions in relation to this ground are difficult to understand. The reference in (a) and (b)(ii) of the ground to an “event” appears to be a reference to the term “supervening event” as it appears in the judgment of Burchett J in One.Tel Limited v Commissioner of Taxation (2001) 101 FCR 548; [2000] FCA 270, at [6], and of Preston CJ of LEC in Kiama, at [80]. The Appeal Panel extracted these passages, which summarised the relevant principles. In Kiama, Preston CJ of LEC distilled the principles in respect of two types of cases:

2. [62]

   In written submissions to this Court, the homeowners submitted: “if there is a need to find an event then it is clearly the [builder’s] refusal to comply with consent orders”. This is contrary to the terms of the ground of appeal itself, which nominates “the consent of the builder to a work order or the builder’s submission to a work order” as the relevant “event”. This aspect of the ground was not further developed by the homeowners.

3. [63]

   The second part of the ground and the submissions in support of it are also unfocussed and undeveloped. It appears to be that, since the Appeal Panel proceeded (correctly) on the basis that the Tribunal was functus officio in the absence of a renewal application in respect of all issues except that of liability for costs, it was:

4. [64]

   In oral submissions, the homeowners submitted that, in determining whether the figure of $30,000 was exceeded for the purposes of r 38(2)(b), the Appeal Panel made a determination based on “evidence that was not part of the consent order” and therefore “effectively, had a hearing within the appeal”. In oral submissions, the homeowners nominated [70]–[78] as the relevant parts of the Appeal Panel decision.

5. [65]

   The builder submitted that the ground, as framed, did not disclose a question of law. Rather, it alleged a misapplication of the law, being the Lai Qin principles. Accordingly, leave to appeal should be refused. If leave is granted, the builder submitted that the work order was not an “event” because it “was not a result arising from a litigated outcome determined by a contested proceeding, such that the owners were [entitled] to an order for costs. Thus, no error of law is demonstrated.

6. [66]

   The issue of an “event” arose in the Appeal Panel decision in the context of the Appeal Panel reviewing the basis of the Tribunal’s decision, noting that the Tribunal had referred to Lai Qin and Kiama and then concluded, in an extract recited at [50] of the Appeal Panel decision, that:

7. [67]

   It is apparent from this passage that the Tribunal found for the homeowners pursuant to the principle set out in Kiama at [80(a)(ii)], not [80(b)], which is surprising, since, as noted by Preston CJ of LEC, the ordinary exercise of the discretion in such a case is “the usual order as to costs, unless there is disentitling conduct on the part of the other party”. The Appeal Panel noted this inconsistency, at [59].

8. [68]

   The Appeal Panel found that “The original work order made by the Tribunal on 18 November 2018, however, bears hallmarks of a surrender”, although it went on to find that the homeowners’ refusal to allow the builder access to rectify the work, together with the nature of the scheme established by the Home Building Act 1989 (NSW), disentitled the homeowners to an award of costs.

9. [69]

   That being so, the first part of ground 2A raised a matter that was irrelevant to the Appeal Panel decision. Leave to appeal is refused.

10. [70]

    The second part of ground 2A was undeveloped in submissions by the homeowners. I have reviewed paragraphs [70]–[77] of the Appeal Panel decision, and do not find any error in the scope of material considered or the manner in which that was done. Again, there is no question of law and leave to appeal is refused.

Ground 3

1. [71]

   There being no errors identified in grounds 1 and 2A, this ground necessarily fails. Leave to appeal is refused.

Ground 4

1. [72]

   The homeowners submitted that the builder had not applied for leave to appeal to the Appeal Panel in terms of why the alleged errors were “more than just arguable”, which was “a significant error of law”. It was submitted that the builder’s application for leave to appeal to the Appeal Panel, as filed, referred to mixed ground of law and fact, being the operation of r 38(2)(b). The homeowners submitted that the grounds would have failed on the basis of Malachite, and therefore leave should have been refused.

2. [73]

   The builder submitted that an error of law, as alleged by the homeowners, did not constitute a question of law, in the requisite sense. The builder submitted that the Appeal Panel carefully considered the question of leave.

3. [74]

   Earlier in this judgment, I summarised the Appeal Panel decision in respect of the issue of the grant of leave to appeal to the builder. I am satisfied that the Appeal Panel carefully considered that issue and did not fall into error. In any event, I do not consider that in relation to this ground the homeowners have identified a question of law, as they were obliged to do. Leave to appeal on this ground is also refused.

Costs

1. [75]

   The builder seeks an order for costs, in the event that the homeowners’ appeal fails. In my view, that is appropriate.

Orders

1. [76]

   I make the following orders:

   1. (1)

      Leave to appeal is refused.

   2. (2)

      The plaintiffs to pay the defendant’s costs of the appeal.