Bell v Pearce (Home Building) [2006] NSWCTTT 407 (28 July 2006)

CONSUMER, TRADER AND TENANCY TRIBUNAL

Home Building Division

ORDER

The Tribunal orders that:

1. The Owners are to pay 50% of the Builder’s costs from 4 June 2004, the costs from 14 December 2004 being assessed on an indemnity basis, those before that date as between party and party; and

2. In the assessment of costs, there should be no allowance for solicitor’s costs of 22 March 2005.

REASONS FOR DECISION

APPLICATION

1. I gave final reasons relating to the substantive disputes on 19 May 2006, as varied under the provisions of the Consumer, Trader and Tenancy Tribunal Act 2001 s.50 on 2 June 2006. They were the third reasons I had given, and there had been a previous interim decision by another Member.

2. Outstanding in my last reasons was the question of costs. I indicated an inclination to order that each party bear its own costs, and in paragraph u of the reasons explained why I had reached that position. In paragraph v of the reasons, I adverted to some of the matters which may have borne on the overall decision and gave the parties directions for the filing and service of costs submissions. As has been the history of this matter, there was non-compliance with the direction, but there are now submissions in chief from each party, and I am in a position to complete the decision.

APPEARANCES

3. The Owners continue to be unrepresented, and the Builder to be represented by Mr C Doyle, solicitor.

JURISDICTION

4. This final aspect is a part of the original disputes, which arose out of the construction of a pair of semis by the Builder for the Owners. Jurisdiction is to be found in the Home Building Act 1989 s.48A and s.48K.

FINDINGS

5. Each party refers to past offers to settle, and submits that from the rejection of those offers there should be costs consequences. The Owners have not given details of the offers they refer to; the Builder has attached copies of the offers to his submissions. On 4 June 2004, the Builder was prepared to accept $30,000.00 inclusive of costs; the last paragraph of that letter advises that should the offer not be accepted, and more than $20,000.00 recovered, costs would be sought. There were conditions on the offer, including entry by the parties into a Deed of Release. There was a time limit

6. On 11 August 2004, after the hearing of the interim matter referred to in paragraph a above, the Builder offered mutual discontinuances. There was again a time limit. Although there was a requirement that a Notice of Discontinuance be filed (the Tribunal’s legislation refers to withdrawal rather than discontinuance, but nothing turns on this), there was no requirement of a deed. On 29 November 2004 there was yet a third offer, open for 7 days, that the Builder would accept $25,000.00 inclusive, the claims be withdrawn, there be mutual releases, and some minor requirements.

7. My order (as amended) was that the Builder receive $39,020.68.

8. The Consumer, Trader and Tenancy Tribunal Act 2001 (“the Act”) provides for costs. Further provision for costs is contained in the Consumer, Trader and Tenancy Tribunal Regulation 2002. The section and clause are set out in the Appendix to these reasons.

9. Mr Doyle submits that the effect of the provisions is that costs are discretionary, and that the usual order that costs follow the event is appropriate. I accept the first part of this submission, subject to the rider that the discretion is one to be exercised judicially. I also accept that the usual rule is that costs follow the event. There are no submissions to either of these points by the Owners, but they are unrepresented.

10. The Court of Appeal and the Federal Court have looked at the question of Calderbank letters, and their effect upon costs order on several occasions over the last few years. A recent decision, and one which conveniently summarises and follows those preceding it, is South Eastern Sydney Area Health Service & Anor v King [2006] NSWCA 2. Hunt AJA said:

90 However, a Calderbank letter from a plaintiff to a defendant offering to settle the litigation for a specified amount is not an offer of compromise pursuant to Part 22. There is no presumption that indemnity costs will be ordered in favour of the plaintiff where the amount awarded is greater than the amount nominated in the letter. That factor is only one of the factors to which the court may have regard. The discretion to award indemnity costs following a Calderbank letter must be considered having regard to all of the circumstances of the case, including the relevant strengths and weaknesses of each party’s case as they may have been apparent to the parties at the time the offer was made. See, generally, Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd , Federal Court (Lehane J), 2 February 1998, at 3; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]; Jones v Bradley [No 2] [2003] NSWCA 258 at [8]–[9], [16]; Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19]; Brymount Pty Ltd v Cummins [No 2] [2005] NSWCA 69 at [13].

11. The test I draw from this paragraph (and the cases referred to) is that while the Calderbank offer is a starting point, there are other aspects to consider. The test must also be considered in the lack in this Tribunal of formal procedures for offers of settlement. How might the Owners have seen the cases at the time of the offers?

12. At the time of the first offer, the Owners had their claims for contractual relief before the Tribunal and there was an adjudication pending under the Building and Construction Industry Security of Payments Act 1999. While there had to be the question of jurisdiction adverted to in paragraph 27 of my reasons of 23 June 2005, the adjudication did proceed and result in an order. I consider that it was reasonable for the Owners not to accept that offer.

13. There is then the offer of 11 August 2004. By then there had been the interim hearing referred to above, but where the decision had been reserved. Given the outcome of the interim hearing, I consider that the Owners were justified in not accepting the offer of settlement made at that stage.

14. Finally, there was the offer of 29 November 2004. I do not consider that the matters in paragraphs 3 and 4 are relevant to the question now to be decided. That leaves the sum and the question of the deeds of release required. It is strange that in paragraph 1 of their present submissions, the Owners refer to a refusal by the Builder to include a release. There is no evidence of such a refusal in evidence before me. I use that word carefully; I did attempt a conciliation of the applications, and was made aware during the “off the record” discussions of various matters which had passed between the parties. A realistic assessment of the strengths of the cases at that stage should have led the Owners seriously to consider acceptance of the offer. There was the interim decision and the adjudication. Directions had resulted in the presentation of many of the documents needed to resolve the dispute and the parties were in a strong position (even with some outstanding directions) to see how the land then lay. The failure of the Owners to settle on the basis put forth was unreasonable. The normal consequence of this finding would be that the Builder was entitled to his costs from the day acceptance of the offer expired, those costs to be on an indemnity basis.

15. There are some other matters to consider in the determination of costs. This case, like most building cases, contained a large variety of issues. The Owners were successful on many of these items, and the Builder on many others. It is not like a personal injury case where a Plaintiff, who bears the burden of proof, may fail on some aspects, but succeed on others. The applications before the Tribunal had issues on each side.

16. Next, there is the time spent by the parties on these issues. Without being precise, there were approximately equal amounts of time spent on the Owners’ issues and the Builder’s issues. Preparation times would also have been approximately equal.

17. Finally, there is the question of costs for 22 March 2005. As noted in the decision following that hearing, the Builder’s solicitor appeared only briefly, indicating that he had other arrangements for the day. He was seeking an adjournment to suit a personal convenience, and the application was opposed by the Owners. I consider that the Owners should not have to pay any sum related to Mr Doyle’s appearance that day.

18. To make a simple costs order would be to overlook these factors. The Builder concedes that the parties should each bear their own costs up to 4 June 2004. I consider that justice would be served were the Owners to pay 50% of the Builder’s costs from that date. The costs from 14 December 2004 (that is, the expiration of the final offer) should be assessed on an indemnity basis, those before that date as between party and party.

G J Durie

A/Deputy Chairperson (Determinations)

Consumer, Trader and Tenancy Tribunal

28 July 2006

APPENDIX

Consumer Trader and Tenancy Tribunal Act 2001

53 Costs

(1) Subject to this section and the regulations, the parties in any proceedings are to pay their own costs.

(2) The Tribunal may, in accordance with the regulations, award costs in relation to any proceedings.

(3) If costs are to be awarded by the Tribunal in accordance with regulations, the Tribunal may:

(a)  determine by whom and to what extent costs are to be paid, and

(b)  order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.

Consumer, Trader and Tenancy Tribunal Regulation 2002

20 Costs generally

(1) This clause applies to the awarding of costs by the Tribunal as provided by section 53 of the Act.

(2) The Tribunal may award costs in relation to proceedings in respect of which the amount claimed or in dispute is not more than $10,000, or in respect of which no amount is claimed or in dispute, only if the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs.

(3) In any proceedings in respect of which the amount claimed or in dispute is more than $10,000 but not more than $25,000, the Tribunal may award costs in relation to the proceedings only if:

(a)  the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs, or

(b)  the Tribunal has made an order under section 30 (2) of the Act in relation to the proceedings.

(4) In any proceedings in respect of which the amount claimed or in dispute is more than $25,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit.

(5) Despite any other provision of this clause, the Tribunal may order:

(a)  that the costs of proceedings on an application for rehearing of a matter are, if the applicant fails to attend the hearing of the application, to be paid wholly or in part by the applicant, or

(b)  that the costs of any proceedings that the Tribunal considers to be frivolous, vexatious, misconceived or lacking in substance, or as otherwise not to be heard or proceeded with, be paid wholly or in part by the person who instituted the proceedings.

(6) The amount of any costs under subclause (5) is to be substantiated in accordance with directions given by the Chairperson or, in the absence of such directions, in such manner as the Tribunal thinks fit.