Who pays the Costs of NCAT Proceedings?

11/11/2020

Often if the matter cannot be resolved one or other of the parties commences proceedings in the NSW Civil and Administrative Tribunal (NCAT) and seeks various orders in their favour. 

Before any such action is taken one should consider the overall consequences of those actions and what is likely to be the response.  One of the critical issues is who will pay the costs of the proceedings when it is ultimately decided by the Tribunal. 

The general rule in relation to costs in the Tribunal is that unless special circumstances are established, the parties pay their own costs (Section 60(1) of the Civil and Administrative Tribunal Act (NCAT Act)). 

However Rule 36 of the NCAT Act modifies the application of Section 60 in relation to matters in the Consumer and Commercial Division for example, home building matters under certain circumstances.  One circumstance is that if the amount claimed or in dispute in the proceedings is more than $30,000, the Tribunal has a discretion in relation to awarding costs but the discretion must be exercised in a judicial manner.  There are numerous cases in the Courts and in NCAT dealing with circumstances where it is reasonable to depart from the usual order that costs should follow the event in the proceedings.

As we have indicated elsewhere, one of the critical issues in this regard is what offers have been made during the progress of the proceedings.  We believe that it is important in proceedings to make an appropriate offer at the earliest possible time.  There are two consequences that may flow from making an offer.  Firstly the offer may be accepted and the may resolve the dispute.  Secondly if the dispute is not resolved the offer if it is in the appropriate form, can be utilised in the appropriate circumstances to be the basis for opposing an order for costs or seeking an order for costs.  In proceedings as we often see them, the offer process is usually not appropriately utilised.  We do advise our clients in relation to this aspect of a case and there are numerous cases in which offers have been made in particular, on behalf of a party which is likely to have to pay money if the matter cannot be settled. For example if the Owner makes an offer to pay the Builder for example, $80,000 and the matter then proceeds to hearing and the order is that one pays $50,000, then the likely cost order is:

1. That the Owner pays the Builder’s costs up until the date of the offer made by the Owner to the Builder; and
2. The Builder pays the Owner’s cost of the proceedings from the date the offer was made and was not accepted. 

The general law position is that a “successful party” has a reasonable expectation of being awarded costs against the unsuccessful party.  In many cost Applications we see submissions which simply say that they were successful.

However there are circumstances when there is a critical question of who is successful?  We acted on behalf of an Owner who recently received a significant award however the Owner was unsuccessful in receiving the costs of rectification of the most critical defect at the rate as claimed by the Owner.  This claim was based on the expert evidence of the Building Consultant engaged on behalf of the Owner as to the cost associated with the works.  This aspect was a very complicated aspect of the case. 

The Tribunal and Courts do not necessary dissect each and every issue and come to a mathematic solution.

Even if the successful party does not succeed in every claim, the starting point remains that the successful party receives all their costs even if they did not succeed on every issue.  However this can be departed from where the issue on which the party failed was clearly dominant or separable.  In considering whether there are issues which are clearly dominant or separable, one also considers the time involved in that issue as a percentage of the case time involved in the whole of the case. 

In the recent case referred to above, though there was a significant deduction in the claim due to the “cost of rectification” of the particular defect not being fully allowed, the Tribunal on our submissions has made an order that the Builder pay the costs of the Owner. 

The Builder’s submission was that the Builder should only pay mathematical percentage of the Owner’s costs based on the quantum of the original claim and the quantum of the final figure allowed.  This was not usually accepted by the Tribunal.

Further it is unlikely that a cost order made by the Tribunal will be overturned on a review by the Appeal Panel.  However if the underlying decision is set aside by the Appeal Panel, then it is likely that the cost order would be set aside.

One should not ignore to make appropriate submissions on determination of success and how it related to the particular case, the subject of the decision.

If you have any matters regarding any building issues and strata issues please contact the experienced solicitors at Watson & Watson Lawyers by contacting Richard Watson Accredited Specialist in the stream of Building and Construction or his Personal Assistant Shereen DaGloria to discuss your matter and seek appropriate advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.