The Owners - Strata Plan 87003 v Raysons Constructions Pty Ltd (No 2)

[2025] NSWSC 182

Supreme Court

New South Wales

Medium Neutral Citation:

The Owners – Strata Plan 87003 v Raysons Constructions Pty Ltd (No 2) [2025] NSWSC 182

Hearing dates:

On the papers

Decision date:

11 March 2025

Jurisdiction:

Common Law

Before:

Leeming JA

Decision:

1. Notice of motion filed 6 March 2025 dismissed.

Catchwords:

COSTS – certificate under Suitors’ Fund Act 1951 (NSW) sought – unsuccessful respondent’s submissions had led lower court into error – unsuccessful respondent sought to defend erroneous decision on appeal – inappropriate to grant certificate

Legislation Cited:

Home Building Act 1989 (NSW), ss 18B, 18E

Suitors’ Fund Act 1951 (NSW) s 6

Cases Cited:

Calandra v Murden (No 2) [2015] NSWCA 321

Director of Public Prosecutions (NSW) v Kmetyk [2018] NSWCA 156

Donohoe v Albulario (No 2) [2025] NSWSC 34

Frost v Kourouche (2014) 86 NSWLR 214; [2014] NSWCA 39

Lou v IAG Ltd t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319

Mir Bros Developments Pty Ltd v Atlantic Constructions Pty Ltd (1985) 1 NSWLR 491

The Owners – Strata Plan 87003 v Raysons Constructions Pty Ltd [2025] NSWSC 66

Category:

Costs

Parties:

The Owners – Strata Plan 87003 (Plaintiff)
Raysons Constructions Pty Ltd (Defendant)

Representation:

Counsel:
G Carolan (Defendant/Applicant)

Solicitors:
Ray Wehbe & Co Solicitors (Defendant/Applicant)

File Number(s):

2024/00265127

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

New South Wales Civil and Administrative Tribunal

Jurisdiction:

Appeal Panel

Citation:

[2024] NSWCATAP 113

Date of Decision:

20 June 2024

Before:

S Thode (Principal Member), D Fairlie (Senior Member)

File Number(s):

2023/00257814

JUDGMENT

1. LEEMING JA: By judgment delivered on 25 February 2025, this Court allowed an appeal from orders made by an Appeal Panel of NCAT itself allowing an appeal from the decision of a Senior Member of NCAT which had made substantial rectification orders on the application of the Owners Corporation against Raysons Constructions Pty Ltd, a builder and the present applicant: The Owners – Strata Plan 87003 v Raysons Constructions Pty Ltd [2025] NSWSC 66. Raysons, the unsuccessful respondent, was ordered to pay the Owners Corporation’s costs of the appeal in this Court. The Appeal Panel had only dealt with some of Rayson’s grounds of appeal, despite the entirety having been argued in a hearing extending to a second day. My reasons explained why this Court was unable to address those grounds, and that in light of the narrower jurisdiction of this Court it was not possible, at least in large measure, for Raysons by notice of contention to raise for determination in this Court the undetermined balance of its notice of appeal to the Appeal Panel: at [9]. The result of this Court’s orders was that the Appeal Panel will redetermine Raysons’ appeal on the basis of the construction of s 18E(1)(e) and (f) determined by this Court and on the basis that [35] of the Senior Member’s reasons contains an obvious error. Whether or not all or most of the order for rectification will be confirmed or set aside remains to be determined.

2. By notice of motion filed on 6 March 2025, Raysons seeks an order pursuant to s 6(1) of the Suitors’ Fund Act 1951 (NSW) that it be granted an indemnity certificate in respect of the costs of these appeal submissions. That subsection provides:

If an appeal against the decision of a court:

(a) to the Supreme Court on a question of law or fact, or

(b) to the High Court from a decision of the Supreme Court on a question of law,

succeeds, the Supreme Court may, on application, grant to the respondent to the appeal or to any one or more of several respondents to the appeal an indemnity certificate in respect of the appeal.

3. Simplifying somewhat, a certificate gives a qualified entitlement to be paid an amount of money from the Suitors’ Fund established pursuant to s 3 of the Act. The maximum amount payable from the Fund for any one appeal is $10,000, save in the case of an appeal to the High Court, in which event it is $20,000: s 6(2A). Raysons submitted that in accordance with the reasons of Basten AJ in Donohoe v Albulario (No 2) [2025] NSWSC 34, the appeal heard and determined by me was an “appeal” and the Appeal Panel of NCAT was a “court” for the purposes of s 6. There is no basis for departing from that reasoning.

4. Corporations which have a paid up share capital of $200,000 or more are not entitled to be granted a certificate, by reason of s 6(7), but it is clear on the evidence of one of Raysons’ directors that it has a paid up share capital of only slightly more than $30,000. The same affidavit establishes that Raysons is not indemnified or represented by any insurer in relation to the proceedings in this Court.

5. Raysons relies on what was said in Mir Bros Developments Pty Ltd v Atlantic Constructions Pty Ltd (1985) 1 NSWLR 491 at 494:

The section appears in a statute the purpose of which is the relief of a party who incurs or becomes liable for costs not through his own decision or conduct but because of some error of law of the court appealed from: see Moffitt J, as he then was, in Acquilina v Dairy Farmers Co-operative Milk Co Ltd (1965) 82 WN (Pt 1) (NSW) 531 at 534. The history of the legislation, and indeed its terms, make it plain that the purpose which must be kept in mind in its interpretation and application is the relief of litigants against the costs inevitably incurred when appeal review discloses an error of law requiring correction. The object is to ensure that litigants do not, as in the past, bear the costs thereby occasioned but that these costs are spread, by way of the fund, to mitigate the hardship to litigants that would otherwise flow.

6. Raysons submits that my judgment identified at [10]-[12] that there were aspects of NCAT’s decisions which “must have been disillusioning to both sides” in the litigation, and says that those observations support the grant of a certificate to alleviate the costs consequences to the defendant of errors in the decisions.

7. Those paragraphs state:

10 As will be seen below, there are aspects of NCAT’s decisions which must have been disillusioning to both sides in addition to the four years’ delay mentioned above. The first instance decision is replete with patent typographical errors, many of which were noted by the Appeal Panel, on which nothing ordinarily would turn, save perhaps for the possibility that they might support the proposition which is hotly in dispute as to whether the dispositive paragraphs on s 18E also contain a serious error and are not to be read literally. It is clear enough that if they are read literally, they are nonsensical, and at least in large measure the reasons given by the Appeal Panel for granting leave and making further findings of fact turn upon its view that the Senior Member’s reasons bore their nonsensical literal meaning.

11 It is regrettable that a large issue before me is whether the reasons of the Senior Member mean what they say, which is how they were construed by the Appeal Panel. From time to time errors will be made in the reasons for decisions of courts and tribunals, and there may be difficulties in applying to correct them once orders have been pronounced and rights of appeal arise: Tre Cavalli Pty Ltd v The Berry Rural Co Operative Society Ltd [2013] NSWCA 235 at [55]. But in the present case, no orders were made until months afterwards, and the reasons were amended twice. It is regrettable that (as I understand the position) no application was made to the Senior Member to clarify whether there had been a slip in the dispositive paragraph of his reasons. As Mason P noted in National Starch and Chemical Pty Ltd v Nelson [1998] NSWCA 155, there are occasions when such an application can avoid appellate review with all the concomitant expense and delay.

12 On the Owners Corporation’s submission, the Appeal Panel decision repeatedly misapprehended the findings made by the Senior Member, on the dispositive issue, leading to complaints that there were no adequate reasons or that the reasoning was legally unreasonable.

8. As mentioned in [10]-[11] of my reasons, a large issue in the appeal to this Court was whether there was an obvious error in a dispositive paragraph of the reasons of the Senior Member (paragraph 35), which relevantly stated that “In my view, the matters set out in [18] to [27] support a finding that the Owners Corporation was aware of breaches of s 18B warranties as early as …” (my emphasis) and then specified a series of dates which would mean that the Owners Corporation’s proceeding had been commenced out of time. However, and dispositively on the question whether the proceeding had been commenced out of time, the Senior Member said at [36] that the Owners Corporation was first aware of the defects before the last six months of the warranty period, and concluded at [37] that while “there was knowledge of these defects” earlier than the last six months of the warranty period, “I reject the Builder’s submission that there was knowledge of ‘defect issues giving rise to a potential claim for breach of warranties well before 2020’”.

9. Thus on the face of the reasons the Senior Member was distinguishing between awareness of defects and awareness of breaches of statutory warranties, concluding at [37] that the Owners Corporation was aware of the former but not the latter and so was not out of time, but in [35] had said, seemingly inconsistently with the conclusion two paragraphs later, that the Owners Corporation was aware of the breaches of s 18B warranties.

10. The Appeal Panel had proceeded on the basis that [35] bore its literal meaning and therefore regarded the reasons of the Senior Member as inconsistent and disclosing factual error which warranted a grant of leave and allowed the appeal.

11. The background of how the Appeal Panel had reached that conclusion was addressed at [107]–[139] of my reasons, under the heading “What did the Senior Member at first instance find?”. I pointed out at [114] that Raysons had asked the Appeal Panel to proceed on that basis:

In its written submissions before the Appeal Panel (paragraphs 6, 9 and 23), Raysons maintained that [35] should be read literally. Raysons also emphasised this in oral submissions: “I rely upon the finding firstly, which is at, sorry, paragraph 35 of the judgment which finds expressly, in my view the matters set out at 18-27 support [the] finding [that] the Owners Corporation was aware of breaches of the warranties as early as”.

12. I also pointed out that it was not clear how the Owners Corporation had responded, because its submissions in response were made on the second day of the hearing before the Appeal Panel, and the transcript of that day was not tendered before me.

13. Before me on appeal, Raysons advanced the same submissions as had succeeded in the Appeal Panel, namely, that the paragraph should be read literally. I recorded this at [121]:

Before me, Raysons sought to defend the reasons of the Appeal Panel, and contended that [35] of the reasons of the Senior Member were to be read literally, leading to the following exchange:

HIS HONOUR: You say 35 means what it says?

CAROLAN: Yes.

HIS HONOUR: How then do you say I should read 36 and 37?

CAROLAN: 36 in my submission is an acknowledgment that there was an awareness of defects in the intervening period, and I say in my submission there’s no inconsistency between 35 and 36 because it might be a case of putting the cart before the horse, but 35 talks about breaches of warranty, 36 simply identifies that there were defects which in my submission Mr Titterton obviously equated with the existence of breaches of warranty, and--

HIS HONOUR: But if [he] obviously equated defects with the existence of breaches of warranty, how does he go on to say in 37 the evidence isn’t sufficient to support a finding that the owners corporation was first aware of any breach of warranty?

CAROLAN: Yes, well, with the greatest of respect, that’s inexplicable in anyone’s terms.

14. It is pellucidly clear that, at least in relation to the construction of [35] of the reasons of the Senior Member, this is not a case where an appeal has been made necessary other than through the respondent’s own decision or conduct.

15. There was a palpable error on the face of [35], or alternatively this part of the reasons was “inexplicable in anyone’s terms”. So far as the material available to me discloses, Raysons did not go back to the Senior Member seeking clarification (nor did the Owners Corporation). Instead Raysons brought an appeal to the Appeal Panel. In its appeal, Raysons maintained that [35] was to be read literally, as a result of which the appeal was allowed. That submission was in substance accepted by the Appeal Panel.

16. In the further appeal heard and determined by me, Raysons sought to defend the decision of the Appeal Panel on the same basis. I ruled that that was wrong, and that the reasons were to be read as containing an obvious mistake. I said at [135]:

Accordingly, the Appeal Panel was wrong to accept Rayson’s submission that [35] was to be read literally, and disclosed a basic inconsistency in the reasoning of the Senior Member. To the contrary, [35] contains a slip, and should be read as a reference to the Owners Corporation being aware of the defects or deficiencies as early as December 2014. The Appeal Panel erred in failing to apply the principles of construction to correct self-evidently erroneous legal texts. That was an error of law.

17. Thus at every step after the original mistake was made by the Senior Member, far from this being a case where costs were incurred “not through his own decision or conduct”, it was Raysons itself which actively propounded what I determined was an erroneous literal approach to a part of the dispositive reasons of the Senior Member. In other words, acceptance of Raysons’ submission led the Appeal Panel into error, and in this Court, Raysons sought to defend that approach.

18. Those circumstances are well removed from the sort of case to which the power to order a certificate under the Suitors’ Fund Act is directed. True it is that “[t]he purpose of the Suitors’ Fund is to mitigate the consequences of judicial error to litigants”: Lou v IAG Ltd t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319 at [87]. But there are judicial errors and judicial errors. As acknowledged in the passage from Mir Bros Developments upon which Raysons relied, a relevant matter is whether a party incurs or becomes liable for costs “not through [its] own decision”. Thus it has been said that in general terms, the Suitors’ Fund Act provides a measure of compensation to the respondent to an appeal when an appeal is allowed through no fault of the respondent: Frost v Kourouche (2014) 86 NSWLR 214; [2014] NSWCA 39 at [48]; Calandra v Murden (No 2) [2015] NSWCA 321 at [5]-[6]. On the other hand, where the unsuccessful party had invited the primary judge to adopt the course which he or she did, bringing about the need to file an appeal, and where the unsuccessful party seeks to defend that position on appeal, it is not an appropriate case for a certificate: Director of Public Prosecutions (NSW) v Kmetyk [2018] NSWCA 156 at [64]. Calandra v Murden (No 2) was another such case.

19. I have considered two other points. The first is that noted by me in my earlier judgment at [12], to which Raysons referred, which concerns the factual errors claimed to have been made by the Appeal Panel. I did not finally determine whether, as the Owners Corporation submitted, the Appeal Panel had made a series of mistakes concerning the Senior Member’s finding. I did not do so because that was outside the scope of an appeal to this Court, which is confined to a question of law. In those circumstances, I do not see how what the Appeal Panel did in that respect, or what I said at [12], has any material bearing on the issue of an indemnity certificate. Although Raysons referred to that paragraph, it did not advance any submission directed to it.

20. The second is a point not relied on by Raysons. Both sides made submissions on the construction of s 18E(1)(e) of the Home Building Act 1989 (NSW). I considered that there were some errors in the approach taken by the Appeal Panel, and in reaching that conclusion and forming a view on the proper construction of the provision, I accepted some of the submissions advanced by Raysons, and I doubt that Raysons had contributed to the Appeal Panel’s errors. That is a position which is closer to the purposes to which the Suitors’ Fund Act is directed.

21. However, I return to what was dispositive. The misreading of [35] of the reasons of the Senior Member by the Appeal Panel was sufficient to allow the appeal. The Appeal Panel had been led to that reading by an acceptance of Raysons’ submissions. And Raysons sought to defend that reasoning in this Court. In my opinion, even though there were other errors of law in the Appeal Panel’s decision, and even though Raysons may not have contributed to those other errors, Raysons’ role in relation to the dispositive error in the construction of [35] is sufficient to deny Raysons’ application. What should have occurred was either an approach to the Senior Member to clarify [35] before orders were made, or alternatively the Appeal Panel should have been told by Raysons that [35] contained an obvious error and should not be read literally. Instead, Raysons submitted to the Appeal Panel that it was to be read literally, and for that reason warranted intervention by the Appeal Panel. I do not think it is appropriate to grant an indemnity certificate for costs incurred as a direct result of Raysons’ own erroneous submission to the Appeal Panel which it sought to defend in this Court.

22. It follows that the motion filed on 6 March 2025 must be dismissed.

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Decision last updated: 11 March 2025