203 Castlereagh Street Pty Ltd v Skybloo Holdings Pty Ltd

Legislation relating to costs

1. Section 60 of the Civil and Administrative Tribunal Act 2013 ('the NCAT Act') contains the following provisions of relevance to this decision: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid…
2. Section 36(3) (to which reference is made in s 60(3)(f)) imposes on parties to proceedings in the Tribunal a duty to co-operate with the Tribunal to give effect to the 'guiding principle' for the NCAT Act. This principle is stated in s 36(1) to be 'to facilitate the just, quick and cheap resolution of the real issues in the proceedings'.

The costs applications

1. In addition to dismissing the appeal, the appeal decision made provision for either or both of the Respondents to apply, with supporting submissions, for a costs order and for Castlereagh to file submissions in response to any application. It indicated that any party wishing for a hearing on this matter to be conducted should address this topic in its submissions and that following the filing of submissions the Appeal Panel would determine the matter of costs with or without a hearing.
2. Each of the Respondents filed an application for costs, with supporting submissions, on 2 September 2015. They both sought orders for their costs of the appeal against Castlereagh and against the lay advocate, Mr Haney Soltan, who appeared for Castlereagh during the appeal proceedings.
3. On 15 October 2015, Castlereagh filed submissions responding both to the Respondents' applications against itself and to their applications against Mr Soltan. It also filed an unsworn 'Witness Statement' signed by Mr Soltan on 12 October 2015 ('Mr Soltan's statement').
4. In none of these submissions was it argued that there should be a hearing on the matter of costs. We are satisfied that the issues for determination can be adequately determined in the absence of the parties. Accordingly, we make an order under s 50(2) of the NCAT Act dispensing with a hearing.
5. Although the proceedings in the Consumer and Commercial Division included a number of hearings in addition to the hearing on 22 July 2014 at which the original decision was given, the costs submissions by both Respondents did not indicate expressly or by implication that the costs of any of these hearings were being sought. The present decision accordingly relates only to the costs of and incidental to the appeal proceedings. In those circumstances, the matters to be taken into account are those relating only to the appeal proceedings and the manner in which they were conducted, not to the earlier proceedings in the CCD (Sahade v Owners SP No 62022 [2015] NSWCATAP 225 at [30]).
6. We propose to deal with this topic under the following headings: (1) Castlereagh's liability for Skybloo's costs of the stay application; (2) Castlereagh's liability for Skybloo's costs of the balance of the appeal; (3) Castlereagh's liability for Mr Rustom's costs of the appeal; and (4) Mr Soltan's liability to pay costs incurred by either Respondent.

Castlereagh's liability for Skybloo's costs of the stay application

1. Relevant aspects of the stay decision. On the day (4 September 2014) when the stay application was heard by Cowdroy SM, Mr Rustom had not yet been joined as a party to the proceedings. Skybloo is therefore the only party in whose favour an order for the costs of this application might be made.
2. The principal matter on which Cowdroy SM relied in dismissing this application was the fact that Mr Rustom had not been joined.
3. Cowdroy SM also took account of the following matters. The orders made in the original decision of 22 July 2014 which Castlereagh sought to have stayed included an order that it should give immediate possession of the premises at Homebush Bay to Skybloo. On 28 July, Skybloo re-entered the premises. On or about 4 August, it granted possession of them to Mr Rustom. On 5 August, in the context of an application by Castlereagh for reinstatement in the premises, the CCD directed it to serve on Mr Rustom an application for him to be joined in these proceedings. Castlereagh did not, however, seek any such order.
4. In his decision at [40 - 41], Cowdroy SM set out the following reasons for refusing a stay: 40 As has been noted above, Rustom has not been joined as a party to the lessee's proceedings. At present, he is in possession of the premises. The effect of the stay sought by the lessee would be to determine Rustom's right to possession of the premises and re-instate the lessee in possession. 41 In the absence of Rustom being joined to the proceedings, the Tribunal cannot grant a stay, but the lessee's appeal will remain. If successful, this claim could only be for damages and not for possession. Rustom has already taken possession of the premises under a new lease, and unless or until his lease is set aside, he has a legal right to remain in possession. A stay of orders as sought by the lessee could not now be granted because of the intervention of Rustom's rights.
5. At [43], Cowdroy SM observed as follows: 43 If, upon legal advice, the lessee moves to join in Rustom, and to seek orders that his lease be set aside on some equitable basis, it is not impossible that a claim for possession could be upheld. The lessee might attempt to do so by establishing firstly his right to exercise the option and that it was in fact exercised, and second, that a conspiracy existed between the lessor and Rustom to cause harm to the lessee.
6. The parties' submissions. In its costs submissions, Skybloo drew our attention to certain passages in an annexed transcript of the stay hearing. In these passages, Mr Soltan submitted that Castlereagh might indeed be able to establish that a conspiracy of this nature had existed. He also acknowledged, however, that he did not at that stage have any evidence to support this claim. Skybloo further pointed out that at the appeal hearing itself 'the alleged conspiracy did not feature'.
7. Skybloo's contentions regarding the stay application were simply that, for the reasons stated by Cowdroy SM, it was a 'hopeless' and 'misconceived' application and that for this reason alone there were 'special circumstances' warranting an award of costs under s 60(2) of the NCAT Act.
8. Three arguments made in Castlereagh's costs submissions are relevant to the costs of the stay application. They are as follows.
9. First, a factor militating against any award of costs was that Skybloo had refused to participate in mediation by the Registrar of Retail Tenancy Disputes of its dispute with Castlereagh. Correspondence annexed to Mr Soltan's statement showed that he applied to the Registrar for mediation on 9 July 2014 and that on 28 August 2014 the Registrar certified that mediation had not taken place. The certificate stated that this was because 'the lessor declined the Registrar's offer to mediate the dispute'.
10. In support of this argument, Castlereagh cited the following dictum of the Administrative Decisions Tribunal in Handcock & Ors v Salemon Enterprises Pty Ltd (in liquidation) & Anor (No 2) [2009] NSWADT 72 at [36]: 36 Failure to attend a mediation where it would otherwise appear appropriate to do so, as is the situation here, is a factor which should be taken into account when considering whether a costs order should be made…
11. Castlereagh's second argument was that by virtue of the rulings in both the stay decision and the appeal decision that Castlereagh had been denied procedural fairness in the CCD, it could not be said that its case in the appeal was hopeless.
12. Thirdly, the only reason why Mr Soltan 'raised the possibility' of a conspiracy between Skybloo and Mr Rustom during argument at the stay hearing was that Cowdroy SM had indicated that Castlereagh might have to 'prove conspiracy' in order to regain possession of the premises.
13. Discussion and conclusions. We agree with the first of these three arguments advanced by Castlereagh. In the absence of any explanation, refusal to attempt mediation of a dispute arising under the RL Act is a relevant factor in the determination of any application for costs. Castlereagh's second and third arguments, however, carry no weight, for the following reasons.
14. As Cowdroy SM pointed out at [40], 'the effect of the stay sought by the lessee would be to determine Rustom's right to possession of the premises and re-instate the lessee in possession'. Castlereagh should have realised that if the Appeal Panel had granted any such order in the course of proceedings to which Mr Rustom had not been joined, Mr Rustom would have been denied procedural fairness. The fact that Castlereagh's case against Skybloo might well have had some merit - for reasons, ironically enough, that included a denial of procedural fairness to Castlereagh itself - does not detract in any way from this consideration.
15. Furthermore, about a week before the stay application was heard (see [18] above), the CCD had directed Castlereagh to join Mr Rustom as a party to the proceedings still being maintained in that Division. Castlereagh did not comply with this direction. Correspondence annexed to Mr Soltan's statement shows that at about this time Castlereagh was instead trying to obtain from Mr Rustom an undertaking to surrender possession of the premises if Castlereagh was successful in having the original decision set aside. As might have been anticipated, Mr Rustom gave no such undertaking.
16. Our opinion of Mr Soltan's allegation of a conspiracy, made as it was at the stay hearing without supporting evidence, was that it in fact reinforced Skybloo's contention that no stay order could conceivably have been made so long as Mr Rustom was not a party to the proceedings.
17. Our conclusions are as follows. We find that two specific aspects of Castlereagh's application for interim relief constituted circumstances that were 'out of the ordinary' (this phrase, used by the Court of Appeal in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 84 at [60], has been repeated in many decisions on s 60(2) of the NCAT Act) and were therefore 'special' within the meaning of this provision. The first of these is that the relief, if granted, would have had a significantly detrimental impact on the rights of an individual (Mr Rustom) who was not a party to the proceedings. Secondly, Castlereagh had had ample opportunity to join Mr Rustom and had indeed been directed to do so in the proceedings at first instance, but had failed to take this step.
18. In consequence, the granting of this relief would manifestly have involved a denial of procedural fairness to Mr Rustom. For this reason alone, we accept Skybloo's argument that the stay application, in the form in which it was made, was 'hopeless' and 'misconceived'. Because it was a claim that had 'no tenable basis in fact or law' within the meaning of s 60(3)(c), the 'special circumstances' that we have identified were such as to 'warrant' an award of costs against Castlereagh.
19. On these grounds, we order that Skybloo's costs of the stay application are to be paid by Castlereagh.
20. In accordance with the approach outlined above at [15], we defer for later consideration the question whether an additional order for the payment of these costs should be made against Mr Soltan, in his capacity as an agent representing Castlereagh in the appeal proceedings.

Castlereagh's liability for Skybloo's costs of the balance of the appeal

1. We deal here with Skybloo's application for costs in so far as they are costs of the appeal incurred otherwise than in connection with the stay application.
2. The parties' submissions. Skybloo's principal arguments on this question were that the circumstances of the appeal were 'special' for these reasons: it was a 'complex proceeding of a commercial character', in which a valuable right (i.e. the right to possession of premises) was 'hotly contested' and both respondents had therefore to engage legal counsel; the Appeal Panel exercised its power to admit fresh evidence and conducted what was effectively a 'hearing de novo'; Castlereagh's case was 'weak', with the consequence that the 'original decision did not change' despite our finding that it had been denied procedural fairness; Castlereagh and Mr Soltan (who was a lay agent whose leave to appear was open to revocation) engaged in 'egregious conduct' involving contravention of s 36(3) of the NCAT Act, notably through (a) delaying unduly in filing a Notice of Appeal, (b) advancing a number of arguments that were irrelevant, to the point of being frivolous and vexatious and amounting to an abuse of process and (b) filing numerous documents that ultimately proved to be irrelevant to the determination of the appeal.
3. Castlereagh's principal arguments were as follows: Skybloo had refused to participate in mediation (as mentioned above); Castlereagh had succeeded in establishing a denial of procedural fairness, for which Skybloo was partly responsible; Castlereagh had legitimately sought possessory relief, because damages would not have been an adequate remedy; before filing its Notice of Appeal, it had sought to set aside the 'self described "interim decision"' of 22 July 2014 through applications to the CCD because this was a cheaper and speedier process than lodging an appeal; it could not be accused of delay in filing its Notice of Appeal, because it observed the stipulated time limit of 28 days; its case was not 'weak' because a grant of possession of land to a party is not 'final' in law; it was appropriate for Castlereagh to put before the Appeal Panel the numerous documents that had been filed in the CCD because the Panel was determining the case anew; Skybloo had not been disadvantaged by the filing of these documents because all of them were already in its possession.
4. In the ensuing discussion of this part of the appeal, we will refer to a number of specific aspects of these submissions.
5. Whether there were 'special circumstances'. We have no doubt that the circumstances of this appeal were 'out of the ordinary', in the sense in which the Court of Appeal used this phrase in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 84. It should be added that in the relevant passage the Court observed that the circumstances did not have to be 'extraordinary or exceptional'.
6. This finding derives sufficient justification from the following features of the case: (a) the original decision was made at the conclusion of a hearing which (as Castlereagh's representative pointed out more than once) had been scheduled as a directions hearing, not a hearing on the merits; (b) it described itself as an 'interim' decision even though in our opinion (expressed in the appeal decision at [83]) it was 'final in substance'; and (c) at the appeal hearing, with the consent of all parties, a considerable quantity of fresh evidence was admitted.
7. Whether these 'special circumstances' were such as to 'warrant' an award of costs. In the appeal decision at [92], we commented as follows on Skybloo's statement that it wished to be heard on the matter of costs: Having regard to our rulings that the decision under appeal involved a denial of procedural fairness and that fresh evidence should be admitted, our provisional view on this matter is that Castlereagh, although unsuccessful, might not be liable to pay costs under the relevant provision (section 60) of the NCAT Act.
8. For the reasons that follow, we have decided that this 'provisional view' is correct, so far as Skybloo's costs of what we have called 'the balance of the appeal' are concerned.
9. The starting-point in our reasoning is the following proposition. Under a costs provision such as s 60, a party that fails at first instance, but at this stage of proceedings is denied a proper opportunity to present its case, should be given an opportunity to do this on appeal and should not be met with a costs order solely on the ground that the appeal is unsuccessful. This represents an exception to the established principle that 'for an unsuccessful party at first instance to subject the successful party to a further round of litigation before the Appeal Panel, and not succeeding In that endeavour, may be taken into account as a factor favouring an order for the costs of the appeal in favour of the respondent to the appeal' (see BDK v Department of Education and Communities [2015] NSWCATAP 129 at [82]).
10. If, however, the unsuccessful party in this situation institutes and maintains an appeal that it knew or should have known to have little or no merit, it must still be vulnerable to a costs order on the ground set out in paragraph (c) of s 60(3): namely, that its case had no tenable basis in fact or in law, or that there was at least a 'substantial disparity' between the merits of its relatively weak case and the relatively strong case of its opponent. In Jonamill Pty Ltd v Alramon Pty Ltd (No 2) (RLD) [2010] NSWADTAP 3 at [47], the phrase 'substantial disparity' was employed by the Administrative Decisions Tribunal in determining under the predecessor to s 60 the costs of an unsuccessful appeal from a decision made in retail lease proceedings.
11. The reasons why we dismissed Castlereagh's appeal are set out in the appeal decision at [63 - 81] (although our discussion of them was expressed to begin at [67], we incorporated into them the submissions made by Skybloo, which were summarised at [63 - 66]). The following salient features of those reasons are relevant here.
12. The most important factor in our dismissal of the appeal was our conclusion that the date by which Castlereagh was obliged to exercise an option to renew the lease between it and Skybloo was 17 July 2014 (as argued by Skybloo), not a date some six weeks later (as argued by Castlereagh).
13. To a significant degree, this conclusion flowed from our construction of the terms of three documents constituting the lease under which Castlereagh occupied the premises. Relevant clauses of these three documents - which we called 'the Agreement', 'the Memorandum' and 'the Copy Memorandum' - are set out or summarised in the appeal decision at [22 - 27] and [33 - 35].
14. In the absence of any submission to the contrary, we take it that at the time when the appeal was instituted, Castlereagh possessed copies of these documents and was in a position to see for itself that the latest date for exercise of the option appeared to have been agreed between its solicitor and the solicitor for the initial lessor (Payce Properties Pty Ltd) as 17 July 2014.
15. At the hearing of the appeal, however, Castlereagh submitted to us that by virtue of (a) a clause in the Agreement defining the commencement date of the lease as 'the date occurring 1 day after the completion of the lessee's work period' and (b) certain documentary evidence as to the date when the 'lessee's work period' commenced, the date of commencement of the lease, and accordingly the latest date for exercise of the option also, were some six weeks later than Skybloo maintained. This documentary evidence is summarised in the appeal decision at [37 - 42].
16. In seeking to rebut this argument, Skybloo relied on conflicting documentary evidence. This is summarised at [43 - 45].
17. On the grounds set out at [68 - 73], we held that Skybloo's evidence as to the commencement date of the 'lessee's work period' was to be preferred. But at [68] we characterised all the evidence on this crucial question of fact as 'deficient, particularly because there has been no cross-examination of relevant witnesses…' This question was one on which Castlereagh was entitled to present evidence and argument, having not had an opportunity to do so at first instance. It was not a question on which, at the time of instituting its appeal, it could discern from the evidence then available to it that it was bound to fail. In fact, its case on the question did have merit, and could only be rejected after careful consideration of the evidence.
18. In addition, Castlereagh advanced an argument based on s 8 of the RL Act. We outlined this argument in the appeal decision at [50 - 53]. At [74 - 77], we rejected it, but 'only after taking careful account' of dicta in the Supreme Court case on which Mr Soltan particularly relied (see [77]). On this separate issue, therefore, Castlereagh's case also had merit.
19. The next section of these reasons contains a ruling by us that Castlereagh's claim in the appeal proceedings to be entitled as against Mr Rustom to possession of the premises was, by contrast, a claim without merit. But this ruling is not enough of itself to justify an order that Castlereagh should pay Skybloo's costs. This is for the following reasons.
20. In the original decision, the first order made by the CCD was a declaration that the lease between Skybloo and Castlereagh had expired 'because the option to renew the lease agreement has not been exercised'. If we had been persuaded by Castlereagh's contentions as to the date by which the option had to be exercised, we would have allowed the appeal against Skybloo and set aside this declaration. We would have granted relief to Castlereagh to this extent, and would have been inclined to permit it to revive its claim for damages. But because quite separate considerations were applicable to Castlereagh's claim against Mr Rustom, we would not have granted the 'possessory relief' that it sought against him.
21. It remains in this section of our decision to set out our conclusions on the other matters raised in the parties' submissions.
22. We agree with Skybloo that these appeal proceedings were 'proceedings of a commercial character', in which a valuable right (i.e. the right to possession of premises) was 'hotly contested' and both respondents had therefore to engage legal counsel. Relying on the terms of s 60(3)(d) and on the Appeal Panel's decision in Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120, Skybloo submitted that because the proceedings should also be characterised as 'complex', these factors were enough in themselves to warrant an order for costs in its favour.
23. For present purposes, the relevant aspects of the Appeal Panel's decision in Megerditchian are as follows. In an earlier decision (Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 68), it had dismissed an appeal brought by Mr Megerditchian from a decision of the CCD in home building proceedings. In this decision at first instance, he had been ordered to pay $125,704 to the respondent, Kurmond Homes Pty Ltd. His cross claim in an amount of $432,495.56 had been unsuccessful. In the appeal decision at [13], the Panel described these as 'substantial amounts considering the dispute was between a consumer and a commercial contractor'. At [14], it made the following observations about the appeal: 14 The grounds of appeal related to the meaning of the contract. While the appellant was unsuccessful, there was a real issue as to how the contract should be interpreted. It would have been difficult for a person who was not a lawyer to have given meaningful submissions on the proper construction of the contract. The decision of both parties to instruct lawyers was understandable given the nature of the legal dispute and the amount of money involved.
24. Earlier in its reasons, the Appeal Panel had dismissed an argument by Kurmond Homes that the question of costs was not governed by s 60 of the NCAT Act, but by rule 38 of the Civil and Administrative Tribunal Rules 2014. This rule states as follows: (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if: (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000
25. The ground on which the Appeal Panel rejected this argument was that the awarding of costs in appeal proceedings was not one of the 'functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal'. It confirmed that the governing provision was s 60 of the Act.
26. In its decision, which was that a costs order should be made Mr Megerditchian, the Appeal Panel did however take account of the existence of rule 38 at two stages of its reasoning. First, in considering the requirement of special circumstances, it said (at [12]) that 'the nature and complexity of the proceedings and the fact that the Tribunal has a less fettered discretion in relation to the awarding of costs at first instance make the circumstances special'. Secondly, at [15 - 16], it gave the following explanation for deciding to award costs: 15 Because the amount in dispute was more than $30,000, the Tribunal may award costs at first instance "in such circumstances as it thinks fit"… While that rule does not apply on appeal, it is a factor which the Appeal Panel may take into account in deciding whether special circumstances exist on appeal: NCAT Act, s 60(3)(g). One reason for its relevance is that parties have the expectation of an unfettered discretion being applied in relation to an application for costs at first instance and will make decisions about the merits of their case and the desirability of legal representation partly on that basis. 16 In summary, we have decided that the appellant should pay the respondent's costs because the appeal relates to a commercial transaction involving a significant amount of money, a question of law was raised on appeal which justified representation by lawyers and the wider discretion to award costs at first instance, tends to favour an award of costs on appeal.
27. Skybloo's argument was, in essence, that this decision was applicable to the present proceedings.
28. Castlereagh opposed this proposition on the grounds that Megerditchian 'involved a substantial monetary claim of $400,000' and the Appeal Panel erred in relying on rule 38 as a relevant factor because this rule is 'expressly inconsistent' with s 60 of the NCAT Act and 'arguably invalid' under s 25(1).
29. We do not accept this submission by Skybloo. Our reason is that paragraph [16] of the decision in Megerditchian should not be interpreted as meaning that costs should be awarded in every appeal from the CCD where (to quote from this paragraph) 'the appeal relates to a commercial transaction involving a significant amount of money, a question of law was raised on appeal which justified representation by lawyers and the wider discretion to award costs at first instance [exists]'. The Panel in fact said only that this combination of factors 'tends to favour an award of costs on appeal'. To treat it as a sufficient condition for awarding costs would be to bypass all the other considerations listed in s 60(3), notably the question raised in paragraph (c) to which we have paid significant attention in our own analysis - 'the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law'. (We note in passing that, perhaps surprisingly, neither of the Appeal Panel's decisions in the Megerditchian proceedings contains any comment on this particular aspect of those proceedings.)
30. For these reasons, we do not treat the determination of Skybloo's application for costs as in any sense 'governed' by Megerditchian, though we do not quibble with the general statement of principle set out in paragraph [16] of that decision.
31. We also do not accept Skybloo's submission that Castlereagh delayed unduly in filing its Notice of Appeal. The Notice was filed within the stipulated period of 28 days following its receipt of the CCD's reasons for the original decision.
32. We agree with Skybloo, however, that Mr Soltan included a number of arguments that we found to be irrelevant to the determination of the appeal in the submissions that he filed before the appeal hearing and (to a lesser extent) in his oral submissions. As Skybloo pointed out, the ambit of his oral submissions could well have been substantially wider if we had not asked him at the start of the hearing to focus initially on what we identified as the issue of prime importance: namely, whether the option to renew had been validly exercised. But this aspect of his conduct of Castlereagh's case did not cause Skybloo or Mr Rustom to be 'unnecessarily disadvantaged', nor did it 'prolong unreasonably' the time taken to complete the proceedings, within the meaning of paragraph (a) or (b) of s 60(3) of the NCAT Act. While there was little or no merit in certain of his oral arguments (in particular, the argument summarised in the appeal decision at [58 - 60]), these did not occupy a substantial proportion of the hearing of the appeal.
33. We also agree with Skybloo that Castlereagh filed many documents that ultimately proved to be irrelevant to the hearing and/or the determination of the appeal. But the same may be said of both of the Respondents. Justification for this may be found in the fact that on 21 October 2014 all three parties were made subject to directions in the nature of an order for discovery.
34. Castlereagh asserted that all or virtually all of the documents which it filed were already in Skybloo's possession. We do not know whether this assertion was soundly based.
35. We agree with Castlereagh that Skybloo's refusal to participate in mediation is a factor in Castlereagh's favour. We agree also that Skybloo bore some responsibility for the denial of procedural fairness sustained by Castlereagh at the CCD hearing on 22 July 2014. Skybloo continued to press for a substantive decision on its application even after Castlereagh's representative had objected to this on the ground that the hearing had been scheduled as a directions hearing only.
36. On the other hand, we see no merit in Castlereagh's submission based on the fact that it sought possessory relief, not an award of damages. It argued that damages would not have been an adequate remedy. We see no reason why this consideration should bear on the question whether it should pay the costs incurred by a party (Skybloo) against which possessory relief was not claimed.
37. For the foregoing reasons, our decision regarding 'the balance' of Skybloo's costs of the appeal is that Skybloo has failed to establish that they should be paid by Castlereagh. These costs must therefore be borne by Skybloo, pursuant to s 60(1) of the NCAT Act.

Castlereagh's liability for Mr Rustom's costs of the appeal

1. Mr Rustom's submissions. On the application and interpretation of s 60 of the NCAT Act and on the key question whether the option to renew the lease had been validly exercised, Mr Rustom adopted the arguments put by Skybloo and did not seek to add to them.
2. The additional factors on which Mr Rustom relied were these: he had taken possession of the premises on 28 July 2014 (this was six days after the original decision was made), pursuant to a lease previously granted to him by Skybloo; he had spent more than $150,000 in renovating the premises; he had been trading in them since 1 September 2014; and as stated by the Appeal Panel in Chester v Prestige Promotions Pty Ltd [2014] NSWCATAP 34 at [30], 'the loss of occupation of a rental property is a very serious issue for tenants'.
3. In Chester's case, the Appeal Panel, at [29 - 37], ruled that costs should be awarded to the successful respondent in a residential tenancy appeal. Its reasons were that the appellant's case was weak and that the numerous documents filed by the appellant did not assist it. Mr Rustom submitted that these reasons were applicable to his application for costs to be paid by Castlereagh.
4. Castlereagh's submissions. Castlereagh argued first of all that, for the reasons advanced in its defence to Skybloo's costs application, its appeal was 'not doomed to fail'. It maintained that the Appeal Panel's statement in Chester regarding the 'seriousness' for tenants of the loss of occupation of rental premises was wholly applicable to its own situation. Furthermore, it claimed, damages would not have been an adequate remedy for it, but would have been adequate for Mr Rustom because (a) he was 'not a corporate retail lessee, but a natural person' and (b) 'he had not been trading long enough to be able to quantify his expectation damages'. Castlereagh's answer to Mr Rustom's claim that he had been compelled to give consideration to numerous documents 'filed and exchanged with Skybloo' was that it had given him copies of these documents 'as a courtesy, not to disadvantage him'.
5. A further argument advanced by Castlereagh was that it had furnished Mr Rustom with many opportunities not be joined in the appeal proceedings, but Mr Rustom had instead 'compelled' it to join him as a party, thereby making himself liable to pay costs that he could and should have avoided. Castlereagh relied here on copies, attached to Mr Soltan's statement, of correspondence between Mr Soltan and Mr Rustom in the period preceding the stay application. In this correspondence, which we have already mentioned, Castlereagh tried without success to obtain from Mr Rustom an undertaking to surrender possession of the premises if Castlereagh was successful in having the original decision set aside.
6. The proposition on which this submission by Castlereagh was founded was formulated in its costs submissions as follows: 'If Castlereagh was successful on any legal ground, Rustom was to vacate the premises on being served by a request from Castlereagh to do so because Skybloo had no legal interest to lease to him'.
7. In support of this proposition, Castlereagh cited a passage in the Court of Appeal's decision in United Starr-Bowkett Co-operative Building Society (No 11) Ltd v Clyne (1967) 68 SR (NSW) 331. In this case, tenants had been unlawfully evicted from premises of which they had a continuing entitlement to possession. After ruling that the judgment under appeal should be set aside, Sugerman JA stated as follows at 344: In the result, and for the reasons stated, the judgment for the claimant in ejectment and the writ of habere facias should be set aside in each of the four cases. That is sufficient relief in the cases of the applicants ... against whom the writ has not been executed. The applicant Smart has, however, been put out of possession and we should therefore award a writ of restitution (Cole on Ejectment, p 349) but for the circumstance that counsel for the applicant informs us that somebody else, who is not a party to these proceedings, is now in possession. In these circumstances... I think we should leave the applicant Smart to move before a judge in chambers for such relief as he may be advised upon service on the person now in possession.
8. Castlereagh noted in its submissions that this passage was recently quoted by Basten JA in Goater v Commonwealth Bank of Australia [2014] NSWCA 382 at [14].
9. Discussion and conclusions. In our judgment, Mr Rustom's submissions are persuasive and his application for costs must be upheld, for the following reasons.
10. As we have indicated more than once in these reasons, if Castlereagh had succeeded in its appeal against Skybloo through establishing that it had validly exercised the option of renewal, success in its claim for possessory relief against Mr Rustom would in no way have been automatic. As was pointed out to Mr Soltan and indeed acknowledged by him during the hearing of the stay application, Castlereagh would still have had to establish an additional ground in equity - for example, a 'conspiracy' between Skybloo and Mr Rustom - for setting aside the lease granted to Mr Rustom. But Castlereagh did not adduce any evidence in the appeal proceedings that might have provided the basis for such an order.
11. Instead, the position adopted by Castlereagh, both in its correspondence with Mr Rustom to which we have referred and in its costs submissions, was that if it succeeded in its appeal against Skybloo through showing that it had validly exercised the option, it would for that reason alone be entitled to set aside the lease to Mr Rustom. The authority on which it relied was the passage from United Starr-Bowkett which we have just reproduced and which was quoted by Basten JA in Goater.
12. Clearly, however, this position is unsustainable. In the present context, this may be demonstrated by simply reproducing the passage in Basten JA's judgment that immediately preceded his quoting of the extract from United Starr-Bowkett. This was as follows: 12 There is something unsettling about the proposition that an erroneous judgment cannot, as a matter of law, be set aside once the orders have taken effect. Generally, orders of a superior court are likely to take effect long before any appeal can be heard and determined. Lodging an appeal does not usually carry any entitlement to a stay. If the effect of obedience to a court order cannot readily be reversed, a stay may well be granted, but that is to protect the practical value of the right of appeal, not because as a matter of law the appeal could not be upheld once the orders had been satisfied. By parity of reasoning, the failure to grant a stay where a stay would have been appropriate cannot deprive an appellate court of the legal power to set aside an erroneous judgment: the practical consequences of reversal may be another matter. 13 There is no reason why this reasoning should not apply with respect to a judgment affecting ownership of land. If the land were sold pursuant to a power of sale before the judgment was reversed, it might well be impossible for the successful appellant to recover the property, but that problem does not arise in this case (our emphasis). The property has not been sold and the Bank has agreed not to exercise its power of sale pending determination of the appeal. 14 The proposition that, as between the Bank and the borrowers (our emphasis), this Court would not be able to grant necessary relief in the event that the underlying judgment were to be set aside would be startling. That issue was addressed by the Court in in United Starr-Bowkett Co-operative Building Society (No 11) Ltd v Clyne (1967) 68 SR (NSW) 331…
13. Basten JA's reasoning provides confirmation (if that were needed) that these two cases are authority for the following principles. A judgment requiring a tenant to give up possession of leasehold land may be set aside in proceedings between the landlord and the tenant if the tenant establishes that the order for possession was wrongfully made. But if a third party has taken possession in the interim, it is not enough for the tenant to prove this and this alone. These are, in fact, relatively elementary principles of land law, but they appear not to have been sufficiently understood by Castlereagh.
14. Because Castlereagh was determined to pursue its claim for possessory relief against Mr Rustom side by side with its claim against Skybloo, it had no alternative but to join him in the appeal proceedings. But for the reasons that we have outlined, the former claim was defective to a far greater degree than the latter. Evidence that might have given grounds in equity for setting aside the lease to Mr Rustom was wholly lacking.
15. Earlier in this decision, we gave reasons why in our judgment 'special circumstances' are discernible in this appeal. For the reasons that we have just outlined, we now find also that Castlereagh's claim against Mr Rustom was seriously deficient. It had 'no tenable basis in fact or law', within the meaning of s 60(3)(c) of the NCAT Act.
16. On these grounds, we order that Castlereagh pay Mr Rustom's costs of and incidental to this appeal.

Mr Soltan's liability to pay costs

1. Both Skybloo and Mr Rustom submitted that if Castlereagh were to be made liable to pay costs, an order making Mr Soltan liable to the same extent should also be made.
2. In summary, the grounds on which Skybloo made this claim were as follows: Castlereagh's case was unmeritorious; in seeking to advance it, Mr Soltan 'agitated matters in a haphazard and urgent fashion'; as Cowdroy SM observed during the stay hearing, he displayed a tendency to 'think of new points as it [the litigation] comes along'; he advanced claims that were frivolous and vexatious, thereby engaging in abuse of process; he 'appeared to do what he liked… until checked…'; it was in the public interest that a lay advocate appearing by leave before the Tribunal should be required to pay costs occasioned by his failure to endeavour, as required by s 36 of the NCAT Act, to 'facilitate the just, quick and cheap resolution of the real issues in the proceedings'.
3. Mr Rustom's submissions did not materially add to these arguments.
4. In response, Mr Soltan relied on the following dictum of the Court of Appeal in Damjanovic v Maley [2002] NSWCA 230; 55 NSWLR 149 at [75]: In appropriate cases a legal practitioner may be ordered to pay costs. The position is far less clear in relation to a non party lay advocate. There may be extreme circumstances where the conduct of a lay advocate could attract an adverse costs order.
5. He relied also on the decision of the Appeal Panel of the Administrative Decisions Tribunal in Sebastian v Rail Infrastructure Corporation & Anor (EOD) [2006] NSWADTAP 44. Here the Panel held that costs should not be awarded against a lay advocate who had appeared for an unsuccessful appellant. For present purposes, it is sufficient to quote the following extracts from the decision: 47 In Applicant NAGM of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 396 the Full Federal Court said that three things should be borne in mind when determining whether to award costs against a lay advocate. First, the object is to reimburse to a party costs which that party has incurred by reason of the conduct of the non-party. The jurisdiction is not punitive or disciplinary. Secondly, an order for the payment of costs by a non-party is exceptional and any application for such an order should be treated with considerable caution. Caution is especially called for when the non-party is providing voluntary assistance to a litigant who is not legally represented and who is unfamiliar with the legal system. Thirdly, the mere fact that the non-party has been actively involved in preparing and presenting a hopeless case will not ordinarily justify a costs order against that person. 51 Ms Beck [the lay agent] has assisted in preparing and presenting a hopeless appeal. That, in itself, does not justify a costs order… The jurisdiction is not punitive or disciplinary. We are not inclined to characterise her conduct as giving rise to exceptional circumstances that would justify an award of costs against her personally...
6. In addition, Mr Soltan pointed out that in two appellate decisions of the Administrative Decisions Tribunal confirming the awarding of costs at first instance against a lay agent, no claim for costs could have been brought against the party or parties whom the agents purported to represent. In the earlier of these, Kondos & Anor v Citadin Pty Ltd [2003] NSWADTAP 7, these parties were a company in liquidation (the liquidator of which had not authorised proceedings) and a director of this company who had likewise not authorised proceedings. In the second, Satchi & Satchi Australia Pty Ltd & anor v Zeaiter Corporate Holdings Pty Ltd (RLD) [2008] NSWADTAP 65, the relevant party was a company that at the time of the proceedings was deregistered. Mr Soltan argued that each of these decisions should be distinguished from the present case.
7. The other submission by Mr Soltan that we should mention is that Skybloo erred in claiming that his appearance on behalf of Castlereagh was by leave of the Tribunal. In this regard, he was correct: see NCAT Act, s 45(2) and cl 7(b) of Sch 4.
8. We agree with Mr Soltan that Skybloo and Mr Rustom have not made out their respective claims that any liability for costs visited on Castlereagh should also be visited on him. The criterion of 'extreme circumstances' has not been satisfied.
9. Like the lay agent in Sebastian v Rail Infrastructure Corporation, Mr Soltan was responsible for preparing and presenting two proceedings that we have held to be 'hopeless'. These were the stay application and the appeal proceedings against Mr Rustom. But as the Appeal Panel said in Sebastian, 'that, in itself, does not justify a costs order'. In addition, we agree with Mr Soltan that for the reasons advanced by him, the decisions in Kondos and Satchi are distinguishable.
10. Liability to pay costs in these proceedings is accordingly imposed on Castlereagh only, not on its agent Mr Soltan.
11. In addition to resisting personal liability for costs (being a component of these proceedings in which he instructed Mr Fernon of counsel), Mr Soltan sought an order that the two Respondents pay his costs of so doing. We do not, however, consider that their case against him lacked merit to the extent that an order to this effect is warranted.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 November 2015