Brent Kijurina in his capacity as Liquidator of M & J Ventures Pty Ltd (in liq) v Jobella Anwar Pty Limited and anor

Jurisdiction and legislation

1. The Civil and Administrative Tribunal Act 2013 ("CATA") provides at s 60: Costs Each party to proceedings in the Tribunal is to pay the party's own costs. 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. In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, 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, the nature and complexity of the proceedings, whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, whether a party has refused or failed to comply with the duty imposed by section 36 (3), any other matter that the Tribunal considers relevant. If costs are to be awarded by the Tribunal, the Tribunal may: determine by whom and to what extent costs are to be paid, and order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2014 or on any other basis. In this section: costs includes: the costs of, or incidental to, proceedings in the Tribunal, and the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
2. The Civil and Administrative Tribunal Rules 2014 at rule 38 provides: Costs in Consumer and Commercial Division of the Tribunal 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. 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: 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 the amount claimed or in dispute in the proceedings is more than $30,000.
3. CATA provides at s36 that: Guiding principle to be applied to practice and procedure (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it: a. exercises any power given to it by this Act or the procedural rules, or b. interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal: a. a party to proceedings in the Tribunal, b. an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings (5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.
4. Section 50 of CATA provides: 50 When hearings are required (1) A hearing is required for proceedings in the Tribunal except: (a) in proceedings for the granting of leave for an external or internal appeal, or (b) in connection with the use of any resolution processes in proceedings, or (c) if the Tribunal makes an order under this section dispensing with a hearing, or (d) in such other circumstances as may be prescribed by the procedural rules. (2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal. (3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first: (a) afforded the parties an opportunity to make submissions about the proposed order, and (b) taken any such submissions into account. (4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules. (5) This section does not prevent the Tribunal from holding a hearing even if it is not required.

SUBMISSIONS

1. Neither the applicant nor the respondents' addressed the issue of their consent to their application for costs being dealt with on the papers nor whether an order under section 50 of the NCAT Act should not be made.
2. The Tribunal is satisfied that the builders have been afforded an opportunity to make submissions about the proposed order to dispense with a hearing and to determine the costs application on the papers. The issue of costs can be adequately determined in the absence of the parties by consideration of the written submissions lodged with or provided to the Tribunal and the Tribunal will take those submissions into account.
3. Pursuant to Section 50(4) the Tribunal exercises its discretion to determine the application on the papers.

Applicant's submissions

1. The applicant seeks an order for costs against the respondents.
2. The applicant submits the usual provisions of section 60(1) do not apply in that each party pays its own costs. The applicant's case exceeds the limit imposed by Rule 38 and in addition that special circumstances in section 60(3) exist.
3. The applicant contends that it is just and reasonable that a party who caused the other party to incur the cost of litigation should reimburse that party for the liability it incurred. Such an order should not be made to punish the unsuccessful party, its function is compensatory: Latoudis v Casey (1990) 170 CLR 834; Citywide Developments Pty Ltd v Dawn Pienga; Dawn Pienga v Citywide Developments Pty Ltd [2015] NSWCATCD 76.
4. In Gaynor v Burns [2015] NSWCATAP 150 the Appeal Panel considered the decision of Cripps v G & M Dawson [2006] NSWCA 81 where Santow JA considered the words "special circumstances". The meaning attributed is that they circumstance that are special circumstances are circumstances that were clearly out of the ordinary and grossly unreasonable. They do not need to be extraordinary or exceptional. While a finding of "serious unfairness" is not a prerequisite to determining that there are no special circumstances, it is nonetheless a highly relevant consideration.
5. In Cihan v City Tobacconist Pty Ltd & Gebara [2016] NSWCATCD 26 the Tribunal held that "even if Rule 38(3) does not apply given the quantum of the award to the applicant, in that the applicant has been put to the expense of obtaining legal representation to prosecute the claim against the respondents' who put forward defences that lacked factual and legal substance as noted in paragraph 4 of the reasons." The Tribunal went on to follow Cripps.
6. The applicant submits that the Tribunal in this matter found that the claim was: a. required to be brought as a result of the respondents' breach of lease and failure to respond to requests to rectify that breach; b. Reasonably brought to recover: i. Rental that was owed consequent upon the default by the first and second respondents; ii. The cost of rectification/make good to the premises after the respondents departure; iii. Loss of rent for the period of termination to the commencement of a new lease.
7. The respondents': a. defence was that the applicant had not taken appropriate mitigation of damages in seeking to clean and relet the premises and therefore the outstanding rental claimed by the applicant should be limited to reflect such a failure. The Tribunal found that the applicant had mitigated its loss. b. Denied that the premises were left in a poor state and condition. The Tribunal found that they were and the respondents failed to offer evidence that the cost of rectification was unreasonable; c. Contended that it was in the process of selling its business, but failed to offer evidence to support its contention; d. Denied liability for the applicant's legal costs, but failed to offer evidence to support this denial. The respondents are liable for the applicant's legal costs pursuant to the lease as clauses 5.1.3 and 5.1.8.
8. During the full day hearing the second respondent was cross examined at length, but failed to concede points that he later did during his cross examination and ultimately the Tribunal found against him.
9. The applicant contends that the relief sought by the applicant is almost identical to the case of Shen v Bonita, Lie & Go [2015] NSWCATCD 118, where the Tribunal awarded the applicant their costs against the respondent tenant.
10. In accordance with the general principle set out in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6 costs should follow the event. The applicant has been successful and the defences raised by the respondents' were unsupported

Respondents' Submissions

1. The respondents' contend that the Tribunal is prima facie oriented towards "quick and cheap" "justice" and the usual rule should be that each party pay their own costs.
2. The respondents' further submit that "absolutely no special circumstances that would warrant a departure from the usual order in this case".
3. The respondents in particular contend that: 1. Various elements of the respondents case have been upheld; 2. There is no suggestion of fraud or other unfair or inappropriate conduct by the respondent that would activate a departure from the usual order as considered in Cripps; 3. The nature of the matter changed as the claim was first brought by the landlord and subsequently after the landlord went into liquidation, by its liquidator, for the benefit of the creditors and beneficiaries of the company; 4. The respondents, by the liquidation of the landlord were denied a cross claim, which would have been significant. 5. There was no attempt by the applicant to achieve a compromise resolution of the claim and no effort to find common ground. The beneficiary of the claim was the landlord's former company structure. It was not the respondents'' who failed the landlord; it was the director of the landlord and his management of its affairs. 6. For these reasons the there is no reason to depart from the usual order under section 60(1).

FINDINGS

1. The general rule expressed in Oshlack v Richmond River Council (1998) CLR 72 is that a successful party has a reasonable expectation of being awarded costs against the unsuccessful party. The usual principles that should apply in the exercise of discretion are that costs should follow the event.
2. The Tribunal has a general discretion under rule 38 to award costs. Where there is a general discretion to award costs the correct principle is that the Tribunal in exercising discretion should have regard to the nature of all relevant factors: Thompson v Chapman [2016] NSWCATAP 6 (7 January 2016) at [72].
3. The purposes of a costs order is to compensate or indemnify a successful party against the expenses to which it has been put (Latoudis v Casey [1990] HCA 59).
4. In Thompson v Chapman at [71] the Appeal Panel said: 71. Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: Oshlack v Richmond River Council per Gaudron and Gummo JJ at 88 and Kirby J at 121-123.
5. In ABB Engineering Construction Pty Ltd v Abigroup Contractors Pty Ltd BC200305610 per Einstein J at 14, His Honour carried out an extensive review of the authorities distilling a number of principles relevant to the determination of costs, in particular: A successful litigant is generally entitled to an award of costs. Costs are not awarded to punish an unsuccessful party. The primary purpose for an award of costs is to indemnify the successful party. If litigation had not been brought…by the unsuccessful party the successful party would not have incurred the expense it did. As between the parties fairness dictates that the unsuccessful party typically bears the cost of the unsuccessful litigation. The traditional exceptions to the usual order as to costs focus on conduct of the successful party that disentitles it to the beneficial exercise of the discretion In Anglo Cyprian Trade Agencies v Paphos Wine Industries, Devlon J referred to "misconduct" by the successful party as the basis for departure from the usual order. In that case, this conduct was construed to be misconduct relating to the litigation in circumstances leading up to it.
6. The Tribunal is satisfied that the provisions of rule 38(2)(b) are enlivened to dispel the exclusionary provision that special circumstances must exist if the general rule that each party should pay their own costs is to be avoided. There is no necessity for special circumstances to be present in order to award costs in this matter. The claim exceeded $30,000 and Rule 38 applies.
7. Notwithstanding that Rule 38 applies, the Tribunal retains discretion as to whether it will award costs. The applicant has been successful in its claim and it is entitled to expect that its costs would be ordered to be paid by the respondents in the ordinary course. The Tribunal must consider all the relevant factors, which it has done in consideration of both parties submission: Thompson v Chapman. The respondents have not demonstrated why the Tribunal should not exercise discretion to make a costs order other than in the ordinary course in accordance with the authorities: Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin; Citywide Developments Pty Ltd v Dawn Pienga; Dawn Pienga v Citywide Developments Pty Ltd.
8. If the Tribunal is wrong in making the finding that Rule 38 does not need a finding that special circumstances exist, the Tribunal is satisfied that if it needed to find special circumstances, then it can do so in this case, for the reasons set out in the applicant's submissions. Those circumstances need not be extraordinary or exceptional. For the applicant to obtain the relief it sought, it was necessary to bring the claim. The Tribunal has had regard for the respondents' submissions, however, they do not support the contention that Tribunal should conform to the provisions of section 60(1). The lack of agreement by the applicant to reach a compromise resolution with the respondents is not of itself a sufficient reason for the Tribunal to be limited to section 60(1).
9. In the ordinary course, the Tribunal is satisfied that it can exercise its discretion under Rule 38 that the applicant is entitled to an award of costs in its favour against the respondents.
10. The applicant's costs payable by the respondents are to be as agreed or assessed on the ordinary basis.

Cost Order

1. The Tribunal orders that the tenant, Jobella Anwar Pty Limited and guarantor Decky Suryawan Anwar pay to the applicant, Brent Kijurina in his capacity as Liquidator of M & J Ventures Pty Ltd (in liq), as agreed or as assessed on the ordinary basis. P Boyce Senior Member Civil and Administrative Tribunal of New South Wales 13 December 2016 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: 25 January 2017