Bruce v Knight

NCAT Appeal Panel|2021-12-20

Summary

The appellants appealed against a decision of the Consumer and Commercial Division of the Tribunal (Tribunal) of 21 January 2021 in SC 20/26294.
In reasons published 23 July 2021, we decided to allow the appeal, and to remit the matter to the Tribunal: Bruce v Knight [2021] NSWCATAP 224 (Primary Decision). At the conclusion of Primary Decision, we directed that submissions be filed and served in relation to costs.
In their subsequent submissions, the appellants sought orders that the respondent pay their costs of the appeal, and their costs at first instance. In summary, the appellants submitted that there were special circumstances warranting an award of costs. The respondents disputed this, and submitted that each party should pay their own costs.
On 31 August 2021, we published our decision: Bruce v Knight (No 2) [2021] NSWCATAP 254 (Costs Decision). In summary, we ordered the respondents to pay: 1. the appellants' costs of the appeal (2021/00056122) as agreed or as assessed; and 2. the appellants' costs of the proceedings at first instance (SC 20/26294) as agreed or as assessed.
Following publication of the Costs Decision, on 2 September 2021 the Registry received correspondence from the respondents' solicitor submitting that the Appeal Panel had erred in ordering the respondents to pay the appellants' costs of the proceedings at first instance (Section 63 Application) and asked that the Appeal Panel, pursuant to s 63 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), order that: 1. order number 3 of the decision of the Appeal Panel dated 31 August 2021 be "removed"; 2. the references to an award of costs in the proceedings at first instance at pars [2], [4], [20] to [22] and 26 of the decision of the Appeal Panel dated 31 August 2021 be deleted.
Following receipt of that correspondence, on 7 September 2021, we issued directions for the filing and service of submissions on that issue.

Respondents' position

Neither party made a submission that the matter should not be heard on the papers.
As we are comfortably satisfied that the issues for determination can be adequately determined in the absence of the parties by considering their written submissions, we dispense with a hearing on this application for costs under s 50(2) of the NCAT Act.

The appellant's submissions

As with Bruce v Knight (No 2) [2021] NSWCATAP 254, the appellants need to establish special circumstances: NCAT Act, s 60.
In summary, the appellants rely on sub-sections 60(3)(c), (e) and (g), namely:

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 (s 60(3)(c));
whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance (s 60(3)(e)); and
any other matter that the Tribunal considers relevant (s 60(3)(g)).

As to s 60(3)(c), the appellants submit that:

in their original application, the respondents failed to deal with any of the elements of s 63 of the CAT Act and any of the relevant authorities concerning the slip rule, and that the tenor of the application was to ask the Appeal Panel to reconsider part of its Decision;
as found by the Appeal Panel at [36] of the Section 63 Decision, the respondents failed to engage with the obvious distinction between a decision and a clerical error in that decision;
as found by the Appeal Panel at [37], the respondents failed to address the elementary requirement of s 63 that the "error" be about a matter to which "no real difference of opinion exists"; it was "manifestly obvious" that the appellants were contending for an order that was opposed by the respondents and the Appeal Panel made its Costs Decision in that context;
the respondents failed to address or explain their failure to respond to the appellants' application for costs of the first instance proceedings. The respondents contended that they were not on notice that the Appeal Panel was considering making an order for costs at first instance when that order was expressly sought by the appellants. As the Appeal Panel observed at [38] 38, this order "was clearly sought by the appellants".
the simple fact is that the respondents made a forensic decision not to respond to the appellants' claim for costs at first instance. All of the arguments advanced by the respondents in the support of the Section 63 Application could and should have been included in their submissions to the Appeal Panel in its consideration of its Costs Decision.

As to s 60(3)(e), the appellants say that the Section 63 Application was misconceived. They repeat their submissions filed in relation to the Section 63 Application that are "neatly summarised" by the Appeal Panel at [18] - [23] of the Section 63 Decision. They agree with the Appeal Panel's finding at [36] that "the respondents' application [was] misconceived".
As to s 60(3)(g), the appellants note that Appeal Panel had already ordered that the respondents pay the appellants' costs of the appeal and the proceedings at first instance in the Costs Decision. Consistent with the reasoning in that decision, the Appeal Panel should also make a costs order for the Section 63 Application. They submit that it would be incongruous if the respondents were ordered to pay the appellants' costs of the appeal but not ordered to pay their costs of a misconceived application arising from that appeal.
The appellants then submit that it is relevant that the Section 63 Application was maintained notwithstanding that, on 28 September 2021, the respondents filed a Summons in the Supreme Court of NSW seeking orders to set aside the Appeal Panel's costs order in relation to the first instance proceedings. They submit that the respondents should have withdrawn the Section 63 Application, and that they were now "having their cake and eating it".
The appellants submit that before the Appeal Panel the respondents were contending that the Appeal Panel had made a clerical mistake, but in the Supreme Court they were contending that the Appeal Panel had made errors of law. The appellants submit that these contentions are not compatible and are conceptually inconsistent. They submit that if the respondents genuinely believed that the Appeal Panel had made errors of law, they could not have genuinely contended that that same error was a "slip". They submit that none of the "Grounds" set out in the Summons were remotely similar to a clerical mistake.
In the circumstances, the appellants seek an order that the respondents pay their costs on the indemnity basis, or alternatively the ordinary basis.

Indemnity costs

The appellants justify a costs order on the indemnity basis because the Section 63 Application: 15. … had no tenable basis in fact or law and was plainly misconceived. The application had no chance of success. It was unnecessary and without merit. The application unnecessarily wasted the time of the Appeal Panel and the Appellants and, in respect of the Appellants, forced them to incur unnecessary costs. These costs have been completely wasted. The appeal to the Supreme Court that was brought at the same time demonstrates that the [Section] 63 Application was not genuine - see paragraph 11 above. 16. The Appellants submit that these matters amount to "relevant delinquency". Properly advised, the respondents should not have made the application. It is appropriate therefore that the Appellants be fully compensated for the costs they have incurred in successfully opposing the [Section] 63 Application.

The respondents' submissions

The respondents' submissions may be relevantly summarised as follows.
First, in relation to the appellants' submission that the Section 63 Application had no tenable basis in fact or law pursuant to s 60(3)(c) of the NCAT Act, s 63 pertains to instances of errors in decisions, does not set out "elements" to be addressed, and is an "elementary requirement" of an application under s 63. This the respondents submit is a matter that has been considered as a relevant factor by the case law not to be a necessary threshold issue to establish to warrant the making of an order under s 63.
As to the submission that the Appeal Panel found at [36] of the Section 63 Decision that "the Respondents failed to engage with the obvious distinction between a decision and a clerical error…", the respondents submit that [36] of the Section 63 Decision does not at any time make a finding that the Respondents failed to engage with the distinction between a decision and a clerical error.
Secondly, as to the submission that the Section 63 Application was misconceived, the respondents submit that there was a legitimate purpose in seeking a review of the Costs Decision noting there was no reference in the orders made in the Costs Decision to the reversing of the decision of Senior Member Thode of 23 April 2021 that each party to those proceedings is to pay its own costs.
In those circumstances, the respondents submit that it was entirely acceptable and reasonable for the respondents to query the decision of the Appeal Panel, and that it was incumbent upon the Respondents to do so, as until the Appeal Panel clarified this issue there were two inconsistent decisions as to the treatment of costs in the first instance proceedings.
The respondents submit that s 60(3)(e) must be viewed "as a whole". They submit that this is a high bar to meet, which the Section 63 Application does not satisfy. Furthermore, even if s 60(3)(e) is established, which the respondents say it is not, it does not follow that that a costs order should be made.
The respondents note that the appellants submit that costs of the Section 63 Application ought be awarded because costs were awarded in favour of the Appellants in the Costs Decision. The respondents submit that s 60 requires the establishment of "special circumstances", Therefore s 60 necessitates an individual review of the merits of each set of proceedings. Section 60 does not contemplate an award of costs being justified on the basis that costs were awarded in related but separate proceedings.
Thirdly, the respondent submit that the appellants' contention that the Section 63 Application "was not genuine" by reason of the mere existence of the Summons for Judicial Review ought to be rejected.
The respondent submits that the appellants were specifically and unequivocally informed from the beginning that the Summons was filed to protect the position of the Respondents, and for use in the event that the Section 63 Application was unsuccessful. The Respondents submit that they ought not be criticised for taking steps to protect their position and in doing so having an alternate remedy available to them.
In conclusion, the respondents submit: 1. it is well established that the "special circumstances" threshold is a high legal threshold to meet; 2. there are no special circumstances that warrant the making of an order for costs other than the usual costs order in accordance with section 60(1) of the NCAT Act; 3. the Appeal Panel should make an order that each party pay its own costs in accordance with s 60(1); 4. in the event the Appeal Panel is minded to order the costs of this application in favour of the appellants, which is opposed, it should be on the ordinary basis.

The appellants' submissions in reply

In brief submissions in reply, the appellants submit that pars [14] and [16] of the respondents' submissions illustrate the "inherent problem" with the Section 63 Application, namely that the respondents asserted that they were entitled to "[seek] a review of the Costs Decision". The appellants submit that that is exactly what the respondents were not entitled to do, s 63 being reserved for the correction of clerical errors, not for the "review" of decisions.
Secondly the appellants submit that: In paragraphs 17-19, the respondents comment on the Summons for Judicial Review. First, it is a matter of contention whether it is appropriate to file a Summons in the Supreme Court "to preserve our client's position". Proceedings should be commenced only if they have reasonable prospects of success. Second, the Summons was not a Summons to appeal under UCPR Part 50, it was a Summons for Judicial Review under UCPR Part 59. It was not required to be commenced within 28 days of the Costs Decision. UCPR Rule 59.10 states: "Proceedings for judicial review of a decision must be commenced within 3 months of the date of the decision". Accordingly, it did not need to be filed until 30 November 2021, being 3 months after 31 August 2021. Third, it was the respondents' responsibility to ensure that the Summons for Judicial Review was properly filed and managed. That is not affected by sending the Appellants and the Appeal Panel a letter (dated 27 October 2021 and attached) stating that it has been filed for some other purpose. Fourth, attached is a sealed copy of the Judgment/Order showing that the Summons for Judicial Review was summarily dismissed on 10 November 2021 (i.e. it was not discontinued). This is despite the respondents' stated purpose of filing the Summons in case the [Section] 63 Application was dismissed. Fifth, nothing in the respondents' Submissions addresses the Appellants' substantive point that the Summons for Judicial Review asserts that the Appeal Panel made an error of law and this is patently different to the assertion that the Costs decision contained a clerical error.
Finally, the appellants agree that an order for indemnity costs should be sparingly applied. However, having regard to the "major flaws" in the Section 63 Application, it is appropriate in this case to properly compensate the Appellants for their costs, which have been wasted in this futile, unmeritorious and misconceived application.

Consideration

In our view the appellants' submissions are entirely correct. The Section 63 Application was misconceived, as we found in the Section 63 Decision for the reasons we gave and which we will not repeat here.
Accordingly, we may make an order for costs. We see no reason why the respondents should not pay the appellants' costs on (at least) the ordinary basis.
As the appellants submit, the discretion to award indemnity costs was recently considered by Justice Ward CJ in Eq in Fisk v Gold [2021] NSWSC 1465. At [26], her Honour stated: 26 As to a claim for indemnity costs, again, the discretion to award indemnity costs must be exercised judicially (see Mead v Watson(2005) 23 ACLC 718;[2005] NSWCA 133 at (8]) and with caution (see Leichhardt Municipal Council v Green [2004] NSWCA 341 at[47];Ng v Chong [2005] NSWSC 385 at (13]). There is no fixed rule or rationale as to when an indemnity order might be made, except that it requires a "sufficient or unusual feature" (Harrison v Schipp [2001] NSWCA 13 at [139] referring to Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801 at 232-234). Such an order may be appropriate where a party wantonly or recklessly causes the other party to incur costs. It is recognised that this will often be the case where the party liable is guilty of some "relevant delinquency"(see [Oshlack v Richmond City Council (1998) 193 CLR 72; [1998] HCA 11] at [44] per Gaudron and Gummow JJ.
As the appellants submit, the circumstances that might give rise to an indemnity costs order include the following: where a party, properly advised, should have known they had no chance of success; where unfounded allegations of fraud or improper conduct are made, such as where they have been made knowing them to be false; the undue prolongation of proceedings by groundless contentions; where there is particular evidence of misconduct that causes loss of time to the court or other parties; the commencement of proceedings for some ulterior motive; and the unreasonable rejection of an offer of compromise: see Kanjian Holdings No 1 Pty Ltd v Kanjian (No 4) [2021) NSWSC 1390 at [58] and the authorities there referred to.
We consider that an order for indemnity costs is appropriate, for the reasons advanced by the appellants.

Orders

The Appeal Panel orders: 1. A hearing is dispensed with. 2. The respondents are to pay the appellant's costs of the Section 63 Application on the indemnity basis.

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: 20 December 2021

At a glance

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Judgment (9 paragraphs)

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Legislation Cited (1)

Cases Cited (12)

Cited By (5)