Brunsprop Pty Ltd v Joanne Hay & Wes Davies

Scope and nature of the appeal

1. A party may appeal an "internally reviewable decision" made by NCAT as of right on any question of law or with the leave of the Appeal Panel on any other grounds (s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the Act)).
2. Where, as in this case, the decision the subject of the internally reviewable decision is a decision of the Consumer and Commercial Division, cl 12 to Schedule 4 of the Act limits the circumstances in which an Appeal Panel may grant leave appeal to cases where the appellant may have suffered a "substantial miscarriage of justice" because the decision was not fair and equitable or against the weight of evidence, or significant new evidence has arisen: 12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). Note: Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right.

Grounds of appeal

1. Brunsprop cited seven grounds of appeal on its notice of appeal. At hearing all but one ground was abandoned: that the decision not to award costs was fair and equitable because the tenants had: Unreasonably refused a succession of offers of compromise made prior to the hearing Failed to attend the hearing.

Power to award costs

1. Section 60(1) of the Act establishes the general principle that each party is to pay its own costs. The Tribunal may only award costs if satisfied that there are "special circumstances" warranting an award of costs (s 60(2) of the Act). Section 60(3) of the Act sets out a non-exhaustive list of factors the Tribunal may have regard to in determining whether are special circumstances warranting an order for costs: (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.

Does the refusal by the tenants to accept offers of settlement constitute "special circumstances"?

1. To put Brunsprop's submissions in context, it is necessary to set out some background facts.
2. On 28 November 2014, the tenants met with Brunsprop's managing agent, Russell Siwicki, and raised concerns about noise and disruption allegedly caused by building work undertaken by Brunsprop to adjoining premises. In an email sent the same day, the tenants offered to vacate the premises for a few months while construction work was underway, providing they were not required to pay rent.
3. On 2 December 2014, Joel Wertheimer on behalf of Brunsprop, in an email to Mr Siwicki wrote: [T]he notion of moving out is dramatic and we would not entertain this option. This is a basic building process and there is nothing out of the ordinary.
4. In response the tenants repeated their offer to vacate the premises while the building work was being undertaken, and, in addition offered to pay 50% of the rent throughout that period.
5. In a letter to the tenants dated 16 December 2014, Brunsprop's solicitor acknowledged that "development work being undertaken by the Landlord adjacent to the Premises will undoubtedly result in some noise and/or disruption during normal working hours". The solicitor wrote: If the noise/disruption becomes unacceptable to you then strictly without prejudice to its rights under the Residential Tenancies Act the Landlord is prepared to waive the breach of lease and offer you the opportunity to vacate the Premises and seek alternative accommodation on the basis that you remain liable for the payment of rent until all keys for the Premises are returned to Siwicki Real Estate.
6. On 24 December 2014 the tenants wrote to Mr Siwicki stating they were confused about the above letter, denying that they were operating a business from the premises and asserting they had been "good tenants". In reply, Mr Siwicki urged the tenants not to be distressed and reassured them he would deal with the matter after the Christmas break.
7. On 14 January 2015 the tenants lodged the original application with NCAT. On 24 February 2015, solicitors acting for Brunsprop wrote to the tenants asserting "there is no basis for the application [to NCAT]". They advised that nonetheless their client was prepared to offer $300 "in full and final compensation in this matter", providing they agreed to withdraw their application to NCAT. The tenants refused to accept that offer.
8. On 25 February 2015 Brunsprop's solicitors wrote again to the tenants stating that while disappointed with their decision not to accept the "generous offer", their client was nonetheless prepared to increase that offer to $500 as "full and final settlement". In closing they wrote: We have advised our client that there is no need to make such a generous offer for a frivolous and vexatious claim. We put you on notice of our client's intention to seek costs on an indemnity basis which at present are $5000.

Consideration

1. Brunsprop contends that the tenants unreasonably rejected their offers of settlement and this, together with their failure to attend the hearing, constitutes "special circumstances" warranting an award of costs. While Brunsprop concedes that none of the offers made to the tenants were expressed to be in the form of a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333), it contends that the tenants' rejection of the offer made on 25 February 2015 was nonetheless unreasonable and constitutes special circumstances.
2. We accept the proposition that the unreasonable refusal of an offer of compromise may constitute special circumstances for the purposes of s 60(2) of the Act, regardless of whether the offer is expressed to be a Calderbank offer. Whether the rejection of an offer can be said to be unreasonable requires consideration of the terms of the offer made and all of the surrounding circumstances: King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [11].
3. Apart from the bald assertion made by Brunsprop's solicitors - "there is no need to make such a generous offer for a frivolous and vexatious claim" - we have not been provided with any material to assist us to evaluate the reasonableness or otherwise of the terms of the offer made to the tenants. While not determinative, the fact the Tribunal awarded the tenants a sum far in excess of the highest offer made by Brunsprop when it determined the second application, tends to suggest that the opinion expressed by Brunsprop's solicitor about the nature of the tenants' claim and the offers made to them, was not universally held.
4. On the available material, we are not satisfied that the tenants unreasonably refused to accept the offers made by Brunsprop. It follows that we are not persuaded that that refusal constitutes "special circumstances" for the purpose of s 60(2) of the Act.

Does the failure of the tenants to attend the hearing constitute "special circumstances"?

1. As noted on 6 March 2015 the Tribunal dismissed the original application because of the failure of the tenants to attend the hearing. Brunsprop's legal representative attended that hearing.
2. The tenants provided the Appeal Panel with detailed evidence about the reasons for their non-attendance. Their explanation was unchallenged, supported by evidence and accepted by us. They explained that each were unable to attend the hearing in person: Ms Hay on account of illness; Mr Davies on account of a business commitment which required him to travel interstate on the day of the hearing. A review of the emails and facsimiles sent by the tenants to the Tamworth registry of NCAT reveal that, prior to and on the day of hearing, the tenants had applied to the Tribunal for an adjournment and, in the event that application was not granted, permission for Mr Davies to appear by phone. In addition, Mr Davies provided the registry with a phone number on which he could be contacted in the event his application to attend by phone was granted. Apparently an administrative oversight resulted in that information not being brought to the attention of the presiding member.
3. Whatever the reason for the tenants' non-attendance, as a result Brunsprop was put to unnecessary expense and inconvenience.
4. While not listed as one of the factors the Tribunal may have regard to under s 60(2) of the Act, we accept the submission made by Brunsprop that the failure of a party to appear at a hearing may constitute "special circumstances" warranting an award of costs. Whether special circumstances are established will depend on the circumstances of the individual case. These may include the reason for the defaulting party's non-attendance and whether the non-defaulting party had the right to be legally represented.
5. Brunsprop was not entitled to, and had not been granted leave to, be legally represented. (A party to proceedings in NCAT may only be legally represented if granted leave by the Tribunal (s 45(1) of the Act)).
6. When the decision under appeal was made the Tribunal was unaware of the reason for the tenants' non-attendance. While open to the Tribunal to have found that special circumstance existed so as to warrant an order for costs, we are not persuaded, as Brunsprop's submissions suggest, that the tenants' (then) unexplained failure to appear taken together with their refusal to accept earlier offers of settlement, made a finding of special circumstances in effect a foregone conclusion. Nor are we persuaded that the decision to refuse to exercise the discretion to award costs was "manifestly unreasonable": see, for example, Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332. The Tribunal had a discretionary power to award costs and decided not to exercise that power. We are not persuaded that the Tribunal's refusal to exercise that discretion was not fair and equitable.
7. The contention that the decision was not fair and equitable is further weakened by what is now known about the reason for the tenants' failure to attend.

Conclusion

1. We are not satisfied that Brunsprop might have a suffered a substantial miscarriage of justice on the ground that the decision was not fair and equitable. Accordingly, we refuse to grant leave to appeal and dismiss the appeal. 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: 24 July 2015