These reasons for decision relate to an application for costs in which the costs applicant (ARA Engine Reconditioning) was the successful party in appeal proceedings Carlson v ARA Engine Reconditioning Pty Ltd [2019] NSWCATAP 149.
The costs respondent (Mr Carlson) objects to the application and has applied for costs of the costs application.
For the reasons set out below, we have ordered Mr Carlson to pay ARA Engineering's costs of the appeal proceedings. It follows that Mr Carlson's application for costs is refused.
[2]
Background
The parties were involved in a dispute that led to Mr Carlson making an application against ARA Engine Reconditioning to the Consumer and Commercial Division of the Tribunal. The Tribunal dismissed Mr Carlson's application on 22 November 2018. Mr Carlson appealed the Tribunal's decision.
The matter was first listed before the Appeal Panel on 15 January 2019 in a call over list. Procedural directions were made on that occasion and both parties were given leave for legal representation. The matter was then listed for hearing on 28 March 2019.
Mr Carlson sought and was granted an adjournment of the hearing on that day, on the basis that his representative, Mr Organ, was unwell. The Appeal Panel made the following orders in relation to the future conduct of the matter:
1. The application for an adjournment is granted.
2. A further adjournment will not be granted on the basis of Mr Organ's medical condition.
3. If Mr Organ is unable to appear on the next occasion, the appellant should appear in person and/or may be represented by a legal practitioner.
4. If Mr Organ is able to appear, he must appear in person.
The following further procedural directions were made when the appeal was listed for hearing on 8 April 2019:
1. The appeal is listed for hearing on 8 April 2019 at 10:15AM.
2. The appellant (Mr Carlson) must appear in person as must any representative for the respondent.
3. In the event the appellant fails to appear, the appeal may be dealt with in his absence.
The appeal hearing proceeded on 8 April 2019. Mr Carlson was represented by Mr Organ at the appeal hearing. ARA Engine Reconditioning was represented by A and J Kelleyan, an employee and an officer of the company respectively.
The background to the dispute between the parties is set out in our reasons for decision in the substantive appeal proceedings: Carlson v ARA Engine Reconditioning Pty Ltd [2019] NSWCATAP 149 at [4] - [20].
We refused leave to appeal and dismissed Mr Carlson's appeal on 18 June 2019. During the appeal hearing, we did not hear from the parties in relation to costs of the appeal. Our reasons for decision relevantly state at [72]:
72 In this case, ARA Engine Reconditioning was the successful party on appeal. While it was not legally represented at the appeal hearing, both parties were given leave for legal representation. We accept that costs may have been incurred costs that would be recoverable under a costs order.
We therefore made the following orders to give the parties an opportunity to be heard on costs:
3. Any application for costs, together with submissions and evidence in support of the application, is to be lodged with the Appeal Panel and given to the other party within 14 days of the publication of these orders.
4. Any submissions and evidence in response to the costs application are to be given to the Appeal Panel and the other party within 14 days thereafter.
5. Any submissions in reply are to be given to the Appeal Panel and the other party within 7 days thereafter.
6. Submissions are not to exceed five pages in length.
7. The parties are on notice that, subject to their submissions, the Appeal Panel proposes to dispense with a hearing and determine any costs application on the basis of the submissions and evidence provided.
[3]
ARA Engine Reconditioning's application for costs
On 28 June 2019, ARA Engine Reconditioning wrote to the Appeal Panel by email, relevantly stating:
We hereby apply for costs in this matter. We submit that we required legal advice and were put to the expense of obtaining expert evidence.
We hereby seek costs in the sum of $8,023.40, being for the following:
1. Tax invoice from Agostino & Co Solicitors in the sum of $4,400.00;
2. Tax Receipt from Geoff Senz & Associates in the sum of $1,973.40;
3. Tax invoice from Adcot Engineering Services Pty [sic] in the sum of $1,650.00.
We enclose herewith invoices for the above claimed expenses.
Tax invoices were attached to the application. An invoice from Agostino & Co Solicitors & Attorneys is dated 29 June 2019 and is in the sum of $4,400. An invoice from Adcot Engineering Services Pty is dated 26 November 2018 and is in the sum of $1,650. However, an invoice from Geoff Senz & Associates indicates that a discount of $453.00 was applied for prompt payment and the total amount paid by ARA Engine Reconditioning was $1,500.
We note that the invoice prepared by Agostino & Co Solicitors is not itemised. Therefore it does not indicate whether costs were incurred in the proceedings before the Tribunal, in the appeal proceedings, or both. In our view, the invoices from Adcot Engineering Services and Geoff Senz & Associates concern expert evidence and were costs incurred in the Tribunal and not the appeal proceedings.
As result of administrative oversight ARA Engine Reconditioning's costs application was not determined. On reviewing the application for costs when it came to our attention, it appeared that the application for costs made by ARA Engine Reconditioning's solicitor was not copied to Mr Carlson. Accordingly, on 17 February 2020, we made the following directions:
…. Given that Damien Carlson may not have received the costs application, the Appeal Panel has decided to give him an opportunity to make submissions in response to the costs application. The following orders are made accordingly:
1. By 21 February 2020, Damien Carlson is to provide to the ARA Engine Reconditioning Pty Ltd and the Appeal Panel any submissions in response to the costs application.
2. By 28 February 2020, ARA Engine Reconditioning Pty Ltd is to provide to Damien Carlson and the Appeal Panel any submissions in reply.
3. Costs submissions may be emailed to the Registry and the other party and are not to exceed five pages in length.
4. Subject to the parties' submissions, the costs application will be determined on the basis of the submissions provided.
Correspondence from ARA Engine Reconditioning was subsequently received claiming that Mr Carlson had been given a copy of the costs application and asking for the orders made on 17 February 2019 to be revoked. Correspondence was also received from Mr Carlson asking for an extension of time in which to make submissions.
[4]
Mr Carlson's submission on costs
On 20 February 2020, we received a submission from Mr Carlson's solicitor. We have considered that submission when making a decision as we are satisfied that there is no prejudice to ARA Engine Reconditioning in doing so.
The submission on costs provided on behalf of Mr Carlson refers to [72] of the substantive reasons for decision in the appeal proceedings, in which we stated:
In this case, ARA Engine Reconditioning was the successful party on appeal. While it was not legally represented at the appeal hearing, both parties were given leave for legal representation. We accept that costs may have been incurred costs that would be recoverable under a costs order.
The submission goes on to state at [9]:
The Appellant respectfully notes that it appears the Appeal Panel misstated the directions made on 28 March 2019. The Appellant submits that based on the records available to him it is apparent that neither the Tribunal at first instance nor the Appeal Panel granted the Respondent leave to be represented by a legal practitioner at any point in the proceedings.
The submission is incorrect in this regard. Although the parties did not have leave for legal representation before the Tribunal, at the appeal call over on 15 January 2019, both parties were given leave to be legally represented. This is stated in the appeal call over directions published to the parties. The directions made when the appeal hearing was adjourned on 28 March 2019 did not grant leave for legal representation, as that leave had already been given. Rather, the directions were to ensure that if Mr Carlson's chosen representative, Mr Organ, was unable to appear on the next occasion, Mr Carlson was to appear in person or could be represented by a legal practitioner, leave to do so having already been granted.
Otherwise, the submission provided on behalf of Mr Carlson addresses factors arguably relevant to costs of the proceedings before the Tribunal. No submissions are made concerning costs of the appeal hearing, which is what this application concerns.
[5]
Issues
The issues to be determined are:
1. Should a hearing on costs be dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act)?
2. Which legislative provisions and legal principles apply to the costs applications?
3. Should a costs order be made in respect of the appeal proceedings?
4. On what basis should any costs order be made?
[6]
Should a hearing on costs be dispensed with in accordance with s 50(2) of the NCAT Act?
Section 50 of the NCAT Act relevantly provides:
50 When hearings are required
(1) A hearing is required for proceedings in the Tribunal except:
…
(c) if the Tribunal makes an order under this section dispensing with a hearing, or
…
(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.
…
The parties were given an opportunity to make submissions concerning whether costs could be determined on the papers. They did not seek a hearing on costs. We are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions and other material.
An order in accordance with s 50(2) of the NCAT Act has accordingly been made.
[7]
Which legislative provisions apply to the costs applications?
The general position in the Tribunal is that parties pay their own costs unless the Tribunal is satisfied that special circumstances warrant an order for costs: see NCAT Act, s 60. However, for proceedings in the Consumer and Commercial Division, this position is subject to r 38 of the Civil and Administrative Tribunal Rules 2014 (the Rules). Rule 38 relevantly states that the Tribunal may make an order for costs in the absence of special circumstances if the amount claimed or in dispute in the proceedings is more than $30,000.
Mr Carlson's solicitor has submitted that the original claim "was for a figure of $10,771" and claims that the change in the amount sought by Mr Carlson was "a direct result of the position [ARA Engine Reconditioning] took" in the proceedings below. It is correct that Mr Carlson's originally claimed $10,771. However, regardless of the reason he increased his claim, by the time the matter came before the Tribunal for hearing, the amount claimed in the proceedings was more than $30,000. Rule 38 therefore applied to costs of the Tribunal proceedings.
The operation of r 38A of the Rules means that r 38 also applies to the appeal proceedings, as what was in dispute on the appeal was also more than $30,000. This means that we can make an order for costs in the absence of special circumstances.
[8]
Should a costs order be made in respect of the appeal proceedings?
As noted above, the invoices provided by ARA Engine Reconditioning in relation to expert evidence concern the proceedings before the Tribunal rather than the appeal proceedings. It is not clear whether the invoice concerning legal services relates to the Tribunal proceedings, the appeal proceedings or both.
We are only considering costs of the appeal proceedings. No application for costs was made in the Tribunal proceedings and there is no basis for us to consider costs of those proceedings.
ARA Engine Reconditioning was the successful party on appeal. Mr Carlson was refused leave to appeal and his appeal was dismissed.
Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors that must be taken into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9].
Where proceedings have been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.
In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186, the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion:
(1) the starting point is that a successful party should be entitled to an order for costs in his favour;
(2) an award of costs is by way of an indemnity and not as punishment;
(3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party;
(4) the factors to be considered are not to be confined as to do so would constrain the general discretion;
(5) the relative success of the parties on different issues and the time taken to determine them may be relevant;
(6) the nature of the proceedings is relevant;
(7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious.
In support of its costs application, ARA Engine Reconditioning submits that it required legal advice and assistance. As noted above, both parties were granted leave for legal representation. As a respondent in appeal proceedings, it was entirely reasonable for ARA Engine Reconditioning to obtain legal advice, even if it chose not to be represented by a lawyer at the hearing. There is nothing in the submission provided on behalf of Mr Carlson that leads us to conclude that ARA Engine Reconditioning's conduct of the appeal proceedings should disentitle it to an order for costs, consistent with the principles set out above. Nor does the submission lead us to otherwise conclude that, in this instance, costs should not be awarded to the successful party. We are therefore satisfied that a costs order in favour of ARA Engine Reconditioning is the appropriate exercise of the discretion concerning costs. It follows from this that Mr Carlson's application for costs is refused.
ARA Engine Reconditioning has not submitted that costs should be awarded on an indemnity basis, and there is nothing in the material before us to suggest that such an order should be made. Costs are awarded on the ordinary basis.
Making a costs order in ARA Engine Reconditioning's favour does not mean that ARA Engine Reconditioning is entitled to costs associated with the proceedings before the Tribunal. The cost of obtaining reports from Adcot Engineering Services and Geoff Senz & Associates is not a cost of or incidental to the appeal. This is also the case with respect to any legal costs incurred in connection with the Tribunal proceedings.
We would have been minded to make a fixed sum costs order in this case given the relatively low costs involved. However, we are unable to do so because the invoice from ARA Engine Reconditioning's solicitor is not itemised and does not distinguish between costs associated with the Tribunal proceedings and costs associated with the appeal proceedings. We have therefore made an order that Mr Carlson pay ARA Engine Reconditioning's costs, as agreed or assessed. In order to avoid the costs of assessment, the parties are strongly encouraged to settle costs.
[9]
Orders
We make the following orders:
1. A hearing on costs is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013.
2. Damien Carlson is to pay ARA Engine Reconditioning Pty Ltd's costs of and incidental to proceedings AP 18/53550, on the ordinary basis, as agreed or assessed.
[10]
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: 09 March 2020