Demand Investment Nominees Pty Ltd v Lee; (No 2)

1. Neither party opposed us determining costs on the papers. As we are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering their written submissions, we dispense with a hearing: Civil and Administrative Tribunal Act 2023 (NSW) (NCAT Act), s 50(2).
2. In this respect, we note that in Westerweller v The Owners Strata Plan No 18482 [2023] NSWCATAP 113, the Appeal Panel stated at [85] that:

[i]t is the experience of the Appeal Panel that costs decisions in the Consumer and Commercial Division and on appeal (unless dealt with at the time of the hearing) are routinely considered "on the papers", and without a hearing. The parties were given an opportunity to provide written submissions and did so. They can be presumed to have included all relevant issues in their written submissions.

1. We had previously indicated that the relevant costs rule was that found in r 38 of the NCAT Rules. That was for the following reasons.
2. The starting point for costs is s 60 of the NCAT Act. Section 60 relevantly provides:

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.

...

38 Costs in Consumer and Commercial Division of the Tribunal

(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.

1. That means that the relevant costs rule in the proceedings at first instance was that found in r 38 of the NCAT Rules.
2. Rule 38A then provides:

38A Costs in internal appeals

(1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the "first instance costs provisions" ) differed from those set out in section 60 of the Act because of the operation of--

(a) enabling legislation, or

(b) the Division Schedule for the Division of the Tribunal concerned, or

(c) the procedural rules.

(2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.

1. The appeal we heard was an internal appeal: NCAT Act, ss 4, 32.
2. Accordingly, by reason of the operation of r 38A, the relevant costs rule for this appeal is the costs rule in r 38 of the NCAT Rules.

(1) r 38 is not prescriptive, invoking Thompson v Chapman [2016] NSWCATAP 6 at [67] where the Appeal Panel stated:

in circumstances where there is a general discretion to award costs, the correct statement of principle is that the Tribunal in exercising its discretion is to have regard to the nature of the proceedings before it and all relevant factors arising in connection with those proceedings for the purpose of determining what order for costs, if any, should be made.

and at [72]:

The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include:

(1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made: see for example Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304; and

(2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummo JJ at 41 - 44.

(2) "it is by nature of the proceedings that the usual rule should be displaced";

(a) it is more than likely that there will be findings against the appellant in the remittal hearing;

(b) the appellant licence is limited to works not requiring Home Building Fund Insurance;

(c) the respondent made a Calderbank offer prior to the appeal hearing. The respondent considers that the offer was a significant compromise and that it is highly likely that the outcome of the remittal hearing will result in the success of the Calderbank offer and an order for costs would follow. Accordingly, the respondent seeks that the costs be reserved until the completion of the remittal.

1. By reason of these submissions, the respondent submits that the costs of the appeal should be reserved pending the outcome of the remittal hearing.

(1) the respondent consistently resisted the appeal, which proceeded to a final hearing, and thereby increased the cost of the appeal, despite the significant prospects of success of the appeal

(2) the respondent now seeks to avoid a costs order against him, despite being unsuccessful in the appeal;

(3) while the respondent seeks to have a determination on costs reserved until the remitted proceedings are concluded, he has not indicated in his submissions how the outcome of the remitted proceedings would affect his liability to pay the appellant's costs of the appeal;

(4) the outcome of the remitted proceedings has no bearing on costs in this appeal;

(5) reserving the decision the costs of the appeal would delay the resolution of these proceedings and increase costs, without any just outcome achieved;

(6) the Appeal Panel does not have the power to transfer respondent's costs application to the Tribunal in the remitted proceedings;

(7) reserving costs would mean staying the appeal until the remitted proceedings are concluded, in circumstances where the respondent has not provided any justification for an indefinite stay.

1. When rule 38 applies, there is a general discretion to award costs, and it is well established, by decisions such as News v Cotes [2019] NSWCATAP 186, Bonita v Shen [2016] NSWCATAP 159 and Thompson v Chapman [2016] NSWCATAP 6, that:

(1) the starting point is that the usual order for costs should be in favour of the successful party;

(2) the award is not to punish the unsuccessful party but to compensate the successful party for the costs incurred in the proceedings, and

(3) departure from the usual order is permissible if the circumstances favour that course of action.

1. Simply stated, when r 38 applies it is not necessary to establish special circumstances and the usual order is that costs follow the event (that is, follow the outcome of the case) unless there is disentitling behaviour by the successful party: Latoudis v Casey [1990] HCA 59, Oshlak v Richmond River Council [1998] HCA 11.
2. When r 38 applies, as was observed in Tom v Jenkins [2018] NSWCATCD 24 at [12], the successful party can be said to have a reasonable expectation of being awarded costs.
3. All that said, any award of costs is discretionary. As the Appeal Panel stated in eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [37]:

It must be remembered that where a court or a tribunal is conferred with the discretion to award costs, such a discretion must be exercised judicially and not capriciously (Oshlack v Richmond River City Council [1998] HCA 11; (1998) 193 CLR 72 at 81). ...

1. Given these principles, as we see no disentitling conduct of the appellant, and none was claimed by the respondent, we consider that it is appropriate to order the respondent to pay the appellant's costs as agreed or as assessed in accordance with the applicable costs legislation.
2. Finally, we note that the respondent claims he had served a Calderbank offer on the appellant prior to the appeal hearing. As no copy was ever provided to the Appeal Panel, we cannot determine if that Calderbank offer would cause us to alter our decision to order the respondent is to pay the appellant's costs.

(1) A hearing is dispensed with.

(2) The respondent is to pay the appellant's costs as agreed or as assessed in accordance with the applicable costs legislation.

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.