Dimitrou v Accardo [2022] NSWCATCD 1 | Case summary

Whether there are special circumstances warranting an award of costs in favour of the respondent

If, contrary to my finding in [47] above, order 2 of the 30 August 2021 orders on its proper interpretation does not apply to the Local Court proceedings as a whole and part of the costs of the Local Court proceedings has not been determined, then it is necessary to consider the respondent's application for her costs of the proceedings under s 60(2) of the NCAT Act.
I am not satisfied that there are special circumstances warranting an award of costs in favour of the respondent within s 60(3) of the NCAT Act. I am not persuaded that the applicants unreasonably commenced the Local Court proceedings. It is not possible to evaluate the correctness of document 1 as it contains an annual rent calculated by reference to a "CPI Sydney Review", but no indication of the applicable CPI increases. Further, I am unable to determine what circumstances led to the withdrawal of the proceedings by the applicants. I infer that there was a mediation shortly prior to the dismissal of the proceedings. In these circumstances, there is insufficient evidence to determine whether the withdrawal of the proceedings was an effective capitulation or pursuant to a settlement.
Having regard to the applicable legal principles, I am not satisfied that the conduct of the applicants falls within any of s 60(3) to (g) of the NCAT Act for the following reasons: 1. as to s 60(3)(a) of the NCAT Act, I do not accept that the applicants unnecessarily disadvantaged the respondent by their failure to reply to the 5 August 2021 letter which sought to protect her against any precipitate default judgment; 2. as to s 60(3)(b) of the NCAT Act, there is no evidence that the applicants prolonged unreasonably the time taken to complete the proceedings; 3. as to s 60(3)(c) and (e) of the NCAT Act, I do not accept the submission of the respondent that the Local Court did not have jurisdiction to hear and determine the Local Court proceedings or the statement of claim did not disclose a reasonably arguable cause of action. While s 75(1) of the RL Act requires a court to transfer proceedings involving a retail tenancy dispute to the Tribunal where two conditions are satisfied, this does not mean that the court does not have jurisdiction. As I have already held at [49] above, document 1 does not establish that the statement of claim did not disclose a reasonably arguable cause of action; 4. as to s 60(3)(d) of the NCAT Act, I do not accept that the proceedings raised any complex issues; 5. as to s 60(3)(f) of the NCAT Act, I do not accept that the failure of the applicants to comply with the 18 October 2021 orders establishes a failure to comply with s 36(3) of the NCAT Act; 6. as to s 60(3)(g) of the NCAT Act, unlike the position in Rodny at [112], the proceedings had not been the subject of lengthy preparation.

Costs under s 60(2) of the NCAT Act

"Special circumstances" in s 60(2) of the NCAT Act are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].
In considering whether special circumstances exist for the purposes of s 60(2) of the NCAT Act: 1. each case will depend upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [27]; 2. the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; 3. mere success (or failure) of an application does not give rise to special circumstances: The Owners - Strata Plan 5319 v Price [2020] NSWCATAP 245 at [46]; 4. where special circumstances are found to exist, the Tribunal has a discretion to exercise in deciding what, if any, order should be made. Relevant to the exercise of that discretion are those facts upon which the finding of special circumstances was based. However, those findings do not constitute the whole of the relevant matters to be considered in deciding what, if any, order for costs should be made. Rather, the principles applicable to awarding costs generally must also be taken into account: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24].
As to the factor in s 60(3)(c) of the NCAT Act, in Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135 (Zucker) at [44] the Appeal Panel made the following observations: "[44] A finding that a claim is "not proved on the balance of probabilities" is not the same as a finding that a claim is "not tenable in fact or law". They are different concepts. The expression "no tenable basis in fact or law" relates to the common law tests developed and applied in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. For a claim to have no tenable basis in fact or law it must be so obviously untenable that it cannot possibly succeed: General Steel at 130. "Manifestly groundless" or "clearly untenable" are equivalent expressions. In our view, for the purpose of s 60(3)(c), it matters not whether a conclusion that a claim has no tenable basis in fact or law is reached in connection with an application for summary dismissal or after a full hearing on the merits."
As to the factor in s 60(3)(e) of the NCAT Act, in EJE v Western Sydney Local Health District [2021] NSWCATAP 247 at [30] the Appeal Panel made the following observations: "[30] The terms "lacking in substance" and "misconceived" are also not defined by the NCAT Act. The former has been taken to mean "not reasonably arguable" (Owners Corporation of Strata Plan 4521 v Zouk [2007] NSWCA 23 at [45]), the latter, a "misunderstanding of legal principle" (Alchin v Rail Corporation NSW [2012] NSWADT 142 at [26]). We adopt those meanings."
As to the factor in s 60(3)(f) of the NCAT Act, in The Owners - Strata Plan No. 76929 v Baldwin [2021] NSWCATAP 420 (Baldwin) at [34] the Appeal Panel made the following observations: "[34] We agree with the Tribunal below that a failure and even more than one failure to comply with directions of the Tribunal does not have the necessary consequence that there has been a breach of s 36(3) which thereby satisfies s 60(3)(f). …"
In Rodny v Stricke [2020] NSWCATAP 20 (Rodny) at [112] the Appeal Panel held that the withdrawal of an application, which had been the subject of lengthy preparation and the incurring of significant costs, shortly before the hearing was a matter that constituted special circumstances warranting an order for costs within s 60(2) of the NCAT Act.
In Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 (Nichols) Payne JA at [25] (Meagher JA at [13] agreeing) considered the principles governing an application for costs in a case which has been resolved without a hearing on the merits: "[25] The relevant principles governing an application for costs in a case which has been resolved without a hearing on the merits were summarised by McHugh J in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6: "In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, [6] the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission [7] where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases." (footnotes omitted)
The circumstances set out in Nichols at [25] in which an award of costs is made in a case which has been resolved without a hearing on the merits may constitute special circumstances within s 60 of the NCAT Act: Price at [39]-[44].
In ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 (ONE.TEL) at [6] Burchett J observed: "[6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party."
The principles in ONE.TEL at [6] have been applied in the Tribunal: Knox v Bollen; Bollen v Knox [2018] NSWCATAP 106 at [47].

Dimitrou v Accardo

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