This is an application for costs made by the respondent in these proceedings.
The application was dismissed for lack of jurisdiction on 16 October 2014 and directions made at that time granted leave for the parties to agitate the issue of costs by filing and serving short written submissions. Both parties have filed short written submissions and neither party has sought a hearing on the issue of costs pursuant to the directions made on 16 October 2014.
[2]
RESPONDENT'S CASE
The respondent's submission set out a number of matters which it was claimed establishes "special circumstances warranting an award of costs".
Those matters were relevantly,
1. The parties entered into a commercial lease not a retail lease which ought to have put the applicant on notice that the claim was not a retail lease dispute,
2. The applicant's solicitor also acted for the applicant in preparing and reviewing the lease and should have considered whether the applicant conducted a business of the type listed in Schedule 1 of the Retail Leases Act 1994.
3. The applicant did not produce evidence (such as a business plan, audited financial statements, stock ledgers, etc.) to support the proposition that the business operated as a retail shop.
4. The applicant's argument in respect of its intentions for the change in business was not supported by evidence.
5. The respondent had raised the issue of lack of jurisdiction at the first directions hearing but the applicant persisted with its claim.
6. As the application was dismissed it must, by definition, have been misconceived or lacking in substance.
Further, the respondent argued that the applicant had conducted the proceedings in a manner that unnecessarily disadvantaged the respondent in that the applicant failed to provide independent evidence to corroborate its submissions.
In addition the respondent argued that the applicant had unreasonably prolonged the time taken to complete the proceedings by variously failing to refer the matter to mediation, rejecting offers of settlement made by the respondent, attempting to maintain a multiplicity of proceedings involving the same issues and failing to comply with Tribunal directions for filing and serving of documents.
Lastly the respondent asked the Tribunal to consider a potential personal bias by the applicant's solicitor and implications in that regard under Solicitor's Rule 17.
The respondent's submission was that the awarding of costs is compensatory not punitive and that the respondent has incurred considerable costs that have been entirely wasted.
[3]
APPLICANT'S CASE
The applicant's submission was that the respondent had failed to establish "special circumstances warranting an award of costs".
The submissions were relevantly to the following effect.
1. It was the respondent's conduct in locking the applicant out of the premises, refusing access to remove goods and asserting a possessory lien over the applicant's computer that led to the proceedings being commenced.
2. It is the respondent who is responsible for the costs incurred in that he sought leave for legal representation, by filing three additional submissions in reply without leave of the Tribunal and by failing to serve material on the applicant.
3. Allegations against the applicant's solicitor are unfounded, inappropriate and unprofessional and it was the respondent's solicitor son who had been responsible for escalation of the dispute.
4. There is no logical reason for asserting that the finding of lack of jurisdiction automatically lead to the conclusion that the applicant's claim was misconceived or lacking in substance.
The applicant further asked the Tribunal to take into account a number of issues going to personal and financial hardship for the applicant and emotional stress and ill health resulting from the factual matters surrounding the application.
[4]
RELEVANT LAW
The parties, in their written submissions, failed to address the relevant law that determines in what circumstances a costs order may be made by the Tribunal.
The Civil and Administrative Tribunal Act 2013 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.
(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following:
(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.
(4) If costs are to be awarded by the Tribunal, the Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.
(5) In this section:"costs" includes:
(a) the costs of, or incidental to, proceedings in the Tribunal, and
(b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
The Civil and Administrative Tribunal Rules 2014 relevantly provide
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.
This application sought a number of orders at para 21 of the application. All of the orders sought (except one) was for an unspecified sum of money. At paragraph 21(a) of the application the applicant sought orders for $12,360.00.
It is possible, although there is no evidence to support the proposition, that the other monetary sums claimed would, when taken together, and added to the $12,360.00 specified in para 21(a) have amounted to a sum well in excess of $30,000.00. However, as that is uncertain, it can only be said that the amount claimed was at all times indeterminate but in any event greater than $10,000.00. There is no suggestion that this is a case in which the Tribunal has made an order under clause 10(2) of Schedule 4 that would enliven the provisions of Rule 38(2)(a).
Consequently the Tribunal's power to make costs orders is limited by the provisions of s 60 (above).
The starting point for any application for costs is that the parties are to pay their own costs (s 60(1)).
However, an applicant for a costs order may be able to establish that there are "special circumstances warranting an award of costs" (s 60(2)).
The applicant's submissions attempt to establish the "special circumstances" that warrant a costs order.
The Act itself provides no guidance as to the meaning of "special circumstances warranting an award of costs" and I have not been referred to any decided cases that may assist in interpretation of those words in the subject legislation.
Nevertheless, applying the Macquarie dictionary meaning to "special" one finds that the concept can connote a "distinct or particular character", "pertaining or peculiar to a particular person.. .. instance", "having a particular function…", "distinguished or different from what is ordinary".
It is the latter definition that is of most assistance in determining the instant case. That is because there is an ordinary or starting proposition (each party to pay its own costs) which may then be distinguished or shown to be different.
The applicant asserts a number of distinguishing or different characteristics in this case each of which I will deal with to the extent that it is relevant.
I am not satisfied that the fact that the parties entered into a lease described on its face as a "commercial lease" as distinct from a "retail lease" and that as a consequence the applicant was on notice that its claim could not succeed as a retail lease claim is a special circumstance. The question of whether or not the lease entered into by the parties was a retail shop lease for the purpose of the Retail Leases Act 1994 was a question of fact dependent upon whether or not the business conducted by the applicant could be brought within one or other of the descriptions set out in Schedule 1 of the Act. Hence, the description of it as a commercial lease did not necessarily preclude a remedy for the applicant pursuant to the Retail Leases Act 1994.
Similarly the applicant's solicitor's involvement in the preparation of the lease and her knowledge of its content would not have automatically precluded any claim by the applicant under the Retail Leases Act and cannot constitute a special circumstance warranting an award of costs.
The fact that the applicant did not produce evidence to support the assertion that there had been a radical change in the applicant's business plan or otherwise that the business was operated as a retail shop goes to the merit of the argument on the preliminary issue decided in favour of the respondent on 16 October 2014. It is not a special circumstance in the sense that it distinguishes this case from others in which costs would not be awarded. It would be a relevant consideration if there were an argument on the issue of whether or not the costs should "follow the event" or whether costs should be awarded on a basis other than the ordinary basis, which is not the case.
The fact that a matter is dismissed for want of jurisdiction does not in my view mean that it is per se misconceived or that it lacks substance. The issue of whether or not the applicant operates a retail shop is a question of fact. The parties were in disagreement on that issue. Ultimately the Tribunal's decision supported the respondent's argument. Determination of the existence or not of jurisdiction for the Tribunal to hear and determine a matter is an issue that is faced in every application that comes before the Tribunal.
The fact that the respondent raised the issue of jurisdiction early is significant, but is no more than the respondent was obliged to do (see Civil and Administrative Tribunal Act 2013, s 36). The respondent perceived an issue in relation to jurisdiction and properly raised the issue with the Tribunal. The issue has been dealt with at an early stage without the expense of each side preparing their cases on the substantive issues in dispute.
I am not satisfied that the arguments put forward by both sides in regard to the manner of conducting the case or the conduct of the legal representatives amounts to special circumstances nor do the arguments do the parties any credit. The Tribunal is not the forum to debate the manner in which a legal representative has discharged their professional obligations. Both sides were recalcitrant in the manner in which they responded to directions made by the Tribunal. However, those are matters of a procedural nature to raise before the Member if any remedy is sought such as an adjournment due to late (or additional) service of documentary material. They do not amount to characteristics that distinguish this case as different to any other before the Tribunal in which parties are required to pay their own costs.
The respondent's submission that the awarding of costs is compensatory rather than punitive is quite true. See for example, Latoudis v Casey [1990] 170 CLR 534, at 566,7 per McHugh J where it was said
"An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v Noumenon Pty.Ltd. (1988) 47SASR 182. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings."
For that reason the Courts have adopted the (almost) universal practice of awarding costs to the successful party.
That situation just does not apply in the Tribunal due to the operation of s 60(1).
[5]
CONCLUSION
On the submissions made by the respondent, I am not satisfied that a case has been made for "special circumstances that warrant an award of costs".
J Smith
Senior Member
Civil and Administrative Tribunal of New South Wales
14 November 2014
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
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Decision last updated: 10 February 2015