Eager v North Sydney Retirement Trust

NCAT Appeal Panel|2019-04-17

REASONS FOR DECISION

Two costs matters are the subject of this decision each being consequential upon our decision upholding, in part, an appeal from a decision summarily dismissing much of the appellant's (Mr Eager's) claim in Eager v North Sydney Retirement Trust [2018] NSWCATAP 50.
The first is the question of the costs of the above appeal. The second is the outcome of Mr Eager's appeal from the costs decision at first instance that followed the summary dismissal decision and a consent resolution of the balance of Mr Eager's claim that had not been dismissed. The decision on the above appeal has a direct impact upon Mr Eager's costs appeal.
Overall, it can now be seen that each party has had a mixture of success and failure on the respondent's summary dismissal application that, originally, sought the summary dismissal of the whole of Mr Eager's application. In addition, as a result of the appeal, there remained to be determined on the merits one aspect of Mr Eager's application.
For the reasons below, in our opinion, there should be no order for costs in respect of either of these two costs matters with the intent that each party should bear their own costs of all the proceedings to date, except that any costs consequences of the matter that remains to be determined should await the outcome of that determination.
Having been given the opportunity to make submissions on the point, each party has agreed that these two costs matters should be determined on the papers without a hearing. We agree with that course.

Costs orders sought by the parties

Mr Eager applies for the following costs orders: 1. The orders made in the Costs Decision be set aside. 2. Each party pay their own costs of the proceedings at first instance up to and including the date of the Costs Decision. 3. Each party pay their own costs of the Substantive Appeal and the Costs Appeal.
The respondent applies for the following costs orders: 1. Mr Eager pay two thirds of the respondent's costs of the Substantive Appeal on an indemnity basis. 2. The Costs Appeal be dismissed. 3. Mr Eager pay the respondent's costs of the Costs Appeal on an indemnity basis.
As will be seen below, in essence, we agree with Mr Eager's position concerning the costs outcome of the two appeals.

Costs Law

Briefly, we set out the relevant aspects of the law concerning costs with respect to these issues.
It is common ground between the parties that an award of costs to the respondent (the only party that now seeks an award of costs) could only be made in the event that we are satisfied that there are special circumstances warranting an award of costs: s 60(2) of the NCAT Act.
Also, sections 60(3) and (4) provide: (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 the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis.
In determining whether there are the required special circumstances it is not necessary to find that the circumstances are extraordinary or exceptional: SCC (Sam Construction Company) Pty Ltd v Wingate [2017] NSWCATAP 222 at [19]; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; Zeaiter Corporate Holdings Pty Ltd v Satchitanantham (No2) [2009] NSWADT 70 at [37].
The Tribunal retains a discretion whether to award costs even if it is satisfied that there are special circumstances warranting an award of costs: see the word "may" in s 60(2).
The discretion to award costs under s 60 should be exercised having regard to the underlying principle that parties before the Tribunal are ordinarily to bear their own costs: SCC at [23].
The power to award indemnity costs is sourced in the power in s 60(4)(a) to determine the extent to which costs are to be paid.
In Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (No 3) [2017] NSWCA 109 the New South Wales Court of Appeal cited (at [60]) the well known passage from the decision of Justice Shepherd in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (at 230-234) as setting out the principles applicable to an award of indemnity costs: "In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice."
In exercising the costs powers the Tribunal must seek to give effect to the guiding principle to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 36(1) and (2)(a) of the NCAT Act.

Costs of the Substantive Appeal

As we have already identified, it is the respondent who seeks an award of costs in respect of the appeal rather than an application of the ordinary rule that each party pay its own costs.
The respondent seeks an order that Mr Eager pay two thirds of its costs of the appeal on an indemnity basis. This claim for a reduced portion of its costs is founded upon the fact that Mr Eager succeeded on two of his grounds of appeal. Originally, Mr Eager had seven grounds of appeal (including the fresh evidence ground) but before the hearing he reduced his grounds of appeal to four.
The respondent submitted (see para 64) that it is appropriate to award costs in relation to the "dismissal of [Claims] 3 and 4 in these proceedings" because: 1. The Tribunal found the claims in relation to those matters to be frivolous or vexatious as set out in s 55(1)(b) of the NCAT Act; 2. Having found the claims to be frivolous or vexatious, s 60(3)(e) of the NCAT Act operates to allow the Tribunal to identify those "proceedings" as constituting "special circumstances"; 3. The Tribunal should be satisfied based upon the determination of the Dismissal Decision that the elements of the discretion to award costs under s 60(2) have been met.
In further support of an exercise of the discretion to award costs in relation to the dismissal of these two claims, the respondent submitted (at paras 65 to 67) that multiple warnings and opportunities provided to Mr Eager not to pursue the applications in relation to these claims prior to and at the hearing of the summary dismissal application establish that there are special circumstances based upon the matters in s 60(3)(b), (c) and (g) of the NCAT Act.
As to awarding costs on an indemnity basis, the respondent's submissions included: 1. It should have an award of costs on an indemnity basis in relation to those items in respect of which the appellant was unsuccessful in recognition of the fact that an order for party/party costs would be insufficient to meet the actual unnecessary costs incurred by the respondent in defending the application "which has been shown to be vexatious" (para 25 (b)); 2. The finding that Claims 3 and 4 were frivolous ''or otherwise misconceived or lacking in substance" amounts to special circumstances warranting indemnity costs (para 93); 3. Claims 2, 3 and 4 were convoluted, unnecessarily long, in many parts irrelevant, not maintainable and were frivolous and vexatious (para 101); 4. In effect, the Dismissal Decision found that Claims 2, 3 and 4 were manifestly groundless or had no useful purpose and this determination has been upheld on appeal (paras 102-3); 5. Mr Eager's persistence in pressing Claims 3 and 4 to the Appeal Panel has caused the respondent to defend these claims for an unnecessary length of time and incur significant costs (para 107).
There are some problems with these submissions that immediately arise as follows: 1. they do not specifically address the relevant factors by reference to the appeal itself, which is the issue before us, other than in a general way by its submission that the appeal involved a persistence with vexatious, frivolous or misconceived claims - in this regard we note that the respondent's submissions follow quite closely the submissions it made at first instance in respect of the costs applications; 2. the respondent's application for indemnity costs of its successful application to summarily dismiss Claims 2, 3 and 4 was refused by the Tribunal at first instance on the basis that no relevant delinquency had been established. There has been no appeal by the respondent from that decision; 3. there has been no finding by the Tribunal at first instance, or by us, that any of Mr Eager's claims were vexatious and no finding that either of Claims 3 or 4 was frivolous. The finding by the Tribunal at first instance was that Claims 3 and 4 were misconceived: at [65], [78] and [79]. Whilst, there was a finding by that Tribunal that Claim 2 was frivolous, misconceived or lacking in substance (at [79]) we disagreed with, at least, the frivolous conclusion; at [33] - [37]; 4. they do not address the use of the term "proceedings" and not "claims" in s 60(3)(e).
It seems to us that the word "proceedings" in s 60(3)(e) when applied in a consideration of the costs of an appeal is a reference to the appeal as a whole. In view of the significant degree of success that Mr Eager achieved on the appeal, it could not be said that the appeal, as a whole, was misconceived or lacking in substance. Plainly, there is no basis for a conclusion that the appeal, or indeed any part of it, was vexatious or frivolous.
However, we accept that advancing a ground of appeal that is misconceived or lacking in substance is capable in some instances of being the basis for a conclusion that there are special circumstances warranting an award of costs against an appellant. Such a conclusion would be consistent with the circumstances concerning the strength of "claims" the subject of s 60(3)(c) of the NCAT Act and with the awarding of costs in Court proceedings by reference to the outcome of issues. We treat such a situation concerning costs of an appeal as falling within, at least, s 60(3)(g).
In our opinion, none of the unsuccessful grounds of appeal give rise to special circumstances warranting an award of costs referrable to those grounds. This is because: 1. Mr Eager was appealing from decisions that summarily dismissed his claims without a hearing on the merits. That was a step that was out of the ordinary and a step that, in our opinion, he could legitimately question whether it had been an appropriate course for the Tribunal to take. All the more so, in circumstances where he, clearly, had meritorious arguments about the correctness of the dismissal of Claim 2 and his concern about the dismissal of Claims 3 and 4 raised a serious, albeit, misconceived, point (the same point in each claim) about the statutory construction of a provision of the Retirement Villages Act 1999 (Act). 2. There is no basis for a conclusion that Mr Eager was vexatious in advancing the unsuccessful grounds of appeal or that he did so knowing that they were without merit or for a collateral purpose. 3. As to that part of Claim 2 in respect of which the appeal was unsuccessful, there was a real basis for questioning whether the Tribunal had been correct in its conclusion that the format of the audited accounts for the year ended 30 June 2015 closely followed the layout of the proposed budget for that year. There were a number of differences between the two documents, but we refused leave to appeal on this issue on the basis that we were not satisfied that the Tribunal was more than arguably wrong: at [41]. 4. Mr Eager's pursuit of his appeal in respect of Claims 3 and 4 was connected to his Claim 1 concerning the correct calculation of his recurrent charges, in respect of which he was successful (see further below). In simple terms, this was because, as he saw it, to be a proposed budget that complied with s 112 of the Act the budget needed to reflect the correct calculation of recurrent charges, but it did not. 5. The issues in relation to Claims 3 and 4 that were dealt with on the appeal did not occupy a great deal of time at the hearing of the appeal and should not have required much of the respondent's time in respect of the appeal because it was a matter of upholding the clear and relatively short legal analysis on the subject from the Tribunal at first instance: see at [60] - [78] of the reasons at first instance. 6. We do think that Mr Eager's written submissions on the appeal in respect of the Claim 3 and 4 issues were unduly lengthy and far from easy to follow. However, in view of the limited statutory construction point upon which the outcome of the appeal in respect of these issues turned, we do not think that these problems unreasonably prolonged the time taken to complete the appeal.
In his very lengthy submissions on costs Mr Eager made contentions about a variety of what he termed "disentitling conduct" by the respondent. In view of our reasons above it is unnecessary that we deal with these aspects of his submissions.
From these reasons it follows that we reject the respondent's application for indemnity costs with respect to the portion of costs it seeks in respect of the appeal.

Appeal from the Costs Decision

As appears from above, the Costs Decision was concerned with the costs consequences, if any, of the final disposition of the proceedings at first instance through a combination of the summary dismissal of Claims 2, 3 and 4 and the making of an agreement and consent orders disposing of Claim 1.
The actual terms of the orders made in the Costs Decision were: 1. The applicant shall pay the respondent's costs in respect of the preparation, argument, submissions and attendance incurred by the respondent for the strike out application heard on 8 November 2017. Costs to be calculated on a party/party basis as agreed or assessed. 2. In regard to all other costs in the proceedings each party is to pay their own.
In relation to the Costs Decision, Mr Eager can appeal as of right in respect of a question of law and otherwise with leave: s 80(2)(b) of the NCAT Act.
Since this is an appeal against a decision of the Consumer and Commercial Division, cl 12 of Schedule 4 of the NCAT Act is applicable. That clause provides: 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
Plainly, the outcome of the Substantive Appeal has a material bearing on the Costs Appeal. The relevance of the grounds of appeal and written submissions from the parties on the Costs Appeal provided before the outcome of the Substantive Appeal is affected by this consequence.
Nevertheless, one prominent aspect of Mr Eager's grounds of appeal and submissions made before the outcome of the Substantive Appeal was known was that the Tribunal at first instance had, in effect, overlooked the fact that he had achieved success in respect of Claim 1 by the consensual resolution of that claim on 27 February 2017.
The following aspects of the Costs Decision are relevant: 1. Whilst it appears from the reasons that the Tribunal did not intend Order 1 above to encompass any of the respondent's costs in respect of Mr Eager's Claim 1, the terms of Order 1, unfortunately, did not reflect that intention. In order to reflect that intention, Order 1 ought to have added the words at the end of the first sentence "in respect of Orders 2, 3 and 4". 2. Important conclusions of the Tribunal at first instance were that the "proceedings" were found largely to be frivolous or otherwise misconceived or lacking in substance within the meaning of s 60(3)(e) of the NCAT Act (at [29]) and that Mr Eager had been unsuccessful (at [37] - [38]). 3. These conclusions resulted from a combination of the outcome of the summary dismissal application (dismissing Claims 2, 3 and 4) and the Tribunal's view that Claim 1 was not resolved by an order in his favour but, rather, by the resolution of the parties on terms that were not available for the Tribunal to make into orders but rather involved noting the agreement that had been reached; at [37]. 4. In addition to these conclusions, other factors found as making it appropriate to award costs in favour of the respondent were (at [39]-[43]): 1. Without demur, the respondent was granted leave to be legally represented; 2. At a directions hearing before the summary dismissal application the Tribunal had noted the respondent's intention to seek an order for costs should it be successful on the summary dismissal application; 3. Had Mr Eager sought legal advice at any time the futility of much of his claim would have been apparent at an early stage; 4. The respondent was completely successful in its application to strike out the matters raised in its summary dismissal application, which application was discrete from the remaining issue (Claim 1) that was dealt with on 27 February 2017. 1. The respondent's application for costs in regard to the summary dismissal application to be paid on an indemnity basis was rejected on the basis that no relevant delinquency had been established against Mr Eager.
Because of the matters referred to below, to the extent that this may be necessary, we are satisfied that Mr Eager should have leave to appeal the Costs Decision. There would otherwise be a substantial miscarriage of justice to Mr Eager if leave were not granted in circumstances where the decision is not a fair and equitable one.
We have already identified that Order 1 made on the Costs Decision contains an error because it fails to exclude the costs associated with the respondent's pursuit up to the hearing on 8 November 2016 of the application to summarily dismiss Mr Eager's application for Order 1 (see paras 12 and 13 above).
Furthermore, it follows from Mr Eager's partial success on the appeal that some adjustment, at least, must be made to Order 1 of the Costs Decision. This is because under Order 1 he is required to pay the respondent's costs in relation to the summary dismissal of Claim 2 - a dismissal that we, in part, set aside on the appeal.
Yet further, for the reasons that follow, we think that the adjustment to the orders in the Costs Decision must go considerably further than this.
Given Mr Eager's success in respect of Claim 1, a matter that the Tribunal erred in overlooking, it cannot, and should not have been, concluded that Mr Eager's application in the Tribunal was unsuccessful and was found "largely" to be frivolous, misconceived or lacking in substance. Indeed, by the outcome in respect of Claim 1 alone, Mr Eager achieved a not insignificant measure of success on his application to the Tribunal.
In addition, his Claim 2, in so far as it was founded upon the absence from the audited accounts of the statutory charge, was, on the face of things, clearly a meritorious one, albeit that the ultimate merits needed a re-determination by the Tribunal. Also, the other ground for Claim 2 and his Claims 3 and 4 had the features to which we have referred to in the context of dealing with the costs of the appeal (see paras 36(3), (4) and (5) above).
Given the late withdrawal by the respondent of the application to summarily dismiss Mr Eager's Claim 1 (not until the hearing of the summary dismissal application itself), the Tribunal at first instance should not have concluded, as it did, that the respondent was completely successful on its summary dismissal application.
In these circumstances, we are not satisfied that there are special circumstances warranting an award of costs in respect of the proceedings at first instance, save that a determination as to the costs of Claim 2, in so far as it is based upon the matters the subject of the re-determination, should await the outcome of that re-determination.
As with the costs' application in respect of the Substantive Appeal, Mr Eager made lengthy submissions about "disentitling conduct" by the respondent. In view of the conclusions we have come to it is unnecessary for us to deal with those aspects of his submissions.
Given the success that Mr Eager has achieved on the Costs Appeal, we reject the respondent's application for the costs of that appeal. It follows that we also reject the application that such costs be paid on an indemnity basis

Orders

For the above reasons, we make the following orders: 1. A hearing of these costs matters be dispensed with. 2. Each party is to pay their own costs of the Substantive Appeal, being appeal numbered AP 16/55362. 3. The appeal in AP 17/25494 is allowed. 4. Set aside the costs orders made by the Tribunal in matter number RV 16/30766. 5. Each party is to pay their own costs of the proceedings in matter number RV 16/30766, save for the costs of that part of the application for Order 2 that remained to be determined in accordance with the orders made by the Appeal Panel in appeal numbered AP 16/55362. 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: 17 April 2019

At a glance

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Judgment (7 paragraphs)

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Cases Cited (8)

Cited By (2)