In these proceedings on 26 June 2023 leave to appeal was refused and the appeal was dismissed.
Orders were made in the event that a party was minded to make an application for the costs of the Appeal.
We have received submissions from the:
1. respondent's solicitors dated 4 July 2023; and
2. appellant's solicitors dated 24 July 2023.
The respondents have filed reply submissions which they have prepared in their personal capacity. The appellant objects to the reply submissions on the basis that there was no orders from the Appeal Panel which allowed reply submissions. We have decided not to take the reply submissions into account because our orders did not allow for that.
The respondents seek the following orders as to costs:
1. the appellant pays their costs in an amount as fixed by the Appeal Panel, or as specified by the Appeal Panel as to how costs are to be otherwise fixed; or
2. in the alternative, if the Appeal Panel declines to award fixed costs, that the appellant pays the respondents' costs as agreed or assessed.
The respondents filed submissions on costs and in support, an affidavit of their solicitor Mr Weicheng Zheng affirmed 10 July 2023.
The appellant states that a fixed costs order is not appropriate. It submits that the appropriate order is for the appellant to pay the respondent's costs as agreed or as assessed.
The parties do not specifically address whether s60 of the Civil and Administrative Tribunal Act 2013 applies or whether Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) applies.
In the first instance proceedings the amount in dispute was more than $30,000.00 which is borne out by the fact that the decision appealed against was in the sum of $90,000.00. The appellant sought to set aside that decision.
In Riman v Smith [2023] NSWCATAP 205 Principal Member Suthers explained the costs position on Appeals at [8] to [10]:
'The primary provision governing costs in relation to proceedings in the Tribunal is s 60 of the NCAT Act. Pursuant to that section, each party to proceedings is generally to pay their own costs in appeals of this nature. However, that general rule may be displaced in respect of decisions of the Consumer and Commercial Division, and appeals from such decisions, by rr 38 & 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules). In that regard, where the amount claimed or in dispute in the proceedings at first instance is more than $30,000, the general rule in those proceedings is modified by r38(2)(b) of Rules and the Tribunal in those proceedings may award costs even in the absence of special circumstances. It is undisputed that this is the case here.
In an appeal from a decision in such proceedings it is then necessary to consider r 38A of the rules, which 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.
Where r 38 is engaged in the proceedings at first instance, r 38A(1) is engaged in an appeal from a decision in those proceedings. However, that is not the end of the enquiry as to whether s 60 of the Act applies to costs in such an appeal. Rule 38A(2) commands that the first instance costs provisions apply in such an appeal, not that the effect of the application of such provisions in those proceedings be carried over to the appeal. As a result, s 60 of the Act will apply in the appeal unless the amount claimed or in dispute in the appeal is also more than $30,000: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25. Again, though, that was the case here.
Because the appellant sought to set aside the first instance decision in favour of the respondents in the sum of $99,150.27, the amount in dispute in the appeal was also more than $30,000.00. As a result we are satisfied that rule 38A applies. We are able to make a costs order based on the exercise of our discretion in a judicial manner having regard to established principles.
The affidavit of Mr Weicheng Zheng affirmed 10 July 2023 annexes the:
1. costs agreements signed by the respondents and their solicitors which state the hourly rates charged by the solicitors;
2. costs agreements signed by the respondents' solicitors and counsel which states the basis upon which counsel will charge; and
3. invoices rendered by the respondents' solicitors in relation to this appeal.
Mr Zheng states that as at February 2023 the respondents were billed $49,430.69 inclusive of GST, that there was unbilled work in progress of $5,361.40 inclusive of GST and that he anticipated that a further $2,200.00 inclusive of GST would be incurred in making the costs application.
The Appeal Panel has dealt with fixed costs orders in a number of decisions, namely, 203 Castlereagh Street Pty Limited v Skybloo Holdings Pty Limited [2017] NSWCATAP 29 and in Lukas trading as Stone Obsessions NSW v Carstens [2021] NSWCATAP 320. There is no doubt that the Tribunal possesses the power to make a fixed costs order.
In Lukas trading as Stone Obsessions NSW v Carstens an Appeal Panel stated at [12]:
'Under s 60(4)(a) the Appeal Panel has power to fix the costs payable under an order: see Chi v Roger Fuller Pty Ltd (No 2) [2018] NSWCATAP 220 at [49]; Hanna v BOS Holdings Pty Ltd (No 2) [2019] NSWCATAP 73 at [15]; and Five D Pty Ltd v The Owners-Strata Plan No. 79642 [2018] NSWCATAP 244 at [31-32]. In Bechara trading as Bechara and Company v Bates [2016] NSWCA 29 the Court of Appeal (Beazley P; Meagher JA; Payne JA), when discussing making a lump sum or fixed cost order under s 98 of the Civil Procedure Act 2005 (NSW) explained that, at [12-15]:
The power to award a lump-sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at 742-723 [21]-[22]; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123.
The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod v New South Wales [2011] NSWCA 375 at [818] per Beazley JA (Giles and Whealy JJA agreeing).
A "broad brush" approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 [16]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7].
The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814].'
As regards the discount factor referred to, in 203 Castlereagh Street Pty Limited v Skybloo Holdings Pty Limited an Appeal Panel when referring to the type of material that should be available if a fixed sum costs order is to be made, described that material at [41] as including:
'the timing and nature of costs incurred, including details of the work done, the hours worked, the hourly rates actually charged and, in the case of counsel's fees, similar details concerning the work done by counsel;
the rates at which counsel, other lawyers and other professional advocates, if relevant, charge; and
the amount likely to be recoverable on assessment in the event that that took place, which may be established by "objective arm's length evidence from a costs assessor" (to use the language of Stevenson J in SAB Closed 1 at [10].'
The above decisions of the Appeal Panel establish among other things that in making a fixed costs/lump sum order we should consider that we are able to do so 'fairly between the parties and where an appropriate sum can be determined from the available materials'. In determining whether we can apply a discount in the assessment, we should have regard to the amount likely to be recoverable on an assessment. It was stated that such an amount might be established by objective evidence.
[2]
Respondents' submissions and evidence
The respondents' submissions state that $49,430.68 has been spent on legal fees and disbursements in this appeal up to 15 February 2023. Mr Zheng's evidence was that there was an unbilled fee of $5,361.14 inclusive of GST as at 7 July 2023 and that he expected that a further amount of $2,200.00 inclusive of GST would be the costs incurred in the costs application. This leads to a total of $56,992.08 which is stated to be the respondents' costs of the appeal.
Mr Zheng has annexed the respondents' solicitor's accounts of 20 December 2022 and 1 March 2023 which have some information redacted due to asserted privilege. These accounts total $40,149.43, excluding counsel's fees which were $9,281.25.
The respondents submit that there is sufficient material available for the Appeal Panel to determine a fair amount of costs to be awarded. There is no submission made regarding what discount should be applied.
The respondents also submit that a significant consideration in making a lump sum costs order is the fact that the parties have a poor relationship and that the appellant has been uncooperative and obstructive, leading them to believe that an assessment of costs would likely to be protracted. They also submit that the appellant stated in the stay application that it was impecunious and that is a reason which supports a lump sum costs order.
[3]
The appellant's position
The appellant's solicitors submit that the appropriate principles are that the Tribunal should not make a lump sum costs order except in exceptional circumstances and generally where there has been 'megalitigation'. They also submit that the Tribunal should be satisfied first, that the circumstances of the case warrant a lump sum costs order and secondly that there is proper evidence of the quantum of the costs involved.
So far as the material that the respondents rely upon to establish the amount of costs to be awarded, the appellant submits that in connection with the first of the respondents' solicitors invoices it is not possible to ascertain who did the work referred to, or how much time was spent in doing each of the items of work billed for. In addition the appellant raises the issue of the redactions on the first and second invoices which we have identified, submitting that the redactions make the assessment of reasonable costs difficult. Comments are also made in connection with drafting a witness statement and whether the witness statement was used in the appeal, the time charged for preparing the brief to counsel and the time charge for drafting the Reply to Appeal. In connection with the unbilled fee of $5,361.14, the appellant states that there is no indication of the work that was carried out and charged for when the appeal was heard on 13 February 2023. In that regard, the second invoice from the respondents' solicitors billed up to the day after the appeal was heard. In those circumstances, information describing the work the subject of the fee of $5,361.14 is of relevance in considering whether to make a lump sum costs order.
[4]
Determination of the application for a lump sum costs order
We are not persuaded in the circumstances that the respondents' submissions referred to justify the making of a lump sum costs order. In particular we are not persuaded that the appellant will be in a position to delay and protract the assessment of their costs. In our view the appeal proceedings were not overly complex or lengthy such that the making of a lump sum costs order is desirable to avoid a lengthy assessment process. Importantly, having regard to the appellant's submissions, we are not confident that the materials relied upon by the respondents gives us sufficient confidence that we will be in a position to arrive at an appropriate sum for a lump sum costs order. The issue of the redactions on the respondent's solicitor's invoices is a factor in holding that view, as is the fact that there is no information at all about what work the respondents' solicitors carried out when they charged $5,361.14, and why such work should be paid for by the appellant when it seems highly likely that the work the subject of the invoice was carried out after the appeal was concluded. Finally, the respondents have not provided evidence to assist the Appeal Panel in arriving at an appropriate discount factor to be applied in finalising a lump sum costs order.
Despite the fact that we have decided not to make a lump sum costs order, the appellant does not oppose an order being made which requires it to pay the respondents' costs of the appeal such costs if not agreed to be assessed. We will make an order that the appellant must pay the respondents' costs of the appeal, such costs if not agreed 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.)
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: 27 November 2023