Forbes v Spratt

Directions relating to costs of the appeal

1. Directions were made at the hearing so that if the respondents wished to make an application for costs of the appeal, they were to file and serve any written submissions and evidence in support of a costs order by 29 September 2021. The appellant was to file and serve submissions and any evidence in response by 6 October 2021. Submissions in reply by the respondents were to be filed and served by 13 October 2021.
2. The parties were also asked to address in their submissions whether they consented to the Appeal Panel dispensing with an oral hearing on the question of costs.
3. The respondents filed and served submissions and evidence on 29 September 2021 seeking their costs of the appeal and setting out the reasons why they should receive an order for costs. They also submitted that a hearing should be dispensed with to minimise further cost and inconvenience for themselves.
4. On 7 October 2021, the appellant requested an extension of time to file and serve his submissions in response. We granted the appellant an extension until 13 October 2021.
5. The appellant has not filed or served any submissions in response.
6. We are satisfied that the issues for determination can be adequately determined in the absence of the parties by considering the respondents' written submissions in circumstances where the appellant has not sought to provide any submissions or oppose us dispensing with an oral hearing.

Withdrawal of the appeal

1. As stated above, the appellant withdrew his appeal at the hearing of the appeal, as he was entitled to do, and we then made a consequential order dismissing the appeal under s 55(1) of the NCAT Act.
2. In support of their application for costs, the respondents relied upon their counsel's written submissions and an affidavit of their solicitor Mr James A Lenton, sworn on 29 September 2021. The respondents submitted that: 1. the appellant had received legal advice from NSW Legal Aid and had provided emails from NSW Legal Aid to the Tribunal on 7 September 2021. The effect of that advice was that his case was unwinnable and the appellant therefore would not receive funding for the appeal; 2. the advice from NSW Legal Aid was provided after the NSW Legal Aid solicitor had listened to the sound recording of the hearing before the Tribunal; 3. at the call over on 8 September 2021, the Appeal Panel commented on the NSW Legal Aid advice which the appellant had disclosed; 4. on 20 September 2021, the appellant informed the Registry of his intention to withdraw his appeal but did not copy that correspondence to the respondents or their solicitors or otherwise inform them of his intention; 5. late on 21 September 2021, in two separate emails, the appellant filed and served further submissions for the appeal; 6. prior to the hearing commencing at 10:15 am on 22 September 2021, the appellant again forwarded some communications to the Registry but did not copy it to the respondents or their lawyers; 7. Mr Lenton deposed that at no time was he informed of the appellant's intention to withdraw the appeal; 8. at the date of the hearing of the appeal, the appellant was 3 weeks behind in the occupation fee he was ordered to pay by the Appeal Panel on 28 July 2021; 9. the appellant accepted at the hearing of the appeal that he had not removed the shipping containers or the dogs contrary to the orders of the Appeal Panel made on 28 July 2021.

Statutory provisions

1. Rule 38A of the Civil and Administrative Tribunal Rules 2014 (NCAT Rules) provides that the Appeal Panel for an internal appeal must apply the same cost provisions that applied in the decision at first instance when deciding whether to award costs. There are different costs orders that apply to proceedings in the Consumer and Commercial Division where the amount claimed or in issue is more than $30,000. In this case, where the amount is less than $30,000, then s 60 of the NCAT applies.
2. Section 60 of the NCAT Act states: 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 the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) 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.
3. Section 60(1) provides a presumption that each party will pay its own costs. Ordinarily therefore, a successful party would only be entitled to a favourable costs order if we were satisfied that there were "special circumstances" which would warrant us setting aside that presumption and justify the making of such an order: s 60(2).
4. Broad guidance for determining whether "special circumstances" exist is provided in the provisions of s 60(3) set out above, although by reason of subsection (3)(g), the matters set out are not circumscribed. In the exercise of our discretion we may take into account "any other matter that the Tribunal considers relevant". The requirement that must govern the exercise of our discretion is that the circumstances, which apply to the proceedings and for which a costs order is sought, are "special."
5. In eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94, the Appeal Panel at [94] cited with approval an Appeal Panel decision in CPD Holdings Pty Ltd t/as the Bathroom Exchange v Baguley [2015] NSWCATAP 21 which reviewed the authorities dealing with the meaning of "special circumstances" at [23]-[31] and stated: "[94] From those authorities, it can be seen that "special circumstances" are circumstances that are out of the ordinary, they do not have to be extraordinary or exceptional. Further, 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. Each situation must, of course, be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs."
6. In Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135, the Appeal Panel also described "special circumstances" at [37]: "[37] Special circumstances" are circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], citing Santow JA in Cripps v G & M Mawson [2006] NSWCA 84 at [60]."
7. When having regard to the above matters, the fundamental principle remains that a costs order is primarily to compensate and not to punish an unsuccessful party: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] per McHugh J.

Principles

1. Rarely should a court or tribunal determine, hypothetically, who would probably have won a case. In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6, McHugh J said at [31]: "[31] It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue."
2. Accordingly, it is not necessary or appropriate for us to try to discern a clear hypothetical winner in this case.
3. However, a circumstance which may justify an order for costs is where one party, in effect, capitulates or surrenders to the other. In those circumstances the usual order is that the capitulating/surrendering party pays the costs. Capitulation can take different forms but depending on the circumstances, withdrawing proceedings may be a form of capitulation.
4. In Khanna v Bond Realty Pty Ltd [2019] NSWCA 128, Bell P and Gleeson JA said at [31]: "[31] The 26 October notice of motion which was dismissed was a notice of motion which Mr Khanna sought to withdraw in the course of the hearing and it was reasonable that the First Respondent be awarded its costs in relation to that notice of motion. There was and is no good reason why a party that has prepared to meet a notice of motion should be deprived of its costs if a party that has filed it withdraws it in the course of argument. Whilst costs will not always be ordered in such circumstances (see Re Minister for Immigration & Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 624-625; see also Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84), that is not an invariable rule and there was no error of principle in the primary judge's decision to award costs in relation to the 26 October 2018 notice of motion."
5. The general principles applicable to costs where there has been no hearing on the merits were summarised in Kiama Council v Grant [2006] NSWLEC 96 (Kiama) at [80], a decision approved by the Court of Appeal in Hunter Development Corporation v Save Our Rail NSW Incorporated (No 2) [2016] NSWCA 375 at [78], [81] and [82]; also see the recent decision of the Federal Court of Australia: FCA US LLC v Mahindra Automotive Australia Pty Ltd [2021] FCA 1091 at [31]-[35] per by Halley J.
6. In Kiama, and after a review of the authorities, Preston CJ said at [80]: "[80] The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action."
7. Discontinuances do not exist in the Tribunal but decisions of the Supreme Court of New South Wales (and courts subject to similar rules) in relation to costs arising from discontinuances or dismissals offer some guidance in the principles to be applied by the Tribunal. The effect of a dismissal under s 55 of the NCAT Act is similar to the effect of a discontinuance in a court: D Constructions Pty Ltd v Walsh [2020] NSWCATAP 91. The proceedings are brought to an end without a hearing on the merits.
8. As Preston CJ made clear in Kiama, the relevant circumstance is not the form the surrender may take (be it a withdrawal, dismissal by consent or discontinuance) but the reason for or the circumstances giving rise to it. Therefore, a dismissal following a settlement reached between the parties would be considered differently to a dismissal that was tantamount to a capitulation.
9. Much depends on the particular circumstances of each case.
10. For example, in the case of Pines Resort Management Pty Ltd t/as Gateway Lifestyle the Pines v Marsh [2019] NSWCATAP 12 (Pines) the Appeal Panel considered a costs application in circumstances where an appeal had been withdrawn and dismissed. However, as we discuss below, unlike this case, the Appeal Panel in Pines held that the respondent's work in the preparation of evidence and submissions for the appeal was not "out of the ordinary in respect of the steps taken" (at [22]) or that the appellant had failed to meet its obligations under s 36 of the NCAT Act (at [23]).
11. In our view, the "special circumstances" in this case that warrant a favourable costs order for the respondents, include the following: 1. the orders of 15 June 2021 that were the subject of the appeal were made by consent, so effectively the appellant was seeking to challenge the effect of orders that he had previously agreed to; 2. the appellant failed to comply with the Tribunal's consent orders of 15 June 2021, by which the Tribunal had stayed possession of the property until 13 July 2021; 3. the appellant sought an extension within which to comply with the 15 June 2021 consent orders; 4. the Tribunal's further orders of 28 July 2021 suspended the order for possession made on 15 June 2021 subject to appellant the removing the shipping container, dogs and all rubbish and personal belongings (except from room two of the property) and paying a daily occupation fee; 5. the appellant did not comply with any of the Tribunal's orders. There has been no explanation given by the appellant for his failure to comply with those orders; 6. having obtained legal advice from NSW Legal Aid on 7 September 2021 to the effect that he had no reasonable prospects of success on the appeal, and having informed the Tribunal of that advice at the call over on 8 September 2021, for reasons not explained, the appellant delayed until 20 September 2021 to provide any notice of his intention to withdraw his appeal; 7. the appellant failed to comply with the Tribunal's procedural directions of 28 July 2021 requiring the filing and service of his submissions and evidence for the appeal by 18 August 2021; 8. the appellant requested an extension to comply with the procedural directions of 28 July 2021. He again failed to comply with the Tribunal's further procedural directions of 8 September 2021 that extended the time for the filing and service of his submissions and evidence for the appeal to 14 September 2021; 9. when the appellant notified the Tribunal of his intention to withdraw his appeal on 20 September 2021, for reasons not explained, the appellant failed to advise the respondents or their lawyers of that intention at any time until the hearing of the appeal. Inexplicably he then served further documents relating to his appeal on the respondents' lawyers the next day on 21 September 2021, being the day before the hearing; 10. the appellant confirmed his intention to withdraw his appeal at the outset of the hearing on 22 September 2022. That was the first occasion the respondents or their lawyers were made aware of the appellant's intention to withdraw the appeal; 11. after the respondents' served their submissions and evidence on costs, the appellant sought and was granted an extension to provide submissions on costs. He then failed to provide any submissions.
12. The appellant has been afforded ample opportunity to explain the circumstances and reasons of his late withdrawal of the appeal and has failed to do so.

Disposition of the appeal

1. In our view, the appellant has effectively surrendered to the respondents.
2. The factors to which we have referred above establish an ongoing failure on the part of the appellant to comply with his obligations to the Tribunal and the respondents under s 36(3) of the NCAT Act. The appellant had received legal advice prior to the appeal to the effect that he had poor prospects of success. Without forming any view about his prospects on the appeal, he was appealing from orders that he expressly consented to being made by the Tribunal on 15 June 2021.
3. The appellant failed to comply with the consent orders for possession and then continued to refuse to comply with the orders made on 28 July 2021 as a condition of him remaining in a part of the property. The appellant did not take the opportunity we afforded him to explain his non-compliance with the Tribunal's orders or his belated decision to withdraw the appeal.
4. We are satisfied that these matters constitute "special circumstances" entitling the respondents, who have incurred expense in meeting the appeal up to the time the appellant withdrew it, to their costs of the appeal. We therefore allow the respondents' application for costs.

Orders

1. We make the following orders: 1. an oral hearing of the respondents' application for costs of the appeal is dispensed with under s 50(2) of the NCAT Act; 2. the appellant is to pay the respondents' costs of the appeal as agreed or assessed in accordance with s 60(4)(b) of the NCAT Act.

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: 19 January 2022