In reasons for decision delivered on 7 April 2021 (Grandview Pty Ltd v Bacon [2021] NSWCATAP 83) we ordered that the appellants' appeal be dismissed.
Directions were made for the filing of submissions and evidence on costs if any party wished to make an application for costs.
The respondents have both applied for costs orders in their favour.
Submissions have been filed by the appellants, but no submissions have been filed by the appellants.
The second respondent submits it is appropriate to deal with costs on the papers. The first respondent's submissions are silent on that matter but given we had directed submissions on that question we infer that the first respondent also assents to costs being dealt with on the papers.
We are satisfied that the costs issues can be adequately determined in the absence of the parties by considering the written submissions filed, and accordingly we order that an oral hearing on costs be dispensed with.
[2]
Decision
In the proceedings determined by the Tribunal, the Tribunal made the following relevant orders:
"1. In the proceeding constituted by File No HB 19/09424, within 28 days of the date of these orders, the respondents, Grandview Pty Ltd ("Grandview"), Andrew Szatow ("Mr Szatow") and Cheyne Graham Reading ("Mr Reading"), jointly and severally, are to pay to the applicant, Claire Bacon ("Dr Bacon"), the sum of $89,007.67.
2. In the proceeding constituted by File No HB 20/05909, the respondents, Grandview and Mr Szatow, jointly and severally, are:
2.1 within 14 days of payment by Mr Reading to Dr Bacon under order 1 above, to indemnify Mr Reading, by payment to him if it is required in an amount of up to $59,338.45;
2.2 within 28 days of the date of these orders, to pay to Mr Reading, the sum of $5,794.66 comprising two-thirds of these unpaid variations: variation 516A ($2,520.00), variation 5168 ($2,843.00), variation 516C ($1,716.00) and variation 516D ($1,613.00)."
A summary of the appeal was set out at [4] of our reasons of 7 April 2021, namely:
"In summary, the appellants argued that the Tribunal erred in finding that Mr Szatow was a party to the First Contract, that the First Contract was for more than mere building consultancy services, erred in assessing quantum of the costs of rectification, and that that between themselves and Mr Reading, erred in holding them liable for two thirds of the costs of rectification and two thirds of the cost of certain unpaid variations."
Given those matters, the amount claimed or in dispute in the appeal was greater than $30,000. Accordingly, we may award costs even in the absence of special circumstances - Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25.
The first respondent sought an order that the appellants pay her costs of the appeal on the ordinary basis. The first respondent submitted:
"6. Costs in the Consumer and Commercial Division both at first instance and in the Appeal Panel will normally follow the event where the amount claimed or in dispute is more than $30,000. It is submitted that the 1st respondent has been wholly successful in the appeal and that an order for costs should be made in her favour (see rule 38A of the Civil and Administrative Tribunal Rules 2014).
7. The applicant submits that the 1st and 2nd appellants should be jointly and severally liable to pay the applicant's costs of the proceedings on the basis that Tribunal's orders are that the appellants' appeal be dismissed."
The second respondent sought an order that the appellants pay his costs on the indemnity basis, or in the alternative on the ordinary basis. He submitted that s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) applied, the second respondent was required to establish the existence of one or more "special circumstances" referred to in that section, that all of those special circumstances mentioned in s 60 existed in this case and that, in the exercise of our discretion we should make the orders he sought.
More particularly the second respondent submitted that the documents filed by the appellants in this appeal did not properly set out the basis of the appeal. He submitted that the appellants' appeal documents contained various errors and omissions, and that the grounds ultimately relied upon were weak, misconceived and lacking in substance and merit.
He then submitted that s 60 did not apply as the amount claimed or in dispute on the appeal was greater than $30,000. That submission is correct, and we have treated the matters the second respondent identified as being "special circumstances" as matters to be taken into account in exercising the general discretion as to costs including as to indemnity costs.
The second respondent cited Thompson v Chapman [2016] NSWCATAP 6. In that case the Appeal Panel summarised the general principles applicable to exercising the general discretion as to costs. The Appeal Panel said:
"67. Rather, in circumstances where there is a general discretion to award costs, the correct statement of principle is that the Tribunal in exercising its discretion is to have regard to the nature of the proceedings before it and all relevant factors arising in connection with those proceedings for the purpose of determining what order for costs, if any, should be made.
68. Each of Regulation 20 of the CTTT Regulation and Rule 38 provide a general discretion in respect to the award of costs.
69. The starting point in exercising such discretion is that the "usual order for costs" is that a successful party should be entitled to an order for costs in their favour: see Latoudis v Casey [1990] 170 CLR 534 per Mason CJ at 554 and Oshlack v Richmond River Council per McHugh J at 97.
70. The reason for such an order is that it is appropriate for the party who incurred costs caused by the other party in litigation to be reimbursed. Further, an award of costs is by way of an indemnity to the successful party and not as punishment of the unsuccessful party: see Latoudis v Casey per Mason CJ at 543 and McHugh J at 567 and in Oshlack v Richmond River Council per Brennan CJ at 75.
71. Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 88 and Kirby J at 121 - 123.
72. The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include:
1. Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made: see for example Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304; and
2. Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at 41 - 44.
73. An example of such an exception was the case of Dee-Tech, a claim for relief against forfeiture. In that case the Court determined that the entitlement of the lessee (Dee-Tech) to exercise an option for renewal required the favourable exercise of a discretion under s 133(F) of the Conveyancing Act 1919. In that case, White J said at [69]:
'The fact that Dee-Tech was in breach of the lease and was not entitled to exercise its option of renewal except for a favourable exercise of discretion under s 133F, is a reason why costs need not follow the event. On the other hand, the fact I found it entitled to conditional relief against forfeiture is a reason why it should have at least a proportion of its costs, reflecting the extent to which costs were increased by Needam Holdings' resistance to its claim.'
74. However, as White J made clear in Dee-Tech, these are but some of the factors which need to be considered and weighed against each other in determining what order for costs should be made. Other factors considered by White J included whether or not the resistance of Neddam Holdings "went beyond what was reasonable" and pursued issues unsuccessfully and that Neddam was not successful on the predominate issues litigated: per White J at [70] - [71]. Further, the case of Dee-Tech is an example of those cases referred to in Oshlack where, by reason of the nature of the relief sought, it is appropriate for a claimant to pay the costs of the respondent at least up until the stage where the conduct of the respondent and/or issue put into dispute make it just and reasonable for the respondent to pay the successful applicant's costs.
75. That is not to say that, in all circumstances, an applicant who first requires an order in their favour in order to obtain the relief sought should be deprived of the whole or even part of their costs of the proceedings. Each case must be determined on its own facts and where the parties may, without order of a Court or Tribunal, agree to resolve all issues between themselves prior to the commencement of any proceedings, this is also a matter which needs to be considered in determining the proper exercise of any discretion in connection with the award of costs.
76. In short, the proper exercise of the discretion requires the Tribunal to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary or capricious: see Oshlack v Richmond River Council per Gaudron and Gummow JJ at [22] and McHugh J at 65."
The second respondent then submitted that costs should follow the event, and the appellants be ordered to pay his costs.
The second respondent also submitted that his costs should be paid on the indemnity basis. He submitted:
"20. It is further submitted, that the Appellants conduct of the matter amounts to misconduct in:
a. filing multiple amended notice of appeal and written submissions which set out grounds which were unparticularised, vague and confusing;
b. Seeking to rely upon errors of fact without seeking leave and thereafter seeking leave without setting out any basis for that leave;
c. Filing an amended notice of appeal after the closing of submissions;
d. Proceeding at hearing on different basis of appeal to those set out in writing;
e. There was no real prospect of success and as set out in detail at paragraph 9 above, the grounds of appeal were weak, misconceived and lacking in substance and merit.
21. Accordingly, it is submitted that this is a case in which it was unreasonable for the appellant to have subjected the respondent to the expenditure of costs such that an order for costs on an indemnity basis would be appropriate (In the Matter of Indoor Climate Technologies Pty Ltd [2019] NSWSC 356 at [8])."
Relatively recently, Payne JA, with whom Ward JA (as her Honour then was) and Gleeson JA agreed, said in Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (No 3) [2017] NSWCA 109 at [60]:
"The principles applicable to an award of indemnity costs, now under the Civil Procedure Act s 98, are well known. In Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, Sheppard J said at 230-234:
'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.'"
The second respondent cited In the Matter of Indoor Climate Technologies Pty Ltd [2019] NSWSC 356 at [8]. In that passage Black J said:
"The principles on which an order for indemnity costs may be made are also well established. Section 98(1)(c) of the Civil Procedure Act2005 (NSW) permits the Court to order costs on an ordinary or indemnity basis. Rule 42.2 of the Uniform Civil Procedure Rules 2005 (NSW) provides that, unless the Court otherwise orders or the rules otherwise provide, costs payable are to be assessed on an ordinary basis. Rule 42.5 of the Uniform Civil Procedure Rules deals with an order for costs on an indemnity basis. Costs are awarded on the ordinary basis unless there are exceptional circumstances: Leichhardt Municipal Council v Green [2004] NSWCA 341 . An order for indemnity costs is not made to punish an unsuccessful party for persisting with a case that fails, but to compensate a successful party fully for costs incurred, when the Court takes the view that it was unreasonable for the other party to have subjected the successful party to the expenditure of costs: Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20]. Whether an indemnity costs order should be made depends, at least in part, on whether there was a relevant delinquency on the part of the unsuccessful party: Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; (2008) 65 ACSR 324 at [24]; Cabport Pty Ltd v Marinchek (No 2) [2013] NSWCA 131 at [6]. That is to be determined by reference to the conduct of the proceedings, not the conduct that is the subject of the substantive dispute."
Any perceived differences between the passages from we have quoted from Colgate-Palmolive Co and Indoor Climate Technologies on this issue is, in our view, semantic rather than substantive.
At the end of the day the question is whether the particular facts and circumstances identified by the second respondent warrants the making of an order for payment of costs on the indemnity basis. We do not think so.
We do not agree that the various factors the second respondent identified at [16] above amount to misconduct (which we take to mean unacceptable or improper behaviour) nor that this was a case in which it was unreasonable for the appellant to have subjected the second respondent to the expenditure of costs such that an order for costs on an indemnity basis would be appropriate.
In our view the matters identified fall short the degree of impropriety or unreasonableness which would justify such an order. They more properly reflect the fact that the appeal had poor prospects of success, and that a more analytically precise approach was not taken in the preparation of the appeal, a feature not uncommonly found in weak appeals.
Be that as it may, we do not think the matters identified amount to the type of delinquency which would justify the making of an indemnity costs order.
We do accept the respondents' submissions that the "event" was in their favour, that the appellants wholly lost the appeal, and that the usual order that the unsuccessful party should pay the successful parties their costs on the ordinary basis should be made in this case on the basis of the principles summarised in Thompson.
There is no disentitling factor which would suggest that such an order should not be made, nor any other consideration which we can identify which would militate against the making of that order.
[3]
Orders
We make the following orders:
1. An oral hearing on costs is dispensed with.
2. The appellants are to pay the respondents' costs of the appeal on the ordinary basis.
[4]
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: 03 June 2021