Kurmond Homes Pty Ltd v Spiteri

Relevant Law

1. Both parties agree that the relevant provision relating to the costs of the appeal is s60 of the Act. That section 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.
2. Section 60 has been considered in several cases including Megerditchian v Kurmond Pty Ltd [2014] NSWCATAP 120 and recently in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21. The meaning of "special circumstances" can be summarised simply: for special circumstances to be established, it suffices that the circumstances are out of the ordinary; they do not have to be extraordinary or exceptional.
3. Examples of where costs have been awarded include:

• the withdrawal by an applicant of an application after a date for hearing has been set, and in circumstances where the respondent has incurred expense in briefing counsel: see Graham v Director General, Department of Community Services [2001] NSWADTAP 4;
• where the matter was a commercial matter involving a large sum of money: Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120.

1. Costs were not awarded in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2014] NSWCATAP 21. In that case the appellant had withdrawn its appeal following a directions hearing. The respondents submitted that they were entitled to costs, as the grounds of appeal were so inadequate that the appeal was misconceived and destined to fail. The application was refused, the Appeal Panel noting: This was not a situation, where [the respondents] had made the preparations and incurred the costs necessary for the appeal (cf [Graham -v- Director General, Department of Community Services [2001] NSWADTAP 4]), although they had retained a solicitor and had incurred some legal expenses in preparing for the directions hearing. Nor is it a situation where CPD persistently failed to comply with directions or failed to appear (cf [Hoblos v Marchese [1999] NSWADT 127]). Nor is this a commercial matter involving a large sum of money (cf [Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120]).
2. The Appeal Panel also notes that the appellant in CPD Holdings was not legally represented.
3. However, each case must turn on its own circumstances: Gizah Pty Limited v AXA Trustees Limited (No. 2) [2001] NSWADT 164 at [30].

Mr and Mrs Spiteri's submissions

1. Both parties have filed written submissions pursuant to directions. Mr and Mrs Spiteri's solicitor Mr Williamson filed submissions dated 2 February 2015 on 11 February 2015. Mr and Mrs Spiteri submit that this is a situation where special circumstances do exist. They submit that the circumstances satisfy ss.60(3)(a), (c), (e) and (g) of the Act as: 1. Kurmond commenced the appeal after receiving legal advice, and no grounds of appeal are stated in the notice of appeal; 2. on 12 January 2015 the solicitors wrote to Kurmond's solicitors stating that they were no grounds for the appeal, that any stay should be refused and that costs would be sought in respect of the appeal; 3. in the reply to the appeal is was made clear that costs would be sought if the appeal was dismissed; 4. Kurmond had "sought to extend payment in circumstances where it could be said that the process was used to the disadvantage of" Mr and Mrs Spiteri; 5. in the proceedings below sought a costs order against Kurmond; 6. they had been put to unnecessary legal costs; and 7. the appeal was "at least" misconceived or lacking in substance.
2. Mr and Mrs Spiteri rely on the decision of the Appeal Panel in Obieta v Australia College of Professionals Pty Ltd [2014] NSWCATAP 38 at [68]ff. In particular they rely on the statement of the Appeal Panel in para [80] that a "successful respondent to an appeal who has been awarded costs at first instance has a strong claim to a costs award in relation to an appeal".

Kurmond's submission

1. Kurmond's written submissions of 16 February 2015 were filed on 18 February 2015. Kurmond asserts in para. [6] of its submissions that it was advised by the Registry that the only power the Tribunal had to order a stay was if an appeal of the order of 9 December 2014 was filed. Kurmond states that it accepted this advice and filed the appeal on 23 December 2014. Kurmond states that while one of the factors in s60(3) is whether proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance: "what occurred here was a misunderstanding about the Appeal Panel's powers, which was aided and abetted by the Tribunal's registry. As soon as it was understood that the appeal was inappropriate, it was discontinued."
2. Therefore, Kurmond submits, there is "nothing 'special' about what happened here. As the payment was to have been made by 23 January 2015, and the appeal was withdrawn on 2 February 2015, at worst Mr and Mrs Spiteri were disadvantaged by a few days.

Consideration

1. It is the applicant for costs, here Mr and Mrs Spiteri, who bear the onus of establishing an entitlement to costs in a jurisdiction where the primary rule is that each party bears their own costs.
2. Of all the matters on which they rely, which are set out at para [10] above, the matters which appear to be relevant to establishing special circumstances are (b) - the notice of appeal lacking any grounds of appeal, and (g) - the appeal itself being misconceived or lacking in substance. It is not to the point that Kurmond commenced the appeal having obtained legal advice, or that costs would be sought if the appeal was dismissed, or that a costs order against Kurmond had been made in the Tribunal below. None of these factors are relevant to establishing special circumstances.
3. Kurmond's submits that it relied on "advice" from the Registry. Presumably the Registry officer referred to the relevant provision of the Act which deals with stays, s43. Sections 43(2) and (3) provide that: 1. A pending general application or appeal does not affect the operation of the decision to which the application or appeal relates, or prevent the taking of action to implement the decision, unless the Tribunal makes an order staying or otherwise affecting the operation of the decision. 2. The Tribunal may make such orders (whether with or without conditions) staying or otherwise affecting the operation of a decision to which a pending general application or appeal relates as it considers appropriate to secure the effectiveness of the determination of the application or appeal.
4. It seems clear that the appeal was misconceived. The notice of appeal itself makes it plain that a stay was being sought, but that Kurmond did not otherwise wish to appeal the decision itself. Kurmond wished to delay the payment it was ordered to make until such time that proceedings HB 14/39664 had been determined; it did not in fact wish to appeal against the order requiring it to pay the $112,248.05.
5. In those circumstances I find that special circumstances are established. The appeal was lacking in substance, as no grounds were stated for the appeal; and the appeal was misconceived, as the appellant was seeking a stay, but did not wish to appeal. At all times the appellant was legally represented, unlike the position of the appellant in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2014] NSWCATAP 21.
6. In the event of an order being made in their favour, Mr and Mrs Spiteri have asked the Appeal Panel to assess the amount. They have claimed $5,031.40. Kurmond in its submissions contends for a smaller amount, noting that of the $5,031.40, $2,647.80 relates to the directions hearing of 2 February 2015. I note that of that amount, $1,440.00 related to the travel of Mr and Mr Spiteri's legal representative from Penrith to Sydney and return for the directions hearing on 2 February 2015. Kurmond submits that the directions hearing was an expensive exercise, and noted that its solicitor attended the directions hearing by telephone, leaving unsaid the suggestion that Mr and Mrs Spiteri's solicitor could have done the same, rather than travel from Penrith for the directions hearing. Another alternative may have been to have a city agent attend on behalf of the Penrith practitioner.
7. Kurmond has suggested that the Appeal Panel lacks experience to determine and fix the amount of costs to be paid. I disagree. In the case of an internal appeal, Appeal Panels are constituted by either one member who is an Australian lawyer, or two or more members (at least one of whom must be an Australian lawyer: s27(1)(a) of the Act. Kurmond further suggests that if a costs order is to be made, the amount ordered should be a nominal one.
8. Alternatively, Kurmond suggests that the matter be assessed so that fair and reasonable cots can be determined.The "guiding principle" for the Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s.36(1). The Tribunal must seek to give effect to the guiding principle when it exercises any power given to it by this Act: s36(3)(a).
9. In addition, the practice and procedure of the Tribunal is to be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings: s36(4).
10. Given the amount in issue, I consider it would be disproportionate and contrary to the guiding principle to require either party to now have to have the costs assessed. This would add further delay and further expense to what has already occurred. Consistent with the proportionality principle the appropriate course is for the Appeal Panel to determine costs. If costs are awarded by the Tribunal, the Tribunal may determine by whom and to what extent costs are to be paid: s60(4).
11. I do not accept that Mr and Mrs Spiteri should be entitled only to a nominal amount of costs. Clearly their solicitor has undertaken preparation for the directions hearing, including the notice of appeal and preparing the reply, and then attending the directions hearing. In my view it is appropriate that Kurmond pay Mr and Mrs Spiteri's costs of the appeal in the sum of $3,500.

Orders

1. For the above reasons, the Appeal Panel makes the following orders: 1. The appellant is to pay the respondent's costs of the appeal. 2. The appellant is to pay the respondent the sum of $3,500 on or before 21 April 2015.

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

Amendments 25 March 2015 - Category - Costs 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: 25 March 2015