COSTS – rr 38 and 38A Civil and Administrative Tribunal Rules 2014
(NSW) – withdrawal of appeal – whether costs order should be
made
Source
Original judgment source is linked above.
Catchwords
COSTS – rr 38 and 38A Civil and Administrative Tribunal Rules 2014(NSW) – withdrawal of appeal – whether costs order should bemade
Judgment (24 paragraphs)
[1]
This is a costs application arising from the withdrawal of an internal appeal to the Appeal Panel of the Tribunal.
Both parties were legally represented in the Tribunal proceedings and the Appeal Panel proceedings.
The Tribunal dispute involved the Retail Leases Act 1994 (NSW) (RL Act). La Belle Coffee Pty Ltd was the tenant. Mr Hossain was the landlord. The dispute arose from a fire at the premises in October 2024. The tenant claimed the fire was caused by the landlord's negligence and breach of the terms of the lease. The tenant sought damages of approximately $260,000.
In a 21 page decision of 9 September 2025, the Tribunal was not satisfied the tenant had proved the landlord's negligence or failure to maintain and repair in accordance with the terms of the lease caused the fire. The damages claim was dismissed, other than in respect of a rent abatement amount of $6,576 for a 1 month period where the premises were unusable due to fire damage.
On 8 October 2026, the tenant lodged a Notice of Appeal to the Appeal Panel under s 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). Orders were sought that the Tribunal decision be set aside and the landlord ordered to pay damages of $260,000, as well as costs of the appeal proceedings.
On 27 October 2025, a Reply to Appeal was lodged with the Appeal Registry.
On 31 October 2025, the matter was listed for an appeal Call Over. Procedural directions were made and the appeal listed for hearing in March 2026.
On 6 December 2025, the tenant's Solicitor wrote to the Appeal Registry and the landlord's Solicitor withdrawing the appeal under s 55(1)(a) of the NCAT Act.
The landlord's Solicitor wrote to the Appeal Registry and the tenant's Solicitor stating it sought costs.
On 12 December 2025, the Appeal Panel (Blake AM SC PM) made an order that the appeal was dismissed as it was withdrawn under s 55(1)(a) of the NCAT Act, and making a procedural timetable for costs submissions. The procedural timetable included giving the parties an opportunity to make submissions as to whether the costs decision could be made on the papers.
In December 2025, both parties lodged and served costs submissions.
[2]
The landlord sought the tenant pay its costs of the appeal in the lump sum amount of $3,025 plus GST for its costs of providing advice; preparing for the appeal; and appearing at the appeal Call Over.
The landlord's costs submissions referred to s 60(1)-(3) of the NCAT Act. The landlord submitted that there were "special circumstances" sufficient to make a costs order because the appeal had been withdrawn after the Call Over; there was no merit to the appeal; the landlord had complied with procedural directions; and the landlord had incurred legal costs in dealing with the appeal.
[3]
The tenant's submissions also referred to ss 60(1)-(3) of the NCAT Act. The tenant submitted that the proceedings had been withdrawn promptly, and the landlord did not incur any significant costs because the proceedings were withdrawn before the tenant lodged and served its appeal submissions and documents. The tenant denied the appeal lacked merit, and submitted the reason it was withdrawn was due to the constrained financial circumstances of the tenant.
[4]
The landlord submitted, in reply, that the withdrawal was not prompt, and the landlord had incurred legal costs, including attending the Call Over and preparing a Reply to Appeal.
[5]
Neither party opposes the issue of costs being determined on the papers. It is appropriate that the issue of costs be determined on the papers, as both parties have been given a reasonable opportunity to be heard and have their submissions considered. Accordingly, an order under s 50(2) of the NCAT Act is made.
[6]
Applicable costs principles to the withdrawal of an appeal have recently been discussed by Blake AM SC PM in Karpinski v The Owners - Strata Plan No 1731[2026] NSWCATAP 12 (Karpinski) and Manana Farms Pty Ltd v Barambah Organics Dairy Farms Pty Ltd[2026] NSWCATAP 8.
Under s 60(1)-(3) of the NCAT Act parties bear their own costs of the appeal, unless "special circumstances" are established that are sufficient to cause the Appeal Panel to exercise its discretion to depart from s 60(1) of the NCAT Act and award costs.
38 Costs in Consumer and Commercial Division of the Tribunal
(1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal.
(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if -
[8]
...
(b) the amount claimed or in dispute in the proceedings is more than $30,000.
[9]
38A Costs in internal appeals
...
(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.
[10]
For the purpose of r 38A of the NCAT Rules the "determinative factor" is the amount in dispute on appeal, not the amount claimed or in dispute in the proceedings at first instance (Allen v TriCare (Hastings) Ltd[2017] NSWCATAP 25 at [57]).
When rr 38 and 38A of the NCAT Rules apply, the starting point is not that each party bears its own costs, but common law principles that costs follow the event and the successful party is entitled to be awarded costs to compensate it for the costs it has incurred, subject to well established exceptions such as disentitling conduct. The discretion must be exercised judicially (Vella v Mir (No 3)[2020] NSWCATAP 17 at [28]- [29]; Lam v Steve Jarvin Motors Pty Ltd[2016] NSWCATAP 186 at [206]).
Where proceedings are discontinued, or dismissed by consent, or otherwise determined without a final hearing on the merits, the principles in Re Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin[1997] HCA 6; (1997) 186 CLR 622 at 624-625; [1997] HCA 6 (Lai Qin) apply. McHugh J stated:
[11]
"In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. ...
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. ... But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases." (citations omitted)
[12]
The Lai Qin principles are well established and apply in the Tribunal (see, for example, Prestige Homez Pty Ltd v Ghag[2025] NSWCATAP 93 and Karpinski at [22]-[23]).
[13]
The amount claimed or in dispute in the proceedings at first instance exceeded $30,000. The amount "in dispute" in the appeal exceeded $30,000, because the Notice of Appeal clearly states that the tenant was seeking an order the landlord pay the tenant damages of $260,000.
Applying the principles in TriCare at [57], I am satisfied that r 38A(2) of the NCAT Rules applies, notwithstanding that neither party addressed the issue in their costs submissions.
[14]
Even if rr 38 and 38A of the NCAT Rules did not apply, Lai Qin principles apply to whether "special circumstances" exist under s 60(2) of the NCAT Act sufficient to cause the Tribunal to exercise its discretion to depart from the principle in s 60(1) of the NCAT Act. In Karpinski, the Appeal Panel stated at [23]:
[15]
"The principles in Lai Qin and ONE.TEL Ltd v Deputy Commissioner of Taxation(2000) 101 FCR 548; [2000] FCA 270 (ONE.TEL) have been applied in the Tribunal: see, for example, Knox v Bollen; Bollen v Knox[2018] NSWCATAP 106 at [45]- [48]. While withdrawal of proceedings in the Tribunal whether at first instance or on appeal, may in some circumstances, constitute sufficient "special circumstances" to justify a costs order, the mere fact that proceedings are withdrawn is not, of itself, a sufficient "special circumstance" to justify a costs order: MacDermott v Wang[2022] NSWCATCD 71 at [45(4)]."
[16]
Neither party's submissions address the principles in Lai Qin.
In respect of those principles:
[17]
Was the Landlord Almost Certain to Succeed If the Appeal Proceeded to Hearing?
[18]
I am not satisfied that the landlord was almost certain to succeed if the appeal proceeded to hearing. The Notice of Appeal and grounds of appeal are arguable. It is a matter of speculation as to whether the appeal would, or would not, have succeeded if it had proceeded to hearing and been determined on the merits. That is insufficient to conclude that the landlord was "almost certain" to succeed.
[19]
Was There Unreasonable Conduct In the Appeal Proceedings by the Tenant?
[20]
There was no unreasonable conduct in the bringing of the appeal, or the conduct of the appeal proceedings. The conduct of the tenant did not cause the appeal proceedings to be unreasonably delayed. There was a Call Over, and the appeal was withdrawn before the tenant had lodged and served appeal documents and submissions pursuant to the procedural directions that were made at the Call Over. The appeal was withdrawn more than 4 months prior to the allocated appeal hearing date. It was withdrawn in a timely manner. The withdrawal was not a 'surrender' in the face of an appeal that was doomed to fail.
[21]
As the tenant has failed to satisfy the test in Lai Qin, the application for a costs order is dismissed. The same outcome occurs irrespective of whether rr 38 and 38A of the NCAT Rules apply; or the principles under ss 60(1)-(3) of the NCAT Act apply.