In November 2016 the applicant entered into a building contract with the respondent in respect of works to be undertaken at 18 Hollis Avenue Denniston East.
An application for principal relief was filed on 28 November 2018 and the matter was heard on 29 November 2019, 28 February 2020, 14 May 2020, 6 August 2020, and 4 March 2021. On those various occasions the applicant was represented by his solicitors whilst solicitors and counsel appeared for the respondent up to 5 August 2020.
On 28 July 2021 the Tribunal ordered that the respondent pay the applicant a sum of $342,660.79 within one month of the date of those orders. Further orders were made requiring a party seeking costs to provide written submissions and relevant evidence within 21 days of the date of the orders with the other party to provide their response within 42 days of the date of those orders.
Submissions were received from the applicant on 31 August 2021 and no submissions in reply have been received from the respondent by the time submissions were formally closed on 30 September 2021, or at any time since that date.
[2]
Applicant's submissions
Mr Campbell of Bannermans Lawyers provided written submissions which were dated 23 August 2021. The applicant seeks orders that the respondent pay the applicant's costs of the proceedings as agreed or assessed and he has argued that the claim for costs should follow the event as the applicant has been successful in obtaining a Money Order for rectification of defects valued in excess of $30,000.00 and it is noted that the orders made exceed that sum by a significant amount.
Mr Campbell submitted that the respondent's conduct in the matter had caused the applicant to incur further unnecessary costs and had continuously delayed the proceedings.
He referred to an order for costs thrown away which was made in respect of a hearing on 14 May 2020 which has not been paid and to proceedings on 29 November 2019 where an order was made for costs to be paid in a further sum of $2,000.00.
Mr Campbell referred to s.36 of the Civil and Administrative Tribunal Act 2013 in relation to the guiding principles which require the Tribunal to facilitate just, quick and cheap resolution of issues in dispute and argued that the respondent's conduct had breached those principles which would have enabled the matter to be concluded at an earlier time.
He referred to the principal rule contained in s.60 of the Civil and Administrative Tribunal Act and to Rule 38 of the Civil and Administrative Rules 2014 which modified the application of s.60 in certain circumstances.
Mr Campbell then addressed the meaning of special circumstances warranting an award of costs and referred to decisions of the Court of Appeal in GM Dawson Pty Ltd and Anor v Cripps and Anor [2006] NSWCA 81 as well as a decision of the Tribunal Appeal Panel in CPD Holdings Pty Ltd t/a The Bathroom Exchange v Baguley [2015] NSWCATAP 21.
He noted that in Thompson v Chapman [2016] NSWCATAP 6 the Appeal Panel addressed in detail the discretion in relation to orders for costs where it can be properly argued that a successful party should be entitled to an order for costs in their favour.
[3]
Decision
Sections 60(1) and (2) of the Civil and Administrative Tribunal Act 2013 provides a general rule in relation to costs that unless special circumstances are established, the parties are to pay their own costs. The respondent has submitted that special circumstances exist and that an order for costs is warranted in favour of the respondent in the present case.
Section 60(3) of the Act sets out a non-exhaustive way that the Tribunal may have regard to determining whether there are special circumstances. The onus is on the party seeking an order for costs to satisfy the Tribunal that there are special circumstances warranting an award of costs in its favour. The section provides:
(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 has necessarily disadvantaged another party to the proceedings,
(b) whether a party has been responsible for prolonging unreasonable 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 a duty imposed upon it by s.36(3) of the Act, and
(g) any other matter that the Tribunal considers relevant.
In Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 the Appeal Panel approved the meaning of the expression "special circumstances" that had been given in respect of the former s.88 of the Administrative Decisions Act 1997 by the Court of Appeal in Cripps v G&M Dawson [2006] NSWCA 84 where Santo JA with the concurrence of Mason P and Brownie AJA observed that special circumstances are circumstances that are out of the ordinary. The circumstances do not have to be extraordinary or exceptional.
The expression was again reviewed by the Appeal Panel in CPD Holdings Pty Ltd t/a the Bathroom Exchange v Baguley [2015] NSWCATAP 21 where it was observed "the authorities are consistent in stating "special circumstances" are circumstances that are out of the ordinary, but they do not have to be extraordinary or exceptional circumstances". It was noted further that the discretion to award costs must be exercised judicially having regard to the underlying principles that parties to the proceedings to the Tribunal are ordinarily to bear their own costs.
Each case is to be assessed on a case by case basis to see whether or not special circumstances exist such as to warrant the award of coast. In Alexander James Pty Ltd v Pozetu Pty Ltd (No.2) [2016] NSWCATAP 75 the Appeal Panel observed :-
[14] An assessment where the circumstances are special involves the exercise of a value judgment carried out by way of comparison between what is not special circumstances and what is special. There are no special means by which the former can be ascertained. The evaluative process is necessarily one of impression formed by the particular provisions of s.60 which, by s.60(3)(f) also incorporates a consideration of s.36(3) of the Act.
In CEU v University of Technology Sydney [2017] NSWCA 280 the Court of Appeal held:
To establish special circumstances it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional.
Mr Campbell has noted that a party seeking costs does not need to prove all of the factors contained in s.60(3) of the Civil and Administrative Tribunal Act but rather the Tribunal may have regard to them together with any other issues that it considers relevant, in particular
1. Conduct causing delay or failing to rectify defects or enter into a settlement agreement,
2. Conduct causing increased expense to the parties for litigating the process longer that required, and
3. Unreasonableness of the respondent's failure to accept a likely result earlier.
The Tribunal accepts in the present situation that special circumstances exist warranting an award of costs in favour of the successful applicant against the respondent having regard in particular to the provisions of s.60(3) and considering the unchallenged submissions of Mr Campbell in that regard.
The Tribunal has generally accepted that the awarding of costs is compensatory rather than punitive. In Latoudis v Casey [1990] HCA 59 McHugh J said:
An order for costs indemnifies the successful party or a party in litigious proceedings in respect of liability for professional fees and out of pocket expenses reasonably incurred in connection with the litigation (see Kelly v Noumenon Pty Ltd (1988) 47 SASR 182).
The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory.
Mr Campbell has referred to the detailed analysis of the costs principles by the Appeal Panel in Thompson v Chapman [2016] NSWCATAP 6:
[69] The starting point in exercising such a 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] HCA 59.
[70] The reason for such an order is that is appropriate for a party who caused another party to incur costs in litigation should reimburse that party for the liability incurred. Further an award of costs is by way of an indemnity to the successful party and not 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 issues that an order for costs based on the 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 rules should otherwise be displaced in whole or in part: see Oshlack v Richmond River Council per Gaudron and Gummow JJ.
Further at paragraph [76] the Appeal Panel stated in conclusion
In short, the proper exercise of discretion requires the Tribunal to do justice between the parties and to exercise the discretion having regard to the relevant considerations and in a manner which is not arbitrary or capricious"
The Tribunal is satisfied that the applicant has succeeded in circumstances where he has obtained a substantial award of compensation. The Tribunal is further satisfied that the actions of the respondents have prolonged the proceedings and have caused the applicant to incur additional legal expenses. It is noted that the expenses incurred at various stages of the proceedings have been addressed in some detail in paragraphs 2 to 13 of the principal judgment but otherwise there is nothing in the case that ought to prevent the applicant from receiving had the order which he presently seeks. It is appropriate that the respondent should pay the applicant's costs as agreed or failing agreement as assessed under Part 4.3 Division of the Legal Profession Uniform Law Application Act 2014. Any assessment of costs will take into account the costs thrown away which have already been agreed as set out in paragraphs 2 to 13 of my principal judgment.
[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: 14 February 2022