In our decision LSH Auto (Sydney) Pty Ltd v Sherman (No 2) [2021] NSWCATAP 272 we ordered that Mr Sherman's application to the Tribunal be dismissed.
The respondent to that application, the appellant on the appeal, seeks its costs of the new hearing. That application is opposed.
This is our decision on costs and assumes familiarity with our decision referred to above.
Both parties consented to this costs application being dealt with on the papers, and we are satisfied that an order can be made dispensing with an oral hearing of that application as we are satisfied that the issues for determination can be adequately determined in the absence of the parties by considering their written submissions provided to us.
[2]
Submissions and Decision
LSH correctly submitted that the general position is that parties bear their own costs of proceedings before the Tribunal and that, if satisfied that special circumstances exist per s 60(3) of the Civil and Administrative Tribunal Act 2013 (NSW) (the "NCAT Act") warranting an award of costs, the Tribunal may award costs.
LSH correctly submitted that in considering what amounts to special circumstances it has been consistently held by the Tribunal that special circumstances are circumstances that are out of the ordinary, but they do not have to be extraordinary or exceptional.
LSH submitted that the special circumstances referred to in ss 60(3)(a), (c), (d) and (e) existed in this case which warranted an exercise of discretion in its favour in relation to costs.
The terms of those subsections are:
(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) …
(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 …"
In relation to s 60(3)(a) LSH submitted that the new hearing was necessitated by, and a direct result of, Mr Sherman's unreasonable refusal to accept any replacement vehicles offered by LSH.
LSH submitted that Mr Sherman was not entitled to reject, as he did, the two proffered replacement vehicles. LSH adopted the Appeal Panel's comments at [26] of our principal decision and submitted that had Mr Sherman accepted one of the replacement vehicles offered it is highly likely that that acceptance would have resolved the matter and the matter would not have proceeded to a new hearing.
This submission implies that Mr Sherman was not entitled to reject the replacement vehicles, and that we had so held. However, that is not the case as [26] of our principal decision was in qualified terms. It said:
"Further, Cl 8 of Sch 4 requires non-compliance with an order and it is not clear to us what (consent) order was not complied with. In addition, it is not clear to us that Mr Sherman was entitled to reject the two proffered replacement vehicles on the basis he did given, on one interpretation, the Tribunal's order did not mean that an identical vehicle had to be proffered."
[Our emphasis in this costs decision]
We did not say at [26] that Mr Sherman was not entitled to reject the offered replacement vehicles, just that it was not clear to us that he was so entitled given one possible reading of an earlier Order by the Tribunal and all in the context of what was a moot discussion (before us) of the usual need for an order not having been complied with in renewal proceedings. Thus, there was no finding by us that Mr Sherman was not entitled to reject the replacement vehicles under the orders of the Tribunal then applying.
LSH went on to submit that because Mr Sherman had refused to accept the proffered replacement vehicles and it was inherently difficult for LSH to locate an identical replacement vehicle, LSH was forced to prosecute its appeal and the new hearing, and to seek orders clarifying Mr Sherman's right to reject the replacement vehicles offered.
LSH submitted that Mr Sherman unnecessarily disadvantaged LSH in that it necessitated the continuity of the proceedings, thereby increasing the costs incurred by the parties. LSH submitted that Mr Sherman should have accepted one of the replacement vehicles proffered by LSH which would have negated the need for LSH to press on and incur substantially more costs and take up more of the Appeal Panel's time.
We do not accept these submissions.
First, acceptance of these submissions would involve acceptance of LSH's implied and incorrect characterisation of [26] of our decision. [26] was qualified as we have explained, and we did not make any unqualified finding that Mr Sherman was not entitled to reject the proffered vehicles. It may have been that, had we been called upon to decide what the Order identified meant, that LSH was in breach of the order for failing to provide an identical make and model car to the one Mr Sherman ordered.
Second, in our view s 60(3)(a) is not directed to the matters raised by LSH. It is directed to the manner in which a party attends to the conduct and preparation of a matter for hearing, and whether that conduct and preparation causes the other party some disadvantage. Such conduct may include the raising of knowingly false or irrelevant issues, raising matters late and which necessitate an adjournment or adjournments and like matters, but does not include the matters raised by LSH.
Third, the relevant disadvantage is not the mere need to further contest proceedings, but some disadvantage in the actual contesting of the proceedings.
In relation to s 60(3)(c) and (e), LSH essentially submitted that Mr Sherman's claim was so weak that it should be regarded as frivolous, vexatious, was lacking in substance or had no tenable basis in fact or law.
LSH referred to the ultimate issue for determination, that Mr Sherman bore the onus of proof, the evidence Mr Sherman relied on and the reasons why we did not accept that evidence.
LSH submitted that the evidence relied upon by Mr Sherman was entirely incapable of establishing that alleged breach, and was "not just unreliable, it was inherently flawed". That quote came from the Appeal Panel's decision in Boughen v Kumar & Paentia (No 2) [2021] NSWCATAP 262 at [28] and was that Appeal Panel's assessment of the strength of the evidence led by the respondent in that case.
We would not characterise the evidence Mr Sherman led in the same terms. We accept Mr Sherman's submissions that s 60(3)(c) is not satisfied where an unsuccessful party's case was arguable, or even weak, but only where the party's case may be said to have been hopeless (or equivalent expressions such as cannot possibly succeed, manifestly groundless or clearly untenable) citing Kazzi v Bechara (No 2) [2021] NSWCATAP 244 at [18]-[19] and Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135 at [44].
Whilst it is true that we did not accept the evidence led by Mr Sherman, part of our reasoning included an acceptance of the evidence of Dr Casey. But be that as it may, we would not characterise Mr Sherman's evidence (and therefore his case) as being hopeless, inherently flawed, manifestly groundless or any similar expression.
Mr Sherman's evidence gave rise to an arguable case, albeit a weak one and one that ultimately failed. But it was not so weak that it could be regarded as unarguable, manifestly hopeless or some like expression.
Therefore, we do not accept LSH's submissions based on s 60(3)(c) and (e).
In relation to s 60(3)(d) LSH submitted that the new hearing was legally and factually complex and that we were called upon to determine whether, at a technical and granular level, there was a remediable fault within two highly specialised and complex systems.
LSH submitted that both parties tendered significant lay and expert evidence, engaged in extensive cross-examination of critical witnesses, were represented by solicitors and counsel, and made lengthy and complex oral and written submissions. LSH noted that the substantive hearing took three days.
LSH also submitted that it ran a defence relating to the bar to rejection arising under s 262(1)(c) of the ACL (NSW) and that that section had not been substantively considered in Australia. LSH submitted that it was required to embark upon an argument that was, in effect, novel, and commanded a reasonable amount of time at the hearing of the new hearing, notwithstanding that Mr Sherman's claim was otherwise inherently flawed (see paragraphs [13] to [17] above).
LSH submitted that the nature and complexity of the new hearing was sufficient to be considered 'out of the ordinary' and a 'special circumstance' under section 60(3)(d) of the NCAT Act.
Although we agree that the new hearing involved some complex issues, of both fact and law, we do not agree that they were out of the ordinary considering the complexity of many other cases which are heard in the Tribunal. In that sense, the complexity of this case was not out of the ordinary.
The submission about s 262(1)(c) of the ACL (NSW) is correct in that that section had not been substantively considered in Australia, and in that sense was novel, and it was not an easy point to decide. It did involve time and not inconsiderable effort in relation to written submissions, but did not take up much time at the hearing itself. At the end of the day we were not required to consider it, but in our view the complexity of that point was not out of the ordinary considering other complex points raised in the Tribunal.
Were we wrong about that, we would nevertheless not have exercised our discretion to make a costs order in favour of LSH. Even if satisfied that there are special circumstances, an Appeal Panel must further be satisfied that they are circumstances "warranting an award of costs" - Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21]; Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107] at [108]; The Owners - Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [10].
The exercise of the discretion requires the Tribunal "to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]; Obieta v Australian College of Professionals Pty Ltd (2014) NSWCATAP 38 at [81]; Khalafv Commissioner of Police [2019] NSWCATOD 178 at [29]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35].
In our view, even if the nature and complexity of the point identified were regarded as a special circumstance, in the context of this case we would not have regarded it as justifying an award of costs. It ultimately played no dispositive part in our decision, and even though we indicated that we would have accepted LSH's submissions on the point had we been required to decide it, we said that our acceptance of those submissions did not mean that Mr Sherman was denied all other remedies (at [261]). Therefore, that defence would only have operated to deny Mr Sherman one remedy, and we indicated we would not have granted that remedy in any event (at [262]) but would, had we found otherwise in his favour, awarded Mr Sherman compensation (at [264]).
Therefore, we do not accept LSH's submissions regarding s 60(3)(d).
[3]
Conclusion and Orders
In our view, the general position applying in the Tribunal that parties bear their own costs of proceedings should apply in this case.
We make the following orders:
1. An oral hearing of the appellant's application for costs of the new hearing is dispensed with.
2. The appellant's application for costs of the new hearing is dismissed.
3. Each party is to pay its and his own costs of the new hearing.
[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: 30 November 2021