Masters v Reserve Hotels Pty Limited atf NBF Trust

What are the relevant statutory provisions governing the current costs application?

1. The application for costs is governed by s 60 of the NCAT Act which provides as follows: 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. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section: "costs" includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
2. Both parties accepted that the application for costs was governed by s 60 of the NCAT Act. The effect of s 60(1) and (2) of the NCAT Act was set out in Allen v TriCare (Hastings) Limited [2017] NSWCATAP 25 at [71] and [76] as follows: [71] Section 60 of the NCAT Act states the general proposition in subs (1) that each party to proceedings in the Tribunal is to pay the party's own costs. Section 60(2) modifies this by permitting the Tribunal to award costs but "only if it is satisfied that there are special circumstances warranting an order of costs". … [76] "[S]pecial circumstances" for the purposes of s.60(2), are those which are out of the ordinary but they do not have to be extraordinary or exceptional: see the Appeal Panel in CBD Holdings Pty Ltd v Baguley [2016] NSWCATAP 168 [6]; citing the Court of Appeal in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] which concerned the same expression in the previous legislation governing the (then) Administrative Decisions Tribunal."
3. Accordingly, the issue is whether or not we are satisfied that there are special circumstances warranting an order for costs. Further, even in such case, there remains a discretion whether or not to award costs: see Diaspora Holdings Pty Ltd v Owners SP 68608 [2019] NSWCATAP 250.

Applicants' submissions

1. The Applicants submitted that special circumstances existed. The Applicants relied upon two matters as follows.
2. First, the Applicants contended that the Respondents made an unreasonable assertion that the basis for the Applicants' claim was a fraudulent "cash grab": see [18] of the Decision. This it was submitted was an unreasonable allegation of fraudulent conduct and the usual orders to be made in such a case is that costs should be awarded against the Respondents on an indemnity basis, citing White Industries (QLD) Pty Ltd v Flower & Heart (1998) 156 ALR 169 and on Appeal (1999) 87 FCR 134.
3. The Applicants submitted that this allegation was recklessly made and occupied substantial time in cross examination. It was contended this issue was not relevant to the real issues in dispute and the allegation appeared to motivate the Applicants' "no case" submission that similarly took up unnecessary time in the hearing.
4. Second, the Applicants contended that the Respondents did not act commercially in failing to make any offers to settle the proceedings. The Applicants submitted that this caused this conciliation to fail and it was not reasonable to make no offers of compromise.

Respondents' submissions

1. The Respondents submitted that there were no costs incurred by either of the Applicants and there has been no evidence produced of any costs incurred by the Applicants.
2. In respect of the assertion that the claim was a "cash grab", the Respondents stated that the term "money grab" was first raised by the Applicant Mr Masters in his evidence asserting it wasn't a money grab and as a consequence cross examination occurred on this issue.
3. The Respondents submitted that their contention was that the event did not occur and accordingly a realistic motive as to why someone would claim damages for an event which didn't occur is consistent with someone being after a "cash or money grab". It was said that the fact that the Applicants sought a huge amount for damages at mediation gave rise to a reasonable suspicion that the claim was motivated by seeking money. In any event, the term "cash grab" was withdrawn and the term not relied upon.
4. The Respondents submitted that the assertion that they were not acting commercially in failing to make an offer and in causing the mediation to fail has no foundation. The Applicants at the initial conciliation claimed $75,000 in damages each. Such a sum was unreasonable so that the failure of the parties to settle cannot be laid at the feet of the Respondents.

Consideration

1. We are not satisfied that any "special circumstances" exist which would justify departing from the usual rule under s 60 of the NCAT Act that each party should pay their own costs.
2. First, we do not agree with the Applicants' assertion that an unreasonable allegation of fraudulent conduct has been made by the Respondents. Rather, what was being pursued in cross examination was that the Applicants' motive in pursuing the claim was one of financial reward which may impact upon the reliability of the Applicants' evidence. In our view, whilst unsuccessful in this allegation, it could not be said to be an improper or recklessly made allegation.
3. Second, we are unable to be satisfied on the brief submissions made by the Applicants that the Respondents did not act commercially and caused the attempted conciliation to fail. The Applicants did not lead any evidence as to what offers were traded between the parties and what occurred at conciliation, which may have been the subject of privilege in any event.
4. We note the Respondents contend that the Applicants themselves sought unrealistic amounts by way of damages to settle the proceedings. Accordingly, in the absence of any evidence about such matters, we are unable to conclude that the Respondents unreasonably protracted the proceedings by acting uncommercially prior to the hearing.
5. In conclusion, there will be no order as to costs and the Applicants' application for costs will be dismissed.

Orders

1. The Orders of the Tribunal shall be: 1. Order pursuant to s.50(2) of the Civil and Administrative Tribunal Act 2013, dispensing with a hearing of the application for costs. 2. Each party to the proceedings in the Tribunal is to pay the party's own costs. 3. The application for costs by the Applicants is dismissed.

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 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: 26 June 2020