Mendonca v Tonna

Background

1. The applications before the Tribunal relate to a dispute between the parties concerning, amongst other things, whether there is a residential tenancy agreement between them in respect of a property located in Galston. Dr Mendonca claims that Mr Tonna signed a residential tenancy agreement and that Mr Tonna is in breach of the agreement. Mr Tonna claims that he is the beneficial owner of the property. Mr Tonna commenced Supreme Court proceedings seeking declarations in this regard in June 2016.
2. In all, Dr Mendonca has brought four applications seeking orders for termination and possession under the Residential Tenancies Act 2010 (the RT Act). Costs orders in the first three of these proceedings are at issue in this appeal.
3. RT 16/19949 (the first application) was lodged on 28 April 2016 and withdrawn on 1 November 2016.
4. RT 16/28340 (the second application) was lodged on 18 June 2016 and withdrawn on 1 November 2016.
5. RT 16/49008 was lodged on 8 November 2016 and withdrawn on 6 December 2016.
6. An application for costs in respect of the first and second applications was made on 9 September 2016 and an application for costs in respect of the third application was made on 8 December 2016.
7. The first, second and third applications have a complex procedural history, which is summarised at [4] to [24] of the Tribunal's reasons for decision. The summary does not set out all the details of the procedural history, but is sufficient for the purposes of a summary of relevant dates: 4. Dr Mendonca commenced two sets of proceedings in the Tribunal on 24 April 2016 and on 18 June 2016 respectively. Dr Mendonca also brought a third set of proceedings on 8 November 2016 after she withdrew the first and second set of proceedings on 2 November 2016. 5. The April 2016 application sought a termination of a residential tenancy agreement on several bases. The application was listed for conciliation hearing on 29 July 2016, but at the request of Dr Mendonca, the conciliation hearing was brought forward to 15 June 2016. The initial hearing date of 29 July 2016 was given by the Tribunal on the basis that Dr Mendonca had informed the Tribunal in her first application that the notice of termination, which she had served on Mr Tonna, required him to vacate the property on 28 July 2016. 6. On or about 20 May 2016, Dr Mendonca wrote to the Tribunal indicating that she had served both respondents with a new notice to terminate tenancy agreement which provided a revised termination date of 10 June 2016. (At that stage, Dr Mendonca was pursuing her claims against both Mr Tonna and an alleged subtenant.) 7. At the conciliation hearing on 15 June 2016, the Tribunal was informed that Mr Tonna had that day commenced proceedings in the Supreme Court. The Supreme Court proceedings sought a declaration that Mr Tonna and his wife are the beneficial owners of the property over which the residential tenancy agreement was granted. 8. On 15 June 2016, the Tribunal adjourned the matter and gave directions about the filing and serving of evidence by both parties. The subtenant, Mr Nielson, was removed as a party. 9. On 26 June 2016, the Tribunal informed the parties that the matter had been allocated the hearing on 19 August 2016 at 9:15 AM. 10. The June 2016 application was filed by Dr Mendonca on 18 June 2017. This application sought several orders, including a termination order under section 87 of the Residential Tenancies Act 2010 ("the RTA"), based, this time, on a termination date of 10 June 2016. The second application also sought a payment of an amount of $40,000. 11. Although the Tribunal lists the second matter for conciliation hearing on 6 June 2016, at the request of Dr Mendonca, the June 2016 application was adjourned, in chambers, to 19 August 2016, so that it could be heard concurrently with the first set of proceedings commenced in April 2016, for which the hearing date had already been set. 12. During the hearing on 19 August 2016, Mr Tonna was represented by Ms Gatland of Counsel, instructed by Adams and Partners. Dr Mendonca was unrepresented. Both the April and June 2016 applications were heard together. 13. The focus of the hearing on 19 August 2016 was the assertion by Dr Mendonca that there was a residential tenancy agreement entered into between Mr Tonna and herself, that Mr Tonna had sublet the premises and that no rent had been paid for the premises by Mr Tonna or anyone on his behalf for a long time that the residential tenancy agreement should be terminated due to the failure of Mr Tonna to pay rent. 14. Some other issues were raised, such as some alleged illegal constructions on the property, for the purposes of these reasons the claims made by Dr Mendonca on 19 August 2016 need not be canvassed in any detail. 15. However, there was one very important issue - whether or not Mr Tonna had signed a residential tenancy agreement. Dr Mendonca asserted that he did and Mr Tonna asserted that he did not sign any document in the nature of a residential lease. 16. On 19 August 2016, Dr Mendonca had given her evidence-in-chief and was in the course of cross-examination by Ms Gatland when the matter was adjourned part heard. The matter was adjourned because Dr Mendonca had been informed the time allocated for the hearing was 4 hours and, on that basis, she had arranged to see patients in the afternoon. As it happened, the Tribunal was able to continue hearing the matter into the afternoon on that occasion. 17. In the course of adjourning the matter, the Tribunal made a number of procedural directions for the future conduct of the proceedings. 18. Dr Mendonca was granted leave to be represented. Orders were made in relation to the production of original condition report and the document asserted to be the residential tenancy agreement allegedly signed by Mr Tonna. 19. By Request for Withdrawal of Application dated 1 November 2016, Dr Mendonca withdrew the April application and the June application. On 4 November 2016, the Tribunal dismissed both applications in accordance with s 55(1)(a) of the Civil and Administrative Tribunal Act 2013 ("the CATA"). 20. Also on 4 November 2016, the solicitors instructed by Dr Mendonca, TressCox, filed an application seeking an order that "The withdrawal of these (April and June) proceedings made on 2 November 2016 be void and the proceedings are reinstated". The Tribunal declined to reinstate the April and June 2016 proceedings on the basis that it had no power to do so. 21. On 8 November 2016, Dr Mendonca, through her solicitors, filed a third application. There were many orders sought in that application including the payment of an amount of $30,000 and an order terminating the tenancy. 22. After filing the third application, Dr Mendonca's solicitors sought the exercise of the Tribunal's discretion under s 41 of the CATA to extend the time under regulation 22 (2) of the Residential Tenancies Regulations 2010 in relation to the notice of termination allegedly served on Mr Tonna in May 2016. The Tribunal declined to exercise its discretion for the reasons set out in its determination on 29 November 2016. 23. Dr Mendonca's solicitors withdrew the third application on 2 December 2016. The Tribunal dismissed the third application under s 55(1)(a) of the CATA on 6 December 2016. 24. On 8 December 2016, Mr Tonna's solicitors lodged an application seeking an order that Dr Mendonca pays the costs of Mr Tonna on an indemnity basis in respect of the now withdrawn third application filed by or on behalf of Dr Mendonca.
8. Mr Tonna's costs applications were listed for directions on 16 February 2017. Directions were made for the provision of submissions on costs, the time for which expired on 24 March 2017.
9. Dr Mendonca's fourth application, RT 16/54987, was lodged on 20 December 2016. In it she seeks termination of the claimed residential tenancy agreement with Mr Tonna on the basis of non-payment of rent and an order for payment of rent arrears. The matter was listed for a hearing on jurisdiction on 4 April 2017. On 22 June 2017, the Tribunal (differently constituted to the Tribunal that determined the costs applications the subject of this appeal) stayed the proceedings and made directions for the parties to file and serve submissions concerning whether the proceedings should be transferred to the Supreme Court to be heard with Mr Tonna's proceedings. The Tribunal's decision in that regard is also on appeal and is listed for hearing on 31 August 2017.

Tribunal orders

1. The Tribunal made the following orders: 1. In relation to matters RT 16/19949 and RT 16/28340: a. Mr Tonna's costs of his representation both by solicitor and by counsel on 19 August 2016 are to be paid by Dr Mendonca on the ordinary basis, as agreed or assessed, within 14 days of such agreement or assessment. b. Mr Tonna's costs incurred in matters RT 16/19949 and RT 16/28340 between 2 November 2016 and 16 February 2017 are to be paid by Dr Mendonca on an indemnity basis, as agreed or assessed, within 14 days of such agreement or assessment. 2. In relation to matter RT 16/49008: a. Dr Mendonca is to pay the costs of Mr Tonna incurred in matter RT 16/49008 between 8 November 2016 and up to and including 16 February 2017 on an indemnity basis, as agreed assessed, within 14 days of such agreement or assessment. 3. In relation to the costs applications made in respect of matters RT 16/19949, RT 16/28340 and RT 16/49008: a. Dr Mendonca is to pay the costs of Mr Tonna incurred in those applications on an indemnity basis, as agreed or assessed, within 14 days of such agreement or assessment.

Grounds of Appeal

1. In the Notice of Appeal, Dr Mendonca sought leave to appeal on the grounds that the decision was not fair and equitable and that significant new evidence was now available that was not reasonably available at the time of the hearing. However, she withdrew the significant new evidence ground at the hearing.
2. The particulars of Dr Mendonca's ground of appeal, as articulated in the Notice of Appeal are: 1. The Tribunal and Mr Tonna denied her procedural fairness; 2. The Tribunal erred at [68] and failed to give reasons why it did not consider the 17 November 2017 hearing in the exercise of its discretion to award costs; 3. The Tribunal failed to give reasons about the unreasonable conduct of Mr Tonna that unreasonably disadvantaged her and unreasonably prolonged the proceedings; 4. The Tribunal erred in not ordering Mr Tonna to pay her costs or erred in not ordering that each party pay its own costs; 5. The Tribunal erred in ordering her to pay Mr Tonna's costs on an indemnity basis instead of an ordinary basis; 6. The Tribunal erred in finding special circumstances existed for an order for costs.

Orders sought on the appeal

1. According to the Notice of Appeal, the orders sought on the appeal are: 1. Extension of time or stay of appeal be GRANTED to file new evidence in support of the finding and new evidence of the finding that Mark Tonna signed the Residential Tenancy Agreement of 17 February 2014. 2. Extension of time or stay of appeal be GRANTED to file new evidence of the finding that the Tribunal has jurisdiction under Clause 5 of Schedule 4 of Civil and Administrative Tribunal Act 2013. 3. The appeal be ALLOWED under Section 81(1)(a) of the Civil and Administrative Tribunal Act 2013 and decision of 5 May 2017 under appeal be set aside and another decision be substituted for it under Section 81(1)(c) of the Civil and Administrative Tribunal Act 2013 that Mark Tonna be ordered to pay costs of Renuka Mendonca on an indemnity basis (after considering significant new evidence of Mark Tonna's misconduct and its findings). 4. The Appeal be ALLOWED under Section 81(1)(a) of the Civil and Administrative Tribunal Act 2013 and under Section 81(1)(e) of the Civil and Administrative Tribunal Act 2013 the whole or part of the costs case be reconsidered by the Tribunal with further evidence of the finding whether Mark Tonna signed the Residential Tenancy Agreement of 17 February 2014 or not.
2. At the hearing, Dr Mendonca agreed that she had not sought an order for costs in the proceedings before the Tribunal and confirmed that the orders she was seeking on the appeal are: 1. An order allowing the appeal; 2. An order that the parties pay their own costs; 3. In the alternative, an order that she pay Mr Tonna's costs on the ordinary basis.

Scope and nature of the appeal

1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NCAT Act).

Question of law

1. The Appeal Panel considered a right to appeal on a question of law in John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast) and at [13] set out a non-exhaustive list of questions of law that might arise from Tribunal decisions. In summary, the questions of law identified are: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
2. In this case, Dr Mendonca claims that she was denied procedural fairness, which if established gives rise to a question of law. She has not otherwise specified any questions of law as a ground of appeal.
3. However, as Dr Mendonca is self-represented, it is appropriate for us to examine the grounds of appeal generally to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations that might arise to Mr Tonna: Prendergast at [12]
4. We are satisfied that is appropriate to consider whether adequate reasons were given for the award of costs against Dr Mendonca on an indemnity basis, even though adequacy of reasons was not raised in the Notice of Appeal. We reached this conclusion because: 1. The issue of indemnity costs was raised in the Notice of Appeal, albeit in the context of a claim that the decision was not fair and equitable; and 2. Mr Tonna's counsel, Ms Gatland, had an opportunity to make submissions concerning the issue during the appeal hearing.

Determining an appeal

1. The Appeal Panel's powers in determining an appeal are set out in s 81 of the NCAT Act, which states: 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following: (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when varying, or making a decision in substitution for, the decision under appeal.

Submissions and evidence

1. In making a decision in relation to the appeal, we have considered the oral submissions made by Dr Mendonca and Ms Gatland during the hearing and: 1. The Notice of Appeal filed on 18 May 2017; 2. The bundle of documents filed by Dr Mendonca on 30 June 2017; 3. The Reply to Appeal filed on 26 May 2017; 4. Submissions filed on behalf of Mr Tonna on 26 July 2017; 5. Dr Mendonca's submissions in reply filed on 31 July 2017.

Issues

1. The issues to be determined on the appeal are:

• Was Dr Mendonca denied procedural fairness?
• Did the Tribunal err in finding that special circumstances warranted an order for costs, either in respect of the three proceedings or in respect of the costs applications?
• Did the Tribunal give adequate reasons for the award of indemnity costs?
• If not, should the appeal be allowed on that basis?
• If the appeal is allowed, what orders should be made?

1. The Tribunal's power to make a costs order in circumstances where an application had been withdrawn was vigorously argued in the Tribunal below. We note that the Tribunal's finding that it had such a power is not an issue on appeal. We agree that the Tribunal had the power to make an order for costs, even though the applications in respect of which the costs orders were made had been dismissed under s 55(1)(a) of the NCAT Act because they were withdrawn.
2. We also agree that the costs applications were appropriately determined under s 60 of the NCAT Act and not under cl 38 of the Civil and Administrative Tribunal Rules 2014 (the Rules). This is also not an issue on the appeal.

Was Dr Mendonca denied procedural fairness?

1. A denial of procedural fairness is a question of law: Italiano v Carbone [2005] NSWCA 177.
2. Procedural fairness concerns the fairness of the proceedings and not the decision itself. In relation to this, in her written submission and in her oral submission at the hearing, Dr Mendonca made much of applications for adjournments and stay applications made by Mr Tonna in the period leading up to the hearing on 19 August 2016 as well as problems she encountered in obtaining legal advice because she was under cross-examination in the period after the hearing on that date.
3. There are two problems with Dr Mendonca's submissions in this regard. The first is that no order for costs was made in respect of the period prior to 19 August 2016 and the period between 19 August 2016 and 1 November 2016 (the date on which the first applications were withdrawn). The second is that Dr Mendonca's submissions do not address the manner in which the costs applications were dealt with.
4. There is nothing in the material before us to suggest that Dr Mendonca was denied procedural fairness in the hearing and determination of the costs applications. Dr Mendonca had an opportunity to make submissions in response to the costs applications and availed herself of that opportunity. The reasons for decision make it clear that her submissions were considered when the Tribunal made its decision.
5. We are not satisfied that Dr Mendonca has established that she was denied procedural fairness in the determination of the costs applications.

Did the Tribunal err in finding that special circumstances warranted an order for costs, either in respect of the three proceedings or in respect of the costs applications?

1. Section 60 of the NCAT Act 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. (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. The Appeal Panel has considered what constitutes special circumstances warranting an order for costs on a number of occasions. For the purposes of s 60(2) of the NCAT Act "special circumstances" are circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], citing Cripps v G & M Mawson [2006] NSWCA 84 at [60].
3. Further, as the Appeal Panel noted in eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]: [T]he discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. Each situation must, of course, be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs.
4. The Tribunal's reasons for finding that special circumstances warranted an order for costs in the three proceedings are set out from [53] to [93] of the reasons for decision.
5. In summary, the relevant special circumstances found by the Tribunal were that:

• Dr Mendonca conducted all three proceedings in a manner that unnecessarily disadvantaged Mr Tonna from a costs perspective;
• Dr Mendonca had been responsible for unnecessarily prolonging the completion of the proceedings by seeking to have the first two applications reinstated after they were withdrawn (in circumstances where the was no power to reinstate the proceedings) and in bringing a third set of proceedings that was ill considered and subsequently withdrawn, but not until after an unsuccessful application for an extension of time was brought;
• Mr Tonna was involved in litigation which was ultimately withdrawn and which incurred unnecessary costs;
• Three withdrawals of proceedings is in itself out of the ordinary;
• Costs thrown away in respect of the first two proceedings cannot be determined, with two exceptions; these exceptions being the wasted costs of the hearing on 19 August 2016 and the unnecessary costs expended as a consequence of Dr Mendonca's attempts to have the withdrawals of the first two applications set aside and the matter reinstated;
• The fact that the third application relied on a notice that had expired in about May 2016, more than thirty days earlier than the date on which the application was filed was brought to Dr Mendonca's attention on 17 November 2016 and Dr Mendonca was given until 24 November 2016 to consider withdrawing the application. Rather than doing so, Dr Mendonca made an application seeking an extension of time to make the application, which was refused on 29 November 2016;
• The continuation of the third proceedings until 2 December 2016, when Dr Mendonca's solicitor wrote to the Registry withdrawing the application disadvantaged Mr Tonna. The proceedings were unnecessarily prolonged and were ill-conceived;
• The actions of Dr Mendonca in the withdrawal of all three proceedings must be seen as special circumstances warranting an order for costs against her. Any other finding would impose an injustice on Mr Tonna.

1. Having considered the Tribunal's reasons for decision, the written submissions in relation to costs made to the Tribunal below and the written and oral submissions on the appeal, we conclude that it was open to the Tribunal to determine that Dr Mendonca's conduct of the proceedings was "out of the ordinary" and constituted special circumstances warranting an order for costs.
2. In this regard, we agree that Dr Mendonca's: 1. unilateral withdrawal of two applications after the hearing on 19 August 2016; 2. unmeritorious applications to reinstate those applications when the Tribunal had no power to make such an order; 3. commencement of a third application which at least in part relied on a stale termination notice; and 4. unsuccessful application for an extension of time to lodge the third application when Dr Mendonca's solicitor was aware of the problems with the third application are circumstances that are sufficiently out of the ordinary to constitute special circumstances warranting an order for costs on the basis that the conduct of the proceedings caused disadvantage to Mr Tonna.
3. This is particularly so given that the Tribunal did not make an order in relation to all costs incurred in the proceedings, but rather identified costs of the 19 August hearing and of the period after the withdrawal of the two first applications as periods warranting such an order.
4. We note Dr Mendonca's submission that Mr Tonna was the cause of delays in conduct of the proceedings after the hearing on 19 August 2016 because Mr Tonna's solicitor did not consent to her speaking to her solicitor because she was under cross-examination. However, we are of the view that this issue was satisfactorily addressed at [67] to [68] of the reasons for decision.
5. Dr Mendonca also stated in the Notice of Appeal that the Tribunal had not considered the 17 November 2016 hearing when it exercised its discretion to make an order for costs. We disagree with that proposition. The Tribunal clearly considered what had occurred at that directions hearing at [74] to [77] of the reasons for decision.
6. Overall, we are not satisfied that Dr Mendonca has established that the Tribunal erred in finding that special circumstances existed for the purposes of s 60(2) of the NCAT Act, either in respect of the three withdrawn applications or in respect of the costs applications.
7. The Tribunal's finding that special circumstances existed enlivened the discretion to make an order for costs. Exercising that discretion judicially required the Tribunal to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which was not arbitrary or capricious: see Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72; 72 ALJR 578; 152 ALR 83 per Gaudron and Gummow JJ at [22] and McHugh J at [65].
8. We are satisfied that the Tribunal had regard to relevant considerations and did not exercise the discretion in an arbitrary or capricious manner. Rather, it is clear from the reasons for decision that in making a decision to award costs, the Tribunal considered the conduct of the three applications and the submissions of the parties.

Did the Tribunal give adequate reasons for the award of costs on an indemnity basis?

1. As noted above, the Tribunal ordered Dr Mendonca to pay Mr Tonna's costs on the ordinary basis in respect of the hearing on 19 August. Otherwise, it ordered the payment of costs on an indemnity basis.
2. The Tribunal reserved its decision on costs and gave written reasons for decision. Written reasons for a reserved decision should comply with s62(3) of the NCAT Act, which provides that a statement of reasons should set out the following: (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, (c) the reasoning processes that lead the Tribunal to the conclusions it made.
3. The Appeal Panel in Collins v Urban [2014] NSWCATAP 17 found that there is also a common law obligation to give reasons for a decision. In relation to this obligation, the Appeal Panel said: 47 Section 62 establishes a regime under which the Tribunal is not under an express statutory obligation to provide reasons for a decision unless a party makes a request for reasons under s 62(2) but the Tribunal may and in many cases does prepare and give reasons for decision, whether oral or written, without a request to do so from the parties, consistently with s 62(4). 48 A provision such as s 62 of the Act does not, however, define exhaustively when there is a duty to give reasons or the extent of that duty. 49 One reason why reasons are generally required, notwithstanding a provision such as s 62, is that if reasons for decision are neither sought nor prepared and an appeal or application for leave to appeal is lodged, the findings of fact and legal reasoning of the decision maker at first instance would not be available to the appellate body by way of written reasons. In many instances not having findings of fact and legal reasoning explicitly available may render effectively worthless any appeal right because the appellate body does not have a statement of the findings of fact, the relevant law and explanation of how the law was applied to the facts as found, by the decision maker at first instance.
4. We also note Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110, in which the Court of Appeal said that the giving of adequate reasons lies at the heart of the judicial process and that the reasons must do justice to the issues posed by the parties' cases.
5. Although we consider that the Tribunal's reasons for decision, including in relation to the finding that special circumstances exist, are generally satisfactory, we conclude that the Tribunal did not give reasons for its decision that costs should paid on an indemnity basis in orders 1b, 2a or 3a.
6. The reasons for decision do not set out a reasoning process which explains how the Tribunal concluded that costs (other than those costs which relate to the hearing on 19 August 2016) should be paid on an indemnity basis rather than on the ordinary basis. Rather, the Tribunal, having found that special circumstances existed, merely ordered that costs be paid on an indemnity basis.
7. We have concluded that the Tribunal made an error of law in not giving reasons for its order that costs be paid on an indemnity basis. We have determined that the appeal should be allowed in part for this reason.

What orders should be made?

1. Having concluded that the appeal should be allowed in part, we have decided that it would not be appropriate to remit the proceedings to the Tribunal for reconsideration. This would cause the parties unnecessary expense and delay. We have decided to re-exercise the discretion and determine whether the orders for costs set out in orders 1b, 2a and 3a should be ordered on the ordinary or an indemnity basis.
2. We note that the possibility that the appeal could be allowed in relation to the indemnity costs issue was raised with the parties at the hearing and they were given an opportunity to make submissions. We have taken those submissions into account and have also considered the submissions on costs made at first instance.

Submissions

1. Mr Tonna's submission on costs dated 6 March 2017, which was before the Tribunal below, seeks an order for costs on an indemnity basis. However, the submission does not address why the Tribunal should make such an order. At the appeal hearing, Ms Gatland submitted that in making an order for costs the Tribunal has an unfettered discretion, it can assess the conduct of the parties and can make a costs order as it sees fit. She argued that Dr Mendonca's conduct of the three proceedings was such that a costs order on an indemnity basis was warranted.
2. Dr Mendonca's written submission on costs dated 22 March 2017, which was before the Tribunal below, argues that no order for costs should be made. Much of the submission concerns Dr Mendonca's argument that the Tribunal had no power to make a costs order because the proceedings had been withdrawn. However, given the absence of specific submissions in support of an application for indemnity costs, it is not surprising that Dr Mendonca's submission does not address the basis on which the Tribunal should make a costs order if it decided to award costs. At the appeal hearing, Dr Mendonca argued that it would not be appropriate to order indemnity costs, in particular given that in the Tribunal the usual rule is that parties pay their own costs.

Determination of the issue

1. We are not disturbing the Tribunal's finding that special circumstances apply. Nor are we disturbing the Tribunal's exercise of the discretion to make costs orders. The issue we are deciding is whether to make costs orders in the proceedings on the ordinary basis or on an indemnity basis.
2. Indemnity costs are only awarded in limited circumstances. The discretion to do so must be the subject of careful reasoning (Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354) and caution should be exercised in making such an award: Leichhardt Municipal Council v Green [2004] NSWCA 341; Ng v Chong [2005] NSWSC 385 at [13].
3. Other than in relation to the unreasonable refusal of a genuine offer of settlement, one circumstance in which indemnity costs may be awarded is when a case is commenced or continued where there is no chance of success (Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4]), such as where the claim is "without substance", "groundless", "fanciful or hopeless" or so weak as to be futile, such as where a limitation period is obviously at an end: Hillebrand v Penrith Council [2000] NSWSC 1058. However, mere weakness of a case will not be sufficient to warrant an exercise of the discretion to award indemnity costs: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534.
4. In this case, Dr Mendonca's fundamental case is that she has a residential tenancy agreement with Mr Tonna and that he owes a significant amount of rent arrears. While some aspects of the proceedings before the Tribunal clearly lacked merit - in particular the application to reinstate proceedings that had been withdrawn - we do not consider that her case overall was so weak that it would have had no chance of success had her applications not been withdrawn.
5. Another circumstance which may warrant an order for costs on an indemnity basis is where the proceedings amount to an abuse of process: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362. Examples of abuse of process include where the proceedings are commenced other than in good faith or for an ulterior or collateral purpose: Palmer v Gold Coast Newspapers Pty Ltd [2013] QSC 352; Packer v Meagher [1984] 3 NSWLR 486 at 500. Regardless of whether there is in fact a residential tenancy agreement between the parties, we are not satisfied that Dr Mendonca's applications either individually or collectively were made in bad faith or amount to an abuse of process.
6. An award of indemnity costs may also be made for unreasonable conduct. Such conduct may include unnecessarily prolonging the proceedings, (Degmam Pty Ltd (in liq) v Wright (No 2), at 358); unfounded allegations of fraud or improper conduct (Maule v Liporoni (No 2) (2002) 122 LGERA 216 at 229); deliberate or high-handed conduct (Rouse v Shepherd (No 2) (1994) 35 NSWLR 277) and behaviour which causes unnecessary anxiety, trouble or expense, such as the failure to adhere to proper procedure (FAI General Insurance Co Ltd v Burns (1996) 9 ANZ Ins Cas 61-384). Disregard of court orders may justify an indemnity costs order (O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [35]). Perverse persistence by an unrepresented litigant with a hopeless application may also do so: Rose v Richards [2005] NSWSC 758.
7. Misconduct of a serious nature, such as fraud, perjury, contempt or dishonest conduct may also justify costs being awarded on an indemnity basis: Berkeley Administration Inc v McClelland [1990] FSR 565 at 568-569; Ivory v Telstra Corporation Ltd [2001] QSC 102); Vance v Vance (1981) 128 DLR (3d) 109 at 122.
8. We note that Mr Tonna alleges that the residential tenancy agreement Dr Mendonca relies on is not a genuine document. However, this issue has not yet been decided on the merits and we are not satisfied that Mr Tonna has established that Dr Mendonca has engaged in serious misconduct. Further, while aspects of Dr Mendonca's conduct of the proceedings caused disadvantage to Mr Tonna, we are not satisfied that her conduct was so unreasonable that it warrants costs being awarded on an indemnity basis.
9. Overall, we have concluded that the proper exercise of the costs discretion is for costs to be awarded on the ordinary basis and not an indemnity basis. We have therefore varied those parts of the Tribunal's orders which state that costs are to be paid on an indemnity basis.

Costs of the appeal

1. During the hearing, the parties were not ready to address us on costs of the appeal. We advised that we could set out our preliminary views on costs in our reasons for decision and make directions for the provision of any submissions on costs.
2. We can only make an order for costs of the appeal if special circumstances are established. Our preliminary view is that this is a matter in which the parties should bear their own costs. We do not consider that there is anything in the material currently before us which suggests that special circumstances would warrant an order for costs of the appeal.
3. Our view in this regard is subject to any submissions made by the parties. We have therefore made orders for the provision of submissions in the event that either party seeks an order for costs. The parties are on notice that, subject to any submission they make on the issue, we intend to dispense with a hearing on any costs application and decide the issue on the papers.

Orders

1. We make the following orders. 1. The appeal is allowed in part. 2. The orders made on 5 May 2017 in RT 16/19949, RT 16/28340 and RT 16/49008 are varied to substitute "on the ordinary basis" for "on an indemnity basis" in orders 1b, 2a and 3a. 3. The appeal is otherwise dismissed. 4. Any application for costs and a submission in support of the application must be provided to the Appeal Registry and the other party within 14 days of the publication of these orders. 5. Any submission in response to the application must be provided to the Appeal Registry and the other party within 14 days of receipt of the costs application. 6. Any submission in reply on the costs application must be provided to the Appeal Registry and the other party within 7 days thereafter.

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I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar

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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: 21 August 2017