Before the Tribunal are two applications for costs made by the respondent, Mr Mark Tonna, in the substantive proceedings - matters RT 16/19949, RT 16/28340 and RT 16/49008.
The applicant in the substantive proceedings is Dr Renuka Mendonca.
To avoid confusion, the Tribunal will refer to the parties by name in these reasons.
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.
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.
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.)
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
In the course of adjourning the matter, the Tribunal made a number of procedural directions for the future conduct of the proceedings.
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.
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").
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.
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.
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.
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.
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.
[2]
CONSIDERATION
The threshold issue is whether the Tribunal can award costs in respect of matters which are dismissed under s 55(1)(a) of the CATA.
In Edwards v CohenHandler Pty Ltd [2017] NSWCATAP 53, the Appeal Panel said at paragraphs 26 - 34:
26. As to (a), the appellants did acknowledge that the respondent had foreshadowed in its Reply that it would seek costs if it succeeded in its objection to jurisdiction. The appellants submit however the Member made a final order in the Substantive Decision, with the result was that the Tribunal's jurisdiction at first instance had been exhausted. The appellants argued that the Tribunal could only have retained jurisdiction to proceed as it did by making an order reserving the costs application for further consideration.
27. In our view, it is plain in this case that costs were a live issue that the Tribunal failed to address. In our view, this is not a circumstance to which the rule as to finality of proceedings reflected in the maxim functus officio is directed. The notice of order did not, in these circumstances, complete the proceedings. The Tribunal member had one task left to perform, to address the foreshadowed costs application.
28. In the leading case, Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11, the respondent to a review application before an administrative tribunal (the Minister), challenged the tribunal's decision to reopen its order dismissing the application. The Tribunal had dismissed the review application because the review applicant failed to appear at the hearing. The Tribunal reopened the matter when it learnt after the hearing that the review applicant had notified the Registry the previous day that he would be absent due to illness, and had sought an adjournment. The Tribunal decided to set a new hearing date. At the new hearing, attended by the review applicant, it revoked its earlier decision and granted the review application. The High Court upheld the Tribunal's approach.
29. In this case, as we see it, the Tribunal, inadvertently, failed to deal with an application that formed part of the proceedings, a foreshadowed costs application. It is common for parties in this Tribunal to reserve their right to press a costs application depending on the outcome of proceedings, especially in a case like the present where the respondent party is saying that the Tribunal is without jurisdiction or the Tribunal should not become involved in the dispute so as to avoid concurrent proceedings in different judicial forums.
30. Like the situation in Bhardwaj, the Tribunal denied the adversely-affected party (here the respondent) procedural fairness in not having the foreshadowed application addressed. On its face, therefore the Tribunal acted appropriately in giving directions for submissions and dealing with the application.
31. In Bhardwaj, the High Court accepted that the statutory scheme within which a Tribunal operates may manifest an intention that a final order not be able to reopened or revisited for any reason at all, however compelling it may be in the particular circumstances. The Court satisfied itself that the statutory scheme with which it was dealing (a detailed and complex one regulating the conduct of the Immigration Review Tribunal) did not have that effect.
32. In our view, there is nothing in the NCAT legislation that prevented the Tribunal Member from acting as he did. Moreover, the NCAT Act, like many tribunal statutes, includes the injunction that it is to act 'with as little formality as the circumstances of the case permit, and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms' (s 38(4)). Gleeson CJ drew attention in his reasons to a similar provision in the Immigration Review Tribunal's legislation, when he concluded at [14]:
The Act, in Pt 5 Div 5, prescribed the procedures according to which the Tribunal was required to conduct its review of the delegate's decision. If the Tribunal was not prepared to decide in the respondent's favour on the written material before it, then s 360 required that it give the respondent an opportunity to appear and give evidence and present arguments. The Tribunal set out to give the respondent such an opportunity. It intended to follow the statutory procedure. As a result of an administrative slip, it denied the respondent the opportunity that he wanted to have, and that the Tribunal intended to give him. And, in consequence, it dealt with the matter in the belief that the respondent had nothing to say by way of explanation of the conduct that had resulted in the cancellation of his visa. The Tribunal, through an administrative error, failed to implement its own intention, and failed to comply with the statutory requirement to give the respondent an opportunity to be heard. In its reasons for its "decision", the Tribunal merely noted the delegate's decision, and observed that nothing had been put before it as to why the decision was unfair or inappropriate. That did not amount to the conduct of a review. The Act provided, in s 353, that the Tribunal, in reviewing the delegate's decision, was not bound by technicalities or legal forms and should act according to substantial justice. When it learned of its own administrative error, the Tribunal recognised that it had not performed its functions and proceeded to do so.
33. The philosophy reflected in s 38(4) of the NCAT Act is reinforced by the provisions which follow, in s 38(5) (relating to fair procedures) and s 38(6) (relating to transparency).
We accept that position might be different if a party whose foreshadowed costs application is overlooked does not reagitate the application for some significant period after the handing down of the principal decision, and when any orders have been executed. But this is not a case of that kind.
Clause 9 of the Civil and Administrative Tribunal Regulation 2013 provides:
9 Additional power to set aside or vary decision determining proceedings
(1) In addition to any power that is expressly conferred on the Tribunal by the Act or enabling legislation to set aside or vary its decisions, the Tribunal may order that a decision it has made that determines proceedings be set aside or varied in either of the following circumstances:
(a) if all of the parties to the proceedings have consented to the making of the order to set aside or vary the decision,
(b) if the decision was made in the absence of a party and the Tribunal is satisfied that the party's absence has resulted in the party's case not being adequately put to the Tribunal.
Note.
The following provisions of the Act are examples of provisions that expressly confer powers to set aside or vary decisions of the Tribunal:
(a) section 45 (3) (which enables the Tribunal to revoke leave granted to a person to represent a party),
(b) section 53 (4) (which confers a power on the Tribunal to set aside proceedings and decisions involving procedural irregularities resulting from a failure to comply with provisions of the Act or the procedural rules in relation to the commencement or conduct of proceedings),
(c) section 63 (which confers a power on the President or a presiding member to correct obvious errors in decisions of the Tribunal),
(d) section 64 (3) (which enables the Tribunal to vary or revoke a non-disclosure order made under section 64),
(e) section 73 (3) (which enables the Tribunal to vacate or revoke an order with respect to contempt of the Tribunal).
(2) The Tribunal may make an order under this clause of its own motion or on the application of a party.
(3) Unless the Tribunal grants an extension under section 41 of the Act, an application for an order under this clause must be made within 7 days after the decision concerned was made.
(4) Except where the parties have consented to the making of the order, the Tribunal may not make an order under this clause unless the Tribunal has first:
(a) afforded the parties an opportunity to make submissions about the proposed order, and
(b) taken any such submissions into account.
(5) A party may not make an application for an order under this clause to set aside or vary a decision of the Tribunal if:
(a) an internal appeal or appeal to a court against the decision has been lodged or determined, or
(b) an application for a judicial review of the decision has been made or determined.
(6) A party may not, without the leave of the Tribunal, make an application for an order under this clause to set aside or vary a decision of the Tribunal if the party has previously made an application under this clause to have the decision set aside or varied.
(7) If the Tribunal sets aside a decision under this clause, it may also set aside any orders that it made consequent on the decision that has been set aside.
Note.
An example of such a consequent order may be an order for costs in the proceedings.
(8) Proceedings for the purposes of this clause are prescribed for the purposes of section 50 (1) (d) of the Act.
Note.
A hearing is not required for proceedings that are prescribed for the purposes of section 50 (1) (d) of the Act.
(9) This clause does not limit any power of the Tribunal to set aside, revoke or vary its interlocutory decisions or any other decisions that do not operate to determine proceedings.
The next issue to be determined is whether or not the Tribunal is required to find special circumstances before making any order for costs or is able to exercise its discretion under the power conferred by rule 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 ("the Rules"), which provides:
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:
(a) …
(b) the amount claimed or in dispute in the proceedings is more than $30,000.
Section 60 of the CATA 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.
The Tribunal said in Staniland v Integrity Homes Pty Ltd [2016] NSWCATCD at [45]:
45. The applicants argue that the amount claimed was in excess of $30,000.00 and accordingly the Tribunal has jurisdiction to award costs. This submission must be considered in light of the fact that a sum of $20,000.00 was claimed until August 2014. From August 2014 until February 2016 the claim was increased to $47,541.00 and from February 2016 until the Hearing the amount claimed was $38,130.00. If the Tribunal was to consider the amount claimed then the amount in dispute would have no work to do. At the start of the hearing the amount in dispute was the difference between the amount claimed by the applicants and the amount considered by the respondent, namely a sum of $24,435.72. The amount recovered was $26,902.17 being the amount found to be owing in the proceedings. I am not satisfied that this result will enliven r 38(2)(b) in favour of the party who was responsible for initiating the claim as the interpretation proposed by the applicants would enable any party to qualify for an order for costs simply by claiming an amount in excess of $30,000.00 in circumstances where the sum actually in dispute or likely to be recovered was less than $10,000.00. I accept the submissions of the respondent in this regard and I am not satisfied that r 38 can allow the applicant to overcome the restriction in this case. The position may be different where a successful respondent is obliged to defend a claim in excess of $30,000 brought by an ultimately unsuccessful applicant but I am not required to determine this issue at the present time.
Regulation 23 of the Residential Tenancies Regulation 2010 provides:
23 Monetary limit of jurisdiction of Tribunal: s 187 (4) (a) of Act
The amount prescribed for the purposes of section 187 (4) (a) of the Act is:
(a) if the order is with respect to a rental bond, $30,000, or
(b) in any other case, $15,000.
An instructive analysis of the operation of s 60 of the CATA is found in the decision of the Appeal Panel in Gaynor v Burns [2015] NSWCATAP 150. The Appeal Panel decision was overturned by the Court of Appeal on constitutional grounds (see Burns v Corbett; Gaynor v Burns [2017] NSWCA 3), but the deliberations made by the Appeal Panel in respect of the operation of s 60 of the CATA remain a useful guide.
At [16] to [19], the Appeal Panel said:
The words "special circumstances" appear in a number of legislative provisions, and have been subject of discussion and comment in respect of the relevant legislation under consideration in each case (see Cabal v United Mexican States [2000] FCA 7) and in this Tribunal (see CPD Holdings Pty Ltd t/a The Bathroom Exchange v Baguley [2015] NSWCATAP 21; Megerditchain v Kurmond Homes Pty Ltd [2014] NSWCATAP 120).
The Macquarie Dictionary defines "special" as follows:
Of a distinct or particular character.
… .
(6) Distinguished or different from what is ordinary or usual: special circumstances.
The drafting of s 60(1) evinces the intent of the legislature that generally each party to proceedings in the Tribunal shall be responsible for their own costs. Departure from s 60 (1) may occur but only if the Tribunal finds, there are "special circumstances" warranting it to do so. In determining whether there are special circumstances the Tribunal may, in a structured exercise of discretion, have regard to the criteria in s 60 (3) (a) - (g).
In Cripps v G & M Dawson [2006] NSWCA 81 Santow JA considered the words "special circumstances" as they appeared in s 88 (1) of the Administrative Decisions Tribunal Act 1997 (NSW) (repealed). That provision enabled the Tribunal to award costs in relating to proceedings before it only if it was satisfied there were "special circumstances warranting an award of costs". Santow JA set out the Tribunal's statement of relevant principle at [18] - [19] of its reasons and concluded that the Tribunal had erred in its application of those principles in failing to find "special circumstances" explaining at [60]
60 It is not necessary to determine whether in the circumstances the appellant committed equitable fraud. In my view it suffices that the conduct of Cripps and Jones, in relying upon their status as the registered proprietors of the freehold and the doctrine of indefeasibility of title to wrongly deny registration and consequently assignment of the lease, so acted as by their conduct to give rise to special circumstances; that is, circumstances that were clearly out of the ordinary and grossly unreasonable so far as the respondent tenant was concerned. On the one hand, the Tribunal correctly concluded that the respondent, through no fault of its own, has been placed in the situation where it has been forced to pursue this litigation. Yet it still failed to find special circumstances. With respect, I consider that the Tribunal was in error in failing to conclude that special circumstances here applied. For this purpose, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional. While a finding of "serious unfairness" is not prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration.
[our emphasis]"
The Tribunal finds that Mr Tonna's legal representatives had put Dr Mendonca and her legal representatives on notice as early as September 2016 that an application for costs would be made if Mr Tonna was successful in resisting the applications commenced in April 2016 and June 2016. A formal application for costs was filed on 9 September 2016.
The administrative dismissal of the April 2016 and June 2016 applications following their withdrawal by Dr Mendonca was made without affording Mr Tonna procedural fairness in not having his 9 September 2016 costs application addressed. The situation is no different to that found in Edwards. There was a foreshadowed costs application which was not dealt with by the Tribunal. In the circumstances, the s 55(1)(a) order did not complete the proceedings. The Tribunal, like in Edwards, had one last task to perform - to address the foreshadowed costs application.
The dismissal under s55(1)(a) of the CATA was an administrative act which did not complete the proceedings, because the September 2016 application for costs had not been dealt with. Whilst the dismissal affected the substantive proceedings instituted and withdrawn by Dr Mendonca, it could not and did not, in the Tribunal's opinion, have the effect of defeating the entitlement of Mr Tonna to pursue his costs applications if he so wished.
Applying the Appeal Panel's reasoning in Edwards, the Tribunal finds that the question of costs was alive issue which the Tribunal failed to address in dismissing the first two applications following Dr Mendonca's withdrawal of them.
The Tribunal's dismissal of the first and second set of proceedings in November 2016 denied Mr Tonna procedural fairness in not having his application addressed. The Tribunal finds that it has jurisdiction to deal with Mr Tonna's application for costs in respect of the April and June applications lodged by Dr Mendonca.
A costs application relation to the third withdrawn application was filed by Mr Tonna's legal representative on 8 December 2016, well within the seven days referred to in clause 9(3) of the Regulation.
It is put forward on Dr Mendonca's behalf that Mr Tonna is precluded from making an application for costs in respect of the third proceedings because there has been no application to set aside or vary the Tribunal's decision (within seven days or otherwise) pursuant to clause 9 of the regulation.
On 8 December 2016, Mr Tonna filed an application for costs in respect of the third application which had been withdrawn by Dr Mendonca on 2 December 2016. The application for costs filed in December 2016 also restated the application for costs made in September 2016 in respect of the April and July applications.
The Tribunal finds that Mr Tonna made an application for costs in respect of the third proceedings within seven days of Dr Mendonca withdrawing those proceedings.
Dr Mendonca's legal representatives submit that Mr Tonna has not made any application under clause 9 of the regulation and is now well out of the statutory seven days available for the application to be made. This submission overlooks the fact that a costs application was filed within time.
Section 38(4) of the provides:
(4) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.
It is clear from the Application for Miscellaneous Matters filed on behalf of Mr Tonna on 8 December 2016 that Mr Tonna contests the withdrawal and dismissal to the extent that the question of costs has not been determined. The application filed on 8 December 2016 is also clearly one in which an order is sought by a party absent when an order of the Tribunal was made.
The Tribunal is satisfied that the administrative operation of s 55(1)(a) of the CATA resulted in the inability of Mr Tonna to seek costs in relation to the withdrawal of third application until after the dismissal had occurred. The Tribunal finds that the application for costs filed on 8 December 2016 is an application for an order under clause 9 of the regulation and was made within seven days of the Tribunal's decision to dismiss the substantive application. The effect of the application filed on 8 December 2016 is to enliven the Tribunal's jurisdiction to deal with the costs application.
The Tribunal determines that it has power to deal with the costs applications made by Mr Tonna in respect of all three applications withdrawn by Dr Mendonca.
The next issue is to determine is if an award of costs should be made in favour of Mr Tonna. To enable the award of costs requires an exercise of the Tribunal's discretion.
In exercising the Tribunal's discretion to award costs, the Tribunal can only award costs if it is satisfied that there are special circumstances warranting an award of costs (s 60(2) of the CATA). However, rule 38 of the Rules authorises the Tribunal toward costs in the absence of special circumstances warranting such an award if the amount claimed in dispute in the proceedings is more than $30,000.
The Tribunal is not satisfied that the amount in dispute was more than $30,000. Whilst the first application filed by Dr Mendonca sought an order for a payment of $40,000, Dr Tonna's legal representatives could have been under no misapprehension the maximum claim by Dr Mendonca was, in respect of the money order sought, $15,000. That is the maximum amount available under Regulation 23 of the Residential Tenancies Regulation 2010. The Tribunal follows the reasoning in Staniland.
To enliven the Tribunal's jurisdiction to award costs under s 60(2) of the CATA, it is necessary for the Tribunal to be satisfied that there are special circumstances warranting an award of costs.
Although not prescriptive, the Tribunal may have regard to the elements referred to in s 60(3) of the CATA.
The Tribunal finds that the way Dr Mendonca has conducted all three proceedings (to the extent that the first two were withdrawn and to the extent that the third set of proceedings were ill-conceived) has unnecessary disadvantaged Mr Tonna in a costs perspective.
The Tribunal also finds that Dr Mendonca has been responsible for unnecessarily prolonging the completion of the proceedings. After withdrawing the first two proceedings, Dr Mendonca sought to have them reinstated. After that application for reinstatement was unsuccessful, Dr Mendonca brought a third set of proceedings which were ill considered and, subsequently, withdrawn, but not after an interlocutory application was made to correct shortcomings in the application.
The Tribunal, having regard to the comments made by the Appeal Panel in Gaynor, and taking into consideration the passage cited by the appeal panel from Cripps v G & M Dawson [2006] NSWCA 81, the Tribunal finds that the circumstances in which Mr Tonna found himself, through no fault of his own, placed him in a situation where he was involved in litigation which was ultimately withdrawn and which forced him to defend incurring unnecessary costs. The circumstances were clearly out of the ordinary. What transpired by the withdrawal of the three proceedings by Dr Mendonca visited serious unfairness upon Mr Tonna.
Applying the decision of Santow JA in Cripps, the Tribunal concludes that special circumstances apply. The circumstances of the three withdrawals is, in the Tribunal's finding, out of the ordinary. Furthermore, that finding is reinforced by the Tribunal's further finding that there has been a serious unfairness to Mr Tonna in the way the three withdrawn matters have been conducted. The unfairness arises from the costs that have been unnecessarily incurred by Mr Tonna in all three of Dr Mendonca's aborted applications.
Having found that special circumstances exist, it is necessary for the Tribunal to determine what costs should be awarded.
Dr Mendonca has instituted four sets of proceedings involving what is essentially a residential tenancy termination and possession application.
Three of those applications were unilaterally withdrawn by Dr Mendonca and the fourth application, it seems, has yet to be heard by the Tribunal.
The fact that there have been three withdrawals of proceedings is, in itself, out of the ordinary. The fact that Dr Mendonca continues to pursue her claims in a fourth application exacerbates the out of the ordinary nature of the proceedings.
It has been held on numerous occasions that an award of costs is an award to compensate the party in whose favour a costs order is made, rather than a punishment for the party against whom the order is made.
The Tribunal has found that the withdrawal of the first and second applications and the commencement of the third application constitutes special circumstances for the purposes of s 60(2) of the CATA.
The Tribunal has also found that the withdrawal of the third application again constitutes special circumstances for the purposes of s 60(2).
The submissions filed on behalf of Dr Mendonca assert that "it is impossible now to determine which costs are truly wasted, in circumstances where both the substantive issues (including the validity of the residential tenancy agreement according to expert evidence) and jurisdictional issues (given the NSWSC proceedings) have yet to be determined. Most of the parties' costs must relate to those issues since those are the issues that have been ventilated and inherently are the most expensive. "
The Tribunal accepts that submission to a limited degree. It is impossible for the Tribunal to determine what costs have been wasted in relation to the first and second applications - with two exceptions.
The first exception relates to the costs of Mr Tonna expended on 19 August 2016 which have been wasted. The action taken by Dr Mendonca in withdrawing her first two applications has visited upon Mr Tonna expenses in the engagement of legal representation to appear for him on 19 August 2016 which have been thrown away.
The submissions made on behalf the Dr Mendonca assert that there was some disagreement between the parties' representatives about allowing Dr Mendonca (who was still in cross examination from 19 August 2016) to confer with her counsel and this impasse was the major cause which led to the withdrawal of the first two applications by Dr Mendonca. The difficulty which flowed from Dr Mendonca being in cross examination was raised by Dr Mendonca's counsel sometime before 6 September 2016. In a letter dated 6 September 2016, Dr Mendonca's solicitors wrote to Mr Tonna's solicitors informing Mr Tonna's solicitors that Dr Mendonca's solicitors proposed to advise the Tribunal that her solicitors wished to speak with Dr Mendonca to ascertain her instructions. The terms of a proposed direction were submitted to Mr Tonna's solicitors. The submissions further state that the response provided by the legal representatives of Mr Tonna on or about 9 September 2016 were extremely limited and artificial.
The Tribunal files indicate that the solicitors representing Dr Mendonca filed an application for the matters to be relisted for the purposes of further directions to deal with this dispute. The application was not filed until 28 October 2016. Before the application could be listed for hearing by the Tribunal, Dr Mendonca withdrew her applications of April and June 2016 five days later on 2 November 2016.
The second exception relates to further costs unnecessarily expended by Mr Tonna for the work undertaken by Mr Tonna's legal representatives in consequence of Dr Mendonca's attempts to have the withdrawals of the first and second applications set aside and the matters reinstated. On 4 November 2016, Dr Mendonca sought an order that "The withdrawal of (the first and second) proceedings made on 2 November 2016 before it and the proceedings are reinstated".
The submissions filed on behalf of Dr Mendonca also stated at paragraph 104:
"Finally, it should be noted that the costs (sic) discretion ought be exercised separately in relation to third application, as opposed to the first and second applications. "
The Tribunal accepts that submission.
The third application was commenced on 8 November 2016 - 6 days after the first two applications were withdrawn by Dr Mendonca. It was lodged on Dr Mendonca's behalf by her solicitors.
The application sought seven orders - each under s 187(1) of the RTA. Orders sought under subsections a, b, c, e, f, h and i. The application did not seek any order under s 87 of the RTA upon which to ground the orders sought under s 187. Nevertheless, it was clear at the directions hearing held on 17 November 2017 that the third application was intended to seek an order terminating a residential tenancy agreement and an order granting possession of the property to Dr Mendonca.
At the directions hearing on 17 November 2017, Mr Tonna's barrister argued that the third proceedings are outside the jurisdiction of the Tribunal because they were brought at a time when an issue arising under the application was the subject of a dispute in proceedings pending before the Supreme Court. The Tribunal's attention was directed to sub clause 7 of clause 5 of Schedule 4 of the CATA.
Another issue which arose during the directions hearing on 17 November 2016 was that any notice of termination served on Mr Tonna in or about May 2016 would have been lapsed as the date of termination in the notice would have been more than 30 days earlier than the date upon which the third application was filed.
The solicitor who appeared on behalf of Dr Mendonca on that day said that her client wished to pursue the application despite those two issues.
To allow Dr Mendonca's solicitor to consider her client's position, the Tribunal made orders on 17 November 2017 requiring Dr Mendonca to advise the Tribunal and Mr Tonna by 24 November 2016 if Dr Mendonca sought to withdraw the third proceedings. The orders made also provided that if the proceedings are not withdrawn, written submissions were to be made about the jurisdictional point raised by the barrister for Mr Tonna.
Rather than notify the Tribunal by 24 November 2017 about if the third application was withdrawn, Dr Mendonca filed another application under regulation 22 (2) of the Residential Tenancies Regulation 2010 seeking an order to allow the third proceedings to continue despite the lapse of time between the alleged service of the notice of termination, the termination date under that notice, and the commencement of the third proceedings.
On 29 November 2016, the Tribunal provided a written determination to the parties that the Tribunal declined to exercise its discretion under s 41 of the CATA to extend time under regulation 22(2) of the Residential Tenancies Regulation 2010 to enable the third application to proceed based on, inter alia, the failure of Mr Tonna to comply with a termination notice alleged to have been served on or about 19 May 2016.
The Tribunal also determined that, to avoid any further interlocutory applications, the Tribunal extended the dates for the filing of submissions regarding the jurisdictional point.
In making that determination, the Tribunal said:
"The Application for Miscellaneous Matters is predicated on the desire of Dr Mendonca to save costs. No consideration has been given to any prejudice which may be suffered by Mr Tonna. Mr Tonna has undoubtedly occurred (should read "incurred") unnecessary expense in the withdrawal of the two prior applications by Dr Mendonca, the lodgment of the current application (in its present form) and the Application for Miscellaneous Matters now being dealt with. The guiding principle set out in s 36(1) of the Act is to facilitate the just, quick and cheap application of the principle to the interests of both the applicant and the respondent. The just, quick and cheap resolution of the real issues in the proceedings will be achieved more efficiently if the orders made on 17 November 2016 are complied with."
On 2 December 2016, Dr Mendonca's solicitors sent an email to the Penrith Registry withdrawing the third application on behalf of Dr Mendonca. The Tribunal dismissed the third application in accordance with s55(1)(a) of the CATA on 6 December 2016.
The Tribunal finds that the way the third proceedings were conducted by Dr Mendonca was out of the ordinary. The third proceedings were conducted in a way that disadvantaged Mr Tonna. They were unnecessarily prolonged and they were ill-conceived. The continuation of the proceedings until 2 December 2016 (and the institution of interlocutory proceedings in the meantime) was, in the Tribunal's view, seriously unfair to Mr Tonna, especially in view of the exchange between the Tribunal and Dr Mendonca's solicitor on 17 November 2017 which alerted Dr Mendonca's solicitor to the difficulties evident with the third application.
In relation to the costs applications in respect of the first and second proceedings (RT 16/19949 and RT 16/28340) the Tribunal makes an order that Dr Mendonca is to pay the costs of those proceedings as follows:
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.
Mr Tonna's costs incurred in relation to the first and second proceedings 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.
In making the orders in relation to the first and second proceedings, the Tribunal makes it clear that the costs orders made above are not intended to preclude either party from seeking to make a claim for costs in the fourth application lodged by Dr Mendonca which may have been incurred prior to the commencement of the fourth application (and not otherwise subject to the above costs orders). This gives effect to the submission made on behalf of Dr Mendonca that there will be some costs already incurred which have not been wasted and the work undertaken in the earlier proceedings will be utilised in the subsequent proceedings.
In relation to the costs application in respect of the third proceedings (RT 16/49008) Dr Mendonca is to pay the costs of Mr Tonna incurred in those proceedings 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.
The remaining issue which needs to be dealt with by the Tribunal is costs in relation to the costs applications.
As the Tribunal has found that Mr Tonna is entitled to orders for costs in respect of the costs thrown away on 19 August 2016 and costs incurred by him in relation to matter RT 16/49008, it follows that an order for costs to be made in favour of Mr Tonna.
Mr Tonna's barrister contends that the costs should be awarded on an indemnity basis.
Dr Mendonca's barrister submitted that that Dr Mendonca did not seek costs of the cost dispute because there are no live proceedings in which to make an order and the Tribunal had no power to make such an order, but if that was not the case, Dr Mendonca would seek costs on the basis that Mr Tonna's conduct in pressing what Dr Mendonca's barrister described as "this extraordinary and belated application for indemnity costs in a jurisdiction where no costs is the general rule and all three applications were already finally dismissed has acted sufficiently unreasonably and to the disadvantage of (Dr Mendonca) such that there are "special circumstances".
In all the circumstances, the Tribunal will exercise its discretion and award costs in relation to the costs applications to Mr Tonna on an indemnity basis. The submission on behalf of Dr Mendonca to attempt to displace the unfairness to Mr Tonna that his claim for costs, incurred in now defunct proceedings, through no fault of his, is unreasonable and disadvantageous to Dr Mendonca, is rejected.
The unnecessary costs involved in the three withdrawn proceedings have been brought about solely by the conduct of Dr Mendonca.
Objectively, the actions of Dr Mendonca in the withdrawal of all three proceedings commenced by her must be seen as "special circumstances" warranting an order for costs against her. The Tribunal has made that finding. Any other finding would impose an injustice on Mr Tonna. Mr Tonna is entitled to be compensated for the costs unnecessarily incurred.
For the avoidance of doubt, the Tribunal records that if there is an overlap in the work undertaken by Mr Tonna's legal representatives in relation to matter RT 16/49008 for which indemnity costs have been ordered and the work undertaken in relation to the costs applications for which indemnity costs have also been ordered, only one claim for those costs can be made.
[3]
Orders
In relation to matters RT 16/19949 and RT 16/28340:
1. 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.
1. 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.
In relation to matter RT 16/49008:
1. 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.
In relation to the costs applications made in respect of matters RT 16/19949, RT 16/28340 and RT 16/49008:
1. 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.
C R Xuereb
General Member
Civil and Administrative Tribunal of New South Wales
5 May 2017
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: 21 June 2017