Metrix Development Pty Ltd & Ors v Chen and Liang

The Appeal

1. The appeal was brought by the Appellants (who were tenants under a residential tenancy agreement with the Respondent landlords) following orders made by the Tribunal at first instance terminating the tenancy and making an order for possession, as well as an order for payment of an occupation fee. There was a further order to the effect that the bond was to be paid to the Respondents in reduction of rent arrears. In addition, there was an order authorising agents of the Respondents to enter the premises with an authorised valuer.
2. After lodgement of the Notice of Appeal the appeal came before the Appeal Panel for the purposes of a call-over and the hearing of an application for a stay on the operation of the orders made at first instance. At the call-over leave was given to the Respondents to be legally represented on the condition that there be no claim for legal costs of the appeal.
3. At the hearing of the appeal on 7 May, a solicitor, Ms Metledge, sought leave to appear for the Appellants. Leave was given.

Appellants' Submissions

1. The Respondents refer to and rely upon s 60 of the Civil & Administrative Tribunal Act 2013 NSW (the NCAT Act). The text of s 60 is 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. The Respondents submit that special circumstances exist warranting an order for costs in their favour and rely upon ss 60(3)(c), (e) and (g). The Respondents submits that the Appellants raised 12 grounds of appeal and were unsuccessful on all grounds.
3. The essence of the Respondents' submissions is that the appeal had no tenable basis in fact or law (relying upon s 60(3)(c)) and that the appeal was misconceived or lacking in substance (s 60(3)(e)). The Respondents refer to the judgment in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69, (1964) 112 CLR 125 for the proposition that for a claim to have no tenable basis in fact or law it must be so obviously untenable that it cannot possibly succeed. The Respondents submit that none of the submissions made by the Appellants met with acceptance by the Appeal Panel.

The Appellants' Submissions

1. The Appellants' submissions draw attention to the fact that on 23 April 2021 the Appeal Panel made an order giving leave to the Respondents to have legal representation on the condition that there be no claim for legal costs of the appeal. The Appellants submit that therefore the Respondents are prevented from making any claim for legal costs.
2. The balance of the Appellants' submissions seek to reargue the submissions made in support of the appeal. For example, the Appellants submit that they had an equitable set-off with respect to a claim for damages against the Respondents entitling them to rent abatement or rent reduction with the consequence that they were in fact not in arrears of their obligations to pay rent. The Appellants seek to rely upon letters sent to the Respondents described as "Calderbank offers", the last of which is contained in a letter dated 26 April 2021. That letter proposed a compromise by which each party released the other from "all current or future claims" and a promise by the Appellants to vacate within seven days of the execution of a "proper Deed of Release". The Appellants submit that the Calderbank offer made by the Appellants was more favourable to the Respondents than the Appeal Panel's decision.
3. The Appellants submit that notwithstanding the success of the Respondents, both at first instance and in the appeal, it would be appropriate for this Appeal Panel to be satisfied that there are special circumstances such as to give rise to an award for costs in favour of the Appellants. Accordingly, the Appellants make application for such an order.
4. In support of the application for an order for costs in favour of the Appellants the Appellants argue that s 60 is displaced by r 42.20(1) of the Uniform Civil Procedure Rules (UCPR). That rule contains the broad provision that if proceedings are dismissed costs should be paid by the plaintiff unless it appears to the court that some other order should be made. In addition, the Appellants submit that it would be in the interests of justice for the Appeal Panel to find that there are special circumstances warranting an award of costs against the Respondents.
5. Finally, the Appellants submit that r 38(2)(b) of the Civil & Administrative Tribunal Rules (the Rules) is applicable in this case because the amount of rent arrears in dispute was more than $30,000. In addition, the Appellants referred to the interim stay order made in the appeal proceedings which provided for the Appellants to have a stay on the operation of the possession order on the condition that the Appellants pay arrears of rent as at 30 March 2021 at which time the arrears exceeded $30,000.

Consideration

1. We will deal with the Respondents' application for an order for costs first and subsequently consider the Appellants' application for an order for costs.
2. Although the Respondents referred to ss 60(3)(c), (e) and (g) the tenor of the submissions was that the Appellants' position had no tenable basis in fact or law. Whilst it is true that the Appellants failed on all grounds of appeal, we do not consider that any of the grounds could be described as "so obviously untenable that it cannot possibly succeed" to use the language from the General Steel judgment. The grounds involved consideration of the provisions of the Residential Tenancies Act ( the RT Act) (in particulars ss 43, 44 and 45) and qualifications to the Appellants' right to quiet enjoyment, as regulated by the provisions of s 55 of the RT Act. For the same reasons we do not think that the appeal as a whole could be described as within the parameters of s60(3) (e).
3. We are of the opinion that the general position as contained in s 60(1) of the NCAT Act should prevail such that each party should pay the party's own costs. This is because we are of the opinion that the grounds of appeal put forward by the Appellants do not give rise to special circumstances warranting an award of costs.
4. Furthermore, and significantly, the Respondents had leave for legal representation on the condition that there would be no claim for legal costs. The submissions of the Respondents do not address why that condition should be displaced. Nor do we think that the conduct of the Appellants with respect to the appeal would justify an order for costs in the face of the condition imposed upon the Respondents.
5. We now turn to the Appellants' claim for costs. We obviously do not place any store upon those submissions which seek to re-agitate arguments put forward during the appeal and which have already been rejected. Insofar as the Calderbank letter is concerned, we do not agree that the letter of 26 April 2021 contains an offer more favourable to the Respondents than what the Respondents achieved in the appeal (namely dismissal of the appeal). The letter of 26 April 2021 included a proposal for mutual releases and that feature alone makes it impossible to conclude that the Calderbank offer was more favourable to the Respondents than dismissal of the appeal.
6. The Appellants also submitted that s 60 is displaced by the provisions in the UCPR referred to above. The basis for that submission was not explained and it would seem to us to be entirely inconsistent with s 60(1) of the NCAT Act. The UCPR apply "to each court referred to in Column 1 of Schedule 1 in relation to civil proceedings of a kind referred to in Column 2 of that Schedule" (UCPR, rule 1.5(1)). The Tribunal is not a court referred to in Schedule 1 to the UCPR. We do not accept that s 60 is displaced.
7. Finally, the Appellants assert that what was in dispute was an amount in excess of $30,000 and that therefore r 38(2) of the NCAT Rules applies. In our view, even if the appeal could be construed as one to which that rule is applicable, the result would be an order for costs in favour of the Respondents rather than an order for costs in favour of the Appellants. In any event, we are of the opinion that that rule is not applicable to the appeal proceedings which was entirely concerned with orders for termination of a residential tenancy agreement and not for an amount claimed or in dispute.
8. We are therefore of the view that the Appellants' submissions should be rejected.

Orders

1. It follows that the orders that are appropriate are the following: 1. An order dispensing with a hearing with respect to the parties' applications for costs is made. 2. The applications for costs orders are 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: 20 September 2021