Nuset Group Pty Ltd v Whitehead (No 2)

1. This is a costs application arising from the Appeal Panel decision in Nuset Group Pty Ltd v Whitehead [2025] NSWCATAP 127 (the substantive appeal decision).
2. The substantive appeal decision relates to an internal appeal by the appellant, Nuset Group Pty Ltd (Nuset), of a decision of the Consumer and Commercial Division that the appellant pay damages of $33,299.43 to the first respondent, Mr Leslie Whitehead. The claim was made under the Fair Trading Act 1987 (NSW) and the Australian Consumer Law (NSW) and related to the sale of a faulty Mercedes Benz Sprinter Van. The Tribunal also ordered that Nuset pay Mr Whitehead's costs as assessed or agreed. The appeal was made under s 80(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). Nuset applied for a stay of the orders. The stay was refused, and the costs of the stay were reserved pending the hearing of the appeal.
3. The second respondent, Mr Ian Creak, is a director of Nuset. He was personally joined to the proceedings in the Consumer and Commercial Division. The application against Mr Creak was dismissed and no orders were made against him. Consequently, he did not join in the appeal but because he was a party to the proceedings below, he was properly a party to the appeal. Mr Creak took no active part in the appeal, other than as the duly appointed representative of Nuset. No costs orders are sought in relation to or by Mr Creak in relation to the appeal.
4. On 5 June 2025 the appeal was dismissed. Procedural directions were made about the costs of the appeal. This costs decision is to be read in conjunction with the substantive appeal decision.
5. Mr Whitehead has made an application for costs of the appeal against Nuset. Nuset opposes the costs application.
6. I have made an order that Nuset pay Mr Whitehead's costs of the appeal, including the costs of the stay, on an ordinary basis as assessed or agreed. My reasons follow.

1. The general provision that governs costs in the Tribunal is s 60 of the NCAT Act, which is in Part 4. However, there are different rules for costs that apply across the Divisions of the Tribunal, depending on the proceedings, by reason of s 35 of the NCAT Act. Section 35 of the NCAT Act provides that each of the provisions in Part 4 is subject to the enabling legislation and procedural rules. The "procedural rules" are defined in s 4(1) as the Tribunal rules made by the Rules Committee. These procedural rules are contained in the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules). Because the decision under appeal was a proceeding in the Consumer and Commercial Division, the relevant rules that apply are rr 38 and 38A of the NCAT Rules. These rules therefore modify the general application of s 60.
2. Section 60 provides as follows:

60 Costs

(1) Each party to proceedings in the Tribunal is to pay the party's own costs.

(2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.

(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following -

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d) the nature and complexity of the proceedings,

(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(f) whether a party has refused or failed to comply with the duty imposed by section 36(3),

(g) any other matter that the Tribunal considers relevant.

(4) If costs are to be awarded by the Tribunal, the Tribunal may -

(a) determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis.

(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.

1. However, Rules 38 and 38A of the NCAT Rules provide:

38 Costs in Consumer and Commercial Division of the Tribunal

(1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal.

(2) 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) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or

(b) the amount claimed or in dispute in the proceedings is more than $30,000.

38A Costs in internal appeals

(1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of -

(a) enabling legislation, or

(b) the Division Schedule for the Division of the Tribunal concerned, or

(c) the procedural rules.

(2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.

1. Accordingly, in the appeal of a decision of the Consumer and Commercial Division, the costs provisions applying in the proceedings at first instance are carried over to the costs rules applying to the appeal of the decision. This amendment was made to the NCAT Rules and applies to all internal appeals lodged after 1 January 2026 where the provisions that applied to the determination of costs in the proceedings at first instance differed from the provisions set out in s 60 of the NCAT Act.
2. Relevantly, if the amount claimed or in dispute in the appeal is more than $30,000, the Appeal Panel will have a discretion to award costs, despite s 60 of the NCAT Act, and the Appeal Panel can make an order for costs in the absence of the costs applicant establishing "special circumstances".
3. As explained by the Appeal Panel in Allen v TriCare (Hastings) Pty Ltd [2017] NSWCATAP 25 at [23] r 38A(2), "requires the Appeal Panel to apply the first instance costs provisions, which is relevantly modified by r 38(2), when deciding whether to award costs of appeals" and this means, at [24]:

Rule 38(2) allows the Appeal Panel to award costs in the absence of special circumstances warranting such an award if either of the requirements in (a) or (b) of that subrule is satisfied.

1. In determining whether either of the requirements in (a) or (b) apply the Appeal Panel further held at [57] that the "determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance".
2. The discretion under r 38A of the NCAT Rules is on its face unfettered but it is well-established that this discretion must be exercised judicially ( for instance, see 203 Castlereagh Pty Ltd v Skybloo Holdings [2017] NSWCATAP 29 at [21])

1. Mr Whitehead and Nuset have filed and served costs submissions. Mr Whitehead has also lodged documents in support of his application. These submissions were filed before the hearing of the appeal and following the directions made on 5 June 2025. I have taken into account all submissions filed.
2. Mr Whitehead seeks a fixed costs order in the sum of $21,912.00 for costs incurred in the stay application and on the appeal. It is submitted that the Appeal Panel is able to make a fair and equitable assessment of the quantum of costs based on the material provided. It is further submitted that Mr Whitehead should be relieved of the need to incur further costs to have the costs assessed.
3. The costs claimed by Mr Whitehead are $6,170 for the stay application and $15,785 for the appeal. The documents provided comprise an earlier affidavit relied on detailing costs of $15,664 for costs on the stay application and other costs associated with the appeal. It was also estimated that further costs for counsel and solicitors for the hearing of the appeal would be in the vicinity of $7500, including GST.
4. In support of the current application, Mr Whitehead has provided copies of invoices from counsel dated 27 November and 12 December 2024 and 5 February and 12 March 2025 (totalling $10,485) and copies of invoices from his solicitors dated 2 and 17 December 2024, 29 January 2025 and 5 and 31 March 2025 (totalling $7,568).
5. Mr Whitehead relies on his submissions dated 5 February 2025 and submits that under r 38A of the NCAT Rules, the Appeal Panel may award costs in his favour without being satisfied about special circumstances. It is submitted that Mr Whitehouse was successful in opposing the stay application and he was successful on the appeal. There are no factors that would warrant a departure from the usual principle that costs follow the event. Mr Whitehead relies on the decision of the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 and, relevantly, at [29] as follows:

29. Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] HCA 59; [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.

1. Nuset submits that the Tribunal is a "no cost" jurisdiction and relies on s 60(1) of the NCAT Act which provides that each party should bear their own costs unless special circumstances exist. Nuset also relies on Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 and submits that in that decision, the Appeal Panel affirmed that costs orders in NCAT remain the exception not the rule.
2. It is submitted that Mr Whitehead has not provided any compelling evidence of special circumstances that would justify the exception to the rule. It is further submitted that success alone does not constitute special circumstances and that costs order should not be granted merely because the party has been successful. In this regard, Nuset also relies on Vella v Mir, but does not refer to a particular paragraph of the decision to support this proposition.
3. Nuset further submits that the costs claimed by Mr Whitehead are excessive and that the figure grossly outweighs the value of the dispute itself. It is submitted that costs must be proportionate to the value of the dispute and must not create an undue burden on the parties or the Tribunal. In this regard, Nuset submits that the cost of opposing the stay application was unreasonable and inappropriate. It is submitted there was a reasonable basis for the request for the stay and that Nuset acted in good faith and relied on available evidence in support of the application. It is further submitted that to make an order for costs would be disproportionate and unjust in the circumstances.
4. Nuset also submits that it was self-represented, saving procedural time and expense, and the costs incurred by Mr Whitehouse who was legally represented, were unreasonable. Nuset disputes opposes the Mr Whitehead's request for a lump sum assessment of costs, noting that the previous Tribunal already refused to make such an assessment, confirming that costs would be payable on an ordinary rather than a lump sum basis which provided for full recovery of legal costs.
5. Both parties submitted that this application for costs could be dealt with on the basis of the written submissions and documents provided by the parties without the need for a hearing.

1. I am satisfied that a hearing on the issue of cost should be dispensed with under s 50(2) of the NCAT Act and that the issue of costs can be determined on the basis of the written submissions and documents provided by the parties. As already noted, neither party requested an oral hearing on the issue of costs, and both provided detailed written submissions. I am satisfied that the directions in relation to submissions and documents gave the parties a reasonable opportunity to put forward their arguments on the issue of costs. This approach is consistent with the guiding principle under s 36(1) of the NCAT Act for the just, quick, cheap and efficient resolution of the real issues in the dispute.
2. The issues are whether the Appeal Panel should order costs in favour of Mr Whitehead and, if so, what order should be made.

1. Rule 38A provides that the Appeal Panel must apply the first instance cost provisions, which means that the Appeal Panel has discretion to award costs in the absence of special circumstances warranting an award under s 60 if the requirements of either subrule (a) or (b) are satisfied.
2. In Allen v TriCare, the Appeal Panel observed at [59] that what is in dispute can generally be ascertained from the grounds of appeal.
3. In its Notice of Appeal, Nuset sought orders that the award for damages and costs be set aside and that those orders should be substituted with an order the Nuset repair the Mercedes Printer Van with no order as to costs. The amount in dispute in the appeal was therefore the damages awarded by the Tribunal at first instance and costs order. The damages awarded was $33,299.43, which exceeds $30,000. As such, the requirements of r 38(2)(b) are clearly satisfied in respect of the appeal and the relevant costs provisions that apply, as required by r 38A(2), are the provisions in r 38(2)(b). As such, the Appeal Panel has discretion to order costs in the absence of special circumstances.
4. Nuset submits that the Appeal Panel should not order costs in the absence of special circumstances because s 60 of the NCAT Act sets out the general presumption that each party is to bear their own costs. However, this submission is in error and fails to recognise that the cost provisions in r 38(2)(b) apply in the circumstances of this appeal because the amount in dispute in the appeal exceeds $30,000. Accordingly, the Appeal Panel has discretion to decide whether to order costs, irrespective of whether there are special circumstances.
5. In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186, the Appeal Panel set out the relevant principles at [67] as follows:

(1) the starting point is that a successful party should be entitled to an order for costs in his favour;

(2) an award of costs is by way of an indemnity and not as punishment;

(3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party;

(4) the factors to be considered are not to be confined as to do so would constrain the general discretion;

(5) the relative success of the parties on different issues and the time taken to determine them may be relevant;

(6) the nature of the proceedings is relevant;

(7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious.

1. In this case, Mr Whitehead was successful on all grounds. The starting point is that he should be entitled to an order for costs in his favour. There was no "disentitling conduct" in the manner in which Mr Whitehead opposed the appeal. He was given leave to be legally represented in the appeal under s 45 of the NCAT Act and this necessarily added to the costs. However, this is not a reason to reject his application for costs or to reduce the costs to be recovered. The proceedings at first instance were complicated and this was recognised by the order made by the Tribunal giving leave for Mr Whitehead to be legally represented in those proceedings. Mr Whitehead had the benefit of a significant award in his favour and Nuset raised numerous grounds of appeal challenging this award, as is apparent from the substantive appeal decision. He was given leave by the Appeal Panel to be legally represented, again in recognition of the complexities in the appeal. Mr Whitehead should not be disadvantaged because he retained legal representation, which he was entitled to do once he obtained leave.
2. I accept that the total costs claimed are significant, partly because the costs include the costs of defending the stay application. While Nuset submits the stay application was reasonably based, Mr Whitehead was also entitled to defend the application. He had a decision in his favour in the proceedings at first instance. He was successful in defending the application for a stay and there is no reason why he should not be recompensed for these costs incurred. These costs are "costs of" and "incidental to" the appeal under s 60(5) of the NCAT Act.
3. If costs orders are not made in favour of Mr Whitehead in relation to the appeal, he will be out of pocket because he will have to pay, or has already paid, solicitor-client costs in relation to the appeal.
4. I am therefore satisfied that a costs order should be made in his favour. The question is, what order should be made?

1. The Appeal Panel has a broad discretion under s 60(4) to determine by whom and to what extent costs are to be paid. As already noted, this discretion must be exercised judicially and will invariably depend on the circumstances of each case to do justice between the parties.
2. The Appeal Panel may order that costs be assessed on the basis of the "legal costs legislation" or any other basis. It can make a fixed or lump sum order or may make an order based on a percentage of the total costs claimed. Costs orders may also be made on an "ordinary basis" or "indemnity basis" as identified, for instance, in reg 42.2 and 42.5 of the Uniform Civil Procedure Rules 2005. Costs orders made on the ordinary, rather than indemnity, basis do not fully compensate a party for the solicitor-client costs incurred.
3. Mr Whitehead seeks a lump sum or fixed costs order, but the lump sum claimed appears to be substantially on an indemnity basis, relating to all costs incurred. Mr Whitehead submits that the fixed or lump sum costs order should be made to relieve him from incurring further costs and delay in having those costs assessed. In contrast, Nuset submits that any costs orders should not be made for a lump sum because there is insufficient evidence to support the fixed-sum costs claimed. It is further submitted that if costs are to be made, they should proceed through an ordinary costs assessment process where submissions can be made about whether the costs claimed or incurred are appropriate.
4. I accept Nuset's submissions on this issue. First, the submissions and invoices provided do not provide sufficient detail about the costs paid and incurred and there is some confusion about the amounts claimed. For instance, the affidavit of Mr Whitehead sworn 5 February 2025, states he had paid $15,664 for costs incurred to the date of his affidavit and the affidavit of his lawyer sworn 10 June 2025 states that Mr Whitehead has incurred costs of the appeal and the stay of $21,912. Copies of invoices have been attached to the affidavits, but it is difficult to reconcile the amounts. Secondly, while I accept that a lump-sum costs order would be cost effective and timely for Mr Whitehead, it may be unfair to Nuset because it appears to allow Mr Whitehead to recover all or most of his costs incurred rather than a percentage of the costs assessed through the cost assessment process, which is the usual course with costs recovered on an ordinary basis. Court and Tribunals will usually only order "indemnity" costs if satisfied that the conduct of the party has been unreasonable or has prolonged the proceedings without justification. Nuset lodged an appeal of the decision and made application for a stay of those orders. The NCAT Act allows for an internal appeal process, albeit with leave unless the appellant raises a question of law. An appellant should not be disadvantaged in making such an application by a costs order outside the usual parameters, unless such an order is warranted. Even though Nuset was the losing party on the substantive application and the stay application, I am not satisfied that Nuset acted unreasonably or that it prolonged the appeal proceedings.

(1) An oral hearing on the issue of costs of the appeal is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW)

(2) The appellant is to pay the first respondent's cost of the appeal, including the costs incurred on the stay application and in relation to this costs application, as agreed or assessed on an ordinary basis.

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.