On 17 December 2021, we determined the substantive issues in this appeal: Pace v Pratelli [2021] NSWCATAP 410 (Reasons).
The appeal concerned a decision made by the Tribunal in the Consumer and Commercial Division. The full background of the dispute is set out in our Reasons. It is sufficient for the purposes of this decision on costs to provide the following brief summary:
1. the respondent, Rose Marie Pratelli, is the owner of residential premises in Croydon Park, Sydney (the Premises) in which the appellants, Daniel Pace and Santina Pace as tenants, resided under a Residential Tenancy Agreement (the Agreement);
2. a Notice of Termination dated 12 March 2021 was served by the respondent on the appellants. The specified date for possession was 11 April 2021. Also on 12 March 2021, the respondent entered in a contract for the sale of the Premises with a completion date of 12 July 2021;
3. a further Notice of Termination dated 16 April 2021 was served on the appellants, with a date for possession of 30 June 2021 (the Second Notice of Termination);
4. a Tenancy Application (the Application) claiming a termination order and no other relief was lodged by the respondent in the Tribunal on 1 July 2021;
5. on 19 July 2021, at the hearing of the Application, the Tribunal terminated the Agreement and ordered possession of the Premises to be given to the respondent forthwith, such order being suspended until 26 July 2021;
6. the appellants remained in possession of the Premises, causing the respondent to apply to the Tribunal for orders for possession. A warrant for possession was issued on 27 July 2021, although prior to the warrant being executed, on 9 August 2021 the appellants provided vacant possession of the Premises.
The appellants lodged their Notice of Appeal on 23 July 2021, challenging the Tribunal's orders terminating the Agreement and the primary finding by the Tribunal that there was no fixed term lease that entitled them to possession of the Premises until 31 March 2022. The appellants accepted that leave to appeal was necessary from the decision of the Tribunal in the Consumer and Commercial Division.
Relevantly, in our Reasons at [84] - [86] we found that:
"[84] …we are not satisfied that there was an error in the findings of fact made by the Tribunal or that in reaching its findings, the Tribunal failed to have sufficient regard or give appropriate weight to the evidence adduced by the appellants.
[85] The appellants have not demonstrated that the Tribunal's reasons upholding the validity of the Second Notice of Termination and making the order for possession were affected by error and that there may have been a substantial miscarriage of justice to warrant the granting of leave to appeal.
[86] We therefore refuse leave to appeal."
In our orders disposing of the appeal, we made no order as to the costs of the appeal but made provision for the respondent to seek an order for her costs. We made the following orders:
"(1) Leave to appeal refused.
(2) There is no order as to the costs of the appeal.
(3) If the respondent seeks a different costs order to order (2) above, then the following orders will apply:
(a) within 14 days of the publication of these reasons, the respondent is to file and serve any submissions and evidence addressing any "special circumstances" in support of an application for her costs under s 60 of the NCAT Act and to also address whether a hearing on the question of costs may be dispensed with and have the matter determined "on the papers";
(b) the appellants are to file and serve any submissions and evidence in response within 14 days of receipt of the respondent's submissions and evidence and address whether a hearing on the question of costs may be dispensed with and have the matter determined "on the papers"."
Pursuant to the leave provided in our orders, the respondent has sought to vary our order as to the costs of the appeal. The respondent also sought an extension of time in which to provide submissions and the material to be relied upon in support her application. We granted an extension to both parties in our orders made on 25 January 2022.
The respondent's submission and supporting material was received on 2 February 2022. The appellants did not seek any further extension of time in which to lodge any submissions and we have afforded them ample time to have done so outside the timeframe of our orders of 25 January 2022. No submission or other material has been received from the appellants.
[2]
Respondent's submissions
The respondent's submissions were provided directly by the respondent and not through the lawyers that represented her at the appeal. The submission is short, and it is convenient to set it out in full:
"The respondent (Rosa Maria Pratelli) wishes to make an application for a Cost Order in relation to the abovecase number, within the time frame granted in the order issued on the 25th January 2022, being the 9th February 2022.
I have attached the following documentation, relating to all the costs that we have incurred due to the actionsof the former tenants (Daniel Pace & Santina Pace).
These costs are broken up as follows:
1. All our solicitor costs incurred during the Appeal Process. Attached is a summary of all eleven (11) invoices along with a summary page. The total amount incurred in legal fees to fight this appeal, which ultimately we were successful, was an amount totalling $66,800.15 incl GST.
2. A summary of interest incurred on the two (2) investment loans, secured by the property in question [address omitted], due to settlement (for the sale of the property) NOT taking place on 12th July 2021, due to the former tenant refusing to vacate the premises. Settlement eventually took place on the 13th August 2021. The amount claimed here is $3,041.41 over both loans."
We are satisfied that the respondent has correctly summarised the material from the schedules and the documentation provided with her submission set out above and it is not necessary for us to set out that evidence in any further detail.
[3]
Relevant legislative provisions and principles in relation to costs
Section 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (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.
The word "proceedings" in s 60 of the NCAT Act includes proceedings constituted by an appeal: s 60(5)(b).
In proceedings commenced in the Consumer and Commercial Division, by reason of the operation of s 35 when read with par (a) of the definition of "procedural rules" and the the definition of "Tribunal rules" in s 4(1) of the NCAT Act, s 60 is subject to r 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) which provides:
[4]
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.
In an internal appeal such as this that is made under s 80(1) of the NCAT Act, as we stated in our Reasons at [38], r 38A provides that despite s 60 of the NCAT Act, the Appeal Panel "must apply the first instance costs provisions when deciding whether to award costs in relation to an internal appeal".
We therefore have considered whether r 38 of the NCAT Rules applies to the appeal.
The Appeal Panel considered the interpretation of r 38 of the NCAT Rules in The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite Holdings), relevantly at [86]-[88] and [97]:
"[86] [T]he expression "the amount claimed or in dispute in the proceedings" used in r 38(2)(b) suggests that the rule is concerned with the relief being directly sought in the proceedings in respect of a specific amount. It does not speak of any property or other civil right that might be at issue or any question of valuation in relation to such rights.
[87] In this regard, the meaning of the rule needs to be considered in the context of the NCAT Act and the fact that r 38 operates as an exception to s 60 of the NCAT Act. Section 60 states that a party is to pay their own costs, however the Tribunal may make an order for costs if special circumstances are established: see Bonita v Shen [2016] NSWCATAP 159 at [41] and following. That is, but for r 38 (or provisions in other enabling legislation conferring power to award costs in particular circumstances), the general position under s 60 is that each party is to pay their own costs: see s 60(1) of the NCAT Act.
[88] Also, the expression in r 38(2)(b) needs to be considered in light of the enabling legislation by which the Tribunal is given jurisdiction to hear and determine particular disputes. It is an expression reflective of some of the types of orders which the Tribunal might make in connection with claims brought before it."
…
"[97] … in claims where the relief does not give rise to a money award or relief from an obligation to pay a specific amount the rule does not operate."
Unless rr 38 and 38A of the NCAT Rules are applicable to an appeal because the amount in dispute is more than $30,000 as described in Malachite Holdings at [86]-[88] and [97], then by reason of the operation of s 60(1) of the NCAT Act each party will pay its own costs of the appeal, unless the party seeking costs having established "special circumstances"can obtain an order under s 60(2). In other words, if a matter in the appeal is not concerned with the making of a monetary order or there is an amount in dispute but it is less than $30,000, then it is necessary to establish "special circumstances" to obtain a favourable costs order.
For the purpose of r 38A of the NCAT Rules the amount claimed or in dispute is the amount in dispute on appeal, not the amount in dispute in the proceedings at first instance: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57].
1. As we have set out at [2(4)] above, in the proceedings before the Tribunal there was no claim made by the respondent in her Application for a money award. There was also no counter-claim by the appellant seeking relief from any obligation to pay a specific amount.
2. The only orders of a financial nature made by the Tribunal in the Application brought by the respondent and from which the appellants appealed, was an order that the appellants pay a daily occupation fee of $157.14 per day from the date of termination, namely 17 July 2021. That daily occupation fee was payable until the date of vacant possession, which as we have set out in [2(6)] above, occured on 9 August 2021, being 24 days and totalled $3,771.36.
3. However, if the appellants had been successful on all grounds of their appeal, it would have meant that the total of the daily occupation fee would not be payable. The amount of $3,771.36, if it can be characterised as being "in dispute" in the proceedings by reason of the appeal, does not in any event reach the threshold necessary for r 38 of the NCAT Rules to apply.
Therefore, the respondent will only be entitled to a favourable costs order if we are satisfied that there are "special circumstances" and exercise the discretion to make a costs order under s 60(2) of the NCAT Act.
Broad guidance for determining whether such circumstances exist is provided in s 60(3) of the NCAT Act, although by reason of subs (3)(g), the matters set out are not circumscribed. In the exercise of our discretion we may take into account "any other matter that the Tribunal considers relevant". The requirement that must govern the exercise of our discretion is that the circumstances which apply to the proceedings and for which a costs order is sought are "special."
1. We expressly referred to this requirement in our order 3(a) made on 17 December 2021 set out in [5] above, which specifically requested the respondent to address any "special circumstances" under s 60 of the NCAT Act.
"Special circumstances" in s 60(2) of the NCAT Act are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].
In considering whether special circumstances exist for the purposes of s 60(2) of the NCAT Act:
1. each case will depend upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [27];
2. the 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: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48];
3. mere success (or failure) of an application does not give rise to special circumstances: The Owners - Strata Plan 5319 v Price [2020] NSWCATAP 245 at [46];
4. where special circumstances are found to exist, the Tribunal has a discretion to exercise in deciding what, if any, order should be made. Relevant to the exercise of that discretion are those facts upon which the finding of special circumstances was based. However, those findings do not constitute the whole of the relevant matters to be considered in deciding what, if any, order for costs should be made. Rather, the principles applicable to awarding costs generally must also be taken into account: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24].
[5]
Consideration
In this case, the respondent has not sought to identify any special circumstances to cause us to set aside the statutory prescription that each party pay their own costs of the appeal in accordance with s 60(1) of the NCAT Act. While the respondent has identified very significant legal costs she has incurred, the test required under s 60 is for "special circumstances" to be demonstrated to warrant an order for costs to be made in her favour.
The respondent has not sought to do so. On the material provided to us in her application for a different costs order of the appeal, we are unable to ascertain any special circumstances. The respondent's legal costs do not represent an amount "in dispute" for the purposes of r 38 of the NCAT Rules.
Similarly, the interest claimed by the respondent that accrued on the two loans by reason of the delayed sale of the Premises because of the appellants' refusal to vacate the Premises, is not an amount "in dispute" for the purposes of r 38 of the NCAT Rules. That is a separate claim that has not been brought in any proceedings before the Tribunal and it is a matter that was outside of the scope of the appeal and our Reasons.
[6]
Orders
We make the following order:
1. the respondent's application for a different costs order to order (2) made on 17 December 2021 is dismissed.
[7]
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: 17 May 2022