On 24 January 2017 the Tribunal made orders in the substantive application that:
1. The application is dismissed because the Tribunal has no jurisdiction to determine the application; and,
2. The proceedings
1. be transferred to the District Court of New South Wales (in accordance with the rules of that court) that has jurisdiction in the matter, and
2. continue before that court as if they had been instituted there.
On 2 February 2017 the applicant made an application that the matter be listed for hearing on the issue of costs.
On 15 February 2017 the Tribunal directed that:
1. The applicants are to file and serve submissions on which they rely in support of their application for costs by 3 March 2017;
2. The respondents are to file and serve submission upon which they intend to rely by 17 March 2017;
3. The applicants are to file and serve submissions in reply to the respondents' response by 24 March 2017.
4. In these directions the parties submissions are to include submissions as to whether the Tribunal has jurisdiction to make a costs order where the Tribunal has made a finding that it has no jurisdiction to hear and determine the substantive matter.
5. Pursuant to Section 50 of the Civil and Administrative Tribunal Act 2013 the Tribunal intends to determine the applicants application for costs on the papers and to dispense with a hearing unless the parties make submissions otherwise.
[2]
Jurisdiction and legislation
The Civil and Administrative Tribunal Act 2013 ("CATA") provides at s 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:
1. whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,
2. whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
3. 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,
4. the nature and complexity of the proceedings,
5. whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, whether a party has refused or failed to comply with the duty imposed by section 36 (3),
6. any other matter that the Tribunal considers relevant.
1. If costs are to be awarded by the Tribunal, the Tribunal may:
1. determine by whom and to what extent costs are to be paid, and
2. order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2104 or on any other basis.
1. In this section:
costs includes:
1. the costs of, or incidental to, proceedings in the Tribunal, and
2. 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 Civil and Administrative Tribunal Rules 2014 at rule 38 provides:
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:
1. 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
2. the amount claimed or in dispute in the proceedings is more than $30,000.
CATA provides at s36 that:
Guiding principle to be applied to practice and procedure
1. The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
2. The Tribunal must seek to give effect to the guiding principle when it:
1. exercises any power given to it by this Act or the procedural rules, or
2. interprets any provision of this Act or the procedural rules.
(3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal:
(a) a party to proceedings in the Tribunal,
(b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.
(4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and co mplexity of the subject-matter of the proceedings
(5) however, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.
Section 50 of CATA provides:
50 When hearings are required
(1) A hearing is required for proceedings in the Tribunal except:
(a) in proceedings for the granting of leave for an external or internal appeal, or
(b) in connection with the use of any resolution processes in proceedings, or
(c) if the Tribunal makes an order under this section dispensing with a hearing, or
(d) in such other circumstances as may be prescribed by the procedural rules.
(2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal.
(3) The Tribunal may not make an order dispensing with a hearing 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.
(4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules.
(5) This section does not prevent the Tribunal from holding a hearing even if it is not required.
[3]
SUBMISSIONS
Neither the applicant nor the respondents' addressed the direction whether an order to dispense with a hearing under section 50 of the NCAT Act should not be made.
The Tribunal is satisfied that the parties have been afforded an opportunity to make submissions about the proposed order to dispense with a hearing and to determine the costs application on the papers. The issue of costs can be adequately determined in the absence of the parties by consideration of the written submissions lodged with or provided to the Tribunal and the Tribunal will take those submissions into account.
Pursuant to Section 50(4) the Tribunal exercises its discretion to determine the application on the papers.
[4]
Applicant's submissions
The applicant seeks an order for costs against the respondents.
The applicant submits the usual provisions of section 60(1) do not apply in that each party pays its own costs. The applicant's case exceeds the limit imposed by Rule 38 and in addition that special circumstances in section 60(3) exist.
The power to of the Tribunal to award costs was considered in The Trust Company Ltd v Diamond Certification Laboratories of Australia Pty Ltd [2016] NSWCATAP 63 at [30]:
The costs power granted to the Tribunal is accordingly broad, and the Appeal Panel is satisfied the power to award costs is not dependent upon whether or not the Tribunal finds that it has jurisdiction to grant any relief: rather, the power arises because proceedings have been brought before the Tribunal. This fact is criteria upon which court is empowered to make an order for costs. For further consideration see Doula Spirit Pty Ltd v Andrew Argyrou [2014] NSWCATAP at [227].
The applicant contends that the Tribunal has jurisdiction to make a costs order where the Tribunal is empowered under section 60(2) to award costs if it is satisfied that there are "special circumstances" warranting an award of costs.
The applicant contends that its claim is continuing to accrue and at October 2016 the amount of the claim is $159,965.94.
The applicant contends that the operation of Rule 38 displaces the requirement for special circumstances for costs to be awarded and to displace section 60(1).
Fairness dictates that the unsuccessful party typically bears the liability for costs unless it is demonstrated that some other order is appropriate: Nguyen v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen [2015] NSWCATAP 264. "While the discretion to award costs under Rule 38 is unfettered, in our view costs should generally "follow the event", recognising however that factors may exist that militate against the successful party recovering all of its costs".
In ABB Engineering Construction Pty Ltd v Abigroup Contractors Pty Ltd BC200305610 per Einstein J at 14, His Honour carried out an extensive review of the authorities distilling a number of principles relevant to the determination of costs, in particular:
A successful litigant is generally entitled to an award of costs. Costs are not awarded to punish an unsuccessful party. The primary purpose for an award of costs is to indemnify the successful party. If litigation had not been brought…by the unsuccessful party the successful party would not have incurred the expense it did. As between the parties fairness dictates that the unsuccessful party typically bears the cost of the unsuccessful litigation.
The applicant submits that the Tribunal should take into account the following:
1. The applicant was successful in relation to the preliminary issue of jurisdiction.
2. Both parties were legally represented;
3. It were the respondents who elected to file a notice of motion in the Local Court to have the proceedings transferred to the Tribunal asserting that the Tribunal had jurisdiction by reason of the Retail Leases Act;
4. The applicant has been put to the expense of the proceedings that it would not have incurred if the respondents had not transferred the proceedings from the Local Court including:
1. Attending mediation before the Office of the Small Business Commissioner;
2. Appearing before the Tribunal on 20 September 2016 and 8 November 2016;
3. Making submission to the Tribunal on the preliminary issue of jurisdiction;
1. The applicant has complied with all direction of the Tribunal;
2. The respondent did not file any submission as directed by the Tribunal;
3. It is unlikely that the costs of the Tribunal proceedings can be recovered in the costs of the cause in the District Court;
4. Fairness dictates the respondent bears the liability for costs incurred by the applicant in the Tribunal proceedings.
[5]
Respondents' Submissions
The respondents accept that the decisions of The Trust Company Ltd v Diamond Certification Laboratories of Australia Pty Ltd and Doula Spirit Pty Ltd v Andrew Argyrou support the applicants contention that section 60(2) permits the Tribunal to make a costs order in proceedings having been brought before it, where the Tribunal finds that it has no jurisdiction.
The respondent submits that the claim does not exceed $30,000 and that the applicant has not quantified its claim. The applicant has not pleaded its case. The Tribunal cannot be satisfied as to the quantum of the applicant's claim. As such, the Tribunal cannot be satisfied that Rule 38(2) applies and if so, then the Tribunal must consider that special circumstances apply.
The respondents submit that special circumstances do not apply as the applicant has unreasonably prolonged the time to complete the proceedings by its conduct in consenting tho the transfer of the proceedings to NCAT, taking part in mediation through the Retail Tenancy Unit and then maintaining the claim after using the resources of the Tribunal and the retail Tenancy Unit. Fairness dictates that the applicant should bear the liability of the respondent's costs. The applicant should be ordered to pay the respondents costs.
[6]
FINDINGS
The general rule expressed in Oshlack v Richmond River Council (1998) CLR 72 is that a successful party has a reasonable expectation of being awarded costs against the unsuccessful party. The usual principles that should apply in the exercise of discretion are that costs should follow the event.
The Tribunal has a general discretion under rule 38 to award costs. Where there is a general discretion to award costs the correct principle is that the Tribunal in exercising discretion should have regard to the nature of all relevant factors: Thompson v Chapman [2016] NSWCATAP 6 (7 January 2016) at [72].
The purposes of a costs order is to compensate or indemnify a successful party against the expenses to which it has been put (Latoudis v Casey [1990] HCA 59).
In Thompson v Chapman at [71] the Appeal Panel said:
71. Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: Oshlack v Richmond River Council per Gaudron and Gummo JJ at 88 and Kirby J at 121-123.
In Gaynor v Burns [2015] NSWCATAP 150 the Appeal Panel considered the decision of Cripps v G & M Dawson [2006] NSWCA 81 where Santow JA considered the words "special circumstances". The meaning attributed is that the circumstance that are special circumstances are circumstances that were clearly out of the ordinary and grossly unreasonable. They do not need to be extraordinary or exceptional. While a finding of "serious unfairness" is not a prerequisite to determining that there are no special circumstances, it is nonetheless a highly relevant consideration.
In Cihan v City Tobacconist Pty Ltd & Gebara [2016] NSWCATCD 26 the Tribunal held that:
"even if Rule 38(3) does not apply given the quantum of the award to the applicant, in that the applicant has been put to the expense of obtaining legal representation to prosecute the claim against the respondents' who put forward defences that lacked factual and legal substance as noted in paragraph 4 of the reasons." The Tribunal went on to follow Cripps.
In ABB Engineering Construction Pty Ltd v Abigroup Contractors Pty Ltd BC200305610 per Einstein J at 14, His Honour carried out an extensive review of the authorities distilling a number of principles relevant to the determination of costs, in particular:
A successful litigant is generally entitled to an award of costs. Costs are not awarded to punish an unsuccessful party. The primary purpose for an award of costs is to indemnify the successful party. If litigation had not been brought…by the unsuccessful party the successful party would not have incurred the expense it did. As between the parties fairness dictates that the unsuccessful party typically bears the cost of the unsuccessful litigation. The traditional exceptions to the usual order as to costs focus on conduct of the successful party that disentitles it to the beneficial exercise of the discretion In Anglo Cyprian Trade Agencies v Paphos Wine Industries, Devlon J referred to "misconduct" by the successful party as the basis for departure from the usual order. In that case, this conduct was construed to be misconduct relating to the litigation in circumstances leading up to it.
The Tribunal is satisfied that the provisions of Rule 38(2)(b) are enlivened to dispel the exclusionary provision that special circumstances must exist if the general rule that each party should pay their own costs is to be avoided. There is no necessity for special circumstances to be present in order to award costs in this matter. Despite no formal pleadings or evidence to support the claim, all that is required is that the claim exceeds $30,000. It does and therefore Rule 38 applies.
Notwithstanding that Rule 38 applies, the Tribunal retains discretion as to whether it will award costs. The applicant has been successful in its contention that the Tribunal did not have jurisdiction and it is entitled to expect that its costs would be ordered to be paid by the respondents in the ordinary course. The Tribunal must consider all the relevant factors, which it has done in consideration of both parties submission: Thompson v Chapman .The respondents have not demonstrated why the Tribunal should not exercise discretion to make a costs order other than in the ordinary course in accordance with the authorities: Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin; Citywide Developments Pty Ltd v Dawn Pienga; Dawn Pienga v Citywide Developments Pty Ltd.
If the Tribunal is wrong in making the finding that Rule 38 applies. Then it considers if special circumstances exist. The Tribunal is satisfied that if it needs to find special circumstances, then it can do so in these proceedings, for the reasons set out in the applicant's submissions. Those circumstances need not be extraordinary or exceptional. For the applicant to obtain the relief it sought, it was necessary to bring the claim.
The Tribunal has had regard for the respondents' submissions, however, they do not support the contention that Tribunal should conform to the provisions of section 60(1). The lack of agreement by the applicant to reach a compromise resolution with the respondents is not of itself a sufficient reason for the Tribunal to be limited to section 60(1).
In the ordinary course, the Tribunal is satisfied that it can exercise its discretion under Rule 38 that the applicant is entitled to an award of costs in its favour against the respondents.
The respondents maintained that the Tribunal had jurisdiction through the affidavit of the respondents' solicitor, they made no other submissions. Their participation before the Tribunal was minimal. The respondents' application for costs included at the end of the respondents' submissions is dismissed.
The applicant's costs payable by the respondents are to be as agreed or assessed on the ordinary basis.
[7]
Cost Order
The Tribunal orders that the respondents, Eden Spa Pty Ltd, Matthew Hartney Ashleigh Kajan pay to the applicant, Gerard Pennimpede and Rita Angela Pennimpede costs as agreed or as assessed on the ordinary basis.
P Boyce
Senior Member
Civil and Administrative Tribunal of New South Wales
6 April 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: 07 June 2017