Polymeris v Coopers Canteen Pty Limited

Costs application

1. The respondent, as the successful party, has made an application for costs. Directions were made by us for the filing and service of submissions regarding costs.
2. The respondent's costs submissions were filed on 9 February 2018. The appellant filed his costs submissions on 21 February 2018.
3. Both parties agree that we may determine the respondent's costs application on the basis of the submissions filed in the Appeal Division without the need for a hearing.

Cost applicants' submissions

1. The respondent (costs applicant) submits that the 'amount in dispute' as referred to in r 38(2)(b) of Civil and Administrative Tribunal Rules 2014 was $40,000.00 and therefore that Rule 38 applied.
2. The respondent further submits that Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 is relevant to its application for costs. We have been referred to [48] and [57] where the Appeal Panel stated: '48. The inclusion of the words "or in dispute" after "the amount claimed" in r 38 indicates that amounts may be in dispute in proceedings even if they are not the subject of a specific claim for an order for payment.' '57 Adapting these principles to the circumstances of the present appeals and having regard to the specific wording of r 38, it appears to us that in applying r 38(2)(b): (1) The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance; (2) The phrase "in dispute" is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; (3) Whether "the amount … in dispute" in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000; (4) The fact that the value of the property the subject of any appeal exceeds $30,000 does not, of itself, mean that "the amount … in dispute" in that appeal is greater than $30,000.'
3. The respondent next submits that if it is not entitled to recover costs under r 38, special circumstances are present such as to entitle it to a costs order under s 60 of the Civil and Administrative Tribunal Act 2013 (the 'Act').
4. The special circumstances relied upon by the respondent are: 1. The findings made by the Appeal Panel at [6] - [11] and at [24] and [25] of its decision; 2. The appellant's grounds of appeal and his amended grounds of appeal; 3. That the appellant's position in the appeal made the sale of the respondent's business with an assignment of the lease impossible; 4. The appeal panel's findings regarding the absence of any legal basis for maintaining that the lease had been terminated by the appellant's solicitors letter of 20 March 2015; 5. The inconsistency of the position taken by appellant; and 6. The fact that the appellant did not seek to set aside the 1 December 2016 decision and that by instituting an appeal the appellant acted in such a way that he must have known that the purchaser of the respondent's business would seek to avoid the purchase.

The costs respondent's submissions

1. The appellant, as the costs respondent, submits that no costs order should be made. It is submitted that the appellant did not conduct the proceedings to the disadvantage of the respondent and that there was no prolongation of the proceedings by the appellant. The appellant also submits that so far as r 38 is concerned, the proceedings did not relate to a dispute between the parties for any monetary amount as expressed in r 38.

Costs Jurisdiction

1. Section 60 of the Act provides that: '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. Rule 38A of the Civil and Administrative Tribunal Rules states: '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.'
3. Part 4 of the Act deals with Practice and Procedure. Section 60 of the Act is in Pt 4. Section 35 of the Act which is also in Pt 4 states: 'Each of the provisions of this Part is subject to enabling legislation and the procedural rules.'
4. The effect of s 35 of the Act makes it clear that s 60 of the Act is subject to the Civil and Administrative Tribunal Rules.
5. The appeal in these proceedings was lodged on 22 December 2016.

Determination of the costs application

1. We will first deal with the respondent's application for the costs of the appeal pursuant to r 38A. Then, if necessary, we will address whether there are special circumstances present that enliven the power to award costs under s 60(2) of the Act and whether such an award should be made.
2. Rule 38A applies to the present appeal because: 1. it was lodged after 1 January 2016; and 2. the first instance cost provisions differ from those set out in s 60 of the Act in that: 1. the proceedings at first instance were brought under the provisions of the Retail Leases Act 1994; 2. Sch 4, cl 3 of the Act allocates such proceedings to the Consumer and Commercial Division of the Tribunal; and 3. therefore, in those proceedings "the first instance costs provisions" included r 38 of the Civil and Administrative Tribunal Rules, that differed from those set out in s 60 of the Act.
3. Accordingly, in the present appeal, r 38A(2) requires the Appeal Panel to apply the first instance costs provisions, here, s 60 of the Act as relevantly modified by rule 38(2), when deciding whether to award costs of the appeals: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [23].
4. 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 rule 38(2)(a) or (b) is satisfied, that is: 1. if 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 (r 38(2)(a)); or 2. the amount claimed or in dispute in the proceedings is more than $30,000 (r 38(2)(b)).
5. There is no suggestion that rule 38(2)(a) has any relevance to the costs application.
6. The respondent relies on rule 38(2)(b) submitting at [7] of its submissions that it: 'was seeking declaratory relief to enable it to complete it (sic) sale of the business and lease pursuant to the contract for sale dated 13 September 2016. The contract sum in that contract was $40,000. The appellant landlord asserted the lease was determined.'
7. In Allen v TriCare at [57(1)] the Appeal Panel stated: 'Adapting these principles to the circumstances of the present appeals and having regard to the specific wording of r 38, it appears to us that in applying r 38(2)(b): (1) The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance'
8. In the appeal there was no specific amount claimed. It therefore falls to be determined if the: 1. "amount … in dispute" in the appeal ,was more than $30,000.00.
9. In connection with this issue, at [57(2-3)] the Appeal Panel in Allen v TriCare stated: '(2) The phrase "in dispute" is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; (3) Whether "the amount … in dispute" in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000;'
10. The purpose of the appellant as indicated by his Amended Notice of Appeal was to overturn the order made at first instance that the lease between the parties remained in full force and effect and was not determined in March 2015, or at any other time.
11. In its Reply to the Amended Appeal, the respondent stated it had determined the lease and confirmed that position by stating: 'In circumstances where no party maintains the Lease is on foot there is no apparent utility in allowing the Appeal.'
12. While the respondent's position at first instance as referred to at [4] above was that it was seeking declaratory relief to enable it to complete the sale of its business which required an assignment of the lease, we find that the position had changed at the time of the appeal in that the respondent had determined the lease. That being the case it follows that the completion of the sale of the respondent's business with the necessary assignment of the lease was no longer being pursued.
13. The appeal was therefore concerned with the appellant's attempt to overturn the decision of the Member made 1 December 2016. Had that attempt been successful there would inevitably have been commercial ramifications. However, there was no evidence or submission made as to what those ramifications might have been.
14. Given that by the time of the appeal, there was no evidence before us that the respondent was still in a position to sell its business for $40,000.00, or evidence of the value of the lease to the appellant, we are unable to find that the amount in dispute in the appeal was more than $30,000.00.
15. In these circumstances we are unable to make a costs order pursuant to r 38(2)(b) of the Civil and Administrative Tribunal Rules.

Section 60(2) of the Act

1. As stated at [76] of Allen v TriCare (Hastings) Ltd : [S]pecial circumstances" for the purposes of s 60(2), are those which are out of the ordinary but they do not have to be extraordinary or exceptional: see the Appeal Panel in CPD Holdings Pty Ltd v Baguley [2016] NSWCATAP 160 at [6]; citing the Court of Appeal in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] which concerned the same expression in the previous legislation governing the (then) Administrative Decisions Tribunal. In addition, s 60(3) gives a non-exhaustive list of matters that the Tribunal may take into account when determining whether there are special circumstances. The matters in s 60(3) are: (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.
2. At paragraph [14] we set out the special circumstances relied upon by the respondent. We will now consider those circumstances.
3. Paragraphs [6] - [11] of our decision dealt with background facts. None of the matters referred to in those paragraphs falls within any of the matters referred to in s 60(3), nor do they raise any matter that we consider to be relevant.
4. Paragraphs [24] and [25] of our Reasons dealt with correspondence between the parties and their solicitors in December 2016 and an affidavit by the appellant in this appeal disagreeing with the decision of the Tribunal Member at first instance. We are also of the view that none of the matters referred to in these paragraphs engage the provisions of s 60(3), nor do they raise any other matter of present relevance.
5. The respondent contends that a special circumstance is that the appellant's position in the appeal made the sale of its business with an assignment of the lease impossible. While it is possible that may have been the practical effect of the appeal, we do not consider that the institution of the appeal could be described as the appellant conducting the proceedings in a way that unnecessarily disadvantaged the respondent. The appellant was successful in establishing that he was not afforded procedural fairness since he was not given adequate notice of the final hearing on 1 December 2016. At paragraphs [20] and [21] of our decision we found that although the appellant could establish a denial of procedural fairness, for the reasons we expressed that finding did not resolve the appeal.
6. Paragraphs [29]-[35] of our decision dealt with the issues of the appellant's failure to establish that the lease had been terminated by his solicitor's letter of 20 March 2015 and the inconsistency of the position taken by him. In those paragraphs we found that the appellant's position that the lease had been terminated in March 2015 could not be sustained for a number of reasons. Further, the appellant's later conduct established that he accepted the lease as being on foot, a position that was inconsistent with the relief that he sought in this appeal, namely that order 1 of the Tribunal dated 1 December 2016, declaring that the lease between the parties remained in full force and effect, and was not determined in or about March 2015 or at any other time, be set aside.
7. In our view the issues addressed by us at [29]-[35] of our decision establish that the appellant's case to set aside the Tribunal's orders was weak, contradicted by his own actions, which 'were consistent with the Lease remaining on foot in the terms in which it was executed by the parties', at [29] of our decision, thus lacking a tenable basis in fact.
8. As we have found, the appellant was denied procedural fairness because he was given insufficient notice of the date of the hearing. We also found at [26] that because of the appellant's position that the lease did not remain on foot, there was no utility in upholding the appeal on the denial of natural justice ground.
9. Despite our finding that the appellant was denied procedural fairness, we have decided that special circumstance do exist, such to justify an order that the appellant pay the respondent's costs of the appeal. The special circumstances that we have found are those stated in paragraph [42] and therefore constitute a 'special circumstance' as referred to in s 60(3)(c) of the Act.

Orders

1. We make the following orders: 1. By consent, a hearing on the question of costs is dispensed with and the matter is to be determined on the basis of the parties' written submissions; and 2. The appellant must pay the respondent's costs of and incidental to these appeal proceedings such costs if not agreed 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

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar

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: 18 July 2018