On 10 October 2018 the Appeal Panel made orders:
1. To the extent necessary leave to appeal is refused.
2. Appeal dismissed.
3. If a party to the Appeal wishes to make an application for costs of the Appeal such application and documents in support are to be filed and served 14 days from the date of this decision.
4. Submissions and documents in opposition to the application are to be filed and served 28 days from the date of this decision.
5. The decision on costs will be made on the papers under s 50(2) of the Civil and Administrative Tribunal Act 2013, subject to the submissions of the parties.
On 24 October 2018 the Respondent filed an application for costs, submissions in support and an Affidavit by Jonathon Hunt in support of an application that the order for costs to be paid in a lump sum.
On 6 November 2018 the Appellant filed Reply Submissions of 11 pages along with a Statutory Declarations by the Appellant with Annexures A to O, and by Peter Roberts with Annexures A to C.
[2]
Background
In September 2006 the Appellant purchased a property following advice by the Respondents as to the means by which the purchase should be implemented. The Appellant became aware in 2013 that a land tax liability arose as a consequence of the fact that the property was not, according to public records, the principal place of residence of the First Appellant. The Appellants understood that the land tax liability arose as a consequence of the purchase of the property in accordance with the advice provided by the Respondents, or alternatively the liability would not have arisen had the advice not been negligent.
The Appeal Panel understands that the pursuit of the Appellant's claim against the Respondents for damages arising from the advice provided by the Respondents in September 2006 has been a prolonged and difficult exercise.
The Appellants have, for the substantial period of the pursuit of the claim, been self-represented. In the course of the hearing of the appeal by this Appeal Panel the First Appellant referred to legal advice she had received which induced her to transfer her initial application in the Tribunal to the District Court and to seek substantial damages. It seems that when she became aware of the inaccuracy of the legal advice she had relied upon she implemented the return of her application to the Tribunal.
The Appeal Panel also understands that when effecting the re-transfer of the claim to the Tribunal the claim was amended to $29,291.55 based on the amount of the Land tax liability which she had incurred.
This Appeal Panel at [2] noted that:
The appeal is primarily focussed upon the issue of the "amount claimed or in dispute" in proceedings which when commenced sought an order for payment by the Respondent of $40,000, which increased to $175,000 and was subsequently reduced to the recovery of a loss of $29,291.55 incurred on 1 May 2013.
The phrase involved is "the amount claimed or in dispute" (in the proceedings) in Rule 38 of the Civil and Administrative Tribunal Rules 2014 which provides:
Clause 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.
The issue of the correct application and interpretation of Rule 38 has been to subject of frequent consideration in decisions of the Tribunal and Appeal Panels. The most recent consideration by an Appeal Panel on the subject is The Owners Corporation Strata Plan No 63341 v Malachite Holdings Pty Ltd [2018] NSWDATAP 256 which discloses the complexity involved in this issue.
This most recent consideration of the difficulties involved in the interpretation of the critical words in Rule 38 does not alter the conclusions reached by the Appeal Panel in this matter, however it is nevertheless a factor which should be acknowledged. The Appeal Panel considers that it is appropriate to have regard to this factor in considering the issue of costs in this appeal. The Appeal Panel recognises that the issues involved in the appeal were confined, however does not consider that the appeal should be categorised as being misconceived or clearly destined to fail.
The Appeal Panel recognises that the Appellants made an error of judgement in commencing the proceedings in the Tribunal including "an amount claimed" of $40,000. Further they were poorly advised to bring District Court proceedings claiming $200,000. In the circumstances the tax liability of less than $30,000 ought to have been the amount claimed.
Assuming that the claim against the Respondents was well based, despite there being no finding of liability on the part of the Respondents for their advice in 2006, the more recent poor legal advice as to how recovery should be pursued has, in a sense, added insult to the perceived initial injury on the part of the Appellants.
The Appeal Panel also notes that much of the material referred to in the numerous annexures to the recent Statutory Declarations seems to have some relevance to the issues involved in earlier actions in which the Appellants were unsuccessful, in particular the decision in the limitation proceedings, the appeal from which was unsuccessful, see [2018] NSWCATAP 69. It may be that if different issues and evidence had been introduced in these earlier stages of this prolonged litigation the outcome may have been different. The matters which the Appeal Panel must consider at this stage are however limited. The costs decision by this Appeal Panel of the costs of the appeal is not the occasion for a review of issues and evidence which might have been successfully raised earlier.
[3]
Submissions
The Respondents seek an order the Appellant pay their costs of the appeal proceedings and that the costs be for a fixed sum of $8,561.13.
Apart from reliance upon submissions addressing the usual principles applicable to the costs of internal appeals see rule 38A of the Civil and Administrative Tribunal Rules 2014 (NSW), the Respondents rely upon the service of a Calderbank letter dated 18 July 2018 upon the Appellants which included an offer to compromise the amount ordered that the Appellants pay to $13,000.00.
The Appeal Panel accepts that the offer did represent a compromise from the amount which the Tribunal had ordered be paid of approximately $20,000.00.
The offer was expressly made accept payment of $13,000.00"
"...in full and final satisfaction of the Costs Decision and the Costs Appeal."
The Costs Decision was that made by the Tribunal on 22 May 2018 and the Costs Appeal was determined by this Appeal Panel on 10 October 2018. The offer was accordingly made to settle both the initial decision and the appeal from that decision.
The consequences which follow from the making of such an offer and the apparent rejection of the offer have been addressed frequently in the decisions on costs in the Tribunal. The Appeal Panel accepts that a principled application of discretion requires that an order be made that the Appellants pay the Respondents' costs of the Appeal. The more difficult question to be addressed is what, in the circumstances of this Appeal, are the appropriate terms of such an order.
The Appellants sought, in effect that there be no order as the costs, or that each party be ordered to pay their own costs of the Costs Appeal. The submissions raise issues concerning the conduct of the first instance hearing on 12 October 2017. It was submitted that there had been jurisdictional errors and a denial of procedural fairness, in refusing an application for an adjournment to obtain legal advice, on the part of the Tribunal in the conduct of the initial hearing. It is said that as a consequence the Appellants were denied the opportunity to obtain legal advice particularly concerning the operation of Clause 6 of Schedule 1A of the Land Tax Management Act 1956 (the LTM Act).
The Appeal Panel in [2018] NSWCATAP 69 referred to the application of the LTM Act, possibly in relation to some provisions which concerned the limitation issues involved in the defence of the claim by the Respondents, and stated that:
The possible application of clause 6 of Schedule 1A was not apparently explored in the evidence before the Senior Member.
The Appellants seem to be suggesting that the possible inadequacy in the conduct by the Appellants of the proceedings heard on 12 October 2017 at first instance, was attributable to the refusal of an application for an adjournment. This Appeal Panel believes that such a proposition, if correct, ought to have been raised in the course of the Appeal Panel hearing in AP 17/44924.
This Appeal Panel understands that much of the Appellants' submissions dated 5 November 2018, are intended to show that if the Appellants had addressed the issues about the correct application of particular provisions of the LTM Act, in the first instance proceedings, then the limitation defence by the Respondents would have failed. The determination of the costs in these appeal proceedings is unfortunately not an appropriate occasion to ventilate these issues.
The Appeal Panel understands that the focus of the Appellants submissions is the identification of "special circumstances" which, if found to exist might justify an order that there be no order as to costs.
The difficulty in his approach is that to be comfortable that "special circumstances" exist the Appeal Panel would need to examine the probability that the underlying legal contentions have substance. It would be inappropriate for the Appeal Panel to engage in such an exercise at this stage in the proceedings.
The Appeal Panel having accepted that as a consequence of the offer made by the Appellants, see [16 to 19] and its apparent rejection, that there should be there be an order in favour of the Respondents, and that terms of the order be either on an indemnity basis or for a lump sum.
At [26] to [29] the Appeal Panel referred to the jurisdiction of the Tribunal as to costs including applications for costs before an Appeal Panel.
In addition to the provisions referred to the Appeal Panel considers that there are a number of further matters which the Appeal Panel should consider when dealing with the costs decision in this appeal.
The first is the recognition that the provisions of subsection 36 (4) of the Civil and Administrative Tribunal Act require that the Appeal Panel give effect to the guiding principle "to facilitate the just, quick and cheap resolution of the real issues in the proceedings" and states:
(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 complexity of the subject-matter of the proceedings.
Further the Appeal Panel recognises the presumption, or principle, pursuant to section 60 of the Act that the parties to proceedings in the Tribunal are to pay their own costs.
[4]
Consideration
The relevant aspects of these appeal proceedings, apart from the recognition that the appeal was not misconceived, see [11], are the degree of complexity involved and the realistic, or reasonable time, which would be required to address the issues. This involves the issue of proportionality.
The hearing of the Appeal was allocated for 3 hours and was completed in only part of that time.
The only issue involved in these appeal proceedings was whether the order that the Appellants pay the Respondent's costs involved some appealable error. There was no challenge to the fact that the order was for a lump sum, see [32] of the Appeal Panel's decision.
Further there was no challenge by the Appellants, either at first instance or in the appeal that the amount claimed for costs was inappropriate or disproportionate. In some respects the relative inexperience of the Appellants in the conduct of "commercial" disputes, reflected in the manner in which the appeal was conducted, meant that the response to the appeal by the Respondents was considerably simplified.
The decision by the Appeal Panel included acceptance, see [31] of the Appeal Panel's decision, that there were special circumstances justifying the decision by the Tribunal that the Appellants pay the Respondents costs. Accordingly the issue of whether the "amount claimed or in dispute" was more than $30,000 was of incidental relevance, however was the Appellant's principle focus in the appeal. These submissions included oblique criticism of the Respondents conduct of the proceedings.
The Appellant's made extensive submissions as to why it was inappropriate or unfair that the Appellants be ordered to pay any further amount to the Respondents for costs. The Appeal Panel concludes that a fixed or lump sum costs order should be made for an amount which represents a proportionate amount having regard to the relatively straightforward task required of the Respondents, and the limited issues involved in the appeal.
Further notwithstanding the absence of any direct challenge by the Appellants to the amount sought by the Respondents, the Appeal Panel concludes that having regard to the matters referred to at [32] to [37] it is entirely appropriate for the Appeal Panel to make an assessment of the lump sum amount to be paid to the Respondents for their costs of the appeal which is proportionate and which represents a just and balanced allowance for the Respondent's costs.
The Appeal Panel assesses the amount which is to be paid by the Appellants to the Respondents for their costs of the Appeal under a lump sum order as being $6,000.00
[5]
Orders
1. The Appellants are to pay the lump sum of $6,000.00 to the Respondents immediately for their costs of the appeal including the costs of the costs decision.
[6]
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: 19 March 2019