Sarraf and Ors v Con Zorba t/as ACP Distributors

DECISION

The Civil and Administrative Tribunal Act 2013 provides so far as is relevant; 60 Costs (1) each party to proceedings in the Tribunal is to pay the parties 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 disadvantages another party of the proceedings. (b) whether a party has been reasonable for prolonging unreasonably the time taken to complete proceedings. (c) the relative strengths of the claim 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 s. 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. (b) order costs to be assessed on the basis set out in legislation (as defined in s. 3A of the Legal Profession Uniform Civil Application Act 2014).
It is also appropriate to have regard to r 38 of the Civil and Administrative Tribunal Rules 2014 which provides; 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 s. 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 $10,000.00 but not more than $30,000.00 and the Tribunal has made an order under cl 10(2) of Sch 4 to the Act in relation to the proceedings or; (b) the amount claimed or in dispute in the proceedings is more than $30,000.00. It is noted that the respondent relies on this rule in pursuit of his claim as well as the assertion that special circumstances warranting an award of costs apply in the present instance.
In Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 the Court of Appeal held that special circumstances were established if they were out of the ordinary. They did not require to be exceptional or extraordinary. That definition of special circumstances was considered and adopted by the Appeal Panel of the Tribunal in Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120.
In CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 the Appeal Panel, after considering the definitions of special circumstances concluded; 29 consequently I am of the opinion that in order to satisfy the test of "special circumstances" one must find circumstances that are out of the ordinary, but without having to be extraordinary or exceptional and those circumstances would warrant an awarding of costs … 30 each case depends upon its own particular facts …
In relation to the issue of special circumstances, the respondent, who seeks costs, relies on the following matters in s 60(3); (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 and, (d) the nature and complexity of the proceedings. It is also suggested that the proceedings may have been misconceived or lacking in substance which would result in another special circumstance in accordance with s 60(3)(e) of the Act.
The respondent further contends that an offer to resolve this matter was served on 11 July 2014. That offer was for an amount of $5,000.00 to be paid to the applicant together with costs. A period of 28 days was allowed for consideration of that offer but it was never taken up and the orders of compensation now payable by the respondent to the applicant are substantially less than that offered in July 2014.
The respondent points to the leave for legal representation which was granted to both parties in June of 2014 when the amount claimed by the applicant was in the order of $83,000.00. It is contented that this matter was also a special circumstance to be taken into account.
The Tribunal has generally accepted that the awarding of costs is compensatory rather than punitive. In Lataudis v Casey [1990] HCA 59 McHugh said; "an order for costs indemnifies the successful party for a party in litigious proceedings in respect of liability for professional fees and out of pocket expenses reasonably incurred in connection with the litigation; Kelly v Noumenom Pty Ltd [1988] 47 SASR 182. The rationale of the order is that it is just and reasonable that a party who has caused the other party to incur the cost of litigation should reimburse that party for the liability incurred. The order is not made to punish the successful party its function is compensatory." Thus in civil proceedings an order may be made and usually will be made even though the unsuccessful party has merely not succeeded or has acted reasonably in commencing the proceedings. On this basis courts have adopted the almost universal practice of awarding costs to a successful party. This situation does not however apply in the Tribunal due to the operation of s 60(1) see Doula Spirit Pty Ltd v Andrew Argyray [2014] NSWCATCD 227.
When the provisions of s 60 of the Act are considered it is clear that the general principal relating to each party bearing their own costs is the primary position which in itself is inconsistent with the primary principals adopted by a court where the successful party can have a reasonable expectation of costs following the event. The provisions of s 60(4) enable the Tribunal to determine, without specific rules, the party against who many order for costs is to be made. The provisions of s 60(3) provide a basic guideline upon which the principals of an award of costs can be considered whilst the provisions of r 38 of the Civil and Administrative Tribunal Rules 2014 enable the Tribunal to make an order for costs where an amount in issue exceeds the sum of $30,000.00.
In the principal judgment the Tribunal observed that the respondent had been substantially successful in the proceedings. This observation was made without knowledge of any offer of compromise and it was based upon the premise that the respondent was required to oppose a claim in the order of $83,000.00 based upon a need to undertake extensive work to rectify tiling and hand rails. The applicant succeeded to a very limited extent and only in relation to rectification work which was in general conceded by the respondent's expert as being required. The cost of that work was ultimately the only compensation ordered to be paid by the respondent. The principal judgement indicates clearly that the only claim upon which the applicants succeeded related to completion of expansion joints involving rectification which both experts agreed to be necessary (see paragraph 48). Whilst there was a variation between the costing of Mr Shepherd on behalf of the applicants and Mr Barnett on behalf of the respondent, the amount ultimately ordered to be paid represented the assessed cost of that rectification together with a builder's margin and GST. This cost was less than that calculated by Mr Shepherd on behalf of the applicants and more than that calculated by Mr Barnett on behalf of the respondent. The Tribunal found that none of the other amounts claimed by the applicants had been established on the totality of the evidence.
In such circumstances the respondent was substantially successful on the whole of the claim and it is appropriate to consider whether circumstances exist under which the respondents should have an order for costs. The power to award costs to either party clearly exists within s 60(4) of the Act. The provisions of r 38 of the Civil and Administrative Tribunal Rules would enable an order for costs in the absence of special circumstances as it is clear that the amount in dispute between the parties clearly exceeded $30,000.00 at the time when the claim was filed and at all relevant times up until the matter was finally determined. It could be said that the respondent would in any event be entitled to an order for costs without proof of special circumstances on that basis alone.
In addressing the special circumstances that may be relevant in the present case it is appropriate to note that the amount initially claimed and the potential complexity of the case warranted an order that each party be legally represented as and from June 2014. It is clear that both parties were legally represented after that time.
The applicants have substantially failed to establish the claim and the principals relating to the awarding of costs within the court structure as enunciated in Lataudis v Casey (Supra) which were applied and approved by the Tribunal in Doula Spirit Pty Ltd v Andrew Argyray (Supra) are therefore to be considered.
The respondent made an early offer to compromise and resolve this matter in July 2014. It is clear that he has incurred substantial costs since that date and it would in my view be inappropriate that he be required to pay those costs in addition to any monies which were ordered to be paid to the applicants. Legal representation was granted to both parties in June of 2014 and it would appear that solicitors have been involved for both parties since that time. It follows, having regard to the circumstances outlined above that the applicants should pay the respondent's costs as agreed or as assessed in accordance with the Legal Profession Uniform Law Application Act 2014 on a party party basis.
The Tribunal has given consideration to an award for indemnity costs from a period of 28 from the time the offer of compromise expired, however it has been recognised within the Tribunal that there is no provision for the use of an offer of compromise as referred to in the Uniform Civil Procedure Rules (see Terence Eve and Lindy Eve v John Boyd t/as Kalana Homes [2014] NSWCATCD 152) and the circumstances of the present case do not in my view justify the award of indemnity costs particularly because; 1. (i) The offer of compromise was made at the time to one of the parties in person rather than the parties through their solicitor (whose identity may not have even been known at that stage). 2. (ii) In the circumstances the parties in person or possibly their solicitors may not have appreciated that the failure to respond favourably to the offer of compromise would have given rise to an application for indemnity costs. 3. (iii) The respondent was not totally successful in the claim although he did succeed to an extent better than the offer he had made.
It is appropriate to order that the applicants pay the respondent's costs as agreed or as assessed in accordance with the provisions of s 60(4) of the Act. J A Ringrose General Member Civil and Administrative Tribunal of New South Wales 9 May 2016 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: 06 July 2016

At a glance

Court

Decision date

Source

Judgment (5 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (8)

Cited By (1)