Somerville v Club Méditerranée Australia Pty Ltd

The Appeal Panel's discretion

1. It is common ground, and the Appeal Panel accepts, that the question of costs falls to be determined by reference to s 60 of the NCAT Act. Section 60(1) sets out the prima facie position that each party is to bear their own costs. Section 60(2) provides the Appeal Panel with a discretion to override that prima facie position but that discretion is only enlivened if the Appeal Panel is satisfied that there are special circumstances warranting an award of costs. In deciding whether there are special circumstances, the factors set out in s 60(3) may be considered.
2. Section 60(3) provides: (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.
3. Special circumstances are circumstances that are out of the ordinary and need not be extraordinary or exceptional: Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 ("Edwards") at [9]. Each case depends upon on its own particular facts and circumstances: Murphy v Trustees Catholic Aged Care Sydney [2019] NSWCATAP 84 at [23].
4. If it is satisfied that there are special circumstances, then before making a costs order the Appeal Panel must further be satisfied that they are circumstances "warranting an award of costs": Fitzpatrick Investments Pty Ltd v Chief Cmr of State Revenue [2015] NSWCATAD 103. The discretion is to be exercised judicially and not capriciously: Edwards at [10].

Preliminary matters

1. There are two preliminary matters: whether an order for costs of the first instance hearing can be made and whether the affidavit filed by the respondent should be considered.

The scope of the application

1. The respondent seeks an order for costs of both the first instance hearing and the appeal. However, the Appeal Panel's directions related only to the costs of the appeal. Differently constituted Appeal Panels have reached different conclusions as to whether the costs of the first instance proceedings can be awarded on an internal appeal: contrast The Owners - Strata Plan No. 74385 v Pullicin (Costs) [2020] NSWCATAP 49 with Macey's Group Pty Ltd v The Owners - Strata Plan No 33591 [2021] NSWCATAP 88 at [50].
2. However, it is unnecessary to come to a concluded view on this issue. This is because the Appeal Panel is not satisfied that the respondent has demonstrated that there are special circumstances warranting an order for costs of the appeal, or of the first instance proceedings. As to the latter, it may be noted that there was no appeal ground relating to the absence of a costs order below and the Appeal Panel was not provided with a copy of the transcript, or an audio recording, of the hearing at first instance. Further, on the face of the materials available to the Appeal Panel, and notwithstanding the appellant's indication that the first instance proceedings were more complex than the appeal, it does not appear that the first instance proceedings differed so significantly in nature from the appeal proceedings as to suggest that they were attended by special circumstances.

The affidavit relied upon by the respondent

1. The appellant objects to the Appeal Panel having regard to the affidavit relied upon by the respondent in circumstances where the directions made referred only to the filing of submissions and where (the appellant submits) the affidavit contains submissions and the appellant would be unable to respond to it within the five page limit to which his submissions are subject.
2. The Appeal Panel has considered the affidavit and decided to allow the respondent to rely upon it. The affidavit contains text of two and one-half pages which sets out some of the history of the dispute and identifies the costs incurred by the respondent (set out in an exhibit of three pages) and correspondence between the parties (set out in a series of exhibits totalling fourteen pages). The remaining seven pages are a coversheet and some exhibit notes. There are some submissions made in the affidavit but these have each been addressed by the appellant in his submissions. Further, the appellant did not indicate that he wished to adduce any evidence in response. In these circumstances, the Appeal Panel is satisfied that the evidence in the affidavit is relevant and that the appellant is not prejudiced by the Appeal Panel having regard to it.

Are there special circumstances?

1. The respondent has submitted that s 60(3) (c), (d) (e) and (g) are engaged. In the course of its submissions concerning s 60(3) (c), (d) and (e), the respondent made various submissions on matters not strictly relevant to those subparagraphs, but which fall for consideration under s 60(3)(g). Those submissions are considered as part of the consideration of s 60(3)(g) below.

(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

Submissions

1. The respondent submitted that s 60(3)(c) is engaged because the appellant failed completely in his claim. The appellant submitted that the phrase "no tenable basis in fact or law" in s 60(3)(c) requires something far beyond losing the case, and that his case was arguable.

Consideration

1. The appellant failed on all grounds on the appeal. Whilst success or failure is a relevant consideration, it does not follow from the appellant's failure on the appeal that there was such a disparity in the strength of his claim as against the position of the respondent that a special circumstance arises. The Appeal Panel is satisfied, as the appellant submitted, that his case on appeal was arguable.

Submissions

1. The respondent submitted that s 60(3)(d) is engaged because of the complexity of the allegations made. The appellant submitted that whilst the issues at first instance were complex, the issues on appeal were not and that the Appeal Panel's rationale for its decision was set out in only eight paragraphs ([16]-[23]).

Consideration

1. The primary issue for determination by the Appeal Panel was whether the Tribunal failed to consider a submission made by the appellant based upon cl 5 of the Respondent's Terms and Conditions (see Somerville at [16]). A secondary issue was the quantum of the refund sought by the appellant (see Somerville at [23]). In the Appeal Panel's view, neither of these issues was of sufficient complexity to amount to a special circumstance, either alone or together.

(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance

1. The respondent submitted that s 60(3)(e) is engaged because the proceedings lacked substance and a basis in law and were arguably vexatious. In support of this submission, the respondent relied upon correspondence from the appellant, on his firm's letterhead, in which he referred to: his 45 years in legal practice, his awareness of his legal rights, his previous experience in litigation against another travel company, and the possibility of a substantial class action; and in which he demanded a refund failing which he would commence proceedings for that refund, together with interest and legal costs.
2. The appellant submitted that the only basis put forward for the submissions that the proceedings lacked substance and a basis in law and were arguably vexatious is the correspondence he sent to the respondent before the first instance proceedings and that this falls short of establishing that "the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance".

Consideration

1. For the reasons set out above concerning s 60(3)(c), the Appeal Panel is not satisfied that the proceedings were lacking in substance or devoid of a basis in law.
2. The respondent's submission that the proceeding is "arguably vexatious" is also rejected. Whilst the correspondence prior to the filing of the first instance proceedings might be regarded as aggressive, this does not mean that the subsequent proceedings are vexatious.

(g) any other matter that the Tribunal considers relevant

1. The respondent submitted that s 60(3)(g) is engaged because the appellant brought an appeal which was entirely unjustified, without merit and with no prospects of success, despite the respondent having written to the appellant prior to the appeal requesting that it be withdrawn.
2. As noted above, the Appeal Panel's view is that the appeal was arguable. It follows that the appeal was neither unjustified, without merit nor without prospects of success. In these circumstances, the respondent's correspondence is of little moment.
3. As noted above at [14], the respondent's submissions on s 60(c), (d) and (e) included various submissions on other possible grounds for finding special circumstances. These are considered below.
4. The first is that the appellant pursued the proceedings despite Virgin Australia having provided him with a credit for the amounts he sought to recover from the respondent. The appellant did not respond to this submission. The existence of the credit is an unusual feature of the case and sufficient to amount to a special circumstance.
5. The second is that the respondent was required to engage legal representation because the appellant, a solicitor of 45 years' experience, wrote to the respondent on the letterhead of the legal firm which he founded and demanded a refund, failing which he would commence proceedings for the refund, together with interest and legal costs. The Appeal Panel acknowledges that it might be expected that the appellant may have an advantage because of his experience, but does not regard this as a special circumstance.
6. The third is that the appellant acted unreasonably in the correspondence he wrote before the first instance proceedings were commenced. Whilst this has been considered above in the context of vexation under s 60(3)(e), it also falls for consideration independently of that context. In other words, it is appropriate to consider whether that correspondence might amount to a special circumstance despite it being insufficient to ground a finding that the appellant's conduct of the appeal was vexatious. Having considered it in this way, the Appeal Panel is not satisfied that the appellant's correspondence amounts to a special circumstance.

Exercise of the discretion

1. The only special circumstance is the fact that the appellant pursued the appeal despite Virgin Australia having provided the appellant with a credit.
2. The Appeal Panel is not satisfied that this circumstance warrants the exercise of the discretion to award costs in favour of the respondent. The appellant was still entitled to bring the proceedings against the respondent despite the existence of the credit. Further, the worth of the credit, considered during the time of the appeal, was questionable. As noted in Somerville at [11], the credit is for use once the pandemic and travel restrictions end. At all times during the appeal process, there was considerable doubt as to when that might occur. There was also the associated uncertainty as to what the financial position of Virgin Australia might be at that time.
3. Finally, the Appeal Panel notes that the appellant made a series of other submissions, and in particular as to the operation of sub-sections 60(3)(a), (b) and (f). In circumstances where: the respondent does not rely upon those sub-sections; the conclusions set out above have been reached on the matters relied upon by the respondent; and the appellant does not seek a costs order, it is unnecessary to address the appellant's other submissions.

Conclusion and Orders

1. For the reasons set out above, it is appropriate to determine the respondent's costs application on the papers, but that application should be dismissed.
2. The Orders of the Appeal Panel are: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013, a hearing of the respondent's costs application is dispensed with; and 2. The respondent's application that the appellant pay its costs is dismissed.

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: 16 August 2021