SPL Living Pty Ltd v JAM Super Property Holdings Pty Ltd (No 2)

Whether time should be extended for JAM's submissions in reply

1. We will firstly deal briefly with JAM's failure to lodge its submissions in reply in accordance with the timetable set out in the orders. Section 36(3) of the NCAT Act imposes a duty on parties and legal practitioners to co-operate with the Tribunal to give effect to the Tribunal's guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal. Adherence to procedural timetables is a core obligation on all parties in the Tribunal under that provision.
2. Under s 41 of the NCAT Act, the Tribunal may, of its own motion, extend the period of time for the doing of anything under any legislation in respect of which the Tribunal has jurisdiction despite anything to the contrary under that legislation. We have considered whether JAM's submissions in reply should be accepted in spite of their tardiness. We have not considered it necessary to seek SPL's views on the extension of time, in view of the outcome of our consideration of the submissions, the considerable costs already incurred in these proceedings and our obligation to facilitate the just, quick and cheap resolution of the real issues in the proceedings under the guiding principle in s 36(1) of the NCAT Act.
3. In line with the principles in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22, the length of the delay was short, JAM has not provided a reason for the delay, the submissions raise a procedural issue which requires consideration prior to determining the costs application (a request to defer consideration of JAM's costs application in the appeal proceedings until its costs application in the proceedings below has been determined) and SPL would suffer little to no prejudice if JAM were permitted to lodge its reply submissions one week late. Accordingly we have allowed an extension of time and accepted JAM's reply submissions.

JAM's request to defer consideration of JAM's costs application in the appeal proceedings until its costs application in the proceedings below has been determined

1. In its submission in reply, JAM submitted that:

The proper and appropriate course is to defer the determination of JAM's costs application in the appeal proceedings until its costs application in the proceedings below has been determined. That is because, if an order is made that SPL pay JAM's costs of the proceedings below, such order may constitute a special factor warranting an award of costs in the appeal proceedings: Edwards v CohenHandler Pty Ltd (No 2) [2017] NSWCATAP 81 at [12].

1. It is necessary to consider the paragraph on which JAM relies from Edwards v CohenHandler Pty Ltd (No 2) [2017] NSWCATAP 81 (Edwards) in context. The Appeal Panel matter in Edwards concerned a costs application for proceedings in which the appellant had appealed from a costs decision in the Tribunal below. Thus, the matter of costs had already been determined in the Tribunal below when the Appeal Panel in that matter noted:

11 The costs applicant refers to the following matters as 'special circumstances': the relative strengths of the claims made by each of the parties to the appeal, focussing in particular on the weakness of the argument that the Tribunal was functus officio when it delivered its substantive decision (factor (c)), the nature and complexity of the appeal proceedings (factor (d)) and two special factors (under (g)).

12 The first of the special factors was one to which we referred in our principal decision, i.e. Appeal Panels have often taken account the fact that an adverse costs order was made at first instance against the party that has now lost the appeal.

1. We do not propose to defer consideration of the appellant's own costs application in the appeal on the basis of their anticipation of a costs decision in their favour in the Tribunal below, where s 60 NCAT Act also applies.
2. The mere mention in Edwards that Appeal Panels have often taken into account adverse costs order at first instance is not a compelling reason for the present proceedings to be further delayed.
3. Any further delay in the determination of costs in these proceedings pending the determination of a costs application below does not align with our obligation to facilitate the just, quick and cheap resolution of the real issues in the proceedings under the guiding principle in s 36(1) of the NCAT Act.

JAM's submissions on costs in the Tribunal proceedings

1. JAM filed a copy of the submissions dated 11 October 2024 seeking their costs in the Tribunal. We have had regard to those submissions to the extent that they are relevant to the application for costs in the Appeal Panel; however as we identified in the principal decision, we would only consider making an order in relation to the costs of this appeal, not in relation to the costs of the proceedings at first instance in the Tribunal. The Tribunal did not make any order for costs and no appeal was lodged in relation to the question of costs of the proceedings in the Tribunal (see [68] of the principal decision). This is consistent with the Appeal Panel decision in The Owners - Strata Plan No 74835 v Pullicin (Costs) [2020] NSWCATAP 49 at [5] - [9] (Pullecin) (although for an alternative view, see Macey's Group Pty Ltd v The Owners - Strata Plan No 33591 [2021] NSWCATAP 88 at [34]- [55] (Macey's)).
2. Here, we prefer and are minded to follow the reasoning in Pullecin rather than Macey's on the basis that there are costs arguments which are specific to the Appeal Proceedings on both sides and do not relate to the proceedings in the Tribunal. Consequently, even if we did not prefer the reasoning in Pullecin it is appropriate to consider the issue of the award of costs in the Tribunal proceedings separately from the issue of the award of costs in the appeal.

JAM's submissions on costs in the appeal proceedings

1. In relation to costs in the Appeal Panel, JAM sought its costs of the appeal on the ordinary basis, contending that there were "special circumstances" which warranted an award of costs in its favour because of SPL's behaviour in the Tribunal.
2. JAM set out the procedural history of the matter at first instance, which is summarised below:

(1) 19 January 2024: JAM filed an application in the Tribunal seeking the termination of a residential tenancy agreement and the payment of unpaid rent owed by SPL under the Residential Tenancies Act 2010 (NSW) (the RTA);

(2) 22 March 2024: the matter was listed for final hearing. SPL did not attend and orders were made in its absence terminating the residential tenancy agreement, ordering SPL to give vacant possession and to pay JAM $15,000 for rental arrears;

(3) 28 March 2024: SPL filed an application to set aside the 22 March 2024 orders;

(4) 11 April 2024: the application was heard and the proceedings were reinstated;

(5) 16 April 2024: JAM made an offer to fully resolve the proceedings on the basis that it would accept $9,189.52 (April 2024 Offer). That offer was attached to the submissions and was also referenced in the application for costs in the Tribunal. It was not accepted by SPL;

(6) 1 May 2024: SPL asserted that the Tribunal lacked jurisdiction to hear the claim;

(7) 19 June 2024: the jurisdictional issue was heard and the Tribunal determined that it had jurisdiction to hear the matter;

(8) 4 September 2024: the matter was heard;

(9) 20 September 2024: Reasons were delivered finding in favour of JAM and ordering SPL to pay JAM $15,000 in 14 days. The sum was not paid;

(10) 2 October 2024: SPL filed an appeal from the Tribunal decision and sought an interim stay of the money order; and

(11) 16 October 2024: the Tribunal stayed the money order made in JAM's favour on the condition that SPL pay $15,000 into a controlled monies account in the joint names of the parties.

1. JAM contended that the following matters contributed to special circumstances which would warrant an order in its favour for costs of the appeal on the ordinary basis:

(1) Non-acceptance of an offer may be sufficient to ground special circumstances within the meaning of s 60(2); Tang v Mawad Group Pty Ltd (No 2) [2021] NSWCATAP 345 at [24]. The April 2024 Offer was unreasonably rejected by SPL and was beaten by the result ultimately achieved in the Tribunal. Had it been accepted, the dispute would have been brought to a timely and commercial end. Instead JAM was forced to endure another 15 months of litigation in the Tribunal;

(2) SPL had been responsible for prolonging unreasonably the time taken to complete the proceedings. SPL failed to appear at the hearing on 22 March 2024, which necessitated the set aside application. SPL then instigated an unsuccessful jurisdictional challenge involving cross-examination of witnesses. When SPL was finally order to pay JAM $15,000 it sought a stay of the order and filed an ultimately unsuccessful appeal. JAM submitted that, whilst much of this conduct had occurred in the Tribunal below, it was relevant to the Appeal Panel's determination as to whether SPL's conduct as a whole had been reasonable.

(3) JAM had been deprived of its monetary award by SPL's actions. Almost 12 months had passed since SPL was ordered to pay JAM $15,000 but JAM had not seen any of that money;

(4) Where a party has been successful first before the Tribunal and second before the Appeal Panel, a finding of special circumstances might be warranted; Edwards at [25] - [26].

(5) JAM submitted that the prospects of the appeal were weak from the start. SPL had purported to fashion about 17 questions of law in its Notice of Appeal but the Appeal Panel found there were none. SPL should have understood that it would require leave to appeal and to demonstrate that it had suffered a substantial miscarriage of justice but there was no basis for an argument that the evidence below "preponderated so strongly against the central conclusion that SLP was the relevant tenant that no reasonable tribunal member could have reached such conclusions".

(6) SPL had not conducted itself in a manner consistent with the quick and cheap resolution of the proceedings, and so as to ensure "the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings." While the amount in dispute was only $15,000, SPL was forced to defend a substantial appeal involving about 30 grounds of appeal. SPL was represented in the appeal by experienced solicitors and counsel which required JAM to dedicate significant resources to defending the appeal.

1. SPL submitted that there should be no order as to costs in respect of the appeal. In taking this position, SPL forwent its right to seek costs arising out of the deregistration of JAM and the vacation of the original appeal hearing on 4 February 2025.
2. Referring to [68] and [69] of the principal decision, SPL contended that our preliminary view that special circumstances did not exist and accordingly no order should be made in relation to the costs of the appeal was correct, on the following bases:

(1) SPL had made an offer of settlement prior to the Appeal Panel hearing:

(a) On 14 January 2025, SPL made an offer to JAM (SPL's Offer) to the effect that the $15,000 be released to JAM together with any accrued interest, following which SPL would withdraw the appeal on the basis there was no order as to costs and JAM would take all steps to withdraw the Tribunal application on the basis there was no order as to costs, or if that was not possible, to consent to the Tribunal's decision being set aside and the application being withdrawn. Had JAM accepted SPL's Offer, the proceedings could have been resolved in January 2025. At the time of SPL's offer, a stay had been granted in favour of SPL and JAM would have been fully informed of the issues in the proceedings as all the evidence and submissions had been served. "JAM was in an ideal position to evaluate and accept SPL's Offer but it chose not to do so."

(b) On 17 January 2025, JAM rejected SPL's Offer and sought payment of the sum of $15,000 plus $30,500 for its costs (said to represent 50% of its costs up to that time) (JAM's Counter Offer). SPL contended that JAM continued to defend the appeal proceedings from that date only for the purposes of attempting to seek its costs and contrary to the guiding principle in s 36 of the NCAT Act as:

(i) JAM caused the parties to incur unnecessary and significant costs from 17 January 2025 when it rejected SPL's offer that would have resolved the substantive dispute 100% in its favour;

(ii) The decision to reject SPL's offer resulted in the Tribunal's time being taken up for a substantive appeal hearing (where the only benefit to JAM was a potential costs order) and that decision denied other members of the public access to justice; and

(iii) The decision to reject SPL's Offer ignored the general position that the Appeal Panel applies s 60 of the NCAT Act when determining costs and each party is to pay its own legal costs.

(c) SPL submitted that the Appeal Panel could not find special circumstances to exist in this context and to do so could create a dangerous precedent in encouraging litigants to continue proceedings solely for the purposes of hoping to obtain a costs order, which was at odds with s 36 and s 60 of the Act.

(2) JAM's costs were excessive; As at 17 January 2025 JAM's costs were stated to be $61,000 and must now be significantly higher considering that the appeal proceedings were heard six months later, the appeal proceedings were listed on a number of occasions after 17 January 2025 due to the deregistration and reinstatement of JAM and it appeared that counsel was engaged by JAM after 17 January 2025 as JAM's appeal submissions were not prepared by counsel but by Solicitors for the respondent. As a result, SPL reckoned JAM's costs to be over $100,000, which weighed against a costs order as the parties were likely to be involved in a further protracted dispute in the assessment process given the quantum. Further, it was inconsistent with ss 36 and 60 of the NCAT Act to award costs to a party who by January 2025 had spent over four times the amount in dispute on legal costs.

(3) JAM was deregistered during the Appeal Proceedings which caused unnecessary delay and expense:

(a) According to an ASIC search, JAM was deregistered on the day before the initial Appeal Panel hearing (3 February 2025). This resulted in the original hearing date being vacated and both sides preparing evidence going to that issue and further listings on 7 February 2025, 5 March 2025 and 2 April 2025 to deal with the issue and set the appeal down for hearing. Costs were reserved in relation to that issue. SPL submitted that cost of the appeal should not be awarded to JAM as both parties had costs arguments to advance in respect of the proceedings.

(b) For the avoidance of doubt, SPL set out that it did not press its costs in respect of the deregistration as foreshadowed at the listing on 4 February 2025 on the basis that there be no order as to costs in respect of the appeal.

1. In response to JAM's submissions on costs, SPL submitted that an offer made in the first instance should not carry any force in respect of determining the issue of costs of the appeal; Bluth v Boyded Industries Pty Ltd (No 2) [2024] NSWCA 194 at [54] - [57]. It was reasonable for SPL not to accept the offer given the jurisdictional dispute which was still to be heard and before the 'real issue in dispute' (being the parties to the agreement) emerged.
2. JAM had significantly contributed to the delay in receiving its money in light of the deregistration of the company and the original appeal hearing of 4 February 2025 being vacated. If JAM had accepted SPL's offer, the money would have been paid in January 2025 plus accrued interest. There was also a contested stay hearing where the Tribunal found that a stay was warranted in the circumstances to protect the status quo.
3. JAM was not entirely successful on the appeal. The appeal was dismissed as leave to appeal was refused.
4. The prospects of the appeal were not weak and there was a substantial basis to SPL's contention that it was not a party to the residential tenancy agreement. JAM had changed its position on several occasions regarding the form of the agreement. JAM had commenced proceedings when it was unable to identify with precision the parties to the agreement and the rent payable. The identity of the tenant was unclear.
5. SPL was not responsible for prolonging unreasonably the time taken to complete the proceedings. JAM was the architect of any delay. Its deregistration on the eve of the appeal hearing on 4 February 2025 resulted in the hearing being vacated and the appeal ultimately being heard on 26 June 2025. JAM further could have resolved the proceedings in January 2025 by accepting SPL's Offer which would have had the effect of it being paid the entirety of the $15,000.
6. SPL contended that SPL's Offer demonstrated that it had conducted itself in a manner consistent with the quick and cheap resolution of the proceedings and JAM had conducted the appeal since January 2025 solely for the purpose of attempting to recover its costs.

1. In relation to SPL's Offer, JAM submitted that JAM had already been put to significant expense and inconvenience in the litigation and the proceedings below had been delayed by SPL's failure to appear at a final hearing on 22 March 2024 and by SPL's failed jurisdictional challenge. After JAM succeeded in the Tribunal, SPL had sought and obtained a stay of the $15,000 money order. JAM submitted that SPL's Offer did not allow for these matters and required JAM to forego its right to claim costs not only of the appeal but of the proceedings below. JAM did not consider that position to be reasonable in circumstances where SPL had rejected JAM's offer nine months earlier for $9,189.52, which JAM had bettered in the Tribunal. JAM contended that SPL was not forced to prosecute the appeal when JAM rejected its offer. SPL had chosen to file the appeal and SPL could have discontinued the appeal at any time but chose not to do so.
2. JAM contended that the costs had been substantially increased due to SPL's conduct in failing to appear at the final hearing, its reinstatement application and its jurisdictional challenge, the stay and the appeal proceedings. Further, the quantum of any recoverable costs would be a matter for taxation. Any issues of proportionality would feature in the costs assessment.
3. JAM had provided SPL with two "without prejudice" offers of settlement within the appeal proceedings; on 12 December 2024 and 17 January 2024. JAM submitted that these offers provided real compromise in circumstances where JAM either offered to forgo over 50% of its total costs incurred in the original proceedings or all of its costs in the appeal proceedings.

Should a hearing on costs be dispensed with in accordance with s 50(2) of the NCAT Act?

1. Under s50(3) of the NCAT Act, the Tribunal may not make an order dispensing with a hearing unless the Tribunal has first afforded the parties an opportunity to make submissions about the proposed order and taken the submissions into account. This also applies to the Appeal Panel in relation to an appeal.
2. Order 6 of the orders in the principal decision required submissions to include whether the parties considered that the issue of costs could be determined on the papers. Both parties consented to the costs application being determined on the papers.
3. The parties have been afforded an opportunity to make submissions. The costs issues can be adequately determined in the absence of the parties by considering the written submissions and any accompanying documentation. Accordingly it is consistent with the Tribunal's guiding principle under s 36 of the NCAT Act to dispense with a hearing in relation to costs.

What is the relevant legislative context for the costs application in the appeal?

1. Under s 60(1) of the NCAT Act, each party to proceedings in the Tribunal is to pay the party's own costs. Under s60(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.
2. An exception to s 60(2) is found in rule 38 of the Civil and Administrative Tribunal Rules 2014 (NCAT Rules), which relates to the CCD. Under rule 38(2), the Tribunal may award costs in the absence of special circumstances warranting such an award if the amount claimed is more than $10,000 but not more than $30,000 and the Tribunal has made an order under cl 10(2) of Sch 4 of the NCAT Act in relation to the proceedings, or the amount claimed or in dispute in the proceedings is more than $30,000. Rule 38A extends this provision to the amount claimed or in dispute in the Appeal Panel.
3. Here, the amount claimed or in dispute is less than $30,000 and rules 38(2) and 38A do not apply. Accordingly, we may only award costs in the appeal proceedings if satisfied that there are "special circumstances warranting an award of costs" within the meaning of s 60(2) of the NCAT Act.
4. Subsection 60(3) of the NCAT Act 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.

1. Subsection 60(3) uses the expression "may have regard to the following" and the factors are not mandatory considerations. The list is also not exclusive: NCAT Act s 60(3)(g).

Special circumstances warranting an award of costs

1. As summarised in Ung v Golden Century Property Investments Pty Ltd [2018] NSWCATCD 56 ([15] - [18])(citations are omitted):

(1) "Special circumstances" are circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional;

(2) Being successful in proceedings is not, of itself, a special circumstance. There must be some additional factors present in the case to justify an award of costs;

(3) Even if there are special circumstances, it may still not be appropriate for the Tribunal to award costs for discretionary reasons;

(4) The discretion to award costs is broad and unfettered, save that it must be exercised judicially... and also "according to rules of reason and justice, not according to private opinion ... or even benevolence ... or sympathy".

Has JAM established special circumstances warranting the award of costs in its favour?

1. JAM contended that special circumstances existed which should warrant an award of the costs in the appeal in JAM's favour on the ordinary basis.
2. Several of those circumstances related to the initial proceedings in the Tribunal, including SPL's refusal of JAM's April 2024 Offer and SPL's alleged behaviour in the Tribunal proceedings. JAM acknowledged that an offer made by a party prior to a first instance hearing may not carry the same force on appeal. SPL submitted that an offer made in the first instance should not carry any force in respect of determining the issue of costs of the appeal. We consider that these are matters to be considered in any costs application which may be pursued in the Tribunal proceedings. We do not intend to make any comment which may be perceived to influence that application. We do not consider those issues to constitute circumstances which are relevant to the costs application in the appeal, much less special circumstances warranting an award of costs in the appeal.
3. JAM submitted that the fact that JAM had been deprived of its monetary award by SPL's actions constituted special circumstances. The payment of the $15,000 awarded below was stayed pending the appeal. An interlocutory decision by the Appeal Panel to preserve the status quo is a routine matter and, without more, does not constitute circumstances that are out of the ordinary such that they would be "special" in the sense conveyed by s 60(3).
4. JAM submitted that its success both at first instance and on appeal might give rise to special circumstances, citing Edwards at [25] - [26]. Those paragraphs in Edwards state:

25 While we agree with the cost applicant that the point agitated by the appeal was one that was not untenable, though we rejected it, it remains the case that the costs applicant was exposed to a second round of litigation albeit a second round restricted to the costs order of the Tribunal below.

26 While the statutory rule is that ordinarily each party must bear its own costs, the fact that the party successful at first instance has been taken to appeal, and the appeal has been unsuccessful does, we think, strengthen the respondent party's case for being awarded the costs of the appeal. There is a public interest in the finality of litigation, which is supported by leaving open the possibility of treating as a special circumstance the fact that the appeal has been unsuccessful.

1. This was in the context of the Appeal Panel taking into account an adverse costs order made at first instance and an offer made by the costs applicant in that case to resolve the proceedings made soon after the costs respondents served the claim initiating the proceedings. In paragraph [23] in Edwards, the Appeal Panel also referred to "the base line rule ... that a successful party is not entitled, merely by the fact of success, to a costs order." This long held standard is not lightly displaced; see Citadin Pty Ltd (No. 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd [2001] NSWADTAP 31 at [6]:

Being successful in proceedings is not in itself a special circumstance.

1. JAM has not raised grounds to dislodge that proposition here.
2. Although we found that SPL raised no question of law and leave to appeal was not granted, there were issues raised by SPL which required some investigation and consideration on our part. We would not consider SPL's prospects of success in the appeal to be so weak as to constitute special circumstances.
3. JAM contended that SPL had not complied with s 36(3). The amount in dispute was only $15,000 but SPL was represented in the appeal by experienced solicitors and counsel which required JAM to dedicate significant resources to defending the appeal. These circumstances are also not sufficiently out of the ordinary such that they would constitute special circumstances for the purposes of s 60(3).
4. Lastly, in its reply submissions JAM raised two "offers of settlement" made on 12 December 2024 and 17 January 2025. Although the offers were expressed as being made in accordance with the principles enunciated in Calderbank v Calderbank (1975) 3 All ER 33 (Calderbank), JAM did not refer to the offers in those terms. They would not appear to meet the Calderbank principles as they do not provide a settlement more favourable than the outcome in the principle decision; they sought the release of the $15,000 and payment of, respectively, 75% and 50% of JAM's total costs, which would only become payable upon an order by the Tribunal and/or the Appeal Panel awarding costs, which in turn would necessitate special circumstances warranting an award of costs.
5. It is unclear whether JAM is submitting that these offers of compromise should themselves constitute special circumstances, or whether they are merely put forward as grounds for indemnity costs in the event that costs be awarded. For completeness, an argument that the offers of settlement should constitute special circumstances would be circular and futile in the present context. Section 60 requires special circumstances warranting a costs order to exist before costs can be awarded. As special circumstances need to exist prior to a costs order being made, an offer to settle on part payment of costs cannot by itself be special circumstances because there is no basis for payment of costs, whether in part or in full, on the ordinary basis or on an indemnity basis, where no special circumstances are already in existence.
6. For these reasons, JAM has not established special circumstances which would warrant an award of costs in the appeal and it is unnecessary to consider whether to exercise our discretion to do so.
7. In the event that special circumstances had been established, however, there would be substantial reasons not to exercise that discretion. JAM did not address SPL's submissions regarding JAM's deregistration prior to the scheduled hearing of the appeal in February 2025. On 7 February 2025, costs were reserved in adjourning those proceedings which would not support a costs order in JAM's favour in the appeal overall.

(1) A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013.

(2) No order as to costs.

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.