This is an application for costs and other orders made by the appellant pursuant to a decision of the Appeal Panel in Strata 778 Pty Ltd v Enright [2019] NSWCATAP 106.
Subsequent to the publication of reasons in the substantive Appeal Panel proceedings, an order was made amending the reasons under s 63 of the Civil and Administrative Tribunal Act 2013 (NSW) ('the NCAT Act') to reflect that David McCabe was the second respondent to the appeal.
The substantive Appeal Panel proceedings involved a decision by a Senior Member of the Tribunal who had heard and determined a Retail Leases Act 1994 (NSW) dispute.
Relevantly, the landlord (Strata 778 Pty Ltd) had taken proceedings against the tenant and guarantor (Enright & McCabe) seeking damages for breach of lease. The damages sought exceeded $90,000. The landlord also sought payment of the bond; interest under the provisions of the lease; and costs. There was a cross application by the tenant against the landlord.
The retail lease bond held by the Office of Small Business was $33,000 (plus interest).
The Senior Member awarded the landlord damages of $18,381.96 and dismissed the cross application. No orders were made regarding payment of the bond; or interest under the lease. In respect of costs, the Senior Member held that each party should bear its own costs under s 60 (1) of the NCAT Act because that was the "usual order".
Strata 778 Pty Ltd v Enright [2020] NSWCATAP 71 | Case summary | Zoe
The Appeal Panel upheld the appeal of the landlord on the basis that the Senior Member had erred in law by (i) not dealing with the claims of the landlord to the bond and interest under the lease; (ii) failing to consider r 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) ('the NCAT Rules') that provided that an award for costs in Consumer and Commercial Division proceedings could be made if the amount claimed or in dispute exceeded $30,000, without "special circumstances" being demonstrated.
The Appeal Panel remitted the issues of payment of the bond; interest under the lease; and costs of the proceedings at first instance back to the Senior Member for determination. Orders were made to facilitate such issues being determined on the papers and without oral hearing in accordance with s 50 (2) of the NCAT Act.
In its submissions in the appeal, the landlord submitted that in regards to the bond, the outcome of the appeal was the balance of the bond, it being clear that the tenant owed $18,381.96 by reason of the orders and findings of the Senior Member at first instance.
In respect of the Appeal Panel proceedings, we made directions for the issue of costs of the Appeal Panel proceedings to be determined. The directions provided a timetable for the filing and serving of submissions, and for submissions to deal with whether or not the party consented to the issue of costs being determined on the papers.
The landlord then filed submissions that sought the following orders contained within the submissions:
1. Payment of costs of the appeal in a lump sum amount of $5,326; or alternatively on an agreed or assessed indemnity basis;
2. Costs were payable because the amount claimed or in dispute in the original proceedings exceeded $30,0000 and by reason of r 38A of the NCAT Rules the landlord did not have to establish "special circumstances" to be awarded costs of the appeal;
3. The landlord should be awarded interest on costs under r 39 of the NCAT Rules;
4. The landlord was entitled to legal costs under cl. 5.1.8 and 13.3 of the lease because such costs arose as a result of the tenant's default;
5. The Office of Small Business be ordered to pay the balance of the bond towards the landlord's legal costs in the appeal proceedings.
Both parties filed and served written submissions. We have read and considered those submissions.
Neither party sought an oral hearing on the issue of costs and in any event we are satisfied that it is appropriate to deal with the costs application on the papers.
[2]
Costs of the Appeal
The landlord submits that by reason of r 38A of the NCAT Rules the landlord is entitled to a costs order without "special circumstances" being established. The basis of the submission is that the amount claimed or in dispute in the original proceedings exceeded $30,000.
The landlord made no submission that "special circumstances" were established under s 60 (2) of the NCAT Act.
Under s 60 (1) of the NCAT Act, parties are bear their own costs. Under s 60 (2) of the NCAT Act, a cost order can be made if "special circumstances" are established. Section 60 (3) of the NCAT sets out the matters to which the Tribunal may have regard to in respect of whether "special circumstances" exist.
"Special circumstances" are circumstances that are out of the ordinary, but not necessarily exceptional or extraordinary. The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].
Rule 38 of the NCAT Rules states:
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.
Rule 38A of the NCAT 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.
In respect of Rule 38A of the NCAT Rules, in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 the Appeal Panel found at [57]:
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
…
Thus, what the Appeal Panel must consider is whether the amount claimed or in dispute exceeds $30,000 in the Appeal Panel proceedings in respect of whether there is a realistic prospect that the wealth of the appealing party (the landlord) would be changed by more than $30,000 dependent upon the outcome of the appeal.
Accordingly, the mere fact that the amount claimed or in dispute in the original proceedings exceeded $30,000 does not invoke r 38A of the NCAT Rules. For the provisions of s 60 (1) (2) and (3) of the NCAT Act not to apply, we must be satisfied that there is a realistic prospect the wealth of the landlord would be changed by more than $30,000 by reason of the outcome of the appeal.
We are not satisfied that Rule 38 and 38A of the NCAT Rules apply to the costs application in the Appeal Panel proceedings. Success in the appeal by landlord and the remittal of the matter only realistically involves the balance of the bond amount separate to the award of damages made by the Senior Member at first instance of $18,381.96. That amount is less than $30,000. The landlord did not appeal the order for payment of damages of $18,381.96 and there was no cross appeal in respect of this order. Even if costs of the appeal are taken into account (and they should not be, as a costs order is separate to damages), the amount claimed or in dispute in the appeal still does not exceed $30,000. There is also no clear evidence that if interest under the provisions of the lease is taken into account in addition to the balance of the bond, the amount exceeds $30,000.
We are satisfied the provisions of s 60 of the NCAT Act apply to the Appeal Panel proceedings. The landlord has made no submissions on the issue of "special circumstances" and in any event there is nothing in the appeal proceedings that are out of the ordinary.
In respect of the Appeal Panel proceedings, both parties are to bear their own costs.
[3]
Interest Under r 39 of the NCAT Rules
Rule 39 of the NCAT Rules only applies to interest on a judgement debt. It is inapplicable to the circumstances of this application.
[4]
Costs Under the Provisions of the Lease
We have ordered that each party pay its own costs of the appeal, so the provisions of the lease do not require any consideration. In any event that is a cause of action under the lease, not an issue arising from our directions facilitating determination of a costs application in the appeal proceedings.
[5]
Orders
The Appeal Panel makes the following orders:
1. An oral hearing on the issue of costs is dispensed with under s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW).
2. The application for costs and other orders is dismissed.
3. Each party is to bear its own costs of the appeal in accordance with s 60 (1) of the Civil and Administrative Tribunal Act 2013 (NSW).
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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
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Decision last updated: 30 April 2020