Swedzah Pty Ltd v Moama Waters Providore Pty Ltd (No 2)

(1) An application by the tenant (the tenant's application) (2021/00416395 (formerly COM 21/02840)) for damages in the sum of $428,534 following the landlords' repudiation of the Lease, on the basis of which the tenant then terminated the Lease. The Tribunal at first instance found that the landlords had repudiated the Lease and the tenant had therefore validly terminated the Lease. After deducting the landlords' claim for unpaid rent and electricity, the Tribunal awarded the sum of $31,603.67 to the tenant; and

(2) A cross-application by the landlords (the landlords' application) (2021/00401137 (formerly COM 21/18396)), for an order that the tenant pay for unpaid rent, utilities, cleaning and rubbish removal. That application was dismissed.

1. Only the orders in the tenant's application were the subject of the Appeal.
2. For the reasons set out in the principal decision, we decided that the landlords had failed to establish that the Tribunal made an error on a question of law. Leave to appeal on grounds other than a question of law was not sought. As the Notice of Appeal was filed out of time, leave to extend time was not granted and the Appeal was dismissed.
3. In Order 3 of the principal decision, we allowed the parties to file any written submissions in relation to costs within 14 days of the orders (by 12 May 2025) and to reply to each other's submissions 7 days thereafter (by 19 May 2025). Submissions were required to include whether the parties considered that the issue of costs could be determined on the papers in accordance with s 50(2) of the NCAT Act.
4. The tenant provided submissions on costs on 8 May 2025. Noting that no response had been received from the landlords, on 28 May 2025 Registry sent the tenant's costs submissions to the landlords and an extension of time was granted for the landlords to respond until 4 June 2025. No response was received from the landlords within that time frame, or up until the time of writing.

1. The tenant applied for an order for the landlords to pay the tenant's costs of the appeal.
2. The tenant submitted that the proceedings at first instance were brought in the CCD and involved a claim of more than $30,000. Therefore, under cl 38 of the Civil and Administrative Tribunal Rules 2014 (NSW), special circumstances were not necessary before the Tribunal at first instance and the Appeal Panel on appeal could make an award of costs in respect of the application at first instance. Because rule 38 applied at first instance and the appeal was filed after 1 January 2016, rule 38A applied to the appeal so as to apply rule 38 to the questions of costs of the appeal. Rules 38 and 38A removed the need for special circumstances before an order for costs could be made in respect of an appeal where the amount in issue on the appeal exceeded $30,000.
3. The amount in issue on the appeal is the amount by which the appeal might affect the position of the parties. On this appeal the amount in issue was in excess of $30,000. At first instance, the Tribunal awarded the tenant the sum of $31,103.67. By notice of appeal, the landlords had sought an extension of time for filing the notice of appeal and to appeal from the decision of the Tribunal at first instance, awarding the tenant the sum of $31,103.67. By dismissing the appeal from the order made at first instance, the Appeal Panel had dealt with an amount in issue exceeding $30,000. Accordingly the tenant submitted that rule 38 applied and the Tribunal was not required to determine if special circumstances applied.
4. The tenant submitted that the starting point should be that the usual order for costs should be in favour of the successful party. The tenant sought an order that the landlords pay the tenant's costs of the appeal including the costs of making the costs submissions to be assessed within the meaning of s 60 of the NCAT Act.

(1) Should a hearing on costs be dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act)?

(2) Which legislative provisions and legal principles apply to the costs application?

(3) Should the Appeal Panel make a costs order?

(4) Who is the successful party?

(5) On what basis should any costs order be made?

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 3 of the Appeal Panel's orders in the principal decision required submissions to include whether the parties considered that the issue of costs could be determined on the papers. The tenant submitted that the costs application could be dealt with on the papers. The landlords did not provide any submissions to the contrary.
3. The parties have been afforded an opportunity to make submissions. We are satisfied that 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 facilitate the just, quick and cheap resolution of the real issues in the proceedings to dispense with a hearing in relation to costs.

Which legislative provisions and legal principles apply to the costs application?

1. Under ss 60(1) and 60(2) of the NCAT Act, each party to proceedings in the Tribunal is to pay the party's own costs and the Tribunal may award costs in relation to an appeal only if it is satisfied that there are special circumstances warranting an award of costs.
2. In proceedings commenced in the CCD, by reason of the operation of s 35 when read with par (a) of the definition of "procedural rules" and the definition of "Tribunal rules" in s 4(1) of the NCAT Act, s 60 is subject to the NCAT Rules.

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 -

...

(b) the amount claimed or in dispute in the proceedings is more than $30,000.

1. Rule 38A of the NCAT Rules relevantly provides:

38A Costs in internal appeals

...

(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.

1. For the purpose of r 38A of the NCAT Rules the amount claimed or in dispute is the amount in dispute on appeal, not the amount in dispute in the proceedings at first instance: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57].
2. It is uncontested that the amount claimed or in dispute in 2021/00416395 (formerly COM 21/02840) (the home building claim which was appealed) in the Tribunal below and the amount claimed or in dispute in the Appeal Panel was more than $30,000. Rule 38A applies in these proceedings and the discretion to award costs is enlivened.

1. In Vella v Mir (No 3) [2020] NSWCATAP 17 (Vella (No 3)) at [28]-[30] the Appeal Panel summarised the relevant principles on the Tribunal's (and, by extension, the Appeal Panel's) exercise of its discretion to award costs, as follows:

28. Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9].

29. Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] HCA 59; [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.

30. In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion:

(1) the starting point is that a successful party should be entitled to an order for costs in his favour;

(2) an award of costs is by way of an indemnity and not as punishment;

(3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party;

(4) the factors to be considered are not to be confined as to do so would constrain the general discretion;

(5) the relative success of the parties on different issues and the time taken to determine them may be relevant;

(6) the nature of the proceedings is relevant;

(7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious.

1. As rule 38A applies, in ordinary circumstances, costs would follow the event and an award of costs would be made to the successful party.

1. The question to be asked in determining which was the successful party was considered by Ward J (as she then was) in Quest Rose Hill Pty Ltd v White [2010] NSWSC 1190 (at [67]), to include the question "Had the plaintiff won anything of value or anything he could not have won without fighting the action through to a finish?"
2. We summarised the landlords' contentions in the principal decision as follows:

(1) The landlords contended that the tenant made a forensic decision in the running of its case at first instance to base its claim for damages on projected future earnings in an amount of $44,000 per week. It did not claim or make any alternative argument to the effect that, if that claim did not succeed, it should be awarded a lesser sum of damages based on the historical trading figures which showed earnings of only $9000 per week.

(2) The landlords contended that the Tribunal had failed to accord procedural fairness to the landlords by determining a new damages figure on the basis of the historical figures without giving the landlords the opportunity to make submissions or otherwise address that course.

(3) Further, the landlords argued that the historical trading figures were not included in the tenant's pleadings or proven by the tenant. Once the Tribunal found that the Veale Report was not admissible, there was no evidence upon which to base the damages assessment.

(4) The landlords also contended that the decision was unreasonable.

1. The landlords' application for an extension of time was not granted and the appeal was dismissed. The landlords were unsuccessful on every appeal ground and the tenant was the successful party.

1. No submissions have been lodged by the landlords to suggest that the tenant has engaged in any disentitling behaviour or that costs should not follow the event.
2. Accordingly, in light of the reasoning set out above, the tenant is awarded costs in the appeal on the ordinary basis, as agreed or, if not agreed, then assessed on the basis set out in the legal costs legislation (as defined in section 3A) of the Legal Profession Uniform Law Application Act 2014.

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

(2) The appellants (the landlords) are to pay the respondent's (the tenant's) costs of, or incidental to, the appeal with such costs, if not agreed, to be assessed in accordance with the Legal Profession Uniform Law Application Act 2014 (NSW).

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.