The Glen Village Limited v Cracknell

reasons for decision 1These proceedings were commenced in the Consumer, Trader and Tenancy Tribunal ("CTTT"). The CTTT was abolished on 31 December 2013 and the functions of that tribunal were transferred to the New South Wales Civil and Administrative Tribunal ("NCAT"). The legislation dealing with the abolition of one tribunal, and the establishment of another tribunal, allowed NCAT to determine proceedings which had yet to be determined by CTTT by utilising the legislation under which the CTTT operated. 2For ease of reference when no differentiation is required, either tribunal will be referred to as "the Tribunal" to encompass both the CTTT and NCAT. 3On 2 July 2014, the Tribunal dismissed both substantive claims. The decisions were published, together with reasons, by Notice of Order issued by the Tribunal pursuant to section 49 of the CTTT Act. The Notice of Order is generated internally within the Registry's case management system and issued to the parties only. It has not been published on a website, such as Austlii, accessible by the public. 4When announcing the decision to dismiss the claims, costs were sought by the respondents. Directions were made for the exchange of submissions. Each party has complied with those directions and a decision is now made on the papers. 5Costs are regulated by section 53 of the CTTT Act. It sets out the legislative default position that parties in any proceedings are to pay their own costs. This overrides the common law principle that costs follow the event. 6Section 53 allows the Tribunal to award costs in accordance with the regulations. Clause 20 of the Regulation sets out the circumstances which the Tribunal is to consider if it is to make an order for costs. 7Where there is no amount is dispute, such as in this case, the Tribunal may award costs if satisfied that there are exceptional circumstances that warrant the awarding of costs. 8As well, the Tribunal may order the costs of any proceedings that the Tribunal considers to be frivolous, vexatious, misconceived or lacking in substance be paid wholly, or partly, by the person who instituted the proceedings. 9It is the respondents' claim that by filing the application out of time results in the litigation satisfying the requirement of being an exceptional circumstance as required by the legislation, in that such a failure means the litigation was frivolous, vexatious, misconceived and lacking in substance. 10The heart of this dispute lies in the operation of section 174 of the RV Act. The relevant parts of that section read - "174 Letting or subletting of premises (1) A resident of residential premises in a retirement village may let ...the premises under a residential tenancy agreement in accordance with this Division. (2)... (3) (4) A resident of residential premises in a retirement village must not let or sublet the premises unless he or she has given the operator of the village written particulars of: (a) the name and age of the proposed tenant or subtenant, and (b) the term of the proposed residential tenancy agreement, and (c) such other matters in relation to the proposed agreement as the operator may reasonably require, and the operator has consented in writing to the agreement. (5)... (6) If the operator decides not to consent to the residential tenancy agreement ... the operator must, no later than 7 days after receiving the written particulars required by subsection (4): (a) advise the resident of that decision (and of the reasons for it), and (b) apply to the Tribunal for an order declaring that the operator is not obliged to consent to the agreement. (7) If the operator does not apply for such an order within the time allowed by this section, the operator is taken to have consented to the residential tenancy agreement." 11The section prohibits a resident from entering into a residential tenancy agreement with a retired person unless the operator has consented in writing to the agreement. 12If the operator decides not to consent to the residential tenancy agreement, it must, within seven days advise the potential landlord of the refusal and the reasons for it. As well, the operator is also required to apply to the Tribunal for an order declaring that the operator is not obliged to consent to the agreement. 13In the event the operator does not apply to the Tribunal within the time limit, it is taken to have consented to the residential tenancy agreement. 14In the reasoning issued on 2 July 2014, I noted that Ms Lowson, representing the respondents, immediately before embarking on the hearing of the claim challenged the jurisdiction of the Tribunal to determine the application on three grounds. So, before hearing the substantive claim, three interlocutory issues had to be determined. Ms Lowson stated these to be: (1) the application was lodged out of time, (2) estoppel applied, and (3) the proceedings had no utility. 15To determine whether the claim was lodged out of time required a simple mathematical exercise. The application by the operator was filed on 19 February 2013. The Tribunal counted backwards for seven days. This resulted in a finding that the starting point of the time limit would be 12 February. The Tribunal found no evidence of any advice to the respondents indicating the operator did not consent to the proposed lease being forwarded to, or received by, them between 12 and 19 February. The Tribunal continued traversing the chronology of the dispute in reverse until discovering a letter from the applicant's solicitor dated 11 January 2013 advising the respondents of the operator's refusal to consent to the proposed lease. 16As explained in the reasoning of the dismissal of the claim, the Tribunal was of the view that this letter comfortably fell within the bounds of section 174(6) and that this correspondence triggered the start of the legislative time limit. As the claim was filed at the Tribunal well after the expiration of the time limit, the application was dismissed. 17The Tribunal notes that the respondents were of a similar view. After receiving the 11 January letter, they signed a residential tenancy agreement with the tenant on 21 January, some ten days later, and after the seven day time limit expired on 18 January 2013. 18Consequently, the other two interlocutory claims set out in [14] above encompassing estoppel and lack of utility, as well as the substantive claim, were not the subject of any determination. 19The respondents contend that a cost order should be made in their favour due to the claim lacking in substance and because it had no reasonable prospects of success as it had been lodged out of time. To substantiate this assertion, the respondents point to the behaviour of the applicant's lawyer. The respondents claim that the matter should have been dismissed by Member Eftimiou when it was first before the Tribunal on 21 March 2013. 20As set out in the reasoning for the decision dismissing the claim, the Tribunal noted that on 21 March, Member Eftimiou issued directions, particularly for the exchange of documents, as well as noting that an application had been made by the lawyer acting for the respondents to have the tenant joined to the proceedings. There is nothing to indicate that the question of the claim being made out of time was raised before the Member. 21The simple mathematical exercise cited above in [15] could have been performed on that date and if the Member was convinced of the untimeliness of the filing of the application, she could have persuaded the applicant to withdraw the claim; summarily dismissed the claim; or adjourned the proceedings for a formal hearing about that issue. 22The respondents assert that the actions of the applicant's lawyer prolonged the proceedings. That claim sits oddly when compared to the actions of the respondents' lawyer who appeared before Member Eftimiou on 21 March which prolonged the dispute by seeking to expand the number of parties involved to include the tenant. 23In The Owners Corporation of Strata Plan 4521 v Zouk & Anor [2007] NSWCA 23, the New South Wales Supreme Court of Appeal examined the role of the Tribunal when determining whether to award costs. That case involved proceedings about strata laws but the principles stated by the Court of Appeal are applicable in other litigation before the Tribunal. 24At paragraph [34] of the Court of Appeal's reasoning, it is suggested that if the Tribunal dismisses an application under strata laws, it is required to state that it is doing so because it finds the application is "frivolous, vexatious, misconceived or lacking in substance". These are the same grounds the respondents rely on to ground the application for their costs. 25In the present case, at the commencement of a hearing to determine the substantive claim, the respondents challenged the jurisdiction of the Tribunal on the basis the claim had been brought out of time. In this regard, they were successful. Consequently, the merits of the claim were never agitated and so the Tribunal was not able to determine whether the claim itself was frivolous, vexatious, misconceived or lacking in substance as the claim was dismissed before the merits of the substantive action could be ventilated. 26Therefore, as the Tribunal was unable to determine the merits of the substantive claim due to it being dismissed, it could make no findings on whether the substantive claim was frivolous, vexatious or lacking in substance which could have been added to the order dismissing the claim. 27The burden of proof rests on the respondents to demonstrate that the Tribunal should shift from the legislative default position to a finding that the circumstances surrounding the claim were exceptional. In this endeavour they have failed as the Tribunal was prevented from scrutinising the circumstances of the substantive claim due to the respondents' preliminary dismissal application being successful. 28Therefore, the Tribunal is of the view that the legislative default position of "each party is to pay their own costs" has not been displaced. Rather than make an order for each party to pay either themselves or others, the Tribunal is of the view that the better way of expressing the cost order is as set out in the headnote above. B Howe General Member NSW Civil and Administrative Tribunal 19 September 2014 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: 20 November 2014