The Trust Company Ltd v Diamond Certification Laboratory of Australia Pty Ltd

NCAT Appeal Panel|2016-02-29|Before: Vigden CJ

Mr D Novick (Respondent) File Number(s): AP 15/44283 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 30 June 2015 Before: G Meadows, Senior Member File Number(s): COM15/35789

REASONS FOR DECISION

Reasons for decision have been delivered by the Tribunal and by the Appeal Panel in respect of two proceedings, being proceedings in the Consumer and Commercial Division of the Tribunal, COM 15/35789 (the COM proceedings) and internal appeal proceedings AP 15/44283 (the Appeal proceedings).
In respect of both the COM proceedings and the Appeal proceedings, each party applies for costs.
Because of the inexorable intermingling of the issues between the appeal and COM proceedings, these Reasons for Decision cover costs applications in both proceedings. When dealing with the COM proceedings the relevant reference is made to "the Tribunal". When dealing with the Appeal proceedings the relevant reference is made to "the Appeal Panel".

Appeal Proceedings

As a result of such refusal, the Trust Co filed its appeal against the orders made refusing to determine the question of jurisdiction separately.
For the reasons set out in its written judgment the Appeal Panel, determined that the appeal should succeed (The Trust Company Ltd v Diamond Certification Laboratory of Australia Pty Ltd [2015] NSWCATAP 257). The same Appeal Members then reconstituted as the Tribunal and proceeded to determine the question of jurisdiction. The hearing of both the appeal and the COM proceedings occupied two and a half hearing days, including a view of the subject premises. The Tribunal found in favour of the Trust Co (Diamond Certification Laboratories Pty Ltd v The Trust Company Ltd [2015] NSWCATCD 122). It followed that the Tribunal had no jurisdiction to entertain the claim.

Costs Application

As a result of the decisions, both the Trust Company and DCLA have filed applications for costs.

COM Proceedings costs application

In respect of the COM proceedings, the Trust Co (as respondent to those proceedings) submits that it was wholly successful in its application that the Tribunal did not have jurisdiction to hear DCLA's application. The Trust Co claims that pursuant to r 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) ("the Rules") it should be entitled to its costs.
The Trust Co alternatively submits that special circumstances exist to warrant an order for costs. It observes that DCLA was placed on notice prior to the commencement of the COM proceedings and again at the first hearing day that the Tribunal lacked jurisdiction: nevertheless DCLA refused to withdraw its claim. Further, DCLA opposed the Trust Co's application in the COM proceedings to set aside summonses issued to it. DCLA also opposed the application in the COM proceedings that the issue of jurisdiction be considered as a preliminary issue. The Trust Co also relies upon the fact that it made an offer to settle the proceedings at an early stage.
Based upon the above, the Trust Co submits that despite s 60(2) of the Civil and Administrative Tribunal Act 2013 (NSW), "special circumstances" exist which would justify an order for costs. It submits that the conduct of DCLA in refusing to have the jurisdictional matter determined as a preliminary question was unreasonable.
In summary, the Trust Co submits that irrespective of whether special circumstances exist, pursuant to r 38 of the Rules, the Tribunal may award costs in proceedings to which the Rule applies in the absence of special circumstances warranting such an award if the amount claimed in the dispute is more than $30,000.

Appeal Proceedings costs application

As to the costs of the Appeal proceedings, the Trust Co submits that it was wholly successful in its appeal. Accordingly costs should follow the event.

DCLA Submissions

DCLA's submissions are somewhat inconsistent. DCLA submits that it has a cost claim against the Trust Co. Further it submits that there are "a number of collective special circumstances that warrant a Cost Order payable to DCLA". In consequence the Trust Co's conduct DCLA submits that the claims for costs raised by the Trust Co should be dismissed because there are no special circumstances or conditions that warrant an order for costs.
Simultaneously however, DCLA's submissions state: "The Tribunal noted that since it had no jurisdiction to determine the application, it may follow that it has no jurisdiction to award costs." Based upon such statement, DCLA submits that the Trust Co's claim for costs should be immediately dismissed.
It should be made plain at the outset that the Tribunal has made no decision as to costs. The extract relied upon by DCLA was merely an observation that the Tribunal sought submissions on the question of whether it could make a costs order if it found that it lacked jurisdiction to grant relief. No decision as to costs, or its jurisdiction as to costs has been made.
As to the special considerations, DCLA refers to the power under s 60 of the Civil and Administrative Tribunal Act to award costs. It refers to the numerous attempts to reach a consensus to avoid litigation and to the fact that it has attempted to settle its claim. DCLA had referred its issues with the Trust Co to the ACCC and also to the Small Business Commissioner. DCLA submits that it relied upon advice from the Small Business Commissioner to the effect that NCAT was the appropriate tribunal for resolution of its dispute.
DCLA also refers to alleged misleading documentation in relation to statements contained in the affidavits of lawyers acting on behalf of the Trust Co. DCLA claims there were false claims relating to the supply of factual details concerning the tenancy of Germani, jewellers; that it was denied access to various documents prepared by the City of Sydney; that personal threats were made to Mr Dan Novick. Reference is also made to alleged unpreparedness of the Trust Co at a directions hearing on 30 June 2015, and alleged delay in the supply by the Trust Co of an Agreed Statement of Facts.
In addition to the written submissions, the Appeal Panel and the Tribunal heard submissions in respect of each matter simultaneously since both matters are closely related. Arising out of the consideration of the written submissions, and the oral submissions, we make the following findings.
For the record we note that the submissions on costs of the Trust Co are contained in submissions dated 14 December 2015 and the submissions of DCLA filed on 22 February 2016. The Tribunal and Appeal Panel also considered the affidavits of Craig David Higginbotham sworn 16 February 2016, and of Dan Novick sworn 26 January 2016.

Tribunal's power to award costs

The Tribunal and the Appeal Panel are empowered, pursuant to s 60 of the Civil and Administrative Tribunal Act to award costs. Pursuant to s 60(1), it is provided that each party to proceedings before the Tribunal is to pay its own costs. However pursuant to s 60(2) the Tribunal is empowered to award costs if it is satisfied that there are "special circumstances" warranting an award of costs.
Pursuant to s 60(3) various matters are referred to be considered by the Tribunal in determining whether special circumstances exist. They include: 1. whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings; 2. Whether a party has been responsible for unreasonably prolonging the time taken to complete the proceedings; 3. 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; 4. The nature and complexity of the proceedings; 5. Whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance…
Pursuant to r 38(2) of the Civil and Administrative Tribunal Rules 2014 (NSW) the Tribunal may award costs even in the absence of special circumstances warranting such an award where, inter alia, the amount claimed or in dispute in the proceedings is more than $30,000: see s 38(2)(b). The provisions of r 38 takes supremacy over the costs provisions contained in s 60: see Nguyen v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen [2015] NSWCATAP 264 at [82]-[86].

Jurisdiction to award costs

We deal firstly with a question raised by DCLA's submissions, namely whether NCAT can make an order for costs in respect of proceedings in which it is found that there is no jurisdiction to grant relief. There are authorities to the effect that where jurisdiction of a court or tribunal has not been enlivened, it has no power to award costs: see Plumb v Comcare (1992) 39 FCR 236; Byron Shire Council v Vigden CJ & Anor [1999] NSWLEC 285. Further, it should be observed that there are instances where a court is invested with express power to award costs even if the proceedings before it are dismissed for want or jurisdiction: see Federal Court of Australia Act 1976 (Cth), s 43(1); Judiciary Act 1903 (Cth), s 26.
The question is whether, in the circumstances of a proceeding being dismissed for want of jurisdiction, NCAT has a broad power to award costs. Significantly NCAT is invested with a broad power to award costs: s 60(2) of the Civil and Administrative Tribunal Act provides: The Tribunal may award costs in relation to proceedings before it only if it is satisfied there are special circumstances warranting an award of costs.
It should be observed that the power to award such costs arises "in relation to proceedings before it". Both the COM proceedings and the Appeal proceedings were proceedings before the Tribunal. Further, it should be observed that the general power to award costs provided by s 60(2) expanded by the provisions of s 60(5) which provides: In this section: Costs includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
Section 60(4)(a) provides that if costs are to be awarded by the Tribunal it may "determine by whom and to what extent costs are to be paid".
The costs power granted to the Tribunal is accordingly broad, and the Appeal Panel is satisfied the power to award costs is not dependent upon whether or not the Tribunal finds that it has jurisdiction to grant any relief: rather, the power arises because proceedings have been brought before the Tribunal. This fact of itself is the criteria upon which court is empowered to make an order for costs. For further consideration see Doula Spirit Pty Ltd v Andrew Argyrou [2014] NSWCATAD at [227].
The terms of the Civil and Administrative Tribunal Act distinguishes this matter from Vigden v Byron Shire Council and Plumb Comcare. In each case the particular legislation was not sufficiently wide to permit a costs order.
Accordingly the Appeal Panel finds that it has power to award costs although it has found that it had no jurisdiction to grant the relief claimed by DCLA.

Application of costs power

The proceedings the subject of the COM proceedings related to premises which the Tribunal has found constituted a retail lease of an office contained in commercial premises. Accordingly the Tribunal had no jurisdiction to entertain the dispute. When DCLA foreshadowed its claim against the Trust Co, DCLA was placed squarely on notice that its claim would be challenged on two bases, namely an absence of jurisdiction because the premises occupied were not retail premises but rather shop premises, and secondly because the amount claimed exceeded $4m. Despite these warnings, DCLA chose to pursue its application.
Since jurisdictional issues arose for consideration, as was notified to DCLA before it commenced the proceedings, the question is whether the usual rule is to apply pursuant to s 60(1) that each party should pay its own costs, or whether there are special circumstances warranting an order for costs, or whether there are special circumstances warranting an order for costs. Further, whether, irrespective of whether "special circumstances" exist, the provisions of r 38 should apply.
In the COM proceedings, the Tribunal made an order refusing the Trust Co's application to determine the discrete and pivotal point relating to whether the Tribunal had jurisdiction. The Trust Co was justified in proceeding to appeal such order. Where an application is made to the Tribunal alleging a lack of jurisdiction, and where the determination of such a separate issue would result in the saving of costs or an otherwise prolonged hearing which may ultimately prove fruitless, such an application for a separate determination on the separate issue should normally be made. In this instance we are satisfied that the Trust Co was acting appropriately in its application for a separate jurisdictional hearing.
The Appeal Panel has considered the submissions of DCLA in support of its contentions that it should be entitled to an award of costs. However, we note that the issues concerning the attempted settlement can be given no weight, and whilst DCLA may have been anxious to avoid these proceedings, the Appeal Panel is unable to determine the reason why the negotiations failed and whether such results was a consequence of the unreasonable conduct of one party or the other.
The Tribunal also notes that DCLA had obtained an indication from the Small Business Council that NCAT was the appropriate forum. This advice was erroneous, but does not bear upon the ultimate fact that DCLA, in the absence of any legal advice, instituted these proceedings.
DCLA has submitted that the Trust Co was deliberately obstructed with regard to the concession that Germani was a tenant, and also with respect to the provisions of Council plans. However, having had the explanation provided by the Trust Co in respect of each issue the Appeal Panel is satisfied that there is no basis for the allegation of obstruction. Because of the precise location of Germani in a different physical layout of the building, Germani had not been recorded as the lessee of the same premises as occupied by DCLA. As to Council plans, the Trust Co could not obtain copies in the absence of the consent of the Uniting Church, as the owner of the premises.
As to the amount of damage, the Tribunal could never have awarded the amount claimed, as was later recognised by the DCLA when it limited its claim to the maximum amount which could have been awarded, namely $400,000.
The Tribunal is satisfied that DCLA elected not to seek legal advice, and it rejects the claim, made by DCLA that it could not afford to do so. No evidence of impecuniosity is before the Tribunal, and it notes that DCLA is actively trading, leasing city premises and is able to pay wages or salaries to at least four employees.
In its application to the Tribunal, DCLA referred to the subject premises as "office" on three occasions: it did not refer to such premises being a "shop" as was its principal contention. Had legal advice been obtained, the costs of the proceedings may well have been avoided.
The Tribunal concludes that this is an instance where r 38 applies, and that it is not appropriate or necessary to consider whether "special circumstances" exist. The particular criteria in r 38 are satisfied. Essentially the dispute between the parties constituted a commercial dispute which was brought in the wrong forum and the provisions of r 38 prevail.
The Appeal Panel considers that the usual rule should apply, namely that the losing party should pay the successful party's costs: see Oshlack v Richmond River Council (1998) 193 CLR 72; Smith v Giro Construction Pty Ltd [2015] NSWCATAP 214 at [20]-[23] that is, DCLA's application for costs of the COM proceedings is refused and the costs application of the Trust Co is allowed. However, since the issue of Germani and the plan issue delayed the proceedings, and such delay could have been avoided, we will apportion such costs. These matters occupied part of the hearing on 20 October 2015. The Germani issues were resolved overnight and conceded early the following morning.
We also take into account that a significant part of the two in a half day hearing was attributable to issues that were common to both the Appeal proceedings and the COM proceedings, which properly leads to an apportionment between the two proceedings.
The Trust Co submitted that the time spent during the hearing on the appeal issues was minimal and that most of the hearing was occupied with the question of whether the premises was a retail shop. However, this submission fails to recognise how and why the Appeal Panel, reconstituted as the Consumer and Commercial Division, came to hear the preliminary jurisdictional issue.
The Trust Co originally submitted that the Appeal Panel should set aside the interlocutory decision and rather than remit the matter to the Consumer and Commercial Division for rehearing of the preliminary question of jurisdiction: that is, it should hear the issue itself pursuant to s 81 of the Civil and Administrative Act. The basis for this submission was that the Appeal Panel would need to canvass the merits of the preliminary jurisdiction issue in determining whether leave to appeal should be given and whether the appeal should be allowed or dismissed. It was further submitted that it would be consistent with the guiding principle in s 36 of the Civil and Administrative Act for the Appeal Panel to proceed to hear and determine this preliminary issue.
For the reasons set out at [54] to [56] of The Trust Company Ltd v Diamond Certification Laboratory of Australia Pty Ltd, the Appeal Panel noted that this submission was misconceived. However, it accepted at [57], as did the parties, that because the Appeal Panel had heard much of the evidence and legal argument on jurisdiction, it would avoid duplication and expense for the members of the Appeal Panel to hear the preliminary issue constituted as the Consumer and Commercial Division. These issues were discussed not only at the hearing of the appeal but at a procedural directions hearings conducted by the Appeal Panel before the hearing. DCLA, to its credit, agreed with the submissions made by the Trust Co in this regard. Relevantly, the Appeal Panel directed that the evidence and submissions before it on the question of jurisdiction should be evidence and submissions in the remitted proceedings (see at [59]).
The Tribunal, constituted as the Consumer and Commercial Division, has broad discretion to determine to what extent costs are to be paid (s 60(4)). Given there was significant cross over between the Appeal and COM proceedings, the Tribunal finds there should be a proportionate reduction for costs that may be attributable to the appeal. While it is not an exact science, having regard to the cross over between the COM and Appeal proceedings and the fact that there was some delay occasioned by the conduct of the Trust Co, the Tribunal determined that DCLA is to pay 66% of the costs of the Trust Co of the COM proceedings.

Appeal costs

As to the costs of the appeal, the issue arising was one essentially of law, namely whether the Tribunal should have granted a separate hearing on the question of jurisdiction. The Appeal Panel finds nothing unusual concerning such an appeal. That is, the Appeal Panel is not able to conclude that there are any "special circumstances" in relation to the appeal. Accordingly the Appeal Panel concludes that each party should pay its own costs of and incidental to the appeal.
We note that r 38A of the 2016 Rules has no application to these proceedings, which were commended in 2014 and accordingly the extant 2014 Rules as to costs applies.

Orders

The following orders are made: 1. In proceedings No COM 15/35789, being Diamond Certification Laboratory of Australia Pty Ltd v The Trust Company Limited, the Tribunal orders that Diamond Certification Laboratory of Australia Pty Ltd is to pay 66% of the costs of the proceedings. 2. In proceedings No AP 15/44283, being The Trust Company Limited v Diamond Certification Laboratory of Australia Pty Ltd, the Appeal Panel orders that each party is to pay their own 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. Registrar

Amendments 09 March 2016 - Paragraph 32 - remove the word 'Court' and replace it with 'it'. 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: 09 March 2016

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