The appellant commenced these proceedings in respect of a decision of the Consumer and Commercial Division wherein its tenancy with the respondents was terminated under s 86 of the Residential Tenancies Act 2010 (NSW) (RTA) based on a termination notice relying on sale of the residential premises.
The appellant did not attend the hearing at first instance.
In the appeal, the appellant raised what can, even in the absence of argument, be described as an issue of the Tribunal acting beyond power. That is, the Tribunal proceeded on an acceptance that termination under s 86 of the RTA was available, where in fact, it was not because there was a fixed term tenancy in place and notices under s 86 of the RTA must not specify a termination date earlier than the expiry of the fixed term, which this one did: RTA, s 86(3). The parties had been in dispute over whether a fixed term agreement was in place, due to disagreement over the nature of options contained in the agreement which the appellant said it had validly exercised and the respondents said it had not.
I conducted the initial callover of the appeal on 20 January 2023 and tried to assist the parties, by a process of informal conciliation, to gain a clearer understanding of the issues in dispute. I granted the appellant leave to be legally represented and stayed the order for possession, conditional upon the appellant always maintaining the payment of the occupation fee up to date.
I listed the appeal for hearing on 28 February 2023. Prior to that hearing, but after the appellant had lodged its submissions and evidence, the respondents gave a written indication that they consented to the appeal. After some confusion as to the orders sought was remedied, I issued orders that, in summary, the appeal was allowed; the orders at first instance were set aside; and the proceedings at first instance were dismissed.
The respondents consented to those orders. However, despite orders sometimes being described as "by consent" as a form of shorthand, an appeal cannot be allowed simply on the basis of the parties' consent: Ingham Enterprises Pty Ltd v Belokoski [2018] NSWSC 1233; Bellman v Peters [2020] VSCA 143. An appellant is always obliged to demonstrate error, or apparent error, on the part of the Tribunal to obtain relief, which may be accepted by the respondents. Here, though, I was satisfied the Tribunal had fallen into error, or at least apparently fallen into error, as to the existence of a fixed term tenancy agreement. That apparent error was contributed to by the appellant's failure to attend and put its case at first instance, which it sought to explain in the appeal by way of having experienced technical difficulties joining the hearing.
The appellant sought its costs of the appeal. I made directions with a timetable for the filing of submissions in respect of costs, noting that the Appeal Panel may dispense with a hearing and deal with the issue on the papers. The parties were directed to address that issue in their other submissions, should they wish to. Neither party opposed the application being dealt with on the papers. As I am satisfied that the issues for determination can be adequately determined in the absence of the parties by considering the written submissions and other material lodged with the Tribunal, I will make an order dispensing with a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
For the reasons set out below, I have decided to refuse the appellant's application for costs.
[2]
Principles relating to costs of the appeal
The primary provision governing costs in relation to proceedings in the Tribunal is s 60 of the NCAT Act. Pursuant to that section, each party to proceedings is generally to pay their own costs in appeals of this nature, where amounts in issue do not engage rr 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW). However, pursuant to s 60(2) of the NCAT Act, the Tribunal may award costs if it is satisfied that there are special circumstances warranting it doing so. Section 60(3) provides a non-exhaustive list of relevant factors which might constitute special circumstances.
Each application for costs must be determined on its own merits and the central and overriding principle in any order as to costs is that of doing justice between the parties in each particular case: Moseley v AB (No 2) [2017] NSWSC 1812 at [65] - [66].
"Special circumstances" are circumstances that are out of the ordinary but need not be those which are exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] (Santow J); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. Even if satisfied that there are special circumstances, I must further be satisfied that they are circumstances "warranting an award of costs": Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21].
If a costs order was to be made in its favour, the appellant sought costs in the fixed sum of $10,089. The appellant provided a summary of the charges levied by its lawyers in respect of the appeal.
[3]
The appellant's submissions
The appellant submits that the respondents conducted the proceedings, and the appeal, in a way that unnecessarily disadvantaged the appellant.
The respondents were always aware that the lease was subject to options, and that those options had been exercised. Despite this, the application at first instance was based on a notice purporting to be issued under s 86 of the RTA. The respondents knew or ought to have known that such notice could not be issued during the fixed term of the lease as extended by the options. Nevertheless, they conducted the proceedings at first instance as if there had been no exercise of the options, and continued this stance throughout, until opposition to the appeal was eventually withdrawn.
At the hearing at first instance, the appellant was unable to join the hearing for technical reasons referred to in more detail in submissions of 6 February 2023. Despite the respondents knowing of the exercise of the options, it appears that the Tribunal Member was misled into believing that the lease had no subsisting fixed term. Had the Member been informed of the options and of their exercise, it is reasonable to expect that the termination order would not have been made and the appeal would never have been necessary.
The respondents have been responsible for prolonging unreasonably the time taken to complete the proceedings, by persisting with their position that the options under the lease had not been exercised.
At the hearing on 20 January 2023, the managing agent representing the respondents made submissions that the exercise of the option was not valid. After hearing those submissions, the Principal Member suggested that the respondents consider obtaining legal advice. Had they done so, the proceedings would have come to an end at that point. However, the respondents left it until after the appellant had incurred the further costs of preparing and filing its submissions to withdraw their resistance to the appeal.
The claim of the respondents that the options were not valid had no tenable basis in fact or law.
The case turns on the respondents' claim that the appellant's exercise of options was not valid. The dealings between the appellant and the respondents have been through their managing agent, Michelle Oxenbridge. No suggestion has been made in any of the correspondence from the respondents' managing agent as to why the exercise of the options is not valid, other than the following statement.
Within residential leasing, for a lease to be renewed you are required to sign a new lease (at the expiry of the old lease), otherwise the lease then becomes a periodic lease which has slightly different terms and conditions. In this case, unfortunately, a new lease/lease renewal was not signed so the clause in the annexure of the original lease is no longer valid and the issued termination notice still stands. I feel there may be some confusion between residential and commercial leases.
This implies that the managing agent believed that an option cannot be validly exercised in relation to a residential lease without the parties signing "a new lease/lease renewal". This is clearly incorrect. There is nothing to prevent a residential lease containing a valid option or options being validly exercised by notice served in accordance with the option provision.
The appellant also sought a stay pending the hearing of the appeal. The attention of the Tribunal is drawn to the submissions on the Stay Application dated 10 January 2023 and filed with the Appeal Panel. It is submitted that this is clearly a case in which a stay would be granted. Despite this, the respondents opposed the stay, and the appellant was put to expense in obtaining legal representation to prepare submissions and to appear before the Tribunal on 20 January 2023 to seek the stay.
The proceedings were not unusually complex. However, they involved seeking to evict the appellant and a number of subtenants from the homes in which they were living. This justified the appellant taking the proceedings very seriously, and engaging solicitors throughout the appeal process, including the application for a stay.
It is submitted that the proceedings were perhaps not frivolous or vexatious but were certainly misconceived and lacking in substance.
For the reasons set out above, it is submitted that the respondents should pay the appellant's costs of the appeal including the stay application.
Because of the extensive amount of time and cost already expended on this futile matter, the appellant requests that the Tribunal fix a lump sum order for costs, pursuant to s 60(4)(b) of the NCAT Act.
[4]
The respondents' submissions
The respondents first point out that they were successful at first instance.
The matter has not been conducted other than in the normal course or routine for matters such as this. The respondents maintain in their submissions that the appellant never entered into a new lease.
The proceedings, even according to the appellant, have no or little complexity.
If the matter was so clear cut, as submitted by the appellant, it is questionable why any representation was needed at all.
The member at first instance was satisfied the orders should be made and, in those circumstances, it is denied that resistance to the appeal was frivolous or vexatious when the Tribunal had supported such a position.
The respondents do not wish to continue resisting the appeal as other circumstances have occurred since the Tribunal terminated the tenancy. The respondents submit they were put to expense because their managing agent had not obtained proper legal advice.
What is clear, is that on the basis of the appellant's submissions, had the appellant appeared in the initial proceedings, or appeared with sufficient technological equipment, then the matter would have been decided in its favour and there would have been no need for an appeal.
It is unfair for the respondents to pay the appellant's costs when the appellant has contributed significantly to, or caused itself to be in the position it is in.
Further, the respondents submitted that:
1. In fairness, the only reason an appeal was required was due to the actions or inactions of the appellant. There was an issue as to the validity of any exercise of an option which is no longer being contested. As previously indicated, the failure by the appellant to properly appear at any hearing, is not a basis for costs.
2. The respondents have not been responsible for prolonging unreasonably the time taken to complete the proceedings. Their resistance to the appeal was withdrawn only upon the purchasers of the property rescinding the contract for sale of the property and that was what gave rise to the withdrawal of resistance to the appeal. That position was immediately conveyed to the Tribunal and to the appellant after the Contract for Sale was rescinded.
3. The appellant's Stay Application listed on 20 January 2023 related to directions in relation to the appeal and the Stay Application. There was no additional work or prolonging of the proceedings by allowing the matter to go through the normal course.
4. The parties were involved in a factual dispute about the exercise of the option. The appellant gives no legal authority about whether signing a new lease is required. In those circumstances there was merit in the resistance to the appeal but as indicated previously, due to the change in circumstances of the respondents there was little "utilitarian value" in proceeding with the dispute.
5. In the event that the Tribunal is minded to order costs, the amount claimed is essentially an indemnity figure, not an ordinary costs figure. In any event, the amounts claimed are excessive and the hourly rate is above what might be expected for a matter which, according to the appellant itself, was not particularly complex or onerous.
6. In addition, if an order is made, there should be a significant reduction due to the fact that the appellant failed to adequately appear at the Tribunal hearing in the first instance.
[5]
Consideration
Some issues should be clarified at the outset. The first is that a transcript of the hearing and the Tribunal's oral reasons has not been put before me, meaning that I do not know what, if anything, the Tribunal was told of the disputed issue of options having been exercised. In any event, I am not dealing with the issue of costs of the first instance proceedings, only the appeal. On that basis, the respondents bringing and maintaining the proceedings at first instance can have no bearing on my decision. Nor do I have any evidence of the termination of the respondents' proposed sale of the property and so that is also unable to be considered. Furthermore, there is no suggestion that the respondents somehow contributed to the appellant's failure to be heard at first instance, which appears, despite no sworn evidence having been lodged, to have been simply an unfortunate vagary of litigation in a digital age. There is also no explanation as to why the appellant did not seek to avail itself of the benefit of Civil and Administrative Tribunal Regulation 2022 (NSW) cl 9, which would have allowed it to apply to have the decision set aside where it was made in its absence.
On that basis, the appellant was required to lodge and prosecute its appeal to obtain relief. That it needed to bring an application for a stay and was required to comply with directions made to satisfy the Appeal Panel a stay was warranted is also simply an inevitable consequence of the decision at first instance. As I indicated earlier, whilst the respondents could consent to the appeal being allowed, as they eventually did, the appellant was still required to demonstrate error, or apparent error, before such an order could be made.
In those circumstances, it is only the respondents' conduct in resisting the appeal from the first mention which, in my view, can properly be considered as contributing to the costs of the appellant, in a material sense, in determining whether special circumstances warranting an order for costs exist. The other costs incurred by the appellant were incurred as ordinary incidents of its need to prosecute the appeal.
I am not satisfied that the respondents resisting the appeal to the extent that they did is a special circumstance, and certainly not one warranting an award of costs. There is nothing unusual in disputes before this Tribunal in a party maintaining a position as to the existence of a fact, or the application of the law, which turns out to be erroneous. Nor does a party allowing proceedings to take their course, even if they subsequently alter their position, constitute unreasonable prolonging the time taken to complete the proceedings.
I also note that the extent of the material lodged by the appellant after 20 January 2023 was three pages of written submissions, some of which were repetitious of those contained in the submissions in support of the stay, and fourteen pages of pre-existing documentary evidence which was again, to a significant extent already put before the Tribunal in respect of the application for a stay. The cost of preparing that material and correspondence, and attendances ancillary to that task, properly assessed, would in my view be extremely modest.
The application for costs should be dismissed.
[6]
Orders
My Orders are as follows:
1. A hearing of the appellant's application for costs is dispensed with.
2. The application for costs is dismissed.
[7]
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: 29 May 2023