TNAU Finery Pty Ltd v SuperBurrito Pty Ltd; SuperBurrito Pty Ltd v TNAU Finery Pty Ltd

The relevant provisions and principles governing costs

1. As was determined in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25, in an appeal from the Consumer and Commercial Division where the "amount claimed" or the "amount … in dispute" in both the proceedings at first instance and the appeal exceeds $30,000, then r 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) takes effect and alters the usual position set out in s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) in respect of the costs of the appeal. The parties here agree that r 38A is engaged and the costs of the appeal are to be determined on the usual principles applied by the courts.
2. Each application for costs must be determined on its own merits and the central and overriding principle in any decision 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].
3. The effect of r 38A, where it is engaged, is to provide "a wide discretion to make an order for costs." It does not specify the factors that must be taken into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: Carlson v ARA Engine Reconditioning Pty Ltd (No 2) [2020] NSWCATAP 39 at [32].
4. An order for costs is not made for the purposes of punishing the unsuccessful party but for the purpose of providing a part indemnity to the successful party for their costs incurred: see Oshlack v Richmond River Council 193 CLR 72; [1998] HCA 11.
5. The starting point where proceedings have been heard and determined on the merits and r 38A applies is the common law principles that costs follow the event as "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": Carlson ibid at [33].
6. However, as we noted in the Appeal Decision at [270] and [272], relevant to consideration of whether the usual rule should apply are the facts that: 1. Both parties here succeeded in establishing one or more grounds of appeal; 2. The landlord maintained numerous grounds of appeal on which it did not succeed; 3. The substantial point upon which its appeal has succeeded was one which was not raised before the Tribunal at first instance; 4. The grounds on which the landlord has succeeded could be stated in short compass and did not warrant the filing of nine pages of grounds of appeal or 51 pages of written submissions; and 5. The landlord has failed on its grounds of appeal relating to the application of the Covid Regulation and Jobkeeper Rules in determining whether the tenant was an "impacted tenant," which grounds occupied about 25% of the landlord's written submissions and probably a greater proportion of the time at the hearing.

The tenant's submissions

1. The tenant seeks an order that: 1. the landlord pay 20% (or some other percentage as to the tribunal seems fit) of the tenant's costs of the appeals; or, in the alternative to (1): 2. the landlord pay the tenant's costs of their appeal, appeal case no. 2022/0069427; and 3. each party bear their own costs of the landlord's appeal case no. 2022/00068195.
2. Ordinarily costs in the tenant's appeal would follow the event: Solomon v Miller (1865) 2 WW & A'B(Eq) 135; Firebird Global Master Fund 11 Ltd v Republic of Nauru (No 2) (2015) 327 ALR 192; [2015] HCA 53 at [6]. The tenant succeeded on the grounds it pressed at hearing.
3. On the other hand, the landlord succeeded only on Ground 1 of its eighteen grounds of appeal.
4. In circumstances where parties enjoy mixed success on issues, the Appeal Panel may oust the usual costs rule, taking into account the parties' relative level of success and the time taken up and costs incurred on the issues that failed: Sydney City Council v Geftlick (No 2) [2006] NSWCA 374 at [27].
5. Of the eighteen grounds of appeal the landlord only succeeded on Ground 1, which was not argued at first instance and required leave of the Appeal Panel.
6. In those circumstances courts have denied costs of either the proceedings at first instance or of the appeal because the ground upon which it decided the case was not presented at first instance: Oshlack supra at [67] - [70]; Nassif v Fahd [2007] NSWCA 308; Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129; [2006] FCAFC 118 at [82].
7. The orders made by this Appeal Panel had the effect that the previous costs orders in favour of the tenant have now been set aside. In those circumstances the landlord should now be denied the costs of its appeal.
8. Another factor in considering the appropriate costs order with respect to the landlord's appeal is the time and cost spent on the single successful ground (Ground 1) compared with the resources committed to the balance (Grounds 2 - 18).
9. The landlord's written submissions comprised 51 pages in chief and 25 in reply. Of those 76 pages, only one and a half pages were devoted to Ground 1. Similarly, during the course of oral argument, the landlord focused on Grounds 2 - 18 and spent relatively little time on Ground 1.
10. In those circumstances the landlord should be denied the costs of its appeal and an order that no order as to costs of the appeal in case no. 2022/00068195 should be made.
11. In the alternative, the orders set out at [11(2) &(3)] are proposed.
12. The form of order [11(1)] will take into account on a global, broad brush, approach the mixed success of the parties in both appeals together but fail to reflect the time spent on any particular part of the case.
13. The figure of 20% is submitted to reflect all the factors referred to above.
14. The orders at [11(2)&(3)] would reflect the success of the parties in the individual appeals. However, the drawback of those orders is that on any question of assessment the issue of apportionment of time and work will likely be in issue and a difficult task for any assessor. The costs of preparing the application and dealing with any objections would also be disproportionate to the exercise.

The landlord's submissions

1. The landlord proposes the following orders as to costs: 1. In proceedings no. 2022/00068195: 1. The tenants pay the landlord's costs of the Appeal. 1. In proceedings no. 2022/00069427: 1. The additional costs of these proceedings not forming part of the concurrent costs of appeal proceedings no. 2022/00068195 shall be costs in the cause in proceedings no. 20/49367 and shall abide such costs orders as may be made in those proceedings upon rehearing in the Tribunal below.
2. The landlord was successful in the appeal. Costs are compensatory and should follow the event. The general approach is to order costs in accordance with the outcome of the proceedings as a whole without attempting to differentiate between particular issues: Bostik Australia Pty Ltd v. Liddiard (No. 2) [2005] NSWCA 296 at [31]-[36].
3. The landlord succeeded on a number of its grounds: Appeal Decision at [263].
4. There is no basis in the conduct of the landlord to deprive the landlord of costs. The landlord would have been required to prosecute the appeal in any event. The issue arising under the legislation was a complex issue. That is a function of the legislation and not the fault of the landlord. The reason for failure of the point involved in grounds 4 to 7 appears to have been that the Appeal Panel did not accept the submission that Rule 6 of the Commonwealth Rules controls the construction of Rules 7 and 8.
5. That does not justify an award of costs against the landlord. The landlord succeeded in any event. To deprive the landlord of costs on that basis would require a finding that the point was so unreasonable or unarguable that it ought not to have been taken, There is no basis for such a finding. Moreover, there would have been costs in any event, including the costs of a hearing.
6. It is to be noted that the tenant's Reply to Appeal filed 10 June 2022 did not raise the unconscionable conduct claim as a basis for resisting final orders in favour of the landlord. It will be the landlord's contention on rehearing that the outcome of the appeal is fatal to the unconscionable conduct claim. If the landlord succeeds in that contention in the rehearing it would be unjust if its success on the appeal, determining (if so found upon rehearing) in effect the whole proceedings, were not to be compensated in costs.
7. If the Appeal Panel is against the landlord on the above submissions, it is submitted in the alternative that it should be ordered that the landlord's costs of the appeal be landlord's costs in the proceedings below. This would have the effect that if the landlord succeeds on the rehearing it will have its costs of the appeal.
8. The tenant's appeal was moot because it was common ground that the damages award could not stand.
9. The appropriate outcome is that the landlord should have the costs of its own appeal, including the costs of the hearing, and that the tenant's costs of its appeal should be costs in the cause in the tenant's proceedings in the Tribunal below.
10. For the above stated reasons there is no basis for the costs orders proposed by the tenant. In substance, it lost the appeal.

The tenant's response

1. The landlord's submissions are not accurate. The Appeal Decision refers to upholding grounds of appeal but must be read as multiple grounds of appeal for all parties including those of the tenant.
2. An examination of the Appeal Decision for each ground (as reformulated by the Appeal Panel) is required.
3. Ground 1 - the landlord succeeded: Appeal Decision at [91].
4. Ground 2 was not resolved in the landlord's favour: Appeal Decision at [102] - [104].
5. Ground 3 not resolved in the landlord's favour: Appeal Decision at [112], [161], [162], [169]. The error identified in the Appeal Decision at [153] was not itself a ground of appeal (see the landlord's Grounds of Appeal and submissions at [136] and [137]).
6. Ground 4 was not resolved in the landlord's favour: Appeal Decision at [198]. The good faith issue was not considered by Tribunal below and will be subject of rehearing.
7. Ground 5 was not resolved in the landlord's favour: Appeal Decision at [203]
8. Ground 6 was not resolved in the landlord's favour: Appeal Decision at [208]
9. Ground 7 was not resolved in the landlord's favour: Appeal Decision at [214]
10. Ground 8 was not resolved in the landlord's favour: Appeal Decision at [233]-[234]
11. The landlord's submissions portray it as a model litigant forced to commence and carry on litigation in the public interest. Just because a point of law is complex and a matter of interest does not mean that a litigant is required to prosecute an appeal. To accept the landlord's submission would result in every unsuccessful litigant on a point of law not being deprived costs.
12. The Appeal Panel does not need to make a finding that the conduct of the landlord was "unreasonable or unarguable". Costs remain a discretion taking into account all relevant circumstances. The landlord's costs should not be allowed here primarily because it succeeded on a ground not raised below. That was a point made in the tenant's primary submissions as to costs. It is not a point to which the landlord makes any submission to the contrary.
13. If the Appeal Panel is minded to make the alternative order sought by the landlord then a similar order should be made for the Lessee. The Lessee's appeal was not moot because the appeal concerned damages for which the amount will be relevant on rehearing on unconscionability: Appeal Decision at [268].

Determination

1. The starting point of our considerations should be that: 1. The tenant succeeded on all grounds pressed at the hearing of the appeal; 2. The landlord succeeded only on a point it could have, but did not raise at the hearing at first instance; 3. The appeal hearing itself was able to be conducted efficiently, within the time allocated, albeit much of the time spent in argument, and prior written submissions, was on the landlord's grounds which did not succeed.
2. We would not, at the level of principle, deprive the landlord of all of its costs of its appeal. Whilst it needed our leave to proceed on the ground on which it ultimately succeeded, that ground was identified early, and clearly, in the appeal. Any order for costs in its favour should, however, be significantly reduced to take those issues into account. Again, at the level of principle, the tenant should have its costs of its appeal.
3. In respect of the possibility of making separate orders in the two appeals, we agree with the tenant that this would likely lead to the assessment of apportionment of time and work being in issue and a difficult task for any assessor. The costs of preparing the application and dealing with any objections could well become disproportionate to the exercise, leading to further, and unnecessary expense to both parties.
4. We do not accept the landlord's contention that we can speculate that on rehearing the outcome of its appeal will be fatal to the tenant's unconscionable conduct claim. Further, its costs in those proceedings remain a live issue.
5. On that basis, we think a broad brush assessment of the appropriate outcome in both appeals, and the primary outcome sought by the tenant, is warranted. Indeed, given our findings at [48] and [49] above, the proposed figure of 20% seems modest.

Orders

1. Our orders are: 1. A hearing in respect of costs is dispensed with. 2. TNAU Finery Pty Ltd is to pay 20% of the costs of SuperBurrito Pty Ltd in the appeals, on the ordinary basis.

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: 06 April 2023