Tork v Parklea Operations Pty Limited t/as Gateway Lifestyle Residential Park - Stanhope Gardens

What are the relevant statutory provisions governing the current costs application?

1. Section 60 of the NCAT Act provides: "60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) 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, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be 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 ) or on any other basis. (5) 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."
2. Rule 38 of the Civil and Administrative Tribunal Rules ("NCAT Rules"­) provides: "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-- (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000."
3. Rule 38A of the NCAT Rules provides: "(1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of: (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or the procedural rules. 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."
4. Because Rule 38 applied at first instance and the appeal was filed after 1 January 2016, Rule 38A applies to these proceedings before the Appeal Panel and Rule 38 applies to the question of costs of the appeal.
5. The parties accepted that the amount claimed or in dispute in the appeal did not exceed $30,000. Accordingly, the parties also properly conceded that while Rule 38 applies by virtue of Rule 38A, the result is that the standard position under s.60 of the NCAT Act is not displaced for the purposes of determining the costs of the appeal: see Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25.
6. The effect of s.60(1) and (2) of the NCAT Act was set out in Allen v TriCare (Hastings) Limited at [71] and [76] as follows: "[71] Section 60 of the NCAT Act states the general proposition in subs (1) that each party to proceedings in the Tribunal is to pay the party's own costs. Section 60(2) modifies this by permitting the Tribunal to award costs but "only if it is satisfied that there are special circumstances warranting an order of costs". … [76] "[S]pecial circumstances" for the purposes of s.60(2), are those which are out of the ordinary but they do not have to be extraordinary or exceptional: see the Appeal Panel in CBD Holdings Pty Ltd v Baguley [2016] NSWCATAP 168 [6]; citing the Court of Appeal in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] which concerned the same expression in the previous legislation governing the (then) Administrative Decisions Tribunal."
7. Accordingly, the issue is whether or not we are satisfied that there are special circumstances warranting an order for costs. Further, even in such case, there remains a discretion whether or not to award costs: see Diaspora Holdings Pty Ltd v Owners SP 68608 [2019] NSWCATAP 250.

Submissions of the Respondent

1. The Respondent relied upon three matters as setting out special circumstances as follows: 1. the relative strengths of the claims made by each of the parties, having regard to s.60(3)(c) of the NCAT Act; 2. the nature and complexity of the proceedings, having regard to s.60(3)(d) of the NCAT Act; and 3. the following additional other matters, having regard to s.60(3)(g) of the NCAT Act, the total amount in dispute in the first instance proceedings and the uncertainty in respect of the representative nature of the appeal proceedings.
2. As to the question of the relative strengths of the claims made by each of the parties, the Respondent referred to the two grounds of appeal advanced by the Appellants, as set out in paragraphs 11 and 28 of the Decision. The Respondent submitted that the first ground of appeal failed, as it was inconsistent with earlier decisions of the Tribunal and Appeal Panel, namely in Recklessly Silver Portfolios Pty Ltd T/as Ballina Waterfront Village & Tourist Park [2018] NSWCATCD 59 ("Recklessly (No 2)"); Stewart v Raythel Holdings Pty Ltd T/as Colonial Tweed Holiday Home Park [2019] NSWCATCD 48, and Bavin v Parklea Operations Pty Ltd [2019] NSWCATAP 120.
3. The Respondents submitted that, on appeal, the Appellants sought a different outcome from that which had already been established by the Tribunal and Appeal Panel in its earlier decisions and the Respondent incurred costs in defending the appeal.
4. Further, the Respondent contended the first ground of appeal also failed as the Appellants did not satisfy the onus of proof. The Respondent referred to paragraph 20 of the Decision of the Appeal Panel wherein it was stated that the Appellants were "… unable to demonstrate any overcharge beyond that set out in the expert report of Ms Petkovic".
5. The Respondent also referred to the second ground of appeal raised by the Appellants being an allegation of denial of procedural fairness. The Respondent referred to [32] of the Appeal Panel's Decision: "Based on the above, it is clear to us that the Tribunal considered and rejected the submission of the residents as to the inapplicability of the so-called "averaging methodology". The Tribunal can also be taken to have considered the argument by its reference to the evidence in the expert report of Mr Harris, referred to at [49] of the Decision. There, the Tribunal clearly referred to and must have considered Mr Harris' evidence and his proposed methodology that electricity use should be calculated by reference to off-peak rates."
6. The Respondent contended that the second ground of appeal was therefore without merit and resulted in costs being incurred by the Respondent.
7. Nextly, the Respondent referred to the nature and complexity of the proceedings which it submitted resulted from: 1. arguments advanced by the Appellants, some of which appear to have been abandoned; and 2. difficulty in reconciling the arguments of the Appellants with those series of decisions set out by the Respondent in its submissions.
8. The Respondent contended that the complexity of these appeal proceedings placed the Respondent in a position where it incurred costs. It referred to the fact that at first instance and in the hearing of the appeal, the Appellants were represented by Counsel. The Respondent was represented at first instance and on appeal by Counsel.
9. Lastly, the Respondent referred to two other relevant matters - namely, the total amount in dispute in the first instance proceeding; and the uncertainty in respect of the representative nature of the proceedings.
10. The Respondent referred to the fact that the amount of the dispute in the first instance proceedings was significant and in excess of $30,000 , given that there were far more parties making claims in the first instance proceedings compared to the more limited number of Appellants. The Respondent referred to the Tribunal's decision in Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 wherein the Tribunal stated that: "One reason for its relevance [being the amount in dispute at first instance] is that parties have the expectation of an unfettered discretion being applied in relation to an application for costs at first instance and will make decisions about the merits of their case and the desirability of legal representation partly on that basis."
11. The Respondent pointed out that whilst only 15 parties appeared on appeal, with a total claim of $26,695.94, being less than $30,000, the first instance proceedings involved 93 original applicants and the Respondent had no way of knowing how many of the original Applicants would join in the appeal originally lodged by the First Appellant.
12. The Respondent contended that it engaged legal representation for the appeal proceedings based upon the uncertain information in the Appellants' Notice of Appeal and without knowing the number of further Appellants that would join in the proceedings.
13. The Respondent pointed to the potential for this appeal to have far reaching implications for it beyond the immediate parties, regardless of the extent to which it was revisiting established principles. This meant that the Respondent had no real choice other than to incur legal costs in its defence.

The Appellants' Submissions

1. The Appellants contended that their arguments in the appeal were unsuccessful, but not untenable. They quoted the Appeal Panel in Diaspora Holdings Pty Ltd v Owners SP 68608 at [70]: "Success of the proceedings is necessarily not of itself a special circumstance, otherwise the starting point in the "usual costs rules" - that costs follow the event - will lead to the application of those "usual costs rules" where the legislative intent under CATA s.60 is that something more is required: Citadin P/L v Eddy Azzi Aust P/L (No 2) [2001] NSWADTAP 31 at [6]."
2. The Appellants contended that, contrary to the Respondent's submission, the construction and application of ss.77 and 85 of the Residential Land Lease Communities Act 2013 ("RLLC Act") was not settled and that there are first instance decisions of the Tribunal, which do not use the Reckless (No 2) methodology for calculating the reimbursement of mistaken overpayment; those decisions being Marsh v Pines Resort Management Pty Ltd (Unreported, NCAT File No. RC17/33313) and Myles v Holiday Retreats Australia Pty Ltd T/as River Gum Holiday Park (No 2) (Unreported, NCAT File No RC17/32008).
3. Nextly, the Appellants submitted that the Appeal Panel decision in Bavin v Parklea Operations Pty Ltd was not concerned with the question whether s.77(3) of the RLLC Act involved separate consideration of usage charges and supply charges; but rather, whether it was necessary for a home owner to provide a precise calculation of the amount of the overpayment and the methodology by which it was calculated, in order to have an entitlement to restitution. The reference in that decision to Reckless (No 2) did not endorse the methodology in that case per se, the Appellants contended, but rather the Appeal Panel noted that it was an appropriate way of dealing with the evidence before the Tribunal in that case: [2019] NSWCATAP 120 at [107].
4. Next, the Appellants accepted that the issues in the proceedings were complex, given that the construction of s.77 of the RLLC Act was not straightforward. The Appellants, however, submitted that this is not a "special circumstance" warranting an award of costs. The appeal hearing occupied half a day and the outcome of the matter turned on the question of statutory construction.
5. The Appellants stated it should count in their favour that the Appellants consolidated potentially 15 different individual appeals into a single proceeding; which saved costs and time for the Appeal Panel and the parties.
6. Also, the Appellants contended that contrary to the Respondent's submissions the Appellants did not abandon any arguments and did not create any complexity in the matter.
7. The Appellants contended that the Respondent's submission that the arguments raised on appeal were difficult to reconcile with earlier Tribunal decisions should not be accepted.
8. The Appellants contended that the first instance Tribunal decisions relied upon by the Respondent did not engage directly with the questions of construction of s.77 and were not binding on the Appeal Panel. The early Appeal Panel decision was also not directly on point.
9. Lastly, the Appellants submitted that the Respondent's contention that the fact that the proceedings below were heard concurrently is a special circumstance, is not correct. The Appellants relied upon the remarks of the Appeal Panel in Allen v TriCare (Hastings) Limited at [77], as follows: "[77] The fact that the proceedings at first instance, or even on appeal, were heard concurrently does not fall within any of the matters listed in (a) to (f) of s 60(3) matters. Nor could it legitimately be said that having a joint or concurrent hearing of a number of proceedings, such as the present, that concern substantially similar issues arising out of common or related facts, is something out of the ordinary. It is a common occurrence in the Tribunal."
10. The Appellants noted that the matters heard in the Tribunal at first instance were 93 individual proceedings heard concurrently, not a single set of proceedings. The amount in issue in those cases ranged between about $500 and about $2,800. The outcome, in the first instance proceedings, in every case, was that the Respondent was ordered to make restitution to a home owner.
11. The Appellants submitted that, contrary to the Respondent's submission, Rule 38(2) of the NCAT Rules was not engaged at first instance. The Tribunal at first instance dealt with 93 individual applications, heard concurrently.
12. However, the matters were not consolidated into a single set of proceedings for the purposes of Rule 38 of the NCAT Rules. As the Appeal Panel held in Allen v TriCare (Hastings) Ltd at [37] and [38]: "[37] … "[P]roceedings" refers to the process set in motion, or commenced, by lodging an application or Notice of Appeal. That process includes the steps taken by the Tribunal to hear and determine whether to grant the relief sought in the Application or Notice of Appeal, as well as any interlocutory or ancillary steps. "Proceedings" are defined by the subject matter raised in the Application or Notice of Appeal. The participants in proceedings are limited to the parties determined in accordance with s.44 of the NCAT Act and the NCAT Rules. [38] The Tribunal may hear two or more proceedings at the same time; especially if that is conducive to the just, quick and cheap resolution of the real issues in each set of proceedings, as required by s.36(1) and (2) of the NCAT Act. Nothing in the NCAT Act or the NCAT Rules suggest, however, that when such proceedings are heard together, there is only one set of proceedings, rather than 2 or more separate proceedings, absent an Order of the Tribunal, in effect consolidating the different sets of proceedings into one."

Consideration

1. The Appeal Panel largely accepts the submissions of the Appellants and it is not satisfied that special circumstances warrant the making of costs in favour of the Respondent. Turning to each of the matters raised by the Respondent.
2. First, we accept the Appellants' submission that the proper construction and application of ss.77 and 85 of the RLLC Act was not settled. Accordingly, we accept that the Appellants' submissions were reasonably arguable and could not be described as "untenable". In particular, there was no Appeal Panel decision which made the contentions of the Appellants untenable or without reasonable prospects of success. We agree that the Appeal Panel decision in Bavin v Parklea Operations Pty Ltd was not determinative of the contentions sought to be advanced as to the construction of s.77 and s.85 of the RLLC Act.
3. Similarly, we are of the view that the second ground of appeal could not be described as untenable. In our view, the second ground of appeal also had reasonable prospects of success. Further, we are not satisfied that there was any relevant abandonment of any ground of appeal by the Appellants, such as to constitute a special circumstance warranting any costs order being made against them.
4. Secondly, we accept the Appellants' submission that whilst the nature and complexity of the proceedings were such that it was reasonable for the Respondent to engage in legal representation; and that the issue of the construction of s.77 of the RLLC Act was not straightforward, we agree with the Appellants' submission that this could not be considered a "special circumstance" warranting an award of costs. An appeal of this type and nature, focusing on statutory construction and occupying half a day of hearing, could not be regarded as a "special circumstance" warranting an award of costs.
5. Thirdly, we agree with the Appellants that the other relevant matters sought to be raised by the Respondent - namely, the nature of the first instance proceedings and the possibility of the outcome of the appeal having an impact beyond the parties to the appeal - do not amount to special circumstances warranting an award of costs. We agree with the Appellants' submissions, based upon the Appeal Panel decision in Allen v TriCare (Hastings) Ltd at [77], that the fact that the proceedings at first instance, or even on appeal, were heard concurrently does not fall within any of the matters listed in (a) to (f) of s.60(3) and could not be regarded as something out of the ordinary.
6. Further, for the reasons expressed by the Appeal Panel in Allen v TriCare (Hastings) Ltd at [37] and [38], we accept the Appellants' submission that Rule 38(2) did not apply to the first instance proceedings, because such proceedings remained as 93 individual separate applications that happened to be heard concurrently.
7. We accept, in broad terms, the Respondent's submission that the outcome of the appeal may have implications beyond those parties, making it important for the Respondent to be legally represented in order to defend its position. However, in our view, this does not establish a special circumstance warranting a special costs order. It will not be uncommon for proceedings before this Tribunal to involve a consumer-type claim of a small amount being pursued against an organisation or respondent which could have implications beyond the individual applicant. In such circumstances the case may be regarded as something of a consumer "test case".
8. In our view, simply because an individual's single claim which is less than $30,000 has implications beyond that applicant for the respondent, this should not be regarded as a special circumstance warranting an order for costs in favour of the respondent should it succeed in resisting the claim of the applicant. In this regard, we think it important to bear in mind the different policy position underlying the statutory provision that, by and large, "each party is to pay the party's own costs" provision, subject to "special circumstances", as pointed out by Basten JA in Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) (2006) 68 NSWLR 177 at 189, [50] as follows: "[50] The "costs follow the event" principle is based upon questions of perceived fairness as between litigants. It depends entirely upon the outcome of the litigation, and not upon the reasonableness of the parties in litigating. Questions of reasonableness can be taken into account through special costs rules, based on formal and informal offers of compromise in the course of the proceedings. These rules, taken together, accept that the likelihood of an adverse costs order is a deterrent to litigation and an encouragement to settlement. By way of contrast, the introduction of a "no costs" regime is likely to reflect a policy of encouraging the use of particular Tribunal or Courts for dispute resolution. Thus, the choice of one or other of these regimes as the standard approach will reflect the adoption of one or other policy to particular forms of litigation."
9. In conclusion, we are not satisfied that the Respondent has demonstrated the existence of special circumstances warranting an order of costs in favour of the Respondent. In the result, we dismiss the costs application and make no order as to costs.

Orders

1. The Orders of the Tribunal shall be: 1. Order pursuant to s.50(2) of the Civil and Administrative Tribunal Act 2013, dispensing with a hearing of the application for costs. 2. No order as to costs of the appeal. 3. The application for costs by the Respondent is dismissed.

SCHEDULE File No at first instance RC Appellant Name From Schedule 1 18/46382 Janet Jones 18/46176 Susan McIvor 18/46216 Ron Anthony Nicholls 18/46480 Mary Preston 18/46438 Heather Schilliro 18/46275 Bevan Sheperdson 18/46229 Pauline Sheppard 18/46450 Lex Stanford 18/46544 Patricia Starks 18/46516 Barry Stevens 18/46379 Nerida Tootill From Schedule 2 19/14831 Christopher Jones From Schedule 3 19/17836 Mary Eggmann From Schedule 4 19/22691 Samar Rafidi

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: 12 February 2020