Weraberto Pty Ltd v Vicinity Bankstown Pty Ltd

NCAT Consumer and Commercial|2022-07-20

REASONS FOR DECISION

The parties who are applying for costs are the two respondents to the substantive application. The cover sheet of the cost submissions listed the case numbers for both the interim lease application (COM21/49744) and this substantive application (COM21/49747). If the respondents wanted costs of the interim application they could have applied for them from the Senior Member who made final orders on the interim application on 8 December 2021. In any event the interim application was resolved by the parties agreeing to consent orders, including that the respondents would remove the hoarding from the shop so that the lessee could continue trading.
It is not appropriate for the respondents to attempt to get a cost order for any costs they incurred in defending the interim application. No orders have been made about making a cost application for the costs associated with the interim application and this decision does not concern the interim application at all.

Background to the substantive application

On 29 June 2022 the Tribunal set out the background to these proceedings: This substantive lease application was lodged on the same day as the (resolved) interim application namely on or about 6 Dec 2021. On 8 Dec 2021, the Tribunal determined the interim application and made [directions] in this, the substantive lease application, including an order that the applicant provide Points of Claim properly explaining its substantive application, by 24 Jan 2022. That was not complied with and has never been complied with. The application came back before the Tribunal on 3 Feb and 4 March and on both occasions the Tribunal simply adjourned without making any orders nor referring to the orders that had been made on 8 Dec and not complied with by the applicant. On 4 March the Tribunal ordered no further adjournments except in exceptional circumstances. On 1 April the Tribunal made more orders for the applicant to provide its evidence and importantly, the long overdue Points of Claim to explain what orders it sought and the legal and factual basis for those orders. The applicant applied for an extension of time to comply with those orders and it was granted by the Tribunal. Yet no documents were received from the applicant. It is entirely unclear what orders the applicant is seeking in this substantive application. The 1 April orders notes that the applicant wants a declaration it does not need to pay the outstanding rent arrears in the amount $74,000 however no explanation for this order, including the power of the Tribunal to make such an order, is explained. On Friday afternoon the applicant sent an email to the Tribunal in which it explained it was trying to negotiate with the respondent/s and seemed to set out orders it may have sought in the hearing this afternoon. Those included legal costs incurred in these proceedings and compensation for loss of trade for the days the hoarding was erected on the store. This was not quantified and no evidence was referred to, nor was any legal basis referred to in the email. No application for adjournment was made. The email was in fact a reply to the Tribunal's email attaching the Notice of Hearing so it is clear the applicant had the Notice of Hearing which was first sent to it 21 April 2022. There are many issues in this case commenced by the applicant. It really needed to properly explain its case so that the respondent could answer it and the Tribunal could decide it. As it stands the Tribunal has no idea what orders the applicant sought and on what basis, despite four directions hearings, multiple extensions of time, adjournments and orders for the applicant to file Points of Claim, the first which was made seven months ago. … The respondents have suffered a disadvantage by these long delayed and unexplained and unresolved lease proceedings. They have incurred costs and delayed pursuing the $74,000 rent arrears to see what are the outcome of these proceedings. The respondents have legal representation as is their right in such matters and they have not been able to prepare a response to the application as the respondents do not know what is being sought in the application. The respondents apply for their legal costs incurred in these proceedings.

Background to the cost decision

The orders the Tribunal made on 29 June 2022 were as follows: 1. The application is dismissed because: • There is no appearance of applicant by 01:40 PM. No satisfactory explanation for nonattendance has been given to the Tribunal. NOTE: The proceedings may be re-instated on the application of the Applicant under section 55(2) of the Civil and Administrative Tribunal Act 2013 if the Tribunal considers that there is a reasonable explanation for the failure to appear and the application is made within 7 days after the Tribunal dismissed the proceedings that are sought to be re-instated, rule 36, subject to any extension granted under section 41. • The application for unknown orders is dismissed because the Tribunal considers that there has been a want of prosecution of the proceedings and the applicant has conducted these proceedings is conducting the proceedings in such a way that unreasonably disadvantages the respondents to the proceedings by any conduct (including by failing to comply with an order or direction of the Tribunal). 2. The issue of costs is reserved. 3. The respondents are to file and serve written submissions in support of their cost application by 13-Jul-2022 4. The applicant is to file and serve written submissions about the cost application by 27- Jul-2022 5. In the cost submissions the parties must express their attitude to the Tribunal making an order dispensing with a hearing under s.50 of the NCAT Act.
The applicant did not, within 7 days of the 29 June 2022 orders, apply to set aside the order that the matter was dismissed because the lessee did not appear at the hearing.
The applicant did not appeal against the decision of the Tribunal to dismiss the application for want of prosecution.
The respondents made their cost application on 20 July 2022 and therefore required an extension of time which was referred to the Member on 8 August 2022 due to an administrative error and the extension was granted on the same day allowing the respondents to file their submissions in support of their cost application by 20 July 2022.
Time was therefore extended for the applicant to file any submissions about the cost application by 10 August 2022, although the applicant has never applied for an extension of time. The applicant did not provide cost submissions to the Tribunal by close of business 10 August 2022 or at all.

The orders sought

The respondents seek a cost order that the applicant's director personally pay them their legal costs on an indemnity basis as a gross sum cost order in the amount of $23,509.86.
In the alternative the respondents seek a cost order that the applicant itself pay them their legal costs on an indemnity basis as a gross sum cost order in the amount of $23,509.86

Issues

Should the Tribunal dispense with a hearing on the question of costs?
Does s.60 of the NCAT Act or rule 38 of the NCAT Rules apply?
Are the respondents entitled to a cost order in their favour?
Should the cost order be on the ordinary or indemnity basis?
Should the applicant's director personally pay any cost order?
Should the cost order be a gross sum cost order?

Issue 1 - dispensing with a hearing

The Tribunal gave the parties an opportunity to express their attitude to the Tribunal dispensing with a hearing on the question of costs. The respondents in paragraph 2 expressed that they were "content for the Tribunal to make an order under" s.50 of the NCAT Act. The applicant has chosen not to provide any submissions on the question of costs.
The Tribunal finds it appropriate to dispense with a further hearing in this matter as it is the quickest, cheapest and most just way to resolve the question of costs, especially in circumstances where the applicant did not appear at the final hearing of its own substantive hearing and may not turn up to a hearing about costs either.

Issue 2 - s.60 or rule 38?

In paragraph 5 the respondents submitted: [the proceedings] concern a dispute about rent and other charges owed by the Applicant under a Lease of approximately $74,000 and an assertion by the Applicant that it is not liable to pay that amount to the Respondents.
The respondents submit rule 38 applies and the Tribunal agrees. While the applicant never explained why it should not pay the respondents $74,000 in rent and other charges, had the applicant properly argued its case and had an order that it was relieved from paying this amount, the resources of the respondents would have changed by more than $30,000. Therefore "the amount in dispute" exceeded $30,000. The applicant never amended its claim to be one seeking relief from payment of less than $30,000.
Even if Rule 38 had not applied the Tribunal would have found special circumstances applied to award costs in any event, given the repeated non-compliance by the applicant including its failure to ever explain its case against the two respondents.

Issue 3 - Are the respondents entitled to a cost order in their favour

The respondents were required to appear at four directions hearings plus the final hearing on 29 June 2022. These repeated appearances were all caused by the applicant filing a retail lease application against them and then not properly prosecuting that application.
In paragraph 11 of their written submissions they set out repeated instances of non-compliance with Tribunal orders by the applicant. It is true the applicant did not comply with most if not all orders made by the Tribunal and prolonged the proceedings and caused a disadvantage to the respondents.
However subparagraph 11.1 is irrelevant and also not entirely correct. The subparagraph concerns the interim application which was resolved by the entry of consent orders. This cost applicant does not concern the interim application as already explained.
Subparagraph 11.7 is: the Applicant did not appear at the contested hearing on 29 June 2022 and the Respondents were wholly successful in their defence of the Applicant's substantive application.
There was no contested hearing on 29 June 2022 as there was no applicant in attendance. All that happened was that the Tribunal dismissed the application for want of prosecution and for non-appearance. There was no consideration of the merits of the application; there couldn't be because the applicant never explained what was its case.
In subparagraph 11.10 the respondents submitted: through no fault of their own, the Respondents found themselves incurring the cost in respect of preparing for and attending at the contested hearing of these proceedings.
The Tribunal reads this subparagraph to mean "final" hearing rather than "contested" hearing.
In any event it is unclear what preparation the respondents could have undertaken given the paucity of pleadings or evidence filed by the applicant in the matter. As the respondents pointed out in subparagraph 11.6 "the Applicant did not file any evidence in the proceedings". The preparation could not have amounted to more than looking up the Notice of Hearing and understanding how to dial into it. There was no documentation from the applicant to read and respond to.
It is true that the proceedings were dismissed but this was because the applicant did not turn up and had not properly prosecuted its case, not because the respondents had wholly successfully defended the application.
In any event the outcome was that the applicant was unsuccessful in the claim it commenced some seven months earlier and the respondents obtained the outcome they desired which was for the application to be dismissed.
According to Rule 38 the usual order for costs would apply which is that costs should follow the event and accordingly the applicant should pay the respondents costs of these proceedings. That is only COM21/49747.

Issue 4 - Should the cost order be on the ordinary or indemnity basis?

The Tribunal has the power to award costs on an indemnity basis but declines to exercise its discretion to do so.
The respondents submitted in paragraphs 17 and 18 (citations omitted): To make such an order, the Tribunal needs to be satisfy itself that there is a "sufficient or unusual feature", or some "relevant delinquency" bearing a relevant relation to the conduct of the case. For the reasons set out in paragraph 11 above, the Respondents submit that the Applicant's conduct in the case was delinquent and that it would be appropriate for an order for indemnity costs to be made.
The Tribunal disagrees. The reason for the cost order at all is that the applicant did not comply with Tribunal orders and did not appear at the hearing, causing the case to be dismissed. The applicant's lack of prosecution of the case is an insufficient basis, in the Tribunal's opinion, to award costs on an indemnity basis. As it is, any lawyer appearing for respondents in a case not properly pleaded or explained and without any evidence in support, would not have spent $23,509.86 on defending it. It is inconceivable that the appearance at four directions hearings and a final hearing which was always going to lead to a dismissal given the applicant had not pleaded or prosecuted its case, could amount to over $23,000 in legal costs.
Indemnity costs are not warranted in these proceedings.

Issue 5 - Should the applicant's director personally pay any cost order?

In paragraphs 19 to 25 inclusive the respondents submit they should obtain a personal cost order against the director of the applicant.
The director of the applicant is not a party to these proceedings and the respondents, both of which are legally represented, did not ask that the director be joined to the proceedings, even just this application for costs.
It is a denial of procedural fairness or natural justice to make any orders against a person without giving that person an opportunity to be heard about those orders.
It would be highly improper for the Tribunal to order the director, who has not been joined to the cost application and has not had an opportunity to be heard on the cost application, to pay any amount to either respondent.
That aspect of the respondents' cost application is dismissed.

Issue 6 - Should the cost order be a gross sum cost order?

There are a number of criteria a party must address if it is to get a gross sum cost order: see Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116.
The cost applicants have addressed none of those, indeed they have given not a single justification for a gross sum cost order. There was no evidence served with the cost submissions either, for example no affidavit by a solicitor with carriage or tax invoice or any other evidence in support of the gross sum cost order.
Thus there is no way for the Tribunal to judicially consider whether it is appropriate to make a gross sum cost order and it therefore must decline to do so.
It must be observed that the Tribunal does not consider the incursion of $23,509.86 legal costs to be in any way proportionate to the issues in contention in the substantive proceedings, as those issues were never even explained by the applicant. The applicant put on no evidence so the respondents' lawyers could not have spent hours reviewing and responding to such evidence. There were no pleadings so the respondents did not prepare or file any Points of Defence. As far as the Tribunal can see the only legal costs that could or should have been incurred in these hopeless proceedings would be the appearances at the directions hearings and final hearing, none of which took more than 45 minutes.
So even if the Tribunal had found a gross sum cost order was appropriate, which it has not, it would not have awarded anywhere near $23,509.86 allegedly incurred by the respondents in these proceedings which were not properly prosecuted by the applicant.

Conclusion

The Tribunal orders the applicant pay the respondents costs, on the ordinary basis, as agreed or assessed.

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 21 September 2023 - Formatting amendments. 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: 21 September 2023

At a glance

Court

Decision date

Source

Judgment (14 paragraphs)

Parties

Cases Cited (1)