Williams Street Convenience Store Pty Ltd v Kronheim

Application of r 38A

1. The next issue to deal with is the provisions which apply in respect of the determination of this cost application. In our reasons at [71] and following we said in respect of costs in the appeal: 71 Rule 38A requires us to apply r 38 in determining costs in this appeal. 72 Rule 38 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. 73 Prima facie, there is no amount claimed or in dispute, the issues in the appeal being whether an order declaring who is entitled to the bond and whether a costs order was to be made: see The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite). Consequently, s 60 of the NCAT Act is not displaced. 74 In such a case, special circumstances would need to be established. Prima facie there is nothing out of the ordinary in this appeal. Further, it seems to us that even if special circumstance could be established, having regard to the fact the appellant only succeeded on one of two issues, each party should pay their own costs in any event. 75 We will make a conditional order to this effect and allow the parties to file and serve evidence and submissions if they contend a different order should be made. Any submissions should deal with whether an order should be made dispensing with a hearing.
2. The appellant says rr 38 and 38A is engaged. As we said in our reasons in the decision (set out above) we agree.
3. The appellant says that the amount claimed or in dispute is more than $30,000.
4. The substantive appeal was essentially in respect of two matters.
5. First, the appellant said an order for costs should have been made in the proceedings at first instance. The amount of the cost was not the subject of the dispute. Rather, the issue was whether the Tribunal was in error in failing to make a costs order. On this issue the appellant succeeded.
6. The second matter concerned the return of the bond. Here the appellant sought declaratory relief. On this issue the appellant failed. Again, there was no issue concerning the amount of the bond or who should be paid what amount of money.
7. Having regard to what was said by the Appeal Panel in Malachite, there is no amount claimed or in dispute, let alone an amount in excess of $30,000. Consequently, while r 38 applies to this appeal, in the absence of there being an amount claimed or in dispute greater than $30,000, the operation of s 60 of the NCAT Act is not displaced.
8. It follows that the appellant must show special circumstances: s 60(2) NCAT Act. Otherwise, s 60(1) provides that each party is to pay their own costs: s 60(1) NCAT Act.
9. Section 60(3) sets out various factors to which the Tribunal may have regard in determining whether there are special circumstances. This section provides: (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.
10. In regard to special circumstances, the appellant raises three matters. These are: 1. The respondent misconducted the proceedings below and in the appeal in relation to the security bond issue. This constitutes circumstances which are out of the ordinary and are factors to be considered under s 60(3)(a) and (e) of the NCAT Act. (Misconduct ground). 2. The respondent unreasonably refused two offers of compromise, a relevant factor to be considered under s 60(3)(e) of the NCAT Act (Refusal of offer ground). 3. the proceedings are commercial in nature, a relevant factor under s 60(3)(d) of the NCAT Act (Commercial proceedings ground).
11. We will deal with each of these in turn.

Misconduct ground

1. Misconduct is a serious allegation.
2. The submissions made to support this allegation included: 1. the respondent listing the details "of his solicitor as the contact person"; 2. the failure to attach an ASIC search; 3. completing an application form with the "old registered address" of the appellant so as "to deprive the appellant from being notified of the application by the Tribunal's registry". 4. The fact a directions hearing occurred on 14 August 2020 of which the appellant and its agent was not aware resulting in direction being made in the appellant's absence.
3. These allegations are unfounded and inappropriate. This is demonstrated by the submissions of the appellant at paras 11 and 12 of its submissions in chief, where it said in connection with the above conduct: 11 The respondents misconduct exhibits deliberate intention to deprive the appellant from attending the first directions hearing to raise its claim to the bond. This conduct forced the appellant to raise its claim to the bond as an ancillary before the Tribunal below and before the Appeal Panel. 12 Had the respondent not engaged in this conduct, there would not have been a need for the appellant to raise its claim to the bond issue in this appeal, as it would have raised it at the first directions hearing and obtain directions to deal with its bond claim issue below.
4. Further, none of the conduct to which the appellant refers in respect of the proceedings at first instance could have any relevance to what costs order should be made in this appeal.
5. Next, the appellant asserts inappropriate conduct by the respondent continued in connection with the appeal and the bond claim. This misconduct was said to arise from the application to adduce fresh evidence in the appeal in connection with the bond and an assertion said to be made by the respondent that "there is evidence that the rental bond was transferred to Ezymart and became a security for Ezymart's lease". This misconduct is said to be revealed by the following (found at appellant's submissions in chief at para 16 and 18): 16 Examination of the fresh evidence on pages 342-379 of the filed respondent's document shows no evidence whatsoever on this issue. Had the respondent attended any evidence in support, the appellant would not have pressed the bond declaration issue as an ancillary order in this appeal. By its misconduct, the respondent failed to give effect to the guiding principle of the Tribunal in s 36 of the NCAT Act, a relevant factor in any application for costs. 18 The respondent conducted this appeal in a way that disadvantaged the appellant, in failing to attend any fresh evidence in support of its no tenable basis claim, that the rental bond became available as security under a subsequent lease with Ezymart, notwithstanding direction 2(b) made on 2 March 2020 in this appeal, a relevant factor in considering any costs order as to this appeal.
6. In doing so, reference is again made to what occurred in the proceedings at first instance on 2 August 2018.
7. These submissions do not support any claim of misconduct. They should not have been made.
8. This ground is not established.

Refusal of offer ground

1. Two offers of compromise are relied upon. The first is one made on 19 November 2019 (First Offer). The second offer was made on 14 March 2020 (Second Offer).
2. The First Offer was made before this appeal was commenced. It was not made in connection with the appeal. It was in connection with a proposal not to pursue costs if the bond was released to the appellant. In related to an attempt to settle costs in the proceedings at first instance.
3. As is evident from our reasons in the substantive appeal, the appellant failed on the claim in relation to the bond.
4. In our view the refusal to accept this offer, particularly in the context of the outcome of this appeal, could not be said to be unreasonable nor does it give rise to facts that would otherwise establish special circumstances arising in the appeal to warrant an order for costs in favour of the appellant.
5. In relation to the Second Offer, this was made on 14 March 2020.
6. The offer appeared to have been interlinked with the question of return of the rental bond. In this regard the offer stated: Williams is willing to forgo $1800.00 from its rental bond on the condition that Dennis Kronheim consents to the setting aside of order 2 made on 30 January 2020 stating "Each party is to bear its own costs of and incidental to proceedings in Matter COM 18/33757" and replacing with an order stating "2. The applicant Dennis Kronheim is to pay the respondent's costs and disbursements of proceedings see COM 18/33757 in the agreed amount of $1000.00".
7. The offer also stated: This offer is not open for negotiations and will only remain open until the beginning of the Call Over of the above appeal at 11 am on Tuesday, 17 March 2020, after which it will lapse.
8. It was not suggested any information was provided at this time in connection with the amount of costs actually incurred or which might be claimed. In essence it required a complete capitulation and an agreement as to the amount of the costs to which the appellant was entitled in the proceedings at first instance. It also, apparently, involved a concession concerning the rental bond, the details of which were not specified in the offer. Finally, it provided a timeframe of only 3 days in circumstances where all that had occurred at this time was the service of a notice of appeal and the fixing of a matter for call over.
9. In these circumstances, it could not be said that any refusal to accept the Second Offer was unreasonable, the offer itself being unclear as to how the whole of the proceedings would be disposed of, particularly as there was a claim for declaratory relief in the appeal in connection with the bond.
10. This ground is not established.

Commercial proceedings ground

1. The final ground is that the proceedings are commercial in nature.
2. The appellant only succeeded in one of two claims in the appeal. That is each party had some success.
3. There is nothing out of the ordinary in connection with these proceedings, save perhaps the manner in which the appellant has sought to obtain declaratory relief of a substantive nature in an appeal in connection with an order for costs.

Other matters

1. In light of our decision above, there is no need to deal with the appellant's submissions concerning the application of the Legal Profession Uniform Law (NSW) and the permission given under Sch 4 cl 7(b) of the NCAT Act.
2. In so far as we have made an order for costs in the proceedings at first instance, as we said before, any issues arising in relation to that matter are to be dealt with by the person appointed under the relevant Legal Profession legislation to assess the costs in question. For present purposes, as identified by the appellant, it is sufficient to note that the permission given to a "qualified entity" as defined in s 6 of the LPUL is to "an individual (emphasis added) engaged in legal practice under the authority of a law of the Commonwealth or of a jurisdiction, other than this Law or the Uniform Rules". There appears to be no permission given to a corporation, in this case Warehousing Pty Ltd trading as The Retail Leases Doctor.
3. Any issues arising in relation to this issue remain to be dealt with during any costs assessment process.

Orders

1. The Appeal Panel makes the following orders: 1. A hearing of the application for costs is dispensed with pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 2. The application for costs is dismissed and 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 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: 03 March 2021