In Wynne Avenue Property Pty Ltd v MJHQ Pty Ltd [2019] NSWCATAP 41 we upheld an appeal brought by the appellant Wynne Avenue Property Pty Ltd from a decision of a Senior Member which had held in favour of the respondent MJHQ Pty Ltd that a notice of termination of a retail tenancy was invalid.
In our decision we reserved costs, and the appellant has sought an order for costs in its favour which has been resisted by the respondent. These reasons are based upon written submissions made by each of the parties.
[2]
The statutory matrix for awarding costs
This costs application is governed by Rule 38 A of the Civil and Administrative Tribunal Rules 2014 which is in the following terms;
38A Costs in internal appeals
(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
(c) the procedural rules.
(2) 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.
The appeal was brought from the Consumer and Commercial Division. Accordingly, by Rule 38A the costs rules of that division will prima facie apply. Those rules are to be found in Rule 38 which is in the following terms;
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.
As properly conceded by the appellant in its submissions, the proceedings from which the appeal was brought did not involve a claim for any particular amount of money and were concerned only with the validity of a notice of termination of the retail tenancy. Accordingly, the provisions which provide an exception to the application of section 60 of the Civil and Administrative Tribunal Act 2013 do not apply. Therefore, the disposition of these cost proceedings is governed by the provisions of Section 60 which is in the following terms;
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.
The determination of these proceedings will revolve around a consideration of whether special circumstances exist such that an award of costs should be made as provided for in Section 60 (2) having regard to the matters set out in Section 60 (3), albeit that these latter matters are not exhaustive and the extent to which they are relevant is a matter for the exercise of discretion.
The Appeal Panel in Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135 described special circumstances (at [37]) as being
circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], citing Santow JA in Cripps v G & M Mawson [2006] NSWCA 84 at [60]
On one view, it is otiose to refer to circumstances in connection with proceedings before this Tribunal as being "special", and to make a distinction between whether those circumstances are "out of the ordinary" as compared to "extraordinary or exceptional." Each set of proceedings which comes before this Tribunal is based upon an asserted entitlement to bring an application created by statute, and involves, usually, resistance based upon an allegation that no such entitlement arises. The factual circumstances which apply to applications are diverse, and, importantly, the parties to the proceedings and their idiosyncratic behaviour usually create another layer of diversity. In total, it may be said that most proceedings before this Tribunal have a degree of complexity, and that by nature they are anything but ordinary. Accordingly Section 60 requires a determination of what is special, and thus not ordinary against the background of the usual complex proceedings which come before this Tribunal.
The determination of whether costs should be awarded can only be made after the underlying proceedings have been decided. It follows, therefore, that the time at which a consideration of whether special circumstances exist is after the conclusion of the proceedings. However, as will be seen, the particular matters which may be considered by reference to Subsection 60(3) may conceivably have taken place after the commencement of the proceedings and prior to their finalisation. Accordingly, there may be some doubt about whether it is appropriate to have regard to the state of affairs as they existed only at the time the proceedings were finalised.
The provisions of Section 60 (3) provide assistance by outlining six specific matters to which reference may be made, and one catch-all matter which probably does nothing more than highlight the breadth of the discretion involved. These specific matters have a number of subcategories.
The first subcategory refers to the conduct of a party, as contained in subparagraphs (a), (b) and (f). We apprehend that these matters are confined to the manner in which the proceedings were conducted by the parties, and that the merits of the respective positions taken by them in connection with the proceedings is of secondary consideration.
The second subcategory refers to the proceedings themselves as contained in subparagraphs (c), (d) and (e). These matters will allow a consideration of the circumstances of the proceedings themselves in determining whether special circumstances exist. Presumably, at one extreme are proceedings which involve a novel previously untested point of law applying to new legislation. At the other extremity will be proceedings the outcome of which is clearly governed by well-established authority at appellate court level binding upon the Tribunal.
[3]
Consideration
The appellant did not seek to justify an award of costs based on special circumstances arising out of the conduct of the respondent. Indeed, such an argument would have no basis because, apart from seeking to resist the appeal by relying on the decision under appeal, the respondent did not engage in any conduct of the kind described in the various subsections of Section 60 (3).
However, the appellant relied in particular on the provisions of Section 60 (3) (c). It submitted that once the respondent had read through the Reasons for Decision under appeal it should have understood that it contained such errors that it would have realised that its defence of the appeal was untenable.
We reject this submission for a number of reasons. Firstly, it is inappropriate to proceed on the basis that a party to proceedings with a successful first instance decision available to it which prima facie determines the underlying proceedings in its favour should be put to the test of considering the merits of the decision in the context of defending any appeal so that it risks an adverse costs order on the basis of a finding of special circumstances. There is nothing out of the ordinary in defending a decision of the kind under appeal which was prima facie regularly given and which dealt at some length with substantial legal arguments so as to convert the appeal proceedings into those with special circumstances attaching.
Secondly, we are not prepared to characterise the position of the respondent on appeal as having no tenable basis in fact or law. The fact that the position contended for by the respondent was rejected, and even though parts of it were found by us to have no merit, is not sufficient to conclude that there was no tenable basis. Given the well-known vagaries and uncertainty as to the outcome of the litigation process, it is difficult to characterise an argument or position as having no tenable basis, either in fact or, indeed, in law. For completeness we note that there can be no question or suggestion that the position taken by the respondent on appeal was frivolous or otherwise misconceived or lacking in substance such that the circumstances of the appeal be characterised "special", nor can it be argued that the nature and complexity is sufficient to justify such a characterisation.
For these reasons we reject the application made by the appellant that it should have a costs order in its favour on the basis of special circumstances within Section 60 of the Act. It is dismissed accordingly.
[4]
Order
1. The costs application brought by the appellant is dismissed.
[5]
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
[6]
Amendments
05 April 2019 - Clarification of party that brought costs application
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: 05 April 2019