ZXJ v ZXK

NCAT Appeal Panel|2023-03-15

REASONS FOR DECISION

On 22 November 2022, we upheld in part an appeal brought from a decision made by the Guardianship Division of the NSW Civil and Administrative Tribunal dismissing the appellant's application for costs: ZXJ v ZXK [2022] NSWCATAP 371 (the Appeal Decision). We went on to reconsider that application and were satisfied that "special circumstances" warranted the exercise of the discretion to award costs to the appellant.
In these reasons we address three questions: in relation to the Tribunal proceedings, whether the discretion to award costs to the appellant in a fixed amount should be exercised; if so, what sum should be fixed; and, in relation to the appeal, whether there are special circumstances warranting an award of costs.
The proceedings the subject of the decision by the Tribunal not to award costs (the Tribunal proceedings) were commenced by the appellant's two daughters (the Daughters). They involved several directions hearings and a two-hour hearing. The appellant urges us to fix costs of $82,000 for those proceedings. The Daughters assert that this figure is excessive and urges us to fix costs of $22,000.
For the reasons we explain below, we decided to award costs to the appellant of $32,312.25 for the Tribunal proceedings. We were not satisfied that there are special circumstances warranting an award of costs in respect of the appeal. Therefore, each party must bear their own costs.
These reasons should be read in conjunction with the Appeal Decision.

Determination of amount of costs

The parties agreed that the question of the amount of costs payable by the Daughters could be determined without an oral hearing and on their respective written submissions. Having considered those submissions, we concluded that this question could be adequately determined without an oral hearing and exercised the discretion to dispense with the requirement to hold a hearing: NCAT Act, s 50(2).

Principles governing the exercise of the discretion to fix costs

Section 60(4) of the NCAT Act gives the Tribunal power to fix costs where the Tribunal is satisfied that there are special circumstances warranting an award of costs: 60 Costs … (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.
Costs are defined to include: (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: NCAT Act, s 60(5).
The principles relevant to the exercise of the discretion to fix costs under s 98 of the Civil Procedure Act 2005 (NSW) were stated by Beazley JA (as Her Excellency then was) in Hamod v New South Wales [2011] NSWCA 375 (Hamod) at [813]-[820]. Beazley JA stated that the exercise of that power is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment: at [817]. Beazley JA identified several factors which merit particular consideration including the relative responsibility of the parties for the costs incurred, the degree of any disproportion between the issue litigated and the costs claimed, the complexity of proceedings in relation to their cost, and the capacity of the unsuccessful party to satisfy any costs liability: at [816].
Beazley JA went on to state the principles which inform the exercise of the power to award a lump sum costs order: 1. In the exercise of its discretion the court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or a formal costs assessment: at [819] 2. The assessment of any lump sum to be awarded must represent a review of the successful party's costs by reference to the pleadings and complexity of the issues raised on the pleadings; the interlocutory processes; the preparation for final hearing and the final hearing: at [819] 3. The costs ordered should be based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills): at [820] 4. The approach taken to estimating the costs to be ordered must be logical, fair and reasonable. This may involve an impressionistic discount of the costs actually incurred or estimated in order to take into account the contingencies that would be relevant in any formal costs assessment: at [820] 5. The courts have typically applied a discount in assessing costs on a gross sum basis: at [814]. (Citations omitted)
Section 60(4) of the NCAT Act and s 98 of the Civil Procedure Act are in similar but not identical terms. Nonetheless, consistently with the approach taken by other Appeal Panels, we will apply the principles stated above in the exercise of the power to fix costs under s 60(4) of the NCAT Act. (See, for example, Commissioner of Police v Robinson (No 2) [2022] NSWCATAP 280 at [26]; 203 Castlereagh Street Pty Limited v Skybloo Holdings Pty Limited [2017] NSWCATAP 29 [39],[40]; Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116 at [47],[48].)
In exercising the power to fix costs, as well as the principles summarised above, the statutory framework governing the operation of NCAT is relevant, in particular: 1. the obligation imposed by the NCAT Act which requires the Tribunal to give effect to the "guiding principle" to facilitate the just, quick and cheap resolution of the real issues in the proceedings when exercising any power given it by the NCAT Act: NCAT Act, ss 36(1), 36(2)(b); 2. the duty of the parties and their legal representatives to co-operate with the Tribunal to give effect to the guiding principle: NCAT Act, s 36(3); 3. the instruction that "the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings": NCAT Act, s 36(4).

Appellant's submissions in support of her claim for costs in the sum of $82,000

The appellant claims costs of $82,000 (incl GST). The total costs incurred by the appellant are said to be $92,000 (incl GST). The appellant explains that the figure of $82,000 was arrived at by identifying (and adjusting for) those costs which relate to work undertaken that was unrelated to the appellant's capacity to manage her financial affairs (the Capacity issue).
In support of her claim, the appellant relies on a spreadsheet (the Spreadsheet) prepared by the appellant's Solicitor (the Solicitor) detailing the costs claimed for the period from 7 December 2020 to 16 September 2021 (inclusive) and the methodology used to calculate those costs. The Spreadsheet lists 260 "narrations" (individual items of work for which costs are claimed, "the Items"), the amount of time spent on each Item, the rate charged for the subject work, and the Solicitor's estimate of the percentage of time spent on each Item that was unrelated to the Capacity issue.
The Solicitor stated that in preparing the Spreadsheet he took the following approach: 1. where the Item "fell within the costs order", he applied no discount 2. where the Item "contains significant time due to preparation beyond the Capacity Issue", he applied a discount of 20% 3. where the Item appears evenly divided between the Tribunal proceedings and "other issues", primarily the concurrent proceedings commenced by the appellant in the NSW Supreme Court concerning her late husband's will (the Supreme Court Proceedings), he applied a discount of 50%.
The appellant contends that the costs claimed satisfy each of the requirements of "costs thrown away" referred to by Williams J in The Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251 at 254 in that they were reasonably incurred; relate to work done; and became wasted in the circumstances.
In support of the contention that the costs claimed are reasonable, the appellant asserts: 1. The hourly and daily rates charged by the Solicitor are "within the range" for law firms in the Sydney CBD. The rates charged by junior and senior counsel reflect the experience of counsel retained in the Tribunal proceedings. 2. Because of the restrictions resulting from the COVID-19 pandemic, work which might otherwise be undertaken by juniors was undertaken by the Solicitor and, where possible, Law in Order, an external legal services provider. In any event, much of the work undertaken by the Solicitor was complex and could not be undertaken a junior lawyer. 3. The issues beyond the Capacity issue were "complex, interrelated and had various technical and historical elements". Ultimately, the quantum of costs in the Tribunal proceedings reflect the issues raised in other jurisdictions in which the parties were involved, the NSW Supreme Court and the NSW Local Court. Because of the manner in which the Daughters put their case, many of the costs flowed from duplicating issues raised in other jurisdictions. Had the Daughters consented to the appellant's proposal to transfer the Tribunal proceedings to the Supreme Court, those costs could have been avoided.
The appellant asserts that because the Daughters pursued issues in the Tribunal proceedings which were unrelated to the Capacity issue (eg allegations of undue influence or unconscionability in relation to the Son) the following costs were wasted: 1. All fees charged by senior counsel up to and including 16 September 2021. The appellant argues that it was necessary to retain senior counsel because of the "common substratum of fact" between the Tribunal proceedings and the Supreme Court proceedings, and the possible impact of the decision made by NCAT on the Supreme Court proceedings. 2. All fees charged by junior counsel up to and including 16 September 2021. The appellant argues that it was necessary to brief junior counsel to advise and appear in the Tribunal proceedings because that counsel was also involved in the apprehended domestic violence order proceedings in the Local Court (Local Court proceedings) where the "same issues were agitated" as in the Tribunal proceedings. In addition, because of the voluminous material filed by the Daughters, the Solicitor required the assistance of counsel. 3. All fees charged by the Solicitor in relation to: 1. briefing, instructing and attending conferences with Senior Counsel 2. considering the "links and overlaps" between the Tribunal, Supreme Court and the Local Court proceedings 3. because of those links and overlaps, undertaking several steps which would otherwise be straightforward such as preparing submissions in support of the appellant's request to be legally represented in the NCAT proceedings, and 4. with junior counsel, reviewing material filed by the Daughters.

Daughters' submission on costs

The Daughters submit that the bulk of the costs claimed by the appellant do not fall within the ambit of the class of costs the Appeal Panel intended to be covered by the costs order. Further the Daughters submit: 1. Despite the Appeal Panel's view that the costs originally claimed by the appellant of $85,000 was "excessive", the appellant reduced her claim by only $3000. 2. The approach taken by the appellant to calculating costs said to fall within the ambit of the proposed costs order is "misconceived" and ignores the fact that the Appeal Panel indicated that the costs proposed to be awarded were "very specific and covered a narrow window of time". For example, the appellant has claimed for costs in preparing for directions hearings concerning procedural issues on the basis that those issues were said to be unrelated to the Capacity issue. 3. The appellant's claim for costs relating to other jurisdictions is a further example of that misconceived approach. Under the banner "addressing other issues", the appellant claims costs for: 1. Issues pleaded in the Supreme Court proceedings" (eg probate, resulting trust from matrimonial home, family provisions, taking of accounts vis-à-vis management of real estate and rent). In seeking to include these costs the appellant has gone "far beyond the scope of the proposed costs order". Further, it is "grossly inappropriate" to claim these costs in circumstances where those matters have been agreed to by the parties in the highly contentious proceedings in the Supreme Court. That claim comes close to breaching the confidentiality clause in a Deed of Settlement between the parties. 2. Issues raised in the Local Court proceedings. Those proceedings concerned an apprehended domestic violence order taken out by NSW Police against the appellant's son on behalf on Daughter 1. It cannot reasonably be said that any costs incurred in those proceedings fall within the ambit of the proposed costs order. 1. Any costs incurred before 20 May 2021 fall outside the ambit of the proposed costs order. The application for a financial management order filed by Daughter 1 on 16 October 2020 clearly raised the issue of the appellant's capacity. It was not until 20 May 2021, when Daughter 2 served applications seeking review of the revocation of the 2004 EPoA and the making of the 2019 EPoA by the appellant, that the appellant was required to address issues beyond the Capacity issue. 2. Given the rejection by the Appeal Panel of the appellant's challenge to the finding made by the Tribunal that the proceedings did not raise complex issues of fact or law, all costs of senior counsel, together with the Solicitor's costs in consulting with senior counsel, should be refused.

Should the discretion to order fix costs be exercised?

The following factors weigh in favour of the exercise of the discretion to fix costs. The Tribunal proceedings were protracted. Each party is likely to have already incurred significant costs. The history of conflict between the parties, demonstrated throughout the Tribunal proceedings and after the Appeal Decision was handed down by their inability to reach agreement on the amount of costs, tends to indicate that any costs assessment is likely be contested. If that were to occur, the resolution of the appellant's application for costs would be further delayed and each party would incur additional expenditure.
Neither party has suggested that the issue of costs be referred for assessment or have pointed to any factor which weighed against the exercise of the discretion to fix costs.
In our view, it is possible on the available material to exercise the power to fix costs in a manner that is "logical, fair and reasonable". Finally, exercising the discretion to fix costs will "avoid the expense, delay and aggravation" arising out of the process of assessing costs: Hamod at [817]; Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 120. For all these reasons we have decided to exercise the power to fix costs.

What amount of costs should the Daughters be ordered to pay the appellant?

We have several difficulties with the approach taken by the appellant to calculating her claim for costs.
First, that approach takes out of context our comments about the scope of the proposed costs order. At [77] of the Appeal Decision we stated: We have decided to order that the Daughters pay to the appellant the costs thrown away up until 16 September 2021, in preparing to address issues raised by the Daughters unrelated to the appellant's capacity to manage her financial affairs.
Those comments must be read together with the preceding paragraphs, where we referred to the Daughters' actions in filing "significant amounts of material largely irrelevant to … question [of the appellant's capacity to manage her financial affairs]'" and, as a result, the appellant being required "to address those issues or at least those relevant to the applications before the Tribunal": at [75]. At [76], we observed that while in the Guardianship Division of NCAT, "the practice of parties, including represented parties, prosecuting issues and filing material largely irrelevant to the real issues in the proceedings is not unusual. However, here the circumstances can properly be described as being out of the ordinary."
It is the additional work undertaken by the appellant necessitated by the Daughters' actions in filing "significant amounts of material largely irrelevant to [the capacity] question" that falls within the scope of the Costs order. As the Spreadsheet demonstrates, the Solicitor has claimed for most work undertaken throughout the Tribunal proceedings on the basis that it is said to be unrelated to the Capacity issue irrespective of whether that work was required to be undertaken because of the appellant's actions in serving "significant amounts of material" largely irrelevant to that issue. For example, the appellant claims: 1. 80% of the costs for preparing an application to the Tribunal seeking leave for the appellant to be legally represented (Items 1, 3) 2. 50% of the costs for preparing for and attending the first directions hearing before the Tribunal on 21 December 2020 (Items 13, 14) and 80% of the costs of reporting about the outcome of that hearing to the appellant and her son (Item 15), and 3. 100% of the costs of preparing submissions in support of the appellant's unsuccessful application that the proceedings be dismissed on the ground that Daughter 1 lacked a "genuine concern" for her welfare and therefore did not have standing to bring the application for a financial management order (Item 24).
Second, the approach taken by the appellant to her claim for costs rests on the premise that the Tribunal proceedings raised complex questions of fact and law. On appeal, the appellant unsuccessfully challenged the conclusion expressed by the Tribunal [1] : "[T]he case and factual matrix of the proceedings was not complex or complicated. There were no complex questions of law or procedure. It did not require the engagement of senior counsel."
We accept, as the appellant contends, that the stakes raised by the Tribunal proceedings, in so far as her interests were concerned, were high. Had the Tribunal made a financial management order, as urged by her Daughters, that order had the potential to halt or at least to delay the Supreme Court proceedings. However, it does not follow that because the Tribunal proceedings were of great significance to the appellant they necessarily raised complex questions of facts or law. We are not persuaded by the appellant's argument that the issues raised in the Tribunal proceedings were so significantly complex as to warrant the additional expense of retaining senior counsel.
Third, we are not persuaded by the appellant's argument that the costs claimed for work in jurisdictions other than NCAT were "related to" the Tribunal proceedings; see, for example, Items 11, 24, 55, 59, 76, 97. The appellant argues that that work "related to" the Tribunal proceedings because it was necessary to consider the "links and overlaps" between those proceedings and proceedings in other jurisdictions. It is not immediately apparent how it can be said, for example, that 50% of the work undertaken on 8 September 2021, described by the Solicitor as "considering outlines and submissions with regard to mediation and options for settlement and consequences with regard to Supreme Court proceedings, the will of your husband and the NCAT proceedings" (Item 97), can properly be described as "costs of, or incidental to, proceedings in the Tribunal". To the extent that it relates directly to the NCAT proceedings it clearly does; there is however no evident basis for apportioning the costs as between Tribunal and other proceedings, and the suggested 50% figure appears arbitrary.
Further, even if it were accepted that a proportion of the costs of work involving jurisdictions other than NCAT could be properly described as costs of, or incidental to, the Tribunal proceedings, there is no material to suggest that that work was undertaken because of the manner in which the Daughters conducted the Tribunal proceedings, namely filing significant amounts of material largely irrelevant to the Capacity issue.
For broadly the reasons advanced by the Daughters, we have decided not to award costs for: 1. work undertaken before 20 May 2021 ($17,539) 2. work undertaken by senior counsel ($8,800), or 3. work undertaken because of the apparent overlap between the NCAT proceedings and proceedings in other jurisdictions.
With respect to the balance of the costs claimed we have decided to: 1. Award costs claimed for work undertaken by the Solicitor between 14 September 2021 and up to and including 16 September 2021 (Items 101-117), less a discount of 25%. The appellant claims costs for $7733. As the Daughters properly concede, by serving a "great deal of material" unrelated to the Capacity issue on the appellant on 14 September 2021 and later withdrawing that material, the work undertaken on behalf of the appellant in reviewing and preparing to respond to that material was wasted. Adopting the approach typically applied by courts of applying a discount in assessing costs on a lump sum basis (Hamod at [814]), we have decided to apply a discount of 25% to the claimed costs and award $5799.75 ($7733 - 25% ($1,933.25)). 2. Award costs claimed for work undertaken by junior counsel between 14 September 2021 and up to and including 16 September 2021 (Items 126, 127, 128), ie $9,682 less a discount of 25%. Costs awarded are $7261.50. 3. Award a proportion of costs claimed for work undertaken between 20 May 2021 and 14 September 2021, $31,902.20. For the following reasons we have decided to apply a higher discount, than that applied for the period 14 September 2021 and 17 September 2021, that is, a discount of 50%. First, the available material does not support a finding that all the work undertaken throughout this period falls within the scope of the proposed costs order in that it was both unrelated to the Capacity issue and necessitated because of the Daughters' actions in serving significant amounts of material largely irrelevant to that issue. On the basis of the description of the work contained in the Spreadsheet taken together with the history of the Tribunal proceedings we accept that some of that work probably satisfies both criteria. Second, a significant proportion of the costs claimed for this period relates to work undertaken because of the apparent overlap between the NCAT proceedings and the Supreme Court proceedings. We are not satisfied that those costs can are costs of, or incidental to, proceedings in the Tribunal. We award costs for this period in the sum of $15,951 ($31,902.20 x 50%). 4. Award a proportion of costs claimed for junior counsel for work undertaken before 14 September 2021, that is $6,600. For broadly the reasons given in (3) above we apply a discount of 50% to those costs, that is, $3300.
We order the Daughters to pay costs to the appellant of $32,312.25 in total ($5799.75 + $7261.50+$15,951 + $3300).

Costs of the appeal

The appellant seeks the costs of the appeal of $54,000. The appellant argues that the following considerations constitute special circumstances which warrant an award of costs: 1. Being a "House v The King appeal" [2] , the nature of the appeal was technical and difficult. The broad, expansive and discretionary nature of s 60 of the NCAT Act added to the complexity of the appeal. The appeal was not a "garden variety" appeal of "limited remit". 2. The appellant required legal representation to conduct the appeal and could not have undertaken the appeal personally. Given the nature of the appeal, the involvement of senior counsel was warranted. 3. In circumstances where the nature of the Tribunal's error in declining to exercise the discretion to award costs was "clear", the position taken by the Daughters in contesting the appeal was "untenable".
The Daughters dispute that the above considerations constitute special circumstances warranting an award of costs. The Daughters point out that neither party was wholly successful in the Appeal.

Consideration

To exercise the discretion to award costs, we must be persuaded that there are "special circumstances" warranting the exercise of that discretion. It is sufficient that the circumstances are "out of the ordinary". They do not have to be "extraordinary or exceptional". [3] In evaluating whether special circumstances are established, we apply the principles set out at [25]-[28] of the Appeal Decision.
In circumstances where the appellant succeeded on only one of her five grounds of appeal [4] , the contention that the Daughters' position was untenable must be rejected. We find unconvincing the assertion that a House v The King appeal is technical, difficult and particularly complex. While the appellant is said to have been unable to represent herself in the appeal, we are not persuaded that this amounts to special circumstances.
We are not satisfied that the considerations on which the appellant relies separately or in combination amount to special circumstances warranting the exercise of the discretion to award costs. The application for costs in the appeal is refused.

Orders 1. The first and second respondents must pay to the appellant $32,312.25 for the costs of the Tribunal proceedings. 2. The appellant's application for costs in the appeal is refused.

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

Endnotes

Costs Decision at [24]
(1936) 55 CLR 499; [1936] HCA 40
Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60], Santow JA.
At the hearing of the appeal the appellant withdrew the claim that the Tribunal erred by having regard to the "Guardianship Division-Cost Guideline", 1 August 2017. 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: 15 March 2023

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