Costs Order Set Aside in Appeal: NSW Civil and Administrative Tribunal

The Tribunal set aside the original costs order and remanded the issue back for reconsideration due to errors in the initial ruling. The decision was based on the Civil and Administrative Tribunal Act 2013 (NSW) and the Civil and Administrative Tribunal Rules 2014 (NSW).

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: [NAME] v [COMPANY] (No 2) [2022] NSWCATAP 332 Hearing dates: On the papers Date of orders: 26 October 2022 Decision date: 26 October 2022 Jurisdiction: [NAME]: G Blake AM SC, Senior Member Decision: (1) The Notice of Appeal is amended to include a claim that the costs order of the Tribunal at first instance made on 10 March 2022 is set aside. (2) The costs order of the Tribunal at first instance made on 10 March 2022 is set aside and the issue of costs of the hearing at first instance is remitted to the Tribunal for reconsideration. (3) The respondent is to pay the appellant's costs of the appeal as agreed or assessed. Catchwords: COSTS — Party/Party — General rule that costs follow the event — Application of the rule and discretion – where an appeal is upheld and the proceedings remitted to the Consumer and Commercial Division for reconsideration Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 4, 35, 60 Civil and Administrative Tribunal Rules 2014 (NSW), rr 38, 38A [NAME] Act 1951 (NSW) Cases Cited: [NAME] v Secretary, Department of Health (1988) 14 NSWLR 252 Jaycar Pty Limited v Lombardo [2011] NSWCA 284 Manca v Tullipan Homes Pty Ltd [2022] NSWCATAP 296 Texts Cited: None cited Category: Costs Parties: [NAME] (Appellant) [COMPANY] (Respondent) Representation: Counsel: [redacted] [NAME] (Respondent)

Solicitors: [redacted] [NAME] (Respondent) File Number(s): 2021/00329551 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 21 October 2021 Before: [NAME], Senior Member File Number(s): HB 19/48190

REASONS FOR DECISION

Overview 1. On 9 September 2022, [NAME] made a decision in these proceedings which included orders, in the absence of the agreement of the parties as to the costs of the appeal, in relation to the application of the appellant for an order that the respondent is to pay his costs of the appeal, and reasons for the decision (the Decision): Manca v Tullipan Homes Pty Ltd [2022] NSWCATAP 296.

2. These reasons for decision should be read with, and use the same abbreviations as in, the Decision.

3. I have decided that the costs order of the Tribunal at first instance made on 10 March 2022 should be set aside and the respondent should pay the appellant's costs of the appeal.

The hearing on the papers 1. The appellant relies on the following documents: 1. his affidavit sworn on 21 September 2022 (the 21/9/2022 [NAME] affidavit); 2. his submissions on costs dated 23 September 2022 (the appellant's costs submissions); 3. his reply submissions on costs dated 18 October 2022 (the appellant's costs submissions in reply).

1. The respondent relies on its cost submissions in reply dated 11 October 2022 (the respondent's costs submissions).

The issues 1. In the appellant's costs submissions, the appellant seeks the following orders: "a. An order pursuant to rule 38A of the Civil and Administrative Rules 2014 (NCAT Rules) that the Respondent pay his costs of the appeal as agreed or assessed; and b. An order under s 81 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) setting aside the costs order of the Tribunal at first instance made on 10 March 2022 and remitting the issue of costs of the hearing at first instance to the Tribunal for reconsideration together with the substantive items referred to in [NAME]'s decision. c. An order pursuant to s 53 of the NCAT Act amending the Appellant's Notice of Appeal to include a claim for order 1.b. above."

1. The respondent does not oppose orders (b) and (c) sought by the appellant, but opposes order (a) and seeks the following orders: "(a) An order that the costs of the Appeal are costs in the cause such that if [NAME] is again unsuccessful in relation to those matters which have been remitted, he must pay Tullipan's costs of the Appeal; or (b) Alternatively, an order that each part is to bear its own costs with respect to the appeal proceedings."

1. As I am satisfied that it is appropriate to make orders (b) and (c) sought by the appellant, it is unnecessary to consider the 21/9/2022 [NAME] affidavit. The remaining issue which arises for determination is the costs of the appeal.

2. The parties are in agreement and I am satisfied that rr 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) are applicable to the costs of the appeal.

3. Before considering the costs of the appeal it is convenient to set out the applicable statutory provisions and legal principles and summarise the submissions of the parties.

The applicable statutory provisions

NCAT Act 1. Section 60(1), (2) and (5)(b) of the NCAT Act relevantly provide that each party to an appeal is to pay the party's own costs and the Tribunal may award costs in relation to an appeal only if it is satisfied that there are special circumstances warranting an award of costs.

2. In proceedings commenced in the Consumer and Commercial Division, by reason of the operation of s 35 when read with par (a) of the definition of "procedural rules" and the definition of "Tribunal rules" in s 4(1) of the NCAT Act, s 60 is subject to the NCAT Rules.

NCAT Rules 1. Rule 38 of the NCAT Rules relevantly 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— … (b) the amount claimed or in dispute in the proceedings is more than $30,000.

1. Rule 38A of the NCAT Rules relevantly provides: 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— … (c) the procedural rules. (2) Despite section 60 of the Act, [NAME] 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 applicable legal principles 1. In [NAME] v Secretary, Department of Health (1988) 14 NSWLR 252 ([NAME]) at 271 Mahoney JA held: "Although costs lie in the discretion of the Court: Supreme Court Rules 1970, Pt 52, r 11; the ordinary rule is that the general costs of an appeal, like the general costs of the trial, follow the event: …. But the general rule is, of course, subject to exceptions. Those exceptions are, inter alia, of two general kinds. First, if the costs of the appeal have been increased by an issue on which the [NAME] parties failed and those costs are of sufficient significance to warrant a special order, the party who succeeded on that issue should have the costs of it, to be set off against the general costs of the appeal: …. And, secondly, there may be reasons why the general costs of the appeal or the costs of particular issues will be ordered otherwise. …"

1. In Jaycar Pty Limited v Lombardo [2011] NSWCA 284 (Jaycar) at [61]-[63] Campbell JA held (Young JA at [71] and Meagher JA at [72] agreeing): "[61] It is an inevitable part of our legal system that on occasions a judge will act in error. If the error of the judge is not one that has been brought about by one of the parties (or by some other person who is amenable to the jurisdiction that the court now has to make costs orders against non-parties (cf Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell Street Theatre Pty Ltd [2011] NSWCA 128 at [21]-[25])) the costs of rectifying that error should, prima facie, be treated as one of the viscissitudes of litigation. Therefore, the costs of rectifying the error should prima facie follow the event. [62] This principle is well established in the basis upon which appellate courts make costs orders. Allegations that a judge has made an error make up the daily diet of the Court of Appeal. However, if such an allegation turns out to be correct, the fact that it was a judge who made the error provides no reason for the Court of Appeal to make no order for the costs involved in remedying that error. The bringing of an appeal is a separate " event" to the trial concerning which the appeal is brought, and the application of UCPR 42.1 thus justifies the party who succeeds on that " event" prima facie receiving the costs of that event, ie of the appeal. Thus, if the appropriate way for the Court of Appeal to remedy the error in the court below is to set aside the judgment and enter a judgment for a different party, UCPR 42.1 requires that the costs of both the trial and the appeal be awarded to the party who was [NAME] on the appeal, unless there is reason to do otherwise. If the appropriate way for the Court of Appeal to remedy the error in the court below is to order a new trial, the usual order is that the [NAME] receive the costs of the appeal, and that the costs of the first trial abide the event of the second trial, unless there are special circumstances warranting a different order: [NAME] v Commonwealth (No. 2) [2004] NSWCA 427. But, relevantly for the present case, the party who succeeded on the appeal should, prima facie, receive the costs of the appeal, regardless of the fate of the new trial. [63] The [NAME] Act 1951 provides some limited relief concerning some of the circumstances in which imperfect functioning of the legal system results in a litigant incurring costs that would not have been incurred had the system operated perfectly. The imperfect functioning includes not only a judgment being set aside on appeal, but also the occurrence of other (but by no means all) vicissitudes of litigation that cause litigants to incur costs, but are not the fault of any of the parties. However, the [NAME] Act proceeds on the basis that a party to the litigation has been ordered to pay costs that have arisen as a consequence of the imperfect functioning of the legal system. The statute itself recognises that imperfect functioning of the legal system is not a reason why costs incurred as a consequence of that imperfection should not be the subject of an order for costs. Rather, it recognises that, in the limited circumstances in which the Act applies, it is appropriate for a partial indemnity to be made available from public funds to the party required to bear those costs. …"

The submissions of the parties

The appellant's costs submissions 1. In the appellant's costs submissions, the appellant relevantly makes the following submissions: 1. the power to award costs pursuant to r 38 of the NCAT Rules is discretionary. However, the exercise of the discretion is informed by well-established principles. The primary position, based on the principle of fairness, is that a [NAME] party to litigation is entitled to an award of costs in its favour; 2. he has succeeded in its appeal, with the exception of ground 8 relating to items 8.01, 8.08, 8.09, 8.10, 8.11 and 8.13. Those items accounted for a minor subset, both in number and value, of the totality of items in respect of which error by the Tribunal was claimed and occupied very little time in the hearing of the appeal. He is effectively the [NAME] party to the appeal; 3. there has not been any disentitling conduct on his part. On the contrary, the errors by the Tribunal were patent, yet the respondent, with the exception of several items, strongly contested the appeal and sought to justify and uphold the findings and orders of the Tribunal on their merits; 4. he notes the comments by [NAME] in the Decision at [42]-[43]. The organisational choice he made for the presentation of the Notice of Appeal in an effort to bring structure to it, when the Tribunal at first instance dealt with a large number of items individually and/or in groups, each of which was affected by identifiable errors of law, is not a valid reason for exercising the costs discretion adversely to him; 5. [NAME] has (with the exception of ground 8 relating to items 8.01, 8.08, 8.09, 8.10, 8.11 and 8.13) upheld the appeal. With respect to the items remitted to the Tribunal for reconsideration, [NAME] has upheld the appeal for the reasons set out in the Decision but has not ruled that any of the additional grounds of appeal were unarguable or without merit.

The respondent's costs submissions 1. In the respondent's costs submissions, the respondent relevantly makes the following submissions: 1. [NAME] has a general discretion in respect of the award of costs and whilst the starting point may be that the [NAME] party should be entitled to an order for costs, there is no absolute rule that, absent disentitling conduct, a [NAME] party is to be compensated by the unsuccessful party. The factors to be considered are not confined and the relative success of the parties is a relevant consideration. The proper exercise of the discretion requires the Tribunal to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary or capricious. These principles call into sharp focus: 1. who, in the context of this appeal, is the [NAME] party; and 2. what, having regard to the circumstances of this case, will do justice between the parties; 1. [NAME] did not determine whether the appellant ought to ultimately succeed in altering the orders of the Tribunal by reason of the appeal points he raised. On this basis alone, it cannot be said that the appellant was the [NAME] party in the appeal. Not only did he fail on various aspects of his appeal, but he has not yet succeeded in overturning the decision of the Tribunal. If he is ultimately [NAME] in doing so, it would seem difficult to argue against an order for costs of the appeal in his favour. Conversely, if the appellant is still unsuccessful notwithstanding the appeal, the appeal has simply caused unnecessary time, cost and expense and it will be the [NAME] party. For this reason, the appropriate order is that costs be costs in the cause; 2. if [NAME] is not prepared to make an order that costs of the appeal be costs in the cause, the appropriate order is that each party pay their own costs. Such an order is appropriate for the reasons in [18(2)] above together with the fact that: 1. the appeal grounds were convoluted and unnecessarily complex. As stated in the Decision at [41] and [42], the Notice of Appeal made it difficult for [NAME] (and it) to determine the issues arising for determination on the appeal; 2. it made numerous and appropriate concessions by agreeing to vary order 1 of the Tribunal Decision, to also include items 85, 138, 139 and 159; 3. in so far as the appellant succeeded in his appeal, he did so by reason of an error of the Tribunal, not by reason of any deficiency in its defence. Albeit it does not apply to appeals in the Tribunal, the [NAME] exists in implicit acceptance that where a court errs and that requires a re-hearing, it is not in the interests of justice for the respondent to the appeal to bear the costs liability; 4. finally, a substantial issue raised in the appeal was the appellant's attempts in putting forward further evidence so as to overcome evidentiary gaps in respect of defects which he had failed to prove at first instance. He was wholly unsuccessful in those attempts.

The appellant's costs submissions in reply 1. In the appellant's costs submissions in reply, the appellant relevantly makes the following submissions: 1. the respondent's submission is fundamentally flawed because it conflates the "event" of the outcome of the appeal with the separate "event" of the ultimate decision of the Tribunal following remittal of the matter to it. The relevant "event" for the purposes of the costs order sought by him is the event of its success in the appeal. That is the only "event" which [NAME] can and should have regard to; 2. he has succeeded in his appeal by securing orders setting aside the Tribunal Decision, except for the small number of items referred to in the respondent's costs submissions. The paucity of reasons provided by the Tribunal made it difficult if not impossible to understand the reasoning process behind the Tribunal Decision. The outcome of reconsideration by the Tribunal cannot be foreseen. The Tribunal may in respect of some or all of the alleged defects reconsider the issues in his favour. The Tribunal may provide more detailed reasons reaffirming the Tribunal Decision. Those reasons may or may not identify errors in the Tribunal Decision. There may be further appeals either by him or the respondent; 3. it would be most unusual for an appellate court or tribunal to tie a [NAME]'s entitlement to costs of the appeal to the ultimate outcome of the cause upon re-trial; 4. there is no valid basis for the alternative exercise of the cost discretion sought by the respondent, namely, that each party pay their own costs of the appeal. The respondent has not established any cogent grounds for departing from his prima facie entitlement to costs. By reference to the points raised by the respondent: [redacted] 1. the concessions made by the respondent were in respect of obvious errors by the Tribunal which could not be resisted. Those concessions, however, were not made until after the appeal was brought and the hearing commenced; 2. the existence of the [NAME] entitlement does not mean that an appellant should not have the costs of a [NAME] appeal where the court at first instance has erred. Moreover, the submission overlooks the basic fact that every [NAME] appeal requires there to be an error on the part of the court at first instance; 3. the remittal of the matter to the Tribunal for reconsideration without any further evidence does not prevent the Tribunal from taking into account the evidence referred to in his submissions at first instance and the evidence referred to in those submissions. Paragraph [64] of the Decision amply demonstrates that he was justified in his complaint that the Tribunal had failed to consider his evidence concerning the presence of the defects.

The costs of the appeal 1. Having regard to the principles in [NAME] at 271 and Jaycar at [61]-[63], I am satisfied that the respondent should pay the appellant's costs of the appeal for the following reasons: 1. the ordinary rule is that the general costs of the appeal follow the event; 2. the issues on which the appellant failed in the appeal did not significantly increase the costs of the appeal and do not warrant a special costs order; 3. the fact that it was the Tribunal which made the errors of the nature identified in the Decision provides no reason for [NAME] to not make an order in favour of the appellant for the costs involved in remedying those errors; 4. the fact that the [NAME] Act 1951 (NSW) does not apply to proceedings in the Tribunal provides no basis to displace the ordinary rule that the costs of the appeal should follow the event.

Orders 1. I make the following orders: 1. the Notice of Appeal is amended to include a claim that the costs order of the Tribunal at first instance made on 10 March 2022 is set aside; 2. the costs order of the Tribunal at first instance made on 10 March 2022 is set aside and the issue of costs of the hearing at first instance is remitted to the Tribunal for reconsideration; 3. the respondent is to pay the appellant's costs of the appeal 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 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: 26 October 2022