Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Martin & Sidgreaves v Big Country Developments Pty Limited [2023] NSWCATAP 77 Hearing dates: On the papers Date of orders: 17 March 2023 Decision date: 17 March 2023 Jurisdiction: Appeal Panel Before: I R Coleman, SC ADJC Principal Member M Gracie, Senior Member Decision: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act (2013) (NSW), dispense with a hearing of any application for an order for the costs of the appeal and/or an order for the costs of the proceedings before the Tribunal at first instance, and determine any such application(s) "on the papers". 2. Allow the Appellants' costs of the appeal on the ordinary basis, as agreed or assessed. 3. Allow the Appellants' costs of the proceedings before the Tribunal at first instance on the ordinary basis, as agreed or assessed, up until 4 November 2021. 4. Allow the Appellants' costs of the proceedings before the Tribunal at first instance from 5 November 2021 on an indemnity basis as agreed or assessed, save for the Respondent's costs of the Appellant's Settlement Agreement Application. 5. Allow the Respondent's costs of the Appellants' Settlement Agreement Application on the ordinary basis, as agreed or assessed. 6. Note but make no order with respect to costs provided in the Consent Orders made in Local Court Proceedings No 2021/67009 on 4 June 2021. Catchwords: APPEAL- costs of successful appeal and unsuccessful cross appeal – application of NCAT Rules 38 and 38A – usual order as to costs – application for indemnity costs of appeal – application for indemnity costs of proceedings before Tribunal - Calderbank offers – apportionment of costs of appeal where certain grounds were amended or not pursued- whether separate costs order appropriate for unsuccessful and separate application in proceedings while Tribunal's decision was reserved – consideration of consent orders dealing with parties' costs in the Tribunal on transfer of proceedings from the Local Court Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Residential Tenancies Act 2010 (NSW) Retail and other Commercial Leases (COVID-19) Regulation 2020 (NSW), Retail and other Commercial Leases (COVID-19) Regulation (No 2) 2020 (NSW) Retail and other Commercial Leases (COVID-19) Regulation (No 3) 2020 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Bondi Builders Pty Ltd v Dennis [2022] NSWCATAP 317 Brymount Pty Ltd t/as Watson Toyota v Cummins (No 2) [2005] NSWCA 69 Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 Hanave Pty Ltd v Wine Nomad Pty Ltd: Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30 Macourt v Clark (No 2) [2012] NSWCA 411 McKeith v Royal Bank of Scotland Group PLC; Royal Bank of Scotland Group PLC v James (No 2) [2016] NSWCA 260 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Sheridan Martin & Raelene Sidgreaves v Big Country Developments Pty Limited ACN 000 235 923 [2022] NSWCATAP 312 Vella v Mir (No 3) [2020] NSWCATAP 17 Texts Cited: None Category: Costs Parties: Sheridan Martin & Raelene Sidgreaves (Appellants) Big Country Developments Pty Limited ACN 000 235 923 (Respondent) Representation: Counsel: N Simone (Respondent) Solicitors: Gibson Howlin Lawyers (Appellants) Darian Iacono & Legal (Respondent File Number(s): 2022/00146007, 2022/00206976 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Commercial and Consumer Division Citation: N/A Date of Decision: 23 December 2021 Before: M Tibbey, Senior Member File Number(s): COM 21/26399 REASONS FOR DECISION Introduction 1. Sheridan Martin and Raelene Sidgreaves (Appellants) appealed against orders made in the Commercial and Consumer Division of the Tribunal (Tribunal) on 22 April 2022 in proceedings between the Appellants and Big Country Developments Pty Limited (Respondent). 2. The Respondent filed a Cross Appeal against the orders of the Tribunal. For convenience we refer to the Respondent/Cross-Appellant as the Respondent throughout these reasons. 3. In our Principal Decision in Sheridan Martin & Raelene Sidgreaves v Big Country Developments Pty Limited ACN 000 235 923 [2022] NSWCATAP 312 delivered on 29 September 2022, we allowed the appeal and dismissed the cross appeal. This is our decision on costs in relation to the costs of the hearing before the Tribunal and the costs of the appeal. Background to the Appeal 1. The Appellants rented premises owned by the Respondent at Lane Cove (Premises), initially pursuant to a Lease on or about 1 December 2014 that was then renewed for periods until 30 November 2019, when the Appellants held over on a month-to-month basis. 2. The Appellants fell into arrears of rent. An extension of time was offered by the Respondent. Payments between May and October 2020 totalling $5,338.07 were received by the Respondent. On 28 August 2020, the Appellants provided a letter that asserted that "their business was Covid impacted". 3. The Appellants claim to have been "Covid impacted" brought into consideration the operation of three Regulations, being the Retail and other Commercial Leases (COVID-19) Regulation 2020 (NSW), the Retail and other Commercial Leases (COVID-19) Regulation (No 2) 2020 (NSW), and the Retail and other Commercial Leases (COVID-19) Regulation (No 3) 2020 (NSW) (Regulations 1, 2 and 3 respectively and collectively, the Covid Regulations). 4. The dispute concerned whether the Appellants were entitled to the protections that may be afforded a Covid impacted tenant by the operation of one or more of those Covid Regulations. 5. The Appellants ceased to occupy the Premises on 30 October 2020. 6. On 9 March 2021, the Respondent commenced proceedings in the Local Court for arrears of rent in the sum of $34,730.85, the filing fee of $507, its costs of $654.40 and interest. Those proceedings were transferred to the Tribunal on 4 June 2021. Tribunal's Findings 1. The Tribunal found that by providing the statement on 28 August 2020, the Appellants "complied with the terms of Regulation 1, and therefore their lease became "Covid impacted" within the terms of Regulation 1, and also for the purposes of Regulations 2 and 3. 2. However, the Tribunal found that the Appellants were not entitled to any rent reduction due to Covid for the period May to August 2020, "consistent with clause 7(3B) of Regulation 1" because of the consequences of the failure of a lessee to provide information pursuant to Regulation 7(3A) of Regulation 1. That finding was made by reference to the date when notice of being Covid impacted was given to the Respondent, not the time from when the Appellants were in fact Covid impacted. 3. The Tribunal also rejected the Respondent's contention (the subject of its Cross Appeal) that none of the three Covid Regulations applied because the Appellant's were "holding over" and therefore "nothing occurred that was "under the lease"". The Tribunal found that the Appellants had "remained in occupation pursuant to the continuing terms of the Lease and that those terms remained operative even though the Lease was in a holding over period". Outcome of the Appeal 1. It was common ground at the hearing of the appeal that, if: 1. the Appellants' appeal succeeds, and the Respondent's cross appeal fails, the Appeal Panel would make an order pursuant to s 81(1)(d) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) setting aside the order of the Tribunal that the Appellants pay to the Respondent the sum of $23,780.83 and make an order that any monies paid by the Appellants to the Respondent be repaid to them; 2. the Appellants' appeal fails, and the cross appeal succeeds, pursuant to s 81(1)(d) of the NCAT Act, the order of the Tribunal will be to set aside, and in lieu thereof, make an order made that the Appellants pay to the Respondent the sum of $34,730.85; and 3. the appeal and the cross appeal fail, the Appellants will be liable to pay the Respondent the balance of the sum of $23,780.83 ordered by the Tribunal. 1. This decision on costs presumes a familiarity with our Principal Decision. In summary, we found at [131] of our Principal Decision that: … the Tribunal erred in holding that the Appellants were only entitled to the benefit of Regulation 1 from 28 August 2020. Unless, as the Respondent contends by its cross-appeal, the Respondent was able to enliven clause 7 of, by that time, Regulation 3, the Appellants are entitled to succeed with their appeal. In our view, once the Appellants were impacted lessees, as clearly they were, and consistent with the decision in Darzi [Darzi Group Pty Limited v Nolde Pty Limited [2021] NSWSC 774 per Robb J] subject to clause 7 of Regulation 1, and the savings provisions of subsequent Regulations, the Respondent was prevented for all time from seeking to recover any arrears of rent for the whole of the period 24 April 2020 to 30 October 2020. 1. We dismissed the Respondent's Cross Appeal: see [146] of our Principal Decision. 2. In our Principal Decision, and subject to the outcome of the appeal, we also expressed our provisional view about the costs of the hearing before the Tribunal below, as follows at [148] to [155]: 148. The Appellants submitted (paras 139-141, 28 June 2022) that, if the appeal is allowed, the basis upon which the Respondent was held to be entitled to a partial costs order would dissolve and, rather than having been partially successful, the Respondent will have been wholly unsuccessful. 149. The Respondent submitted (41) that its costs should continue to be payable because "the parties have contractually agreed on a position in respect of costs in the event of a dispute", the basis of that submission being the lease between the parties (Exhibit PH-1, p43, clause 5.1.8) by which the Appellants were submitted to have agreed that they would pay the Respondent's "reasonable legal costs relating to the default" of monies under the lease. It was further submitted (42) that the "Appellants should be held to the contractually agreed position on costs". 150. The reasons of the Tribunal with respect to costs referred to the Respondent's reliance upon the provision of the lease upon which the Respondent continues to rely. The Tribunal rejected the Respondent's reliance upon a "Calderbank offer" (Calderbank v Calderbank [1975] 3 All ER 333). The Appeal Panel does not understand that the Calderbank offer should assume significance for present purposes. 151. The Tribunal reiterated [18] that "It was a term of the Lease that, should there be a need to enforce payment of rent, that the reasonable legal costs of the Applicant would be met by the Respondents. This is a factor that the Tribunal takes into account in the exercise of its discretion as to costs". On a balanced reading of the Tribunal's reasons, the partial costs order in favour of the Respondent was made in reliance upon that fact or circumstance. The lease which contained that provision was entered into well before the Covid-19 pandemic, and the introduction of the Covid-19 Regulations. Moreover, it was the Respondent's considerable measure of success in the proceedings before it which led the Tribunal to find that the Appellants should pay the Respondent's "reasonable legal costs" and thus make the costs order. 152. The costs of the proceedings before the Tribunal being governed by Regulation 38, as the parties agree that they were, the Respondent's success in the Tribunal, in the absence of disentitling conduct, and none has been suggested, would have been sufficient basis for the costs order which the Tribunal made, even though, mathematically, it reflected the success of the Respondent to a marginally greater extent than the Respondent actually achieved. 153. Given that, as the appeal will be allowed, and the Appellants will be relieved of the obligation to pay the $20,938.21, less the sum of $507 which is not disputed, as ordered by the Tribunal, the basis of the order for costs at first instance dissolves. 154. To allow the costs awarded at first instance to stand in circumstances where the basis of the costs order has dissolved does not sit well with the Appeal Panel. That is particularly so in circumstances where the orders which the Appeal Panel will make, mean that the Appellants have been overwhelmingly successful at first instance, and pursuant to Rule 38A, prima facie entitled to the costs of those proceedings. 155. … We do not understand either to vigorously dispute that the fate of the Tribunal's costs order is not determined by the outcome of the appeal and cross-appeal 1. It was agreed at the hearing of the appeal that pursuant to s 50(2) of the NCAT Act, the costs of the appeal and cross-appeal could be determined "on the papers" and without an oral hearing. A timetable for written submissions on costs was ordered. Both parties lodged written submissions. The Appellants submissions were lodged on 19 October 2022 and the Respondent's submissions were lodged on 25 October 2022. 2. Both parties' submissions raised a range of competing positions in relation to the costs of the proceedings before the Tribunal and on appeal, claims for indemnity costs, the apportionment of costs of the appeal, severable costs orders in the proceedings below and costs of the Local Court proceedings. We have considered both parties' submissions and for the reasons that follow, we have decided to: 1. Allow the Appellant's costs of the appeal on the ordinary basis as agreed or assessed; 2. Allow the Appellant's costs of the proceedings before the Tribunal on the ordinary basis as agreed or assessed up until 4 November 2021 and from 5 November 2021 on an indemnity basis as agreed or assessed. 3. Note that consent orders made in the Local Court in proceedings 2021/67009 on 4 June 2021 to the effect that the costs of those Local Court proceedings (save for the costs of the Appellant's Notice Motion filed on 13 March 2021), "were to be the parties' costs in NCAT". Beyond noting the effect of that consent order between the parties, this Tribunal cannot make further orders in relation to that Local Court order. 4. Allow the Respondent's application for its costs of opposing the Appellant's application to enforce a purported settlement of the proceedings, which was dismissed by the Tribunal as a separate (presumably interlocutory or ancillary) matter and that was determined by the Tribunal subsequent to the hearing in the substantive proceedings. The Respondent has referred to this as the "Settlement Agreement Application" and we have used that same description in these reasons. Appellant's Submissions 1. The Appellants submitted that the Respondent should pay their costs of the appeal and the cross appeal. The Appellants sought their costs to be agreed or assessed on the ordinary basis from 9 March 2021 to 4 November 2021 (including their costs in the Local Court - except with respect to the Appellant's Notice of Motion - on the ordinary basis). From 5 November 2021 (the date of their Calderbank letter), costs were sought on an indemnity basis, as agreed or assessed. Respondent's submissions 1. The Respondent accepted that it should pay the Appellants' costs of the appeal and cross appeal on the ordinary basis as agreed or assessed except that in relation to the appeal, the Respondent sought its costs "thrown away as result of the amended or abandoned grounds of appeal". 2. The Respondent also sought an order to set aside Order 2 made by the Tribunal on 22 April 2022, to substitute it with the following costs order: The Appellants pay the costs of the Respondent as regards the Settlement Agreement Application on the ordinary basis as agreed or assessed; The Respondent is otherwise to pay the Appellant's costs on the ordinary basis as agreed or assessed General Principles Pertaining to Costs 1. Rules 38 and 38A of the Civil & Administrative Tribunal Rules 2014 (Rules) make provision with respect to costs incurred in proceedings in the Consumer and Commercial Division of the Tribunal. Rules 38 and 38A are as follows: 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. 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. 1. Clearly r 38(2)(b) applies where "the amount claimed or in dispute in the proceedings is more than $30,000": that is the agreed position in this case (also see Hanave Pty Ltd v Wine Nomad Pty Ltd: Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 at [41]). 2. In Bondi Builders Pty Ltd v Dennis [2022] NSWCATAP 317, referred to by the Appellants, the Appeal Panel stated at [28]–[ 29]: 28 … when rule 38 applies there is a general discretion to award costs and it is well established, by decisions such as News v Cotes [2019] NSWCATAP 186, Bonita v Shen [2016] NSWCATAP 159 and Thompson v Chapman [2016] NSWCATAP 6 that: (1) the starting point is that the usual order for costs should be in favour of the successful party, (2) the award is not to punish the unsuccessful party but to compensate the successful party for the costs incurred in the proceedings, and (3) departure from the usual order is permissible if the circumstances favour that outcome. 29. Simply stated, come out when rule 38 applies it is not necessary to establish special circumstances and the order usually made is that costs follow the event (ie follow the outcome of the case) unless there is disentitling behaviour by the successful party... Consideration The costs of the appeal 1. We have referred above to the principles that apply to a decision concerning the costs of an appeal from a decision of the Consumer and Commercial Division. Consistent with those principles, the Respondent has accepted that the amount in dispute and the outcome of the appeal enlivens the principles of r 38 and r 38A. 2. A costs order is primarily to compensate a successful party and not punish an unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 per McHugh J at [67]. 3. The parties agree that as the successful party on the appeal, the Appellants are entitled to their costs of the appeal and the cross appeal. Therefore, there are two issues for us to determine in relation to the costs of the appeal, namely whether the Appellants' costs should be ordered on the ordinary or an indemnity basis and whether there should some apportionment of the appellants costs to reflect grounds it amended or did not pursue in the appeal. Indemnity Costs 1. As to the first, the Appellants submit that they are entitled to their costs of the appeal on an indemnity basis for two reasons: 1. First, the appellant served a Calderbank letter on the Respondent on 5 November 2021, offering to settle the proceedings by a payment to the Respondent of $21,000; 2. Secondly, the Respondent rejected a payment made by the Appellants by cheque in the sum of $26,000 in purported acceptance of the Respondent's offer made on 8 November 2021 to settle the proceedings The Appellant contends that the letter was dated 8 November 2021 (submissions paragraph 18) but the Respondent contends that it was dated 9 November 2021 (submissions paragraph 6). For present purposes, nothing turns on which date is correct. 1. The making of an offer of settlement in proceedings at first instance, even where it is not renewed on an appeal, is a relevant circumstance, just like any other, to be taken account in the exercise of our discretion in awarding costs for an appeal. However, as the Respondent submitted, in some cases if the original offer predates the appeal by some considerable time and it was not revived or renewed, this fact may be of significant relevance: see Brymount Pty Ltd t/as Watson Toyota v Cummins (No 2) [2005] NSWCA 69 at [27]-[30]; McKeith v Royal Bank of Scotland Group PLC; Royal Bank of Scotland Group PLC v James (No 2) [2016] NSWCA 260 at [32]. 2. As we have set out above, the appeal was conducted on the basis of three possible outcomes. The second of the three possible scenarios was an outcome in favour of the Respondent, by which it would be entitled to a sum of $34,076.35 representing unpaid rent. It was wholly unsuccessful. 3. That of itself is not sufficient to entitle a successful party to indemnity costs. The Respondent's submissions referred to Vella v Mir (No 3) [2020] NSWCATAP 17, where the Appeal Panel relevantly stated at [34]-[38]: 34. It is open to the Tribunal to consider the effect of a Calderbank letter in accordance with common law principles in determining the exercise of its discretion. 35. In Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 Basten JA identified two questions which are relevant to a Calderbank offer. They are whether there was a genuine offer of compromise and whether it was unreasonable of the offeree not to accept it. 36. The determination of whether or not the rejection of an offer was reasonable is an evaluative judgment requiring a consideration of the facts and circumstances specific to the case: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [19]. Further, reasonableness is not to be determined with hindsight. Rather, the strength or otherwise of the applicants' claim should be considered as at the time of the offer: Gretton v Commonwealth of Australia [2007] NSWSC 149. 37. The mere fact that a genuine offer of compromise made in a Calderbank letter is not accepted does not automatically mean that the offeror is entitled to an order for costs on an indemnity basis. As stated by Giles J in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]: …. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure: see for example, John S Hayes & Associates Pty Ltd v Kimberley-Clarke Australia Pty Ltd (1994) 52 FLR 201; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FLR 235. 38. The onus of establishing that a different costs order should be made falls on the offeror. 1. In our view, the issues in relation to the rejection of the Calderbank offer just prior to the hearing of the proceedings below, and which was not renewed for the purposes of the appeal, make any consideration of that offer more pertinent and relevant to our decision on the costs of the proceedings in the Tribunal rather than in this appeal. We are not satisfied that the non-acceptance of a Calderbank letter that was made only a few days before the hearing below and that was not renewed for the purpose of this appeal, demonstrates a sufficient degree of unreasonableness in not accepting the offer at that time and without knowledge of the complexity of the issues on the appeal, to warrant an order for indemnity costs of the appeal. 2. We refuse the Appellants' application for indemnity costs of the appeal. The Appellant's costs of the appeal are payable on the ordinary basis, as agreed or assessed. Apportionment of the appellant's costs 1. The Respondent contends that the Appellants either amended or abandoned various issues on the appeal. The Respondent seeks its costs "thrown away" in respect of those "non-ventilated issues" (which it does not expand upon other than by a page and paragraph reference to the Appellant's written submissions dated 22 June 2022). There is no breakdown of time wasted or an indication of how these "non-ventilated" matters were clearly separable from the main issues in the appeal. 2. The principles in relation to the apportionment of a successful party's costs do not warrant the order for the Appellants' costs of the appeal to be dissected in the way suggested by the Respondent. Generally, a successful party's entitlement to the whole of the costs of the proceedings should not be discounted to allow for another party's success in a separate issue that played a very minor part in the proceedings as a whole: Macourt v Clark (No 2) [2012] NSWCA 411 at [7]. In Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30 at [14], the Court of Appeal held that the severability of one issue on which the successful party failed is not, without more, sufficient to warrant departure from the general approach. The exercise of discretion will often depend upon matters of impression and evaluation: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [11]. 3. We refuse the Respondent's claim to have the Appellant's costs apportioned. The Respondent did not provide any detailed submissions or relevant evidence for us to be able to make an informed decision of the basis upon which these "non-ventilated issues" would warrant the making of apportionable costs orders and in what percentages these issues represent by reference to the overall time spent and costs of the appeal compared to matters on which the Appellants were successful. Proceedings at first instance 1. As we have stated above, the agreed starting point is that the Appellant's are entitled to their costs of the proceedings at first instance on the ordinary basis, as agreed or assessed. However, both parties have sought a variation to that usual order for costs. 2. The Appellants seek their costs on an indemnity basis from the date of their Calderbank offer made on 5 November 2021. 3. The Respondent submitted that the Appellants are entitled to the benefit of the usual rule that costs follow the event (on the ordinary basis) save for the issue of the "Settlement Agreement Application". Indemnity Costs 1. The Appellants served the Respondent with a Calderbank letter dated 5 November 2021 offering to settle the proceedings upon a payment of $21,000, inclusive of costs and interest. The offer was rejected by the Respondent in a letter in November 2021 containing a counter-offer to accept $26,000 in full and final settlement of the proceedings. 2. The proceedings were heard by the Tribunal at 2:00 pm on 10 November 2021. Neither offer was therefore made at a time that was well in advance of the hearing to obviate the need for the preparation and exchange of evidence. Both parties were legally represented when the offers were made. The offers were made in reliance upon Calderbank principles to invoke the protections and advantages that may be provided by a refusal to accept a genuine offer to compromise in the event that the party refusing the compromise did not obtain a better outcome than the Calderbank offer. As is often the case, challenges by the losing party by reference to the timing, validity or the reasonableness of the terms of the Calderbank offer were not made when the offer was received (which might carry more weight and relevance) but only when a party seeks to rely upon it in an application for its indemnity costs. There was nothing particularly unreasonable about the terms or contents of either Calderbank letter to prevent acceptance. 3. The reasonableness of the amount offered by the Appellants (confirmed also by the terms of the counter-offer from the Respondent) can be objectively ascertained. If the Respondent had accepted the Appellants' offer, it would have obtained an outcome far better than it achieved. Both parties and the Tribunal could have avoided the allocation of a hearing. The parties would not have incurred further legal costs. 4. The Respondent provided several reasons in its submissions to challenge the Appellants' submission that their offer was unreasonably rejected, none of which (in so far as they could have then been raised) were included in the respondent's rejection of the offer in its letter of November 2021. Those matters included: 1. The Calderbank letter did not set out the case which was eventually run by the Appellants before the Tribunal; 2. The hearing was concerned with a complex interplay of the Covid Regulations but the Calderbank letter only referred only to Regulation 1; 3. There was a "reasonably good case to run to hearing on substantive issues which are of some complexity"; 4. The Appellants' offer was inclusive of both costs and interest such that the offer did not take into account or only "minimally" went towards the rent claim after costs and interest were taken into account. 1. There is some force in the last of those contentions although there is nothing in the rejection of the offer in the Respondent's letter that substantiates that matter as a reason for rejecting the offer. As stated above, no reasons were given for the Respondent's rejection of the offer. The reasonableness of an offer being rejected has to be ascertained in the context of the circumstances then known by both parties. At the time the Appellants' offer was made, the hearing was four business days away. It must be expected that a very large percentage of the parties' costs had by that time been incurred. Ordinarily that may be a factor in disentitling a party to its indemnity costs where that offer is inclusive of costs and interest. As submitted by the Respondent, the offer only represented a relatively small amount of its claim of $35,000 for rent and it presumably included a large component referrable to the Appellants' legal costs. 2. That is a counterfactual proposition. The Respondent's claim was for approximately $35,000 but no rent was found to be in arrears and no unpaid amounts were recoverable. In that case, the offer to settle in the context of the issues in dispute by both parties, not just from the Respondent's perspective, was $21,000 more than the Respondent was found to be entitled. The fact that the offer included costs and interest is less relevant than might be the case if the Calderbank offer was only marginally bettered, which was not the case. 3. We therefore find that the Respondent unreasonably rejected the Appellants' Calderbank offer. Accordingly, we allow the Appellants' costs at first instance payable on the ordinary basis, as agreed or assessed, and on an indemnity basis from 5 November 2021, save for the costs of the Settlement Agreement Application in respect of which the Respondent seeks it costs, which we will now consider. Settlement Agreement Application 1. The Respondent seeks a "carve out" from any award of costs made in favour of the Appellants in respect of the proceedings before the Tribunal at first instance. 2. The Respondent seeks its costs in relation to the Appellants "wholly unsuccessful Settlement Agreement Application". 3. As we understand the Settlement Agreement Application, the Appellants sought to have the proceedings dismissed or stayed because of a payment of $26,000 made by the Appellants by a cheque made in favour of the Respondent on 12 November 2021 (which was rejected and not deposited by the Respondent). That payment was in purported acceptance of the Respondent's Calderbank offer dated 8 November 2021. 4. The Respondent's settlement offer was purportedly accepted after the hearing before the Tribunal on 10 November 2021 and when the Tribunal's decision had been reserved. In that case, the purported acceptance of the Respondent's offer had nothing to do with the Appellants' desire to avoid incurring further costs in the proceedings before the Tribunal. Rather, it increased the parties costs after the hearing because the Appellants then brought their unsuccessful Settlement Agreement Application. 5. We are unaware if the Appellants made an open offer at the hearing to pay $26,000 to the Respondent but presumably, they did not and the Appellants had possibly formed the view after the hearing that the outcome of the proceedings would not be in their favour. We express no concluded view about that but the conduct of the Appellants in this instance in seeking to enforce the Respondent's acceptance of their payment of $26,000 after the hearing, and then making the Settlement Agreement Application, seems inexplicable. 6. The parties exchanged written submissions on this issue and the Appellants' application was determined (presumably on the papers) and dismissed. The Respondent now seeks its costs of the Appellants' unsuccessful Settlement Agreement Application and to have those costs excised from the order for costs made in favour of the Appellants. 7. We accede to the Respondent's application, particularly because we have allowed the Appellants' costs at first instance from 5 November 2021 on an indemnity basis. We see no reason to have our order for costs made in favour of the Appellants' to include their unsuccessful Settlement Agreement Application. 8. This is not a matter where there was a separable issue in the proceedings and dealt with in the hearing at first instance. This was an entirely separate application after the conclusion of the hearing and it was both unrelated and irrelevant to the Tribunal's determination of the substantive issues in the proceedings. 9. In such circumstances, costs should follow the event in the same circumstances and practice (by analogy) provided in the Uniform Civil Procedure Rules 2005 (UCPR) and applied by all NSW Courts in respect of a Notice of Motion. 10. We allow the Respondent its costs of the Appellants' unsuccessful Settlement Agreement Application. We will therefore "carve out" from our costs order in favour of the Appellants in respect of the proceedings at first instance, the Respondent's costs of the Settlement Agreement Application. 11. The Appellant's are to pay the Respondent's costs of the Settlement Agreement Application on the ordinary basis, as agreed or assessed. Costs Order in the Local Court 1. The Appellants also sought orders in respect of consent orders made in the Local Court in which, as we have set out above, the costs of those Local Court proceedings "were to be the parties' costs in NCAT" (save for the costs of the Appellant's Notice Motion filed on 13 March 2021). 2. The orders made in the Local Court are not a matter with which the Tribunal generally, or this Appeal Panel, is seized with jurisdiction. The implementation of orders with respect to costs in the Local Court, even if expressed to be referrable to the parties' costs in this Tribunal, is a matter between the parties (noting they are consent orders) or for the Local Court in the event of any dispute about the operation of those orders. Orders 1. We make the following orders: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act (2013) (NSW), dispense with a hearing of any application for an order for the costs of the appeal and/or an order for the costs of the proceedings before the Tribunal at first instance, and determine any such application(s) "on the papers". 2. Allow the Appellants' costs of the appeal on the ordinary basis, as agreed or assessed. 3. Allow the Appellants' costs of the proceedings before the Tribunal at first instance on the ordinary basis, as agreed or assessed, up until 4 November 2021. 4. Allow the Appellants' costs of the proceedings before the Tribunal at first instance from 5 November 2021 on an indemnity basis as agreed or assessed, save for the Respondent's costs of the Appellant's Settlement Agreement Application. 5. Allow the Respondent's costs of the Appellants' Settlement Agreement Application on the ordinary basis, as agreed or assessed. 6. Note but make no order with respect to costs provided in the Consent Orders made in Local Court Proceedings No 2021/67009 on 4 June 2021. ******************** 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 27 April 2023 - Coversheet - Second Case Number added. 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: 27 April 2023