Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Cornucopia (Young) Pty Ltd v Ward t/as Newcastle Model Autosports and Hobbies [2024] NSWCATAP 59 Hearing dates: On the papers Date of orders: 09 April 2024 Decision date: 09 April 2024 Jurisdiction: Appeal Panel Before: G Sarginson, Senior Member Decision: (1) An oral hearing is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). (2) Cornucopia (Young) Pty Ltd is to pay Ian Ward and Denise Ward t/as Newcastle Model Autosports and Hobbies legal costs of the appeal proceedings in the amount of $880 immediately. Catchwords: COSTS — proceedings to which rr 38 and 38A of the Civil and Administrative Tribunal Act 2013 apply — retail lease appeal — withdrawal of proceedings in close proximity to hearing date — self-represented respondents who obtained legal advice — whether lump sum costs order should be made Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil Procedure Act 2005 (NSW) Legal Profession Uniform Law (NSW) Retail Leases Act 1994 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Arambewela v Castle Projects Pty Ltd [2018] NSWCATAP 14 Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 Cachia v Haines (1994) 179 CLR 403; [1994] HCA 14 Durran t/as Canberra Sheds and Outdoor Storage v Bliss [2018] NSWCATAP 43 Huang v Drumm (No 2) [2018] NSWSC 1853 Hunter Development Corporation v Save Our Rail NSW Incorporated (No 2) [2016] NSWCA 375 In the matter of BBARC Pty Ltd [2023] NSWSC 697 Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116 Khanna v Bond Realty Pty Ltd [2019] NSWCA 128 Kiama Council v Grant [2006] NSWLEC 96 Moseley v AB (No 2) [2017] NSWSC 1812 Profitability Consulting Pty Ltd v Thorpe [2018] NSWCATAP 41 Promina Design & Construction Pty Ltd v The Owners-Strata Plan No 97449 (No 4) [2023] NSWCATAP 338 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 Riman v Smith [2023] NSWCATAP 205 Sethi v The Owners-Strata Plan 93392 (No 8) [2024] NSWSC 213 Shoal Bay Developments Pty Ltd v Community Association DP 270468 [2020] NSWCATAP 115 Stankovic v State of NSW (No 2) [2016] NSWSC 335 The Owners-Strata Plan No 21563 v Rutherford [2023] NSWCATAP 326 The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 ZXJ v ZXK (No 2) [2023] NSWCATAP 76 Texts Cited: None cited Category: Costs Parties: Cornucopia (Young) Pty Ltd (Appellant) Ian Ward and Denise Ward t/as Newcastle Model Autosports and Hobbies (Respondents) Representation: Solicitors: Stevens Vuraran Lawyers (Appellant) Respondent (self-represented) File Number(s): 2023/00317231 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not Applicable Date of Decision: 08 September 2023 Before: G Ellis SC, Senior Member File Number(s): COM 22/55616 REASONS FOR DECISION 1. This is a costs application by the respondents to the appeal in circumstances where the legally represented appellant withdrew the appeal 4 calendar days (2 business days) prior to the hearing. The respondents seek an order that the appellant pay their legal costs in the lump sum amount of $1,100. 2. The legal costs sought by the respondents is in respect of legal advice they obtained during the course of the appeal. No legal representative sought to appear for the respondents in the appeal proceedings. Background 1. There had been a retail lease between the parties. The appellant was the lessor and the respondents were the lessee. The lease ended in February 2022 by way of the landlord taking possession. 2. The lessor commenced proceedings in the Tribunal against the lessee seeking damages of $109,435.42 in respect of rent and outgoing arrears; interest; make-good expenses; and legal costs under the terms of the lease. 3. Both parties were legally represented in the Tribunal proceedings. 4. The matter proceeded to hearing in the Tribunal before Ellis SC, Senior Member. 5. At the hearing, the amount of damages sought by the appellant was recalculated to be the amount of $125,084.26. Additionally, the appellant sought an order for costs of the proceedings ( [27] of the Tribunal decision). 6. On 8 September 2023, the Tribunal ordered the respondents pay the appellant damages of $72,797.15. The Tribunal published a written decision, comprising of 36 pages. 7. The appellant filed an appeal to the Appeal Panel of the Tribunal pursuant to s 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) on 6 October 2023. 8. The grounds of appeal were that the Tribunal did not afford the appellant procedural fairness by rejecting the appellant's evidence of rent arrears and substituting its own findings in circumstances where (a) the Tribunal did not raise this at the hearing; and (b) the respondents only challenged the veracity of the appellant's calculations during written submissions in reply. 9. The orders sought in the appeal were that the respondents pay the appellant: "…the amount claimed by the appellant below (subject to the deduction from make good costs arising from the decision of the Tribunal below at [95]-[97] which is not challenged on appeal). As the number will depend on the interest payable, the precise order sought will be provided on the hearing of the Appeal." 1. The appellant also sought the respondents pay its costs of the appeal. 2. On 25 October 2023, the matter was listed for a call-over in the Appeal Panel. The appellant's Solicitor appeared at the call over. The respondents appeared self-represented by Mr Ward appearing. 3. The matter was set down for hearing on 23 January 2024. Procedural directions were made regarding the parties filing and serving submissions and documents relied upon in the appeal. The respondents was also directed to file a Reply to the appeal by 1 November 2023. 4. Direction 2 of the Appeal Panel stated that the appellant was to file with the Appeal Panel and serve on the respondents all submissions and documents (including any transcript or sound recording of the hearing relied upon) by 30 November 2023. 5. On 2 November 2023, the Appeal Panel extended the timetable obligation to file and serve a Reply to appeal to 22 November 2023. 6. No documents and submissions were filed by the appellant pursuant to the procedural directions of the Appeal Panel. 7. The respondents filed the Reply to appeal on 16 November 2023. 8. On 17 January 2023, Mr Ward wrote to the Appeal Panel Registry seeking to appear at the appeal hearing on 23 January 2023 by audio-visual link. The application was supported by a medical certificate that Mr Ward was unfit to travel. The respondents reside in the Newcastle/Lake Macquarie area and the appeal hearing was listed in Sydney. 9. The Appeal Panel Registry notified the appellant's Solicitor of the application and sought the view of the appellant as to whether or not it consented to the respondents' application to appear by audio-visual link. 10. In response to this correspondence, the appellant's Solicitor emailed the Appeal Panel Registry on 18 January 2023 stating that the appellant was prepared to withdraw the appeal. There was reference to the respondents not being legally represented in the appeal, so there would be "no question of legal costs." 11. On 19 January 2023, the appellant filed a Notice of Withdrawal. 12. The Appeal Panel Registry sought the respondents' views on whether or not they objected to the withdrawal or wished to raise any other issues in respect of the proposed withdrawal. 13. Mr Ward replied to this correspondence by email, asserting that the appellant had not complied with procedural directions regarding the filing and serving of submissions; the appeal was being withdrawn at the "11th hour"; and the respondents had incurred legal costs in obtaining advice. The email attached an invoice from Slack-Smith Legal in respect of legal advice provided to the respondents. 14. The respondents did not oppose the proceedings being withdrawn provided that the appellant pay their legal costs. 15. The appellant's Solicitor replied by email on 19 January 2023 that it did not consent to paying legal costs to the respondents. 16. On 19 January 2024, Suthers Principal Member made orders that the appeal was dismissed as it was withdrawn under s 55(1)(a) of the NCAT Act, and made procedural directions for the parties to make written submissions on the issue of costs. The directions made reference to the parties indicating whether they consented to the issue of costs being determined "on the papers" (i.e. without an oral hearing). 17. Neither party sought an oral hearing to determine the issue of costs. I am satisfied that an oral hearing should be dispensed with under s 50(2) of the NCAT Act. The monetary amount in dispute in the costs application is small; the time and expense to the parties (and the Appeal Panel) in conducting an oral hearing on the issue of costs is not warranted; and written submissions are an adequate opportunity for the parties to convey their legal arguments. Costs Submissions Respondents 1. The respondents' costs submissions in chief were filed on 31 January 2024. According to the submissions, they were prepared "with the assistance" of Mr Slack-Smith, Solicitor, of Slack-Smith Legal. 2. The respondents submit that r 38 (sic) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) applies, because although the appellant did not set out the precise amount sought in the appeal, the difference between what was awarded by the Tribunal, and the amount the appellant asserted in the appeal should have been awarded, was substantially greater than $30,000. 3. The respondents submit that the appellant failed to comply with the Tribunal's procedural directions; failed to withdraw the appeal at an early stage; and only withdrew the appeal in close proximity to the hearing. 4. The respondents submit that the appellant should pay their costs, either on the basis that it was the party who withdrew the appeal under general costs principles; or in the alternative, on the basis that there were "special circumstances" under s 60(2) of the NCAT Act. 5. The respondents also referred to the Consumer and Commercial Division Procedural Guidelines on Costs which identify that a party can seek costs in respect of the fees charged by a lawyer in preparing the case. 6. The respondents attached tax invoices of Slack-Smith Legal dated 9 November 2023 and 30 January 2024 in the total amount of $1,100 (each invoice in the amount of $500 plus GST) with a description of the legal services provided. Appellant 1. The appellant's costs submissions were filed on 16 February 2024. 2. The appellant's submissions in opposing the appeal are summarised as follows: 1. There was no "event" as the appellant withdrew the appeal and it was not determined on the merits. The appellant did not capitulate in the appeal; nor did the appellant act unreasonably (citing Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin 186 CLR 622; [1997] HCA 6 at 626). 2. The appellant attempted to garnishee the amount awarded by the Tribunal from the respondents' bank account. On 21 December 2023 it was informed by the bank that there were no funds available to garnishee. At that point, it became clear the respondents "may very well be unable to pay any further amount was ordered to be paid upon the success of the appeal." 3. The respondents have not paid any monies to the appellant in satisfaction of the Tribunal order. 4. The respondents did not "disclose" that they were obtaining legal advice, and it would be "fundamentally unfair" for a party to obtain legal costs in respect of a lawyer "whose existence that party was never willing to disclose." The respondents submitted that the situation was "analogous to the former position in relation to costs for lawyers uncertified in the jurisdiction in which they were appearing." 5. If costs are awarded to the respondents, that amount should be "set off" against the amount of the Tribunal order of 8 September 2023. The respondents should not have the "benefit' of a discrete costs order in their favour when they had not paid any judgment monies to the appellant. 6. The appeal had merit. The appellant's prospects of success were "strong." The respondents had never filed a cross appeal. CONSIDERATION Withdrawal of Proceedings in Appeals Involving Amounts Claimed or In Dispute Over $30,000-Costs Principles 1. Under s 60(1) of the NCAT Act, parties are to bear their own costs of the proceedings, unless "special circumstances" are established under s 60(2) of the NCAT Act. The matters for consideration as to whether or not "special circumstances" are established are set out in s 60(3) of the NCAT Act. 2. If the provisions of ss 60(1)-(3) of the NCAT Act apply, it must be determined (a) whether there are "special circumstances" and (b) whether those "special circumstances" are sufficient to exercise the discretion to depart from the usual position under s 60(1) that a party bears its own costs, such that a costs order should be made in favour of a party. Applicable principles are discussed in The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [5]-[15]). 3. An exception to ss 60(1) and (2) of the NCAT Act is contained in r 38 and r 38A of the NCAT Rules. Those provisions 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 … (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. The operation of r 38 and r 38A of the NCAT Rules is a two-step process. Firstly, the amount claimed or in dispute in the proceedings under appeal must have exceeded $30,000. Secondly, the amount claimed or in dispute in the appeal itself must have exceeded $30,000. Both steps must be satisfied for the appeal costs determination not to involve consideration of whether "special circumstances" are established under ss 60(2) of the NCAT Act (Promina Design & Construction Pty Ltd v The Owners-Strata Plan No 97449 (No 4) [2023] NSWCATAP 338 at [10]-[18] and the authorities cited therein). 2. In this matter, the amount claimed or in dispute in the proceedings at first instance exceeded $30,000. 3. I am satisfied that the amount claimed or in dispute in the appeal also exceeded $30,000. 4. Although the appellant did not precisely identify in its appeal how much the orders sought in the appeal would affect the original outcome, when comparison is made between the amount of damages the appellant sought in the original proceedings; the evidence it asserts should have been accepted by the Tribunal quantifying the appellant's loss; the amount the Tribunal awarded that is the subject of the appeal; and that the appellant sought in the appeal to be awarded damages consistent with the amount claimed at first instance (subject to additional interests, and legal costs), the difference exceeds $30,000. 5. Further, the submissions of the appellant do not assert that the amount claimed or in dispute in the appeal involved an amount less than $30,000. 6. The two-step criteria under r 38 and r 38A of the NCAT Rules are met. Accordingly, the Appeal Panel does not have to be satisfied that "special circumstances" are established to award costs in favour of the respondents. 7. Costs orders are made to compensate the successful party in litigation for the costs of bringing or defending the proceedings; not to punish the unsuccessful party. The usual principle is that they "follow the event," the "event" being a judicial determination in favour of a party. There are circumstances in which a successful party will not be awarded its costs, such as where there has been disentitling conduct by the successful party; or a proportionate costs order is made; or under Calderbank principles. 8. Costs decisions involve the assessment of discretionary matters, but that discretion needs to be exercised in a judicial (rather than capricious) manner. The overriding principle in any order for costs is that of doing justice between the parties in the particular case (Moseley v AB (No 2) [2017] NSWSC 1812 at [65]-[66)]. 9. However, where proceedings have been withdrawn (in the Tribunal) or discontinued (in a court), there has been no judicial determination on the merits, and subject to the application of any specific Tribunal or court regulation that pertains to costs issues in such circumstances, there is no "event." 10. The principles applicable when considering whether to make a costs order in favour of a party in circumstances where proceedings have not been heard and determined on the merits were set out by McHugh J in Re: Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 (Lai Qin) at 624-625 as follows: In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation... Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. ... But such cases are likely to be rare. If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. (footnotes and citations omitted). 1. In Hunter Development Corporation v Save Our Rail NSW Incorporated (No 2) [2016] NSWCA 375, the NSW Court of Appeal (Beazley P, with Macfarlan JA and Meagher JA agreeing) cited with approval (at [78]) the following passage by Preston CJ in Kiama Council v Grant [2006] NSWLEC 96 at [80]: "The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action." 1. However, it is important to acknowledge that discontinuation of proceedings in a court (to which the provisions of the Civil Procedure Act 2005 (NSW) and Uniform Civil Procedure Rules 2005 (NSW) (UCPR apply) and withdrawal of proceedings in the Tribunal under s 55(1)(a) of the NCAT Act involve different statutory provisions. 2. A party may discontinue proceedings in a court under r 12.1(1) of the UCPR with the consent of each other active party in the proceedings, or with leave of the court. Pursuant to r 42.19(2) of the UCPR, a plaintiff who discontinues proceedings is to pay the costs of the defendants, unless the court otherwise orders. 3. Further, under r 42.20(1) if the court makes an order for the dismissal of proceedings (in whole part) then unless the court otherwise orders the plaintiff must pay the defendant's costs of the proceedings, to the extent they have been dismissed. 4. The Civil and Administrative Tribunal Rules 2014 (NSW) contain no provisions similar to rr 42.19 and 42.20 of the UCPR. Accordingly, the discretionary matters for consideration in a costs application when proceedings are withdrawn and dismissed under s 55(1)(a) of the NCAT Act are not necessarily identical to the matters for consideration when proceedings have been discontinued under r 12(1) of the UCPR, although the principles provide some guidance to the exercise of discretion. 5. The principles applicable to the operation of r. 42.19(2) and of the UCPR were summarised by Black J In the matter of BBARC Pty Ltd [2023] NSWSC 697 as follows at [7]-[8]: "I summarised the case law dealing with the application of this rule in Re Cabramatta King Tea Pty Ltd [2022] NSWSC 462 at [7]ff as follows: In Fordyce v Fordham (2006) 67 NSWLR 497; [2006] NSWCA 274 ("Fordyce"), McColl JA (with whom Beazley JA agreed) observed that the "default order" in the similar provision in UCPR r 42.20 does not establish a presumption that costs will be ordered against the plaintiff upon the dismissal of the proceedings, and other relevant considerations included those identified in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624–625; (1997) 143 ALR 1; [1997] HCA 6 ("Lai Qin"). Santow JA there agreed with that observation and also noted that the onus is on a discontinuing party to justify such an order by reference to the normal costs outcome in such an event. An order contrary to the "default" order will involve an exercise of discretion to depart from that position contemplated by the rule, where "some sound positive ground or good reason for departing from the ordinary course" is established: Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [10], [54]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 ("Bitannia") at [54]. The fact that parties were justified or acted reasonably in commencing or defending the proceedings may but will not necessarily support a departure from the "default order" under that rule: Australiawide Airlines at [64]. In Metro Hotel Sydney Pty Ltd v Kol Tov Pty Ltd [2010] NSWSC 1195, where proceedings were compromised by the parties after they became otiose, following the sale of a hotel which brought the management agreement that was in issue to an end, Hamilton AJ noted that the similar provision in UCPR r 42.20 extends, on appellate authority, to dismissals by consent as well as dismissals after a hearing and to that extent intrudes upon the approach laid down in Lai Qin . His Honour there held that there should be no order as to costs as between the parties, where the occurrence of that supervening event had led to a compromise of the proceedings and there had been no unreasonable conduct on the part of the defendants. In McNamara v San [2010] NSWSC 809 at [12], Hallen AsJ (as his Honour then was) summarised the principles applicable to the similar provision in UCPR r 42.20 as follows: "The following principles may be regarded as relevant in determining who is to bear the burden of costs in a case where the proceedings are dismissed before a final hearing: (a) Costs discretions are truly discretionary: see Oshlack v Richmond River Council (1998) 193 CLR 72 at 84 and there are no absolute rules; (b) The purpose of a costs order is to compensate, or indemnify, the person in whose favour it is made, not to punish the person against whom it is made: Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ; (c) Rule 42.20 of the UCPR does not give rise to a presumption that costs will be ordered against the Plaintiff: Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497; Foukkare v Angreb Pty Limited [2006] NSWCA 335 at [65]; Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129; Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [53]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32. However, the rule does create a starting point by requiring "… the plaintiff must pay the defendant's costs of the proceedings …" unless that outcome is displaced by a discretionary decision ("unless the court otherwise orders"); (d) Generally, there must be some proper justification, sound positive ground, or a good reason, for departing from the ordinary position: Fordyce v Fordham at [2] per Santow JA; Australiawide at [54] per Bryson JA; circumstances in which it has been held appropriate to depart from the ordinary position include where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff's control; where the plaintiff achieved practical success in the proceedings, or where costs have been significantly increased by the unreasonable conduct of the defendant. (e) The Plaintiff should be the moving party on an application for an alternative costs order: Bitannia at [70] per Basten JA. If facts are to be relied upon to found the court making a different order, the Plaintiff will bear the onus of proving the relevant facts; (f) Where the proceedings are dismissed prior to any hearing on the merits, "the Court cannot try a hypothetical action between the parties" to determine the question of costs: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201; Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624; Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd [2007] NSWSC 1120 at [35]; (g) It may be necessary to analyse the whole of the proceedings to determine the appropriate costs order: Fordyce at [67] per McColl JA. A relevant consideration is whether the Plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them: Australian Securities Commission v Aust-Home Investments Ltd at 201 (cited with approval in Foukkare); all the relevant circumstances, and not just the fact of dismissal, should be considered; (h) It is also important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs by the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs: One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 at 553; cited with approval in Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 per Davies AJA (with whom Mason P and Meagher JA agreed) at [5]; (i) The distinction between the two categories referred to above is often helpful in exercising the costs discretion, notwithstanding that neither category can be precisely defined, the boundary between them is unclear and other factors may be relevant: Bitannia per Basten JA at [79]–[81]; Perre v State of New South Wales [2009] NSWLEC 51 at [49]; (j) The rule requires the court to make such order as it thinks just in the particular circumstances of the case." That summary was cited with apparent approval by Kunc J in Spatt v Benson [2019] NSWSC 1195 at [64] and I followed it in Parlby v Blair [2013] NSWSC 100 at [11]ff, Re Myao Travel Pty Ltd [2020] NSWSC 1672 at [6]ff, Australian Unity Funds Management Ltd v NorthWest Healthcare Australia RE Ltd [2021] NSWSC 1039 ("Australian Unity") at [9]ff, and in Davis v Certain Lloyds Underwriters [2022] NSWSC 131 at [9] on which I have partly drawn for these observations as to the case law." I also followed that decision in Re Harmony Homes Pty Ltd [2023] NSWSC 300 at [4]ff." 1. Under s 55(1)(a) of the NCAT Act, proceedings are dismissed because the application or appeal has been withdrawn. There are no applicable provisions of the NCAT Act or its Rules that refer to "discontinuation" or the costs consequences that involve "discontinuation." 2. Withdrawal (or, in a court, discontinuation) of proceedings may be construed as a capitulation, depending on the circumstances (Khanna v Bond Realty Pty Ltd [2019] NSWCA 128 at [31]; Shoal Bay Developments Pty Ltd v Community Association DP 270468 [2020] NSWCATAP 115 at [88]). 3. In Arambewela v Castle Projects Pty Ltd [2018] NSWCATAP 14 (Arambewela) the Appeal Panel stated at [19]: Where an application or appeal is discontinued there is of course no "successful party." Nonetheless, I accept that in the ordinary course, absent some compelling reason, the discontinuing party should pay the costs of the discontinued proceedings. 1. Arambewela involved an appeal that was withdrawn, where the amount claimed or in dispute in the appeal exceeded $30,000. 2. Notwithstanding that the withdrawal was a capitulation, the Appeal Panel exercised its discretion not to award costs to the respondent. This was because (a) the respondents had not paid the appellant the judgment amount of $123,235; (b) the appellant had reasonably concluded that there was no prospect of recovering monies from the respondent so the appeal had no utility; and (c) the appeal was withdrawn "at a relatively early stage of the appeal and before the date the parties were required to file submissions" (Arambewela at [20]-[21]). 3. Where there has a been a costs application arising from the late withdrawal of an appeal in circumstances where ss 60(1) and (2) of the NCAT Act apply (i.e. "special circumstances" must be established that are sufficient to award costs in favour of a party), the late withdrawal may, or may not, give rise for a costs order. For example, in Durran t/as Canberra Sheds and Outdoor Storage v Bliss [2018] NSWCATAP 43, late withdrawal by a self-represented appellant did not result in a costs order. 4. In Riman v Smith [2023] NSWCATAP 205, the Appeal Panel dealt with a situation where an appellant filed an appeal well out of time (from original consent orders); did not comply with procedural directions to file and serve submissions and documents in support of the appeal, and only withdrew the appeal after being pressed to do so by the respondent's Solicitor. In those circumstances, the Appeal Panel was satisfied that the appellant had capitulated, and should pay the respondent's costs of the appeal as agreed or assessed. 5. In this matter, the Tribunal is satisfied the appellant capitulated by withdrawing the appeal in such close proximity to the appeal hearing date, in circumstances where it had not complied with procedural directions to file and serve documents and submissions in support of the appeal. It could not succeed in the appeal because it had not filed and served any material to support the appeal; and had waited until just before the hearing to withdraw the appeal. 6. The appellant submits that the appeal did have merit. However, it had not complied with procedural directions for the filing and serving of costs submissions of documents, including any transcript or sound recording of the hearing. A submission made in the context of opposing a costs application that the appeal had merit can be given limited weight in such circumstances. 7. Had the appeal not been withdrawn two business days prior to the hearing, it would have inevitably failed by reason of the absence of any written submissions; or documents in support of the appeal or a sound recording or transcript of the hearing. 8. In substance, the appellant argues that it made a decision not to waste legal costs proceeding with the appeal in circumstances where the respondents had not complied with the Tribunal orders; did not pay any money to the appellant; and the attempt to garnishee the respondents' bank account was unsuccessful. They are the critical "supervening events" that the appellant relies upon to argue it should not have to pay the respondents' costs of the appeal. 9. However, there are a number of matters that militate against that submission. 10. Firstly, parties and legal practitioners have a duty to assist the Tribunal to achieve the just, quick and efficient resolution of the real issues in the dispute under s 36(3) of the NCAT Act. Complying with procedural directions of the Tribunal forms part of that duty, unless there is a good reason why the procedural directions were not complied with. Even if there is a good reason, it is appropriate to seek an extension of a procedural order before the date of compliance, rather than either ignoring the date of compliance or choosing not to comply. 11. Not only did the appellant withdraw the proceedings in very close proximity to the hearing date, it did so approximately 7 weeks after it was due to file and serve its submissions and documents in support of the appeal and it never sought an extension of that procedural obligation. The period between 30 November 2023 and 19 January 2024 is 50 days. Even taking into account the Christmas/new-year period, there was ample opportunity for the appellant to withdraw its appeal at an earlier stage if it did not intend to prosecute the appeal. The appellant knew from the call-over on 25 October 2023 that the appeal was listed for hearing on 23 January 2024. That conduct unnecessarily prolonged the appeal proceedings. 12. Secondly, the appellant submits that its attempt to garnishee the respondents' bank account was unsuccessful in late December 2023. The orders of the Tribunal on 8 September 2023 were that the respondents pay the appellant "immediately". The appellant was able to take measures immediately to register the Tribunal orders as a judgment debt and take enforcement action. The call-over of the appeal was approximately 6 weeks after the decision of the Tribunal. The appellant had ample opportunity to make appropriate enquires and take enforcement action both prior to the call-over, and leading up to the time it was obliged to file and serve its documents and submissions in the appeal. 13. Thirdly, the appellant was legally represented in the appeal. A self-represented appellant may involve different considerations by reason of not immediately understanding what measures can be taken to enforce a judgement, and that may (but not necessarily will) provide a reasonable explanation for the late withdrawal of an appeal in circumstances where the appellant ultimately believes on reasonable grounds the respondents have no assets, and it is pointless to proceed with the appeal. 14. Fourthly, there was no timely correspondence from the appellant to the respondent to put the respondents on notice that it was considering withdrawing the appeal. 15. Further, garnisheeing of a bank account is only one type of enforcement action. 16. The appellant submits that there is a public interest in parties who are ordered to pay money in Tribunal proceedings paying that money, and the respondents have manifestly failed to do so. 17. I have taken into account that the respondents have failed to pay the amount ordered on 8 September 2023. That factual matter (and the view that it was not worthwhile to pursue the appeal due to it being unlikely any monetary orders made from a successful appeal would be complied with) were discretionary matters considered in Arambewela. 18. A critical factual distinction between this matter and Arambewela is that in Arambewela the appeal was withdrawn at a relatively early stage and before the appellant's timetable obligation to file and serve documents and submissions in the appeal. This appeal was only withdrawn at the 'heel of the hunt' and after Mr Ward made contact with the Appeal Panel Registry regarding the application to appear by Audio-Visual Link. 19. Even if the very late withdrawal of proceedings where no submissions and documents have been filed and served in support of the appeal is not conceptualised as a "capitulation," it is unreasonable conduct in the proceedings that is relevant to the exercise of the costs discretion reposed in the Appeal Panel in the circumstances of this matter. Have the Respondents Incurred Legal Costs By Obtaining Legal Advice Even Though No Lawyer Has Appeared For Them In The Appeal Proceedings? 1. Section 60 of the NCAT Act relevantly states: 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. (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. 1. "Costs of, or incidental" to the appeal extends to legal costs incurred in taking preparatory steps that are reasonably connected to the proceedings (The Owners-Strata Plan No 21563 v Rutherford [2023] NSWCATAP 326 at [67]-[69] and the authorities referred to therein). 2. In Profitability Consulting Pty Ltd v Thorpe [2018] NSWCATAP 41 at [8]-[19] the Appeal Panel held the definition of "costs" in s 60 of the NCAT Act was the same as the definition of "legal costs" in the Legal Profession Uniform Law (NSW). The Appeal Panel stated at [16]: The "legal costs legislation" referred to in s 60(4)(b) of the NCAT Act, includes Part 4.3 of the Legal Profession Uniform Law (NSW). Division 7 of Part 4.3 of the Legal Profession Uniform Law (NSW) governs the assessment of legal costs. Section 6 of that Act defines the term "legal costs" to mean: (a) amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services; or (b) without limitation, amounts that a person has been or may be charged, or is or may become liable to pay, as a third party payer in respect of the provision of legal services by a law practice to another person— including disbursements but not including interest. 1. Costs are awarded "by way of…partial indemnity…for professional legal costs actually incurred in the conduct of litigation" (Cachia v Haines (1994) 179 CLR 403; [1994] HCA 14 at [11]; Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 at [22]). 2. The costs of the self-represented respondents obtaining legal advice from a Solicitor during the course of the appeal proceedings are, in the circumstances of this matter, costs of, or incidental to, the appeal proceedings. 3. The appellant submits that the respondents should not be entitled to costs because the respondents did not inform the appellant's Solicitor and the Appeal Panel they had a Solicitor advising or acting in the proceedings. 4. Under cl 7(b) of Sch 4 of the NCAT Act, parties to Retail Leases Act 1994 (NSW) disputes in the Tribunal do not require leave for legal representation in the Tribunal. Section 45(2) of the NCAT Act states that a party to an internal appeal may be represented by a person without requiring leave from the Appeal Panel if the party was entitled to be represented by such a person without the leave of the Tribunal in the proceedings in which the decision under appeal was made . 5. This is not an appeal where the respondent needed to seek leave to be legally represented. A party incurring legal costs in Tribunal proceedings where it required leave to be legally represented, but never made a successful application to be legally represented, involves different discretionary considerations to a retail lease matter where no leave was required. 6. The salient issue is whether the respondents obtaining legal advice to assist the respondents in representing themselves in the appeal proceedings is a legal cost of or incidental to the proceedings. I am satisfied that it is, in the circumstances of this matter. The respondents were not under an obligation to inform the appellant's Solicitor that they were obtaining legal advice. From the invoices provided in the appellant's materials, it can be inferred that the respondents were not seeking that Slack-Smith Legal represent the respondents in the appeal proceedings, but that the Solicitor provide legal advice to assist Mr Ward to represent himself and his wife. 7. Further, the legal costs incurred involve a small amount. This is not a situation where a self-represented party claims to have incurred a very large amount of legal costs in obtaining advice and a Solicitor preparing the matter, but without the Solicitor seeking to be on record as the legal representative of the party in the appeal; or notifying the other party; or obtaining leave to appear in the appeal proceedings (if leave is required under s 45 of the NCAT Act). 8. The submissions of the appellant do not identify any applicable legal principle or statutory obligation on the respondents or Slack-Smith Legal to inform the Tribunal or the appellant's Solicitor that Slack-Smith Legal had provided legal advice and assistance to the respondents. The only analogy referred to is "costs for lawyers uncertified in the jurisdiction they were appearing" prior to the unform legal recognition legislation. That analogy is of no assistance to whether a self-represented litigant obtaining legal advice in an appeal is a legal cost recoverable under s 60 of the NCAT Act. 9. The appellant also refers to being deprived of the opportunity to negotiate the terms of the withdrawal with Slack-Smith Legal had they known that firm was providing advice to the respondents, and that the respondents had created the "reasonable expectation" that they were self-represented in the proceedings. 10. However, there is nothing to indicate that the appellant made any enquiries with the respondents about the "terms" of any withdrawal prior to seeking to withdraw, and in any event the appellant only withdrew the proceedings 2 business days prior to the hearing. Lump Sum Costs Order 1. The Tribunal has the power under s 60(4) of the NCAT Act to make a lump sum costs order (Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116 at [38]-[48]; ZXJ v ZXK (No 2) [2023] NSWCATAP 76 at [11]-[16]). Principles applicable to lump sum costs orders have also recently been summarised by Chen J in Sethi v The Owners-Strata Plan 93392 (No 8) [2024] NSWSC 213 at [18]-[19]. 2. I am satisfied that a lump sum costs order is appropriate. I am satisfied that the respondents' legal costs can be fairly assessed on the basis of the two invoices provided from Slack-Smith Legal. The costs amount sought is small, and the expense and delay of the costs assessment process would be entirely disproportionate to the amount of costs sought to be recovered. 3. When making a lump sum costs order, courts and tribunals often apply a percentage discount to take into account the vicissitudes of the costs assessment process and the distinction between party/party costs and Solicitor/client costs. That percentage reduction often is in the range of 10%-30% (e.g. Stankovic v State of NSW (No 2) [2016] NSWSC 335 at [15]-[17]; Huang v Drumm (No 2) [2018] NSWSC 1853 at [33]-[38]). It is not inevitable that a percentage discount must be applied, particularly if the amount involves a disbursement such as a filing fee or expert report. 4. Considering the details of the work performed set out in the invoices and the small quantum of the claimed costs, I am satisfied a discount of 20% is appropriate. Should Any Costs Order Be Set-Off From the Judgment Debt Arising From the Tribunal Decision of 8 September 2023? 1. The appellant submits that because the respondents have not paid any of the judgement amount involving damages of almost $73,000 any lump sum costs order should be set off against the judgement amount and the respondents should not have the benefit of a separate costs order in their favour. 2. While I acknowledge the force of that submission, there is a practical difficulty in adopting such a course of action. The powers of the Appeal Panel are relevantly set out in ss 56 and 81 of the NCAT Act. For the Appeal Panel to "set off" the costs order, it would have to vary the decision under appeal under s 81(1)(b) of the NCAT Act; and/or impose a condition under s 56 of the NCAT Act. It is not appropriate to do that in circumstances where (a) the appeal has been dismissed because the appellant withdrew the appeal; and (b) there has been a certified money order obtained by the appellant in the amount of $72,797.15, and the appellant has registered that order as a judgement and sought to enforce it. 3. If the Appeal Panel were to "set off" the costs order, it would not only have to vary the order of 8 September 2023 but further measures would have to be taken to eliminate the inconsistency between the judgement debt and the varied order of 8 September 2023. In the alternative, it would have to impose a condition under s 56 of the NCAT Act. 4. The complexity of doing so is not justified, and may potentially cause confusion and further expense to the parties. The more orthodox and appropriate course of action is that there be a costs order in favour of the respondents, that is separate and distinct from the order of the Tribunal in favour of the appellant dated 8 September 2023. Conclusion 1. The Appeal Panel is satisfied that a lump sum costs order should be made in favour of the respondents as a result of the appeal being dismissed under s 55(1)(a) of the NCAT Act. ORDERS 1. An oral hearing is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 2. Cornucopia (Young) Pty Ltd is to pay Ian Ward and Denise Ward t/as Newcastle Model Autosports and Hobbies legal costs of the appeal proceedings in the amount of $880 immediately. ********** 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: 09 April 2024