New South Wales Supreme Court CITATION : BURRINGBAR REAL ESTATE CENTRE PTY LIMITED v ANTHONY JOHN RYDER & ORS [2008] NSWSC 891 HEARING DATE(S) : Monday 14 July 2008 JUDGMENT DATE : 29 August 2008 JURISDICTION : Administrative Law JUDGMENT OF : Hall J at 1 DECISION : Pursuant to s.98 of the Civil Procedure Act, the first to sixth defendants are to pay the plaintiff's costs in this Court on an ordinary basis. An indemnity certificate, as provided for by s.6 of the Act, should issue to the first to sixth defendants. CATCHWORDS : COSTS – whether usual order as to costs – whether costs of the court proceedings be costs in the remitted proceedings in the Tribunal – indemnity certificate under the Suitors' Fund Act sought LEGISLATION CITED : Civil Procedure Act 2005 Suitors Fund Act 1951 Builders Licensing Board v Pride Constructions Pty Limited [1979] 1 NSWLR 607 Burringbar Real Estate Centre Pty Limited v Ryder [2008] NSWSC 779 Ex parte Parsons; Re Suitors' Fund Act (1952) 69 WN (NSW) 380 CASES CITED : Full Brick Homes Pty Limited v Consumer Claims Tribunal (13 February 1997, unreported, BC9704003 at 8) Knudsen v Kara Kar Holdings Pty Ltd (No 2) (2000) 52 NSWLR 254 Krslovic Homes v Timothy Sparkes [2004] NSWSC 37 Oshlack v Richmond River Council (1998) 193 CLR 72 The Owners - Strata Plan No 37762 v Dinh Phuong Dung Pham [2006] NSWSC 1442 PARTIES : BURRINGBAR REAL ESTATE CENTRE PTY LIMITED v ANTHONY JOHN RYDER & ORS FILE NUMBER(S) : SC No 2008/30009 P: R E Dubler SC COUNSEL : 1-6D: R Scruby 7D: Submitting appearance - K Rayner P: O'Reilly & Sochacki SOLICITORS : 1-6D: Stacks 7D: I V Knight IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST HALL J FRIDAY 29 AUGUST 2008 No 2008/30009 BURRINGBAR REAL ESTATE CENTRE PTY LIMITED v ANTHONY JOHN RYDER & ORS JUDGMENT (On application for costs) 1 HIS HONOUR: Judgment was delivered in this matter on 31 July 2008. The only issue that remains for determination concerns the costs of the proceedings. 2 This costs determination concerns the awarding of costs as between the plaintiff and the first to sixth defendants. The seventh defendant, the Tribunal, filed a submitting appearance at the commencement of the substantive hearing and took no other steps in the proceedings before this Court. The seventh defendant is not exposed to an order for costs. Accordingly, references in this judgment to the defendants should be construed as referring to the first to sixth defendants. 3 Before turning to the question of costs, I set out below the background to the substantive proceedings. Background to the Costs Determination 4 Before this Court, the plaintiff applied for prerogative relief in respect of a decision and orders made by the Consumer, Trader and Tenancy Tribunal (the "Tribunal") on 26 October 2007. In short, the plaintiff claimed that the decision made by the Tribunal was vitiated by a breach of the rules of procedural unfairness, and accordingly, sought orders that the order made on 26 October 2007 in each of the proceedings in the Tribunal be quashed and set aside and that those proceedings be remitted to the Tribunal for re-hearing according to law. 5 In the judgment delivered on 31 July 2008, it was determined that the Tribunal had denied the plaintiff procedural fairness and that the plaintiff was entitled to the orders sought. 6 The factual matrix surrounding this denial of procedural fairness was unusual. 7 The plaintiff and defendants were parties to proceedings before the Tribunal (the defendants as applicants before the Tribunal, the plaintiff as the respondent) listed for hearing at the Local Court at Tweed Heads at 2.00 pm on Friday 26 October 2007. The defendants were disputing the plaintiff's claim to agent's commission in the amount of $120,000. 8 The Tribunal hearing commenced at the stipulated time (or shortly thereafter) before a Tribunal member and in the presence of the defendants (then the applicants). The plaintiff (the respondent in the Tribunal proceedings), however, was absent. 9 The director of the plaintiff company and his solicitor were sitting in an interview room outside the hearing room at all times during the Tribunal hearing. They had not realised that the hearing had commenced. 10 The Tribunal member conducted the hearing in the absence of the plaintiff, although, on at least two occasions the presiding member directed a security guard/court officer to exit the hearing room for the purpose of finding the plaintiff's representative. This instruction, I noted, was prompted when certain of the defendants properly informed the Tribunal member that they had seen the director of the plaintiff company waiting in an interview room shortly before the commencement of the hearing. The security guard/court officer said that he searched the foyer and interview area of the court precinct yet returned each time to inform the Tribunal member that he could not locate the representative of the plaintiff. 11 The Tribunal member gave a decision and made orders in favour of the defendants. 12 Against these unusual facts, a finding was made in the present proceedings that the Tribunal had denied the plaintiff procedural fairness. The Tribunal had proceeded to hear the matter ex-parte without adjourning the proceedings to permit inquiry to be made into the whereabouts of the plaintiff's representative. Cost Submissions by the Parties 13 Judgment having been given in favour of the plaintiff and relief granted in its favour, the plaintiff has applied for a cost order in its favour. 14 It was submitted for the plaintiff that in accordance with the ordinary rule, the defendants, as the unsuccessful parties, should pay the plaintiff's costs on an ordinary basis: see Uniform Civil Procedure Rules 2005, Rule 42.1. 15 The defendants, in resisting the making of a costs order, made two alternative submissions. 16 First, Mr Scruby of counsel for the defendants submitted that this Court should order, pursuant to s.98 of the Civil Procedure Act 2005, that the costs of these proceedings be costs in the remitted proceedings in the Tribunal. In other words, the defendants sought an order that the costs of the proceedings be awarded according to the award of costs of the later Tribunal re-hearing: see Knudsen v Kara Kar Holdings Pty Ltd (No 2) (2000) 52 NSWLR 254. 17 Mr Scruby submitted that this was the appropriate order for a number of reasons: the "real issue" between the parties (the plaintiff's alleged entitlement to payment of an agent's commission) was still to be determined by the Tribunal; the question before this Court (concerning breach of procedural fairness in the unusual factual circumstances and where the Tribunal is empowered by regulation to proceed to hear matters ex-parte) was novel; and the conduct of the defendants before the Tribunal was unimpeachable. 18 In the alternative, he submitted that in the event that this Court made cost orders in favour of the plaintiff, the defendants should be granted an indemnity certificate pursuant to s.6 of the Suitors' Fund Act 1951. The certificate would entitle the defendants to an amount equivalent to that of the plaintiff's costs ordered to be paid (and actually paid by the defendants), as well an amount equivalent to half of the costs incurred by the defendants or such other percentage as may be prescribed: see Suitors' Fund Act, s.6(2). 19 For the same reasons as those specified in their first submission, counsel for the defendants submitted that an indemnity certificate was warranted. The general principle concerning costs 20 Section 98 of the Civil Procedure Act confers on the Court a broad discretion to award costs. Section 98 provides that:- "(1) Subject to rules of court and to this or any other Act:- (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis." 21 This statutory discretion is to be exercised in light of Rule 42.1 of the Uniform Civil Procedure Rules. Rule 42.1 provides that:- "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made a to the whole or any part of the costs." 22 This rule gives effect to the well-established general principle that a successful party is ordinarily entitled to a costs order in its favour. As expounded by McHugh J:- "Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation … By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs." : Oshlack v Richmond River Council (1998) 193 CLR 72 at 96. 23 McHugh J continued, explaining the rationale underpinning the usual order as to costs as follows:- "… if the litigation had not been brought, or defended, by the unsuccessful party, the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. ": Oshlack (supra) at 97. 24 Whilst the above principles must be considered in determining any award of costs, plainly, the Court can depart from the usual cost orders in appropriate circumstances. Determination of the Costs Claim 25 Notwithstanding the reasons put forward on behalf of the defendants within their first submission, I do not consider there to be adequate reason to depart from long-standing principle so as to deprive the successful plaintiff of its costs and make the costs of these court proceedings contingent on the outcome of the remitted Tribunal proceedings. 26 Whilst the matter at issue in these proceedings arose out of the conduct of the earlier Tribunal proceedings, the issue (breach of procedural fairness) determined in the present proceedings is discrete and separate from the dispute which will be ventilated in the remitted Tribunal proceedings (the alleged entitlement of the plaintiff to payment of an agent's commission). 27 That the question for determination before this Court was novel (requiring contemplation of the interaction of the statutory scheme against the unusual factual matrix) does not, in my opinion, provide sufficient reason to warrant the order sought by the defendants in their first submission. The "novel" question that was determined in the present proceedings, as I have stated, is separate to the questions which will require determination in the remitted Tribunal proceedings and on that basis it is not appropriate to order that the costs be costs in the remitted proceedings. 28 The defendants opposed the plaintiff's application for prerogative relief, thereby resulting in the plaintiff incurring costs in pursuing the relief granted. It follows that, despite the appropriate conduct of the defendants before the Tribunal, as referred to in paragraph [10], I do not consider that any of the reasons advanced on their behalf, alone or together, provides sufficient grounds for not making the usual order as to costs in favour of the plaintiff. 29 Accordingly, pursuant to s.98 of the Civil Procedure Act, I order the first to sixth defendants to pay the plaintiff's costs of the proceedings in this Court on the ordinary basis. 30 I turn to the defendants' application for the grant of an indemnity certificate under s.6 of the Suitors' Fund Act and whether this Court should exercise its discretion under that provision to grant such a certificate. 31 The exercise of the power under s.6 is dependent upon whether the unsuccessful defendants can establish three necessary requirements, namely, that there has been an appeal to this Court; that it is one against the decision of a court; and that it involves an appeal on a question of law or fact: see s.6(1), Suitors' Fund Act; see also Builders Licensing Board v Pride Constructions Pty Limited [1979] 1 NSWLR 607 at 616 (although, at that time of that case, the discretion was limited to appeals involving questions of law). The word "appeal" for the purposes of this Act has been given an expanded meaning, defined to include "any motion for a new trial and any proceeding in the nature of an appeal": s.2, Suitors' Fund Act. 32 In this case, the above three requirements under s.6 of the Act have been met. The matter before this Court was an "appeal" for the purposes of the Act in that it was a "proceeding in the nature of an appeal": see Ex parte Parsons; Re Suitors' Fund Act (1952) 69 WN (NSW) 380, 381, per Street CJ; see also Full Brick Homes Pty Limited v Consumer Claims Tribunal (13 February 1997, unreported, BC9704003 at 8) per Rolfe J. The appeal was against the decision of a court, the decision of the Tribunal falling within the terms of that expression: see The Owners - Strata Plan No 37762 v Dinh Phuong Dung Pham [2006] NSWSC 1442 at [16]; Krslovic Homes v Timothy Sparkes [2004] NSWSC 37 at [43]-[46]. Accordingly, the present matter was a successful appeal by the plaintiff against a decision of a court to this Court on a question of law or fact: Burringbar Real Estate Centre Pty Limited v Ryder [2008] NSWSC 779. 33 Notwithstanding the defendants' ability to meet these three requirements, the granting of an indemnity certificate, as has been emphasised in earlier authority, is a matter requiring an appropriate exercise of the discretion of the Court: Reeve v Fowler [1965] NSWR 110; see also s.6(5), Suitors' Fund Act. As has previously been observed, the Act fails to provide specific guidance as to the criteria that a Court should consider in exercising the discretion: Reeve (supra); Regina v Hookham [No 2] (1993) 32 NSWLR 345. 34 However, as explained by Priestley JA in Hookham (supra) at 346:- " The reasoning behind the Act must be to the general effect that the court system, in what has happened prior to the appeal being upheld, has made a mistake and that there will be at least some circumstances in which costs caused by the fault of the system should not be visited on the respondent. " 35 In Hookham (supra), Priestley JA provided illustrations of "obvious cases" in which the Court would or would not exercise the discretion. As to a case in which the Court would exercise the discretion, Priestley JA provided the example of a respondent who had succeeded in the court below by reason of that court having taken an erroneous view of the law or the facts which the respondent had not advanced. His Honour also gave an example of an "obvious case" in which the Court would not exercise its discretion, where the court below had acted on an incorrect basis put forward by counsel. 36 In Full Brick Homes Pty Limited (supra), Rolfe J granted certain defendants in that matter (the second and third defendants) a certificate under s.6 of the Act. The plaintiff had been successful in obtaining a declaration that an order by the Tribunal (then the Consumer Claims Tribunal) was void for want of procedural fairness, the order having been made on the claim brought by the second and third defendants against the plaintiff. 37 The Tribunal in that case had breached its duty of procedural fairness, firstly, by failing to notify the plaintiff of the hearing date (and yet proceeding with the hearing in its absence), and, secondly, in dismissing the plaintiff's application for rehearing without an investigation of the strength of the claims made in its application. The second and third defendants had not been responsible for the procedural errors committed by the Tribunal and as Rolfe J stated "I do not expect [them] to have been aware of the requirements of natural justice": Full Brick Homes Pty Limited (supra). Rolfe J considered that the plaintiff was entitled to its costs and granted the second and third defendants a certificate under the Suitors' Fund Act. 38 I consider that the particular circumstances in the present case are such that it is appropriate that this Court exercise its discretion under s.6 to grant an indemnity certificate to the defendants as sought. 39 In that regard, I have, in particular, taken into account the facts that gave rise to the denial of procedural fairness and which vitiated the decision of the Tribunal and, in particular, to the fact that the error by the Tribunal was not the result of any conduct of the defendants. 40 Accordingly, I am of the opinion that in these proceedings an indemnity certificate as provided under s.6 of the Act should issue to the first to sixth defendants. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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