Civil and Administrative Tribunal New South Wales Medium Neutral Citation: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 Hearing dates: 30 January 2015 Date of orders: 24 February 2015 Decision date: 24 February 2015 Jurisdiction: Appeal Panel Before: R Titterton, Principal Member Decision: Application for costs refused Catchwords: Appeal – Civil and Administrative Tribunal (NSW) – internal appeal – costs – special circumstances Legislation Cited: Administrative Appeals Tribunal Act 1975 (Cth), s.29 (NSW), s.114 Civil and Administrative Tribunal Act 2013 (NSW), s. 60 Civil and Administrative Tribunal Rules 2014 Cases Cited: Attorney General v Betts [2004] NSWSC 901 Attorney General v Bhattarcharya; Attorney General v Wentworth Citadin Pty Ltd (No. 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd [2001] NSWADTAP 31 Collins v Urban [2014] NSWCATAP 17 Gizah Pty Limited v AXA Trustees Limited (No. 2) [2001] NSWADT 164 Graham -v- Director General, Department of Community Services Hoblos v Marchese Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 Phillips and Inspector-General in Bankruptcy [2012] AATA 788 Category: Principal judgment Parties: CPD Holdings Pty Ltd t/as The Bathroom Exchange John Baguley and Daniela Baguley Representation: The Appellant was represented by its director Mr J Morphett The Respondent was represented by Mr M Birch of Hancock Alldis & Roskov, Solicitors File Number(s): AP 14/46500 (AP 14/0322) Decision under appeal Court or tribunal: Civil and Administrative Tibunal Jurisdiction: Consumer and Commercial Division, Home Building Date of Decision: 11 July 2014 Before: J Smith, Senior Member File Number(s): HB 13/20788 and HB 13/27768 reasons for DECISION Introduction 1. In this application the respondents, Mr and Mrs Baguley, seek an order that the appellant, CPD Holdings Pty Ltd t/as The Bathroom Exchange (CPD), pay their costs of CPD's appeal. Background 1. Mr and Mrs Baguley and CPD had each filed an application in the Home Building Division of the Consumer Claims and Tenancy Tribunal (CTTT). The CTTT was abolished on 1 January 2014 and the two matters proceeded before this Tribunal, the NSW Civil and Administrative Tribunal (the Tribunal) pursuant to the transitional provisions of Schedule 1 of the Civil and Administrative Act 2013 (NSW) (the Act) and the relevant statutory provisions that were in place prior to 1 January 2014. 2. CPD's application HB 13/20778 was filed in the CTTT on 18 April 2013. The application sought orders for payment of the sum of $31,182.20 allegedly outstanding under a contract for the performance of residential building work by it for Mr and Mrs Baguley. Mr and Mrs Baguley's application HB 13/27768 was filed in the CTTT on 23 May 2013. They sought orders for compensation for allegedly incomplete and defective work and for liquidated damages in the total sum of $21,219.35. 3. The matters were heard by Senior Member J Smith on 10 June and 11 June 2014. In reasons dated 11 July 2014 CPD was ordered to pay Mr and Mrs Baguley $9,780.00 immediately. The costs of those proceedings are still to be determined. 4. CPD filed a notice of appeal on 8 August 2014. A directions hearing was held on 23 October 2014, and the Appeal Panel made directions for the filing of evidence and submissions by each party. The following day, 24 October 2014, CPD withdrew its appeal. On 30 October 2014 the Appeal Panel vacated the orders made on 23 October 2014. The Appeal Panel ordered that, subject to an application for costs in the appeal being made on or before 20 November 2014, that the appeal was to be dismissed pursuant to s.55(1)(a) of the Act). On 31 October 2014 Mr and Mrs Baguley made this application for the costs they have incurred by CPD filing its appeal. The conduct of the appeal 1. In filing a notice of appeal the appellant completes a form which in which the appellant states information such as the details of the decision appealed from, the appellant's identity and representative's details, unavailable dates, special needs, whether an interpreter is required and the details of the respondent. More importantly, in sections 11A, 11B and 11C of a notice of appeal, an appellant sets out the orders challenged on appeal, the grounds of appeal and the orders the Appeal Panel should make. 2. Some assistance is given to an appellant in completing these sections. For instance in section 11B, "Grounds of Appeal", the form states: "List below a short summary of each reason why you consider the Tribunal was wrong when it decided to make the order/s appeal from (list grounds on a separate sheet if space is not sufficient)". 1. In CPD's notice of appeal the sections which set out substantive details of the appeal are answered "TBC", presumably meaning "to be confirmed". Thus in: section 12A (application for leave to appeal); section 12B(i) (decision not fair and equitable); and section 12B(ii) (decision of the Tribunal against the weight of the evidence; what evidence did the other party give – what documents did the other party show the Tribunal - what decision do you think the Tribunal should have made, given the evidence/documents presented at the hearing), Mr Morphett, the director of CPD, has written "TBC". 1. In response to section 12B(iii) of the notice of appeal (what evidence/documents do you now seek to produce of the Tribunal) Mr Morphett has written "a full transcript of the hearing and directions hearings if applicable". 2. In response to section 11B (grounds of appeal) of the notice of appeal Mr Morphett has written "TBC" and "as attached". This is a reference to a document attached to and forming part of the notice of appeal and marked "A". This document, titled "Grounds of Appeal" states: I request that the Tribunal grant the right of appeal with leave on the following basis; 1 The decision was [not] fair and equitable. 2 The decision was against the weight of evidence. 3 Evidence is available that was not available at the time of the hearing. These grounds are summarized; The determination by the Tribunal did not fairly consider the weight of the termination issue when awarding damages for defects. The determination by the Tribunal went against the [weight] of expert evidence presented. The determination by the Tribunal did not accept an agreement that was made between the parties and presented to the Tribunal that settled one aspect of the owners claim against the builder. The determination by the Tribunal awarded damages for one item that was not supported by the evidence. These grounds for appeal will need to be supported by a transcript of the hearing. The recordings have been applied for on 28 July 2014 and have to date not been received. Once received the relevant sections will be reduced to writing in the form [of] a professionally prepared transcript. A full and complete notice of appeal will then be filed and served. Therefore an extension of time is respectfully requested. 1. During the costs hearing (which was conducted by telephone) Mr Birch indicated that his copy of the notice of appeal did not contain the page headed Grounds of Appeal. He did not take issue with the fact that this document had been filed and formed part of the notice of appeal. During the course of the appeal hearing I read this document to Mr Birch and offered him the opportunity to be sent a copy and for him to make written submissions later. Having heard the content of the document he said that he did not wish to be provided with a copy of it or to make any further submissions. He indicated that there was no reason to change his submissions as the content made no difference to his argument, that being that the grounds of appeal were inadequate and the appeal itself was frivolous and vexatious. 2. A directions hearing was held on 23 October 2014. The directions made by the Appeal Panel included the following: The appellant is to file with the Tribunal and provide to the respondent on or before 24/11/2014: a concise list of the questions to be determined on the appeal; and any documentary evidence in support of the appeal; and written submissions on the question why the appeal should succeed. . . . 5. The issue of: (a) leave being granted to following this appeal out of time; and (b) leave being granted to raise issues other than the question whether there is an error of law in the decision to appear be appealed from, be determined at the hearing. 1. In addition, and over the objection of Mr Morphett, the Appeal Panel granted leave to both parties to be legally represented. 2. On 24 October 2014 (that is the following day) Mr Morphett filed a request for withdrawal of his appeal. In a letter accompanying that request, also dated 24 October 2014, and also sent to Mr Birch, Mr Morphett stated: My reason for withdrawing the appeal is as follows: the parties were granted leave for representation which I made objection to. The question of leave for an appeal was set down for a one-day hearing and both parties did not object to the question being dealt with on the papers. In accordance with the Tribunal's published guidelines it is usual for the issue of leave for an appeal to be dealt with on the papers unless the parties are in disagreement. The appeal was to correct $26,947 of a judgment amount of $34,598. The costs in this matter to date have been in excess of $65,000 for my case alone. The owners claim to the hearing was $96,813.30 of which they were successful of only just over $30,000. In accordance with the Tribunal's published guidelines it would seem expected that neither party would be given legal representation. The Tribunal is intended to be a less formal jurisdiction which allows low-cost access to a fair outcome. Whilst I believe the judgment handed down was a substantial injustice, the cost I am forced to risk and the potential for costs to the Owners, simply places too high a price on justice. This decision is not one I find satisfaction in making, but now that the decision has been made I wish to inform the Owners and the Tribunal promptly so as to avoid further costs for all concerned. Should the Owners seek cost to this appeal to date I request the opportunity to be heard on the matter. 1. On 30 October 2014 the Appeal Panel vacated the orders made on 23 October 2014 and dismissed the appeal, subject to any application for cost being made by 20 November 2014. 2. On 31 October 2014 Mr Birch wrote to the Tribunal, indicating that his clients wished to make an application for their costs said to be thrown away by the commencement and subsequent withdrawal of the appeal. On the same day Mr Morphett wrote to both the Tribunal and Mr Birch indicating that he opposed costs being awarded. His letter stated that he had incurred expenses in obtaining advice "on grounds for lodging the appeal", and he did not request Mr and Mrs Baguley to pay his expenses in relation to the appeal. He says that the reasons for appeal "were genuine and were a direct response to further claims made by [Mr and Mrs Baguley] and relating to the hearing of the substantive matter". After setting out disputed facts and other misunderstandings between the parties and the Tribunal he states that CPD "filed an appeal with the intention of having the Tribunal resolve the matter". He says that CPD "properly withdrew the application once leave was granted so as to avoid a further escalation of costs for all involved". The submissions of Mr and Mrs Baguley 1. Mr Birch prepared written submissions on behalf of Mr and Mrs Baguley which were received by the Registry on 7 December 2014. In summary he submits that: his clients should not be prejudiced or disadvantaged because they elected to obtain legal advice and representation while CPD chose to represented by Mr Morphett; CPD did not disclose in its appeal the orders being challenged, the grounds of appeal including particulars, the orders being sought or any of the threshold requirements for leave to appeal which are referred to in the decision of the Appeal Panel in Collins v Urban [2014] NSWCATAP 17; and CPD requested the Appeal Panel to set the appeal down for hearing and acquiesced in allowing the Appeal Panel to make directions for the orderly preparation of the appeal. 1. Mr Birch correctly identifies s.60 of the Act as the section which deals with costs in respect of internal appeals before the Appeal Panel: see Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [6] to [8]. Section 60(1) provides that each party to proceedings in the Tribunal is to pay their own costs. Section 60(2) provides that the Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. 2. There are two bases on which Mr Birch submits there are special circumstances warranting an award of costs in his clients' favour. The first is that CPD provided no particulars about any of the grounds stated for its appeal and on the face of the notice of appeal the appeal had no prospects of succeeding in fact or in law. In particular he submits that "TBC" is not adequate for Mr and Mrs Baguley to understand the basis and content of the appeal. 3. The second basis is that the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance. In this respect Mr Birch also submits that appeal was speculative, and that the speculative nature of the appeal is evidenced by the immediate withdrawal of the appeal after the call over and orders being made for the further conduct of the appeal. 4. In the circumstances Mr and Mrs Baguley submit that CPD should pay their costs on the party/party basis in the sum of $2,906.75. The submissions of CPD 1. Mr Morphett relies on his letters of 24 October and 31 October 2014, summarized above, to support his submission that CPD not pay Mr and Mrs Baguley's costs of the appeal. The principles to be applied 1. The principles governing costs of an internal appeal are set out in s.60 of the Act. That section provides, in terms: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36(3), (g) any other matter that the Tribunal considers relevant. 1. In Phillips and Inspector-General in Bankruptcy [2012] AATA 788 the Commonwealth Administrative Appeal Tribunal (AAT) considered the phrase "special circumstances" in the context of the time limits provided for in s.29 of the Administrative Appeals Tribunal Act 1975 (Cth). Section 29(6) of that Act provides that, notwithstanding sub-section (4) which prescribes times for the filing of applications, the AAT may entertain an application if it is of the opinion that there are special circumstances that justify it in doing so. The AAT stated at [422]: . . . " special circumstances" mean those that take the applicant outside the circumstances that are the ordinary or common circumstances generally applying. As Kiefel J said in Groth v Secretary, Department of Social Security in a different context: " The phrase 'special circumstances', it has been said, although imprecise is sufficiently understood not to require judicial gloss: . . . and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the ordinary or usual case. ..." Her Honour reflected the proposition put forward by Burchett J in the earlier case of Minister for Community Services and Health v Chi Keong Thoo, that "... the core of the idea of 'special circumstances' is that there is something unusual or different to take the matter out of the ordinary course ...". (citations and footnotes omitted) 1. In Graham -v- Director General, Department of Community Services [2001] NSWADTAP 4 the applicant complained of unlawful sexual discrimination contravening the Anti-Discrimination Act 1977 (NSW). As the Appeal Panel of the ADT noted at [7], the matter had: proceeded through various procedural stages. The procedural stages included a number of directions hearings, and an application by the agency seeking summary dismissal of the complaints. The matter finally was listed to be heard and, after some other earlier dates were vacated, was due to proceed over 3 days of the week commencing Monday 17 May 1999. 1. On Friday 14 May 1999 the complainant withdrew her complaint of unlawful discrimination against the respondent agency. Section 114 of the Anti-Discrimination Act 1977 relevantly provided that, except as provided by subsection (2), each party to an inquiry shall pay his or her own costs. Section 114(2) provided that where the Tribunal is of the opinion in a particular case that there are circumstances that justify it doing so, it may make such order as to costs and security for costs, whether by way of interim order or otherwise, as it thinks fit. 2. The application was for costs was allowed, in part. On appeal the Appeal Panel noted at [15] ff: 16 The complainant was represented as she has been throughout by Ms Keys of counsel at the hearing of the agency's costs application. The Tribunal decided to grant the application in an amount, $3100, which met some of the costs incurred by the agency in defending the proceedings. It declined to make an order for substantially higher sums that had been sought by the agency. It explained its approach as follows: [W]e are of the view that up until 19 April 1999, this case followed what is the normal procedures in this jurisdiction. After that date, there was a late withdrawal by the complainant of her complaint and we feel, having regard especially to that factor, in the circumstances, the respondent should be compensated to some extent for the costs incurred since then, especially those on 17 May and 25 June. The amount allowed in costs is $3100. 17 Read in conjunction with the discussion recorded in the transcript, it is clear that the Tribunal considered that the ordinary rule that costs not be awarded in Equal Opportunity matters should apply to the proceedings while there were still being actively prosecuted by both parties. But the Tribunal felt that justice demanded that the respondent be given some relief from the costs incurred once the applicant brought the proceedings to end by withdrawing at a point where the respondent had made the preparations and incurred the costs necessary for the hearing. 1. In Citadin Pty Ltd (No. 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd [2001] NSWADTAP 31 the Appeal Panel of the Administrative Decisions Tribunal (ADT) considered an application for costs. Section 88 of the Administrative Decisions Tribunal Act 1997 provided that the ADT may award costs in relation to proceedings before it, but only if it is satisfied that there are special circumstances warranting an award of costs. At [6] the ADT stated: The usual rule in the Tribunal is that parties bear their own costs of proceedings. Being successful in proceedings is not in itself a special circumstance. There must be some additional factor or factors present in the case to justify an award of costs. Withdrawal by an applicant of an application after a date for hearing has been set, and in circumstances where the respondent has incurred expense in briefing counsel, may be such a circumstance: see Graham -v- Director General, Department of Community Services [2001] NSWADTAP 4. 1. In Gizah Pty Limited v AXA Trustees Limited (No. 2) [2001] NSWADT 164 the ADT considered another application for costs. The ADT stated: 29 Consequently, I am of the opinion that in order to satisfy the test of "special circumstances" one must find circumstances that are out of the ordinary, but without having to be extraordinary or exceptional, and those special circumstances would warrant an award of costs. . . . 30 Each case depends upon on its own particular facts. . . . 31 In Hoblos v Marchese [1999] NSWADT 127 the Tribunal refused to find "special circumstances" and in support of its opinion relied upon numerous cases .The Tribunal correctly (in my respectful view) observed that the discretion under section 88 is not unfettered, required that the Tribunal "must take into account all the circumstances" and that the "discretion to displace (the ordinary rule that costs follow the event) is a judicial one requiring the private and public proposes of the rule to borne in mind." 32 In Hoblos the applicant failed to comply with initial directions, could give no reason why there was no compliance, failed to comply with a revised timetable , failed to appear on the adjourned date, failed again to comply with further directions , appeared on a further adjourned date but only by an agent with limited instructions who could make no submissions and ultimately the proceedings instituted by the applicant were in fact dismissed. The respondent, not surprisingly, applied for a costs order and submitted that there were in fact "special circumstances". The Tribunal , having considered the principles, declined to make an order for costs. This case Hoblos is often quoted in support of a proposition that in this Division orders for costs are rarely made. 1. The expression "special circumstances" was considered by the Appeal Panel of the Tribunal in Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120. The Appeal Panel stated at [11] that: The expression "special circumstances" was considered by the Court of Appeal in the context of section 88(1) of the Administrative Decisions Tribunal Act 1997 (NSW). Santow JA said in Cripps v G & M Mawson [2006] NSWCA 84 at [60]: I consider that the Tribunal was in error in failing to conclude that special circumstances apply here. For this purpose it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional. 1. In Mergerditchian the Appeal Panel ordered the appellant to pay the respondent's costs because the appeal related to a commercial transaction involving a significant amount of money, a question of law was involved which involved representation by lawyers and because of the wider discretion to award costs at first instance. (At the time, because the amount involved was more than $30,000, the Tribunal at first instance could award costs as it thought fit. While that rule did not apply on appeal, the Appeal Panel considered that it was a factor it could take into account in determining whether or not special circumstances existed on appeal.) Consideration 1. The authorities are consistent in stating that "special circumstances" are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances. Accordingly the question for decision is whether the conduct of the appeal by CPD is out of the ordinary and warrants the Appeal Panel ordering CPD to pay Mr and Mrs Baguely's costs. 2. In my view, the conduct of CPD has not been out of the ordinary. True it is the notice of appeal lacked detail, and surprisingly did not contain information well known to CPD such as the orders appealed from. It is also correct that Mr Morphett did not state what orders he sought. But the notice of appeal did set out, in the attached document, albeit briefly, grounds of appeal. Those grounds, after paraphrasing clause 12 of Schedule 4 of the Act, put Mr and Mrs Baguely on notice of the substance of CPD's grounds of appeal (namely that the Tribunal failed to give sufficient weight to the termination issue when awarding damages for defects; that the Tribunal misunderstood the expert evidence; that the Tribunal did accept that one aspect of the claim had been resolved, and that the award of damages for one item was not supported by the evidence). 3. This was not a situation, where Mrs and Mrs Baguley had made the preparations and incurred the costs necessary for the appeal (cf Graham), although they had retained a solicitor and had incurred some legal expenses in preparing for the directions hearing. Nor is it a situation where CPD persistently failed to comply with directions or failed to appear (cf Hoblos). Nor is this a commercial matter involving a large sum of money (cf Mergerditchian). 4. Further, the appeal was filed on 8 August 2014, and Mr Morphett requested to withdraw it on 24 October 2014, the day after the first directions hearing. While Mr and Mrs Baguley undoubtedly incurred some legal expenses, there is some force in Mr Morphett's submission that he promptly acted to withdraw the appeal so as to avoid further costs for all concerned. 5. Where it not for the content of the document headed "Grounds of Appeal", there would be considerable force in Mr Birch's submission that CPD had failed to provide any particulars about the grounds of appeal. While Mr Birch submitted that the content of the document titled Grounds of Appeal made no difference to his submissions, in my view it did. I consider that the content of that document demonstrates that there was an arguable point in CPD's appeal. I also bear in mind that the document was prepared by Mr Morphett, who is not a lawyer. 6. As to the submission that the appeal was frivolous or vexatious or otherwise misconceived or lacking in substance, in Attorney General v Wentworth (1988) 14 NSWLR 481 at 491 Roden J stated that proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought; brought for collateral purposes and not for the purpose of having the court adjudicate on the issues to which they give rise, or if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless. That decision has been followed in many cases: see for instance Attorney General v Bhattarcharya [2003] NSWSC 1150 and Attorney General v Betts [2004] NSWSC 901. While those cases are authorities concerning whether or not a litigant should be prevented from commencing proceedings, except with the leave of the court, by reason of habitually and persistently instituting vexatious proceedings, the passage of Roden J referred to provides a useful approach to understanding the concept of proceedings being frivolous or vexatious or otherwise misconceived or lacking in substance. 7. Again, while there would be considerable force in this submission based on Mr Morphett's employment of "TBC" throughout his notice of appeal, in my view the content of the grounds of appeal document attached to the notice of appeal precludes a finding that the appeal was frivolous or vexatious or otherwise misconceived or lacking in substance. Conclusion and order 1. Section 60 of the Act provides that parties to proceedings are to pay their own costs. For the above reasons I am not satisfied that Mr and Mrs Baguley have demonstrated that there are special circumstances warranting an order that CPD pay their costs of the appeal. 2. Mr and Mrs Baguley's application for costs is dismissed. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar ******** 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: 24 February 2015