In the Local, District and Supreme Courts ordinarily costs follow the event. This means that if a party is successful, they will be awarded costs in their favour and the unsuccessful party will be required to pay the costs of the successful party. If a party is unsuccessful, they will be required to pay costs to the successful party.
However, the above is different in the NSW Civil and Administrative Tribunal (the Tribunal) as costs in the Tribunal are discretionary, which means that a Tribunal Member will not necessarily award costs to a successful party.
Of significance if a claim is valued at less than $30,000.00 costs will not generally be awarded to a party unless there are exceptional circumstances warranting an order for costs referred to below.
A Tribunal is guided by section 60 of the NSW Civil and Administrative Tribunal Act 2013 which sets out the costs regime and is as follows:
(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.
(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 Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.
Costs are defined relevantly to include:
(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.
Section 36 of the Act also relevantly provides:
(1) The “guiding principle”for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
(2) The Tribunal must seek to give effect to the guiding principle when it:
(a) exercises any power given to it by this Act or the procedural rules, or
(b) interprets any provision of this Act or the procedural rules.
(3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal:
(a) a party to proceedings in the Tribunal,
(b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.
(4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.
(5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.
Further guidance is set out in Regulation 38 of the Civil and Administrative Tribunal Rules 2014 which provides:
(1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal.
(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if:
(a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10 (2) of Schedule 4 to the Act in relation to the proceedings, or
(b) the amount claimed or in dispute in the proceedings is more than $30,000.
The Tribunal Member may have regard to the above matters in considering whether to award costs or not and it is arguable that the Tribunal may make an order that each party pay their own costs.
Any offers submitted during the course of the proceedings are taken into account in considering whether a costs consequence should follow against a party. The Tribunal Member may exercise its discretion in making an order for costs and an example is a Respondent
prolonging the proceedings in not resolving the matter when an Applicant was willing to do so.
A party should therefore be aware of the possible cost implications when considering whether to accept or reject an offer as costs are not a guarantee in the Tribunal as compared to other Court jurisdictions.
Legal advice should be sought in any event.
If you have any questions concerning this article please contact our Ms Pierrette Khoury, Solicitor Director of Khoury Lawyers.