The ACT Civil and Administrative Tribunal (ACAT), unlike the Courts system generally, is well known as for being a ‘no costs’ jurisdiction, meaning that each party bears their own legal costs. This is consistent with the essential purpose of ACAT – to be an inexpensive, informal and less cumbersome avenue for civil disputes to be resolved.

Importantly, ACAT proceedings are not ‘inexpensive’ per se, they are simply an inexpensive alternative to ACT Magistrates Courts proceedings. ACAT proceedings may still costs hundreds or thousands, especially in circumstances where legal practitioners are required. This amount of money, despite being cheaper than the Courts, is still not affordable for some parties, which is why the question of legal costs is still crucial.

An unfortunate consequence of ACAT’s default position on costs is that parties to a civil dispute may not commence proceedings on account of their inability to afford to do so. As a result, parties may be left without a feasible mode for remedy or be forced the pay legal costs regardless of the outcome of the matter. This contributes to the popular notion that the justice system is grossly inaccessible.

There is some good news, however. Recent cases have shown that ACAT will abandon their default ‘no-costs’ setting in certain circumstances:

  1. Legal Costs form part of the Contractual Debt; and
  2. ACAT makes a Costs Order.

Legal costs from part of the contractual debt

In the 2017 case, Trustees of the Roman Catholic Church for the Archdiocese of Canberra and Goulburn as Trustees for St Mary Mackillop College Canberra v Kenningham [2017] ACAT 97 (Kenningham Case), it was established that legal costs may be recovered in ACAT if a party to an agreement reserves the right to claim as such under a term of the agreement.

Facts:

The Applicant commenced proceedings in order to recover unpaid school fees from Ms Kenningham, who sent her children to the St Mary Mackillop College Canberra (College). A clause in the enrollment form, which was signed by Ms Kenningham, provided that the College may recover any legal costs incurred as a result of the late or non-payment of school fees. Accordingly, the College commenced proceedings to recover the sum of the unpaid school fees as well as the legal costs incurred as a result of the proceedings.

Result:

ACAT ordered the Ms Kenningham pay the College the sum of the unpaid fees as well as the reasonable legal costs that were incurred by the College. Notably, this was done so without a “costs order,’’ but instead, the legal costs form part of the contractual debt pursuant to the specific clause in the enrollment form. Also noteworthy, there is an emphasis on the term ‘reasonable’ which will be determined on a case-by-case basis.

Meaning:

  1. Where a party to a dispute over a contract wishes to recover any monies owing under the contract, a clause contained in a contract between the parties that entitles a party to recover their legal costs will not be ignored by ACAT, meaning that they will likely be able to recover the legal costs as a part of the contractual debt in accordance with the contract itself.

Cost orders:

Section 48(1) of the ACT Civil and Administrative Tribunal Act 2008 (Act) provides the default position that parties must bear their own costs. Section 48(2) of the Act provides the discretionary power for ACAT to make costs orders in certain circumstances:

  1. Where the decision is in favour of the Applicant, an order may be made for the Respondent to pay the cost of the filing fee of the application and any other costs associated with the application.
  2. Where the tribunal considers that a party to an application has caused unreasonable delay or obstruction before or while the tribunal was dealing with the application – the tribunal may order the party to pay the reasonable costs of the other party arising from the delay or obstruction.

In the case CIC v ACT Planning and Land Authority [2013] ACTSC 96 (CIC Case), the proper operation and scope of ACAT’s powers to make costs orders was considered.

The judgment established that despite there being discretionary powers, the Act only confers narrow powers that are limited by notions of reasonableness, interests of justice and only an exhaustive list of circumstances under which such discretion can be exercised.

There is no question that ACAT’s default position in relation to costs is that each party bears its own costs. Despite there being a discretionary power in the Act, the power confers limited rights for ACAT to vary the default position. Applicants to ACAT should therefore be mindful of the limited circumstances in which costs can be recovered.

Prior to pursuing any legal action in ACAT or otherwise, it is essential that parties understand not only their prospects of success, but also what the chances are of recovering legal costs are.