Recovering costs in a cost-free jurisdiction

The ACT Civil and Administrative Tribunal (“the ACAT”) is well known as a ‘no costs’ jurisdiction. This epitomizes the intended purposes of ACAT, to be simple, quick, inexpensive and informal.  As such, parties to a matter in the ACAT are intended to bear their own costs unless the ACAT orders otherwise, which the ACAT may do if, for example, one party has caused unreasonable delay or obstruction.

However, the cases below demonstrate that, if the parties to the proceedings were parties to a contract that provided for payment of costs incurred in recovering any moneys owed, the ACAT may still enforce the contract and award “costs” in keeping with the contractual terms, notwithstanding the usual rule that each party should bear their own costs of ACAT proceedings.

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

Facts

In 2017, the applicant, St Mary Mackillop College, commenced ACAT proceedings to claim unpaid school fees from the respondent who sent her children to the College. The College also claimed legal and other costs incurred by them in seeking to recover the unpaid school fees in accordance with a recovery clause in the signed enrolment form, which entitled the school to recover any expenses incurred by them as a result of late or no payment.

Findings

The Tribunal ordered the respondent to pay the applicant the amount of unpaid school fees owing, as well as the expenses properly incurred by the school in taking action to recover the debt.  The ACAT did so without entering a “costs order” in the usual way, but instead ordered the expenses incurred in the proceedings were able to be recovered as a contractual debt in accordance with the contract between the parties in the form of the signed enrolment form.  In doing so, the ACAT found it was not being asked to exercise any discretion regarding costs, instead it was required only to apply established principles of contract law.

Key Lessons:

• In the event that a party to the contract seeks to recover any monies owing under an agreement, a recovery clause in a contract will entitle that party to recover its costs in doing so from the other party.
• Although ACAT is a ‘no-cost jurisdiction’ where parties are to bear their own costs, the ACAT has shown reluctance in denying the effect of a contractual agreement.
• Although costs are always a matter for the court or at the ACAT’s discretion, there may be a additional contractual basis for recovering costs.
• Another instance in which ACAT may make an order for costs is where one party has caused unreasonable delay or obstruction before or while the ACAT is dealing with a matter. Note that this is distinct to a case simply being poor, unsubstantiated or disorganised.[1]
• However, the ACAT has made clear that a contractual recovery clause will not automatically result in recovery of the costs of recovering amounts, as this is still upon discretion of the court or Tribunal.
• Contracting parties should take caution in reviewing all contractual terms before signing, so as to not be taken by surprise at a later stage.

If you have any questions regarding ACAT or costs jurisdiction, please contact the Litigation & Dispute Resolution team at BAL Lawyers.

[1] Bell & de Castella and Rob de Castella’s Smartstart for Kids Ltd [2013] ACAT 66