1735 Pty Ltd v Chief Commissioner of State Revenue; 1735 Pty Ltd atf Bares Family Trust v Chief Commissioner of State Revenue

1735 Pty Ltd v Chief Commissioner of State Revenue; 1735 Pty Ltd atf Bares Family Trust v Chief Commissioner of State Revenue - [2021] NSWCATAD 134 - NSWCATAD 2021 case summary — Zoe

[14]

Special circumstances

In A J Holdings (NSW) Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 143, (AJ Holdings) Sorensen SM said: 15 … For the purposes of s 60(2), "special circumstances" are circumstances surrounding the conduct of the case that are out of the ordinary, but without having to be extraordinary or exceptional: Megerditchian at [11], Spiteri at [54], [60], eMove at [48], B & L Linings at [56-69], CPD Holdings Pty Ltd (t/as Bathroom Exchange) v Baguley [2015] NSWCATAP 21 (CPD) at [24], [29], [30], [32]. It seems 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: Fitzpatrick Investments at [19].
In Lin v Chief Commissioner of State Revenue [2018] NSWCATAD 98, a costs application by the Chief Commissioner in relation to a failed taxpayers' application concerning a land tax assessment, I said: 10 The … description of "special circumstances" has been applied in numerous cases including those referred to in AJ Holdings at [15], in Redmadi Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 231 at [137], and in Fitzpatrick Investments at [17] and [20]. In particular, at [60] in CRIPPS and Another v G & M DAWSON Pty Ltd and Another; G & M DAWSON Pty Ltd and Another v CRIPPS and Another [2006] NSWCA 81 [Cripps v Dawson], Santow JA, with whom Mason P and Brownie JA agreed, said that for special circumstances to apply in relation to an application by the Chief Commissioner for costs before the Tribunal and Appeal Panel of the Tribunal's predecessor, the Administrative Decisions Tribunal (ADT), (in respect of relevantly identical legislation concerning the award of costs) "For this purpose, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional.".
In Fitzpatrick Investments Pty Limited v Chief Commissioner of State Revenue [2015] NSWCATAD 103, the Tribunal considered an application by the respondent Chief Commissioner of State Revenue who had been successful in Substantive Proceedings, which included 16 directions hearings and in respect of which the applicant withdrew the application for review on the Friday before the hearing was to commence on the following Monday for two weeks. The Chief Commissioner was unsuccessful in his claim for costs.
In its reasons the Tribunal said: 14 The Tribunal may only make a costs order under s 60 of the Act, as an exception to the general principle that each party to proceedings in the Tribunal is to pay the party's own costs, if the Tribunal "is satisfied that there are special circumstances warranting an award of costs". 15 In order to be awarded costs in this matter, the Chief Commissioner has to establish, having regard to the matters set out in s 60(3), that there are "special circumstances" warranting an award of costs. The phrase "special circumstances" is not given any meaning in the legislation but the phrase has been considered judicially.
The Tribunal referred to CRIPPS and Another v G& M DAWSON Pty Ltd and Another; G & M DAWSON Pty Ltd and Another v CRIPPS and Another [2006] NSWCA 81 (Cripps v Dawson) and said: 18 The expression "special circumstances" is also found in other legislation and a similar interpretation has been suggested. For example, in Brian Lewis Groth v Secretary Department of Social Security [1995] FCA 1708 in considering whether there were "special circumstances" in Mr Groth's case which rendered it appropriate to disregard the whole or part of certain compensation payments he had received in the assessment of his pension entitlement under s 1184 of the Social Security Act 1991, Kiefel J agreed that the phrase "special circumstances" although imprecise is sufficiently understood not to require judicial gloss and that, for purposes of the appeal before her Honour, the only inquiry to be undertaken was whether there were special circumstances "to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case". 19 In two other decisions, Burchett J in the Federal Court took the same approach, although in different contexts. In Minister for Community Services and Health and Medicare Participation and Review Committee v Chi Keong Thoo [1988] FCA 54, Burchett J expressed the view 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" ... 20 In order to invoke s 60 and award costs in a matter, it is accordingly necessary to be satisfied that there are circumstances relating to the conduct of the proceedings that are clearly out of the ordinary. The circumstances "do not have to be extraordinary or exceptional". In determining that there are special circumstances, grossly unreasonable conduct or a finding of "serious unfairness" are not prerequisites to such a determination, they are nonetheless highly relevant considerations. 21 It is necessary to consider all the matters set in s 60(3), although some may not apply in a particular case. Finding special circumstances is not sufficient to exercise the discretion; it can only be exercised if the special circumstances identified by a party warrant the award of costs ...
In Yammatree Pty Ltd (Applicant); North West Local Land Service (Respondent) [2015] NSWCATAD 221 the Tribunal said: 8 Subsection 60(2) gives the Tribunal a wide discretion to award costs where it is satisfied that there are 'special circumstances' that warrant an award of costs. That is, the Tribunal must be satisfied there are 'special circumstances' and that these warrant an award of costs. 9 Section 60(3) provides that the Tribunal may have regard to a range of factors. These include the subsection 60(3)(g) provision regarding "any other matter that the Tribunal considers relevant." It is clear that the factors set out in section 60(3)(a) to (f) are not meant to be an exhaustive list of what might constitute "special circumstances". 10 However, as the Appeal Panel noted in Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38, it does not follow that a costs order should be made because some factors are made out. 11 It remains necessary for the Tribunal to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the ordinary rule that each party bear their own costs.
There is no doubt that s 60(3) is very broad. It provides: (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.

[17]

The Applicants' case and Dandanis & Associates' case

In summary, the Costs Respondents assert s 60(1) provides that each party to proceedings before the Tribunal shall pay its own costs; s 60(2) provides that the Tribunal may award costs only if it is satisfied that there are special circumstances which warrant an award of costs; there are no special circumstances in relation to the proceedings; even if there are special circumstances they do not warrant an award of costs; s 36 stipulates the guiding principles in relation to the conduct of the proceedings require just, quick and cheap resolution and the Chief Commissioner failed until late in the proceedings to view the relevant properties so as to clarify the issues in dispute at an appropriate time, accordingly the Chief Commissioner did not seek a just, cheap and quick resolution of the proceedings; and the Chief Commissioner issued the Assessments without ensuring he was aware of all relevant matters.
The Applicants also relied at AS [2(e)] on the failure of the Chief Commissioner to seek a just cheap and quick resolution of the proceedings where it "has now advised the Tribunal" that its costs exceed $189,000 in respect of assessments of approximately $90,000.
On 16 September 2020, during a directions hearing in which Dandanis & Associates was represented by Carter Newell Lawyers, Dandanis & Associates was joined as a party to these costs proceedings and consented to orders including that it "file and serve submissions and evidence by 2 October 2020".
In submissions filed for Dandanis & Associates on 2 October 2020, they submitted at [2] that they relied on AS, and further submitted: 3. Insofar as concerns costs the overriding premise is that each party to proceedings in the Tribunal is to pay its own costs. While the Tribunal may award costs, it may only do so in special circumstances. It is respectfully submitted that having regard to the overriding premise, there are no special circumstances in these proceedings. It is also submitted that the authorities relied on by the Respondent in support of a costs order against Dandanis are inapplicable to the current circumstances. … 12(c) Section 60(3) of the Act provides that in determining whether there are "special circumstances" warranting an award of costs, the Tribunal "may" have regard to a number of factors. 13 There are no special circumstances in these proceedings. 14 … even if there were special circumstances sufficient to warrant an order for costs, those costs should be ordered on an ordinary, party-party basis and not on an indemnity basis.

[18]

Did special circumstances occur which warranted an award of costs in relation to the proceedings

The Applicants claimed at AS [2(d)] there were no relevant special circumstances having regard to: (i) the complexity of the matter; (ii) the disparity [of] the resources available to the Respondent compared to the Applicant; (iii) the inherent right of the Applicant to seek a review of the Respondent's determination especially in circumstances where the Respondent changed its longstanding position from prior assessments; and (iv) importantly consideration of the consistent approaches of the Applicants in inviting the Respondent to view the properties so as to clarify the issues in dispute at an early stage of the proceedings and the Respondent persistent failure to undertake an inspection until the late stage of the proceedings; and at [2(e)] relied on "the failure of the Chief Commissioner to seek a just cheap and quick resolution of the proceedings".
Dandanis & Associates submitted in DS: 1. at [3] that there was an overriding premise that each party pays their own costs unless the Tribunal awards costs, which it may only do if there special circumstances; "there are no special circumstances in these proceedings"; 2. at [3] and [16] the authorities relied on by the Chief Commissioner were "inapplicable to the current circumstances" and can be distinguished as they dealt with different courts or tribunals under different legislative provisions and did not deal with non-party costs orders against legal representatives; 3. at [10], it relied on AS and the Edmonds and Gunawan affidavits; 4. at [18] to [20] the Tribunal's jurisdiction to make a costs order against a non-party is subject to contention and referred to Diaspora Holdings Pty Ltd v The Owners- Strata Plan No. 68608 [2018] NSWCATCD 52 (Diaspora Holdings Tribunal), a Tribunal decision which was appealed to the Supreme Court. Dandanis & Associates provided extracts from [232] and [233] in the decision of Parker J in that Court (Preston v Diaspora Holdings Pty Ltd; Diaspora Holdings Pty Ltd v Owners Corporation of Strata Plan 68608 [2019] NSWSC 651) (Diaspora Holdings Supreme Court). The extracts included His Honour expressing some reservations concerning the Tribunal power in s 60(4)(a) to award costs and suggesting Parliament may only have been contemplating costs orders against the parties and stating "In my view there is room for further debate on the question."; 5. at [20] and [21] "the Tribunal must seriously consider whether it is [sic] the power to make the orders sought" and if it had jurisdiction "it should only be exercised in the most extreme circumstances…particularly when such costs orders are sought against a party's legal representative…" 6. at [21] regard must be had to the following principles (Dandanis & Associates provided judicial authorities): 1. "The jurisdiction to order a legal practitioner to pay costs personally must be exercised with care and discretion and only in clear cases"; 2. "Litigation lawyers ought not be deterred from pursuing their clients' interests by fear of incurring a personal liability to their clients' opponent"; 3. "A legal practitioner is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail"; 4. "A legal practitioner's ability to rebut an application for a personal costs order may be impacted by duties of confidentiality, and where that is the case the practitioner should be given the benefit of the doubt"; and 5. "Instituting or maintaining a proceeding on behalf of a client that has no or substantially no prospect of success does not of itself attract the wasted costs jurisdiction".
At DS [12] Dandanis & Associates referred to ss 60(1), (2) and (3), in respect of which there is no dispute, and at [13] repeated its submission that there were no special circumstances in the proceedings.

[19]

The Chief Commissioner's response to the Costs Respondents

The Chief Commissioner submitted at RS [12]: The phrase "special circumstances" is not given any meaning in the Act but the phrase has been judicially considered. In Cripps & Another v G & M Dawson [2006] NSWCA 81 (Cripps), Santow JA (Brownie AJA agreeing) stated that "special circumstances" "…do not have to be extraordinary or exceptional." Further, Burchett J in the Federal Court in Minister for Community Services and Health v Chee Keong Thoo (1998) 78 ALR 307 at 324 stated "the core idea of 'special circumstances' is that there is something unusual or different to take the matter out of the ordinary course … As a result, the ordinary course appears less appropriate or fair."
In relation to the Substantive Proceedings the Chief Commissioner submitted: 1. At [16] The Applicants … strenuously contested the assessments … in the absence of evidence necessary to discharge their onus of proof. 2. At [18] Counsel for the Applicants conceded on several occasions that the Applicants were aware of the onus they bore … 3. At [20] … Mr Bares declared "… on the primary production exemption application form that any primary production activity was part-time (judgment at [89]) and that the primary purpose was to keep the weeds and fire hazard under control and maintain tracks and fences (judgment at [90])." 4. At [22] As a result of the Applicants filing the report of Mr Hartley on 4 October 2019, the Respondent became aware of large structures on the land which had not been disclosed by the Applicants. This set in motion an inquiry by the Respondent as to other uses of the Subject Lands in the relevant land tax years to ensure the Tribunal had before it all relevant material to determine the dispute. The Respondent exerted time (and consequential costs) to uncover competing uses of the Subject Lands including the use of Lot 10 for the Aqua Island water park and a quarry. However, the Applicants (including through Mr Bares) appeared to contend no work had been conducted prior to 31 December 2016. Even when faced with video footage of the earthmover constructing Aqua Island, Mr Bares contended it was simply building a dam. The Respondent's evidence demonstrated not only that Aqua Island was constructed during the relevant land tax years but also was open to the public and was in fact used by the public before 31 December 2017. 5. At [23] to [26] [23] … following receipt of Mr Hartley's report, the Respondent sought voluntary production of documents, issued summonses, retained Mr Schuster to prepare a report and arranged a site visit. [24] … the Applicants' solicitors resisted the Respondent's request to obtain access to documents such as photographs, aerial photographs or footage of the Subject Lands and the documents relied on by Mr Hartley. This included a groundless objection to production of Mr Hartley's source documents on the basis of privilege despite Mr Hartley having already provided documents to the Applicants' solicitor to produce to the Respondent. [25] It was the Applicant's burden to disclose all of the relevant facts, "warts and all", and it should not have been necessary for the Commissioner to go to this cost. The Applicants chose not to put all of the relevant material before the Tribunal … [26] All of these facts were within the knowledge of the Applicants and were matters which should have been disclosed to the Tribunal but were not. The Applicants also refrained from adducing records such as the annual census documents which further disadvantaged the Respondent in the running of its case. 6. At [30] … the Applicant withdrew most of its application for review six weeks after the hearing …
At [32] the Chief Commissioner submitted: … each of the above matters constitute special circumstances and when viewed collectively, it is beyond doubt that in this matter the conduct of the Applicants and their solicitors warrant the making of an order for costs in favour of the Respondent …

[21]

Complexity

Section 60(3)(d) refers to "the nature and complexity of the proceedings" as a matter to which the Tribunal may have regard. The Costs Respondents relied on alleged complexity as a reason for there being no relevant special circumstances.
I find that to the extent that there was any complexity, much of it was occasioned by the manner in which the Applicants conducted the proceedings including their multiple failures to promptly comply with orders / directions of the Tribunal both prior to and between the hearing dates, failing to provide all relevant information to the Chief Commissioner and the Tribunal in a timely manner, apparently not briefing Mr Hartley with all relevant information within their knowledge thus leaving it to him to provide his expert's report based substantially on hypotheticals, making numerous claims to the Chief Commissioner and submissions to the Tribunal which were not supported by probative evidence in circumstances where the Tribunal had been informed by the Applicants' counsel that the Applicants were aware that the onus of proving their case lay on them, and, in their closing submissions made several weeks after the hearing, withdrawing most of their claims to exemption from taxation and ceasing to rely on two of their three lay witnesses including Mr Bares, a manager and former director of one of the two corporate applicants and the sole director of the other corporate applicant, who had had much of the carriage of pre-litigation communications with the Chief Commissioner and whose sworn evidence to the Tribunal when asked whether he oversaw "the development of the land and anything that happens on the land" was "to the larger part probably, yes". Mr Bares evidence is that he attended the land one or two or three times a week throughout the relevant period and he had a fairly good idea of the activities conducted on the land (T 6 December 2019, page 66 at 11 to 23).
In relation to Dandanis & Associates' submissions I note: 1. Dandanis & Associates did not refer in their submissions to the several orders by Parker J in Diaspora Holdings Supreme Court, including that the defendants pay the plaintiffs' costs of the Court proceedings, referring some matters back to the Tribunal and in particular saying at [257] "… I will leave it to the Tribunal to deal with the costs associated with the representation point in the Tribunal." His Honour made no order to the effect that the Tribunal had no power to make a costs order against the solicitors to a party in proceedings in the Tribunal. Neither party drew my attention to any subsequent relevant decision of the Tribunal nor am I aware of any such decision. 2. there was no reference to the extent of Dandanis & Associates' compliance with their overriding duty, as officers of the court, to the tribunal in which the proceedings were conducted.
I find that the evidence relied on by the Chief Commissioner regarding the Costs Respondents and relevant submissions were not based on any breach of the "principles" referred to in DS [21(a) to (e)] which were summarised above.
I reject the Costs Respondents submission as to the effect of 'complexity' on special circumstances in these proceedings.

[26]

Witnesses

I make the following comments in relation to paragraphs [10] to [15] of AS under the subheading "Witnesses".
The Applicants relied on their long-standing commercial relationship with farmers who used certain relevant land for the Applicants' failures to obtain relevant information and provide it to the Tribunal. The Applicants may not have been aware of the detail of the onus which lay on them. However, they were all times represented by experienced solicitors who I assume would have been aware of that onus and explained same to their clients.
Paragraph [12] of AS asserts summonses were issued and served on the farmers "upon the advices of the Applicants' solicitors and Counsel". No evidence was placed before the Tribunal in support of the submissions nor was any evidence provided as to when the alleged advice was given.
Counsel for the parties were informed by the Tribunal on several occasions during the hearing that submissions which were unsupported by evidence or authority should not be relied on and may not be accepted.
I reject the submissions at [12] other than in respect of my below findings concerning summonses being issued on the advice of Dandanis & Associates.
At [13] and [15] the Applicants submitted that their summonses to the farmers were a genuine attempt to assist the Tribunal, that all relevant material should be available to the Tribunal and did not delay the hearing.
I observe that: 1. Consent orders were made on 17 September 2019 including a guillotine order that, without leave, the Applicants could not rely on any evidence they filed and served after 5 p.m. on 4 October 2019. 2. Counsel for the Applicants conceded that the guillotine order was made in the context of a breach by the Applicants of the Tribunal's orders. 3. Certain unsuccessful requests were made by counsel for the Applicants during the first day's hearing on 6 December 2019 for leave to adduce additional evidence in chief. No leave was sought prior to the issue of summonses, to issue such summonses or file and serve any additional evidence from the farmers nor was any such leave granted. 4. Nor were relevant requests for leave made to the Tribunal after the first hearing day and prior to arranging the issue of the summonses to the farmers.
On the second hearing day the Tribunal was informed from the bar table by the Applicants' counsel that the summons to Mr McPherson was apparently issued by the Tribunal registry on about 17 or 21 January 2020. These dates are more than 5 weeks after the first hearing day and less than 3 weeks before the second hearing day.
Counsel for the Chief Commissioner submitted that it was too late to admit additional evidence, such evidence would be contrary to the Tribunal's guillotine order in September 2019.
I formed the opinion that there was a reasonable possibility, that if evidence obtained under the summonses was admitted into evidence during the second hearing day it may well have led to the Chief Commissioner seeking an adjournment to consider such evidence and then seeking to lead evidence in reply. This would have further delayed the proceedings. I directed that documents, sought to be admitted into evidence which were obtained under the summonses, not be admitted.

[30]

The Chief Commissioner's case

At RS [1] the Chief Commissioner sought costs against the Applicants calculated on an indemnity basis from 4 October 2019 and at RS [2] "having regard to the way in which the proceedings were conducted by Dandanis & Associates, the Chief Commissioner also applied for an order that Dandanis & Associates be jointly liable for the costs payable by the Applicant in respect of the three specific events referred to below."
At RS [3] the Chief Commissioner submitted the Tribunal could be satisfied there were special circumstances warranting an award of costs under s 60(2) and the Chief Commissioner relied on s 60(3) in that the proceedings were conducted in a way that unnecessarily disadvantaged the Respondent s 60(3)(a); a claim was made which had no tenable basis in fact or law s 60(3)(c) and was lacking in substance, s 60(3)(e); the Applicants and their solicitors failed to comply with the duty imposed on them under s 36(3) (s 60(3)(f)); and the Applicants abandoned the majority of their application more than seven weeks after the hearing, s 60(3)(g).
At RS [5] the Chief Commissioner stated he relied on several specific documents comprising several hundred pages, namely the judgement in the Substantive Proceedings, three affidavits and their respective attachments, five written submissions filed in the Substantive Proceedings, and the transcript covering the two hearing days of the Substantive Proceedings.
At RS [9] to [11] the Chief Commissioner substantially repeated paragraphs [8] to [10] in his earlier submissions of 7 August 2020. The Chief Commissioner's submissions: 1. referred to ss 36 and 60 and submitted that although the staring point is that each party to proceedings is to pay their own costs, if the Tribunal is satisfied that there are special circumstances which warrant an award of costs, the Tribunal, having had regard to certain specified matters, has power to award costs to a party, 2. referred to s 36(3) and submitted: … the Applicants and their solicitors were 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. The "guiding principle" is defined in s 36(1) of the Act and it is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. and 1. stated the Tribunal was empowered to determine the basis of costs to be paid, including on an indemnity basis. However, the fundamental rationale for the awarding of costs is that such an award is compensatory, not punitive.
I observe : 1. The Applicants did not disagree with the thrust of the Chief Commissioner's submissions as to the costs provisions, the Tribunal's powers to award costs and the 'guiding principle' in ss 36 and 60: AS [2(a)(b) and (c)]. 2. Dandanis & Associates adopted the submissions in AS at DS [2] and did not dispute the Chief Commissioner's submissions at RS [9] to [11] which appeared under the subheading "Costs power". 3. The dispute was that the Costs Respondents submitted that the evidence did not support the Chief Commissioner's submissions.
At [13] and [14] in RS, the Chief Commissioner repeated the 7 August 2020 submissions of the Chief Commissioner at [12] and [13] as follows:

[32]

Mendonca's Case

Mendonca's Case was a 2017 decision of the Appeal Panel of this Tribunal in respect of an internal appeal against three decisions made in the Consumer and Commercial Division of the Tribunal on 5 May 2017. The decisions concern applications for costs made by the respondent to the appeal, Mr Tonna, who was also the respondent in each of the proceedings in the Tribunal below.
The Appeal Panel allowed the appeal in part and varied some of the decisions under appeal. Those decisions were to the effect that some of Mr Tonna's costs were to be paid by Dr Mendonca on the ordinary basis as agreed or assessed and other costs were to be paid on an indemnity basis as agreed or assessed.
The Appeal Panel carried out a detailed analysis of relevant authorities and made specific orders so as to substitute "on the ordinary basis" for "on an indemnity basis" in certain of the orders made at first instance.
In relation to whether there were special circumstances which warranted an order for costs, the Appeal Panel said: 34 … For the purposes of s 60(2) of the NCAT Act "special circumstances" are circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], citing Cripps v G & M Mawson [2006] NSWCA 84 at [60]. 35 Further, as the Appeal Panel noted in eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]: [T]he discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. Each situation must, of course, be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs.
Relevantly to these proceedings, the Appeal Panel observed at [17] that special circumstances found by the Tribunal below included Dr Mendoca having conducted the proceedings in a manner that unnecessarily disadvantaged Mr Tonna from a costs perspective; Dr Mendoca involved Mr Tonna in litigation which was ultimately withdrawn and which incurred unnecessary costs; and the proceedings were unnecessarily prolonged and were ill-conceived.
At [39] the Appeal Panel held that circumstances specified in that paragraph were "sufficiently out of the ordinary to constitute special circumstances warranting an order for costs on the basis that the conduct of the proceedings caused disadvantage to Mr Tonna." and at [40]: This is particularly so given that the Tribunal did not make an order in relation to all costs incurred in the proceedings, but rather identified costs of the 19 August hearing and of the period after the withdrawal of the two first applications as periods warranting such an order.
Having regard to the immediately preceding paragraph, I note that in the current application, the Chief Commissioner has sought costs from 4 October 2019, the date Mr Hartley's report was filed. I also note that Ms Kiu deposed in her 18 September 2020 affidavit: 1. at [6] that the Chief Commissioner's legal costs from the commencement of these proceedings to 1 September 2019, were approximately $38,000 and are not being sought by the Chief Commissioner; and 2. at [7] that Senior Member Higgins ordered on 17 September 2019 that the Applicants pay the costs of and incidental to the appearance on that day.
The Appeal Panel stated at [44] in Mendonca's Case "The Tribunal's finding that special circumstances existed enlivened the discretion to make an order for costs."
In the recent decision of The Owners - Strata Plan No 55773 v Roden (Costs) [2020] NSWCATAP 197 the Appeal Panel, presided over by Justice Armstrong, President of the Tribunal, held: 46 Having found the proceedings were complex and that "special circumstances" exist to warrant an award of costs, the Tribunal has a general discretion in respect of costs. In these circumstances costs are compensatory and the starting position is that costs should follow the event.

[36]

Issuing summonses without leave

The Final Costs Application sought an order that Dandanis & Associates be jointly liable with the Applicants on an indemnity basis for costs incurred by the Chief Commissioner in relation to: Dandanis & Associates issuing summonses after the first hearing day without seeking leave of the Tribunal in circumstances where the Tribunal had made a guillotine order for the filing of the applicant's evidence some months prior.
Dandanis & Associates stated firstly at DS [23(a)] that it relied on AS [10] - [15] and secondly at DS [24] stated the step involving the issue of the summonses was taken in conjunction and consultation with experienced trial counsel and did not cause the Chief Commissioner to incur wasted costs.
I deal with the second submission concerning the alleged role of counsel first. I note that, as occurred throughout much of the substantive proceedings, submissions for the Applicants were not supported by any substantive relevant evidence. As noted above, the parties were informed by the Tribunal on numerous occasions during the hearing that submissions which were not supported by evidence or authorities would be given little or no weight and should not be relied on. No evidence or authority was provided in support of the submission concerning the role of counsel in these proceedings and I reject the submission.
I refer now to the submission that issuing the summonses did not result in the Chief Commissioner incurring wasted costs. I find that the Chief Commissioner has provided plausible evidence that he undertook work in responding to those summonses. Dandanis & Associates has produced no evidence in support of its submission. I reject Dandanis & Associates' unsupported submission.
As to the submission in relation to AS [10] - [15], I note that under the heading "Witnesses" at [#70] to [#80] above, I rejected the submissions at AS [10] to [13] and [15]. The submission at [14], to the extent that it is relevant, supports the Chief Commissioner's case that he carried out work in relation to the summonses.
It is noteworthy that AS [12], contains a submission that the summonses were issued "upon the advice of the Applicants' solicitors and Counsel". AS was signed on 21 August 2020 by Dandanis & Associates, the then solicitors for the Applicants.
DS, filed on behalf of Dandanis & Associates by that firm's solicitors Carter Newell Lawyers, states at [10] that Dandanis & Associates rely on AS; at [23(a)] DS repeats the submissions at AS [10] - [15] concerning the 'issue of a summons' (sic); and at [24], steps including the issue of the summons "were taken in conjunction and consultation with experienced trial counsel …" without repeating the statement as to the involvement of Dandanis & Associates in advising the Applicants on the issue of the summonses to Mr Pearson and Mr McPherson.
In the circumstances I find on the balance of probability that AS [12] and DS [23(a)] constitute plausible evidence that Dandanis & Associates advised the Applicants to issue the summonses and that the Applicants accepted that advice.
I have dealt above with the lack of evidence as to the involvement of Counsel in relation to the issue of the summonses and do not need to repeat my comments.
In the circumstances, I find that Dandanis & Associates is jointly responsible with the Applicants for costs incurred by the Chief Commissioner in dealing with the summonses issued in January 2020 at the request of the Applicants without leave of the Tribunal; without any application for leave; notwithstanding that counsel for the Applicants informed the Tribunal at the end of the hearing on 6 December 2019 that the Applicants had closed their case in relation to documentary evidence; and having regard to the guillotine order of the Tribunal on 17 September 2019. I find the issuing of the summonses disregarded the Tribunal's consent orders and caused unnecessary trouble and expenses for the Chief Commissioner. The costs are awarded on an indemnity basis as agreed and in default of agreement as assessed.

[37]

Making a 'hopeless' adjournment application

The Chief Commissioner submitted at RS [2.b] that he sought an order that Dandanis & Associates were jointly liable with the Applicants on an indemnity basis for costs in by the Chief Commissioner in relation to: Dandanis & Associates making a hopeless adjournment application prior to the second day of the hearing (on the basis that it was purportedly affected by the appeal panel's decision to be delivered in McIntosh v Chief Commissioner of State Revenue). The Respondent repeats the matters stated at [6(b)] of Annexure A.
I note "[6(b)] of Annexure A" refers to paragraph [6.b] of an email sent from the Chief Commissioner's solicitors to Carter Newall Lawyers, the solicitors acting for Dandanis & Associates in these proceedings. The email is said to particularise the Chief Commissioner's claim against Dandanis & Associates for costs. The preamble to [6] provides the context of the Chief Commissioner's application against Dandanis & Associates and states the application is directed at that firm's failure to comply with Tribunal directions, making an application for an adjournment that had no tenable basis and conducting the proceedings in a way which disadvantaged the Chief Commissioner - leading to costs being wasted or unnecessarily incurred by the Chief Commissioner.
Paragraph [6.b] stated: Dandanis & Associates made an adjournment application prior to the second day of the hearing on the basis that the proceedings were purportedly affected by the decision in McIntosh v Chief Commissioner of State Revenue, in circumstances where Dandanis & Associates had been informed by the Tribunal on the first day of the hearing that the evidence in the proceeding was severely deficient. It was not a case that would turn on McIntosh but rather on the taxpayer's onus of proof. The application for an adjournment was untenable and was ultimately rejected by the Tribunal, The respondent was required to file and serve submissions responding to the adjournment application and the applicants' submissions, consider and respond to the applicants' request for an urgent relisting during mid January 2020 ahead of the hearing which resulted in wasted costs. Those costs amount to $13,036.89.
The McIntosh Appeal Panel said at [6] the main issues of the Mcintosh appeal concerned the Tribunal's decisions at first instance to aggregate: (1) … the use of the subject land by multiple users for the purpose of determining if the land is used for primary production; and (2) … the commercial activities of those users engaged in primary production both on and off the subject land
The Applicants submitted at [11] that it would facilitate the just quick and cheap resolution of the real issues in the proceedings to adjourn the further hearing of the matter until the McIntosh Appeal Panel handed down its decision because it may lead to a resolution of the current proceedings without any need for a further hearing, it would narrow issues in dispute, and may prevent an appeal by either party later if the Tribunal handed down a decision which was contrary to the decision of the McIntosh Appeal Panel.
The Chief Commissioner's written submissions of 6 February 2020, substantially supported by evidence, included: 1. the result in McIntosh at first instance turned on the particular facts and evidence presented in that case. The McIntosh Tribunal made findings of fact in 11 separate areas referred to at [2(a) - (k)] in the reasons. At [3] in the February submissions, the Chief Commissioner submitted there was no evidence as to those matters before the Tribunal in the Substantive Proceedings; 2. issues raised in the McIntosh case referred to by the Applicants in the 21 January 20 submissions under the heading "Relevance of McIntosh appeal to current proceedings" would not arise because the Applicants had failed to adduce evidence about factual matters; 3. the Applicants had closed their documentary evidence on the first day of the hearing; and 4. the Tribunal had made a guillotine order in relation to the Applicants filing further evidence.
Having considered the relevant documents and the history of the proceedings with particular emphasis on the Applicants' multiple failures to comply with Tribunal directions, delays which had already occurred in the proceedings and the failure by the Applicants to produce substantive relevant evidence in support of their case, I formed the opinion that the adjournment application had minimal substance and would be likely to further delay the Substantive Proceedings. Accordingly, I rejected the Applicants' application.
The Chief Commissioner included, at [15] in his submissions, an application for his costs of the adjournment application on an indemnity basis.
I directed that the Chief Commissioner's costs application be deferred until the close of the Substantive Proceedings
In the circumstances, I find that Dandanis & Associates is jointly responsible with the Applicants for costs incurred by the Chief Commissioner in dealing with the Applicants' adjournment application, which had been dealt with by the Tribunal in its orders of 11 February 2020. I have particular regard to the unnecessary trouble and expense caused to the Chief Commissioner by the application. The costs for this event are awarded in favour of the Chief Commissioner on an indemnity basis as agreed and in default of agreement as assessed.

[38]

Failing to give reasonable notice that the Chief Commissioner's expert was not required to attend the hearing.

The Chief Commissioner submitted at RS [28.b]: … the Applicants and their solicitors further breached s 36(3) of the Act by … failing to notify the Respondent that Mr Schuster was not required for cross examination until the commencement of the hearing on 6 December 2019 (after previously advising he was required to attend from Dubbo) resulting in costs thrown away for the Respondent;
The Costs Respondents do not dispute that the Chief Commissioner, having been informed on 2 December 2019 by email that Mr Schuster was required to be available for cross-examination on the first hearing day, was informed, no more than 30 minutes before the commencement of the hearing that day, that Mr Schuster was no longer required.
The Applicants submitted in AS at [16]: … The election not to cross examine Mr Schuster was within the ambit of Counsel's conduct of the trial and his forensic decision. The Applicant had no control over such decision.
That submission, which was not supported by evidence, was adopted by Dandanis & Associates.
DS also relied, at [11], on the Edmonds Affidavit and the Gunawan Affidavit. The Edmonds affidavit effectively states that the Chief Commissioner is seeking an indemnity costs order against Dandanis & Associates for three matters including the failure to give reasonable notice that the Chief Commissioner's expert was no longer to attend the hearing in Sydney and that in default of agreement the costs would be assessed. I have considered the Gunawan Affidavit and the documents annexed thereto. The latter comprises a chain of emails between the solicitors for the parties marked "without prejudice except as to costs" and three open emails dated17 and 19 March 2020.
I have considered the Edmonds Affidavit and the Gunawan Affidavit for the purposes of the Chief Commissioner's costs application. The affidavits have not affected my findings.
At DS [13] Dandanis & Associates submits "There are no special circumstances in these proceedings." Having regard to my findings in these reasons I reject the submission.
The Tribunal does not challenge the submissions at AS [16] as to the outline of Counsels' anticipated role in proceedings in general. However, there is no evidence before the Tribunal that: 1. any entity or person other than Dandanis & Associates, presumably acting on behalf of and in accordance with instructions from the Applicants, was involved in the decision to reverse the requirement that Mr Schuster attend the hearing for cross-examination, and so informed the solicitors for the Chief Commissioner. 2. Mr Schuster would not have to travel from his home in Dubbo to the hearing in Sydney to accord with the Applicants' requirements. 3. The decision that Mr Schuster would not be required to attend the hearing was not made one or more days before the Chief Commissioner's solicitors were notified of the changed requirement.
I note the Chief Commissioner's evidence as to his solicitors' receipt of notification that Mr Schuster would not be required to attend the hearing a few minutes before the hearing started. The Costs Respondents have not disputed the timing of the notification nor have they provided any evidence so as to explain same.
I find the timing of the notification that Mr Schuster would not be required in Sydney for cross-examination by the Costs Respondents to be unexplained. I reject the unsupported implication that the Applicants' counsel is responsible for the notification and its timing.
I find that the unexplained last minute timing of the notification warrants costs being awarded on an indemnity basis because it caused unnecessary trouble and expense for the witness and the Chief Commissioner.
Having regard to the conceded involvement of Dandanis & Associates in the notification and the lack of relevant explanatory evidence concerning either the notification or timing, I find that Dandanis & Associates is jointly responsible with the Applicants for costs wasted by the Chief Commissioner on Mr Schuster's attendance in Sydney. The costs are awarded on an indemnity basis as agreed and in default of agreement as assessed.

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Judgment (41 paragraphs)

Legislation Cited (3)

Cases Cited (23)

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