A J Holdings (NSW) Pty Ltd v Chief Commissioner of State Revenue

Costs orders by the tribunal

1. The power of the Tribunal to award costs is conferred by CATA s 60. Section 60 of the Act provides: 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: 1. whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, 2. whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, 3. 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, 4. the nature and complexity of the proceedings, 5. whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, 6. whether a party has refused or failed to comply with the duty imposed by section 36(3), 7. any other matter that the Tribunal considers relevant. 1. If costs are to be awarded by the Tribunal, the Tribunal may: 1. determine by whom and to what extent costs are to be paid, and 2. 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. 1. In this section: "costs" includes: 1. the costs of, or incidental to, proceedings in the Tribunal, and 2. 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.
2. The term "costs" in s 60 refers to the types of costs recoverable in legal proceedings. "Costs" that the Tribunal can order to be paid under s 60(2) will not include compensation for time spent by a litigant who is not a lawyer in preparing and conducting his or her case: Hammond v Ozzy's Cheapest Cars Pty Ltd (t/as Ozzy Car Sales) [2015] NSWCATAP 65 (Hammond) at [107] citing Cachia v Hanes (1994) 179 CLR 403 at 409; eMove Pty Ltd v Dickinson [2015] NSWCATAP 94 (eMove) at [50]. (Mr A J Sidgreaves, as a director of the applicants, represented the applicants before the Appeal Panel and the Tribunal. In the ADT proceeding the applicants were represented by legal representatives.)
3. Under s 60, the general costs rule is that each party is to pay their own costs. A costs order is therefore an exception to the general costs rule. In general it is very unusual for awards of costs to be made in the review jurisdiction of the Tribunal, especially at first instance: GA v University of Sydney (No 2) [2010] NSWADTAP 53 at [17], [19], Campbell v Chief Commissioner of State Revenue (RD) [2011] NSWADTAP 27 at [26], KT v Sydney Local Health District (formerly Sydney Local Health Network) (No 2) [2011] NSWADTAP 42 at [18].
4. Pursuant to s 60(2) costs may only be awarded if the Tribunal is satisfied that there are "special circumstances" warranting an award of costs. See Hammond at [106]; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 (Megerditchian) at [3]; eMove at [36]. Pursuant to s 60(3) the Tribunal may have regard to the matters there recited in determining whether there are "special circumstances" warranting an award of costs.
5. The fundamental rationale for the awarding of costs is that such an award is compensatory, not punitive: eMove at [37] citing Latoudis v Casey (1990) 170 CLR 534 at 543; Oshlack v Richmond River Council (1998) 193 CLR 72 at 97.
6. The person applying for a s 60(2) costs order is the party who bears the onus of establishing an entitlement to costs: Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48 (Spiteri) at [18]. In the present matter the Applicant must establish that there are "special circumstances warranting an award of costs".
7. It is not enough or sufficient to exercise the discretion that the circumstances are "special"; the special circumstances identified must also "warrant" an order for costs: B and L Linings Pty Ltd and Anor v Chief Commissioner of State Revenue (No 4) (RD) [2008] NSWADTAP 14 (B & L Linings) at [56]; Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [18-21] (Fitzpatrick Investments).
8. The term "special circumstances" as used in s 60 is not defined in CATA, or elsewhere. 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].
9. 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: Citadin Pty Ltd (No. 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd [2001] NSWADTAP 31 cited in CPD at [28].
10. Unreasonable conduct that is out of the ordinary and conduct which is grossly unreasonable can attract exercise of the Tribunal's power under s 60 to award costs. See Spiteri at [55], Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [55].

The Review Application proceedings

1. For the purposes of the GMTA the holder of a hotel licence is a "hotelier". The ADT Decision was premised on the basis that on the 21st day after the end of the quarter (but not at the end of the quarter) the Appellants/applicants were the deemed holders of the hotel licence (Appeal Decision at [16]). That premise was disputed before the Appeal Panel notwithstanding that the applicants' Objection accepted that the Appellants/applicants were the licensees from 2 January to 29 January 2012 (Appeal Decision at [15 and16], [19 and 20]). In the ADT proceeding the parties agree that Mr Parrott was licensee as at 31 December 2011, and the applicants, from 4 January 2012 or possibly 2 January 2012 (ADT Decision at [16]). The ADT identified as the issue for determination, the date or dates on which the quarterly instalment was "due" within the meaning of GMTA, s 7(4): ADT Decision at [21].
2. The primary issue in the ADT was whether the tax liability arose at the end of the quarter or on the 21st day (Appeal Decision at [20]). The ADT was satisfied that the quarterly instalment was "due" on 23 January 2012 (as 21 January fell on a weekend) and concluded, "As the applicants held the licence of Tommy's Tavern on that date, they are liable to pay the Quarterly Instalment" (ADT Decision at [52-53]).
3. The primary question for the Appeal Panel was whether the due date is the last day of the quarter, or the 21st day after the end of the quarter (Appeal Decision at [2]). The Appeal Panel determined that the instalment was due at the end of the quarter (Appeal Decision at [90]). On that finding, whether the Appellants/applicants were deemed licensees (i.e., "hoteliers") on the 21st day, as contended for by the Respondent's, was of no moment (Appeal Decision at [92]). If the Appellants/applicants were not hoteliers at the relevant time then, according to the Appeal Panel, there was a subsidiary issue, namely, whether the Appellants/applicants "were nevertheless liable to pay the tax [under GMTA s 6(3)(b)] as persons interested in the hotel business on that date": Appeal Decision at [2].
4. On setting aside the ADT Decision orders, the Appeal Panel ordered that questions of whether the Appellants/applicants were liable under GMTA s 6(3)(b) and, if so, whether it was appropriate to apportion liability (as permitted by GMTA s 11), remitted to the Tribunal for determination, with the hearing of further evidence on the questions.
5. The Remitter Decision proceeding is limited to answering the two questions remitted. The Tribunal having concluded that the applicants were not liable pursuant to GMTA s 6(3)(b), answered the first of the two questions, "No". Accordingly, the Tribunal was not required to answer the second question.

Preliminary issue

1. The Applicant "urge[d] the Tribunal to disallow the Respondent's submissions": Applicant's letter dated 2 June 2015 (Letter) filed on that date.
2. In a document dated and filed 5 May 2015 and headed "Final Submissions" (AWS2), the Applicant pointed out that it had complied with the timetable relating to the costs application: AWS2 paras 1-2. The timetable required the Respondent's submissions to be filed and served by 18 May 2015. Those submissions, dated 21 May 2015, were filed on 21 May; no explanation for the late filing was given. On or about 27 May 2015 the Applicant advised the Tribunal that the Respondent's 21 May submissions were received on 27 May. On 28 May 2015 the timetable was further amended to allow the Applicant to file and serve any submissions in reply by 2 June 2015.
3. A J Sidgreaves signed the Letter as director of the Applicant. On the matter of submissions in reply the Letter advised, "I intend to rely on my final submissions filed on 3 [sic] May 2015. I do not propose to file any further submissions in reply."
4. I am not minded to disallow the Respondent's submissions as urged by the Applicant. Procedural fairness was not denied. The Applicant was afforded the opportunity to file submissions in reply and chose not to do so.

Costs issue

1. The Applicant's filed submissions comprise AWS2 and the document filed 1 April 2015 (AWS1). The substance of the Applicant's case in the costs application appears from AWS2 paragraphs 3 to 6, which read as follows: SPECIAL CIRCUMSTANCES 3. Section 7 of the Gaming Machine Tax Act (the act) has attached to it a penalty in the form of penalty units making the matter a summary matter upon the provisions of sections of 'the act' being breached. Section 24 of 'the act' requires that 'proceedings for an offence under this act or the regulations are to be dealt with summarily before the local court.' When the Respondent failed to recover gaming machine tax for the instalment period 1 October 2011 to 31 December 2011 in a sweep as required by section 7 of 'the act' 'in the case of the hoteliers, the liability to such an instalment lies with the hotelier who holds the relevant licence at the time the instalment is due', that hotelier committed a criminal offence by not making the tax available to be collected by the Respondent. 4. It is common ground that the Applicant was not both the tax payer and hotelier when the instalment became 'due'. This was confirmed and vindicated by the Tribunal before the Appeal Panel - File No.139038. When the matter was put before the Tribunal originally - File No.126111 the Respondent was fully aware that the Applicant was not the 'hotelier who holds (held) the relevant licence at the time the instalment is due' yet still demanded full payment of the outstanding liability. The Applicant 'at the time the amount became due, was' not 'directly interested in the business, or the profits of the business carried out under the hotel licence'. The Tribunal upon remittal - Case No.1410535, has also confirmed this position and again the Respondent as of 29 August 2012 and [sic] was fully aware of this fact as well and allowed proceedings to commence and continue. 5. The Applicant was unnecessarily disadvantaged by the Respondent due to the following: (i) The Tribunal never had jurisdiction to review the non-payment of an instalment of gaming machine tax, which is a criminal offence. Had the matter been put before the local court, it would have been disposed of more quickly than it was before the Tribunal, which also made the proceedings more complex, by nature as it was asked to review both statute law and a criminal offence. (ii) The Respondent in the following case simply ignored the ruling of Block J who provided a definition of an instalment period and dealt with the meaning of the word 'due' (Paragraph 9); Papacostas v The Chief Commissioner of State Revenue [2006] NSWADT 57 (iii)The ruling of Block J was binding on the Respondent and this matter has been live since 2012 and is a matter, which should have never been put before the Tribunal 6. In light of the ruling of Block J, the claims of the Respondent lacked substance, were frivolous and misconceived and also ignored the provisions of section 19(6) of the Gaming Machines Act - 'however a person is not considered as having a financial interest in a hotel licence by reason only of being the owner of the hotel'.
2. As indicated in AWS2 para 5, the claimed "special circumstances warranting an award of costs" is that the Applicant "was unnecessarily disadvantaged by the Respondent due to" the matters set out in that paragraph. Pursuant to CATA s 60(3)(a) one of the matters to which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs is, "whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings". On the considerations outlined below, I am not satisfied that the Applicant was "unnecessarily disadvantaged".

AWS2 para 4

1. The Applicant's submission ignores that the finding that the "due" date is at the end of the quarter, was not made until the handing down of the Appeal Decision on 4 March 2014. The ADT on 9 July 2013 found that the "due" date was the 21st day after the end of the quarter. Plainly, the Respondent's contention to that effect was arguable. Accordingly it was not unreasonable for the Respondent to argue for that contention in both the ADT and the Appeal Panel proceedings.
2. The ADT Decision was premised on the relevant time being the 21st day after the end of the quarter, by which time the applicants were taken to be deemed licensees and therefore hoteliers: see paras 18-20 above. The Appeal Panel having determined the relevant date was the end of the quarter, whether the applicants were hoteliers on the 21st day after the end of the quarter was of no moment in the Appeal Decision: see para 20 above. The issue of whether the Applicant was "directly interested in the business, or the profits of the business carried out under the hotel licence" arose in the Appeal Decision proceeding. That issue was not determined until the handing down of the Remitter Decision on 13 February 2015.
3. The Respondent did not contend that the applicants were the "hotelier" at the end of the quarter. Appeal Decision at [71-72], [91].

AWS2 para 3, 4, 5i

1. In this matter the "proceedings before it" in relation to which the Tribunal may award costs pursuant to s 60(2) is, of course, the Review Application. The applicants, not the Respondent (the Chief Commissioner), commenced the Review Application proceeding. The appeal proceeding in the Appeal Panel was commenced by the applicants; and the remitter proceeding in the Tribunal was a consequence of orders made by the Appeal Panel.
2. The sole matter for review by the ADT was the Decisions. The ADT was not, as asserted by the Applicant (AWS2 para 5i), "required to review …a criminal offence". I reject the Applicant's submission (AWS2 para 5i) that "Had the matter been put before the local court, it would have been disposed of more quickly than it was before the Tribunal, which also made the proceedings more complex, by nature as it was asked to review both statute law and a criminal offence."
3. Liability for the tax payable under the GMTA is independent of any non-payment offence committed by the hotelier. If the hotelier fails to pay the tax, liability to pay the amount of that tax is imposed by GMTA s 6(3) jointly and severally on the hotelier and the persons "directly interested in the business, or the profits of the business carried on under the hotel licence". A prosecution proceeding brought against the hotelier, even if successful, would not of itself affect the operation of GMTA s 6(3)(b).
4. Whether the applicants are liable under s 6(3)(b) was not in issue in the ADT proceeding (the review proceeded on the basis that the applicants were the hotelier: see paras 18-19 above). The Appeal Panel did not decide that issue and expressly required the Tribunal on remitter to determine it (Appeal Decision at [103]). Accordingly it was not unreasonable for the Respondent to argue in the Tribunal that the applicants were liable under s 6(3)(b).

AWS2 para 5ii, 5iii

1. The parties are in dispute on the matter of whether the decision in Papacostas v The Chief Commissioner of State Revenue (Papacostas) is relevant to the meaning of "instalment period" and "due" in GMTA s 7. To that extent, the Respondent says he did not ignore Papacostas (RWS para 15).
2. The ADT did not accept that Papacostas is authority for the proposition that a quarterly instalment is, within the meaning of GMTA s 7(4), "due" at the end of the quarter (ADT Decision at [17], [25-30]). In the ADT, Judicial Member Perrignon accepted the Respondent's submission that the decision in Papacostas was distinguishable by its facts (ADT Decision at [30]). The Appeal Panel did not overrule this finding. The Appeal Panel acknowledged the Appellants'/applicants' submission that the ADT "ought to have followed Papacostas" (Appeal Decision at [32]). The Appeal Panel made no finding that the ADT "ought to have followed Papacostas", and did not express any view on the submission. In the Appeal Panel's consideration of when the instalment is "due" and in its conclusion that "the time the instalment is due is the end of the quarter", no mention is made of Papacostas (Appeal Decision at [82-90]). Papacostas is, essentially, a case on apportionment under GMTA, s 11: see Appeal Decision at [97], ADT Decision at [24-30].
3. Neither the ADT nor the Appeal Panel accepted the applicants' submission that Papacostas, in relation to "due", applies in this case. The Applicant has not established that by reason of Papacostas the "due" issue "is a matter, which should have never been put before the Tribunal".

AWS2 para 6

1. Having regard to paras 34-38 above, I am not satisfied that the Applicant has established that any identified "claims of the Respondent lacked substance, were frivolous and misconceived" (cf CATA s 60(3)(e)).
2. The Applicant's submission that the Respondent "ignored the provisions of section 19(6) of the Gaming Machines Act" is, in my view, misconceived. Neither the Appeal Panel nor the Tribunal made a finding that s 19(6) of the Gaming Machines Act 2001 (NSW) is relevant to determining the operation of GMTA, s 6(3)(b).
3. Section 19 of the Gaming Machines Act 2001 provides for the transfer of gaming machine entitlements. Subsections (3), (5) and (6) (there is no subs (4)) are as follows- (3) An application for the Authority's approval of the transfer of a gaming machine entitlement must: (a) be accompanied by the fee (if any) prescribed by the regulations, and (b) be accompanied by such particulars or other matter as may be required by the Authority in relation to the proposed transfer, and (c) in the case of an application for the transfer of an entitlement held in respect of a hotel licence - demonstrate, to the satisfaction of the Authority, that the proposed transfer is supported by each person who, in the opinion of the Authority, has a financial interest in the hotel licence, and (d) be in the form and manner determined by the Authority from time to time. (5) For the purposes of subsection (3)(c), a person is taken to have a financial interest in a hotel licence if the person is entitled to receive any income derived from the business carried on under the authority of the licence or any other financial benefit or financial advantage from the carrying on of the business (whether the entitlement arises at law or in equity or otherwise). (6) However, a person is not, for the purposes of subsection (3)(c), to be considered as having a financial interest in a hotel licence by reason only of being the owner of the hotel.
4. The express terms of s 19(6) show that "financial interest" in that provision refers exclusively to the "financial interest in the hotel licence" mentioned in s 19(3)(c). The term "financial interest in a hotel licence", and even the term "financial interest", is not found in GMTA s 6(3)(b), a provision concerned with a direct interest in "the business or the profits of the business".

Other matters

1. The Respondent takes in RWS with "certain factual and legal inaccuracies" in AWS1 and AWS2, and also denies allegations made by the Applicant in AWS1 of corrupt and negligent conduct on the part of the Respondent: RWS para 25ff.
2. To the extent that AWS1 submissions are not already within matters raised or adverted to in AWS2, they do not seem to me to be relevant to the costs issue in relation to the Review Application. As has already been noted (para 25 above), the Applicant advised the Tribunal in writing on 2 June 2015 that, in relation to the costs application, "I intend to rely on my final submissions [AWS2]. I do not propose to file any further submissions in reply."
3. The Applicant's allegations of "corrupt and negligent conduct" on the part of the Respondent (which the Respondent denies) have, in my view, no standing beyond that of denied allegations. The presumption of regularity in the maxim omnia praesumuntur rite et solemniter esse acta presumes that a public officer has acted properly in the administration of his office (until the contrary is proved): see e.g., Pertl v Kahl (Deputy Commissioner of Taxation (SA)) (1976) 13 SASR 433; McNeil v Narrabri Shire Council [2013] NSWCA 112 at [49].

Conclusions

1. I am not satisfied that the Applicant has established that the Respondent has conducted the Review Application in a way that unnecessarily disadvantaged the Applicant. In regard to the other matters specified in CATA s 60(3), I am not satisfied that the Applicant has established any matters on which I may properly be satisfied that there are special circumstances warranting an award of costs in favour of the Applicant.
2. There will accordingly be no order as to costs. 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: 07 July 2015