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[2011] NSWSC 895
Supreme Court of NSW
2013-07-22
Original judgment source is linked above.
Withdrawal and dismissal 1The background of this case is summarised in the reasons for decision at an earlier stage in the proceedings, Bristrol Custodians Ltd v Chief Commissioner of State Revenue (No.2) [2013] NSWADT 128. The case was adjourned from 30 May to 22, 25 and 26 July. It consisted of the application by the respondent to dismiss with costs the substantive proceedings under s 73(5)(g)(ii) and (iv) of the Administrative Decisions Tribunal Act 1997 (ADT Act) as frivolous or vexatious or for want of prosecution. The substantive application and the applicant's own application for costs were also adjourned to those dates 2On the adjourned date the applicant gave notice of withdrawal and sought an order dismissing the substantive application under s 73(5)(g)(i) of the ADT Act. The applicant's application for costs was withdrawn at the same time. 3The applicant's counsel explained that since 30 January 2013 the applicant had been a company in liquidation in New Zealand and subject to the jurisdiction of the High Court of New Zealand. The liquidator, having since submitted his final report in the liquidation, and his role thereby being spent, now applied to withdraw the proceedings under s 73(5)(g)(i) of the ADT Act so as to enable the Supreme Court to deal with the matter. The applicant relied on the affidavit of Rosita Luk dated 21 July 2013 (this affidavit was referred to by both sides in submissions but never formally tendered) in support of the application, which set out how the liquidator was now potentially liable to become a party to the former liquidators' proceedings in that court, as was the respondent in these proceedings. 4In relation to the moneys claimed in these proceedings, the respondent had lodged with the liquidator two proofs of debt, one of which had been satisfied and the other withdrawn. As regards the proof of debt that had been satisfied, s 321 of the Companies Act 1993 (NZ) provided the basis for an objection to removal from the register. It provided expressly that a claim against a company is not "undischarged" if it has been paid in full. Therefore, if the claim has been discharged by payment, the creditor has no basis on which to object to removal from the register or the termination of the liquidation. Similarly, a debt is not undischarged under s 321 if the liquidator has notified the creditor that the assets of the company are insufficient, as was the case here. 5A creditor who lodged a claim but withdrew it on or before the date fixed by the liquidator would be excluded from the benefit of any distribution made before his or her claim was made. That was the case with the respondent's withdrawn claim. 6Such a creditor could only be entitled to receive the benefit of any distribution from which it was previously excluded if any assets remained or, in the opinion of the liquidator, were likely to remain, available for distribution. Late claims could be permitted but without disturbing previous dividends. A creditor who had not proved in time was not entitled to recover from shareholders to whom the liquidator had distributed the surplus. Where there were no remaining assets, that would be pointless. The applicant had no remaining assets in its winding up. 7In view of the above, the applicant submitted, it would be remiss of the liquidator, and indeed the respondent, to continue with this application when it was effectively futile and there were no prospects of recovery by the Chief Commissioner. It would also be inappropriate of the liquidator to ask this tribunal to adjourn the matter until the action in the New Zealand High Court brought by the liquidators of the former trustees was disposed of, when the respondent had no prospect of ever being able to become a party to that application or to make a similar application with any success himself. 8Further, it would not be appropriate for the tribunal to continue with the determination of a controversy which was the subject matter of other litigation in superior courts of record. The policy of the law is against multiplicity of proceedings and the courts seek to avoid the situation that the existence of several lawsuits over the same subject matter might lead to contradictory results. As Waddell J pointed out in Reynolds v Reynolds [1977] 2 NSWLR 295 at 306, the existence of two proceedings was considered prima facie vexatious and one would normally, as a matter of course, be stayed. 9The Supreme Court, having jurisdiction to decide all matters in the current controversy, was better equipped to discharge its obligation to ensure that as far as possible, all matters in controversy between the parties might be completely and finally determined, and all multiplicity of proceedings be avoided. For that reason, this tribunal had effectively become forum non conveniens. 10The respondent did not dispute the applicant's account of the present position but pressed his application to dismiss under paras.(ii) and (iv), pointing out that the applicant had not filed its submissions and evidence until that day and had announced its withdrawal only then. It was unable to discharge its statutory onus of proving that the two properties in issue had been held on trust before being transferred to the applicant. 11Section 73(5)(g) relevantly provides that the tribunal "may dismiss at any stage any proceedings before it...(i) if the applicant (or, if there is more than one applicant, each applicant) withdraws the application to which the proceedings relate". 12The cases show that the right to withdraw an application is for practical purposes unfettered. In Re Stevenson and the Commonwealth (1987) 13 ALD 524 the federal Administrative Appeals Tribunal had to interpret s 42A of the Administrative Appeals Tribunal Act 1975 (Cth), which at that time read: "Where all of the parties consent, the Tribunal may dismiss the application without proceeding to review the decision....". It will be noted that the language of s 42A, requiring the consent of all parties, was more restrictive than s 73(5)(g)(i). The tribunal held that the conditional right set out in s 42A was not inconsistent with the right of an applicant to withdraw an application and did not remove that right. The tribunal could not compel an unwilling party to continue with an application. After withdrawal there was no longer a subsisting application or an effective application. 13In Re Queensland Nickel Management Pty Ltd and Great Barrier Reef Marine Park Authority (1992) 28 ALD 368 at 374, the federal tribunal declared that it ought to be open to an applicant to settle the claim at any time up to the decision. "In the vast bulk of cases, it saves the parties and the public money". Notice of withdrawal was effective to withdraw the application from review, and "the proceeding is to be treated as having been disposed of finally.... That decision stands, as effectively as it would have stood if we had given a reasoned decision rejecting the application for review". 14In the present case, there would be no point in continuing to hear the respondent's dismissal application. If successful, it would achieve no more than the applicant's unilateral withdrawal would. If unsuccessful, the result would be made nugatory by the applicant's withdrawal. In either case, the costs so incurred would be wasted. The substantive application was therefore dismissed under s 73(5)(g)(i).
Costs on dismissal 15The principles governing orders for costs are set out in s 88 of the ADT Act: 88 Costs (1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section. (1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as: (i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or (ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or (iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or (iv) causing an adjournment, or (v) attempting to deceive another party or the Tribunal, or (vi) vexatiously conducting 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) any other matter that the Tribunal considers relevant. (2) The Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs. (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Tribunal, and (b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application. 16It has long been established that a tribunal retains the power to consider an application for costs notwithstanding that the substantive issue in the case has been finally determined: Jeffery v Corrections Victoria (2004) 21 VAR 196 at [38]; see also Sanchez v Comcare (1997) 48 ALD 785. 17Mr Rider pointed out that the Court of Appeal in AT v Commissioner of Police, New South Wales Police Force [2010] NSWCA 131 at [32] -- [33] had declared that while the governing principle in the tribunal was that each party should bear its own costs, there was "a relatively low hurdle" for the making of a costs order in favour of a successful party. In that case, however, the applicant/appellant had obtained decisions in her favour at two successive levels in the appeal process. Further, the court considered that the respondent's conduct, while not improper, had been unnecessarily intransigent. Tribunals have also pointed out that special considerations arise from the legislative objective of ensuring that no sections of the community will be deterred from seeking relief in the tribunal system: Murphy v Chief Commissioner of State Revenue [2012] NSWADT 221 at [27]. 18In Re Minister for Immigration and Ethnic Affairs, ex parte Lai Qin (1997) 186 CLR 622 at 624, McHugh J., while noting that a successful party is prima facie entitled to a costs order, pointed out that: When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. 19The court could not try a hypothetical action between the parties, which would burden the parties with the costs that by settlement they had avoided, but the court might in some cases conclude that one of the parties had acted so unreasonably that the other should obtain the costs of the action. 20Moreover, in some cases a judge might feel confident that although both parties had acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. But such cases are likely to be rare, his Honour said. But if both parties had acted reasonably until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion would usually mean that the court would make no order as to costs (at 625). See also Smith v Airservices Australia [2005] FCA 997; David Doyle v Hall Chadwick [2011] NSWSC 895. 21The respondent relied on four main grounds for seeking a costs order, the first of which was that the applicant had made a claim that had no tenable basis in fact or in law. While the respondent's position in the substantive application may well have been the stronger one, it might be going too far to say that the applicant's case was hopeless. In ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697, Barrett J. applied the change of trustee exemption in a somewhat analogous case, while in Perpetual Trustee Company v Commissioner of State Revenue (2000) 44 ATR 273, [2000] VSC 177 the Victorian Supreme Court refused to do so as the change of trustee was a step in an overall sale transaction, and not solely to effect a change of trustee. 22Next, the respondent submitted that the applicant's interlocutory appeal was vexatious, as was shown by the Appeal Panel's decision dismissing it. To that contention the appellant replied that the respondent's allegations of irregularities amounted to a claim of fraud, which should have been particularized. As that had not been done, the applicant had been forced to seek further information to enable it to respond to the allegation. While it is not necessary to resolve that particular issue, it does appear that the applicant had a legitimate forensic basis for launching the appeal. 23The respondent then contended that, assuming it was correct to say that the applicant company no longer had any assets that would enable it to satisfy an order for costs and was highly unlikely ever to have any, impecuniosity had never been held to be a reason for declining to make a costs order. He relied inter alia on Scott v Secretary, Department of Social Security (No.2) [2000] FCA 1450 and Yilan v Minister for Immigration and Multicultural Affairs [1999] FCA 1212. While those cases arose in courts where the normal costs rule applies, the same principle has been adopted in tribunals, subject to the considerations mentioned in Murphy and similar cases: Fasham Johnson Pty Ltd v Ware [2004] VCAT 1708 at [14] -- [15]. The principle will thus be relevant when considering the element of fairness in s 88(1A). 24Finally, the respondent submitted that the tribunal should be satisfied that it is fair to award the respondent its costs under s 88(1A)(b) of the ADT Act because of the applicant's conduct in prolonging unreasonably the time taken to complete the proceedings by failing to comply with tribunal directions to file and serve evidence and submissions in the substantive proceedings and consistently applying for adjournments and stays in the tribunal proceedings without giving any indication that it intended to prosecute the proceedings. The respondent submitted that the applicant had carried out a deliberate course of action designed to assist the applicant in the liquidator proceedings and to frustrate the progress of the tribunal proceedings. 25The applicant countered that the recent delays and adjournments had been explained and one of them had been due to a contretemps over a proposed application by the respondent for a suppression order. Further, the delays caused had been accommodated by adjustments to the timetable allowing more time to the respondent. The costs incurred by the respondent had not been entirely wasted as he had obtained his preferred result, in that the reassessment still stood. 26While the adjustments to the timetable may have mitigated the inconvenience caused to the respondent by the adjournments, they could not compensate him for the costs incurred. On the other hand, there is little evidence to support the respondent's contention that the applicant had followed a deliberate course of action designed to assist the applicant in the liquidator proceedings and to frustrate the progress of the tribunal proceedings. 27Had the substantive matter been litigated to a conclusion and the respondent had emerged successful, the five (or possibly six, depending on what is counted) adjournments and repeated missed deadlines since the application was lodged in 2011 might well have justified an order for costs against the applicant. 28In this case, however, the applicant's withdrawal has saved the costs of two full hearing days as well as those of any potential consequential proceedings, and given the respondent the result it sought. That is a consideration relevant to the criterion of fairness in s 88(1A). Moreover, it would not be appropriate for the tribunal to impose on parties considering withdrawal a perverse incentive to persist in hopeless or futile litigation on the off -chance that they might succeed and thereby forestall a possible costs order following withdrawal. Accordingly I do not think that fairness requires an order that the applicant pay the respondent's costs. 29There will therefore be no order as to costs.
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: 31 July 2013
Bristrol Custodians Ltd
Chief Commissioner of State Revenue
[2004] VCAT 1708
[2000] VSC 177
(1997) 186 CLR 622