Chalik v Chief Commissioner of State Revenue [2025] NSWCATAD 238;

1. The Decision is one under which the Respondent states that he disallows an objection (the Objection) made on 20 November 2023 by Mr Isaac Chalik concerning Duties Assessment Number 10739288-002 (DAN-002) issued by the Chief Commissioner on 29 October 2023.
2. In fact, the Decision has two elements. First, the Respondent undertakes a review of a transfer made in 2023 to the Applicants of a lot in a particular strata plan (the 2023 Transfer). The original duty assessment for the 2023 Transfer - Duties Assessment Number 10739288-001 (DAN-001) - was not the subject of the Objection, but the Respondent observes in the Decision that he has determined to reassess the 2023 Transfer with ad valorem duty (rather than the nominal duty with which it was originally assessed) in the light of certain determinations made by him in the course of considering the Objection. The Respondent seeks evidence as to the relevant real property's value and indicates that following receipt of that evidence he will issue a new assessment for the 2023 Transfer in the place of DAN-001. Secondly, the Respondent states that in view of that determination it is no longer necessary to review the decision concerning DAN-002 and therefore declines to consider further the Objection. In doing so, the Chief Commissioner indicates that once ad valorem duty is paid following his reassessment of the 2023 Transfer, DAN-002 will be withdrawn.
3. The Applicants then proceeded to lodge the Substantive Application on 9 May 2024, on the basis set out in Section 3 of their Administrative Review Application Form dated 8 May 2024, that "Objection not considered but rather a reassessment of a different related decision. Breach of s9(1) of Taxation Administration Act (NSW) where 'Commissioner must consider an objection'".
4. The Substantive Application then formed the subject of directions hearings on 30 July, 17 September, 17 October and 22 October 2024, as the result of which on 17 October 2024, the Tribunal dispensed with a hearing pursuant to section 50(2) of the NCAT Act, and on 22 October 2024, the Tribunal made certain orders directed at ensuring the orderly disposition of the Costs Application.
5. These included relevantly an order that the Applicants file and serve their costs application by 5 November 2024; orders that the Applicants and the Respondent file and serve their evidence and submissions on the Costs Application by respectively 5 November 2024 and 26 November 2024, and that the Applicants file and serve any material in reply by 10 December 2024; an order that the Costs Application be heard on the papers after 10 December 2024; and Notations as to:

(a) the withdrawal by the Respondent of DAN-002; and

(b) the Respondents' intention to make the Costs Application.

1. The Respondents have not lodged a formal application, in the form of the Tribunal's General Application Form, seeking costs. However, they lodged written submissions as to costs and submissions in reply, and the Respondent has lodged detailed submissions on costs.
2. In view of the parties' clear engagement from their respective perspectives with the Costs Application the Tribunal is satisfied that the Respondent has not been disadvantaged by the Applicants' failure to comply strictly with order 1 of 22 October 2024.
3. Accordingly, having regard to the guiding principle in section 36 of the NCAT Act, that procedural matters be dealt with before the Tribunal "... to facilitate the just, quick and cheap resolution of the real issues in the proceedings ..", the Tribunal intends to proceed on the basis that the Applicants' lodging of their submissions amounts to substantial compliance with the order.

1. Section 60 of the NCAT Act makes provision concerning costs in proceedings before the Tribunal. The starting point is section 60(1). It provides that:

Each party to proceedings in the Tribunal is to pay the party's own costs.

The general rule therefore is that parties before the Tribunal are responsible for their own costs.

1. This is modified by s 60(2) of the NCAT Act, which provides that:

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.

1. Section 60(3) of the NCAT Act provides some guidance as to the considerations that the Tribunal may take into account in determining whether there are special circumstances warranting a departure under s 60(2) of the NCAT Act from the general rule:

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.

1. This list affords the Tribunal guidance but, if only by reason of the inclusion of section 60(3)(g), without fettering its ability to consider all matters which appear relevant. Moreover, the list merely indicates factors that may be considered in deciding whether there are special circumstances; it does not mean that the presence of one or more factors in relation to a particular set of proceedings should necessarily result in a costs order.

1. All of this sits in a wider statutory matrix.
2. Section 36 of the NCAT Act provides relevantly in section 36(1) that:

The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

Of particular relevance here are the words "quick" and "cheap". The NCAT Act favours neither delay nor expense in proceedings before the Tribunal, and this statutory aversion manifests itself in a number of provisions, including:

(a) section 36(3) of the NCAT Act, which imposes a duty on parties to proceedings to co-operate with the Tribunal in order to give effect to the guiding principle, and

(b) the costs provisions in s 60 of the NCAT Act.

1. The underlying policy setting of s 60 of the NCAT Act is clear. It provides a real incentive to parties to conduct proceedings in a way which is conducive to economy of time and expense, and thus consistent with the guiding principle. This is because a party who fails to do so can normally expect to bear the financial consequences of that failure, even if the eventual outcome of the proceedings is one which he or she supports. The NCAT Act does not seek to prohibit parties from incurring costs - whether modest or substantial - in relation to proceedings before it, should they choose to do so. What it can (and does) do, however, is to ensure that absent special circumstances the financial consequences of such a choice rest with the person who makes it.
2. Although the general approach in the Tribunal to legal representation, as set out in Section 45(1) of the NCAT Act, is that parties should normally represent themselves in proceedings before the Tribunal, this Is not the case in proceedings in the Administrative and Equal Opportunity Division. Section 9(1) of Schedule 3 to the NCAT Act gives parties to proceedings in this Division an entitlement to be legally represented without requiring the leave of the Tribunal.

1. In considering this application the Tribunal looks to the matters set out in section 60(2) of the NCAT Act.
2. Section 60(2)(a): Whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings.

The Substantive Application was lodged on 9 May 2024 and was considered at directions hearings on 18 June, 30 July, 17 September, 17 October and 22 October 2024. The 18 June directions provided for a further directions hearing on 30 July, at which time orders could be made for the filing and service by the Respondent of documents (the s58 Documents) under section 58 of the Administrative Decisions Review Act 1997, if the Applicant had not decided by then to withdraw the Application. At the 30 July directions hearing, directions were made for the filing and service of the s58 Documents, for the subsequent filing and service of evidence and submissions by both parties, and for the hearing of the Substantive Application on 25 October 2024. The Respondent filed the s58 documents on 23 August 2024; these are organised consistently with the Respondent's usual practice, and nothing in them appears to depart from the Respondent's normal approach to compliance with its obligations under section 58. At the 17 September directions hearing the timetable set out in the 30 July directions was varied, both retrospectively and prospectively, to correspond to the actual and likely course of events, which was relevantly as follows:

(a) On or about 11 September 2024, the Applicants provided their written submissions on the Substantive Application, consistently with the 17 September directions;

(b) On or about 23 September 2024, the Respondent appears to have provided his written submissions in the Substantive Application, consistently with the 17 September directions;

(c) On 3 October 2024, the Respondent's solicitor wrote to the Applicants' solicitors, outlining in some detail an intention to proceed in the way summarised in paragraph [5] of these reasons, and the Respondent's reasons for doing so; and

(d) Thereafter, as described in paragraphs [7] and [8] of these reasons, the hearing of the Substantive Application was vacated and the Costs Application proceeded.

Nothing in this course of events discloses any conduct on the part of the Respondent in connection with the Substantive Application that unnecessarily disadvantaged the Applicant.

Nor does the Decision constitute, as the Applicants claim in the Substantive Application, a failure to consider the Objection. Section 91(1) of the Taxation Administration Act 1996 requires that the Respondent "... consider an objection and either allow the objection in whole or in part or disallow the objection". The decision makes it clear that the Respondent did in fact give consideration to the Objection and proceeded to the next step under that section, by disallowing it.

That the Respondent indicated an intention to withdraw DAN-002 and to reassess DAN-001 does not alter those conclusions. There is no controversy that these Duties Assessments were made on 26 September 2023 and are thus well within the limitation periods of 5 years applicable under section 9 of the Taxation Administration Act 1996 to the reassessment of a tax liability, and under section 13 to the withdrawal of an assessment. It was thus open to the Respondent to make the reassessment and withdrawal proposed.

1. Section 60(2)(b) of the NCAT Act: Whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings

The summary in paragraph [21] above does not indicate any unreasonable prolongation of the proceedings by the Respondent.

1. Section 60(2)(c) of the NCAT Act: 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

There is a divergence of views between the Applicants, on the one hand, and the Respondent, on the other, as to the liability to ad valorem duty of the 2023 Transfer. Such a substantive divergence is necessarily an element in all applications for the review of decisions by the Respondent and does not of itself indicate the absence of any tenable basis for the respective positions of either the taxpayer or the Chief Commissioner.

Because of the way in which the Substantive Application has been dealt with, there is no substantive finding of the Tribunal in relation to it. It is inappropriate for the Tribunal to make such a substantive finding for purposes solely of the Costs Application.

However, the Respondent's counsel issued on 23 September 2024 detailed submissions concerning the Substantive Application, the final paragraph of which is that "The assessment in DAN-002[1] should be confirmed". The Tribunal has sufficient confidence in the professionalism of counsel appearing before it to conclude that neither such a conclusion nor its underlying reasoning would be issued by counsel without there being at least an arguable, albeit not necessarily ultimately correct, basis for doing so.

1. Section 60(2)(d) of the NCAT Act: The nature and complexity of the proceedings

The Applicants' claim for costs is based essentially on:

(a) the perceived complexity of the controversy: see paragraphs [11] and [12] of the Applicant's submissions dated 8 November 2024, and paragraph [5(c)] of their submissions of 10 December 2024; and

(b) the financial materiality to the Applicants of the possible duty liability: see paragraph [13] of the Applicants' submissions dated 8 November 2024, and paragraph [5(d)] of their submissions of 10 December 2024.

The Decision and the Substantive Application require consideration of section 64 of the Duties Act 1997, which provides for the assessment with fixed duty only of acquisitions of land effected by their substitution for other kinds of land use entitlements. This treatment is available subject to certain conditions, and the issue appears to be whether the circumstances in which the Applicants originally acquired their - subsequently converted - land use entitlements were such as to satisfy these conditions. The underlying concepts require a relatively sophisticated legal analysis, but neither they nor their application to the factual situation raised by the assessments present in the Tribunal's view the degree of complexity for which the Applicants contend.

The amount of duty involved in the Substantive Application was in the order of $72,000. While not insignificant, this is a liability of the same order of magnitude as that incurred by a purchaser of real property in New South Wales for a consideration of $1,600,000. Since, according to press reports[2] . the median Sydney house price as at June 2025 was $1,722,443, the amount of duty at stake is neither exceptional nor surprising for Sydney residential real estate. The Applicants' claim that the amounts involved are so material as to support a costs order is thus less than compelling.

1. Section 60(2)(e) of the NCAT Act: Whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance

Since the Applicant initiated the Substantive Application. this is not a material consideration in their claim.

1. Section 60(2)(f) of the NCAT Act: Any other matter that the Tribunal considers relevant

The Respondent's decision, to withdraw DAN-001 and DAN-002, and to issue a new duties assessment notice in their place, appears likely to crystallise the real issues at stake as between the Applicants and the Respondent.

1. The Tribunal is not satisfied therefore that special circumstances sufficient to justify a costs order against the Respondent exist in the present case.

1. The Tribunal dismisses the application for 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.

[1] Being Duties Assessment Number 10739288-002

[2] smh.com.au/property/news/it-s-challenging-sydney-s-median-house-price-hits-record-high-1-7m-20250718-p5mfwx.html