Chan v Commissioner of Fair Trading

Background

1. The Respondent issued Determinations to take disciplinary action against each of the Applicants on 25th October 2013.
2. On 7th February 2014, after internal review, the Respondent determined to reprimand Ms Chan, in accordance with section 192(1) (a) of the Property Stock & Business Agents Act 2002 and to impose a monetary penalty of twenty penalty units (currently equating to $2200) on her. Ms Chan successfully sought review of this decision.
3. On 7th February 2014 after internal review, the Respondent determined to affirm the determination to reprimand Kit Man Chan in accordance with section 192(1)(a) of the Property Stock & Business Agents Act 2002. Mr Chan successfully sought review of this decision.
4. The Tribunal gave its substantive decision on 14th November 2014. The Tribunal set aside both disciplinary decisions. The Applicants wrote to the Tribunal in 22nd December 2014 seeking costs. The Tribunal set a timetable for the parties to provide written submissions on costs. The parties provided written submissions on costs. The Tribunal summarises the Applicants' submissions on costs as follows.

Applicants' Submissions in relation to Costs Application

1. The Applicants seek an order for costs pursuant to section 60 of the Civil and Administrative Tribunal Act 2013. The Applicants seek costs on the basis that there were special circumstances warranting the award of costs (s.60 (2)).
2. Those special circumstances that arise within s.60(3)( c) are "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 and s.60(3)(e) "whether the proceedings were misconceived or lacking in substance". The Applicants claimed that the findings made by the Respondent against the Applicants had no tenable basis in fact and/or law and were misconceived and/or lacking in substance. The Applicants claim that the Respondent's delegate and internal reviewer disregarded both the facts and the law in coming to their conclusions.
3. The Applicants referred to the findings of the Tribunal that the Applicants had not been in breach of sections 8 & 9 of the PSBA Act in that they were not involved with the Axiom Company during the period relied upon by the Respondents and in that they had not been carrying on business after the expiration of their respective licences. Further the Tribunal had not found that the Applicants were in breach of section 37 of the Act and rules of Conduct 2, 4 and 6 as claimed by the Respondent.
4. The Applicants submitted that the Respondent had before it prior to the Tribunal's hearing, relevant information in relation to the Applicants' cessation of involvement with Axiom by 13th October 2011; the involvement of the new Director of the Corporation in September 2011;the Supreme court orders in February 2010; minutes of the Axiom company's meetings; documents from the Macquarie Bank; signed acknowledgement in relation to the trust monies from the new Director; the Corporation's cessation of carrying on business as a strata manger and evidence of Ms Chan's observation of her obligations as licensee. The Applicants considered that in the light of this information held by the Respondent, the Respondent should not have made the disciplinary findings against them.
5. The Applicants referred to the errors of fact and law made by the Respondent in its determinations, as well as to general factual errors made by the Respondent, referred to by the Tribunal in its decision.
6. Further the Applicants stated that any new information set out in the Applicants' affidavits filed in the matter on 7th July 2014 was hardly relevant to the outcome of the proceedings.
7. The Applicants submitted that the determinations made by the Respondent were riddled with misconceptions and mistakes. None of the claims made by the Respondent against the Applicants had any tenable basis in fact or law and were either misconceived or lacking in substance.
8. The Applicants submitted that they had made out the special circumstances warranting an award of costs pursuant to section 60(2) of the Civil and Administrative Tribunal Act 2013 and should be awarded their costs.

Respondent's submissions on Costs

1. The Tribunal summarises the Respondent's submission on costs as follows.
2. The Respondent recited the facts of the matter as the Respondent saw it. The Respondent referred to the Applicants' lodgement of affidavits on 7th July 2014, shortly before hearing, providing evidence not previously provided to the Respondent in the course of its investigation. The Respondent noted that the matter had been heard on 28th July 2014 and the decision provided on 14th November 2014. There had been no application for costs made by the Applicants until 22 December 2014. Further this had been made without notice to the Respondent.
3. The Respondent referred to the provisions of section 60 of CATA. The default position is that each party pays its own costs. It is only if the Tribunal is satisfied that there are special circumstances that costs can be awarded. The Respondent set out the history of the costs provisions under the previous Administrative Decisions Tribunal Act (ADTA). The Respondent referred to the Guiding Principle set out in section 36 of CATA, which encouraged the just, quick and cheap resolution of matters in the Tribunal. The Respondent submitted that even if the Tribunal were to find that there were special circumstances, the Tribunal can still decline to award costs. The Respondent submitted that the Tribunal should take into account the public protective purpose of the disciplinary actions in the PSBA and determine against awarding costs.
4. The Respondent referred to a 2009 practice note in the ADT which indicated that costs applications made after the conclusion of a matter will lead to delay. In these circumstances, an applicant for costs should explain why they did not apply for costs at the time of the hearing. The Applicants had not explained their delay. The Respondent submitted that it was the mode of conduct of the matter - not the outcome, hat should influence whether or not special circumstances were established and costs awarded.
5. The Respondent referred to the precedent of B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 5) [2010] NSWADTAP 21 which meant that reference to "proceedings" in section 60 of CATA would not include the Respondent's investigations into the complaint prior to the Respondent bringing disciplinary action against the Applicants and prior to the matter coming to the Tribunal.
6. The Respondent argued that the Applicants had not previously raised the existence of special circumstances in the matter. The Applicants had not argued at any time that there was no tenable basis in fact or law for the Respondent's disciplinary action against the Applicants. The Applicants had not applied for costs at the time of hearing; they had given no notice to the Respondent of making the application for costs and it had been more than six weeks after the disposal of the matter that the Applicants had raised the issue of costs. The Respondent noted that before the Tribunal the Respondent had made certain concessions and that the hearing of the matter had focused on central issues in contention. While the Tribunal had found against the Respondent's position, there was some significant findings made by the Tribunal which confirmed the Respondent's conclusions.
7. In relation to the Applicants' claim that the Respondent's disciplinary action against them had been untenable in fact and in law under section 60 (3) (c) of CATA, the Respondent said that the case law indicated that there would need to be a very high level of weakness in the case before it fell within this category.
8. The Respondent submitted that its case was neither frivolous nor unsupported by evidence. This distinguished it from the cases decided more recently under CATA. The Tribunal Appeal Panel was satisfied in Chester v Prestige Promotions Pty Ltd [2014] NSWCATAP 34 at [34] and in Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 at [78], that "special circumstances" existed for the purposes of section 60(2) of the CATA where the argument put by the appellant was weak and not supported by evidence, those aspects of the claim answering the considerations in sub-sections 60(3)(c) and (e) of the CAT Act.

Were the disciplinary actions misconceived or lacking in substance? S. 60(3) (e)

1. The Respondent referred to the equivalent provision to s.60 (3) (e) of the CATA as s.88 (lA) (a) (iv) of the ADT Act. However, s.88 (lA) (iv) was less extensive, referring only to "vexatious conduct" of proceedings, not to "whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance".
2. There is clearly potential overlap between s.60 (3) (c) and s.60 (3) (e) in that both consider the underlying merits of a claim. However, s.60 (3) (e) is more clearly analogous to the Supreme Court's power to "strike out" proceedings or claims made in proceedings under UCPR 13.4(1). The Respondent submitted that strikeout power should only be exercised where the claim is "clearly deficient": see Cox v Journeaux (No. 2) (1935) 52 CLR 713 at 720. The Tribunal understands the Respondent's argument in this respect to be that, by analogy, the Tribunal should only take the view that the Respondent's case falls into the section 60(3) (e) category, warranting an award of costs to the Applicants, in exceptional circumstances.
3. The Respondent submitted that: 1. its application was not frivolous or lacking in substance; 2. the fact that the Applicant has not previously alleged that the Respondent's case is frivolous or lacking in substance should be considered as evidence that those allegations are spurious.
4. The Respondent submitted that, for the reasons set out above, the Applicants had not made out the existence of any "special circumstances" because: 1. Neither of the considerations in s.60 (3) (c) or (e) is made out; 2. There was otherwise nothing out of the ordinary in the conduct of the proceedings by the Respondent; and that the Applicants' application for costs should therefore be denied.

Costs provisions section 60 CATA

1. The relevant provisions dealing with the awarding of costs are set out in section 60 of the CATA. The general rule is that each party to proceedings is to bear their own costs: CATA s 60(1).
2. Costs may only be awarded if the Tribunal is satisfied that there are special circumstances warranting the award of costs: CATA s 60(2) - having regard to the matters set out in s 60(3) (a)-(g) of CATA.
3. Section 60 also defines the term "costs" and gives the Tribunal power to determine by whom and to what extent costs are to be paid.
4. As noted in the Respondent's submissions, the provisions of this section are similar, though not identical to, the provisions of section 88 of the CATA's predecessor, the Administrative Decisions Tribunal Act (ADTA). The default position in each section is that each party pays its own costs. A significant difference between the sections is that the test for the award of costs in section 88 was where it was "fair to do so," while the new section 60 requires "special circumstances". The relevant factors set out in the previous section 88 and set out in the current section 60(3) are however, similar.
5. Section 60 is set out below. 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: (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. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) 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. (5) In this section: "costs" includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) 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.
6. The Tribunal notes that in the matter of AT v Commissioner of Police 2010 NSWCA 131, Basten J remarked that the test of what is fair, is a low bar. In the matter of Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 in dealing with a costs application under section 60 of CATA, the Deputy President of NCAT O'Connor noted at paragraph 78: 78. The exception ('special circumstances') is, arguably, narrower than the exception at s 88(1A) of the ADT Act ('fair to do so').
7. Tis Tribunal infers that the current costs test of "special circumstances" is a harder test for its proponent to satisfy than the previous where "it is fair to do so".

Objects of CATA

1. To interpret the "special circumstances" provisions, it is relevant to consider the Objects of the CATA as set out in section 3 and the Guiding Principles to practice and procedure set out in section 36.
2. Section 3 of the CATA sets out the objects of the Act as follows (with the Tribunal's bolding): The objects of this Act are: (a) to establish an independent Civil and Administrative Tribunal of New South Wales to provide a single point of access for most Tribunal services in the State, and (b) to enable the Tribunal: (i) to make decisions as the primary decision-maker in relation to certain matters, and (ii) to review decisions made by certain persons and bodies, and (iii) to determine appeals against decisions made by certain persons and bodies, and (iv) to exercise such other functions as are conferred or imposed on it, and (c) to ensure that the Tribunal is accessible and responsive to the needs of all of its users, and (d) to enable the Tribunal to resolve the real issues in proceedings justly, quickly, cheaply and with as little formality as possible, and (e) to ensure that the decisions of the Tribunal are timely, fair, consistent and of a high quality, and (f) to ensure that the Tribunal is accountable and has processes that are open and transparent, and (g) to promote public confidence in Tribunal decision-making in the State and in the conduct of Tribunal members.

Guiding Principles of Practice and Procedure

1. Part 4 of the CATA deals with practice and procedure in the Tribunal. Section 36, within Part 4, sets out the guiding principle to be applied to practice and procedure in NCAT. Section 36 Guiding principle to be applied to practice and procedure (1) 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. (2) The Tribunal must seek to give effect to the guiding principle when it: (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is 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: (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings. (5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.
2. The Tribunal's understanding of the interaction of these sections is that both the parties and their representatives and the Tribunal itself have an obligation in their conduct to act with economy and to focus on the primary issues between the parties.

Tribunal's consideration of the Applicants' application for costs

Were there special circumstances?

1. Section 60 (3) provides that the Tribunal may have regard to a catalogue of factors - including 60(3) (g) "any other matter that the Tribunal considers relevant." It is clear the factors set out in section 60(3) (a) to (g) are not meant to be exclusive or exhaustive of what might constitute "special circumstances".
2. A scan of case law shows that the concept of 'special circumstances" is known in the areas of criminal law, professional disciplinary matters in relation to costs, applications for security of costs and in the social security arena concerning beneficial exercise of a discretion.
3. In Topp's case, the AAT considered the meaning of the term "special circumstances" in relation to its use in section 1184K of the Social Security Act. Section 1184 allowed for the Secretary of the Department of Social Security to exercise a beneficial discretion "if it is appropriate to do so in the special circumstances of the case." Relying on a Full Federal Court decision in Beadle v Director General of Social Security [1984] AATA 176, the AAT considered that if something unfair, unintended or unjust had occurred which was out of the ordinary, this might constitute special circumstances justifying the exercise of the discretion - see Topp and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 99 paragraphs 21 and 38-40.
4. The AAT's analysis in Topp's case also indicates that the determination of the existence of "special circumstances" vested a broad discretion in the decision maker.
5. Other common features of the case law on special circumstances are consideration of the tenuousness of the case brought by a party and the mode of conduct of the litigation.
6. Most recently the NCAT Appeals Panel in the matter of Obieta, considered that "special circumstances" in respect of costs in section 60, included the persistent prosecution of a weak (and unsuccessful) case through an appellate process- see Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38.
7. The Tribunal has considered the Applicants' submissions that none of the claims made by the Respondent against the Applicants had any tenable basis in fact or law and were either misconceived or lacking in substance.
8. The Tribunal was not satisfied in relation to any of the 3 elements the Respondent relied upon, the 2 aspects in relation to sections 8& 9 of the PSBA and the breach of the rules of conduct under section 37.
9. The Tribunal agrees that the Applicants had ceased their corporate roles with Axiom prior to 21st October 2013 to 23rd December 2013 (the period of time relied upon by the Respondent) and thus could not have been in breach of section 8 &9. In this respect the Tribunal agrees there was no tenable basis in fact or in law for the Respondent's claims in this regard.
10. The Tribunal found that the Corporation had not been carrying on business after the Applicants' licences had expired and that in this respect the Applicants had not been in breach of section 8&9 by allowing the Corporation to carry on business without a licence. The Tribunal is satisfied, however, that there was an arguable case, albeit a weak and unsuccessful case, that the Applicants and/or the Corporation had been carrying on business as alleged. The Tribunal does not consider that "there was no tenable basis in fact or law" for this claim by the Respondent.
11. The Tribunal found that neither of the Applicants had been in breach of the Rules of Conduct under section 37 of the PSBA Act. The Respondent had characterised aspects of the Applicants' actions/inactions as being within the scope of the Rules of Conduct. The Tribunal notes that there is little case law to assist in the interpretation of these Rules of Conduct. The Respondent was unsuccessful in maintaining that the Applicants had been in breach of the Rules of Conduct. Its arguments were weak - but the Tribunal is not satisfied in the absence of guiding case law, that it should find that there was no tenable basis in fact or law for these contentions.
12. The Applicants contend that Special circumstances exist in that "the proceedings were misconceived or lacking in substance." section 60 (3) (e).
13. The Tribunal's interpretation of this subsection is that the term "proceedings" refers to proceedings brought in the Tribunal by a party. The Tribunal refers to the use of the term proceedings in section 60(1) which states "Each party to proceedings in the Tribunal is to pay the party's own costs." Further 60(2) refers to "award costs in relation to proceedings before it" while section 60(5) refers to "costs of or incidental to, proceedings in the Tribunal," In these circumstances, the Tribunal interprets the application of section 60 (3) (e) as applying to an application brought before the Tribunal. In this instance, the Respondent did not bring proceedings before the Tribunal. It did not bring an application. The proceedings were brought by the Applicants. The Respondent defended the proceedings brought by the Applicants. This Tribunal considers that the consideration set out in 60(3) (e) of whether the proceedings were misconceived or lacking in substance, was intended to apply to an application brought by an applicant in the Tribunal - not a defence to an application.
14. The Tribunal also notes the Respondent's submission that the term "proceedings" do not refer to the Respondent's investigation of the matter that led to its disciplinary action - prior to the matter coming to the Tribunal. The Tribunal has previously relevantly considered the scope of "proceedings" in the matter of George v Commissioner of Police, NSW Police Force [2013] NSWADT 76 (11 April 2013). The Tribunal considers that the case law supports the contention that costs incurred in pre-Tribunal dealings with a regulator/administrator are unlikely to be subject to the Tribunal's power to award costs under section 60 of CATA. At the same time, in the matter of George v Commissioner of Police, NSW Police Force, the Tribunal considered it could take into account the actions of the "investigative/administrative" body in determining whether to award the costs of the subsequent proceedings, not the costs expended by the parties in the pre - Tribunal stage. George v Commissioner of Police, NSW Police Force [2013] NSWADT 76 (11 April 2013) see especially paragraphs 28-30.
15. The Tribunal starts from the position that the default position is that the parties to the matter must pay their own costs. The Applicants were successful in their applications before the Tribunal. The Tribunal has found that in one respect there was no tenable basis in law or in fact for the Respondent's claims. This is a factor which may constitute special circumstances.
16. The Tribunal balances against this the fact that the issue of costs was not raised at hearing and that the Applicants' application was made approximately 6 weeks after the decision was provided to the parties. The parties and the Tribunal both bear an obligation under the Guiding Principle set out in section 36 of CATA "to facilitate the just, quick and cheap resolution of the real issues in the proceedings" and in such a way that "the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings." This is a consideration set out in in section 60(3) (f) of CATA in determining whether special circumstances exist warranting the award of costs. The bringing of the costs application at some distance from the original hearing and the Tribunal's decision has elongated proceedings otherwise disposed of in one day. The Tribunal is not satisfied in all the circumstances that any identified special circumstances warrant the award of costs to the Applicants.

Conclusion

1. The application for costs is dismissed. 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: 02 April 2015