Cornish v Deputy Secretary, Department of Local Government Planning and Policy [2022] NSWCATAP 6 | Case summary

Consideration

In my view, the initial question to be considered is when did time commence to run in respect of any application brought by the Appellant for payment of his costs incurred in the tribunal proceedings brought by the Respondent's predecessor, and which culminated in the orders made on 12 July 2018. Those proceedings were not ultimately determined until the Supreme Court judgment was published on 3 September 2019. Order 2 made by the Supreme Court was to the effect that the proceedings commenced by the predecessor to the Respondent be dismissed.
The NCAT Act provides that a "general application" is an application made to the Tribunal for a "general decision" (see s 29). Section 4 of the NCAT Act contains the definition of an "ancillary decision" and that definition includes a decision concerning the awarding of costs in proceedings.
The NCAT Rules provide that a general application must be made within the period specified in any enabling legislation or, in any other case, within 28 days from the day on which the applicant became entitled under the enabling legislation to make the application (r 23).
In this case we were not taken to any provision of legislation which would specifically impose a deadline for the commencement of an application for costs, and we are of the opinion that therefore the provisions of the NCAT Act and the NCAT Rules determine the time for the commencement of such an application.
In my view the Appellant became entitled to make the application for an order for costs following the dismissal of the NCAT proceedings which occurred on 3 September 2019 by the Supreme Court order referred to above. It follows that the Appellant had 28 days from 3 September to file the application. It is not in dispute that the application was not filed until 15 September 2020. It is clearly an application that was filed out of time.
I divert to make comment upon the submissions of the Appellant to the effect that the application was not filed out of time because time had not commenced to run. That submission is based upon the notion that the Tribunal decision of 12 July 2018 did not contain an order with respect to costs. Whether that is so or not is, in my respectful view, irrelevant. What is relevant is that those proceedings were dismissed by Supreme Court order made 14 months later on 3 September 2019. In my view the effect of the dismissal was to bring an end to the tribunal proceedings and thereby the Appellant became entitled to make a costs application.
The question that then requires consideration is whether time for lodgment of the application for an order for costs should be extended under s 41 of the NCAT Act.
Section 41 has been subject of decisions published by the Appeal Panel of the Tribunal. One decision is Jackson v NSW Land & Housing Corporation [2014] NSWCATAP 22. In that decision, the Appeal Panel set out the matters that require consideration when considering whether an extension of time should be given. Those matters are summarised at [22] and are as follows: 1. the length of the delay; 2. the reason for the delay; 3. the Appellant's prospects of success, that is usually whether the Appellant has a fairly arguable case; 4. the extent of any prejudice suffered by the Respondent.
In Jackson, the Appeal Panel said that it may be appropriate to go further into the merits of an application, if the explanation for the delay is less than satisfactory, or if the opponent has a substantial case of prejudice and in such a case, it may be relevant whether the applicant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable.
In the Decision the Tribunal considered whether time should be extended and found that the application for costs was lodged "just over 12 months" after the Supreme Court judgment. In my view, the application for costs should have been lodged no later than 28 days after 3 September 2019 (ie. by approximately early October 2019) meaning that it was in fact lodged approximately 11 months after the last date for lodgment required by the NCAT Rules.
The Tribunal then considered the reasons for the delay. One part of the delay was occasioned by those matters described at [19] of the Decision, namely that from 4 September 2019 to 3 June 2020 the Appellant was "consumed by the attempted application of Penrith City Council Policy LG006, so as to ensure that all identifiable administrative remedies had been exhausted before attempting an application for costs in the Tribunal". In other words, the Appellant appears to have sought to recover costs from a third party and not from the Respondent.
The Decision then dealt with the period from 4 June 2020 to 15 September 2020 and stated that no evidence has been provided to confirm the process of seeking reimbursement from the Council or "more relevantly, what occurred between 4 June to 15 September 2020". The Tribunal found that in the absence of any explanation as to why it took a further three months to lodge the application the Tribunal was "not persuaded that there is an adequate explanation of the reasons for the delay in making the application".
The Tribunal found that the delay "was significant" [63] and "not adequately explained, having regard to the importance of finality". There is no error of law, in my respectful view, in relation to those findings, nor can it be said that there was an error of fact, potentially justifying the granting of leave to appeal.
The Tribunal considered whether any prejudice existed to the Respondent, were time to be extended. The Respondent had submitted that there is prejudice in being deprived of the ability to draw a line under the proceedings and the Tribunal agreed that that factor is a relevant prejudice. In my view, in the circumstances of this case, that factor is linked to the lengthy period of delay adding up to approximately 11 months. In other words, the Respondent had a reasonable entitlement to expect that the Tribunal proceedings would be finalised after the publication of the Supreme Court judgment and a delay of this magnitude point, as the Decision records at [62] counts "against any extension of time".
The next factor for consideration is whether the Appellant had reasonable prospects of success or a fairly arguable case.
The Appellant's case was based upon the submission that there existed special circumstances warranting an award of costs. The Appellant relied upon s 60(3)(c), (d), (e) and (g) of the NCAT Act. In summary, this meant that the Appellant submitted that the Tribunal, in determining whether special circumstances existed, should have considered the relative strength of the claims made by each of the parties, including whether a party has made a claim that had no tenable basis in fact or law, the nature and complexity of the proceedings and the fact that the proceedings were frivolous or vexatious, or otherwise misconceived or lacking in substance. Finally, under subsection (g) the Appellant relied upon "any other matter" the Tribunal considered relevant.
It is relevant that the effect of the Supreme Court judgment was that the Respondent lodged an application before the Tribunal in respect of which the Tribunal had no jurisdiction to make the orders applied for. Such an application could be described as one that made a claim that had no tenable basis in fact or law because one of the claims made was that the Appellant "committed misconduct" "by failing to comply with Council's resolution of 27 July 2015" (see [10] of the decision of 12 July 2018). The proceedings, as constituted by the application, could also be described as being misconceived or lacking in substance. In the Decision, the Tribunal appears to have agreed with such an analysis [74] but went on to say that the Tribunal does not regard the fact that the losing party was ultimately successful where there was ultimately found to be no basis on which the Tribunal could impose a disciplinary sanction on that party, would of itself constitute a special circumstance.
The Tribunal agreed that the proceedings were complex [76] and then at [77] found that the "heart" of the Appellant's contention was that there were special circumstances warranting an award for costs because the Appellant was ultimately successful in the Supreme Court. In my view (for reasons upon which I will later elaborate) that description of the heart of the Appellant's contentions gives insufficient weight to the reason that the Appellant was successful, namely because the Respondent's contention of misconduct was based on a resolution which went beyond the Council's power.
The Tribunal found that there was nothing inappropriate in the initiation or conduct of the Tribunal proceedings by the Chief Executive and having regard to the way in which the jurisdictional issue was identified and argued, and that the Tribunal did not agree that the ultimate outcome is a special circumstance warranting an order for costs.
The Appellant submits that the Tribunal has failed to consider an important factor, namely that the proceeding lacked a jurisdictional basis. In my view, the reference to special circumstances arising in cases where there is no tenable basis in fact or law or where proceedings are misconceived or lacking in substance, may include (inter alia) proceedings which have no jurisdictional basis. This approach was the approach consistently taken in a number of proceedings commenced in the Tribunal by the Council of the Law Society of New South Wales all of which involved the contention (conceded by the Law Society) that the Tribunal did not have jurisdiction to determine the applications because of defects that affected the authority of the Law Society to commence proceedings. The cases to which I refer are Council of the Law Society of New South Wales v Judah [2019] NSWCATOD 135, Council of the Law Society of New South Wales v DRE [2019] NSWCATOD 147 and Council of the Law Society of New South Wales v EBX [2019] NSWCATOD 155. In Judah the Tribunal found that the application had, in the circumstances, no tenable basis in fact or law and was misconceived. It was held that in these circumstances, there were special circumstances warranting an award of costs because the Respondent (the solicitor) had been put to expense by reason of the bringing of the application. DRE and EBX applied the same approach as Judah.
In my view there were special circumstances and that those circumstances warranted an award for costs. The fact that there was no jurisdiction is a circumstance coming within s 60(3)(c) because the claim of misconduct lacked a tenable basis, and comes within (e) because the proceedings were misconceived. It was not in dispute that special circumstances are those that can be described as out of the ordinary, but not extraordinary or exceptional.
In my view, this is not a case where the statutory framework could have been said to have been unduly obscure or that other Tribunal decisions or court judgments were capable of misleading the Respondent's understanding of the law. The Respondent was alerted to a jurisdictional issue by the Appellant himself: see [63] of the judgment of Basten JA. Although that apparently occurred on a "convoluted basis" it is not said by the Supreme Court or elsewhere that the jurisdictional issue was raised in such a way that it was so obscure as to excuse the Respondent from considering it. The essential conclusion of the Supreme Court was that the allegation that the Appellant failed to comply with Resolution CW11 was dependent upon the Council have a power to compel the conduct required by that resolution. Other than a power to censure, the resolution went beyond power.
In EJE v Western Sydney Local Health District [2021] NSWCATAP 247, the Appeal Panel stated at [30], that the terms "lacking in substance" and "misconceived" have been the subject of consideration. With respect to the former phrase, it was held in The Owners Corporation of Strata Plan 4521 v Zouk & Anor [2007] NSWCA 23 at [45] that it means "not reasonably arguable" and in respect of the latter phrase it was held in Alchin v Rail Corporation NSW [2012] NSWADT 142 at [26] that it means a "misunderstanding of legal principle". In coming to the opinions expressed above I have adopted the same understanding of the meaning of those terms.
It is important to bear in mind that an order for costs is not intended to punish the unsuccessful party but rather to indemnify the successful party for the expenses that that party has incurred (see Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 543 and McHugh at 567). Whilst the general position in the Tribunal is that each party should pay their own costs (s 60(1)), the Tribunal may award costs under s 60(2) "only if it is satisfied that there are special circumstances warranting an award of costs". In this case, the Appellant has engaged solicitors and counsel and has therefore been put to expense.
As stated above, the language of s 60 of the NCAT Act indicates that the Tribunal has a power to award costs but only if satisfied that there are special circumstances warranting an award of costs. The exercise of a statutory discretion such as this can only be overturned in limited circumstances: House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505-506. Those circumstances were summarised by the Court of Appeal in Hannaford v Commonwealth Bank of Australia [2014] NSWCA 297 at [14] where the court held that any attack on a discretionary decision must fail unless it can be demonstrated that the decision maker: 1. made an error of legal principle; 2. made a material error of fact; 3. took into account some irrelevant matter, 4. failed to take into account, or give gave insufficient weight to, some relevant matter; or 5. arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning (cited in Clarke v Tapp [2015] NSWCATAP 81).
In my respectful view the Tribunal in this case erred in failing to take into account a material fact, namely that the Appellant was successful in having the Tribunal proceedings dismissed by reason of the fact that the Tribunal had no jurisdiction to make the determination requested by the Respondent. Alternatively, it may be said that the Tribunal gave insufficient weight to that relevant matter. It is evident from [77] of the Decision where the Tribunal describes the "heart" of the Appellant's contention that there were special circumstances warranting an order for costs because the Appellant was successful in the Supreme Court that the Tribunal either did not take into account the jurisdictional basis for the Appellants success or gave that matter insufficient weight. Although the Tribunal recognised the existence of a jurisdictional issue, that was counted against the Appellant because of the "way in which the jurisdictional issue was identified and argued". I am not of the view that the Appellant's conduct in raising the jurisdictional issue in a convoluted way constitutes conduct disentitling it to costs if the facts are otherwise that the application lacked a jurisdictional basis and that that circumstance constitutes a special circumstance warranting an award of costs. Accordingly, I am of the opinion that the Tribunal's discretion has miscarried and that an injustice has occurred.
For the above reasons, I am of the opinion that the Appellant had good prospects of success and indeed I am of the opinion that there were special circumstances warranting an award for costs. The paramount consideration is the interests of justice which, in my view, leads to the view that the appeal should be upheld.
Notwithstanding that view as to the Appellant's prospects of success, the fact remains that the Appellant did not bring the application for costs until after an excessively lengthy period and the reasons for that delay are, in my opinion, inadequate. In Jackson, the Appeal Panel stated that time limits are established by legislation for the purpose of promoting the orderly and efficient conduct of proceedings and providing certainty for the parties. Accordingly, time limits should be strictly enforced [21]. In exceptional cases, where the interests of justice so require, time may be extended.
In my view, time should be extended in this case and an order for costs ought to be made against the Respondent. I acknowledge that there is prejudice to the Respondent by further delay in finalising these proceedings, particularly as an order for costs carries with it the subsequent process of the parties negotiating an amount for costs or undertaking the process by which a third party assesses costs. However, that consideration is outweighed in the circumstances of this case by the considerations pointing to the existence of the special circumstances earlier described warranting an award of costs.
I propose that the following orders be made: 1. Appeal upheld. 2. Time is extended for lodgment of the Appellant's application for costs in the proceedings below. 3. The Respondent is to pay the costs of the Appellant in the Tribunal proceedings 2017/00212948 as agreed or as assessed. 4. If a party seeks costs of this appeal, they must file and serve submissions with respect to costs within 14 days. 5. If a party receives from the other party a submission as to costs of the appeal, they must file their submissions in response within a further period of 14 days. 6. The submissions of the parties should address the question of whether costs of the appeal may be determined by the Appeal Panel "on the papers" by the Appeal Panel dispensing with a further hearing.
G FURNESS SC: I would not grant an extension of time to file the appeal and, if an extension of time was granted, I would dismiss the appeal for the reasons I set out below.
I agree with the Deputy President's recitation of the history of the proceedings and his statements as to the relevant legal principles. My dissent concerns whether special circumstances exist to award costs because, in later judicial review proceedings, it was found that the Tribunal lacked jurisdiction to hear the application. That matter is closely related to whether an extension of time should be granted because the prospects of success are a matter to consider when determining an extension.
Dealing first with whether special circumstances exist warranting an award of costs. I agree with the Decision and accept the Respondent's submissions as set out in [45(3)] of the Deputy President's decision for the following reasons.
First, the initial application was commenced in 2017 by the Respondent. At that time, based on the existing law, the proceedings were not misconceived and did not lack substance. Further, the Respondent made no untenable claim in fact or law. It was only following judicial review proceedings in 2019, that the Supreme Court found that the Tribunal lacked jurisdiction to hear and determine the application.
Secondly, as is evident from the decision of Basten JA, the jurisdictional issue on which Basten JA had based his decision was "not front and centre before the Tribunal" and the Appellant did not in any of the grounds "squarely raise(d) the issue of whether non-compliance with resolution CW11 could found the application before the Tribunal". Further, the Decision records the submissions of the Respondent that the submission, successfully made before the Supreme Court was not raised below 'certainly not in the terms it is now raised' [71].
To the extent that the Appellant did raise the issue of whether the Tribunal had jurisdiction, it was only in a convoluted form. Accordingly, the Appellant did not before the Tribunal clearly and unequivocally claim that the proceedings commenced by the Respondent were misconceived or contained an untenable claim for the reasons given by Basten JA.
Thirdly, the Supreme Court did not criticise the conduct of the Respondent in commencing or continuing proceedings against the Appellant. Costs were awarded against the Respondent on the basis that, in that jurisdiction, costs usually follow the event. The Supreme Court did not otherwise consider or interfere with the procedural direction in relation to costs before the Tribunal.
Fourthly, the Respondent was successful at first instance and as such, the Respondent's case could not be characterised, at that time it was commenced and heard as having no tenable basis in fact or law or being misconceived.
Finally, the Tribunal in its Decision, referred to and quoted at length the decision of Basten JA [68]-[74]. In addition, the Tribunal considered the transcript of the Supreme Court proceedings [70]. It cannot be said that the Tribunal failed to consider and give weight to the reason behind the Supreme Court's dismissal of the application before the Tribunal.
I agree with the reasons given in the Decision that 'in the context where there is no assumption that costs follow the event, the Tribunal does not regard the fact that the losing party was ultimately successful …would of itself constitute special circumstance' [74].
It follows that I am not satisfied that the Tribunal made any error of legal principle or fact, took into account any irrelevant matter or failed to give weight to some relevant matter or arrived a sufficiently unreasonable or unjust result. As such, none of the circumstances set out in House and The King apply.
The Deputy President refers to a number of decisions in the Occupational Division concerning proceedings taken by the Law Society of NSW. I note that neither of the parties sought to rely on any of these decisions. In my view, they are to be distinguished from these proceedings. In each of those proceedings brought by the Law Society of NSW, the real issue for determination was whether the Tribunal had jurisdictional power to deal with the disciplinary proceedings. It was found in each case that it did not. The Tribunal in each case awarded costs to the Respondent on the basis that the proceedings had no tenable basis in law and the Tribunal had no jurisdiction.
In the Decision under appeal, the issue of the jurisdiction of the Tribunal as identified by Basten JA was not the 'real issue' or even a substantial issue which was squarely put and argued.
Turning then to the application for an order for costs out of time. It is accepted by all that the application by the Appellant was filed out of time. In my view, based on the history set out by the Deputy President, and by reference to s 41, an extension should not be granted. First, the length of delay was considerable; nearly 12 months. Secondly, the reasons for the delay were either not the subject of evidence or to the extent there was evidence, the reasons were not satisfactory. Thirdly, the Respondent has suffered prejudice of the type determined by the Deputy President. Finally, and most importantly, the Appellant's prospects of success, on my view and for the reasons given above, are not good.
Accordingly, I would not grant leave to file the application for costs out of time.

Cornish v Deputy Secretary, Department of Local Government Planning and Policy

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Judgment (10 paragraphs)

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