This decision deals with a costs application by the respondent in relation to his defence of proceedings in the Tribunal, after a successful appeal to the Court of Appeal against the orders made against him.
The respondent was elected to the Orange Council following the poll conducted on 8 September 2012. On 7 December 2012 the applicant applied under s 329 of the Local Government Act 1993 for an order dismissing the respondent from civic office. The applicant was an office bearer of a local ratepayers' association. He challenged the respondent's election as irregular, because at the time of his nomination, 8 August 2012, the respondent did not have a place of living in the municipality that fell within the meaning of the Act. The Administrative Decisions Tribunal (ADT) heard the application over three hearing days (7 May, 2 July 2013 (evidence) and 23 October 2013 (closing submissions). It delivered its decision on 9 December 2013. It upheld the objection, and granted the order sought. The ADT was dissolved on 31 December 2013. The s 329 jurisdiction was transferred to this Tribunal on 1 January 2014.
The Tribunal subsequently dealt with an application by the applicant for costs. It made a partial award in favour of the applicant: Da Rin v Duffy (No2) [2014] NSWCATOD 59 (10 June 2014). The Tribunal ordered that the respondent pay the applicant's costs from 12 March 2013 as agreed or assessed. The Tribunal did not allow costs for the period 7 December 2012 to 12 March 2013, and the decision included a negative observation to be taken into account in any costs assessment process as to time wasted by the applicant in the hearing of the matter.
In the meantime the respondent had lodged an appeal against the Tribunal's decision with the Court of Appeal. The Court of Appeal upheld the appeal on an error of law ground relating to the proper meaning to be given to the term 'place of living'. The Court set aside the orders made by the Tribunal in the decisions of December 2013 and June 2014. It decided not to remit the matter for redetermination: Duffy v Da Rin [2014] NSWCA 270 (15 August 2014). It referred to the passage of time (then almost two years since the election), and considered that it was preferable that the application be dismissed. It directed the Tribunal to make such an order.
On 12 September 2014 the applicant applied for special leave to appeal to the High Court. Accordingly no action was taken by the Tribunal in relation to the Court of Appeal orders pending resolution of that application. On 9 April 2015 the High Court dismissed the application: Da Rin v Duffy [2015] HCASL 56. The Tribunal then entered an order dismissing the application.
The remaining issue is costs. As these were 'part heard' proceedings for the purposes of the transitional provisions, the law governing costs remains the law that applied to proceedings before the ADT, both as to substance and procedure: see Civil and Administrative Tribunal Act 2013, Sch 1, cll 6, 7, 8. The Local Government Act 1993, s 329(6) empowered the ADT to award costs under s 88 of the Administrative Decisions Tribunal Act 1997 (ADT Act). The ADT Act allowed costs applications to be heard and determined by a single judicial member, and that course has been followed on this occasion (see s 24A(2)(b)).
Both parties have made written submissions, and an oral hearing was held on 20 May 2015.
The respondent's application is for a full award of costs, and the application includes an estimate of costs incurred (for 2013 and 2014). The applicant opposes the application, and applies for an award of costs in his favour.
Section 88 provides:
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.
It will be seen that this provision does not have as its starting point the convention normally adopted in court proceedings, that costs follow the event. Instead the primary rule is that each party bear its own costs.
The respondent's submissions focus on factors relating to the way the proceedings were conducted by the applicant that would justify the making of an exception from the primary rule. In particular the respondent submits that the applicant conducted the proceedings in an unnecessarily prolix way, contributing to unnecessary costs being incurred by the applicant. On the last occasion the Tribunal referred, negatively, to the way the applicant had conducted aspects of the proceedings, thought the applicant had been ultimately successful before the Tribunal.
The Tribunal accepted in those reasons the utility in the public interest of proceedings of this kind, as they helped support the democratic process in local government. The Tribunal was also critical of some aspects of the way the respondent had dealt with the application.
The respondent's submissions on this occasion drew attention to the adverse comments made by the Tribunal in its earlier costs decision, in particular the following statements:
32. [Mr Johnston, the representative of the applicant] issued sweeping summonses for records relating to Mr Duffy's use and occupation of the two places of residence under notice, the room at his son's house and the family farm at Borenore (which lay outside the Orange municipal district). He sought access to financial records, payment records, taxation records as part of this quest. He sought mobile phone records (these records were significant in Borsak v Cheung) with a view to ascertaining how frequently calls were made from within the Orange municipal district. In our view this was an overzealous approach to the task at hand, and involved a significant misjudgement on Mr Johnston's part which contributed to the proceedings being far more elaborate than they need have been. At directions hearings, the question of the period relevant to the question at hand was canvassed. It was indicated that while some evidence of circumstances prior and after the key period might have some value, the evidence should focus on the period April to August 2012. Nonetheless, despite that indication, Mr Johnston filed and served affidavit evidence from local residents recounting observations of the activity of Mr Duffy that lay well beyond that period. This created work for the respondent which ought to have been avoided. This 'surveillance' evidence, together with the evidence about the making of mobile phone calls and their possible location, occupied most of day one of the hearing and was time wasted, in our opinion.
33. As is implied by the respondent's solicitor's submissions, an implication that we accept, there was a much greater degree of order and focus brought to the case on its second and third days of hearing when Mr Brakell of counsel and Mr Bray, solicitor, had become involved. The presence of lawyers for the applicant also contributed to a more detached atmosphere in the way the case ran. Mr Johnston's direct involvement in the Ratepayer's Association cast him as a partisan and did itself contribute to a level of tension, and difficulty, in disposing of the case. …
43. Further to what we said earlier, there was an amount of documentation generated in the case that went well beyond what was required for an economical and efficient disposal of the case. This is mainly attributable to the summonses issued by Mr Johnston. We have in mind in particular the documentation that went to the personal taxation history, the history of his occupation and use of the family farm at Borenore, and the inconclusive and sweeping nature of the inquiries about telephone phone use. As also noted earlier, large volumes of evidence were introduced into the case by Mr Johnston (the surveillance evidence, the telephone evidence) upon which, ultimately, no reliance was placed. (This pattern was repeated in the lodgement of the voluminous affidavit relating to costs in respect of this application.) The case should it seems to us have sharply focussed on the period March/April to July/August of 2012, with only limited attention to events prior to and subsequent to that time. These observations should be taken into account in the costs assessment process.
The respondent's submissions (1 May 2015) referred to the extensive summonses that the applicant had issued to various organisations that might hold location or other data relating to the respondent's place of living with time spans that were very wide, and the attempts made by the Tribunal to limit the scale of the case. The respondent submitted that the only reason the matter took 5 days to complete (counting for this purpose directions hearings as well as days of substantive hearing) was the conduct of the matter by the applicant. The respondent referred to the numerous comments in the transcript of the first day of proceedings from the Tribunal about the need for greater dispatch, and the need to focus on the domestic circumstances of the respondent.
In its reply submissions (4 May 2015, 15 May 2105) the applicant referred to the 'compensatory purpose' of costs awards (Latoudis v Casey (1990) 170 CLR 534 at [13]). The submissions also noted a consideration negative to the applicant's interests: Basten JA's comment in AT v Commissioner of Police [2010] NSWCA 131 at [33] that the words of exception in s 88(1A) - 'only if it is fair to do so' - set a relatively 'low hurdle' for an successful party seeking an order for costs.
The applicant referred to the public interest character of its application, and adopted the factors relied upon by applicants in the case of other applications for dismissal from civic office: that no personal benefit was sought by the applicant in making the application; the respondent's conduct of the matter created avoidable costs; the matter raised important public interest considerations; and the matter dealt with an important question of law. The submissions noted that the applicant is an office bearer of the Orange based Orange Ratepayers' Association which has in its charter a principle that it will lobby councillors to uphold the integrity and propriety and standards in the Orange Local Government Area. The applicant repeated a number of the submissions that were made in support of his earlier costs application to the Tribunal (which had been relatively successful). The applicant replied to the criticisms made by the applicant of his procedural conduct, and, in that way, to the matters about which the Tribunal expressed concern in its earlier decision.
In its written submissions, and, to some extent, in its oral submissions at hearing, the applicant expressed concern that the Court of Appeal's decision had resulted in the applicant not ever having had his case properly heard on the merits. In his second set of submissions (dated 15 May 2015) the applicant made a detailed argument as to why it would have still succeeded on the facts as found if the new understanding of the applicable law were applied to the facts.
The respondent opposed any award of costs to the applicant. The respondent acknowledged that the ultimate question was never determined, and therefore it is not possible to make any order in favour of the applicant on the basis of 'success' as to the merits of the application. The respondent submitted that nonetheless it remained the case that the applicant had lost the proceedings, and that was a significant factor weighing in favour of the respondent's application.
The respondent acknowledged that it may be open to the applicant to argue that a 'supervening event' (the failure to have the matter determined on the merits, because of the Court's order that the matter not be retried) had arisen. Because of the centrality of the outcome of proceedings to the determination of costs in courts, courts find it difficult to make any order other than that each party bear their own costs if proceedings are brought to an end ahead of determination by a supervening event. In One.Tel Limited v Deputy Commissioner of Taxation [2000] FCA 270 Burchett J noted at [6] that in these circumstances, 'there may be difficulty in discerning a clear reason why one party, rather than the other should bear the costs'.
In Re Minister for Immigration and Ethnic Affairs; ex p Lai Qin (1997) 186 CLR 622, the applicant had applied for judicial review of a decision refusing her a visa, with the consequence that she faced deportation. The decision was made, initially, by a delegate of the Minister, and affirmed by the review tribunal. She applied for her costs of the proceedings. The Court (McHugh J) said:
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. …
If I had to make a prediction about the outcome of her application, I would think that it would probably have failed. However, as I have said it is not the function of a court on a costs application - in most cases at all events - to make a prediction as to the outcome of a hypothetical case. It is enough that an applicant has acted reasonably. There is nothing to suggest that the prosecutrix acted unreasonably in bringing her application, particularly bearing in mind that she faced imminent deportation unless the decision of the Tribunal or the Minister was reversed. If the matter had proceeded further, it would also have been reasonable for the Minister to defend the decision of the Tribunal. If no more appeared in the case, I would think there were no grounds for making an order for costs in favour of the prosecutrix.
It might be argued that such an approach should be even more firmly adopted in a tribunal where the normal rule on completion of proceedings, in contrast to the courts, is that there be no order for costs. The respondent acknowledged, appropriately in the Tribunal's view, that it was undoubtedly the case that the applicant was justified in bringing the proceedings. Equally, the respondent was justified in resisting them, and justified in bringing the appeal.
The respondent's submissions also dealt, in the alternative, with the question of what order might have been after applying the correct interpretation of the law to the facts (the merits issue).
[2]
Assessment
It would not be proper for the Tribunal to act in the way suggested by the applicant, and allow a costs dispute to become the vehicle for a reopening of the merits of the applicant's application. Any inquiry of that kind would amount to a form of disobedience of the order of the Court of Appeal.
The Tribunal accepts that these proceedings were not brought frivolously. There was a real question to be answered as to whether the respondent's new living arrangements satisfied the precondition for nomination. The proceedings served a public interest end - the integrity of the electoral process. Equally, it was reasonable, and to be expected, that the councillor would resist the proceedings and vigorously defend them.
The ordinary principle that each party bear their own costs is the predominant consideration in the Tribunal's exercise of the costs discretion.
While the respondent did obtain final orders from the Court of Appeal which required the Tribunal to dismiss the proceedings, it is appropriate to give some weight to the fact that the merits of the application will now never be determined. This was a case where the objection remained reasonably arguable (cf. La France v Clarence [2004] NSWADT 256) even, as I see it, on the basis of the law as explained by the Court of Appeal.
Equally, there should be some recognition of the fact that the respondent did defeat the application. As this case demonstrates, an outcome at first instance is not secure until the exercise of any appeal or judicial review rights is successfully resisted by the party with the benefit of the first instance order. These risks of litigation are relatively well understood by those who take proceedings in the ordinary courts, where the rule that costs follow the event is routinely applied. These risks are, perhaps, less well understood by those who bring proceedings in tribunals. Further, sometimes there are no statutory rights of appeal from tribunals, or any rights are severely limited. This proceeding was not affected in the way. The right of appeal (on question of law) was of a usual kind. The applicant faced that risk.
In relation to the respondent's submissions on this point, the Tribunal doubts that this is a case of a 'supervening event' in the way discussed by Burchett J in One.Tel, or one were proceedings had become 'futile' in the way found by the High Court in Lai Qin. In both of these cases there were steps that took place between the parties that occurred independently of the judicial process, with the result that continued pursuit of the proceedings served no purpose. For another example of this kind, see Australian Securities Commission v Aust-Home Investments Ltd and Ors [1993] FCA 401; (1993) 44 FCR 194, the case primarily relied upon in the passage quoted above from McHugh J. Here the terminating event flowed from the judicial process itself.
It is the case that the Tribunal made numerous observations to the parties in the course of the proceedings over the need to have them proceed more quickly and with less voluminous attempts at evidence collection. These observations were mainly directed to the applicant. In its earlier costs decision the Tribunal gave expression to that concern by not granting the applicant's costs application as it related to its work during the first three months after it filed the application. The Tribunal also referred to the prolix way the case was conducted by the applicant until the end of day one of the hearing, and left that matter to the consideration of the costs assessment process. The hearing proceeded efficiently from day two, when a barrister took over the conduct of the applicant's case. The Tribunal was frustrated in its attempt to have the matter dealt with in a one day hearing.
The Tribunal will not deal with the detail of the exchanges, mainly found in the written submissions, over the rights and wrongs of how each party conducted their case. Overall, the Tribunal considers that a number of the steps taken by the applicant added unnecessarily to the burden of the proceedings, and notes that the respondent's evidence was, basically, confined to three witnesses (the respondent, his wife and his son), and their evidence was candid. The respondent did not, in the opinion of the Tribunal, conduct its case at hearing in a prolix manner. I do not think that the way in which the respondent conducted his case contributed in any significant way to the drawn out nature of the proceedings, and their complexity. After the second day of hearing, the case proceeded in an orderly and efficient way.
The usual rule, as noted, is that each party should pay its own costs. In my view it would be highly unusual for an order for costs of any significant degree to be made to an applicant who was ultimately unsuccessful, even if that lack of success flows from an appeal court order that disallowed the merits of the application being finally determined. The applicant's costs application is refused.
It is fair, in the circumstances, to make an order for costs in favour of the respondent. I fix that amount at 50% of the respondent's costs. In that regard, I have taken into account the way the applicant conducted the case led to the lengthening and unnecessary complexity of the proceedings. The order seeks to take account of the unnecessary expense imposed on the respondent, both in preparation for hearing and at hearing. It also seeks to give some acknowledgement to the outcome of the proceedings. The applicant's application remained an arguable one, and, as noted, section 329 applications have a public interest dimension.
The following order is drafted in usual terms. I see little value in this dispute now moving to the environment of the costs assessment process. I encourage the parties to agree on an amount guided by the respondent's estimate, rather than have this dispute continue into the costs assessment process.
[3]
Order
That the applicant pay 50 per cent of the respondent's costs of the proceedings at first instance, as agreed between the parties or as assessed.
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
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Decision last updated: 24 August 2015