Deputy Secretary of the Department of Local Government, Planning and Policy v Doueihi

NCAT Occupational|2021-12-10

Introduction

The background to this matter appears in the reasons for decision of 24 September 2022: Deputy Secretary of the Department of Local Government, Planning and Policy v Doueihi [2021] NSWCATOD 163 (Primary Decision).
In the Primary Decision, I found the six grounds of the Amended Complaint established. These were that the respondent: 1. failed to complete his written return disclosing interests for the period 1 July 2017 to 30 June 2018 by 30 September 2018, in breach of section 449(3) of the Local Government Act 1993 (NSW) (LGA), (as in force at the time); 2. failed to provide information required by Divisions 1 and 2 of Pt 8 of the Local Government (General) Regulation 2005 (Regulation) in: 1. his initial written return disclosing interests dated 13 October 2017, in breach of s 449(1) of the LGA (as in force at the time); and 2. his written return dated 3 October 2018, disclosing interests for the period ending 30 June 2018, in breach of s 449(3) of the LGA (as-in-force-at the time); 1. lodged returns disclosing interests, namely: 1. his initial written return disclosing interests dated 13 October 2017; and 2. his written return dated 3 October 2018, disclosing interests for the period ending 30 June 2018, which he knew, or ought reasonably to have known, were false or misleading in a material particular, in breach of s 449(1A) of the LGA (as in force at that time); 1. failed to provide information required by Sch 1 of Strathfield Municipal Council's Code of Conduct (Code) in his written return dated 24 September 2019 disclosing interests for the period ending 30 June 2019, in breach of cll 4.21(b) and (c) of Code; 2. lodged a return disclosing interests, namely his written return dated 24 September 2019, disclosing interests for the period ending 30 June 2019, which he knew, or ought reasonably to have known, was false and misleading in a material particular, in breach of cl 4.23 of the Code; 3. failed to comply with a direction given under s 440H of the LGA, which is a breach of s 661 of the LGA, which in turn constitutes misconduct pursuant to s 440F(1)(a) and s 440F(1)(c) of the LGA.

Summary of issues to be determined

The primary issue to be determined is the appropriate protective order to impose on the respondent.
As the applicant noted in its submissions, that are a range of options available to the Tribunal under s 482A(2) being: 1. counselling the respondent (LGA, s 482A(2)(a)); 2. reprimanding the respondent (LGA, s 482A(2)(b)); 3. suspending the respondent from civic office for a period not exceeding six months (LGA, s 482A(2)(c)); 4. disqualifying the respondent from holding civic office for a period not exceeding five years (LGA, s 482A(2)(c1)); 5. suspending the respondent's right to be paid any fee or remuneration that he would otherwise be entitled to as the holder of the civic office, in respect of a period not exceeding six months (without suspending the respondent from civic office) (LGA, s 482A(2)(d)).
The applicant's initial submission, filed prior to the Stage Two hearing, was that a significant period of suspension was warranted having regard to"

having regard to the seriousness of the respondent's misconduct;
the fact that such misconduct was repeated over multiple disclosure periods,
the fact that some of the misconduct concerned a failure to comply with a direction given to the respondent under the LGA; and
the leadership position occupied by the respondent as mayor of the Council at the time of his failure to comply with the notice issued under s 440H(3) of the LGA.

However, by the time of the Stage Two hearing, the applicant was concerned about the truthfulness of some of the respondent's evidence given to the Tribunal at the Stage One hearing. These concerns arose from the evidence of Mr Phillips, the respondent's former accountant, who denied having been instructed in relation to the respondent's pecuniary interest disclosures. Mr Phillips had not given evidence at the Stage One hearing, but he provided a statement to the applicant for the purposes of the Stage Two hearing. The applicant submitted that if the Tribunal formed the view that the respondent had not been honest in his evidence, then a period of disqualification was warranted.

Evidence

Given that last submission, it is necessary to consider the evidence at the Stage Two hearing.
The respondent relied on two statements. The first was dated 31 May 2021, and the respondent was cross-examined on this statement at the Stage One hearing.
In that statement of 31 May 2021 the respondent said that one of his previous advisors, being Mr Phillips, had an obligation to properly manage his affairs, had ignored his questions and did not act ethically in assisting him.

Evidence of Peter Philips

In summary, Mr Phillips says:

for approximately 10 years, he provided accounting services to the respondent;
the services included preparation of Business Activity Statements and tax returns for certain entities that Mr Doueihi had an interest in; and preparation of tax returns for the LMP Unit Trust;
he did not have a formal retainer or costs agreement with the respondent. Instead, from time to time the respondent would come into his office, or call him, and provide instructions for him to carry out certain accounting work. On occasions, the respondent's son Michael provided him with instructions. Mr Phillips charged a market rate for those services;
he was aware from discussions with the respondent that the respondent had engaged other accountants to provide accounting services for other entities that the respondent was involved with;
the respondent never provided the complete picture of his other business interests to Mr Phillips;
from about 2018, the respondent began to contact him less and less, and from about late 2018 to early 2019, he ceased to do any accounting work for the respondent;
the respondent never expressed any dissatisfaction with the accounting services provided.

In summary, Mr Phillips denies that he failed to properly manage the tax matters that the respondent had instructed him to manage, and denies misleading the respondent in any way and says that:

the respondent never raised any concerns with him about the way in which he undertook his accounting work;
the respondent never raised any ethical concerns with him and acted ethically at all times while doing work for the respondent;
the respondent never raised any questions with him about his provision of services regarding the respondent's tax affairs, and did not ignore any questions of the respondent's on this issue;
he did not provide any advice to the respondent about his disclosure obligations, or about his corporate structures, and could not have provided complete advice about his corporate structure, because the respondent had not made him aware of any information about other entities that he did not provide accounting services for.

Mr Phillips was not required for cross-examination.

Evidence of the respondent

In addition to his earlier statement, the respondent also relied on a statement dated 15 November 2021 which was prepared for this Stage Two hearing. The statement is in fact partly a statement, and partly submissions, and the submissions will be treated as such. In summary, the respondent states:

he has always appreciated the seriousness of his duties including his duties of disclosure;
his failure to initially lodge full and correct returns on time was due to ignorance on his part, rather than being deliberate;
he was quick to acknowledge his failure and his remorse both privately and publicly (and here he points to an article which appeared in the Daily Telegraph dated 5 June 2021 and headed "Mayor Apologises for 'false or misleading' Disclosures",in which he made a public confession by saying, among other things, "I am guilty, I did not do the right thing - I'm sorry");
he had no intention nor or motive to deliberately hide his pecuniary interests and quicky arranged to have them corrected;
the corrected returns disclosed nothing illegal or inappropriate, or anything that he could have profited by;
all of the properties were located outside the area of Strathfield Council;
after being contacted by the Office of Local Government, he willingly co-operated and continued to co-operate;
having read the statement of Mr Phillips, it appears that there was some level of miscommunication or misunderstanding between them as to his expectations about Mr Phillips' services; the respondent accepts his responsibility in this regard;
his public shaming in the media has been unbearable, unfair and relentless. It has caused his whole family to suffer, and they continue to receive unfavourable and negative publicity;
he was not ousted as Mayor of Strathfield (as claimed in a newspaper article); rather his term as Mayor expired in September 2021 when did not nominate for Mayor or Deputy Mayor;
the nature of the work in which he is currently engaged, and which he hopes to continue in the future includes, among other things, supporting local organisations such as the Rotary Club; assisting residents; attending local government events and workshops; participating in functions held in the local area, and otherwise helping members of the community in any way he can.

In conclusion, the respondent states: 9. I respectfully appeal to the Tribunal to find that even though my initial returns were deficient in numerous respects, that my failure was ignorance on my part rather than intentional, that I fully cooperated and had my returns corrected as soon as I was informed of the deficiencies, that no benefit or harm has ensued to me or anyone else as a result of my initial failure to lodge correct returns, that my failure falls into the lower scale of seriousness, and that on the merits and circumstances of my case, l ought fairly to be treated leniently.
The respondent was required for cross-examination

Cross examination of the respondent

The respondent was extensively cross-examined by Mr Cobb-Clark. In response to various questions the respondent repeatedly said that he was "sorry", that he "did the wrong thing" and that he was "guilty". As at the Stage One hearing he said that he was not educated.
Mr Cobb-Clark put to him a number of compromising propositions, such as the reason why his current accountant Mr Kamper produced no documents in response to a summons of the Office of Local Government was that no document ever existed. The respondent's response was "Maybe yes, I don't know".
Mr Cobb-Clark put to the respondent directly that he lied when he told the Tribunal that he had relied on Mr Phillip's advice completing his Pecuniary Interest Declaration. The respondent's response was "I'm sorry, I never lie".
Mr Cobb-Clark further put to the respondent that he had lied when he said he had asked questions of Mr Phillips. The respondent's response was "I can't remember".
Mr Cobb-Clark further put to the respondent that he had lied in his first witness statement when you accused Mr Phillips of acting unethically. The respondent's response was "I can't remember".
Mr Cobb-Clark put to him that he had lied because he wanted to blame someone else. The respondent's response was "I'm a good Catholic and I never lie, I don't blame anyone. I always blame myself".
Mr Cobb-Clark asked the respondent about various other matters such as his knowledge including being a director of 10 companies, understanding the corporate structure of his holdings and having a share capital of $750,000 in Crown Developers Pty Ltd. The usual response was "I don't know", and that he just signed whatever papers were put in front of him.

Submissions of the Applicant

The applicant submits that the respondent lied to the Tribunal, both in his statement of 31 May 2021 and in his oral evidence. It submits that it is "highly significant" that Mr Phillips was not required from cross-examination and that the Tribunal is bound to accept Mr Phillip's evidence so long as it is plausible.
The applicant submits that the respondent's repeated lodgement of disclosure forms containing misleading information is serious misconduct warranting strong action being taken by the Tribunal. This is because pecuniary interest returns are not "mere paperwork", but are an essential means of ensuring the conflicts of interest local government decision-making are recognised and either avoided or managed. The forms are required to be made publicly available, and are important means of giving the public confidence in their elected officials, by allowing the public to be aware of and understand what pecuniary interests a local councillor might have: Councillor v McNaughton, unreported PIT, 11 May 1994.
The applicant places particular emphasis on the remarks of the late Mr David Officer QC, who then constituted the then Pecuniary Interests Tribunal, in Director-General, Department of Local Government v Longbottom (unreported, Officer QC, 7 April 2005 at [42], [44] and [49]: Careful, complete and due compliance with the legislation is of great significance for the proper transparent and accountable decision-making process in Local Government. It is not an obligation to be taken lightly by councillors, either in the lodgement of the return or in the careful attention to the detail required for inclusion in the return. ... In light of the importance of the due and complete lodgement of the returns, it is not an acceptable excuse for councillors to be ignorant of, or to pay careless attention to, either the legislation, or the guidelines issued by the Department, or the previous decisions of the Tribunal. Undue haste is no excuse. The Department has been cautioning care and attention at least since the issue of the said circulars. The Tribunal has been urging the same since its decision in Cotter's Case in December 1998. ... This Tribunal wishes to make it plain that, if it is not already plain from the terms of this Decision, that this Tribunal is fast losing patience with those who do not, in a timely manner, fully and accurately disclose what is required by the Regulations. There have been more than ample warnings from this Tribunal and the Department of the importance of timely, careful and complete returns. If a person takes on the responsibility of the office of a councillor, then part and parcel of that responsibility is an obligation to comply with the provisions of the Act relating to pecuniary interest disclosures, and to do so in a thorough and complete manner. An incomplete return can frustrate the very policy behind the legislation. … If councillors cannot or will not heed the numerous warnings, then they should fully appreciate the possible consequences.
The applicant submits that it is now 16 years since the decision in Longbottom, and that any remaining patience that the Tribunal has for local councillors who fail to disclose their pecuniary interests in accordance with the applicable code of conduct and the LGA ought to now be exhausted.
The applicant submits that complying with disclosure obligations is particularly important for property developers, such as the respondent. Given a local Council's responsibility for planning decisions, property developers are particularly likely to find themselves in conflicts of pecuniary interest.
The applicant then provides very detailed submissions about the Grounds of the Complaint that the Tribunal found were established in the Primary Decision.
In relation to the applicant's personal circumstances, in summary the applicant makes the following submissions.

The respondent's lengthy experience as a councillor

The respondent is a very experienced local councillor, first being elected to a local council in in 1995, serving until 2000. The in 2012, he served a further term until 2016. He was then elected to Strathfield Council in 2017, before becoming mayor in 2019
The longer a person's experience as councillor, the greater should be that person's understanding and knowledge of their duties and obligations: Office of Local Government v Neville [2018] NSWCATOD 31 at [45].
That is particularly so having regard to the obligation to disclose pecuniary interests, which is fundamental to good governance and a person's role as local councillor. Therefore, because of the respondent's extensive experience, his misconduct is deserving of a greater degree of censure than similar conduct by a less-experienced councillor would be: Office of Local Government v Shelley [2018] NSWCATOD 103 at [80]. His experience also undermines his claims in his witness statement that he did not understand how to fill in disclosure forms, and did not know who he could contact for information about the forms.

The respondent's lack of insight

The respondent lacks insight into his conduct: see Neville at [44]; Shelley at [79] where his statement deflects responsibility for the false and misleading Initial Disclosure and 2018 Return onto Mr Phillips, his former accountant. As set out above, Mr Phillips denies having been responsible for the Initial Disclosure and 2018 Return. Further, his responses in cross-examination deflected responsibility for the false and misleading statements in the 2019 Disclosure onto his current accountant.
The respondent's evidence shows his lack of understanding of his financial arrangements, which makes it unlikely that the respondent could comply with his obligations under the Code and ensure that further disclosures of pecuniary interests are accurate.
On the basis that the Tribunal finds that the respondent lied in his evidence, the applicant seeks a protective order of disqualification for four years "as it would keep him out of [contesting] this and the next election".

Submissions of the respondent

The respondent also discusses the detail of the various Grounds found established. In summary, he minimises the seriousness of some of them: Ground One is a minor or technical breach; Grounds Two and Three overlap; Grounds Four and Five are identical in respect of 2019 return and are analogous to being "duplicitous".
In this last respect the respondent says that Grounds One to Three and Four to Six substantially relate to the same sets of conduct. Although the allegations are not "duplicitous" in the same way as they may be in criminal proceedings, this is nonetheless relevant when considering penalty. The question is one of fairness to the respondent who should not be sanctioned twice for the same conduct. The principle of totality should be applied such that any penalty is not disproportionately large: Office of Local Government v Pauling [2014] NSWCATAD 121.
As to the criticism that Mr Phliips was not required for cross-examination, he says he was entitled not to cross-examine him but to put the Tribunal that his evidence should not be accepted in certain respects, particularly for those matters which were not corroborated by records, file notes or letters "at all". He submits that it was clear that Mr Phillips was talking from his memory alone.
In any event, the respondent submits that there is significant room for his evidence and the evidence of Mr Phillips to fit together, and that what Mr Phillips remembers is not inconsistent with what the respondent says.
The respondent is unsophisticated, having only been educated to year 10 level. He knows that he could have done better, but he is not completely a person who ignored his responsibilities.
The respondent says that the applicant's submissions in relation to Ground 6 were manifestly excessive, as it cannot be reasonably be said that somehow he was stonewalling the Office of Local Government, as this was simply not the case. Not only did he retain Mr Kamper, there was no suggestion that the Office of Local Government, was in any way unsatisfied by the documents provided, and no further demand was made for them.
The respondent submits that it is critical for the Tribunal to appreciate that he did not profit from any lack of disclosure, and that he had no motive to intentionally not disclose information.
In the circumstances, the respondent submits that the applicant's call for his disqualification as a councillor for four years is "grossly overstated". He says that this can be contrasted with the protective orders made in the various decisions involving Mr Salim Mehajer, a former councillor of Auburn City Council namely Office of Local Government v Mehajer [2014] NSWCATOD 64; Mehajer v Chief Exec utive of the Office of Local Government [2014] NSWSC 1804 and Office of Local Government v Salim Mehajer [2016] NSWCATOD 10.

Principles

In Neville the Tribunal summarised the relevant principles in determining the appropriate protective order as follows: 36. First, s 482 appears in Part 3 (Complaints concerning non-disclosure and proceedings before NCAT) of Chapter 14 (Honesty and disclosure of interests) of the Act. Proceedings under Part 3 of Chapter 14 of the Act are disciplinary in nature. As with professional disciplinary matters, the Tribunal's jurisdiction is at least in part protective, both of the public and of the maintenance of high standards in the ranks of the particular occupation, here local councillors: Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 at 637-638. 37. In Office of Local Government v Councillor Campbell of Murray Shire Council [2015] NSWCATOD 129, the Tribunal (Dr J Renwick SC) noted at [4] that the jurisdiction is disciplinary and protective in nature, in a similar fashion to the discipline of professionals such as lawyers and medical practitioners. This was written before the remarks of Basten JA in Chen v Health Care Complaints Commission [2017] NSWCA 186 at [4] where his Honour noted: As a preliminary point, one should be cautious in relying upon cases concerned with legal practitioners when dealing with the regulation of the medical profession. First, the institutional structures within which the respective professions operate are, and have been historically, different in significant respects. Secondly, the functions exercised by each profession differ significantly. To take merely an obvious example, an important purpose of regulating lawyers is to ensure that they deal properly with clients' property and money. With respect to doctors, a significant purpose is to protect the physical integrity of patients. 38. Thus, there are likely to be some variations in the applicable principles due to the differences between misconduct in elected office and professional misconduct. Nevertheless, broadly I accept the remarks of Dr Renwick SC. 39. Secondly, there are important but indirect effects of a disciplinary order. These were recognised by Basten JA in NSW Bar Association v Meakes [2006] NSWCA 340 in relation to barristers. These considerations are relevant (by analogy) to orders made in respect of a local councillor and include: (1) The order reminds other councillors of the public interest in the maintenance of high standards; (2) The order may give emphasis to the unacceptability of the conduct involved; and (3) By speaking to the public at large, the order seeks to maintain confidence in the standard of conduct of local councillors. 40. Thirdly, there is a "public interest in having the respondent's conduct denounced as unacceptable", and that orders made by the Tribunal would "make plain that conduct of the kind engaged in is unacceptable": Health Care Complaints Commission v Do [2014] NSWCA 307 at [39]. 41. Fourthly, the availability of a range of statutory disciplinary options implies the necessity to consider whether those short of depriving the constituents of their representative can adequately punish the councillor's failure to comply with the statutory obligations and vindicate the public interest in maintaining the honesty of municipal administration: Mehajer v Chief Executive of the Office of Local Government [2014] NSWSC 1804 at [13]. 42. Fifthly, whether the proposed orders will prevent the respondent from exercising any functions as a councillor, and the impact of this on constituents: Mehajer at [13], [15] and [21]. 43. Sixthly, whether there have been any previous offences: Mehajer at [15]; Phillips v Director-General, Department of Premier and Cabinet [2014] NSWCATOD 48 at [52]. 44. Seventhly, the acknowledgement if any, or apology or remorse for, the conduct by a respondent, and the lack of any insight into the conduct on their part. 45. Eighthly, the longer the experience as councillor the greater should be the councillor's understanding and knowledge of their duties and obligations. That is not to say that misconduct of an inexperienced councillor should be excused. All councillors must act honestly and exercise a reasonable degree of care and diligence in carrying out his or her functions under the Act (s 439(1)) and comply with the Council's code of conduct (s 440(5)).

Consideration

Section 482A of the LGA provides: 482A Decision of NCAT--misconduct matters (1) This section applies where a matter has been referred to the Civil and Administrative Tribunal under section 438HA or 440J. (2) The Tribunal may, if it finds that the behaviour concerned warrants action under this section-- (a) counsel the councillor, or (b) reprimand the councillor, or (c) suspend the councillor from civic office for a period not exceeding 6 months, or (c1) disqualify the councillor from holding civic office for a period not exceeding 5 years, or (d) suspend the councillor's right to be paid any fee or other remuneration, to which the councillor would otherwise be entitled as the holder of the civic office, in respect of a period not exceeding 6 months (without suspending the councillor from civic office for that period). (3) In determining which action, if any, to take against a councillor, the Tribunal may take into account any previous incidents of misconduct by the councillor, any disciplinary action previously taken against the councillor and any other relevant matters. (4) In this section, "councillor" includes a former councillor.
At the time of Stage Two hearing the respondent was a councillor of the Council However, as noted, he did not stand for re-election at the local government elections held on 4 December 2021. Nonetheless, as s 482A(4) provides that "councillor includes a "former councillor", the Council may still make protective orders in respect of the respondent's conduct, and neither party submitted otherwise.
The critical issue is whether the respondent lied to the Tribunal both in his written evidence and his oral evidence, thus warranting an order of disqualification.
I am not satisfied that I should make that finding, which effectively amounts to a finding of perjury. While the applicable standard of proof is the civil standard, I am mindful of Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336. As the Tribunal said in Health Care Complaints Commission v Ng [2015] NSWCATOD 85 at [133] to [134]: 133 In Rejfek, the High Court stated: 10. . . . The "clarity" of the proof required, where so serious a matter as fraud is to be found, is an acknowledgment that the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved: see Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336 , per Dixon J. (1938) 60 CLR, at p 362 . . . 11. But the standard of proof to be applied in a case and the relationship between the degree of persuasion of the mind according to the balance of probabilities and the gravity or otherwise of the fact of whose existence the mind is to be persuaded are not to be confused. The difference between the criminal standard of proof and the civil standard of proof is no mere matter of words: it is a matter of critical substance. No matter how grave the fact which is to be found in a civil case, the mind has only to be reasonably satisfied and has not with respect to any matter in issue in such a proceeding to attain that degree of certainty which is indispensable to the support of a conviction upon a criminal charge: see Helton v. Allen [1940] HCA 20; (1940) 63 CLR 691 per Dixon, Evatt and McTiernan JJ. (1940) 63 CLR, at p 714. 134 In Campbell, Sackar J at [72] also referred to Evans and Braddock [2015] NSWSC 249 at [70] - [77], a decision of Hallen J. Hallen J had noted that Emmett J (as his Honour then was) stated in Warner v Hung, In the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123 at [48] that: When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361-2). (emphasis added).
In my view, this is a situation of "inexact proofs, indefinite testimony or indirect inferences". While the respondent's evidence was quite unsatisfactory in many ways, and might be considered to be evasive, was formulaic and did little to assist the Tribunal, and was certainly unpersuasive, that falls short of the satisfaction that I must feel to find that he lied, repeatedly, to the Tribunal in his oral and written evidence.
Given the nature, the extent and the seriousness of the conduct involved, and further given that the respondent was a councillor of significance experience, were the respondent still a councillor I would have seriously considered suspending the respondent from his office of councillor. This is because the respondent's conduct comprised three factually distinct matters involving disclosures which were false or misleading in a material particular, and a failure to comply with a direction of the Principal Investigator under s 440H of the LGA.
However, given the respondent is no longer a councillor, a protective order pursuant to s 482(c) suspending the respondent from civic office has no utility.
The only appropriate order available to the Tribunal is that the respondent be reprimanded for his breaches of the LGA and the Code.
I have considered his claims of public embarrassment and humiliation through the media, but agree with the applicant that this is not a matter by reason of which any lesser protective order should be based. While I have noted the sole personal reference provided to the Tribunal by the respondent, and accept that he undertakes charitable works, I accept the applicant's submission that these matters are not relevant to my determination, and that Tribunal is not required to take action (or not take action) because of the respondent's character. Rather, the Tribunal is required to take action to deter the respondent from again engaging in conduct and to remind other local councillors of the importance of proper disclosure of pecuniary interests.

Costs

As I noted in the Primary Decision, the applicant sought the costs of the hearing of the hearing of 7 June 2021 thrown away by the respondent's effectively withdrawing admissions made to the Tribunal on 2 June 2021. At the time of the hearing, I understood the respondent's counsel to agree that the applicant was entitled to its costs, at least on the ordinary basis.
However, the respondent then provided submissions dated 30 June 2021 to the Tribunal submitting that each party should bear their own costs.
By the time of the Stage Two hearing, the respondent had reverted to the original position, namely that he should pay the costs "thrown away" by his abandonment of admissions previously made, on the ordinary basis. However, the applicant seeks its costs on the indemnity basis.
The submissions of the respondent of 30 June 2021 were in response to the detailed submissions of the applicant dated 23 June 2021. In summary, the applicant submits: 1. on 2 June 2021 the matter was listed for a directions hearing. The directions hearing was necessitated by the respondent's unexplained failure to provide evidence and submissions until 31 May 2021 in circumstances where, pursuant to consent orders made on 24 February 2021, the Tribunal ordered that the respondent provide his evidence by 24 March 2021, and his written submissions by 28 April 2021; 2. on 1 June 2021, the applicant provided draft consent orders to the respondent; 3. on 2 June 2021, during the directions hearing, the respondent's solicitors returned those consent orders to the Applicant, with the respondent's proposed changes in markup; 4. from the respondent's proposed markup, and subsequent admissions at the directions hearing, the applicant understood that the respondent was contesting two issues at Stage One being: 1. whether the respondent's conduct in breaching cll 4.21(b), 4.21(c) and 4.23 of the Code of Conduct constituted misconduct under the LGA; and 2. whether the applicant had proved Ground Six of the Amended Grounds; 1. this position was consistent with the respondent's written submissions of 31 May 2021; 2. the Tribunal confirmed the parties' understanding of the orders and what was being admitted by the Respondent during the directions hearing on 2 June 2021; 3. the directions hearing was attended by the respondent's solicitor, who at various times received an adjournment to enable him to seek instructions from the respondent, and to counsel who was retained at the time; 4. the Tribunal reformulated the orders slightly, and asked both parties whether they were content with the form of those orders, and both parties agreed that they were.; 5. those orders were: By consent, the Tribunal makes the following orders and notations (Orders): In these Orders: "Act" means the Local Government Act 1993 (NSW) as in force at the time of the matters alleged in the Amended Grounds. "Amended Grounds" means the Amended Grounds for Application dated 21 January 2021. "Code" means the Strathfield Council Code of Conduct dated May 2019. BY CONSENT, THE TRIBUNAL ORDERS THAT: 1. The respondent has breached s 449(3) of the Act by reason of the matters set out in Ground 1 of the Amended Grounds. 2. The respondent has breached s 449(1) of the Act by reason of the matters set out in Ground 2(a) of the Amended Grounds 3. The respondent has breached s 449(3) of the Act by reason of the matters set out in Ground 2(b) of the Amended Grounds 4. The respondent has breached s 449(1A) of the Act by reason of the matters set out in Ground 3(a) of the Amended Grounds. 5. The respondent has breached s 449(1A) of the Act by reason of the matters set out in Ground 3(b) of the Amended Grounds. 6. The respondent has breached cll 4.21(b) and (c) of the Code by reason of the matters set out in Ground 4 of the Amended Grounds. 7. The respondent has breached cl 4.23 of the Code by reason of the matters set out in Ground 5 of the Amended Grounds. THE TRIBUNAL NOTES THAT: 1. The issues required to be resolved at a hearing on liability are as follows: a. Whether the conduct admitted by the respondent under Grounds 4 and 5 of the Amended Grounds constitutes misconduct for the purposes of s 440F of the Act; and b. Whether Ground 6 of the Amended Grounds has been proven against the Respondent to the requisite standard. 2. The hearing to determine the issues set out in notation (1) will take place on 7 June 2021 at 10am. 3. Following determination of the issues set out in notation (2) the Tribunal will hold a further hearing on the question of whether the conduct warrants action under s 482A of the Act, and if so, what action is required to be taken. 4. At the conclusion the hearing on Monday 7 June 2021 a timetable will be set down and a hearing date given for the further hearing. 5. The parties are directed to file any submission including submissions already filed with the Registry in word FORMAT on or before 7 June 2021. 6. The respondent is directed to file with the Registry in WORD format a copy of his statement dated 31 May 2021 on or before 7 June 2021. 7. The parties have leave to seek clarification or correction of orders (1) to (7) at the hearing on 7 June 2021 if necessary. 1. neither party indicated, either to the Tribunal or to each other, that corrections were required; 2. the applicant prepared for the hearing on 7 June 2021 on the basis that the only matters in dispute were those set on in 57 above; 3. however, midway through the applicant's submissions on 7 June 2021, and after the evidence had closed, the respondent indicated that it no longer agreed that the respondent had breached any of the provisions of the Code; 4. notwithstanding that the respondent's solicitor was in the hearing at the time, no explanation was given for that radical change of position, although counsel for the respondent suggested at the hearing on 7 June 2021 that there was some sort of ambiguity in the orders; 5. there was no ambiguity. The orders were clearly understood by both parties and the Tribunal, as evidenced by the changes to orders as proposed by the respondent in correspondence, resulting in order which were made by consent; 6. the idea that somehow there was some sort of mere ambiguity in the orders is undermined by the way in which the respondent conducted its case at the resumed hearing on 16 June 2021. The respondent at the hearing, for the first time, denied the substance of Grounds Four and Five of the Amended Grounds, and denied that the pecuniary interest disclosures were false or misleading in a material particular; 7. there is "no way" that this radical change in stance can be reconciled with some sort of ambiguity on the part of the order, especially when the respondent's proposed amendment are considered; 8. if that really was the position that the respondent had always had in mind, the consent orders proposed by the Respondent would have simply deleted any admissions in relation to Grounds Four and Five. 9. there was no inkling in the Respondent's written submissions provided on 31 May 2021 (which had been initially required to be served on 28 April 2021) that this would be the case advanced by the respondent at the hearing; 10. the respondent's conduct in agreeing to consent orders shortly before the hearing admitting various breaches of Council's Code of Conduct, and then midway through the hearing after hearing an outline of the applicant's case seeking to resile himself from those admissions without explanation is fundamentally inconsistent with his duty under s 36 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act); 11. the conduct is particularly egregious in circumstances where the same solicitor acted for the respondent throughout with the respondent having the benefit of legal advice at all material times.
For its part, the respondent filed written submissions dated 23 June 2021. In summary, the respondent submitted: 1. section 60(2) of the NCAT Act provides that no costs are to be awarded unless there are special circumstances warranting an award of costs; 2. the applicant not only seeks costs, but costs on an indemnity basis. As it is only where there are special circumstances that ordinary costs should be ordered, it must be assumed that something extraordinary must be shown to justify such an award, and no such circumstances have been shown; 3. the respondent refutes the applicant's submission that the respondent's position is a radical chance of position as: 1. the respondent's position is consistent with his written submissions; 2. the respondent admitted breach only and not that the breach resulted in the misconduct. 1. the applicant has not discharged its onus in satisfying that the Tribunal that there are special circumstances warranting an award of costs.

Consideration

As noted, by the time of the Stage Two hearing, the respondent's position had changed to conceding, once again, he should pay the applicant's costs thrown away, although only on the ordinary basis.
Section 60 of the NCAT Act provides: 60 Co sts (1) Each party to proceedings in th e Tribunal is to pay the party's own c osts. (2) The Trib unal may award co sts in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of co sts. (3) In determining whether there are special circumstances warranting an award of co sts, 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 se ction 36(3), (g) any other matter that the Trib unal considers relevant. (4) If cos ts are to be awarded by the Tri bunal, th e Tribunal may-- (a) determine by whom and to what extent co sts are to be paid, and (b) order cost s to be assessed on the basis set out in the legal co sts legisl ation (as defined in sec tion 3A of the Le gal Profession Uniform Law Application Act 2014 ) or on any other basis. …
I am entirely satisfied that there are special circumstances in accordance with ss 60(3)(a) and (b) of the NCAT Act. As to s 60(3)(g), I am also consider that, in relation to this issue, the respondent failed to give effect to the guiding principle (NCAT Act, s 36(1)), namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings (NCAT Act, s 36(3)).
The discretion to award indemnity costs was recently considered by Justice Ward CJ in Eq in Fisk v Gold [2021] NSWSC 1465. At [26], her Honour stated: 26 As to a claim for indemnity costs, again, the discretion to award indemnity costs must be exercised judicially (see Mead v Watson(2005) 23 ACLC 718;[2005] NSWCA 133 at (8]) and with caution (see Leichhardt Municipal Council v Green [2004] NSWCA 341 at[47]; Ng v Chong [2005] NSWSC 385 at (13]). There is no fixed rule or rationale as to when an indemnity order might be made, except that it requires a "sufficient or unusual feature" (Harrison v Schipp [2001] NSWCA 13 at [139] referring to Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801 at 232-234). Such an order may be appropriate where a party wantonly or recklessly causes the other party to incur costs. It is recognised that this will often be the case where the party liable is guilty of some "relevant delinquency" (see [Oshlack v Richmond City Council (1998) 193 CLR 72; [1998] HCA 11] at [44] per Gaudron and Gummow JJ.
And in in Mendonca v Tonna [2017] NSWCATAP 176 the Appeal Panel stated at: 59. Indemnity costs are only awarded in limited circumstances. The discretion to do so must be the subject of careful reasoning (Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354) and caution should be exercised in making such an award: Leichhardt Municipal Council v Green [2004] NSWCA 341; Ng v Chong [2005] NSWSC 385 at [13]. … 63. An award of indemnity costs may also be made for unreasonable conduct. Such conduct may include unnecessarily prolonging the proceedings, (Degmam Pty Ltd (in liq) v Wright (No 2), at 358); unfounded allegations of fraud or improper conduct (Maule v Liporoni (No 2) (2002) 122 LGERA 216 at 229); deliberate or high-handed conduct (Rouse v Shepherd (No 2) (1994) 35 NSWLR 277) and behaviour which causes unnecessary anxiety, trouble or expense, such as the failure to adhere to proper procedure (FAI General Insurance Co Ltd v Burns (1996) 9 ANZ Ins Cas 61-384). Disregard of court orders may justify an indemnity costs order (O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [35]). Perverse persistence by an unrepresented litigant with a hopeless application may also do so: Rose v Richards [2005] NSWSC 758.
In my view, this is a case where an award of indemnity costs is warranted. This is because: 1. the respondent's conduct was the sole cause of the hearing on 7 June 2021 having to be adjourned; 2. had the respondent, at some point between 2 June 2021 and 7 June 2021, taken up the Tribunal's invitation and proposed further changes to the orders to resolve a perceived ambiguity, then there is every possibility that the applicant would have had sufficient time to prepare for the hearing and the hearing date could have been preserved; 3. while I decline to use the language in the applicant's submissions that the respondent decided to "ambush" the applicant with his changed position at the hearing, I have no doubt that the conduct of the respondent caused the applicant great prejudice in the conduct of its case; 4. that respondent's conduct was a "sufficient or unusual feature" which wantonly or recklessly caused the applicant additional costs to incur costs; 5. it was also conduct which was unreasonable.
The respondent must pay the costs thrown by the adjournment of the hearing on 7 June 2021 on the indemnity basis.

Orders

The Tribunal orders that: 1. The respondent is reprimanded. 2. The respondent is to pay the applicant's costs thrown away by the adjournment of the hearing on 7 June 2021 on the indemnity basis.

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: 12 January 2022

(2002) 122 LGERA 216

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Judgment (16 paragraphs)

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