Edward Lee's Imports Pty Ltd v Commissioner for Fair Trading [2016] NSWCATOD 165 | Case summary

Edward Lee's Imports Pty Ltd v Commissioner for Fair Trading [2016] NSWCATOD 165 | Case summary | Zoe

[3]

Brief background

The Applicant had held a licence (the Licence) issued under the Motor Dealers and Repairers Act 2013 (the Act). On 16 February 2016 the Respondent and others attended the Applicant's car yard, issued a Notice to Show Cause (the Show Cause) and seized documents. On 10 June 2016 the Licence lapsed and on 20 September 2016 the Respondent issued a Notice of Determination (the Determination) to take disciplinary action adverse to the Applicant.
The Applicant applied to the Tribunal to review the Determination (the Application) and also requested a stay of the Determination. On 12 October, the Tribunal granted a conditional stay and gave directions for filing and serving documents.
The Tribunal's directions included a requirement that the Respondent file and serve documents under s 58 of the Administrative Decisions Review Act 1997 by 9 November 2016. Pursuant to s 58(1)(c) the documents include: a copy of every document or part of a document that is in the possession, or under the control, of the administrator that the administrator considers to be relevant to the determination of the application by the Tribunal.
The Respondent failed to file and serve the s 58 documents and on 10 November informed the Applicant by email (the November email) that it was unable to comply with the timetable but would endeavour to do so by 21 November. The Respondent did not provide the s 58 documents by 21 November. The Respondent's solicitor wrote to the Applicant's solicitor on 23 November (the November letter), received 28 November, and, without providing the s 58 documents, acknowledged that neither the Show Cause nor the Determination reflected the facts proved by those documents.
In further communications, the Applicant's solicitors asked the Respondent's solicitors if the Respondent would agree to pay the Applicant's costs and suggested that the Application should be upheld or the Show Cause be withdrawn and the Respondent should pay the Applicant's costs. The Respondent's solicitors informed the Applicant's solicitors that it was not appropriate for costs to be awarded against the Respondent and did not agree to the Application being upheld.
On 6 December, the Tribunal remitted the matter to the Respondent for reconsideration, made further directions in relation to filing and serving documents and ordered that the Applicant's application for variation of a stay and an application for costs be dealt with on 20 December.
I heard the applications on 20 December. I granted an unconditional stay of the Determination subject to further order of the Tribunal, and ordered that all costs incurred by the Applicant to date be paid by the Respondent. At the end of the hearing the Respondent's counsel orally requested that I provide written reasons for the costs decision.

[5]

Brief chronology 2014 26 November Applicant applied for a motor dealers licence 2015 11 June Respondent granted the Applicant a motor dealers licence (the Licence) expiring on 10 June 2016 2016 16 February Officers of the Respondent and the police attended the Applicant's car yard together with representatives of the media who had been given prior notice and seized documents of the Applicant. 16 February Show Cause issued 6 June Applicant submitted an application dated 2 June to renew the Licence. The page of the application providing credit card particulars bears handwritten notes "Reject Insufficient Funds", the date 12/10/16, and illegible initials. 20 September The Determination was issued by the Respondent to take disciplinary action against the Applicant under s 45 of the Act. The Determination cancelled the Licence and disqualified the Applicant from being a licence holder or from being involved in the direction, management or conduct of a business for which a licence is required under the Act for a period of 10 years. Letter from the Respondent to the Applicant (the September letter) enclosing the Determination and a Schedule to the Determination (the Schedule). The September letter states "I find that the Company has acted in a dishonest and unfair manner and is not fit and proper to hold a licence under the Act. Accordingly I have disqualified and cancelled the Company from being a licence holder or from being involved in the direction, management or conduct of a business for which a licence is required under the Act for a period of ten (10) years." The Schedule: 20 September • provides what appears to be the Respondent's reasons for making the Determination. • Includes a summary of a response to the Show Cause provided on 5 April 2016 by solicitors for Mr Lee and the Applicant. The response includes a blanket denial and specific denials of the allegations and contains several requests for particulars. • Includes a data table providing details of some 37 vehicles allegedly acquired by the Applicant and another company of which Mr Phillip Lee was allegedly sole director. • Asserts that the odometers of the vehicles were reduced resulting in substantial decreases in the true distance travelled by the vehicles. • Asserts that the Applicant is not a fit and proper person as it has acted in a dishonest manner by dealing in at least 37 vehicles which have been subject to odometer tampering whilst in the possession of the company and prior to offering them for sale The Applicant filed: 1 the Application. The attached decision to be reviewed was the September letter, the Determination and the Schedule. The grounds for the Application are: 1 the Determination is against the evidence and the weight of evidence; 2 the Determination was based on conjecture or speculation; 6 October 3 the Determination was unduly harsh. 2 an application for stay or interim order. The order sought was "The [Determination] be stayed pending further order from the Tribunal." The grounds are stated to be: 1 The License is the only source of income of the Applicant; 2 There are reasonable prospects of success of this appeal; 3 The balance of convenience favours the stay, as employees will also be adversely effected. 12 October Phillip Lee, director of the Applicant, made a statutory declaration annexed to which was a chain of emails between the solicitors for the parties. The emails were dated from 16 August 2016 to 13 September Directions Hearing listed for stay application During the hearing the Respondent's representative, Ms Campora, informed the Tribunal: 1 the Applicant's licence had expired on 10 June, 2 no licence renewal application had been received 3 no payment of a renewal fee had been received. Later during the hearing the Applicant informed the Tribunal that the renewal application and credit card details had been provided to the Respondent on 6 June. Ms Campora then said the credit card had not been processed and the Respondent could not say that the renewal application had not been lodged. 12 October The Campora affidavit states at [10] that Ms Campora attached to the affidavit a redacted copy of her report to the Respondent in respect of the hearing. The report states at page 26 of the affidavit in response to Ms Campora's "submission that it would be an inappropriate exercise of the Tribunal's discretion to grant a stay to effectively permit a wound-up business to re-start that "the Tribunal noted that the refusal to deal with the renewal of the licence had been the ultimate cause of the previous business being closed down". Orders made by the Tribunal 1 The Tribunal determines to deal with the matter in the absence of an internal review. 2 The application is granted until further Order of the Tribunal on condition that the Applicant's business is limited to dealing with locally sourced vehicles obtained from a genuine 3rd party. 3 Respondent is to file and serve its s 58 material by 9 November 2016 4 Applicant is to file and serve its material by 23 November 2016 5 Respondent is to file and serve its material in reply by 7 December 2016 The matter was adjourned part heard for further hearing on 20 December 2016. Email from the solicitor for the Respondent to the solicitor for the Applicant stated in part: 10 November "We refer to … the Tribunal orders made on 12 October 2016, in particular the order requiring the service of the s 58 documents by 9 November 2016. We have been unable to comply with the service order but will endeavour to do so by close of business on 21 November 2016 …"

[6]

10 November Letter from the Applicant's solicitor to the Tribunal. The letter noted that despite orders made by the Tribunal on 12 October no s 56 (sic) documents had been received from the Respondent. The letter requested listing for an order that the application be determined immediately with the material currently before the Tribunal or for further directions and to amend the restrictions on the current stay. The November email from the Applicant's solicitor to the Respondent's solicitor included: 10 November "We expect that you will set out what the delay is in a statutory declaration so that our client can consider its position. We also expect that this matter will be listed and dealt with in an open Tribunal as per our letter of even date. We expect that the Respondent acting as a model litigant will write to NCAT with a copy of your statuary (sic) declaration disclosing the reasons for the delay and what steps have been taken and are being taken to complete the evidence. We expect you will disclose when the investigation of our client started. We will rely on this letter with respect to costs." The November letter from the Respondent's solicitor to the Applicant's solicitor (received by the Applicant's solicitor on 28 November) included: 23 November "We refer to your letter dated 10 November 2016, and apologise for our delayed response and failure to serve the Respondent's s 58 documents by 9 November 2016 in accordance with the timetable set down by the Tribunal on 12 October 2016. Upon review of these documents, it has become clear to the Respondent that neither the Notice to Show Cause dated 16 February 2016 ("the NTSC") nor the decision dated 20 September 2016 ("the Decision"), which is the subject of the application for an administrative review in these proceedings, reflects the facts proved by the documents." Comments then followed as to how the Respondent proposed to proceed. 5 December Email from the Applicant's solicitor to the Respondent's solicitor referred to the November letter, asked for the s 56 (sic) documents referred to in the letter, the several other "Notices to Show Cause" referred to in that letter and provide evidence of the reasons for delay or invalid decision by the Respondent. The email requested advice as to whether the Respondent would agree to pay the Applicant's costs and stated: " … our client's position is that the Appeal should be upheld or the Notice to show cause should be withdrawn with the Respondent to pay the Applicant's costs. There is no reason in the circumstances why this matter should be remitted rather than the matter dealt with summarily due to the invalid process taken by the Respondent and our client be relieved of the consequences of the invalid decision. We note that the writer spoke with your Mark Nicoletti on Thursday, 1 December 2016 with our proposal for the Application to be upheld with the Respondent to pay the costs and we are yet to have a response or any information as requested above despite the fact that Mr Nicoletti advised that we would receive a response by Friday." 5 December Email from the Respondent's solicitor to the Applicant's solicitor This email attached proposed short minutes and said "We note that "special circumstances" are required to justify a costs award in the Tribunal. In our view no special circumstances arise in this case. Should your client wish, nevertheless, to make an application for costs, we would consent to additional reasonable orders for the provision of evidence and hearing of that application." Directions Hearing Orders and directions made by the Tribunal included 1 The matter is remitted under s 65 of the ADR Act. 2 Respondent is to serve Notice to Show Cause on 6 January 2017 6 December … 9 Matter listed for hearing on 27 and 28 April 2017 - two days Application for Variation of Stay and Costs to be heard 20 December 2017 1 by 13 December 2016 Applicant to file and serve evidence and submissions on Stay and Costs 2 by 16 December 2016 Respondent to file and serve any evidence and submissions in reply 6 December Respondent conceded that the Determination was in breach of the requirements of procedural fairness, RS [8] 13 December Applicant filed AS Statutory Declaration by Phillip Lee made 14 December filed with the Tribunal together with 17 pages of attachments included: [3] In about August 2016 I have offered Fair Trading evidence to their investigation and I have offered to give a formal interview, but this was refused. [4] Neither the Applicant or myself have wound back odometers as alleged by the Fair Trading, nor were we involved in the practice, if that is what is now alleged. [7] … Annexed hereto … is a true copy of the financials of the Applicant before February 2016 and after. … [8] the Applicant has been disadvantaged by the whole process; 15 December firstly, Fair Trading started with a seizure in February 2016 rather than issuing a normal request for documents, secondly Fair Trading opposed a stay claiming that I failed to apply for a renewal, Thirdly, Fair Trading issued a show cause notice which they now seek to withdraw after the Applicant incurred substantial legal fees to prepare for the hearing of this matter, fourthly, Fair trading have changed their position in relations to waiving or discharging the need for stay conditions and finally, Fair trading again oppose lifting the stay conditions. The Applicant has incurred legal fees since this process started to defend itself and now the process must start again. [9] Since this process has commenced the stress of having to fight for the documents owned by the Applicant, the false stories in the press, the delay of this process has been a great strain on me and has caused me stress and anxiety. I was happy when my lawyers were able to seek an urgent hearing date of 20 December 2016 … Myself and my sister in-law are unsure of our plans next year except that we have another legal battle that we thought would be over … [10] The Applicant cannot afford to start this case over, I must lend the Applicant more funds to be able to Defend the new Fair trading case unless the costs order sought is granted to put the Applicant back to the position it would have been in if Fair Trading followed the proper legal process. 16 December RS filed 16 December The Campora affidavit made 16 December filed together with 44 pages of attachments. The affidavit conceded the Respondent failed to comply with the Tribunal's timetable of 12 October

[10]

The Tribunal's power to award costs

The Tribunal's power to award costs is set out in s 60 of the CAT Act: Section 60 costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (5) In this section: "costs" includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
There is no dispute that: 1. the general rule in respect of costs in proceedings before the Tribunal is that each party pays its own costs and the Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. 2. Section 60 (3) provides matters in respect of which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs. 3. Sections 60 (4) and (5) authorise the Tribunal to determine by whom and to what extent costs are to be paid, provide for assessment, and provide inclusive definitions of "costs".

[11]

The parties' written submissions

The Applicant's written submissions in support of the costs application at AS [13] - [19] include: 13. … Costs may only be awarded if NCAT is satisfied there are special circumstances. 14. Special circumstances are circumstances out of the ordinary but not necessarily extraordinary or exceptional: Younan v Commissioner for Fair Trading (No 2) [2016] NSWCATOD 60 at [7], 15. Younan is an opposite (sic) authority because it involves the same division of NCAT and indeed the same Respondent. 16. On 23 November, the Respondent finally conceded that it could not sustain the taking of disciplinary action on the basis of the NSC. 17. Once it is so conceded on the basis that neither the NSC nor the decision were supportable on any facts within the possession of the Respondent, the following conclusions are irresistible: (a) The Respondent's case had no tenable basis in fact or law; (b) From the instigation of the NCAT proceedings, the Respondent repeatedly and continually failed to comply with the obligations under s 36(3) of the NCAT Act; (c) The Respondent's conduct unnecessarily disadvantaged the Applicant; (d) The Respondent's conduct has unduly and unreasonably prolonged the proceedings; (e) The Respondent far from behaving as it was duty bound to as a model litigant has refused to even consider the s58 documents until over 2 weeks after the time it was supposed to file and serve them. When it did finally do so, it conceded that it had no case. 18. The Respondent has not submitted or tended (sic) the new NSC it proposes to issue. The question of whether it indeed had any case even on the basis of a new NSC is problematic. More importantly, there is a concession that it has had no case to date.
The Respondent's written submissions opposing the costs application are at RS [3] to [18]: 3. It is the ordinary rule that "costs follow the event": UCPR 42.7. The Applicant does not seek costs in respect of any interlocutory application that has been considered by the Tribunal. The Applicant appears to seek its costs generally for the period up to the directions hearing on 6 December 2016, in order to fund its Application (Statutory Declaration of Phillip Lee dated 14 December 2016 [10]). The Applicant has provided no evidence of its legal costs to date, including its costs of preparation for the hearing previously set down for 20 December 2016. 4. The Applicant provides no reasons and identifies no evidence to justify a departure from the ordinary rule. 5. In any event, in this Tribunal, costs are awarded only in "special circumstances" (s.60 of the CAT Act). The Applicant submits that the grounds identified in s.60((a), (b), (c) and (f) of the CAT Act arise in these proceedings: (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) omitted (e) omitted (f) whether a party has refused or failed to comply with the duty imposed by section 36(3). 6. In a letter to the Applicant dated 23 November 2016 (Annexed to the Affidavit of Fabiola Campora sworn 16 December 2016), the Respondent conceded that "neither the Notice to Show Cause dated 16 February 2016 ["Notice"] nor the decision dated 20 September 2016 ["Decision"] ... reflects the facts proved by the documents." 7. The letter makes clear that the Respondent: a. has evidence; b. wishes to re-cast the Notice to reflect that evidence; and c. wishes to re-issue and determine the Notice. 8. At the directions hearing on 6 December 2016, the Respondent conceded that the Decision was in breach of the requirements of procedural fairness because it had determined that the Applicant was not a fit and proper person, which was not a ground of disciplinary action notified to the Applicant in the Notice. 9. The Respondent has not conceded and does not concede that there was or is "no evidence" to support the Notice or Decision, or that its conduct has been otherwise improper. 10. The Applicant misrepresents the concessions that the Respondent has properly made as admissions that it has acted improperly at paragraphs [16], [17], [18], [22], [23], [24] and [26] of its submissions. The Applicant does not provide any other evidence in support of those submissions. The Tribunal would not, in the absence of evidence of an admission or impropriety, find that there was no tenable basis for the Notice or Decision and would therefore find that the "special circumstances" described in s.60(3)(c) do not arise in this case. 11. The Respondent agrees that it did not comply with the Tribunal's timetable set down on 12 October 2016. That, of itself, does not amount to a failure to comply with its obligations to the Tribunal under s.36. The Tribunal would not find that the "special circumstances" described in s.60(3)(f) arise in this case. 12. On 10 November 2016, the Respondent wrote to the Applicant in respect of its inability to comply with the timetable. The Applicant wrote to the Tribunal seeking to have the application relisted but did not otherwise reply to the Respondent's letter. 13. The Respondent has, since 23 November 2016, admitted that the Decision was in error. In its letter to the Applicant dated 23 November 2016, the Respondent proposed an approach to the application, including a timetable similar to that ordered by the Tribunal on 6 December 2016. 14. In its email response dated 5 December 2016, the Applicant expressed its opposition to the Respondent's proposed orders. 15. At the directions hearing on 6 December 2016, the Applicant consented to a timetable for the conduct of its application culminating in a hearing on 27 and 28 April 2017. The time required for the re-determination of the Decision (including time for a response by the Applicant) is, including the Christmas break, about ten weeks, including a four week period for the Applicant to respond to the notice to show cause. 16. In these circumstances, the Tribunal would not find that the Respondent has unreasonably prolonged the time taken to complete the proceedings for the purposes of s. 60(3)(b). 17. The Applicant has provided no evidence that the Respondent's conduct of the application has occasioned "unnecessary disadvantage" to it. The relevant disadvantage is that occasioned by the respondent's conduct of the application, not the respondent's conduct of the disciplinary investigation that preceded it. The claims made by the Applicant in the statutory declaration of Mr Philip Lee, to the effect that it has suffered financial loss, are neither supported by the evidence before the Tribunal nor relevant to the determination of the existence of a criterion for the making of a costs order. 18. In these circumstances the Tribunal would not find that the Respondent's conduct of the application has caused disadvantage to the Applicant for the purposes of s. 60(3)(a).

[20]

Analysis of section 60 (3) factors

Section 60 (3) provides for the matters with which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs.
In CRIPPS and Another v G& M DAWSON Pty Ltd and Another; G & M DAWSON Pty Ltd and Another v CRIPPS and Another [2006] NSWCA 81 (Cripps v Dawson) the Court of Appeal considered an appeal and cross-appeal arising from matters dealt with by the former Administrative Decisions Tribunal Appeal Panel. The appeal was dismissed and the cross-appeal allowed. In dealing with the successful parties' costs application Santow JA, with whom Mason P and Brownie AJA agreed said: 53 Section 88(1) of the Administrative Decisions Tribunal Act 1997 provides that "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 there are special circumstances warranting an award of costs". 54 The Tribunal, following the successful appeal to the Appeal Panel on 3 February 2005, concluded against Dawson that the criterion of "special circumstances" was not satisfied in the circumstances … … 55 While determination of costs is a discretionary matter and moreover a matter of practice and procedure, as the Tribunal itself recognised, unreasonable conduct that is out of the ordinary and conduct which is grossly unreasonable can attract exercise of the Tribunal's power under s88 to award costs. … 60 … With respect, I consider that the Tribunal was in error in failing to conclude that special circumstances here applied. For this purpose, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional. While a finding of "serious unfairness" is not prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration.
In Fitzpatrick Investments Pty Limited v Chief Commissioner of State Revenue [2015] NSWCATAD 103, the Tribunal considered an application by the respondent Chief Commissioner of State Revenue who had been successful in substantive proceedings, which included 16 directions hearings and in respect of which the applicant withdrew the application for review on the Friday before the hearing was to commence on the following Monday for two weeks. The Chief Commissioner was unsuccessful in his claim for costs.
In its reasons the Tribunal said: 14 The Tribunal may only make a costs order under s 60 of the Act, as an exception to the general principle that each party to proceedings in the Tribunal is to pay the party's own costs, if the Tribunal "is satisfied that there are special circumstances warranting an award of costs". 15 In order to be awarded costs in this matter, the Chief Commissioner has to establish, having regard to the matters set out in s 60(3), that there are "special circumstances" warranting an award of costs. The phrase "special circumstances" is not given any meaning in the legislation but the phrase has been considered judicially.
The Tribunal referred to Cripps v Dawson and then said: 18 The expression "special circumstances" is also found in other legislation and a similar interpretation has been suggested. For example, in Brian Lewis Groth v Secretary Department of Social Security [1995] FCA 1708 in considering whether there were "special circumstances" in Mr Groth's case which rendered it appropriate to disregard the whole or part of certain compensation payments he had received in the assessment of his pension entitlement under s 1184 of the Social Security Act 1991, Kiefel J agreed that the phrase "special circumstances" although imprecise is sufficiently understood not to require judicial gloss and that, for purposes of the appeal before her Honour, the only inquiry to be undertaken was whether there were special circumstances "to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case". 19 In two other decisions, Burchett J in the Federal Court took the same approach, although in different contexts. In Minister for Community Services and Health and Medicare Participation and Review Committee v Chi Keong Thoo [1988] FCA 54, Burchett J expressed the view that "the core of the idea of 'special circumstances' is that there is something unusual or different to take the matter out of the ordinary course" ... 20 In order to invoke s 60 and award costs in a matter, it is accordingly necessary to be satisfied that there are circumstances relating to the conduct of the proceedings that are clearly out of the ordinary. The circumstances "do not have to be extraordinary or exceptional". In determining that there are special circumstances, grossly unreasonable conduct or a finding of "serious unfairness" are not prerequisites to such a determination, they are nonetheless highly relevant considerations. 21 It is necessary to consider all the matters set in s 60(3), although some may not apply in a particular case. Finding special circumstances is not sufficient to exercise the discretion; it can only be exercised if the special circumstances identified by a party warrant the award of costs ...
In Yammatree Pty Ltd (Applicant); North West Local Land Service (Respondent) [2015] NSWCATAD 221 the Tribunal said: 8… Subsection 60(2) gives the Tribunal a wide discretion to award costs where it is satisfied that there are 'special circumstances' that warrant an award of costs. That is, the Tribunal must be satisfied there are 'special circumstances' and that these warrant an award of costs. 9 Section 60 (3) provides that the Tribunal may have regard to a range of factors. These include the subsection 60(3)(g) provision regarding "any other matter that the Tribunal considers relevant." It is clear that the factors set out in section 60(3)(a) to (f) are not meant to be an exhaustive list of what might constitute "special circumstances". 10 However, as the Appeal Panel noted in Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38, it does not follow that a costs order should be made because some factors are made out. 11 It remains necessary for the Tribunal to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the ordinary rule that each party bear their own costs.
In Ceepee Pty Ltd v RMS [2015] NSWCATAD 130, an application before this Tribunal for an award of costs of proceedings under s 88 of the Administrative Decisions Tribunal Act 1997 the Tribunal made some comments in respect of the exercise by a court or a Tribunal of a discretion to award costs, s 60 of the CAT Act and the meaning of any special circumstances. In particular, the Tribunal said: 10 Where a court or a tribunal is conferred with the discretion to award costs, such discretion must be exercised judicially and not capriciously (Oshlack v Richmond River City Council (1998) 193 CLR 72 at 81). The fundamental rationale for the awarding of costs is that such an award is compensatory, not punitive: Latoudis v Casey (1990) 170 CLR 534 at 543; Oshlack v Richmond River Council (1998) 193 CLR 72 at 97. … 17 It is the applicant for costs who bear the onus of establishing an entitlement to costs in a jurisdiction where the primary rule is that each party bears their own costs: Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48 at paragraph [18].
In A J Holdings (NSW) Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 143 the successful applicant applied for an order for costs. The Tribunal's reasons for rejecting the application for costs include the following: 10 Under s 60, the general costs rule is that each party is to pay their own costs. A costs order is therefore an exception to the general costs rule. In general it is very unusual for awards of costs to be made in the review jurisdiction of the Tribunal, especially at first instance … 11 Pursuant to s 60(2) costs may only be awarded if the Tribunal is satisfied that there are "special circumstances" warranting an award of costs ... Pursuant to s 60(3) the Tribunal may have regard to the matters there recited in determining whether there are "special circumstances" warranting an award of costs. 12 The fundamental rationale for the awarding of costs is that such an award is compensatory, not punitive … 13 The person applying for a s 60(2) costs order is the party who bears the onus of establishing an entitlement to costs …. 14 It is not enough or sufficient to exercise the discretion that the circumstances are "special"; the special circumstances identified must also "warrant" an order for costs …. 15 The term "special circumstances" as used in s 60 is not defined in CATA, or elsewhere. For the purposes of s 60(2), "special circumstances" are circumstances surrounding the conduct of the case that are out of the ordinary, but without having to be extraordinary or exceptional ... It seems the core of the idea of "special circumstances" is that there is something unusual or different to take the matter out of the ordinary course …

[21]

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

No evidence was brought to the attention of the Tribunal that the Respondent had responded, even after the commencement of proceedings, to the request for particulars made in April 2016 nor that the Respondent accepted the opportunity offered by Mr Lee in August 2016 (at [3] in both his statutory declarations) to give a formal interview and provide evidence to assist the Respondent's investigation.
I am not satisfied that the Respondent informed either the Tribunal or the Applicant in a timely manner that either the Show Cause or the Determination were materially defective.
The Respondent has been under notice since at least 10 November 2016 that the Applicant was applying to the Tribunal to vary the 12 October stay order and to make other applications. It was not until 28 November when the Applicant's solicitors received the November letter that the Applicant was informed that the Respondent had conceded that the Show Cause and the Determination were faulty.
No evidence has been provided to the Tribunal as to when or under what circumstances the Respondent became aware of the defect(s) in the Show Cause and the Determination.
No evidence has been provided to the Tribunal to the effect that the procedure followed by the Respondent in relation to these issues is or should be the ordinary procedure of the Respondent. I comment below on the obligations of the model litigant.
I observe that in the hearing on 20 December 2016 the Respondent continued to oppose the application to vary the stay order notwithstanding that the Respondent had provided no evidence in support of its position and had conceded that the Show Cause and the Determination did not reflect the facts on which it had intended to rely.
A flow-on from the failure by the Respondent to provide the s 58 documents in accordance with the Tribunal's directions is that the substantive hearing has been set back more than four months, thus disadvantaging the Applicant in relation to a matter which the Applicant alleges is critical to the continued operation of its business.

[22]

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

The Tribunal has dealt with this matter since 12 October 2016 on an urgent basis having dispensed with the usual requirement for an internal review.
By failing to provide evidence to the Tribunal properly explaining the Respondent's delay in acknowledging that the decision the subject of the Application was defective and causing the hearing date to be put back more than four months, I find that the Respondent has been responsible for prolonging the time taken to complete the proceedings.
Ms Case submitted that it was apparent from the Show Cause that the Respondent had considered "voluminous documents". That may well be the case. I observe that the Show Cause was served on 16 February 2016 and assume that those documents were considered prior to that date. It was not until 23 November 2016, more than nine months later, and some six weeks after the commencement of these proceedings, that the Respondent conceded that the Show Cause was defective.
It may be that the response by the Applicant in April 2016 to the Show Cause contained references to the conceded defect(s). However, as the Respondent has not brought to the attention of the Tribunal all relevant facts "proved by the documents", as stated in the November letter, the Respondent has not adequately explained the delay.
Ms Case submitted that the relevant defect was procedural and on the face of a document. She relied on RS [12] through [15].
There is no concession that there are no other defects in either the Show Cause or the Determination. Indeed, no evidence was brought to the attention of the Tribunal in support of the submission nor were any submissions made or authorities provided in relation to any relevant principles of procedural fairness. Accordingly, I am unable to determine the extent of any relevant defects in any particular document.
To the extent that there is merely a procedural error on the face of the Show Cause, there has been no adequate explanation as to why there has been a delay in reissuing the document. There is no evidence before me on that issue.
I find that there is a lack of reasons for the delay in the proceedings which is acknowledged to be the responsibility of the Respondent. I also find that the delay unreasonably prolongs the time taken to complete the proceedings, that these are circumstances which are out of the ordinary especially given the lengthy period between the date of the Show Cause and response by the Applicant and the date of the Determination.

[23]

(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,

In Fitzpatrick the Tribunal said: 35 The Applicant also submits that "where there has been no hearing on the merits, the Tribunal is not able to have regard, as is required by s60(3)(c), to 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". In support, the Applicant cited the High Court decision in Re Minister for Immigration and Ethnic Affairs, ex part Lai Qin [1997] HCA 6; (1997) 186 CLR 622 where his Honour McHugh J noted that, in the absence of a hearing on the merits of a case, "a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order". His Honour went on to say: Having read the Tribunal's decision and the affidavit filed in support of the application for the grant of an order nisi, it seems to me that, although the prosecutrix had an arguable case, she did not have strong prospects of success. 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 costs application - in most cases at all events - to make a prediction as to the outcome of a hypothetical case. … 55 I agree with counsel for the Applicant that "where there has been no hearing on the merits, the Tribunal is not able to have regard, as is required by s 60(3)(c), to 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". I think, Lai Qin, cited by counsel in support of this submission, confirms that it is not the function of a Tribunal "on costs application - in most cases at all events - to make a prediction as to the outcome of a hypothetical case". As suggested in Lai Qin by the High Court, this is the general rule. In some cases, where the facts are brief and not in dispute, the matter can be considered on the "papers". But this was not such a case. In this matter there was a great volume of evidence including several expert reports on various aspects of the land. Against that background, the Tribunal was, in any case, really not in a position to determine in a conclusive manner whether the Applicant's claim had no tenable basis in fact or law or lacking in substance.
In these proceedings, the Applicant denies in two statutory declarations by Mr Lee that neither he nor the Applicant have wound back odometers as alleged by the Respondent, nor were they involved in the practice. The substantive evidence before me on the part of the Respondent does not include any evidence in support of the Show Cause or the Determination. Instead the Respondent has conceded that neither the Show Cause nor the Determination reflected the facts proved by what would have been the s 58 documents, albeit without either identifying those documents or disclosing their contents.
I observe that the Table attached to the Schedule lists 37 vehicles. The relevant dates in respect of almost all of the vehicles predate the granting of the Licence and in respect of many of the vehicles predate the incorporation of the Applicant. I further observe that in relation to at least one of the vehicles the advertised mileage is greater than both what is asserted to be the "Auction Mileage" and the "RMS odometer reading" as well as containing a "Screenshot Advertising Date" which is more than 12 months prior to the date of incorporation of the Applicant.
I make no findings in relation to the validity or accuracy of the Schedule or Table.
Ms Case submitted that the Respondent relied on paragraphs [6] through [10] of RS. Those paragraphs include the Respondent's concession at [8] "that the [Determination] was in breach of the requirements of procedural fairness because it had determined that the Applicant was not a fit and proper person, which was not a ground of disciplinary action notified to the Applicant in the [Show Cause]".
It appears to me that the Respondent by its concessions … conceded that it cannot rely on the documents presently before the Tribunal. Accordingly, it has made a claim that has no tenable basis in fact or law.
I am aware of no evidence to the effect that the Respondent's procedure in the circumstances is other than "out of the ordinary".

[26]

(f) whether a party has refused or failed to comply with the duty imposed by section 36 (3),

In Chan v Commissioner for Fair Trading [2015] NSWCATAD 62 Scahill SM when considering an application for costs against the respondent in that matter, who is also the Respondent in these proceedings, said at [35] to [38] 35 To interpret the "special circumstances" provisions, it is relevant to consider the Objects of the CATA as set out in section 3 and the Guiding Principles to practice and procedure set out in section 36. 36 Section 3 of the CATA sets out the objects of the Act as follows (with the Tribunal's bolding): The objects of this Act are: (a) …, and (b) to enable the Tribunal: (i) …, and (ii) to review decisions made by certain persons and bodies, and (iii) … and (c) to ensure that the Tribunal is accessible and responsive to the needs of all of its users, and (d) to enable the Tribunal to resolve the real issues in proceedings justly, quickly, cheaply and with as little formality as possible, and (e) to ensure that the decisions of the Tribunal are timely, fair, consistent and of a high quality, and … Guiding Principles of Practice and Procedure 37 Part 4 of the CATA deals with practice and procedure in the Tribunal. Section 36, within Part 4, sets out the guiding principle to be applied to practice and procedure in NCAT. 38 The Tribunal's understanding of the interaction of these sections is that both the parties and their representatives and the Tribunal itself have an obligation in their conduct to act with economy and to focus on the primary issues between the parties.
Section 36 of the CAT Act states (with bolding by the Tribunal): 36 Guiding principle to be applied to practice and procedure (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it: (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal: (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings. (5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.
In BHR and BHS v Biripi Aborignial (sic) Children's Services (No2) [2015] NSWCATAD 109 the Tribunal said: 6 What constitutes 'special circumstances' is one or more of the matters set out in subsection 60(3) of the Act. … 29 … subsection 36(3) of the Act provides that a party to proceedings before the Tribunal has a duty to co-operate so as to give effect to the guiding principle in that section. This duty expressly includes a duty to comply with the directions and orders of the Tribunal …
In Yammatree Pty Ltd (Applicant); North West Local Land Service (Respondent) [2015] NSWCATAD 221 the Tribunal said: 12 Subsection 60(3)(f) refers to the duty imposed by section 36(3). … Section 36(1) of the NCAT Act sets out the "guiding principle" for the NCAT Act and the procedural rules, in their application to proceedings in the Tribunal. These are to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 13 Subsection 36(3) of the NCAT Act sets out the persons who are to co-operate with the Tribunal to give effect to the above guiding principles. These include (a) a party to proceedings in the Tribunal, and (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.
In Hadidi v Owners Corporation Strata Plan 84787 [2015] NSWCATAP 74 the Appeal Panel, having found that a party had failed on two occasions to file submissions and evidence in accordance with directions of the Tribunal said: 37 The appellant has failed to comply with the duty imposed in s 36(3) to comply with directions of the Appeal Panel: s 60(3)(f) and s 36(3).
Ms Case said, in relation to the Respondent being a model litigant with additional obligations to be fair to the other party, that "ideally" that would be the Respondent's approach.
I find that the Respondent failed to comply with the duty imposed by s 36 (3) in that the Respondent did not comply with directions and orders of the Tribunal in particular the obligation to file and serve s 58 documents by 9 November 2016. I also find that the Respondent failed to inform either the Tribunal or the Applicant that it would not be complying with that obligation until after the date for compliance had passed.
I find that the non-action of the Respondent in the above circumstances is out of the ordinary and is not the behaviour the Tribunal expects of a model litigant.

[27]

(g) any other matter that the Tribunal considers relevant.

I reject Ms Case's submission that the reason the additional hearing was required was because the Applicant did not accept the Respondent's timetable. I find that the reason the additional hearing was required was because the Respondent failed to comply with the Tribunal's timetable and provide s 58 documents by 9 November 2016, or at all.
In respect of the obligations of a model litigant I observe that the New South Wales Model Litigant Policy for Civil Litigation includes: Introduction 1.1 This Policy has been endorsed by Cabinet to assist in maintaining proper standards in litigation and the provision of legal services in NSW. This Policy is a statement of principles. It is intended to reflect the existing law and is not intended to amend the law or impose additional legal or professional obligations upon legal practitioners or other individuals. 1.2 This Policy applies to civil claims and civil litigation (referred to in this Policy as litigation), involving the State or its agencies including litigation before courts, tribunals, inquiries and in arbitration and other alternative dispute resolution processes. The obligation 2. The State and its agencies must act as a model litigant in the conduct of litigation. Nature of the obligation 3.1 The obligation to act as a model litigant requires more than merely acting honestly and in accordance with the law and court rules. It also goes beyond the requirement for lawyers to act in accordance with their ethical obligations. Essentially it requires that the State and its agencies act with complete propriety, fairly and in accordance with the highest professional standards. 3.2 The obligation requires that the State and its agencies … d) endeavouring to avoid litigation, wherever possible. e) where it is not possible to avoid litigation, keeping the costs of litigation to a minimum …
In MAHENTHIRARASA v STATE RAIL AUTHORITY OF NEW SOUTH WALES (NO 2) [2008] NSWCA 201 Basten JA, with whom Gyles and Basten JJA agreed, said: 16 In this State, the relevant principles as to the proper role of the executive government were succinctly stated by Mahoney J in P & C Cantarella Pty Ltd v Egg Marketing Board (NSW) [1973] 2 NSWLR 366 at 383 in the following terms: "The duty of the executive branch of government is to ascertain the law and obey it. If there is any difficulty in ascertaining what the law is, as applicable to the particular case, it is open to the executive to approach the court, or afford the citizen the opportunity of approaching the court, to clarify the matter. Where the matter is before the court it is the duty of the executive to assist the court to arrive at the proper and just result." 17 As his Honour noted, that principle was not novel, but was to be derived from long-standing authority applied to the Crown in the United Kingdom and reflected in this country in the remarks of Griffiths CJ in The Melbourne Steamship Company Ltd v Moorehead [1912] HCA 69; 15 CLR 333 at 342. In more recent years, the obligation of the government has been described as an expectation that it will act and be seen to act as a "model litigant": see Yong v Minister for Immigration and Multicultural Affairs (1997) 75 FCR 155 at 166E (Beaumont, Burchett and Goldberg JJ).
In Ceepee Pty Ltd v Roads and Maritime Services [2014] NSWCATAD 196 (Ceepee 2014) the Tribunal referred at [93] to the Respondent's obligation to endeavour to avoid litigation and at [94] to the possibility that if discussions had taken place between the parties (as was proposed by the Applicant in this matter from April 2016) that may have narrowed issues and avoided many of the costs incurred in that matter.
I observe that on several occasions after the Respondent failed to serve the s 58 documents in accordance with the Tribunal's directions, the Applicant put the Respondent on notice that it would be seeking a costs order. I find that the Applicant did not delay in putting the Respondent on notice of its intentions in this regard.
I find that having regard to the Respondent's concession that neither the Show cause nor the Determination reflected "facts proved" by documents apparently in the possession of the Respondent, it was not reasonably arguable that the Respondent should have opposed the application to vary the stay so that it became unconditional. I find that this is a matter which is out of the ordinary, especially having regard to the Respondent's obligations as a model litigant.
The question as to whether there are special circumstances warranting an award of costs is a high standard given that in this jurisdiction costs do not follow the result is a matter of course.
It appears to me that virtually the whole of the costs incurred by the Applicant in these proceedings may have been thrown away because of the actions of the Respondent. The Respondent has acknowledged several errors in the conduct of the proceedings, whether they are errors in failing to comply with directions of the Tribunal or in the internal procedures of the Respondent's officers. I do not attribute blame to any particular officer.
I am concerned about the delays which have occurred on the part of the Respondent.
I note the Respondent's submissions that there have been unexplained delays on the part of the Applicant in seeking to protect its own position prior to the start of proceedings. I have no evidence before me as to the reason for such alleged delays. However, in the present circumstances they do not substantially impact on the issues raised by s 60.
I am concerned about what appear to be undertakings by the Respondent, especially as a model litigant, in informing the Applicant that it will endeavour to do something by a certain date, not complying with its own timetable and not giving reasonable notice of its likely non-compliance to the Applicant.
The Respondent could have, but did not, inform either the Tribunal or the Applicant of its impending failure prior to the deadline set by the Tribunal.
Notwithstanding the Respondent's opposition to the Applicant's application to vary the previous stay order I observe that there was no submission by or behalf of the Respondent that it was in the public interest that the stay application, which it opposed, not succeed.

Edward Lee's Imports Pty Ltd v Commissioner for Fair Trading

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Judgment (28 paragraphs)

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Cases Cited (21)

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