Edward Lees Imports Pty Ltd v Commissioner for Fair Trading

Legal principles

1. The Tribunal's power to award costs is set out in s 60 of the Civil and Administrative Tribunal Act 2013 ('CAT Act'): 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 the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) 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.
2. '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]. While a finding of "serious unfairness" is not prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration: 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 at [60].
3. 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].
4. 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.
5. When regard is given to the criteria in s 60(3) the conduct of a party, including the conduct of the litigation, can be a relevant factor for the Tribunal to take into account. The purpose of costs orders "are to help ensure that parties conduct their cases in such a way that costs are not unnecessarily incurred or forced on others": AIN v Medical Council of New South Wales [2015] NSWCATAP 241 at [146], referring to Hendrickson v Yarra Bay 16 ft. Skiff Sailing Club Lid (No 2) [2011] NSWADT 204).
6. In Ceepee Pty Ltd v RMS [2015] NSWCATAD 130, 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. …
7. The objects of the CAT Act at section 3 and the guiding principle at section 36 of the CAT Act are relevant to the interpretation of the "special circumstances": Chan v Commissioner for Fair Trading [2015] NSWCATAD 62 at [35] to [38]; BHR and BHS v Biripi Aborignial (sic) Children's Services (No2) [2015] NSWCATAD 109 at [29]; Yammatree Pty Ltd (Applicant); North West Local Land Service (Respondent) [2015] NSWCATAD 221 at [12]-[13].
8. Section 36 of the CAT Act states: 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.

Consideration

1. The Applicant submitted that special circumstances existed because the Respondent "again has failed to act as a model litigant and has failed to comply with s 36 (3) of the CAT Act".
2. The Applicant referred to the conduct of the Respondent prior to and after the commencement of the hearing, noting that this Tribunal had previously awarded costs against the Respondent in an interlocutory decision prior to the commencement of the hearing and remitted the original decision, as providing a relevant history and context for its submissions: Edward Lees Imports Pty Ltd v Commissioner for Fair Trading [2016] NSWCATOD 165 ('the 2016 Costs Decision') and Edward Lee 's Imports Pty Ltd v Commissioner for Fair Trading [2017] NSWCATOD 13 ('the remittal decision').
3. The procedural history has been expressed in detail in the previous interlocutory decisions and in paragraphs 3 to 11 of the substantive decision. Between the 2016 costs decision and remittal decision of December 2016, and the commencement of the hearing on 5 June 2017, listed hearing dates were vacated twice. A third request to vacate hearing dates was refused by the Tribunal. Despite repetitive orders for the filing and service of evidence and submissions, by the time the hearing commenced on 5 June 2017, the Respondent's evidence in reply had not yet been completely filed and served. As noted in the substantive decision: 9. The hearing commenced on 5 June 2017. The Respondent had not, by that date, completed its evidence in reply, which was due to be filed by 7 June 2017. At the hearing on 5 and 6 June 2017 the parties addressed a number of procedural issues, objections to evidence and identification and arrangements for witness attendance and cross examination. Orders were made on 6 June 2017 for the filing and service of the respondent's evidence in reply by 7 June 2017 and written submissions in opening from the Respondent by 5 July 2017, and the Applicant by 12 July 2017. 10 The Respondent did not comply with those orders. On 6 July 2017 the Applicant approached the Tribunal regarding the Respondent's non-compliance and on 7 July 2017 the Tribunal issued a guillotine order for the Respondent's evidence and submissions, to be filed and served by 10 July 2017. That order was also not complied with by the Respondent, which filed its final affidavit on 11 July 2017, after sending it to the Applicant and Tribunal via email at 9.19pm on 10 July 2017.
4. The matters dealt with by the Tribunal at hearing on 5 and 6 June 2017 should have been discussed and agreed between the parties prior to the commencement of the hearing. They were not, because the Respondent had not yet filed all of its evidence by that time, despite the Tribunal's orders. The witness list and objections to evidence had therefore not been considered and finalised, and there had been no useful discussions about agreed facts, issues in dispute, or how the Tribunal and parties were to deal with the voluminous documentation filed by the Respondent. The Respondent finally filed its evidence in reply on 11 July 2017 and the hearing resumed on 19 July 2017 with opening submissions. I accept the Applicant's submission that the hearing dates of 5 and 6 June 2017 were thereby "wasted" by the Respondent's conduct.
5. The Applicant submitted that the Respondent made and maintained allegations which had no tenable basis in fact or law, and failed to make appropriate concessions: The Respondent made submissions for example in relation to phoenix activity which was never formally withdrawn. It was only the fact that the matters were not referred to at all in final submissions that enabled the conclusion to be reached that they were in fact withdrawn. However, cross examination and submissions were required by the Applicant for this issue, which in the end turned out to have no basis in law or fact. The Tribunal reasons at [54] and [55] there was no basis for the allegation in the first place and there was nobody within the Respondent's camp who even attempted to explain why the allegation was originally made and persisted with until being surreptitiously dropped in finally submission. The Tribunal found that the officer in charge Mr. Eyvaz neither knew nor cared to check whether the allegations against the Applicant were supported by evidence (see [55]).
6. I do not accept that the Respondent's claims had no tenable basis in fact or law, but agree that the legal basis and factual basis for some of the claims made, including the allegations of phoenixing, were limited. I accept that the Respondent failed to make appropriate concessions where its legal and factual basis for allegations was limited. I also find that the Respondent failed to make appropriate or reasonable concessions prior to the hearing, including their opposition to the Applicant's stay application of 25 January 2017, where the Tribunal had ordered an unrestricted stay in December 2016 in similar circumstances.
7. The Applicant submitted that the Respondent's tender and reliance on the JEVIC records, being documents found by the Tribunal to be unreliable and of little weight, unnecessarily disadvantaged the Applicant. I disagree that the reliance by the Respondent on unreliable records amounts to "special circumstances", because the Applicant had the opportunity to attack the veracity and reliability of those documents through evidence and submissions, and did so successfully.
8. Although both parties have the same duties under s 36(3) of the CAT Act to comply with orders and directions of the Tribunal and to give effect to its guiding principle, the Respondent's position as a government department subject to the model litigant principles means that its obligations to discharge those duties is more serious. Despite the seriousness of those obligations, the Respondent repeatedly failed to comply with orders and directions of the Tribunal for the filing and service of its evidence after assuring the Tribunal it would do so, failed to provide an adequate reason for those failures, failed to make attempts to narrow the issues with the Applicant and avoid unnecessary cost expenditure, opposed stay orders sought by the Applicant in circumstances where the Tribunal had already ordered a general stay, and did not make appropriate concessions during the course of the proceedings.
9. This is especially concerning in the context of the 2016 costs decision, where the Tribunal made specific findings about the Respondent's failures to comply with its model litigant obligations, to no apparent effect. I adopt the Tribunal's comments in the 2016 Costs Decision as relevant to the Respondent's conduct throughout these proceedings.
10. With reference to the specific provisions of s60(3) of the CAT Act, I find that the Respondent's failure to file its evidence in reply on time and prior to the commencement of the hearing, and its repeated failures to adhere to its model litigant obligations and the Tribunal's orders and directions unnecessarily disadvantaged the Applicant in preparing itself for hearing. The late filing of its evidence and failure to make appropriate concessions unreasonably prolonged the time taken to complete the proceedings, by contributing to the two vacations of hearing dates and wasting the first two days of the hearing on 5 and 6 June 2017. These matters also comprise failures to comply with the duty imposed by section 36(3) of the CAT Act. I find that the serious nature of the proceedings, being disciplinary proceedings involving the cancellation and banning of the Applicant's licence for 10 years, to also be a relevant consideration.
11. Having considered the Applicant's submissions and the conduct of the proceedings, I therefore find that there are special circumstances within the meaning of s60 of the CAT Act. The repeated disregard shown by the Respondent towards the Tribunal's orders and directions and its own model litigant obligations, to the detriment of the Applicant's hearing preparation, and the conduct and length of the hearing, warrants an award of costs in favour of the Applicant.
12. Having found special circumstances, the Tribunal is to determine by whom and to what extent the costs are to be paid, pursuant to ss 60(4) and 60(5). I accept the Applicant's submission that costs should be paid by the Respondent, however disagree with the extent submitted by them to be calculated as 70% of the costs up to and including the costs application and submissions.
13. On review of the file and the reasons in the substantive decision, I accept the Applicant's submission that their appearance at the directions hearing on 25 January 2017 was only necessary because, notwithstanding the Remittal decision and the general unrestricted stay which had been ordered by the Tribunal on 20 December 2016, the Respondent re-suspended the Applicant, requiring the Applicant to file another stay application, which was opposed by the Respondent. I also accept that their appearance at the directions hearing of 11 April 2017 was required because the Respondent issued the Second Determination on 14 March 2017 in circumstances where the parties were preparing for hearing on review of the suspension issued on 6 January 2017, requiring a vacation of the April 2017 hearing dates. These appearances by the Applicant's representatives were necessitated by the Respondent's conduct.
14. Costs orders are intended to be compensatory, not punitive. I have accepted that the first two days of the hearing were wasted as a result of the Respondent's conduct, and that appearances at the directions hearings of 25 January 2017 and 11 April 2017 were necessitated by the Respondent's conduct. I therefore order the Respondent to pay the Applicant's costs of and incidental to the appearances of 25 January 2017, 11 April 2017, 5 June 2017 and 6 June 2017, as agreed or assessed. This should include the time spent in preparation for the hearing prior to 11 July 2017, the date on which the Respondent completed the filing of its evidence in the proceedings.

Orders

1. Oral hearing dispensed with pursuant to s50(1)(c) of the CAT Act;
2. The Respondent to pay the Applicant's costs of and incidental to: 1. Directions hearings of 25 January 2017, 11 April 2017; 2. Hearing of 5 June 2017, 6 June 2017; and 3. Preparation for hearing prior to 11 July 2017, as agreed or assessed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 27 November 2018