Infinity Security Group Pty Ltd v Chief Commissioner of State Revenue

NCAT Administrative and Equal Opportunity|2023-03-17

Introduction

On 2 February 2023 the Tribunal published its reasons for decision in Infinity Security Group Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCATAD 28 (the proceedings). The proceedings concerned the review of assessments of payroll tax for each of the 2016 to 2019 tax years issued to the Applicant on 11 March 2020 under s 37 of the Payroll Tax Act 2007 (NSW) (PTA) (Assessment).
The principal issue in the proceedings was whether arrangements between the Applicant (Infinity), its clients and third party subcontractors were employment agency contracts within the meaning of s 37 of the PTA.
I found that the arrangements between Infinity and some of Infinity's clients (namely its pub/club clients) in respect of the third party subcontractors were not employment agency contracts within the meaning of s 37 of the PTA.
However, in respect of the arrangements between Infinity and its clients other than its pubs and clubs clients, I found that the Applicant had not discharged its onus of establishing those arrangements were not employment agency contracts or that the Assessment was incorrect. Further, I found that the interest and penalty tax imposed in respect of so much of the Assessment as related to those arrangements should also stand.
I remitted the Assessment to the Respondent for determination accordingly.
The Applicant now seeks an order for costs.
All parties consented to an order being made pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act) dispensing with a hearing on the question of costs.
I am satisfied the application for costs can be adequately dealt with on the papers, without a hearing, the parties having had the opportunity to file and serve evidence and submissions in support of their respective positions. Accordingly, I will make an order dispensing with a hearing.

Costs Principles

Section 60 of the CAT Act provides: 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.
The principles relevant to applications for costs in the Tribunal were summarised by the Appeal Panel in The Owners - Strata Plan No 63731 v B&G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [6] - [15] as follows (which principles apply equally whether the costs application is before the Tribunal or the Appeal Panel of the Tribunal): 6.The general rule set out in s 60(1) was: "… designed to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as is practicable: Choi v University of Technology Sydney [2020] NSWCATAP 18 at [41]. [1] 7. In Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42 the Appeal Panel said, at [8], that the discretion to award costs had to be exercised judicially: "…having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. (See eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (no 2) [2016] NSWCATAP 168 at [16].)" 8.Section 60(2) says that the Appeal Panel may award costs to a party "only if" satisfied there are special circumstances warranting an award of costs. 9.Section 60(3) sets out a non-exclusionary list of factors to which an Appeal Panel may have regard in determining whether special circumstances warranting an award of costs exist. 10."Special circumstances" are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] (Santow J); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107]. 11.However, it does not follow that a costs order should be made simply because one or more of the factors in s 60(3) are made out. 12.Even if satisfied that there are special circumstances, the Appeal Panel must further be satisfied that they are circumstances "warranting an award of costs" - Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21]; Youssef at [108]. 13.The exercise of the discretion requires the Tribunal "to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]; Obieta v Australian College of Professionals Pty Ltd (2014) NSWCATAP 38 at [81]; Khalafv Commissioner of Police [2019] NSWCATOD 178 at [29]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35]. 14.He who asserts must prove, and so the party seeking the costs order bears the onus of proving that special circumstances exist - Styles v Wollondilly Shire Council [2017] NSWCATAP 108 at [5] under the heading "Costs". 15.Whether special circumstances exist is a question of fact and each case must be assessed according to its circumstances: Wynne Avenue Property Ltd v MJHQ Pty Ltd (No 2) [2019] NSWCATAP 68 at [57]; The Owners - Strata Plan 20211 v Rosenthal [2019J NSWCATAP 49 at [15].

The Applicant's submissions

The Applicant submits that there are special circumstances warranting an award of costs in this matter and relies in particular on s 60(3) (a), (c), (e) and (g) of the CAT Act.
It says: 1. It was bound to succeed in the proceedings, and the Respondent had no reasonable basis to oppose the application in respect of its pub/club clients, after the decision in E Group Security Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1190 handed down in September 2021 (which found that arrangements between a different security company and its pubs and club clients and contractors were not employment agency contracts under s 37 of the PTA) or, alternatively, after the appeal decision in Chief Commissioner of State Revenue v E Group Security Pty Ltd [2022] NSWCA 115 was handed down in July 2022; 2. The Respondent should have attended a mediation; and 3. The Applicant was instead forced to expend considerable sums to prepare evidence and witnesses for the hearing and, having done so, during the course of the hearing the Respondent withdrew its request that a number of those witnesses be made available for cross-examination.
The Respondent submits that there are no special circumstances which warrant a costs order being made.

Consideration

I do not consider that any of the circumstances the Applicant points to amount to special circumstances warranting the making of a costs order in its favour.
As I said at [118] of my reasons for decision it is well recognised that the analysis as to whether services were provided "in and for the conduct of the business of the clients" as required by s 37 of the PTA is a fact sensitive one. The Applicant had the onus of proving its case. The fact that it was required to provide detailed evidence to meet that burden is not, in my view, a special circumstance.
I also said at [119]: [T]he mere fact that two cases may concern the provision of services of security guards does not mandate a similar conclusion. While there are some similarities in the facts of this case to the facts before Her Honour in E Group Security, I do not accept the Applicant's submission that the facts are on "all fours" with the facts of that case.
As such, I reject the Applicant's submission that it was bound to succeed after the decision in E Group Security. Nor do I consider the fact that in correspondence between the parties prior to the hearing of the proceedings the Respondent may have expressed the view that the decision in E Group Security would "very likely" prove "helpful, if not determinative" was binding on him in any way.
Further, the Respondent was entitled to test the Applicant's evidence, and to cross-examine as many of the Applicant's witnesses as it considered it needed to for that purpose. I agree with the Respondent that parties should be encouraged to withdraw the call for witnesses to be cross-examined if they consider, as the hearing has progressed, there is no longer a need for their cross-examination. That serves to reduce the length and cost of the hearing and should not be a basis for a costs order against the Respondent. Further I agree with the Respondent that, in any event, this could hardly justify an order for costs from July 2022 or even earlier as Infinity is seeking.
I also agree with the Respondent's observation that in this case the length of the hearing could have been considerably shorter had the Applicant's witnesses been available for cross-examination without the need for a number of adjournments to accommodate them.
The Respondent is also entitled to decline to engage in mediation if he reasonably believes that there is no utility in having a mediation. I note that in this case the latest request made of the Respondent to agree to mediation was made at a time when the Applicant had only filed three of the eleven affidavits it ultimately relied upon, most of the Applicant's evidence being prepared after the Court of Appeal's decision in E Group Security. There is nothing before me to suggest that there was a further attempt to engage with the Respondent in relation to mediation after the Applicant's full suite of evidence had been provided.
I do not consider that any of the special circumstances in s 60(3) (a), (c), (e) of the CAT Act are present in this case or that there are any other matters which warrant a departure from the general rule that each party is to bear its own costs of the proceedings.
It is also relevant that Infinity was unsuccessful in relation to its clients other than its pub/club clients and the penalty and interest imposed in the Assessment in so far as it related to those clients.
Accordingly, the Applicant's application for costs should be dismissed.

Orders 1. A hearing on costs is dispensed with; and 2. The Applicant's application for costs is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar 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: 17 March 2023

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Judgment (6 paragraphs)

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Legislation Cited (2)

Cases Cited (20)