Invests Ahmadi Pty Ltd ATF Ahmadi Trust v Chief Commissioner of State Revenue

Background

1. On 6 October 2017, the respondent issued a land tax assessment to the applicant, for the 2016 land tax year, in regard to land it owned within New South Wales. The applicant lodged an object to that assessment, which he was entitled to do: Taxation Administration Act 1996 (NSW) (TA Act), s 86. The respondent disallowed that objection on 9 November 2018 as the applicant had failed to establish that the land, during the relevant land tax year, was used for the dominant purpose of primary production: Land Tax Management Act 1956 (NSW) (LTM Act), s 10AA..
2. On 7 January 2019, having had his objection disallowed, the applicant lodged this application for external review of the respondent's 2016 land tax assessment: Taxation Administration Act 1996 (NSW) (TA Act) and Administrative Decision Review Act 1997 (NSW) (ADR Act). In its application, the applicant identified details of its contact person as being 'Babac Ahmadi' (Mr Ahmadi) and provided the mobile phone number and email address of Mr Ahmadi.
3. On 5 February 2019, Ms McKee wrote to the applicant drawing its attention to the terms of s 10AA of the LTM Act and what is required in order for land to be exempt from land tax on the primary production grounds. Ms McKee also pointed out to the applicant that the onus was on it to prove that the primary production exemption applied to its land for the relevant land tax year: TA Act, s 100(3).
4. On 7 February 2019, the respondent filed and served its material pursuant to s 58 of the ADR Act.
5. On 19 February 2019, the applicant's application first came before the Tribunal at a directions hearing. Mr Ahmadi appeared, in person, on behalf of the applicant at this directions hearing. The Tribunal made orders by consent, including an order for mediation on 3 April 2019 and in the event the matter was not settled at mediation, an order listing the matter for hearing on 9 June 2019.
6. On 15 March 2019, the applicant filed and served a very short statutory declaration of Mr Ahmadi, which had attached to it an unsigned short statutory declaration of Bryan Cromie. This was evidence filed and served by the applicant in compliance with orders made by the Tribunal at the directions hearing.
7. On 22 March 2019, Ms McKee wrote to the applicant noting that it had filed and served the abovementioned statutory declarations. These, Ms McKee advised had not changed the position of the respondent. Ms McKee referred to the earlier advice that had been given by the respondent in its determination of the applicant's objection and her letter of 5 February 2019 as to the requirement of s 10AA of the LTM Act. Ms McKee said that, on the assumption the applicant had no further evidence to file and serve, the respondent did not believe that the applicant's application had 'reasonable prospects of resolving at a mediation on 3 April 2019.' Ms McKee went on to suggest that if the applicant wished to proceed with its application for review of the 2016 land tax assessment the mediation be vacated and that it be heard and determined on the agreed 5 June 2019 hearing date. This, she explained would 'best facilitate the just, quick and cheap resolution of the real issues in dispute.'
8. On 29 March 2019, a further letter from Ms McKee was emailed to the applicant. Attached to that letter was a copy of the abovementioned 22 March letter and draft consent orders vacating the mediation of 3 April 2019.
9. In the absence of any response to Ms McKee's letters, the mediation proceeded on 3 April 2019. The respondent and his representatives attended the mediation. When there was no attendance by the applicant, an officer of the Tribunal's Registry telephoned Mr Ahmadi at around 10.15 am. The officer's file not of her conversation with Mr Ahmadi is as follows: I Phoned the Applicant and spoke with Babac Ahmadi to see whether someone was attending the mediation today. He advised that he was not aware of the mediation. I advised him that the last directions on 19/2/2019 advised all parties of the mediation. He said he is interstate and will not be attending today. I asked him if he wanted me to forward a message to the mediator, he said 'no'.
10. On 4 April 2019, Ms McKee sent an email to Mr Ahmadi at his nominated address. In her email, Ms McKee asked the applicant whether the applicant intended to pursue its application at the 5 June hearing or whether it intends to withdraw it. Ms McKee requested a response by 12 April 2019.
11. On 10 April 2019, the following order was made by the mediator: Mediation not settled. Case listed on 5 June 2019 at 10.00am for Hearing. Note: both parties to comply with orders made on 19 February 2019. Applicant failed to attend - had nothing to offer by way of excuse despite having attended directions hearing on 19/2/2019 and receiving additional notice on 2 April 2019. Respondent also indicates correspondence prior referring to Mediation today.
12. The Registry sent a copy of this order to each party on the same day, including to the applicant at its nominated address of Mr Ahmadi. The Registry of the Tribunal also sent to each party, at their nominated addresses, a Notice of Listing for the hearing on 5 June 2019 to commence at 10.00 am.
13. On 10 May 2019, the respondent filed and served his written submissions in accordance with the orders made by the Tribunal on 19 February 2019.
14. On 30 May 2019, Ms McKee sent an email to Mr Ahmadi confirming that the matter was listed for hearing on 5 June 2019. She also asked whether the applicant intended to file and serve any submissions in reply.
15. On 5 June 2019, the matter was listed before me. As there was no appearance by the applicant and on being informed about the applicant not having attended the mediation, I requested the Registry to telephone Mr Ahmadi on his nominated contact number. At 10.25 am, Mr Ahmadi sent an email to Ms McKee in which he said: 'I am not sure when the hearing is today. But I will not be attending.' As I have noted, I made an order dismissing the applicant's application, at about 11 am that morning, under s 55(1)(c) of the NCAT act, which provides as follows: 55 Dismissal of proceedings (1) The Tribunal may dismiss at any stage any proceedings before it in any of the following circumstances: (a) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) withdraws the application or appeal to which the proceedings relate, (b) if the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance, (c) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) has failed to appear in the proceedings, (d) if the Tribunal considers that there has been a want of prosecution of the proceedings. (2) The Tribunal may reinstate proceedings that have been dismissed under subsection (1) (c) if the Tribunal considers that there is a reasonable explanation for that failure.
16. As I have noted above, a copy of the orders I made that day was sent to each party at their nominated address. Order 1 included a reference to the applicant's right to seek re-instatement of the proceedings under s 55(2) of the NCAT Act. The applicant has not sought reinstatement or communicated further with the Tribunal.

Legal principles

1. As noted above, the ordinary rule in regard to costs under s 60 of the NCAT Act is that each party to proceedings in the Tribunal is to pay his or her own costs: NCAT Act, s 60(1). However, the Tribunal has a discretion to award costs where it is satisfied that there are 'special circumstances' that warrant an award of costs. Hence, the issue in this case is whether the respondent has established that there are 'special circumstances' and that they warrant an award of costs: NCAT Act, s 60(2).
2. The term 'special circumstances' is not defined in the NCAT Act. It has been interpreted to mean circumstances that are out of the ordinary but not necessarily extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11] and Bischoff v Sahade & Owners Corporation SP 62022 [2015] NSWCATAP 196, at [24].
3. As noted above, s 60(3) of the NCAT Act sets out some factors the Tribunal can take into account in determining whether there are special circumstances. This includes, whether a party has refused or failed to comply with the duty imposed by s 36(3) of that Act: see 60(3)(f). 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.
4. 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: 1. a party to proceedings in the Tribunal, and 2. an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.
5. Although s 60(3) of the NCAT Act sets out a range of factors which the Tribunal may take into account in considering whether there are 'special circumstances', it does not follow that a costs order should be made because one or more of the factors in this subsection are made out: see Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38.
6. As I have noted, there is a discretion as to whether to award costs is warranted where 'special circumstances' are established. It is well established that the discretion must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [37] and [48]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (no 2) [2016] NSWCATAP 168 at [16].

Respondent's submissions

1. The respondent submitted that, based on the material filed, these proceedings squarely fell within the range of matters set out in s 60(3)(b), (c), (f) and (g) of the NCAT Act and constituted special circumstances that warranted an award of costs for the following reasons: 1. the applicant had been responsible for prolonging unreasonably the time taken to complete the proceedings. If the applicant no longer wished to proceed, it could have formally withdrawn its application prior to the 3 April mediation or prior to the 5 June hearing; 2. the applicant's claim for a primary production exemption was always factually weak and unlikely to succeed. As pointed out to the applicant in correspondence (and submissions), there was no evidence of any actual use of the land for cultivation, the maintenance of animals or the keeping of bees as at the relevant date of 31 December 2015 to satisfy the requirements of 10AA(3) of the LTM Act; 3. by not attending the mediation or hearing date, or showing any courtesy in responding to the respondent's correspondence, the applicant consistently refused or failed to comply with the duty imposed on parties by s 36(3) of the NCAT Act, and 4. the applicant had been on notice since 4 April 2019 of the respondent's intention to seek costs thrown away by its failure to attend the mediation if the matter continued yet proceeded without the applicant taking an active step in the proceedings that unnecessarily exacerbated the legal costs incurred by the respondent.

Decision

1. As I have already noted, I am satisfied that it is appropriate to determine the respondent's application for costs on the papers.
2. Mr Ahmadi has at all times been the nominated representative of the applicant. He appeared on behalf of the applicant at the 19 February 2019 directions hearing and the respondent and the Tribunal have forwarded all correspondence to the applicant through Mr Ahmadi at his nominated address and contact details.
3. On the material before me, I am satisfied that the applicant has conducted the proceedings in a way that has unnecessarily disadvantaged the respondent through its failure to respond to Ms McKee's correspondence and its failure to enter an appearance at the mediation or the hearing.
4. Given Mr Ahmadi's attendance at the 19 February directions hearing and that all correspondence was sent to him at his nominated address, I am unable to accept that that the applicant was unaware of the 3 April mediation and 5 June hearing dates. On the contrary, on the material before the Tribunal it would appear the applicant, through Mr Ahmadi, chose not to participate in the process some time after it filed its statutory declarations and before 3 April 2019.
5. Hence, in the absence of any explanation from the applicant, through Mr Ahmadi or otherwise, I am satisfied that there has been a failure by the applicant to comply with the duty imposed on it, as a party, under s 36(3) of the NCAT Act. I am also satisfied that the applicant's failure has caused the respondent to incur unnecessary costs. It was at all times open to the applicant to inform the respondent and the Tribunal that it did not wish to proceed with its application. In the absence of having done so, its application progressed in the manner agreed at the 19 February directions hearing, which included an order for the respondent to file and serve written submissions for the purpose of the 5 June 2019 hearing.
6. I am also satisfied that the applicant's claim for a primary production exemption for the 2016 land tax year was weak. The onus was on the applicant to establish its claim: TA Act, s 100(3). That it bore this onus was explained to the applicant a number of times, yet the statutory declarations filed and served by the applicant on 15 March 2019 were insufficient to discharge that onus, of which he was advised in Ms McKee's letter of 22 March 2019.
7. In, my opinion, the applicant's failures and the weakness of its claim constitute special circumstances. Furthermore, I am satisfied that these circumstances warrant a departure from the general rule, that each party pay its own costs.
8. Accordingly, I make the following orders: 1. A hearing on costs is dispensed with in accordance with s 50(1)(c) of the Civil and Administrative Tribunal Act 2013. 2. The applicant to pay the respondents costs as agreed or assessed in regard to: 1. the respondent's attendance at the 3 April 2019 mediation; and 2. the respondent's preparation for and attendance at the 5 June 2019 hearing.

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

Amendments 10 September 2019 - Order 2(a) typographical error corrected. 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: 10 September 2019