Khalaf v Commissioner of Police, NSW Police Force; QLD Protection Security Pty Ltd v Commissioner of Police, NSW Police Force

Khalaf v Commissioner of Police, NSW Police Force; QLD Protection Security Pty Ltd v Commissioner of Police, NSW Police Force - [2019] NSWCATOD 178 - NSWCATOD 2019 case summary — Zoe

Background to the applicants' review application

The applicant, Mohamed Khalaf, was the holder of an individual operator licence under s 12(1)(d) of the SI Act which authorised him to perform the work of an unarmed security guard, a crowd controller and a security trainer.
The applicant, QLD Protection Security Pty Ltd, was the holder of a master licence under s 10(1)(d) of the SI Act which authorised it to provide licensed persons to carry out security activities.
At the relevant time, Mr Khalaf was the sole director and shareholder of QLD Protection Security Pty Ltd.
On 15 May 2017, each applicant was informed of the respondent's decision to revoke their respective security licences. In its written submissions, the respondent explained that Mr Khalaf's security licence was revoked on the basis of his alleged involvement, whilst being the holder of that licence, in a scheme whereby NSW residents (including some residents who were ineligible to obtain a security licence under the SI Act) would 'undertake' (less rigorous) security training to obtain Queensland qualifications and a Queensland security licence, and then use mutual recognition laws to obtain a NSW security licence. The company through which Mr Khalaf was alleged to have facilitated his involvement in this scheme was Safety and First Aid Education Pty Ltd, a company of which he was the owner and director and CEO.
It was not alleged that the company, QLD Protection Security Pty Ltd, who employed a number of security industry license holders, was involved in that scheme. It was Mr Khalaf's association with that company, as its sole director and shareholder, which formed the grounds on which the company's licence was revoked.
The respondent noted that schemes of this kind were disapproved by the Tribunal in Naylor v Commissioner of Police, NSW Police Force [2014] NSWCATOD 43 and Ahmed v Commissioner of Police, NSW Police Force [2017] NSWCATAD 73.
Mr Khalaf's security licence was revoked on the grounds of: (a) it was not in the public interest for him to continue to be the holder of such a licence; (b) he was not a fit and proper person to hold such a licence and (c) he had contravened a condition of his licence. And, as noted above, QLD Protection Security Pty Ltd licence was revoked on the grounds that it was not in the public interest for the company to continue to hold a security licence, because Mr Khalaf, a 'close associate' of the company, was not a fit and proper person.
Both decisions of the respondent were confirmed on internal review, on 5 July 2017.
On 7 September 2017, each applicant sought external review, by the Tribunal, of the decisions of the respondent.

[4]

The Tribunal's power to award costs

The Tribunal's power to award costs is set out in s 60 of the NCAT Act. That section provides as follows: 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.
As can be seen from s 60(1), the ordinary rule is that each party to proceedings before the Tribunal are to pay their own costs. However, the Tribunal is given the discretion to make an order for costs where it is satisfied that there are special circumstances warranting an award of costs.

[7]

The proceedings before the Tribunal

As noted above, the application of each applicant in these proceedings was lodged on 7 September 2017. It was not disputed that the decisions for which the applicants sought review were decisions the Tribunal had jurisdiction to review.
As described below, from this date until their applications were dismissed, the applications came before the Tribunal on six occasions at a directions hearing. During this time, QLD Protection Security Pty Ltd lodged an appeal to the Appeal Panel from an interlocutory decision of the Tribunal and both applicants made an application to the President of the Tribunal to have a question of law referred to the Supreme Court.
In summary, the applications of both applicants progressed before the Tribunal as follows: 1. first directions hearing - 7 November 2017. Prior to the directions hearing, the respondent filed and served its s 58 documents (a copy of the respondent's statement of reasons in regard to each decision the subject of review and a copy of documents held by the respondent relevant to these decisions). Mr Khalaf also filed and served an affidavit, sworn on 6 November 2017, in support of his application and that of QLD Protection Security Pty Ltd for a stay of the decisions of the respondent. 2. At this directions hearing, the Tribunal: 1. extended the time within which each application was to be lodged; 2. made an order staying the decision of the respondent to revoke Mr Khalaf's licence to the extent it authorised him to carry out the activity of an unarmed security guard and in respect of crowd control; 3. refused the application of QLD Protection Security Pty Ltd to stay the decision of the respondent to revoke its licence; 4. made an order that the applicants were to file and served their evidence and submissions by 28 November 2017; and 5. both applications were listed for hearing on 15 February 2019. Two days later, the Tribunal varied this order and set the matters down for a two-day hearing on 15 and 16 February 2019. 1. Appeal - on 28 November 2017, QLD Protection Security Pty Ltd lodged an appeal from the decision of the Tribunal to refuse its application for a stay; 2. second directions hearing - 7 February 2018. The applicants had not filed and served their evidence and submissions as directed. The Tribunal vacated the hearing set down for 15 and 16 February 2018 and listed the matters for hearing on 2 and 3 May 2018 and ordered the applicants to file and serve their evidence and submissions by 2 March 2018; 3. third directions hearing - 17 April 2018. The respondent requested that the matters be listed for directions as the applicants had failed to file and serve their evidence and submissions. At this directions hearing the Tribunal made the following orders: 1. the respondent was to file and serve a statement of issues by 3 May 2018; 2. the applicants were to file and serve any material on which they relied by 8 June 2018; and 3. both matters were listed for further directions, on 14 June 2018; 1. on 19 April 2018, the Registrar wrote to the parties to confirm the 14 June 2018 directions hearing date and also to inform them that the listing of the hearing for 2 and 3 May 2018 had changed; 2. as directed, on 3 May 2019, the respondent filed and served a detailed statement of issues in regard to each matter. 3. on 14 May 2018, the Appeal Panel dismissed the appeal of QLD Protection Security Pty Ltd: see QLD Protection Security Pty Ltd v Commissioner of Police, NSW Police Force [2018] NSWCATAP 113; 4. fourth directions hearing - 14 June 2018. The Tribunal refused the respondent's application for both applications to be dismissed for want of prosecution under s 55(1)(d) of the NCAT Act and an application that the stay order in regard to Mr Khalaf's security licence be lifted and made the following orders: 1. by 21 June 2018, the applicants were to make an application to the President for referral, to the Supreme Court of a question of law; 2. the respondent was to respond to that application by 3 July 2018; and 3. both matters were listed for further directions on 31 July 2018. This date was subsequently vacated; 1. on 2 August 2018, the applicants' application to the President for referral of a question of law was heard; 2. on 28 November 2018, the Tribunal refused the applicants' application for referral: Khalaf v Commissioner of Police: QLD Protection Security Pty Ltd v Commissioner of Police, NSW Police Force [2018] NSWCATOD 191; 3. fifth directions hearing - 4 December 2018. The Tribunal made an order that: 1. the applicants were to file and serve their evidence and submissions by 1 March 2019; and 2. both matters were set down for a further directions hearing on 9 April 2019; 1. on 7 March 2019, at the request of the applicants, the Tribunal extended the time within which they were to file and serve their evidence to 27 March 2019. In an email sent on 5 March 2019, the applicants' solicitor sought an extension of time, as for personal reasons he had been unable to assist the applicants in complying with the order that had been made. The respondent's solicitor expressed concern about a further extension of time given the previous non-compliance of the applicants and submitted that any extension of time should only be made on the basis that any further non-compliance by the applicants should result in the automatic dismissal of each application under s 55(1)(d) of the NCAT Act. The Tribunal did not make the order sought; 2. on 27 March 2019, Mr Khalaf filed and served an affidavit. However, no written submissions were filed or served; 3. sixth directions hearing - 9 April 2019. The Tribunal made the following orders: 1. Commissioner of Police, NSW Police Force is to give to the Tribunal and Mohammed Khalaf a table indexing the documents provided in compliance with order 2 made on 4 December 2018 as extended, with cross references to the statement of issues, on or before 30 April 2019. 2. Mohammed Khalaf is to give to the Tribunal and Commissioner of Police, NSW Police Force any material in reply (if any), on or before 31 May 2019. 3. The respondent estimates that a hearing of 4 days is required, and is available in the weeks commencing 10 June, 17 June and 29 July 2019, and on 5, 19 and 26 August 2019. The applicant's position is that a hearing of longer than 4 days is required. The applicant is to provide to the Tribunal and the respondent, by 16 April 2019, his estimated hearing duration with reasons and available dates. 4. The proceeding is listed for hearing on a date to be advised by the Registrar, after 31 May 2019, at John Maddison Tower, for 4 days or other duration determine having regard to the matters in order three above. 1. on 26 April 2019, the Registrar informed the parties that both matters were set down for hearing for four days, commencing on 30 July 2019; and 2. as noted above, on the evening of Friday, 26 July 2019, the solicitor for the applicant notified the respondent that the applicants were withdrawing their respective application.

[8]

Correspondence between the parties

In correspondence with the solicitor for the applicants, the solicitor for the respondent invited the applicants to withdraw their application on four occasions as follows: 1. 3 May 2018 - attached to the letter of the respondent's solicitor was the respondent's statement of issues. In the body of the letter, the respondent's solicitor asked: 'Do your clients wish to pursue their applications?' The respondent's solicitor went on to explain the nature of administrative review of reviewable decisions by the Tribunal and that they were not akin to criminal proceedings. It was noted that the applicants' solicitor had indicated the possibility that his client, Mr Khalaf, may not give evidence in the proceedings and that it was unusual for an applicant not to give evidence in support of his/her application. The respondent's solicitor went on to say: … [Mr] Khalaf's failure to give any evidence would lead to adverse inferences against him, particularly given the content of the statement of issues. Given the matters set out in the statement of issues it would be fatal to the Applications for Mr Khalaf not to give evidence. If Mr Khalaf was to give evidence, he would not be a credible witness and is unlikely to be of any assistance to the success of the Applications and the Notice of Appeal. We believe the best approach is for your clients to promptly withdraw their Applications and Notice of Appeal. Our client reserves all his rights in respect of costs. 1. 30 May 2018 - attached to the letter of the respondent's solicitor was an updated statement of issues. In the body of the letter, the respondent's solicitor again asked the applicants' solicitor whether his clients wished to pursue their applications and said the following: As we said in our letter of 3 May 2018, we believe the best approach is for your clients to promptly withdraw their Applications and the Notice of Appeal. This is fortified by the Appeal Panel decision which impacts on an erroneous argument advanced by your client. Please let us know by 5pm, Friday, 1 June 2018, if your clients are pursuing the Applications. Our client reserves all his rights in respect of costs. 1. 30 January 2019 - the respondent's solicitor provided a further up-date to the statement of issues and encouraged the applicants to withdraw their applications immediately, prior to 8 February 2019. In his letter, the respondent's solicitor reiterated that the respondent reserved all his rights in respect of costs in reliance of s 60 of the NCAT Act and concluded by saying: Both Applications should be withdrawn immediately with an agreement reached on the payment of the Commissioner's costs. We look forward to hearing from you by 8 February 2019. Our client reserves all rights, including to seek costs on an indemnity basis. 1. 3 May 2019 - the respondent's solicitor sought confirmation, from the applicants' solicitor, that he still acted on behalf of QLD Protection Security Pty Ltd as ASIC records showed that Mr Khalaf had been removed as the sole director and shareholder of the company and he was replaced by Helal Jeda. The respondent's solicitor also asked: … [whether] QLD Protection is still pursuing its application, and if not, does it agree to withdrawal of its application with costs in favour of our client? … 1. 17 June 2019 - in a letter marked 'without prejudice except as to costs', the respondent's solicitor said: Our client does not except your client's proposal to withdraw the Applications on the basis our client does not seek his costs Your clients can withdraw their Applications at any time and, as foreshadowed on numerous occasions, our client will make an application for costs under s 60 of the CAT Act. The preconditions to make such an application are enlivened in this matter. Based on similar matters, our client has been successful in obtaining cost orders from the Tribunal. There are many grounds on which costs can be obtained:  Your clients have had and un-meritorious application for review (and they have known as such for some time).  In our client's view, Mr Khalaf has not been honest, including to the Tribunal.  Your clients have delayed the proceedings, including with a misguided application for referral of a question of law to the Supreme Court.  Your clients had not complied with numerous orders of the Tribunal, including the recent order to file reply evidenced by 31 May 2019. (In this respect, we are seeking to have the matter relisted and dismissed for further non-compliance with that Tribunal's orders). All these actions and omissions of your clients have caused costs to be incurred. Your clients have refused unreasonably to accept previous invitations to withdraw before significant costs were incurred. Being transparent, our client has incurred over $40,000 in legal fees to date and this will rise to $60,000-$70,000 by the end of the scheduled 4-day hearing. In the interests of a prompt resolution of the proceedings, our client will not make an application under S 60 of the CA T Act, if your client- Mr Khalaf-agrees to pay $15,000 towards our client's legal costs upon withdrawal of both of the Applications. This offer is open to be accepted by 5 pm, Wednesday, 19 June 2019.
Other than the text message of the applicants' solicitor, sent on the evening of 26 July 2019, there appears to have been no further correspondence between the parties relevant to the issue of costs.

[10]

Did the applicants fail to comply with orders and cause unnecessary costs to be incurred?

Section 36 of the NCAT Act sets out the guiding principle to be applied to the practice and procedure of the Tribunal. That section relevantly provides as follows: 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) … (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. …
The respondent has not contended that the solicitor for the applicants has failed to comply with his duty under s 36(3) of the NCAT Act. What is contended is that the applicants (i.e. Mr Khalaf in his personal capacity and also as the sole director of the company), as a party to the proceedings failed to comply with his duty to comply with the orders and directions of the Tribunal.
In this regard, the respondent submitted that, in complete defiance of their obligations under s 36 of the NCAT Act, each applicant was entirely responsible for the 17-month delay in progressing their respective applications. The delays it was submitted were caused by the applicants failing to comply with the Tribunal's orders to file and serve their evidence and in bringing an unmeritorious appeal and an application for referral.
In regard to the latter, I accept that the appeal of QLD Protection Security Pty Ltd and the referral application of both applicants delayed the substantive proceedings. However, I am not persuaded by the respondent's contention that these applications were futile and without merit. While the appeal and referral application of the applicants did not succeed, the Appeal Panel, nor the Tribunal made a finding that the appeal or the referral application were futile and lacked substance. I note that the appeal of QLD Protection Security Pty Ltd was limited and it was brought expeditiously early in the proceedings. I also note that the respondent did not make an application for costs in those proceedings.
The referral application was limited in that it related to a question of law arising from two previous decisions of the Tribunal in regard to the interpretation of s 15(1)(a) of the SI Act: see Khalaf [2018] NSWCATAD 266 (supra), at [15]. At [43(6)-(8)] - [44], the Tribunal found that the question for referral had been too narrowly framed and would not facilitate the just, quick and cheap resolution of the real issues in the proceedings. In its concluding sub-paragraph, at [45(5)], the Tribunal remarked that the application for referral could have, and ought to have, been made at a much earlier stage of the proceedings. Again, the respondent does not appear to have specifically sought a costs order in regard to that application. While the Tribunal noted that that the referral application should have been brought earlier, it did not say that it should not have been brought at all. Had it been brought earlier it would have nevertheless delayed the substantive proceedings.
I accept that the proceedings were very protracted and that the applicants failed, on a number of occasions, to comply with orders to file and serve their evidence and submissions. However, for the reasons that follow, I am not persuaded that these failures of the applicants were such that they caused the respondent to incur unnecessary costs giving rise to special circumstances warranting a departure from the general rule that each party pay its own costs.
Although the respondent acted appropriately when he had the applications restored for further directions on 17 April 2018 when the applicants had failed to file and serve their evidence on the first occasions, on 28 November 2017, and again on 2 March 2018. However, in my view, on their own, these failures do not give rise to special circumstances, especially where QLD Protection Security Pty Ltd had filed an appeal and the appeal was still pending. There also appears to have been an issue about the specific matters the respondent was relying on in support of its revocation decisions, as on 17 April 2018, the Tribunal made an order that the respondent was to file and serve a Statement of Issues, before the applicants were to file and serve their evidence. As noted in the affidavit of Mr Khalaf, filed and served immediately before the first directions hearing, it was not until the respondent had served his s 58 documents that Mr Khalaf became aware of the material the respondent had relied on in making his decision.
While the respondent filed and served his Statement of Issues, as directed, on 3 May 2018 it continued to up date that Statement, with the first update being filed and served on 30 May 2018.
Although the applicants failed to file and serve their evidence as directed, on 8 June 2018, it was only six days later that the applicants made their referral application. That application was made at the directions hearing of 14 June 2018 where the Tribunal declined the respondent's application for the dismissal of applicants' applications for want of prosecution. Instead, the Tribunal made orders for the filing and serving of submissions in regard to the applicants' referral application. In this regard, in its oral reasons for decision, the Tribunal noted that despite the applicants having had months to get their 'respective applications in order', they should nevertheless be afforded the opportunity to seek referral to the Supreme Court. The Tribunal also noted the following: … [However], at the end of the day, the applicants are entitled to seek review of the respondent's decisions. They do not need to prove the decisions are wrong, and bear no onus to do so. While it might be inevitable that the Tribunal would come to the same conclusion as the Commission (sic) if the applicants do not file further evidence, this is not necessarily the case. Minds may well differ over what is the correct and preferable decision.
After 14 June 2018, the next time the applicants failed to comply with the orders of the Tribunal to file and serve their evidence and submissions was 1 March 2019. On this occasion, the solicitor for the applicants provided an explanation for this failure four days after the date on which the evidence and submissions were due to be filed and served and time was extended to 27 March 2019.
The applicants did file and serve a statement of Mr Khalaf on 27 March 2019, but failed to file and serve their submissions. In my view, other than the respondent having appropriately taken the view that the matters would proceed to a hearing, nothing turns on the failure to file and serve submissions.
Accordingly, while I accept that the substantive proceedings of the applicants was protracted I do not find that the applicants' appeal, referral application or failure to file and serve their evidence and submissions caused the respondent to incur unnecessary costs giving rise to special circumstances that warrant a departure form the general rule that each party pay its own costs.

[11]

Did the applicants fail to promptly withdraw their applications?

The respondent contends that the applicants knew, from the detailed 3 May 2018 Statement of Issues that they had little prospect of succeeding in their respective applications. The respondent went on to submit that, despite a number of invitations and opportunities to withdraw their respective application, the applicants caused the respondent to incur significant costs in marshalling significant evidence in defence and disproving their false denials and wrong doing.
The respondent also submitted that the applicants' last minute withdrawal before a four-day hearing warranted an order for costs as his evidence had been provided some four months prior to the scheduled hearing.
I have some concerns about the adversarial nature of the respondent's correspondence that invited the applicants to withdraw their applications. As noted by the respondent in his initial invitation to the applicants to withdrawal, on 3 May 2018, administrative review proceedings are not adversarial in nature. Notwithstanding this remark the respondent's correspondence became increasingly adversarial in nature. I accept that in this case, where the applicants were legally represented, nothing turns on this.
Nevertheless, I agree that a last minute withdrawal of an application seeking review of an administratively reviewable decision may give rise to special circumstances. In this regard the respondent relied on the decision of the former Administrative Decisions Tribunal in Rae v Commissioner of Police, NSW Police Force (No 3) [2010] NSWADT 254. In that decision the Tribunal considered and summarised a number of decisions of the Tribunal as to whether a late withdrawal of an application could constitute grounds for making a cost order under the then s 88 of the then Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act). Section 88(1) of the ADT Act was in the same terms as s 60(1) of the NCAT Act in that the general rule was for each party pay its own costs. Section 88(1A) provided that the Tribunal may award cost if it was satisfied that it was fair to do so having regard to matters similar to those contained in s 60(3) of the NCAT Act.
In Rae, at [81], the Tribunal concluded as follows: 81 In my opinion, the broad outcome of these decisions, read in conjunction with the cases outlined above at [40 - 41], is as follows. The withdrawal of proceedings under the AD Act by the applicant shortly before the scheduled hearing provides grounds for the making of a costs order against him or her under section 88(1A) of the ADT Act (in its current form) unless there are reasonable grounds justifying the withdrawal at such a late stage. This form of conduct by the applicant can properly be regarded as an instance of 'prolonging unreasonably the time taken to complete the proceedings' under paragraph (b) of section 88(1A). Alternatively, it should be treated, in the light of case law interpreting the earlier costs provisions, as a relevant consideration under paragraph (e). But by virtue of those particular features of proceedings under the AD Act on which the Tribunal in Tu, Murtough and Jenkins placed strong emphasis, it does not necessarily follow that the applicant should be ordered to pay all the costs of the respondent.
The proceedings in Rae were proceedings brought under the Anti - Discrimination Act 1997 (NSW).
On appeal, the Appeal Panel set aside the decision of the Tribunal: Rae v Commissioner of Police, NSW Police Force [2011] NSWADTAP 30. While the Appeal Panel was not critical of the abovementioned remarks of the Tribunal, at [7], the Appeal Panel noted the important social purpose the Tribunal's equal opportunity jurisdiction serves and that the making of costs orders may discourage people from airing their grievances. The Appeal Panel went on to note that the general rule that each party pay its own costs reinforces the public interest objectives of the Anti-Discrimination Act and hence the exception is not to be applied lightly.
In my opinion, a similar analogy applies to applications for administrative review of an administratively reviewable decision under the Administrative Decisions Review Act 1997 (NSW) (ADR Act). The objects of that Act include the following: 3 Objects of Act The objects of this Act are as follows: (a) … … (c) to foster an atmosphere in which administrative review by the Tribunal is viewed positively as a means of enhancing the delivery of services and programs, (d) to promote and effect compliance by administrators with legislation enacted by Parliament for the benefit of the citizens of New South Wales.
Section 55(1) of the ADR Act gives every 'interested person' a right to seek administrative review by the Tribunal of an administratively reviewable decision. The words 'interested person' is defined in s 4(1) to means a person who is entitled under enabling legislation (an Act other than the ADR Act) to make an application to the Tribunal for an administrative review under the ADR Act of an administratively reviewable decision.
In this case, the decision of the respondent is an administratively reviewable decision by the Tribunal under s 29(1)(c) of the SI Act. That is, as noted by the Tribunal, in its oral reasons for decision, at the 14 June 2018 directions hearing, the SI Act and the ADR Act, gave each applicant the right to seek review of the respondent's decision to revoke their respective security licence and that right was not subject to the applicants bearing an onus to prove that the decision was wrong. However, that right is of course subject to the guiding principle is s 36 of the NCAT Act.
In my view, the respondent's 3 and 30 May 2018 invitation to the applicants to withdraw their applications is no more than an indication to the applicants that the respondent preserved its rights to seek an order for costs in the proceedings more generally.
The respondent's invitations of 30 January, and 17 June 2019 not only seek costs, but on an indemnity basis.
Nevertheless, the question is whether the applicant's late withdraw of their applications in light of the invitations made by the respondent constitute special circumstances. I have some difficulty in finding that the invitations of 3 and 30 May 2018 and 8 February 2019, either individually or together, gave rise to special circumstances. However, the same does not apply to the 17 June 2019 invitation, which was made after the applicants had filed their evidence. Unlike the previous invitations the respondent set out the basis on which a claim for costs would be made should the matters proceed and not withdrawn. The respondent also set out the costs incurred by the respondent as of that date.
Despite that invitation, the applicants did not withdraw their application until almost six weeks later knowing full well that the respondent would be preparing for a hearing. In the absence of the applicants providing any explanation as to why the proceedings were withdrawn so late, I am satisfied that the subsequent withdrawal of the applications by the applicants does constitute special circumstances that warrant a departure from the general rule that each party pay its own costs.

[14]

Mr Khalaf failed to be honest or candid with the regulator

It is convenient to deal with these issues together.
The respondent contended that it had been made clear to the applicants on a number of occasions that the numerous allegations that had been made against them supported the revocation decisions of the respondent. It was submitted that Mr Khalaf had failed to be honest with the regulator and the Tribunal and that the application of each applicant had no tenable basis and the commencement of the proceedings was frivolous and vexatious and their maintenance was a waste of the Tribunal's (and the public's) resources.
I accept that the respondent's case in support of its decision to revoke the security licences of the applicants was well prepared and there was a strong case against the applicants.
However, there has been no finding by the Tribunal of Mr Khalaf having failed to be honest or candid in these proceedings or otherwise in his dealing with the regulator. Nor have Mr Khalaf's denials of any wrongdoing, as contained in the affidavits he has filed in these proceedings been tested. The same applies to the evidence filed and served by the respondent, in that it has not been tested.
The Appeal Panel, in Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135, considered the meaning of the words 'not tenable in fact or in law' and noted that such a finding can be made following a full hearing or a summary dismissal application. At [44], the Appeal Panel said: 44 … [The] expression "no tenable basis in fact or law" relates to the common law tests developed and applied in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. For a claim to have no tenable basis in fact or law it must be so obviously untenable that it cannot possibly succeed: General Steel at 130. "Manifestly groundless" or "clearly untenable" are equivalent expressions. In our view, for the purpose of s 60(3)(c), it matters not whether a conclusion that a claim has no tenable basis in fact or law is reached in connection with an application for summary dismissal or after a full hearing on the merits.
The respondent's written submissions contain an outline of the allegations made against Mr Khalaf and I accept that the allegations are serious. While I accept it is open to the Tribunal to make a finding that the applicants' applications had no tenable basis in fact or law, in my view, it is inappropriate to do so in this case. I make this finding on the basis of Mr Khalaf's ongoing denials of these allegations and the fact that there has been no hearing where this evidence and that of the respondent was tested I do not consider it appropriate to make findings as to whether the applicants' applications had no tenable basis in fact or law, or that they lacked substance. As noted by the Tribunal at the 14 June 2018 directions hearing, views may differ as to what the correct and preferable decision should be had there been a hearing.
I note, in Ajami (supra), at [20], the Tribunal took a similar approach.
The respondent submitted that the decision in Papadellis (supra) should be followed, where, at [20], the Tribunal made a finding that the application in those proceedings had no tenable basis in fact or law. I note that in those proceedings the applicant had filed and served a statutory declaration in which he acknowledged that he had made false statements in his dealings with licensing authorities, but he had done so unintentionally: Papadellis (supra), at [7]. The same does not apply in this case.
For similar reasons, I am not satisfied that the respondent has established that the applications of the applicants were frivolous, vexatious or lacking in substance, or that Mr Khalaf failed to be honest and candid with the regulator and the Tribunal.

At a glance

Court

Decision date

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Judgment (17 paragraphs)

Legislation Cited (5)

Cases Cited (15)

Cited By (26)