7 Each of the parties furnished written submissions, referred to as "AS" in the case of the Applicants' submissions and "RS" in the case of the Respondent's submissions. AS is much shorter than RS simply because it makes no attempt to deal with any of the evidence before the Tribunal. AS makes it clear that the Applicants contend than in the absence of a hearing an order for costs is not competent. RS is much longer than AS because it deals, and in detail, with the evidence before the Tribunal. AS, comprising clauses 1 to 12, inclusive, which is set out in full, reads as follows;
1. The presumption underlying section 88 of the ADT Act is that the unsuccessful party will not be required to pay the costs of the other side unless in circumstances it is fair to do so. While since the amendment to s.88 (1A) the provision gives the Tribunal greater scope to award costs the underlying presumption ought not to be disturbed without good cause. Where there has been no hearing on the merits the Court should be even more reluctant to depart from the presumption.
Applicable Principles
2. In Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, 624 McHugh J said:
"In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra- curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action." [emphasis added]
3. In support of this passage McHugh J cited the decision of Hill J in Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194. In that case Hill J considered the circumstances in which a court could make a costs order without a trial. After referring to several English and Australian cases he stated (at 201) the following propositions:
(1)Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order.
(2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue.
(3)In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB).
(4)In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation.
(5)Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted, a case which, however,
depended upon the specific wording of the statute under consideration. (citations omitted)
[emphasis added]
4. The Full Court approved the passage emphasized in Chapman v Luminis Pty Ltd [2003] FCAFC 162, at [7].
The Chief Commissioner's Submissions
5. The Commissioner submits that the Applicants' conduct constituted an `attempt to deceive' him and the Tribunal and that they are guilty of "gross and palpable falsehoods".
6. These are serious allegations with a serious consequence. Any finding of attempted deception therefore requires satisfaction to the Briginshaw. standard of proof. Dixon CJ said in Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194at 361 to 362:
"Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the Tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences".
7. The High Court explained the content of the Briginshaw standard in Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 67 ALJR 170 where Mason CJ, Brennan, Deane and Gaudron JJ said at 171:
[T]he strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct".
8. This standard could not reasonably be satisfied in the absence of a hearing of all the evidence. Indeed given the extent to which the Commissioner impugns the Applicants' credit and where there are apparent inconsistencies in evidence filed (but never read), procedural fairness requires an oral hearing on the merits before such a finding (and consequently any costs orders) can be made: see Heatley v Tasmanian Racing & Gaming Commission (1977) 137 CLR 487 at 516; Clarence City Council v South Hobart Investment Pty Ltd [2007] TASSC 16 at [28].
9. While the content of the requirement of procedural fairness is not fixed,' This is particularly the case in judicial or quasi judicial proceedings such as those before the Tribunal where it is reasonably expected that, consistent with the obligation to afford procedural fairness, the Tribunal would hold a hearing on the merits before adverse findings and costs orders are made, particularly of the nature sought by the Commissioner; see Kioa v West (1985) 159 CLR 550 at 584-585, 626. It is worth noting that in none of the authorities cited by the Commissioner did the Court make adverse costs orders for misconduct of a party without a hearing on the merits.