Riley v State of New South Wales

NCAT Administrative and Equal Opportunity|2020-01-16|Before: Dr J, Prof J, Project J

REASONS FOR DECISION

This decision concerns an application for costs made by the respondent to proceedings under the Anti-Discrimination Act 1977 ("AD Act") alleging racial discrimination, racial vilification and victimisation. We dismissed those proceedings (Riley v State of New South Wales (Department of Education) [2019] NSWCATAD 223 ("the primary decision")).
The Department of Education ("the Department") submits that there are special circumstances warranting an award of costs. It contends that the applicants' case had no proper evidentiary foundation, that it was weak if not entirely hopeless and that the applicants' conduct delayed the conclusion of the hearing.
We are not satisfied that there are special circumstances warranting an award of costs, for the reasons which follow.

Decision to be made on the papers

Under s 50(2) of the Civil and Administrative Tribunal Act 2013 ("NCAT Act"), the Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal.
In the substantive decision, we directed the parties to make submissions as to whether any costs application could be determined on the papers. The applicants submitted that the costs application should be determined on the papers, consistently with the just, quick and cheap resolution of the issues in dispute (NCAT Act, s 36(1)). The respondents did not make any submissions on this point, but they did not request a hearing of their costs application.

Background

The background to these proceedings is set out in detail in our primary decision (see at [11] to [57]).
One of the applicants was a young Aboriginal contract worker, Nathan Riley, who worked as a mentor for indigenous students at a rural high school. He was engaged by a partnership formed by his father and uncle. The partnership provided cultural awareness programs to indigenous youths at the school, through an agreement with the school.
Nathan Riley and his father and uncle alleged that certain conduct of senior staff members at the school constituted racial vilification. They also alleged that conduct of the relieving principal was racially discriminatory. They said that they were victimised by conduct of school staff members, particularly the relieving principal, after they had complained about their treatment.
We found that the applicants had not established any of their complaints.

Principles governing the award of costs

The usual rule is that each party to proceedings in the Tribunal is to pay the party's own costs: NCAT Act, s 60(1). However, the Tribunal may award costs in relation to proceedings before it if it is satisfied that there are special circumstances warranting an award of costs: NCAT Act, s 60(2). "Special circumstances" are circumstances which are out of the ordinary; they do not need to be extraordinary or exceptional: Gaynor v Burns [2015] NSWCATAP 150 at [19].
The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; Komadina trading as We Paint Pools v Kelleher [2018] NSWCATAP 56 at [17].
Subsection 60(3) of the NCAT provides for factors to which the Tribunal may have regard when determining whether there are special circumstances warranting an award of costs. It provides: "(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 applicant for costs bears 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 [18].

Costs application

The respondents have both applied for costs. The costs submissions often refer only to the Department making a particular submission about costs. It is not clear from the respondents' costs submissions what submissions the second respondent, Ms Head, relies upon in support of her costs application. However, ultimately nothing turns on this. For convenience, we have therefore referred to the costs submissions which are said to be made by one or both respondents as if they were made by both.
The respondents rely on the following circumstances as constituting "special circumstances" warranting an award of costs, being that: 1. the applicants conducted the proceedings in a way that unnecessarily disadvantaged the respondents (NCAT Act, s 60(3)(a)); 2. the applicants were responsible for prolonging unreasonably the time taken to complete the proceedings (NCAT Act, s 60(3)(b)); 3. the claims made by the applicants were weak (NCAT Act, s 60(3)(c)); 4. the respondents made a settlement offer prior to the hearing, which the applicants rejected (NCAT Act, s 60(3)(g)); 5. the applicants did not agree to the most of the respondents' witnesses appearing by audio-visual link, which put the respondents to unnecessary expense (NCAT Act, s 60(3)(g)).
The respondents rely upon an affidavit of Elisa Blakers filed on 19 November 2019. Ms Blakers is a solicitor who was involved in the day to day conduct of the proceedings for the respondents. Ms Blakers' affidavit annexes correspondence between the parties, including offers of settlement and discussions about the appearance of witnesses by audio-visual link.

Disadvantage, delay and weakness of applicants' case

The respondents rely upon a number of factors which they say are relevant to the matters in s 60(3)(a), (b) and (c) of the NCAT Act. They group these provisions together in their submissions.
The respondents submit that the applicants' case had no proper evidentiary foundation. They also submit that a series of amendments to the applicants' points of claim caused them to incur unnecessary costs. Further, they say that the series of amendments, effectively in the final days of a six-day hearing, supports their position that: 1. the relative strength of the applicants' case was weak if not entirely hopeless; and 2. such conduct delayed the conclusion of the hearing.
We set out the history of the amendments to the applicants' points of claim and complaint at [49] to [57] of our primary decision, as follows: "49 On 25 September 2018, the applicants were directed to file any application to amend the complaint and any amended Points of Claim by 26 October 2018. The respondents were ordered to indicate whether or not they objected to the application to amend the complaint and any amended Points of Claim, and to file and serve any amended Points of Defence, by 16 November 2018. 50 The matter was first set down for hearing for four days in March 2019. Many statements and affidavits were filed by the applicants and by the respondents. Oral evidence was given at the hearing by each of the applicants and by staff and former staff of Delroy, including Ms Head, Ms Exner and Ms MacLeod and almost all witnesses were cross examined. 51 On the first day of hearing, 18 March 2019, we made an order, by consent, joining James Riley as an applicant. 52 On 20 March 2019, we granted the applicants leave to file the Amended Points of Claim handed up at the hearing on 19 March 2019. 53 On 22 March 2019, we ordered the applicants to file and serve, by 12 April 2019, an application to amend the complaint, setting out the conduct and/or legal characterisation of that conduct which the applicants say should be included in their complaint but which was not part of the complaint which was referred to the Tribunal. We also ordered the respondents to file and serve, by 3 May 2019, a reply indicating whether there is any objection to any part of the proposed amendments to the complaint and, if so, to which part and on what basis; and Amended Points of Defence. 54 We set the matter down for another two day hearing on 15 and 16 May 2019. 55 On 15 April 2019, the applicants sent a letter to the Tribunal, applying to amend their complaints. The key amendments were: 1. adding James Riley, in his capacity as a partner of ICaN, as an applicant (an amendment which had been foreshadowed at the beginning of the hearing); 2. amending Nathan Riley's complaint to comprise alleged breaches of ss 7, 10, 20C (vilification), 50 (victimisation), 52 (aiding and abetting) and 53 of the AD Act; 3. amending the complaint so that Robert Riley and James Riley complain, in their own capacity and as partners of ICaN, about alleged breaches of ss 7, 8, 20C, 50, 52 and 53 of the AD Act; 4. incorporating into the complaints the further facts pleaded in the Further Amended Points of Claim filed on 15 April 2019. 56 On 16 May 2019, the Tribunal amended the complaint as requested (with a minor exception). It also amended the period of the complaint to commence on 21 June 2016 (because it was accepted that the muster meeting at which Nathan Riley spoke occurred on that date, and not on 22 June 2016, as originally alleged). On the same day, the Tribunal granted the applicants leave to file the Further Amended Points of Claim dated 16 May 2019. 57 We ordered the respondents to file and serve a Defence to the Further Amended Points of Claim by 23 May 2019. We made further orders requiring the parties to file and serve written submissions."
Many of the amendments to the points of claim were made at a late stage of the proceedings. Amendments were foreshadowed on the first day of hearing and then made on the third day of hearing. Further amendments were made on the last day of the six-day hearing. Amendments of significance (as many of these were) after a hearing has commenced are unusual. Notwithstanding this, the respondents did not object to most of the amendments and consented to the joining of a new applicant to the proceedings. Without the respondents' consent, it is by no means certain that the Tribunal would have allowed most of these amendments at such a late stage.
At the Tribunal's prompting, the applicants also amended their complaint during the hearing to reflect changes to their case made in the amendments to the points of claim, and to take into account evidence that the conduct of which they were complaining occurred the day before the date on which the period of complaint began. The respondents objected to some amendments to the complaint, but did not object to most of them.
In circumstances where the respondents did not object to the majority of the amendments made, we do not consider that the making of this series of amendments constitutes special circumstances warranting an award of costs. Any delay to the conclusion of the hearing as a result of the amendments was, in our view, minimal, such that the amendments did not unreasonably prolong the time taken to complete the proceedings (NCAT Act, s 60(3)(b)). If the applicants' changes to the pleadings at a late stage unnecessarily disadvantaged the respondents, they have not explained the nature of that disadvantage (NCAT Act, s 60(3)(a)).
We do not accept the respondents' submission that the series of amendments to the points of claim is an indication that the applicants' case was weak (NCAT Act, s 60(3)(c)). It is an indication that the applicants considered that their case, as originally pleaded, had deficiencies which needed to be addressed. However, the circumstance that the complaint and the points of claim were amended does not of itself indicate that the applicant's case, as amended, was weak.
The respondents make a number of points in respect of the evidentiary weakness of the applicants' case. One of the key incidents forming the basis of the applicants' complaints was a staff meeting, known as a "muster meeting," at which Nathan Riley spoke about an upcoming excursion to Dubbo Police Station with indigenous students.
Nathan Riley gave affidavit evidence that, during his presentation, he was laughed at in front of the staff by Ms Bermingham, the Deputy Principal and that he had to stop talking whilst she laughed. The applicants' Further Amended Points of Claim pleaded that a staff member made a comment which caused the Deputy Principal, Ms Bermingham, "to laugh continuously throughout Nathan Riley's presentation." The applicants' complaint referred to Ms Bermingham's laughter in the muster meeting, but not to any comment being made in that meeting. The applicants submitted that the laughter and the comment constituted racial vilification, being public acts which incited serious contempt for, or severe ridicule of, Aboriginal persons on the ground of their race.
When asked about the comment in cross examination, Nathan Riley was equivocal about whether there had been a comment, saying first that there was a comment and then saying, "[e]ven if there was no comment…" (see the primary decision at [68] and [94]). The relieving principal of the campus had made a near contemporaneous record of the muster meeting in which she had stated that Ms Bermingham made the comment, "Make sure you bring everyone back then" and other staff members laughed at it (primary decision at [75]).
The respondents submit that the lack of evidence about a comment lends weight to their submission that this omission was "fatal."
We agree that the evidentiary basis for the making of a comment by a person other than Ms Bermingham was weak. The Further Amended Points of Claim did not reflect the relieving principal's evidence that Ms Bermingham had made a comment at which other people laughed, and Nathan Riley's evidence about a comment being made was equivocal. Further, the applicants failed to amend the complaint to reflect their allegations about the making of a comment (primary decision at [89]).
The applicants' vilification case was not entirely defeated by their failure to amend the complaint and to plead the making of a comment, as the respondents suggest, because the applicants also relied upon Ms Bermingham's laughter at the muster meeting. We accepted that she interrupted Nathan Riley's speech by laughing (primary decision at [78]). However, we also found that the laughter was not a "public act" capable of constituting racial vilification (primary decision at [118]). The respondents say that it was "obvious" that an act at a school staff meeting was not a "public act." Whilst we found in favour of the respondents on this point, there was authority, relied upon by the applicants, supporting a broad interpretation of this term (Anderson v Thompson [2001] NSWADT 11, discussed in the primary decision at [124]). In light of this, our conclusion on this issue was not "obvious."
The respondents submit that the applicants should have abandoned the racial vilification point, given the evidentiary issues. They also submit that it was "grossly unfair" for the respondents to have departed from their pleading, given that the allegation of racial vilification is a serious one.
The applicants' departure from the pleadings is not properly described as being "grossly unfair." The respondents were on notice that the applicants alleged that a comment had been made at the muster meeting immediately prior to Ms Bermingham's laughter. The respondents' witness, Ms Head, wrote a near-contemporaneous note stating that Ms Bermingham said at the meeting, "make sure you bring everyone back then" and everyone laughed. We agree that the point was not properly pleaded. However, in circumstances where a senior employee of the Department indicated that a comment had been made, the applicants' submission that this had occurred did not cause any significant unfairness to the respondents.
The respondents rely upon two other examples where the pleadings did not reflect the evidence. The first is that the applicants pleaded that Ms Head made a certain comment, but in their submissions submitted that Ms Bermingham had made it (as the Tribunal found: see primary decision at [33]-[34], [96]-[101]). The second is that the applicants pleaded that Ms Head made a comment on 23 June 2016, but submitted that she had made it on 24 June 2016 (as the Tribunal also found: see primary decision at [106]). The respondents say that these examples demonstrate an unacceptable level of unfairness in the way the applicants conducted their case and are demonstrative of the evidentiary void which existed.
The further amended points of claim had a number of deficiencies, as we pointed out in our reasons. In the two examples relied upon by the respondents, the pleadings were not supported by the evidence. However, there was a level of confusion and contradictory accounts in the evidence about which comments were made by whom and when. The disjunction between the applicants' pleadings and submissions, in some instances, may have presented a difficulty for the respondents. If so, this is not apparent from the respondents' submissions in the substantive proceedings. They did not focus, in those submissions, upon the applicants' departure from the pleadings.
We do not consider that the two examples relied upon by the respondents demonstrate that there was "an unacceptable level of unfairness in the way the applicants conducted their case." The applicants' submissions indicate that they were under the misapprehension that the Tribunal had indicated to them that certain proposed amendments to the points of claim, whilst not allowed, could be dealt with in submissions (and presumably considered that those submissions could be made as if the amendment had been allowed). That provides some explanation of their conduct. In any event, we are not satisfied that it caused any significant prejudice to the respondents.
We accept the respondents' submission that the lack of connection, at times, between the applicants' submissions and their pleadings was demonstrative of evidentiary problems with their case. We do not consider, however, that there was an "evidentiary void" affecting the whole of their case. The applicants had some genuinely-held and valid concerns about the conduct of some Departmental employees. Whilst we ultimately rejected their complaints, that does not mean that there was no evidence supporting them.
The respondents submit, in relation to the applicants' racial discrimination complaint, that it was weak, if not hopeless, because of their failure to identify an appropriate comparator. As we explained in our reasons (at [152]), the applicants relied both upon an actual comparator and a hypothetical comparator. Whilst the Tribunal was not persuaded, on the evidence, that Nathan Riley was treated less favourably than a non-Aboriginal person would have been in similar circumstances, the applicants' case was not hopeless. There was evidence to support their claim of racial discrimination. The evidence was not sufficient for them to satisfy the onus of proof. However, that does not give rise to special circumstances.

Settlement offer

The respondents rely upon a settlement offer made to the applicants on 17 September 2018, well before the hearing. The letter of offer indicated that the respondents were "prepared to consider" a statement of regret in "terms to be agreed." They also offered a statement of service, subject to appropriate drafting. The respondents submitted that this was a Calderbank letter which, taken with the other matters it relied upon, constituted special circumstances.
The settlement offer is not a relevant matter, within s 60(3)(g) of the NCAT Act, giving rise to special circumstances which warrant the making of a costs order, either considered alone or in conjunction with other matters. The offer was conditional upon reaching agreement upon the terms of the statement of regret and statement of service. It was expressed in provisional and vague terms. The letter did not propose the terms of a statement of regret or statement of service.
As the applicants point out, the offer was made several months before the respondents' evidence was filed and did not set out the weaknesses of the applicants' case. We accept the applicants' submission that, to the extent that the offer can be regarded as a firm offer, it was not unreasonable for the applicants to reject it at that early stage of the proceedings.

Lack of consent to witnesses appearing by audio-visual link

The respondents also submit that they were put to unnecessary expense by the applicants' insistence that their witnesses be available for cross examination in Sydney, in person. All but one of the respondents' witnesses reside in Dubbo, meaning that the Department was put to expense, flying those witnesses to Sydney. The respondents asked the applicants to agree to its witnesses, or some of them, appearing by audio-visual link.
The respondents did not apply to the Tribunal for leave for their witnesses to appear by audio-visual link. There is an application form for that purpose on the Tribunal's website. The earliest correspondence between the parties concerning this issue is dated 7 March 2019, eleven days before the hearing.
The proper course was for the respondents to apply to the Tribunal for their witnesses to appear by audio-visual link, in sufficient time for the issue to be considered and dealt with by the Tribunal prior to the hearing. They did not do this.
The applicants' lack of consent to the appearance of the respondents' witnesses by audio-visual link (except in the case of one witness) does not constitute special circumstances warranting an award of costs.

Applicants' financial circumstances

The applicants relied upon their financial circumstances as a factor which the Tribunal could consider relevant under s 60(3)(g) of the NCAT Act. Each applicant has sworn an affidavit concerning each applicant's financial circumstances.
Whilst it is not strictly necessary for us to deal with this issue, we have decided to do so, given that the applicants adduced a significant amount of evidence on this topic and made submissions about it.
The consideration of evidence about the applicants' financial circumstances is, at least, in tension with the principle that costs are compensatory. In Health Care Complaints Commission v Philipiah [2013] NSWCA 342 (Philipiah) at [43], Emmett JA observed that the costs "discretion is a judicial one and must be exercised according to proper fixed principles and rules of reason and justice, not according to private opinion." His Honour continued at [44]: "It is important when exercising the discretion to bear in mind that costs are intended to compensate a successful party. Costs are not intended to penalise an unsuccessful party. It is not an appropriate basis for the exercise of the discretion that an order for costs may cause hardship to the party against whom the order is made."
Philipiah was an appeal from a decision of the former Medical Tribunal. In that case, the usual costs rule applied (that costs follow the event). It may be, for this reason, that Philipiah does not determine whether the impecuniosity of a party may be a factor considered relevant by the Tribunal when considering whether there are special circumstances warranting an order for costs. The applicants referred us to some decisions in which the Tribunal had considered a party's financial circumstances relevant to the costs discretion (Scott-Brydges v Lismore City Council (No 2) [2018] NSWCATAD 265 at [42] and Hamid v Commissioner of Police, New South Wales Police Force [2018] NSWCATAD 93 at [43]).
We ultimately do not need to decide whether the Tribunal is entitled to take into account a party's financial circumstances when exercising the costs discretion. That is because we find that the respondents have not established special circumstances exist warranting an order for costs, on the grounds on which they rely.

Orders

We make the following orders: 1. A hearing on the respondents' costs application is dispensed with. 2. The respondents' application for costs is dismissed.

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 16 January 2020 - Date of Orders & Date of Decision Corrected 16 January 2020 - Date of Orders & Date of Decision 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: 16 January 2020

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