BETWEEN : CHURCHES OF CHRIST HOMES AND COMMUNITY SERVICES (INC)

Costs ­ State Administrative Tribunal Act (WA) 2004 s 87(2) ­ Review proceedings dismissed ­ Whether successful applicants entitled to costs ­ Each party to pay own costs

Local Government Act 1995 (WA)

State Administrative Tribunal Act 2004 (WA)

Bilek and Vata Investments Pty Ltd [2005] WASAT 153

Citygate Properties Pty Ltd and City of Bunbury [2005] WASAT 53

Randall and Town of Vincent [2005] WASAT 147

Shark Bay Tuna Farms Pty Ltd and Department of Fisheries [2005] WASAT 206

Uniting Church Homes (Inc) and City of Stirling [2005] WASAT 191

1 On 19 August 2005, the Tribunal found that the land of the United Church Homes (Inc) and the land of the Churches of Christ Homes and Community Services (Inc), which were used as retirement villages, were not rateable by the City of Stirling as they were lands used for the relief of the aged. The applicants subsequently applied for an order that the City pay their costs in the proceedings.

2 The Tribunal recognised that in appropriate circumstances it could make an order for costs against a decision-maker such as the City. However, in the circumstances of the case before it, the Tribunal declined to order costs.

3 The Tribunal was not satisfied that the City had failed to make a decision on its merits in relation to the rating of the lands in question. The Tribunal recognised that the case involved complex questions of law and fact. Even though the City had altered its historic approach to the rateability of the applicants' lands without prior discussion with the applicants, the Tribunal accepted it was open to the City to rely on the Tribunal to make a final determination in respect of the rateability of the land concerned.

4 The Tribunal dismissed the applications for costs against the City.

5 On 19 August 2005 the Tribunal gave its written decision in review proceedings where Uniting Church Homes (Inc) and Churches of Christ Homes and Community Services (Inc) had applied for a review of the decisions of the City of Stirling to disallow their objections to the City's rate record for the 2004-2005 financial year in relation to four properties. The Tribunal upheld the applications for review and allowed the applicants' objections to the rate record on the basis that the land was not rateable land. The Tribunal set aside the City's rate notices in so far as they required the payment of rates. See Uniting Church Homes (Inc) and City of Stirling [2005] WASAT 191.

6 On 11 October 2005 the applicants each sought an order that the City pay the costs of the applicants' proceedings. The Tribunal received written and oral submissions from the parties as to why costs should be awarded in their favour or, in the case of the City, why costs should not be awarded in any respect.

7 Section 87 of the State Administrative Tribunal Act 2004 (WA) deals with the question of costs of parties and others. Section 87(1) provides that unless specified in the Act, the enabling Act or an order of the Tribunal under this section, parties bear their own costs in a proceeding before the Tribunal. This sub-section does not differentiate between proceedings within the review jurisdiction or proceedings in the original jurisdiction of the Tribunal as those expressions are defined in s 3 of the Act.

8 Section 87(2) further provides that unless otherwise specified in the enabling Act, the Tribunal may make an order for payment by a party for all or any of the costs of another party or of a person required to produce a document or other material on the application of the party under s 35. In other words, the Tribunal has a broad discretion under this sub-section to make an order for costs unless an enabling Act specifies otherwise.

9 By s 87(3) the power of the Tribunal to make an order for the payment of costs includes the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience or embarrassment resulting from the proceedings or resulting from the matter because of which the proceedings was brought.

10 Section 87(4) is then particularly relevant where a costs order is applied for in respect of a proceeding that comes within the Tribunal's review jurisdiction. The proceedings in this case were proceedings within the Tribunal's review jurisdiction because the applicants applied for review of a decision of the City, a matter of a type mentioned by s 17(1) of the State Administrative Tribunal Act 2004. Section 87(4) provides that without limiting anything else that may be considered in making an order for the payment of costs where the matter that is the subject of the proceeding comes within the Tribunal's review jurisdiction, the Tribunal is to have regard to -

"(a) whether the party (in bringing or conducting the proceeding before the decision-maker in which the decision under review was made) genuinely attempted to enable and assist the decision-maker to make a decision on its merits;

(b) whether the party (being a decision-maker) genuinely attempted to make a decision on its merits."

11 Nothing in s 87(4) expressly provides that the failure of the party to genuinely attempt to assist the decision-maker to make a decision on its merits, or of a decision-maker to fail genuinely to attempt to make a decision on its merits, will automatically result in a costs order being made. Rather, that factor is a relevant factor which must be regarded when a costs application arises in relation to a proceeding within the Tribunal's review jurisdiction.

12 The various provisions of s 87 of the Act mean, as the Tribunal has previously stated, that the starting position is that parties bear their own costs in a proceeding. However s 87(2) clearly confers a discretion on the Tribunal to make an order for a payment by a party or any of the costs of another party unless otherwise specified in the enabling Act: Shark Bay Tuna Farms Pty Ltd and Department of Fisheries [2005] WASAT 206 at [36]; Citygate Properties Pty Ltd and City of Bunbury [2005] WASAT 53 at [28].

13 In both Citygate Properties Pty Ltd and City of Bunbury and Shark Bay Tuna Farms Pty Ltd and Department of Fisheries the Tribunal observed that normally in an administrative review matter each party should bear its own costs of the proceedings. In Shark Bay Tuna Farms Pty Ltd and Department of Fisheries at [36] the Tribunal stated that:

"... the State Administrative Tribunal has been established by the Parliament of the State with its review jurisdiction as part of the system of public administration of the State to ensure that the citizens and other entities may seek administrative justice in relation to decisions that affect their personal, proprietary and financial interests. The starting out position is that, absent other relevant factors, an applicant should be able to obtain review without being obliged to meet the decision-maker's costs if they do not succeed; and similarly, the decision-maker is not ordinarily entitled to recover costs from the applicant in the event the review application is unsuccessful."

14 In Shark Bay Tuna Farms Pty Ltd and Department of Fisheries the Tribunal decided that the respondent should not pay the applicants cost in review proceedings having regard to all relevant factors including, in the circumstances of that case, the finding at [46] that the decision-maker's view which led to the decision which was the subject of review could not be said to have been "arbitrarily formed in the circumstances of the case" and, at [52], that the decision had involved a "careful assessment" of the materials before the decision-maker ([52]).

15 In Bilek and Vata Investments Pty Ltd [2005] WASAT 153 at [15(3)] the Tribunal, in a commercial tenancy matter in its original jurisdiction, declined to award costs in favour of a respondent. The Tribunal suggested that great care should be taken in exercising any power to award costs in order to ensure that the Tribunal is readily accessible to the public and is of relatively low cost, particularly having regard to the Tribunal's obligations to act fairly and according to the substantial merits of the dispute and to conduct proceedings with as little formality and technicality as possible. The Tribunal also noted that in the circumstances of the case the respondent did not present as a "sophisticated operator". The Tribunal noted that the award of costs in proceedings involving "less affluent sectors of the public might effectively deny access to the justice system".

16 In another setting, in a review proceeding, where a respondent local government had failed to comply with an earlier direction of the Tribunal prior to a final hearing of the proceeding, the Tribunal considered it appropriate to make a small costs order: Randall and Town of Vincent [2005] WASAT 147. The order in that case was plainly designed to make it clear to all parties, including local governments involved in proceedings as decision-makers, that compliance with Tribunal directions is not something that a party may choose to do, or to not do, at its own election.

The contentions as to why a costs order should be made

17 The applicants essentially contend that a costs order should be made against the City because s 87(4) of the State Administrative Tribunal Act 2004 is made out. That is to say that the City made a decision without a genuine attempt to consider the merits.

18 They also point to the trouble and expense the applicants were put to in dealing with the "valuation evidence" led by the City when that evidence proved to be either irrelevant or of little value to the final determination of the proceedings.

19 The applicants refer to the fact that the City, after many decades of not rating the land, decided to change its position and rate the land. The applicants complain that this change of position by the City after so many years, without any effective consultation, discussion or negotiation with the applicants, should be taken into account by the Tribunal when assessing whether or not the decision-maker genuinely attempted to make a decision on its merits concerning the rating question.

20 The applicants also contend that the Tribunal should have close regard to the legal basis upon which the Tribunal's decision was ultimately made, resulting in the City's rating decision being set aside. They say that the City had earlier failed to take any adequate steps to ascertain whether the land in question was used for an exempt purpose and that, during the course of the proceedings, prior to the conclusion of the matter in the Tribunal, the City changed more than once the factual and legal basis upon which it argued that the applicants' lands were rateable. The applicants say that it appears that the City did not obtain legal advice before making its decision to rate the land.

21 Certainly what might be said is that the City believed that the changed living circumstances of persons in retirement homes operated by the applicants had changed over the years and that by reason of the contemporary value of many of the living units "owned" by residents the idea that the applicants were providing relief for the aged was, as a matter of common language, anachronistic.

22 In 2004 at the request of the Minister for Local Government and Regional Development, the local government advisory board undertook an inquiry in relation to the question of the rating exemption for charitable purposes. The City prepared a background document for the board which addressed the question, "Why weren't the lease-for-life retirement villages rated prior to 2004?" see Uniting Church Homes (Inc) and City of Stirling at [18]. The City referred to the fact that retirement villages and facilities offered by them had changed considerably over the last twenty years or so. The City stated that it had concluded that the single "use" of these properties is not charitable - it is simply residential. In these circumstances the City formed the view that such land should be the subject of rates to enable the City to provide full services to the residents of the land.

23 Before the final hearing of the proceedings (which was carefully case-managed by a Senior Member and Member of the Tribunal) the City through its solicitors indicated its desire to call valuation evidence that would bear upon the nature of the use for the purposes of the exemption provision. The applicants contested the relevance of such expert evidence. In the event, the Tribunal allowed the evidence to be called, although this order was subject to directions that the experts exchange reports, confer about matters agreed and disagreed and the reasons for disagreement, and that the witnesses give their evidence concurrently at the final hearing.

24 At the final hearing, it is fair to say not much turned on the valuation evidence of these experts, although it was not entirely unhelpful. The Tribunal dealt with the valuation evidence at Uniting Church Homes (Inc) and City of Stirling at [75]-[90]. The Tribunal noted the evidence of the valuation experts seemed to focus on the question of whether there was a "profitable" use of some of the applicants' land used for retirement villages. The Tribunal questioned, however, whether even if there had been such a finding (which there was not) that would dictate a conclusion that the land was not used for the primary purpose of relief of the aged.

25 This issue aside, there is no doubt that the proceedings were hard fought. From the perspective of the applicants, the City was seen to be acting unreasonably in that it had changed its position in relation to the rating exemption which it had otherwise adopted or applied for some decades. The unreasonableness of its changed position was emphasised, from the applicants' point of view, by the fact that it seemed not to have taken any considered legal advice of its own in relation to its changed position but had acted more from a local government policy perspective, and that this was also borne out by the fact that its legal position, on advice, seemed to change not infrequently during the course of the proceedings.

Contentions as to why costs should not be awarded

26 The City contended that it had not acted wrongly or unreasonably in pursuing the rating issue. Counsel for the City emphasised that the City is obliged to levy rates on rateable land pursuant to the relevant provisions of the Local Government Act 1995 (WA), in that land is generally considered to be rateable unless an exemption applies and until an application for exemption is made to the City and the matter is considered on the information provided by the applicant land should be considered rateable.

27 In this case the City believed that the land in question was used for aged nursing homes and the City had accepted in the past that it was not rateable. However the City reviewed this position when it appeared that the land uses may have changed from the older style nursing homes to use quite a different style of contemporary use where residents have a valuable interest in a retirement village.

28 Counsel for the City explained that the Local Government Act 1995 imposes an obligation on a local government to review its rate records from time to time to ensure they are correct (s 6.39(2)). The mechanism provided in the Act for doing this is to issue a rate notice on the basis of any amendment to the rate record and this triggers a right of objection to the amendment by the owner of the land (s 6.40 and s 6.76). Counsel for the City submitted that the City has no power under the Local Government Act 1995 to enter land for the purpose of establishing the correctness of its rate record and, accordingly, if the City decides that a land use which it has accepted as charitable is perhaps not charitable, it is dependent upon the notice of objection process for establishing the true situation.

29 The City contended that the owners of the property in these cases objected to the rate notices issued but provided insufficient information to the City to determine whether a charitable exemption was applicable and accordingly the City dismissed the objections.

30 It followed then that the landowners sought review in the Tribunal.

31 Counsel for the City contended that it was only through the production of statements of facts in the review proceedings in the Tribunal that the City received sufficient information in regard to each property to make any kind of assessment as to whether a charitable exemption was appropriate. Counsel added that its willingness for the matter to be referred by the Tribunal to mediation or a compulsory conference and its cooperation in allowing the narrowing of issues should also be taken into account, as should the interest of the applicant in RD 6 and RD 7 of 2004 to have the matter go to a hearing on a "test case basis". The City says that the applicant in RD 338 of 2005 was not given much opportunity to indicate whether it would prefer to attempt to narrow the issues, but this resulted from the Tribunal's case management process not from any action of the City. Counsel for the City said the City had cooperated fully throughout the proceedings in an endeavour to narrow the issues and to enable the situation where a "test case" might avoid a series of similar cases involving a range of local governments coming before the Tribunal.

32 In all of the circumstances, the Tribunal is not satisfied that this an appropriate case in which the Tribunal should find that the decision-maker failed to make the primary decision on its merits or that, for any other reason, an order for costs should be made against the decision-maker pursuant to s 87(2).

33 From time to time there will be issues within local government, such as rating decisions, where the question of whether an historic position taken by a local government should be maintained. Ultimately this Tribunal has the statutory responsibility (subject to further appeals) to determine that issue in review proceedings. In most of these types of cases, there will be little alternative but for the Tribunal to be invited to make a decision to resolve an issue that has vexed the decision-maker.

34 In this case of course, it is said that the local government changed its historic position without sufficient cause, without considered advice and without consulting the applicants. While the local government did act in this way to an extent, does not mean that it acted without genuinely considering the merits of the case. While the legal position of the City in the proceedings changed from time to time, the matters in issue were complex, both as to factual matters and legal issues. One only has to peruse the reasons for decision of the Tribunal at Uniting Church Homes (Inc) and City of Stirling, to appreciate that the legal issues have a venerable pedigree in Australian local government rating law and are not always capable of easy resolution. As to the factual circumstances of these cases, there is merit in the submission of counsel for the City that, without the proceedings in the Tribunal, the full factual circumstances were not easily able to be ascertained by the City. Indeed it was due to the careful case management of these proceedings by the Tribunal that a concise account of the factual circumstances relevant to the proceedings was able to be produced. This saved the Tribunal, one suspects, many days of hearing compared with the nearly two days of hearing actually involved.

35 In all of the circumstances the Tribunal is not satisfied that this is an appropriate case for an award of costs to be made against the decision-maker. The issue was one of some complexity both factually and legally. The local government was entitled in all the circumstances to have the question of the rateability of these retirement villages settled by a determination of the Tribunal. As noted by the parties, the proceedings provided something of a "test case" for local governments and retirement village operations as a whole.

36 As to the contention that there should at least be a special costs order in respect of the applicants' valuation evidence, as I noted earlier the Tribunal gave special attention to the valuation evidence in its reason for decision. While it might be said that the valuation evidence adduced by the City did not have a determinative effect in the proceedings, and arguably was not directly relevant to the question of use, the evidence was not entirely unhelpful. The evidence also ensured that the City had a full opportunity to argue its case as to why the land in question should be considered rateable. That the Tribunal was not persuaded by the City's valuation evidence to consider that the applicants' lands were rateable does not of itself mean that the costs order should be made against the City in respect of the calling of such evidence. In the circumstances of this case it was appropriate for the Tribunal to permit a full ventilation of all issues including valuation issues. This enabled the Tribunal to make the correct and preferable decision in relation to the rating issue.

37 The Tribunal would therefore not make any special order in respect of the costs of the parties in relation to the valuation evidence.

38 The applicants' applications for costs orders will be dismissed.

(1) The application of the applicant for the costs against the City in each of the proceedings is hereby dismissed.

I certify that this and the preceding [39] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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JUSTICE M L BARKER, PRESIDENT