Younan v Commissioner for Fair Trading

Legal principles governing costs application

1. The primary rule is that each party to proceedings in the Tribunal pays his, her or its own costs. The Tribunal may, however, order a party to pay another party's costs if satisfied that there are special circumstances which warrant such an order.
2. Subsections 60(1) to (3) of the NCAT Act provide: "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."
3. The term "special circumstances" means there must be circumstances which are out of the ordinary but not necessarily extraordinary or exceptional: see Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]; Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48 at [9]. The discretion to award costs must be exercised judicially: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [37], citing Oshlack v Richmond River City Council [1993] HCA 11; (1998) 193 CLR 72 at 81; Smith v Giro Construction Pty Ltd [2015] NSWCATAP 214 at [21]-[22].

Costs application

1. The applicant submitted that there were special circumstances warranting an award of costs, on the basis that: 1. the respondent's case had no tenable basis in fact or law (NCAT Act, s 60(3)(c)); 2. the respondent repeatedly failed to comply with the duty imposed upon him under s 36(3) of the NCAT Act (NCAT Act, s 60(3)(f)); and 3. the respondent's conduct necessarily disadvantaged the applicant (NCAT Act, s 60(3)(a)).
2. The applicant sought an order that the respondent pay the applicant's costs in the amount of $28,162.95, consisting of: 1. filing fee of $96; 2. costs of legal representation incurred in preparing for hearing of $24,428.95; 3. costs of legal representation at hearing of $2,210; 4. costs of preparation of submissions on costs of $1,428.

No tenable basis in fact or law (NCAT Act, s 60(3)(c))

1. The applicant submitted that the respondent had no grounds to make the Manly or Gosford rectification orders, so that the respondent had acted outside his jurisdiction in applying a penalty of $3,000. It was submitted that the respondent compounded and prolonged the harm caused by the imposition of the penalty by defending decisions which he had no grounds to make. Further, the applicant submitted that the respondent's conduct was especially egregious given that he was the head of an executive branch of government with responsibility to apply the law, and his failure to do this led to a groundless penalty being applied.
2. The respondent submitted that the positions adopted by him were arguable and had a tenable basis in law, even though they were ultimately unsuccessful, and that a costs order was unwarranted. He relied for this proposition upon Metro Windows Pty Ltd & Ors v Commissioner of Fair Trading (No 3) [2013] NSWADT 192 at [24]-[26].
3. In order to determine whether the Commissioner has made a claim or claims having no tenable basis in fact or law, it is necessary to review the submissions made in the substantive proceedings.
4. The Commissioner's position that he was entitled to apply a penalty in respect of the Manly rectification order depended upon his construction of savings and transitional provisions. He accepted that, if the version of s 48F(2) of the Act which came into effect on 15 January 2015 applied, he was not entitled to take disciplinary action in respect of any failure to comply with the Manly rectification order. However, he argued that the savings and transitional provisions had the effect that the previous version of that provision applied.
5. The Commissioner relied in particular upon cl 129 of Sch 4 to the Act, which provides: "An amendment of section 48E by the amending Act does not apply to [a rectification] order under that section made before the commencement of the amendment." His submission was that, notwithstanding that cl 129 of Sch 4 only refers to s 48E, its application should be extended to s 48F. The Commissioner adopted this position notwithstanding that cl 121(1)(d) of Sch 4 provides that, except as otherwise provided, an amendment made by the amending Act extends to a loss, liability, claim or dispute that arose before the commencement of the amendment.
6. The Commissioner's construction of the savings and transitional provisions was, in my view, untenable. There was no basis for extending the application of cl 129 of Sch 4 to s 48F. The presumption that legislation applies prospectively, coupled with the terms of cl 121(1)(d), indicated that the version of s 48F which was in force when the Commissioner took disciplinary action against the applicant applied. The respondent's reliance upon Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] and Gittany Constructions P/L v Director General, Department of Services Technology and Administration [2010] NSWADT 164, did not assist his case (see primary decision at [24]-[25]).
7. As the applicant submitted, the Commissioner was informed of the applicant's view that he lacked power to impose a penalty with respect to alleged non-compliance with the Manly rectification order in the applicant's application to the Tribunal on 1 October 2015 and in his submissions filed on 8 December 2015.
8. The other "claim" which the applicant contends had no tenable basis in fact or law, is the respondent's claim that he was entitled to impose a penalty on the applicant due to the applicant's company's non-compliance with the Gosford rectification order.
9. The issue of whether this was, in fact, a "rectification order" within the meaning of the Act was one raised by the Tribunal. However, the Tribunal was prompted by the applicant's submissions to raise this issue. The applicant's submissions of 8 December 2015 state (at [43]) that the Gosford rectification order "did not specify what works were required to rectify the water ingress" and "simply required that a result be achieved." They also state (at [53]) that the applicant had reasonable cause for not complying with that order because it did not identify how to rectify the leak. The applicant's solicitor had said of that order, in a show cause hearing on 5 March 2015, that "it doesn't actually specify a particular work method or particular thing that needs to be done."
10. The Commissioner's submission that the Gosford rectification order was a "rectification order" within the Act depended upon the contention that the words "requiring the contractor to take such steps as are specified in the order" in s 48E(1) should be interpreted as discretionary, because if they were interpreted as being mandatory, this would create an absurdity and an impracticality (see primary decision at [47]).
11. The Commissioner's position involved reasoning from the consequences of a particular interpretation. It may be acknowledged that a court will prefer an interpretation which avoids consequences that are absurd, anomalous, capricious, curious, extraordinary, inconvenient, irrational, obscure or unjust, unlikely or unreasonable (see Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297 at 322; Shahi v Minister for Immigration & Citizenship (2011) 246 CLR 163, French CJ, Gummow, Hayne and Bell JJ at [38]). However, the Commissioner's position that the interpretation which gave effect to the natural meaning of the words in s 48E(1) of the Act was absurd or impractical was not, in my view, persuasive.
12. The reasons given on behalf of the Commissioner for rejecting the position that a rectification order must identify steps to be taken by the contractor were that it would be absurd or impractical because "an inspector would be placed in the difficult situation of having to identify the relevant defect" and "it would be very expensive for the Department to carry out a full investigation of the work". Neither of these considerations make the proposed construction absurd or impractical. An "inspector" is "a person appointed to carry out an investigation into a building dispute, as referred to in section 48D" (Act, s 48B). Section 48D(1) provides that the Secretary may appoint an employee of the Office of Finance and Services to investigate any matter that has given rise to a building dispute. It may be expected, in this context, and having regard to s 48D(2), that an inspector would be competent to identify a defect, and it may be inferred that the legislature has provided its authority for expenses to be incurred in respect of the inspector's functions.
13. For these reasons, the claims made by the Commissioner to support his position concerning s 48D were, in my view, untenable.
14. It follows that the Commissioner's position in the proceedings that he was entitled to impose a penalty in respect of the applicant's company's non-compliance with the Manly and Gosford rectification orders was also untenable.

Repeated failure to comply with s 36(3) duty (NCAT Act, s 60(3)(f))

1. Pursuant to s 36(3) of the NCAT Act, the Commissioner was 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. The guiding principle is contained in s 36(1) of the NCAT Act and is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
2. The applicant submitted that the Commissioner filed his s 58 documents shortly after the date he was required to do so and served his evidence and submissions one month late and only one working day prior to the hearing. He said that the documents served one working day before the hearing were caught by s 58 of the Administrative Decisions Review Act 1997 (NSW) and that, by failing to file those documents by 24 November 2015, the Commissioner breached both the directions of the Tribunal and its duty under s 58.
3. I accept the following explanation provided by the Commissioner for the late service of his material: 1. his legal representative contacted the applicant's solicitor on 18 December 2015 seeking an extension of time to lodge and serve these documents, because the relevant inspectors were on leave, and the applicant's solicitor indicated he would be away on the Christmas break and asked the legal representative to contact him in January 2016; 2. on 14 January 2016, the applicant's solicitor indicated he had instructions not to consent to an extension of time; 3. the respondent had served its s 58 documents shortly after the date it was required to do so, and the additional documents to be served were a transcript of the applicant's oral submissions made on 5 March 2015 and an affidavit; and 4. the s 58 documents included a CD of the oral submissions.
4. There was no direction for the service of written submissions, so that the service of the respondent's submissions on 22 January 2016 did not constitute a failure to comply with a direction. I note that the bulk of the material upon which the respondent relied, contained in the s 58 documents, was sent by Express Post on the date it was required to be served.
5. It is unfortunate that the affidavit on which the respondent relied was served as late as it was, and the respondent should have sought an order from the Tribunal for an extension of time rather than, apparently, asking the applicant for such an extension. It is unclear for how long the relevant witness was on leave and why the affidavit was not served earlier in January 2015. Further, although the affidavit is dated 22 January 2016 (a Friday), it was not filed until 27 January 2016 (a Wednesday). There is no explanation for this delay. The need for this particular witness to give evidence and the period of time the witness was on leave are matters which may have been canvassed had the respondent applied to the Tribunal for an extension of time to comply with its directions.
6. The applicant has also raised the question of the Commissioner's compliance with s 58 of the Administrative Decisions Review Act. That provision relevantly requires the Commissioner to lodge with the Tribunal "a copy of every document or part of a document that is in the possession, or under the control, of the administrator that the administrator considers to be relevant to the determination of the application by the Tribunal". Whilst it is conventional for a respondent to serve these documents on the applicant (as it was directed to do in these proceedings), that is not required by s 58. Rather, s 58(5) provides that the Tribunal's principal registrar must provide the applicant with reasonable access to those documents.
7. I am satisfied that the Commissioner lodged with the Tribunal copies of all documents he considered to be relevant at the time of lodgement. It appears from the respondent's submissions that a transcript of the oral submissions on a CD was organised after the s 58 documents had been lodged and so was not in existence at that time. There are, however, some documents annexed to the 22 January affidavit which were not provided at the time of lodgement of the s 58 documents, including photographs and emails dated 20 and 21 June 2013. These were apparently overlooked by the respondent at the time of lodging the s 58 documents.
8. The late filing of the Commissioner's evidence, without approaching the Tribunal for an extension of time, is not to be condoned. However, the great majority of the s 58 documents was filed on time and served a day later. As it transpired, the proceedings were determined on technical, legal issues, so that the late filing of the affidavit did not prejudice the applicant. Taking into account the circumstances set out above, it is my view that any failure on the part of the Commissioner to comply with the duty in s 36(3) of the NCAT Act was not sufficient to constitute "special circumstances" warranting an award of costs in these proceedings, either taken on its own or in conjunction with other circumstances.

Causing unnecessary disadvantage to the applicant (NCAT Act, s 60(3)(a))

1. The applicant submitted that the service of the respondent's submissions, evidence and s 58 documents one working day prior to the hearing meant that he was unable to properly consider and review the respondent's case before the hearing and was therefore unnecessarily disadvantaged by the respondent's conduct.
2. For reasons given above, I do not accept that the s 58 documents were served one working day prior to the hearing. Further, there was no order for the filing or service of submissions. The applicant was not disadvantaged by the service of additional documents on or about 22 January 2016, because the matter was determined on legal issues, to which that evidence was of marginal relevance. Accordingly, s 60(3)(a) of the NCAT Act does not provide a proper basis for an award of costs in this case.

Discretion to award costs

1. I have found that the Commissioner's claims in these proceedings had no tenable basis in law and on this basis, and on the basis of what follows, I am satisfied that there are special circumstances warranting an award of costs. In finding that special circumstances exist, I take into account that the Commissioner is responsible for administering the Act and it is of concern that the Commissioner's decision to impose a penalty was made without power. This is particularly so where the error concerning the Commissioner's reliance on the Manly rectification order as a basis for the imposition of a penalty was pointed out in the applicant's application to the Tribunal of 1 October 2015, yet the Commissioner persisted in his position. Similarly, it is concern that, where the Commissioner should have been put on notice that the Gosford rectification order was not a "rectification order" by the applicant's submissions of 8 December 2015, he maintained the view at the hearing that it was such an order.
2. I accept, however, the Commissioner's submission that the applicant's claim for costs of $28,162.95 contains insufficient information to enable an appropriate assessment of costs. Accordingly, I order that the respondent pay the applicant's costs of these proceedings as agreed or, failing such agreement, as assessed on the basis set out in the legal costs legislation (as defined in s 3A of the Legal Profession Uniform Law Application Act 2014 (NSW)). 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 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: 12 May 2016