1735 Pty Ltd v Chief Commissioner of State Revenue; 1735 Pty Ltd atf Bares Family Trust v Chief Commissioner of State Revenue (Costs) [2021] NSWCATAD 134
Background
The Chief Commissioner, the successful party in 1735 Pty Ltd v Chief Commissioner of State Revenue [2020] NSWCATAD 186 (the “Substantive Proceedings”), sought orders for costs against all the Applicants (the unsuccessful parties in the Substantive Proceedings) and Dandanis & Associates, (the firm of solicitors which represented the Applicants in the Substantive Proceedings) (collectively the “Costs Respondents”).
The Statutory Framework
Section 60 of the CAT Actrelevantly provides that:
- Each party to proceedings in the Tribunal is to pay the party’s own costs.
- 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.
- In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following—
- whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,
- whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
- 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,
- the nature and complexity of the proceedings,
- whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,
- whether a party has refused or failed to comply with the duty imposed by section 36(3),
- any other matter that the Tribunal considers relevant.
- If costs are to be awarded by the Tribunal, the Tribunal may—
- determine by whom and to what extent costs are to be paid, and
- 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.
Submissions
The Chief Commissioner sought orders that the Applicants pay the Respondent’s costs of the Substantive Proceedings from 4 October 2019, and Dandanis & Associates be jointly liable with the Applicants for such costs in relation to:
- issuing summonses after the first hearing day without seeking leave of the Tribunal where a guillotine order was in effect;
- making a hopeless adjournment application prior to the second hearing day; and
- failing to give reasonable notice that the Chief Commissioner’s expert witness was not required to attend the hearing in Sydney on the second day.
The Chief Commissioner also sought orders that all these costs should be awarded on an indemnity basis as agreed or assessed.
As to special circumstances, the Chief Commissioner cited Santow JA’s statement in Cripps & Another v G & M Dawson [2006] NSWCA 81 and Burchett J’s statement in Minister for Community Services and Health v Chee Keong Thoo (1998) 78 ALR 307 at 324 as its meaning.
The Chief Commissioner submitted that the following factors constituted special circumstances when viewed collectively:
- The Applicants strenuously contested the assessments in absence of sufficient evidence to discharge their onus of proof.
- They conceded on several occasions that they were aware of their onus of proof.
- That Mr Bares, manager of 1735 Pty Ltd and director of Sheep Station Pty Ltd, the second applicant, declared on the application for primary production exemption form that the primary production activity was part-time.
- As a result of the Applicants filing the report of Mr Hartley on 4 October 2019, the Respondent became aware of large structures on the land which had not been disclosed by the Applicants.
- That following the receipt of Mr Hartley’s report, the Chief Commissioner sought voluntary production of documents, issued summonses, retained Mr Schuster to prepare a report and arranged a site visit and the Applicants’ solicitors resisted the Chief Commissioner’s request to obtain access to documents such as photographs, aerial photographs or footage of the subject lands and the documents relied on by Mr Hartley.
- That the Applicant withdrew most of its application for review six weeks after the hearing.
In summary, the Applicants and Dandanis & Associates submitted that there were no special circumstances in relation to the proceedings and, even if there are special circumstances, they do not warrant an award of costs. Section 36 of the CAT Act stipulates the guiding principles in relation to the conduct of the proceedings require just, quick and cheap resolution and the Chief Commissioner failed until late in the proceedings to view the relevant properties so as to clarify the issues in dispute at an appropriate time, accordingly the Chief Commissioner did not seek a just, cheap and quick resolution of the proceedings and the Chief Commissioner issued the Assessments without ensuring he was aware of all relevant matters.
Decision
The Senior Member, in coming to his decision, referred to s. 60 of the CAT Act and, in particular, to s. 60(3). In holding that the relevant factors the Senior Member was entitled to account for in coming to his decision was very broad, the Senior Member referred to the principles articulated in Ceepee Pty Ltd v Roads and Maritime Services [2015] NSWCATAD 130, as to the discretion of the court, and to A J Holdings (NSW) Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 143, Lin v Chief Commissioner of State Revenue [2018] NSWCATAD 98, Fitzpatrick Investments Pty Limited v Chief Commissioner of State Revenue [2015] NSWCATAD 103, CRIPPS and Another v G & M DAWSON Pty Ltd and Another; G & M DAWSON Pty Ltd and Another v CRIPPS and Another [2006] NSWCA 81 and Yammatree Pty Ltd (Applicant); North West Local Land Service (Respondent) [2015] NSWCATAD 221 as to what is considered “special circumstances”.
At [48] the Senior Member concluded that the Chief Commissioner’s submissions were substantially accurate. The Senior Member rejected the Costs Respondents’ submissions that due to the complexity of the proceedings there were no special circumstances and the alleged disparity in resources available to the Chief Commissioner compared with that of the Applicants.
Whilst the Applicants had an inherent right to seek review of the Assessments, the Senior Member held that it was not relevant in circumstances where the Applicants have the statutory onus and having regard to the manner in which they conducted the proceedings.
The Senior Member also rejected the submission as to the multiple invitations by the Applicants to the Chief Commissioner to view the properties on the basis that they do not satisfy the obligation on the Applicants to provide all relevant information and satisfy their onus. Nor did they excuse the manner in which the Applicants conducted the proceedings.
Further, the Applicants’ submission that the Chief Commissioner failed to seek a just, cheap and quick resolution of the proceedings was rejected on the basis that the Chief Commissioner’s conduct was reasonable in the circumstances.
The Senior Member rejected the Chief Commissioner’s request that an order against the Applicants be limited to an order against 1735 Pty Ltd give that the second applicant was in liquidation and rejected the Chief Commissioner’s submissions as to any several liability of Dandanis & Associates with the Applicants for costs.
The Senior Member discussed the case of Mendonca v Tonna [2017] NSWCATAP 176 at length with respect to special circumstances enlivening the Tribunal’s discretion to make an order for costs, which was affirmed in The Owners – Strata Plan No 55773 v Roden (Costs) [2020] NSWCATAP 197, such costs being compensatory.
In respect to the Substantive Proceedings, the Senior Member found that the history of the proceedings, the transcript of the hearing and the reasons for judgment show numerous failures by the Applicants to comply with s. 36 of the CAT Act. Further the Senior Member held that the proceedings were out of the ordinary in respect of many of the issues considered and to the extent that the Cost Respondent’s contributed to the proceedings being out the ordinary warranted an award of costs.
In respect to the costs sought jointly against the Cost Respondents, the Senior Member held that the issue of summonses was in disregard of the Tribunal orders and that it and the two further specific events above caused unnecessary trouble and expense to the Chief Commissioner.
The Senior Member held, having regard to his findings as a whole, that the correct and preferable decision of the Tribunal is that the relevant factors are of sufficient significance to justify a finding of special circumstances warranting costs being awarded as set out in the orders.
Orders
- In respect of applications 2018/00335346 and 2018/00335353 (being the proceedings relevant to 1735 Pty Ltd v Chief Commissioner of State Revenue [2020] NSWCATAD 186), (the Substantive Proceedings):
- Subject to order (b) below, 1735 Pty Ltd on its own account and as trustee for the Bares Family Trust, and Sheep Station Pty Ltd (the Applicants) shall pay the costs of the Chief Commissioner of State Revenue, incurred on and from 11 October 2019, of and incidental to the Substantive Proceedings, as agreed or assessed on the ordinary basis.
- Dandanis & Associates is jointly liable with the Applicants for the costs of the Chief Commissioner of State Revenue, such costs to be calculated on an indemnity basis as agreed or assessed, in relation to each of the following events:
- Dandanis & Associates causing summonses to be issued after the first hearing day;
- Dandanis & Associates making an adjournment application after the first hearing day and before the second hearing day; and
- Dandanis & Associates failing to give reasonable notice that the Chief Commissioner’s expert was not required to attend the second hearing day.
- The Applicants and Dandanis & Associates shall pay the costs to the Chief Commissioner or his representative within 7 days of agreement or assessment.
https://www.caselaw.nsw.gov.au/decision/1798c6ce4fe6ec0dd7cfb369