Fitzpatrick Investments Pty Ltd atf for The Number One Trust v Chief Commissioner of State Revenue [2022] NSWCATAD 159
Background
The Applicant was unsuccessful in claiming that its land in Erskine Park was exempt from land tax for the 2014 to 2017 tax years as land used for primary production. Ultimately the Applicant did not press its exemption claim in respect of the 2016 land tax year, and following a four-day hearing, the Tribunal confirmed the assessments for each of the 4 years.
Subsequently, the Chief Commissioner made an application for costs, as follows:
a) Costs and disbursements of and related and incidental to the Chief Commissioner’s town planning evidence;
b) Costs and disbursements on an ordinary basis from the date of the Chief Commissioner’s Calderbank letter of 13 March 2020;
c) The Chief Commissioner’s costs of obtaining the transcript of the hearing; and
d) Costs and disbursements of this costs application.
In the alternative to order (b) above, the Chief Commissioner sought 50% of the Chief Commissioner’s professional costs and 100% of disbursements on an ordinary basis from the date of a Calderbank letter of 13 March 2020.
The Statutory Framework
The general rule is that each party in Tribunal proceedings is to pay its own costs: Civil and Administrative Tribunal Act 2013 (“NCAT Act”), s. 60(1). That general rule may be displaced “only if [the Tribunal] is satisfied that there are special circumstances warranting an award of costs”: s. 60(2).
Subsection 60(3) of the NCAT Act sets out the various matters to which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs.
The Chief Commissioner relied on the following paragraphs of s. 60(3):
- Paragraph (a) – whether the Applicant conducted the proceedings in a way that unnecessarily disadvantaged the Chief Commissioner;
- Paragraph (c) – whether the Applicant made claims that had no tenable basis in fact or law;
- Paragraph (e) – whether the Applicant’s claims were lacking in substance;
- Paragraph (f) – whether the Applicant refused or failed to comply with the duty imposed by section 36(3); and
- Paragraph (g) – any other matter that the Tribunal considers relevant.
Submissions
At [9] of the judgment, Senior Member Frost summarised the Chief Commissioner’s criticisms of the manner in which the Applicant conducted its case:
- The Applicant, who was legally represented throughout the proceeding, failed to put on sufficient evidence to discharge its onus of proof; instead, evidence addressing some of the essential elements of the Applicant’s case was produced by the Chief Commissioner;
- In particular, the proof of the critical issue of the precise boundaries of the land in question was left up to the Chief Commissioner through the commissioning of town planning reports; and
- The Applicant’s failure to accept the Chief Commissioner’s offer of settlement caused the Chief Commissioner to incur additional costs, including the preparation for and attendance at the four-day hearing not only by legal representatives but also by expert witnesses.
The Applicant submitted that under s. 100(3) of the Taxation Administration Act 1996 (the “TA Act”) it bore the onus of proving its case. It noted that it put on evidence concerning each of the three limbs of the primary production test. If its evidence was lacking in any respect then the Chief Commissioner could simply rely on the Applicant’s failure to satisfy its onus of proof, and the assessments would necessarily be confirmed. Similarly, the Applicant said it had filed evidence addressing the boundaries of the land and the activities conducted on it, and it was not necessary to retain an expert witness to give town planning evidence; it would have involved incurring further expense if it had. The Applicant made the point that there is no onus on the Chief Commissioner to prove any particular fact.
Decision
The Tribunal did not agree that the Chief Commissioner had been disadvantaged, let alone “unnecessarily disadvantaged”, by the deficient state of the Applicant’s evidence: [32].
SM Frost stated (at [33]):
- “…If there was any deficiency in the Applicant’s evidence the Chief Commissioner was under no obligation to fill in the gaps. He did not have to prove there were competing uses of the land; the Applicant had to prove either that there were none, or that any competing uses were subsidiary to the primary production use.”
The Tribunal observed that the Applicant’s case was not strong enough to displace the assessments, but did not accept the Chief Commissioner’s contention that the Applicant’s claim had no tenable basis in fact or law, or that the Applicant made claims that were lacking in substance: [35].
The Tribunal held that it was not necessary for the Chief Commissioner to obtain expert town planning evidence. Accordingly, the Tribunal refused the Chief Commissioner’s applications to make order (a) (seeking costs of obtaining town planning evidence) and order (c) (seeking costs of the transcript of the four-day hearing): [30].
On the other hand, the Tribunal agreed that, with respect to the 2016 land tax year, the Applicant ought to have withdrawn its claim much earlier than it did (which was only two business days before the hearing) and certainly no later than the time of the Chief Commissioner’s offer of settlement: [36] and [37].
By failing to do so, this meant the Chief Commissioner still had to prepare his case for that year just as carefully and comprehensively as for the other three years, and was forced to devote energy to that part of the Applicant’s case until the very last moment. The Chief Commissioner was thereby unnecessarily disadvantaged: [37] and [40].
SM Frost held that, with respect to the 2016 land tax year, the case contains “special circumstances” in that the Applicant continued to press its exemption claim until the very last moment even though it had no tenable basis in fact: [40]; those special circumstances warranted an award for costs: [41].
Orders
The Tribunal concluded that the appropriate order to make was than order sought in the Chief Commissioner’s alternative order, being 50% of the Chief Commissioner’s professional costs and the whole of the Chief Commissioner’s disbursements on an ordinary basis from the date of the Calderbank letter of 13 March 2020.
The Applicant was also ordered to pay 25% of the Chief Commissioner’s professional costs and the whole of the Chief Commissioner’s disbursements in respect of the costs application.
Link to decision