Chief Commissioner of State Revenue v Kelly and Seve (Rd)

[2010] NSWADTAP 79

Appeal Panel - Internal

CITATION:	Chief Commissioner of State Revenue v Kelly and Seve (RD) [2010] NSWADTAP 79
PARTIES:	APPELLANT Chief Commissioner of State Revenue RESPONDENT Francis Kelly and Joanne Seve
FILE NUMBER:	109019
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	3 August 2010
DATE OF DECISION:	6 December 2010
BEFORE:	Callaghan P, SC, Deputy President
CATCHWORDS:	Interlocutory applications – stay of costs order pending appeal – summary dismissal of appeal
DECISION UNDER APPEAL:	Kelly v Chief Commissioner of State Revenue (No.2) [2010] NSWADT 52
FILE NUMBER UNDER APPEAL:	086114
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Uniform Civil Procedure Rules 2005 Anti-Discrimination Act 1977
CASES CITED:	AT v Commissioner of Police [2010] NSWCA 131 B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No.5) (RD) [2010] NSWADTAP 21 Chen v Marcolongo & Lym International Pty Ltd [2009] NSWCA 121 D.B. Rreef Management Ltd v Valentino Home Fashion Pty Ltd [2008] NSWADT 332 General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 Serobian v Commonwealth Bank of Australia [2009] NSWCA 350 Vaughan v Dawson [2008]World Best Holdings Ltd v Sarker [2010] NSWCA 24
REPRESENTATION:	APPELLANT I S Young, counsel RESPONDENT J Seve, solicitor
ORDERS:	1Dismiss the application by the Appellant for a stay of the costs order under appeal 2 Dismiss the application by the Respondents for the summary dismissal of the Appeal 3 Reserve the issue of the costs of these applications.

REASONS FOR DECISION

1 The subject appeal is by way of Notice of Appeal filed on 18 March 2010 against the decision in Kelly v Chief Commissioner of State Revenue (No.2) [2010] NSWADT 52 (“the costs decision”) of 19 February 2010 wherein the Judicial Member constituting the Tribunal dealt with the issue of costs and ordered that (“the costs order”):

“The Respondent pay half of the Applicants costs of or incidental to proceedings in the Tribunal and the *costs of or incidental to the application (where *costs refers to the costs and disbursements payable by Mr Kelly to Ms Seve (for professional legal services)), as agreed or as assessed under the Legal Profession Act 2004.”

2 The costs decision followed the decision in Kelly v Commissioner of State Revenue [2009] NSWADT 253 (“the principal decision”) wherein the Respondents here as Applicants in those proceedings (“Mr Kelly and Ms Seve”) sought the review of the decision of the Appellant here as the Respondent there (“CCSR”) dated 30 January 2008 to refuse to:

a. form an opinion under Section 65A(1) of the Land Tax Management Act 1956 (“LTMA”) that the proportional unit entitlement (as defined in Section 65A(2) of the LTMA) of Lot 1 the subject of strata scheme SP50871 is unfair or unreasonable; and

b. alter the proportional unit entitlement (as defined in Section 65A(2) of the LTMA) of Lot 1 the subject of the strata scheme SP50870 (for land tax purposes) as necessary to ensure that it is fair and reasonable

i. in respect of the tax year in which the alteration is made (and any subsequent year to which it is applicable);

ii. in respect of the tax years before the tax year in which the alteration is made up to and including the 2000 tax year under Section 65A(2) of the LTMA.

3 In the principal decision the Tribunal dealt with the review application by revoking CCSR’s decision and remitting the matter to CCSR for determination in accordance with the Tribunal’s findings (including that the Respondent should notify the owners of Lot 2 of the original application under Section 65A(1) of the LTMA made by Mr Kelly and Ms Seve and to take into consideration any response from the owners of Lot 2). The review application related to a request by Mr Kelly and Ms Seve of the CCSR that pursuant to s65A(1) of the LTMA the proportional entitlement for Lot 1 in Strata Plan Scheme 50870 be reduced to ensure that it was fair and reasonable; the Strata Plan Scheme comprised the two residential lots at 13 Park Avenue, Avalon, with a unit entitlement for each lot of 1 out of a total of 2 but with each lot being different in value. The principal decision is not under appeal.

4 In the Notice of Appeal the questions of law arising from the costs decision are specified as whether the Tribunal erred in law in that:

“1. The Tribunal failed to have regard to and to consider the submission of the Chief Commissioner in reliance upon the decisions in Vero Insurance Limited v The Gombac Group Pty Ltd [2007] VSC 117 at [18]-[20] and Carlin Pty Ltd v MCTGF [1999] VCAT 1976 as to the proper construction of section 88(1) of the Administrative Decisions Tribunal Act 1997 (“ADT Act 1997”) involving a three step approach and creating a statutory presumption as to no order to costs, being a submission that that was worthy of serious consideration and was seriously advanced to the Tribunal within the principles set out in Dennis Willcox Pty Ltd v FCT (1988) 79 ALR 267 at 276-277?

2. The Tribunal erred in failing either properly or at all, to take a relevant consideration into account, namely the presumption pursuant to section 88(1) that each party is bear their own costs?

3. The Tribunal adopted the wrong legal test and erred in its construction that the requirement of “unnecessarily disadvantaged” in section 88(1)(a)(i) of the ADT Act 1997 was satisfied if the Respondent pointed to a subjective indication that she was disadvantaged?

4. The Tribunal erred and should have construed section 88(1A)(a)(i) of the ADT Act 1997 by reference to the subject matter, scope, context, and purpose of the provision and accordingly any failing to comply with a direction of the Tribunal was limited to such failures as those which comprised, frustrated or delayed the proceedings?

5. In relation to the construction and application of section 88(1A)(a)(i) of the ADT Act 1997 the Tribunal erred in failing to take relevant considerations into account, namely,

(a) the proceedings before the Tribunal were completed without delay;

(b) The hearing was completed within four months of the first directions hearing;

(c) The hearing was set down for one day and completed in one day; and

(d) There were no adjournments sought by the Commissioner at any stage in relation to the proceedings?

6. In relation to the construction and application of section 88(1A)(b) of the ADT Act 1997, the Tribunal having concluded there was no undue prolongation of the time taken to complete the proceedings by the presentation of untenable submissions (being the sole ground alleged and relied on by the Respondent), the Tribunal then erred, after it had already concluded section 88(1A)(b) of the ADT Act 1997 had no application and was thereby functus, in then subsequently taking irrelevant considerations into account in connection with section 88(1A)(b) of the ADT Act 1997, namely:

(a) the proceedings before the Tribunal were completed without delay;

(b) The hearing was completed within four months of the first directions hearing;

(c) The hearing was set down for one day and completed in one day; and

(d) There were no adjournments sought by the Commissioner at any stage in relation to the proceedings.

which considerations were properly relevant considerations and should have been taken into account, but were not, in the construction and application of section 88(1A)(a)(i) of the ADT 1997?

7. In relation to the construction and application of section 88(1A)(c) of the ADT Act 1997 the Tribunal misunderstood and thereby misconstrued the effect of the decision of the Appeal Panel in Jonamill Pty Ltd v Alramon Pty Ltd (No.2) (RLD) [2010] NSWADTAP 3?

8. In relation to the construction and application of section 88(1A)(c) of the ADT Act 1997 and the decision of the Appeal Panel in Jonamill Pty Ltd v Alramon Pty Ltd (No.2) (RLD) [2010] NSWADTAP 3 at [47] the Tribunal erred in failing to take a relevant consideration into account, namely, the nature of the proceedings as being a review at first instance in the Revenue Division of the decision of the Chief Commissioner on objection?

9. In relation to the construction and application of section 88(1A)(c) of the ADT Act 1997 the Tribunal erred in concluding that the Respondent had a significantly stronger claim and there existed a disparity in strength regarding what the Tribunal called the construction point?

10. In relation to the construction and application of section 88(1A)(c) of the ADT Act 1997 and whether there was a material disparity in the strength of respective claims, the Tribunal erred in taking into account an irrelevant consideration namely its own tentative, provisional or “preliminary view” as to the merits of a particular claim?

11. In the exercise of the discretion to award costs the Tribunal erred in its conclusion that the existence of two factors, which factors individually “only tend to weigh slightly in favour” of the Respondent had the consequence that collectively those factors warranted the making of a costs order?

12. In making an award of costs the Tribunal has exercised its discretion in a manner that is so unreasonable that no reasonable Tribunal could possibly have so exercised the discretion?”

5 By Application filed 23 April 2010 CCSR seeks an interlocutory order that the costs order under be stayed pending the determination of the appeal (“the first interlocutory application”).

6 In the Notice of Appeal CCSR seeks pursuant to s113(2) of the Administrative Decisions Tribunal Act 1997 (“the ADT Act”) to extend the appeal to review the merits of the costs decision, specifying the grounds on which leave is sought as including:

(a) The current appeal has formed the subject matter of two decisions (excluding this current appeal) in the Tribunal.

(b) It is in the interests of justice and finality not to subject the parties to further time, cost and inconvenience by remitting the matter back to the Tribunal for reconsideration according to law.

(c) The Appeal Panel has all the functions that are conferred on the Tribunal at first instance to make the appealable decision concerned.

(d) The Appeal Panel has all the necessary relevant factual material before it to decide what is the correct and preferable decision.

7 At a directions hearing before another Deputy President of this Tribunal on 28 April 2010, evidently CCSR sought to have this application dealt with as an interlocutory matter and the Deputy President directed that it be so dealt with (“the second interlocutory application”).

8 At a further directions hearing before me on 23 June 2010 Ms Seve made an oral application, which at my direction is now the subject of written submissions from her filed 25 June 2010, to the effect that the appeal be summarily dismissed (“the third interlocutory application”).

9 The Appeal Panel for the purposes of this appeal has been reconstituted a number of times and I have been the Presidential Judicial Member on the Appeal Panel since June 2010. The parties have filed written submissions in respect of the three interlocutory applications, they are now in agreement that the three interlocutory applications may be dealt with on the papers and at a further directions hearing on 17 November 2010, they agreed that the first and third interlocutory applications may, in accordance with s24A of the ADT Act be decided by myself. The second interlocutory application will be dealt with by the Appeal Panel as recently reconstituted. This decision by me is in respect of the first and third interlocutory applications and a decision by the Appeal Panel on the second interlocutory application will follow. I add that in respect of the first and third applications it appears to me that they may be dealt with on the papers, consistently with s76 of the ADT Act.

10 In relation to the first interlocutory application the submissions for CCSR assert that the costs order referring to costs “as agreed or as assessed under the Legal Profession Act 2004” contemplates “either the parties engage in a process of hard headed bargaining on arms length terms to reach an agreement, or, alternatively, the compulsory processes under Division 11 of the Legal Profession Act 2004 be engaged”. The submissions detail the processes for costs assessment under the Legal Profession Act 2004 and say that the stay is sought “to not unnecessarily subject the Appellant (and Mr Kelly) to further time, cost and inconvenience by requiring either that process of hard headed negotiation to occur, or alternatively, have the costs assessment process running simultaneously in circumstances where the basis of cost is under appeal to the Appeal Panel.” Ms Seve on behalf of Mr Kelly draws attention to s116 of the ADT Act as, she submits, constituting a primary position which would have to be displaced:

“Appeal does not stay decision
Subject to any interlocutory order made by the Appeal Panel, an appeal under this Part does not affect the operation of the decision concerned or prevent the taking of action to implement the decision.”

That provision is not dissimilar to Uniform Civil Procedure Rule 51.44(2) (formerly Part 51 rule 15 of the Supreme Court Rules):

“The filing of a relevant originating process does not:
(a) operate as a stay of proceedings under the decision below, or
(b) invalidate any intermediate act or proceedings.”

11 Ms Seve refers to Serobian v Commonwealth Bank of Australia [2009] NSWCA 350 where at [26] there was quoted what Campbell JA said in Vaughan v Dawson [2008] NSWCA 169 at [16] with a comment that the quoted paragraph “the fundamental principles related to a grant of stay pending appeal were conveniently summarised”. That paragraph in Vaughan v Dawson is as follows:

“It is unexceptional principle that a successful party is prima facie entitled to the fruits of his judgment. That principle has recently been re-affirmed in this Court in Kalafair Pty Ltd v Digitec (Aust) Pty Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 at [28]. What that “prima facie entitlement” means, in practical effect, however, is that the onus is on an applicant for a stay to make out a case that it is suitable for the court to award a stay. This is recognised in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 683 at 694, when the court held that it was for the applicant to demonstrate a proper basis for a stay that will be fair to all parties.”

12 In Chen v Marcolongo & Lym International Pty Ltd [2009] NSWCA 121 Beazley JA also referred to Vaughan v Dawson and said at [12]:

“It is usually said that there are two matters that need to be established for the court to grant a stay. First, the appeal must have reasonable prospects of success and secondly, the balance of convenience must favour the grant of a stay: see Alexander v Cambridge Credit (1985) 2 NSWLR 685. However, the underlying principle that governs the exercise of the court’s discretion to grant a stay cannot be stated in such definitive terms. Rather, the applicant for a stay must demonstrate a proper case for a stay. As the court said in Alexander v Cambridge Credit at 694, (rejecting the proposition that special or exceptional circumstances needed to be shown): ‘It is sufficient that the applicant for a stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in [the applicant’s] favour’.”

13 Ms Seve points out that in Vaughan v Dawson Campbell JA while having dealt with matters going to the balance of convenience said at [37] “…a sufficient basis for rejecting the application for a stay is that I am not satisfied that an arguable case for appeal has been made out”. Ms Seve submits that CCSR “has not demonstrated that an arguable case for appeal has been made out and it is submitted that the Appellant is unable to do so”.

14 Accepting at this stage in favour of CCSR that there is an arguable case for appeal, I am not persuaded on what has been put before me that CCSR has demonstrated a proper basis for a stay that will be fair to both parties. I do not see that the processes involved in the agreement or the assessment of the costs ordered would constitute a sufficient burden on the parties warranting a stay if Ms Seve and Mr Kelly elect to engage in them. CCSR proffers no other situations for consideration – for example, there is no suggestion made that if the costs were agreed or assessed and then paid by CCSR, there is a risk that they would not be recoverable if the appeal were upheld on the costs order set aside. In my opinion, CCSR has not made out a case for a stay of the costs order on the balance of convenience and the first interlocutory application should be dismissed.

15 As to the third interlocutory application, 73(5)(g)(ii) of the ADT Act is the relevant provision:

“(5) The Tribunal:…
(g) may dismiss at any stage any proceedings before it in any of the following circumstances:
…
(ii) if the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance,…”

This provision is not dissimilar to UCPR 13.4(1) (formerly SCR Pt13 r5(1)) which provides as follows:

“If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings
(a) the proceedings are frivolous or vexatious, or
(b) no reasonable cause of action is disclosed, or
(c) the proceedings are an abuse of the process of the court,
the court may order that the proceedings be stayed or dismissed generally or in relation to that claim.”

16 Central to Ms Seve’s submissions on the third interlocutory application is reference to the Model Litigant Policy applicable to State agency litigants such as CCSR, particularly as discussed in AT v Commissioner of Police [2010] NSWCA 131 at [32] and [33]:

“[32]…A further factor to be taken into account is that the respondent, being a State agency, was also required to act as a model litigant: Mahenthirarasa v State Rail Authority of NSW (No 2) [2008] NSWCA 201; 72 NSWLR 273 (Basten JA. Giles and Bell JJA agreeing). That is not to say that the Commissioner was not entitled to insist that statutory procedures be complied with. However, where the statutory scheme was entirely unclear, and the Commissioner’s construction was not accepted, it is a factor which militates in favour of the Commissioner bearing the costs of the member of the public seeking to avail herself of a statutory right of review.

[33] That approach does not diminish the force of the general principle that each party should bear its own costs in the Tribunal, a principle applicable at both first instance and before the Appeal Panel. Although an order varying the general rule may be made ‘only if’ the relevant criterion is satisfied in a particular way, there is a relatively low hurdle for an applicant seeking an order. The criterion of ‘fairness’ will take into account the compensatory purpose of an award of costs, which will generally favour the successful party. The circumstances in which fairness may be identified are indicated by the specific attributes listed in sub-s (1A), but subject to the generality of paragraph (e), read in its context. Other considerations will no doubt include the nature of the jurisdiction of the Tribunal which is invoked and the objects identified in s 3(b)-(g) of the Tribunal Act.”

17 Ms Seve also relies on B & Linings Pty Ltd v Chief Commissioner of State Revenue (No 5) (RD) [2010] NSWADTAP 21 and I note in particular paragraphs [45] to [50] and [114] of that decision.

18 The submissions of behalf of CCSR deal at the outset with the onus on a party seeking summary dismissal, particularly as discussed in Margan v University of Technology (EOD) [2003] NSWADTAP 65 at [10]:

“The failure of the complaint to disclose a contravention of the Act is analogous to the inherent and/or statutory power of courts to dismiss proceedings when the pleadings fail to show a reasonable cause of action. For example, Part 13, rule 5 of the Supreme Court Rules 1970 allows the Court to stay or dismiss proceedings where no reasonable cause of action is disclosed. The rule gives the Court a discretionary power to dismiss the plaintiff’s case when it is so weak that to permit the proceedings to go to trial would be futile: Peter Kent Developments Pty Ltd v Australia & New Zealand Banking Group Ltd (SC (NSW), Hunt J, 6 May 1980, unreported). Ritchie’s Supreme Court Procedure NSW (Peter Taylor SC ed, Butterworths 1984) notes at 2325 that “The test to be applied has variously been described as whether the matter is ‘so obviously untenable that it cannot possibly succeed’, ‘manifestly groundless’, ‘so manifestly faulty that it does not admit of argument’, one which ‘the court is satisfied cannot succeed’, one where under no possibility can there be a good cause of action’”, or one which ‘would involve useless expense’ ( General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129; Pannizutti v Trask (1987) 10 NSWLR 531 at 536; Rajski v Powell (1987) 11 NSWLR 522 at 524; Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 at 942.”

19 In General Steel Industries Inc. v Commissioner for Railways (1964) 112 CLR 125 at 129 Barwick CJ said that the jurisdiction summarily to dismiss proceedings “is to be sparingly employed and is not be used except in a clear case”. The General Steel decision is referred to and quoted more fully in D.B. Rreef Funds Management Ltd v Valentino Home Fashion Pty Ltd [2008] NSWADT 332 at [12].

20 Ms Seve submits that these authorities relate to other legislation which may be worded differently to and is relevantly distinguishable from s73(5)(g)(ii) of the ADT Act. In my opinion that is not the case in that the distinctions in language raise no relevant difference and (what I might term) the General Steel line of authority is applicable here. For example, with reference to the Margan decision, s92 of the Anti-Discrimination Act 1977 provides that the President (and under s102, the Tribunal) may dismiss a complaint if the President (or Tribunal) is satisfied that:

“(i) the complaint, or part of the complaint, is frivolous, vexatious, misconceived or lacking in substance, or

(ii) the conduct alleged, or part of the conduct alleged, if proven would not disclose the contravention of a provision of this Act or the regulation…”

21 Perhaps consistently with the first question of law in the Notice of Appeal quoted above, submissions are made on behalf of CCSR to the effect that the prima facie rule is that each party is to bear its own costs and reference is made to Vero Insurance Ltd v Gombac Group Pty Ltd [2007] VSC 117. Reference is also made to Transport Accident Commission v O’Reilly [1999] 2 VR 436 and to Port Stephen Shire Council v Samson [2007] NSWCA 299, (2007) 156 LGERA 125.

22 The questions of law asserted in the Notice of Appeal contain numerous references to the construction of s88 of the ADT Act. Such an issue has to be assessed against the background of the various authorities relied on (including those relating to the Model Litigant Policy). So considered, that issue does not present to me a situation in respect of the summary dismissal application where to adapt the language used by Barwick CJ in the General Steel decision at 129, it is “so plain and obvious that the (Tribunal) can say at once that (the appeal) cannot succeed.”, even bearing in mind what Tobias JA said in World Best Holdings Ltd v Sarker [2010] NSWCA 24 at [101]:

“The width and open-ended nature of the factors mentioned in s88(1A) particularly that in para (e) makes it very difficult to find an error of law in a finding that a particular matter is relevant.

23 It follows that the third interlocutory application should be dismissed and it also follows that for the purposes of the first interlocutory application there is a sufficiently arguable case for appeal, but as I have said, that application should be dismissed in any event on the balance of convenience issue.

24 In the result I make the following orders:

(1)Dismiss the application by the Appellant for a stay of the costs order under appeal.

(2)Dismiss the application by the Respondents for the summary dismissal of the Appeal.

(3)Reserve the issue of the costs of these applications.