Chinese Cultural Club v Director of Liquor and Gaming - [2007] NSWSC 1029

No judgment structure available for this case.

CITATION: Chinese Cultural Club v Director of Liquor and Gaming [2007] NSWSC 1029
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 28 May 2007

JUDGMENT DATE :
8 November 2007

JURISDICTION: Supreme Court

JUDGMENT OF: Rothman J

DECISION:
(i) Appeal allowed;
(ii) Decision of the Licensing Court of 17 July 2006 dismissing the application of the Chinese Cultural Club Limited for costs of the proceedings brought against it by the Director of Liquor and Gaming be set aside;
(iii) The question of costs be remitted to the Licensing Court to determine in accordance with law;
(iv) The Director of Liquor and Gaming pay the costs of the Chinese Cultural Club Limited of and incidental to these proceedings;
(v) To the extent otherwise entitled, the Director of Liquor and Gaming having a certificate under the Suitors’ Fund Act 1951 (NSW).

CATCHWORDS: COSTS - general principle - costs to follow the event - wrong test by Licensing Court

LEGISLATION CITED: Liquor Act 1982 (NSW)
Registered Clubs Act 1976 (NSW)
Suitors’ Fund Act 1951 (NSW)

CASES CITED: ABT v Bond (1990) 170 CLR 321
Attorney-General (NSW) v Wentworth (1988) 14 NSWLR 481
Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126
Buckman v Flanagan (1974) 133 CLR 422
Canceri v Taylor (1994) 1 IRCR 120
Haines v Leves (1987) 8 NSWLR 442
House v The King (1936) 55 CLR 499
Kanan v APTU (1992) 43 IR 257
Latoudis v Casey (1990) 170 CLR 534
Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460
Ohn v Walton (1995) 36 NSWLR 77
Project Blue Sky v ABA (1998) 194 CLR 355
R v Moore; ex parte FMWU (1978) 140 CLR 470
Saraswati v R (1991) 172 CLR 1

PARTIES: Plaintiff: The Chinese Cultural Club Limited
Defendant: Director of Liquor and Gaming

FILE NUMBER(S): SC 13962/2006

COUNSEL: B W Rayment QC / F Donohoe (Plaintiff)
P Singleton / R Graycar (Defendant)

SOLICITORS: Laurence & Laurence Lawyers (Plaintiff)
Crown Solicitor's Office (Defendant)

LOWER COURT JURISDICTION: Licensing Court of NSW

LOWER COURT FILE NUMBER(S): 13962/2006

LOWER COURT JUDICIAL OFFICER : Kok LCM, Ashton LCM, Beveridge LCM

LOWER COURT DATE OF DECISION: 17/07/06

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ROTHMAN J

8 NOVEMBER 2007

13962/06 THE CHINESE CULTURAL CLUB LIMITED v THE DIRECTOR OF LIQUOR AND GAMING
JUDGMENT

1 HIS HONOUR: The Director of Liquor and Gaming made complaint before the Licensing Court of New South Wales about the conduct of the Chinese Cultural Club. Those proceedings were, by decision of the Licensing Court, permanently stayed, but costs were not awarded.

2 The Club appeals the decision of the Licensing Court given on 17 July 2006 denying the Club its costs against the Director. Some general background to the proceedings is needed.

Proceedings Below on Stay

3 The Complaint contained thirteen grounds and numerous particulars. An amended Complaint was filed that withdrew some allegations but increased the particulars for those that remained.

4 The details of the Complaints are, in their entirety, irrelevant to the current proceeding, but some general example is needed to understand how the question now before this Court arises.

5 The Director lawfully seized a number of documents from the Club. The Director had not complied with the requirements to give proper receipts and copies: see section 58 of the Registered Clubs Act 1976 (NSW). Those documents were in the possession of the Director for some time. They were eventually returned to the Club (or some of them were) approximately one month before the hearing below.

6 Over 10,000 documents were returned relating to conduct going back as far as 13 years. No one now knows the identity of the documents seized from the Club, which are copies and which are originals, or whether other documents were seized by the Director and are now unable to be located.

7 The charges in the Complaint related, amongst other things, to irregularities in the administration of the Club (e.g. the failure to hold any or sufficient meetings to approve actions) disproved by documents held by the Director at the time Complaint was filed and unknown to the Club because of the lack of receipts and/or copies.

8 These circumstances forced the Director into withdrawing a number of charges. The Club applied for and was granted a permanent stay of the Complaint proceedings, after 19 days of hearing. The Licensing Court said in its decision of 31 January 2005:

“Continuity in establishing the provenance of many of the documents is totally compromised from the date of seizure onwards. For example there is evidence that the seized documents included both originals and copies of documents, but in many cases we do not know which is which. The Complainant has not been able to tell us the whereabouts of originals of a number of documents (of which we have copies) referred to in Mr Cross’ affidavit. We do not know in any particular case whether the original was seized or left with the Club, or if seized, whether it is lost, or is somewhere amongst the documents now returned, or is even amongst documents that might remain unknowingly with the Complainant. This is not a question so much of admissibility, as of the ability of the parties and the Court to look at documents on which serious allegations are based and to draw conclusions as to their provenance.

Not only does the Complainant now not know what documents had been in its possessions prior to the return of approximately 10 000 documents to the Club, it concedes some documents are now missing and on the evidence of Mr Greig some documents might even unknowingly still be in the possession of the Complainant.

These events of the past cannot now be corrected. The loss of continuity in relation to documents creates a serious injustice to the Club, particularly considering the onus on the Club.”

9 Further the Licensing Court concluded:

“d. If the Inspectors had complied with their duties under Section 58 and 59 of the Registered Clubs Act – as they were asked to do by the Club in October 1999 – the Club would not have been left to speculate. It would have had not only receipts for documents, but a certified copy of each document.

e. At least some of the documents now identified by the Club’s Solicitor in his affidavit from amongst the late-returned documents, and not described in the Club’s evidence up to this point, are clearly relevant, and helpful to the Club.

f. It is an interesting submission – and not one we accept – that the Club should have known, but the Director/Complainant could not be expected to know, what were the documents the Director had been holding for so long.

We accept that prejudice to the Club is cumulative in this case.”

The Licensing Court concluded that the community’s reasonable expectation that the prosecution would proceed does not outweigh the right of the Club to a fair trial nor the damage to the administration of justice in the hearing continuing. The Licensing Court granted a permanent stay of the Complaint.

Decision on Costs

10 Following the order of the Licensing Court permanently staying the Complaint, the Club sought an order for costs. The Club submitted, inter alia, that the Director ought to be liable to pay the costs of the proceedings and not be in a better position, in relation to costs, than if the Complaint had proceeded and been lost.

11 The Licensing Court refused the Club’s application for costs. It said:

“22. The Court has given careful consideration to the issue raised by the Complainant as to why the Club should not be placed in a better position by obtaining a permanent stay than if the complaint was determined and the provisions of S.62 of the Registered Clubs Act applied. The Court, in our view, has a discretion to award costs in the ‘principal proceedings’. But, how should we exercise that discretion? We infer a legislative intent to protect the Director (or other party not advancing its pecuniary interest) from costs orders in ‘principal proceedings’ except in the limited circumstances set out in s.62(2) of the Registered Clubs Act. In this particular case we conclude it would be repugnant to common sense if the Club were put in a better position with proceedings undetermined than it would enjoy if it were wholly successful in fully heard and completed proceedings. We believe that the discretion vested in the Court should not be exercised to award the Club its costs of the ‘principal proceedings’, but that in exercising its discretion to award costs it should only award the costs incurred by the Club in obtaining the permanent stay of proceedings.

In relation to the costs of the costs application, as each party was partially successful having regard to the matters upon which the respective parties’ submissions have been upheld, each should bear its own costs.”

Legislative Framework on Costs

12 Otherwise than on the specific question of costs that is now before the Court, it is sufficient to understand that the jurisdiction of the Licensing Court below derived from an interaction of the Registered Clubs Act and the Liquor Act 1982 (NSW). No one suggests that jurisdiction did not exist to decide as it did on the substantive question and no appeal or application for review has been pursued in relation to it.

13 On the issue of costs, there are two provisions of most relevance: section 16 of the Liquor Act and section 62 of the Registered Clubs Act. I set them out:

Liquor Act

Civil Procedure Act 2005

Registered Clubs Act

The Appeal to this Court

14 The Club appeals to this Court. It is granted the right to appeal from any adjudication of the Licensing Court on any ground that involves a question of law: section 42(1) of the Registered Clubs Act is in the following terms:

“42(1) A person aggrieved by an adjudication of the Licensing Court in proceedings under this Act may appeal therefrom to the Supreme Court on a question of law.”

15 The Grounds of Appeal in the Summons were amended before the Court to include a new Ground 1A. The Grounds as amended are:

“1. That the court below erred in failing to exercise its discretion by ordering the Defendant to pay the costs of the proceedings.

1A. That the court below erred in making the following errors of law:

(a) That the plaintiff bore the onus of proof in relation to the matters under s62(2) of the Registered Clubs Act.

(b) That there was some evidence as to the way in which questions which would have arisen under s62(2) would have been decided.

(c) That regard might be had to questions which would have arisen under section 62(2).

(d) In failing ot have regard to the principle that the successful party should be compensated for costs incurred, in the absence of any ground making such an order unjust.

(e) In holding that making an order for costs in favour of the plaintiff was contrary to the legislative intent evidenced by s62(2).

(f) In concluding that it was reasonably open in the circumstances which lead to a permanent stay of proceedings to order costs otherwise than in the favour of the plaintiff.

2. That the court below erred in exercising its discretion as to costs by giving effect to perceived policy considerations arising from s62 of the Registered Clubs Act 1976.

3. That the court erred in the exercising of its discretion in failing to have regard to the fact that in default of a costs order made by it, costs would follow the event.

4. The court below erred in failing to hold that it could not be satisfied that the Complaint and Summons was not frivolous or vexatious.

5. That the court erred in failing to have regard to the failure of the Defendant to comply with s59(3) of the Registered Clubs Act 1976 and to the failure of the Defendant to withdraw particulars of the Complaint and Summons after it became clear that they could not be established.”

16 With the exception of Ground 1, which deals with the effect of the adjudication of the Licensing Court, all of the grounds involve an allegation of an error of law and an error on a question of law. Each centres on the proper construction of section 62 of the Registered Clubs Act and the proper policy to apply to the making of an order for costs. The Court has jurisdiction to hear and determine the appeal.

Approach to Costs

17 The Club was wholly successful in the proceedings commenced by the Complaint. The ordinary rules, reiterated by section 62(1) of the Registered Clubs Act, is that costs follow the event. Even if, as is the case, some of the grounds in the Complaint are criminal, quasi-criminal, or penal, the promulgation of section 62(1) necessarily imports the general proposition that costs follow the event: Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460; Latoudis v Casey (1990) 170 CLR 534; Ohn v Walton (1995) 36 NSWLR 77.

18 It is said, correctly, that the decision to award costs is an exercise of discretion. But even such an exercise may be challenged in an appropriate case: House v The King (1936) 55 CLR 499. In Milne, supra, the High Court said:

“And, in all the circumstances, we do not think that the respondents should be precluded from challenging the order made as to costs. The ground of attack is not merely that a discretion has been wrongly exercised. It is a general rule that a wholly successful defendant should receive his costs unless good reason is shown to the contrary, and no reason to the contrary was shown in this case.” (Per Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ at 477).

19 Want of logic is not an error of law and something more must be shown: ABT v Bond (1990) 170 CLR 321 at 356. The difference between error of law and error of fact has traditionally followed the analysis of the Chief Justice Sir Frederic Jordan, in Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126:

Commissioners for Special Purposes of Income Tax v Pemsel

no evidence

20 To that, in the current context, must be added the principles espoused by the Court of Appeal in Haines v Leves (1987) 8 NSWLR 442:

“It is important to note again that the jurisdiction of this Court is limited to hearing appeals "on a question of law": see the Act, s 118. It is not for us to substitute our views on the interpretation of the facts. That is a function reposed by Parliament in the Tribunal. Law operating on fact, there is no gulf between them. They interact in the process of decision making. But the stringency of the limitation in the entitlement of this Court to examine factual determinations was recently stressed by the Court in an appeal from another specialist tribunal, the Compensation Court of New South Wales. Appeals from that Court are, relevantly, also limited to questions of law. In Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 the majority (Glass JA, with whom Samuels JA agreed) stressed that in appeals such as the present, the legislation does not allow the Court to correct errors of fact. It does not permit the Court to review even a finding of fact which is said to be perverse or contrary to the overwhelming weight of evidence or even against the evidence and the weight of the evidence. Nor may the Court review findings on the facts which are alleged to ignore the probative force of the evidence which is all one way, even if no reasonable person could have reached the decision made and even if the reasoning by which the Court arrived at its finding was demonstrably unsound. In all such circumstances, the Court concluded, no error of law would be shown to attract the jurisdiction of this Court. The findings and interpretation of the facts are matters reserved to the Tribunal below. Only if there is no evidence to support a finding, or if the ultimate finding of fact necessarily demonstrates a misdirection on the applicable statute may this Court offer relief, within its remit on questions of law. In Azzopardi I suggested that perversity and illogical reasoning could attract the jurisdiction of the Court. But this was a minority view. The majority opinion is the binding rule. It must be observed in this case. It provides the basis for the consideration of the appeal by this Court.” (Per Kirby P at 469-470).

21 The Licensing Court exercised its discretion by construing the provisions of section 62 of the Registered Clubs Act in accordance with the policy inferred by the Licensing Court. The passage from the judgment on costs, extracted at [11] above, displays that the Licensing Court commenced from the proposition that there is a “legislative intent to protect the Director (or other party not advancing its pecuniary interest) from costs orders.”

22 The High Court in Project Blue Sky v ABA (1998) 194 CLR 355 enshrined the purposive approach to statutory construction. The task, it said, was “to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have” (per McHugh, Gummow, Kirby and Hayne JJ at 384). Some have taken this beyond that which seems to have been intended. It is to be remembered that the judgment immediately thereafter commented:

“Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.”

23 Earlier, Barwick CJ in Buckman v Flanagan (1974) 133 CLR 422 had stated:

“The policy of the Act will be found in its express provisions. It is not proper, in my opinion, to suppose some policy and then to construe the language used by the Act in order to effect that policy. Of course, if the language of an Act as a whole discloses the purposes the Act is intended to effect, particular expressions can take their meaning to conform to that policy.” (at 427)

24 The commencement point of the Licensing Court to construe the legislation so as to protect the Director discloses error. In Latoudis, supra, the High Court said:

“Once that proposition is accepted, as in my view it must be, there is no sound basis for drawing a distinction in relation to the award of costs against an unsuccessful informant between summary proceedings instituted by a police or other public officer and those instituted by a private citizen. In the case of proceedings commenced by a private prosecutor which terminate in favour of the defendant, the private prosecutor should in ordinary circumstances be ordered to pay the costs, even if he or she initiates the proceedings for a public rather than a private purpose.

25 Further, Toohey J, in the same case said:

“What has emerged from a number of decisions is recognition that costs are awarded by way of indemnity to the successful party and, expressly or impliedly, that they are not by way of punishment of the unsuccessful party….

Latoudis

And McHugh J said:

“Likewise, a successful defendant in summary proceedings has a reasonable expectation of obtaining an order for the payment of his or her costs because it is just and reasonable that the informant should reimburse him or her for liability for costs which have been incurred in defending the prosecution. Consequently, a magistrate ought not to exercise his or her discretion against a successful defendant on grounds unconnected with the charge or the conduct of the litigation. The fact that the informant has acted in good faith in the public interest or may have to meet the costs out of his or her own pocket is not a ground for depriving the defendant of his or her costs.” (at 569)

26 In the present circumstances, the Licensing Court was entitled to qualify the ordinary conclusion as to costs by the purpose disclosed by section 62(2) of the Act. But the commencement point, qualified only by section 62(2), is that ordinarily the successful party is entitled to costs.

27 The policy disclosed by section 62(2) is an exception to the general rule. The Licensing Court is required to be satisfied of three criteria:

28 The Licensing Court considered none of the above in the proper context. It inferred a legislative protection for the Director, where none is disclosed in the Act. The Director may, more often than others, fulfil each of the criteria, but the Director is treated equally with others.

29 Further, the “protection” is not directed at those without a pecuniary interest (direct or indirect), but at those that fulfil each of the criteria.

30 Lastly, because the provisions of section 62(2) are an exception to the operation of the general provision in section 62(1), it is for the complainant, in this case the Director, to satisfy the Licensing Court.

31 Whether the power to award costs is being exercised under section 62 of the Registered Clubs Act or under section 16 of the Liquor Act, the policy and considerations of each are so similar as to defy, in these circumstances, the identification of any different criteria to be considered.

32 The parties agreed below that the application (the Complaint) had not been determined. If that were so (on which, by virtue of the agreement, I do not comment), then no provision of the Registered Clubs Act dealt with the question of costs.

33 In those circumstances, the provision in section 16 of the Liquor Act dealing generally with the jurisdiction of the Licensing Court to award costs is not abrogated by any special provision: cf Saraswati v R (1991) 172 CLR 1 at 24. Section 62 of the Registered Clubs Act is not expressed in terms that imply that the circumstances there adumbrated are the only ones in which a costs order may be made. Rather section 62 of the Registered Clubs Act is an additional empowering provision and a specific exception.

34 Finally, I should deal with the effect, if any, of the issue of “onus” in the “protection” suggested by the Licensing Court. As earlier stated the onus in section 62(2) of the Registered Clubs Act (and section 16(2) of the Liquor Act) is on the party seeking to depart from the general rule set up in sub-section (1).

35 It is, in this case, for the Director to establish that the Complaint was, inter alia, not vexatious or frivolous. In the instant proceedings, the documents held by the Director were a complete answer to some, at least, of the Grounds in the Complaint. A proceeding is vexatious if, regardless of the motive of the litigant that commenced them, they are obviously untenable or manifestly groundless: Attorney-General (NSW) v Wentworth (1988) 14 NSWLR 481 at 491. This does not mean that simply because a party proves unsuccessful, the test would be satisfied: R v Moore; ex parte FMWU (1978) 140 CLR 470 at 473. However, it does mean that costs may be awarded where a party institutes a proceeding in circumstances where, on the facts known to the party instituting it, there was no substantial prospects of success: see by analogy Canceri v Taylor (1994) 1 IRCR 120; Kanan v APTU (1992) 43 IR 257 at 304.

Conclusion

36 Errors of law infect the exercise of discretion by the Licensing Court in its decision on costs. Those errors include a misconstruction of the policy to be applied derived from the statutory powers; the failure to consider the “vexatious” nature of at least some parts of the Complaint; and the incorrect onus placed on the Club to prove its entitlement in circumstances where, having succeeded, it was entitled, without more, to costs.

37 The next aspect is the question of the order that should be issued, if any. In the view formed, the Licensing Court has applied the wrong test, it has considered irrelevant matters and it has failed to consider relevant (and required) matters. The discretion has miscarried and the decision ought to be quashed.

38 The Court of Appeal in Ohn v Walton, supra, dealt with a similar situation. It said:

“When legislation confers a power to order costs it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose.

Two things follow:
1. The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or the conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement.

2. The test of whether an order for costs should be made against an unsuccessful plaintiff or complainant is not whether he or she has done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated.

It also said:

“Whether the Medical Tribunal be a court or not, the principles enunciated by Mason CJ and McHugh J are of general application and should be applied by a tribunal such as the Medical Tribunal, absent contrary legislation or regulation….

House v The King

39 While there may be error of the kind that would allow the Court to overturn the decision below, it is the Licensing Court that heard the proceedings, it is the Licensing Court that is better able to judge the extent to which the Complaint was vexatious and to assess whether the whole, or a proportion (and, if so, what proportion) of costs should be awarded.

40 I make the following orders:

(i) Appeal allowed;

(ii) Decision of the Licensing Court of 17 July 2006 dismissing the application of the Chinese Cultural Club Limited for costs of the proceedings brought against it by the Director of Liquor and Gaming be set aside;

(iii) The question of costs be remitted to the Licensing Court to determine in accordance with law;

(iv) The Director of Liquor and Gaming pay the costs of the Chinese Cultural Club Limited of and incidental to these proceedings;

(v) To the extent otherwise entitled, the Director of Liquor and Gaming having a certificate under the Suitors’ Fund Act 1951 (NSW).

**********

29/11/2007 - Change of Solicitor - Paragraph(s) Coversheet

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Citations

Chinese Cultural Club v Director of Liquor and Gaming [2007] NSWSC 1029

Cases Citing This Decision

0

Cases Cited

16

Statutory Material Cited

3

Attorney-General (Cth) v Tse Chu-Fai [1998] HCA 25

Latoudis v Casey [1990] HCA 59

Commonwealth of Australia v Gretton [2008] NSWCA 117

CITATION:	Chinese Cultural Club v Director of Liquor and Gaming [2007] NSWSC 1029 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	28 May 2007
JUDGMENT DATE :	8 November 2007
JURISDICTION:	Supreme Court
JUDGMENT OF:	Rothman J
DECISION:	(i) Appeal allowed; (ii) Decision of the Licensing Court of 17 July 2006 dismissing the application of the Chinese Cultural Club Limited for costs of the proceedings brought against it by the Director of Liquor and Gaming be set aside; (iii) The question of costs be remitted to the Licensing Court to determine in accordance with law; (iv) The Director of Liquor and Gaming pay the costs of the Chinese Cultural Club Limited of and incidental to these proceedings; (v) To the extent otherwise entitled, the Director of Liquor and Gaming having a certificate under the Suitors’ Fund Act 1951 (NSW).

CATCHWORDS:	COSTS - general principle - costs to follow the event - wrong test by Licensing Court
LEGISLATION CITED:	Liquor Act 1982 (NSW) Registered Clubs Act 1976 (NSW) Suitors’ Fund Act 1951 (NSW)
CASES CITED:	ABT v Bond (1990) 170 CLR 321 Attorney-General (NSW) v Wentworth (1988) 14 NSWLR 481 Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 Buckman v Flanagan (1974) 133 CLR 422 Canceri v Taylor (1994) 1 IRCR 120 Haines v Leves (1987) 8 NSWLR 442 House v The King (1936) 55 CLR 499 Kanan v APTU (1992) 43 IR 257 Latoudis v Casey (1990) 170 CLR 534 Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460 Ohn v Walton (1995) 36 NSWLR 77 Project Blue Sky v ABA (1998) 194 CLR 355 R v Moore; ex parte FMWU (1978) 140 CLR 470 Saraswati v R (1991) 172 CLR 1
PARTIES:	Plaintiff: The Chinese Cultural Club Limited Defendant: Director of Liquor and Gaming
FILE NUMBER(S):	SC 13962/2006
COUNSEL:	B W Rayment QC / F Donohoe (Plaintiff) P Singleton / R Graycar (Defendant)
SOLICITORS:	Laurence & Laurence Lawyers (Plaintiff) Crown Solicitor's Office (Defendant)

LOWER COURT JURISDICTION:	Licensing Court of NSW
LOWER COURT FILE NUMBER(S):	13962/2006
LOWER COURT JUDICIAL OFFICER :	Kok LCM, Ashton LCM, Beveridge LCM
LOWER COURT DATE OF DECISION:	17/07/06