Home789 Resources Pty Limited v Zheng Shang

[2022] NSWCATEN 2

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Home789 Resources Pty Limited v Zheng Shang [2022] NSWCATEN 2

Hearing dates:

On the papers

Date of orders:

19 August 2022

Decision date:

19 August 2022

Jurisdiction:

Enforcement

Before:

I R Coleman SC ADCJ, Principal Member

Decision:

(1) That pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 the Tribunal dispenses with a hearing of the competing costs applications.

(2) The application for costs of the Applicant is dismissed.

(3) The application for costs of the Respondent is dismissed.

Catchwords:

PRACTICE AND PROCEDURE- contempt- application for referral to Supreme Court- where application settled without a hearing- where each party seeks costs- whether either party establishes special circumstances warranting an order for costs

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Civil and Administrative Tribunal Rules 2014

Cases Cited:

Australian Securities Commission v Aust-Home Investments Limited [1993] FCA 585; (1993) 44 FCR 194

Brunsprop Pty Limited v Joanne Hay & Wes Davies [2015] NSWCATAP 152

DVI v ZIT [2021] NSWCATEN 4

eMove Pty Limited v Naomi Dickinson [2015] NSWCATAP 94

Ferguson v Hyndman [2006] NSWSC 538

Gizah Pty Ltd v AXA Trustees Ltd (No 2) [2001] NSWADT 164

James v Cowan [1929] HCA 46; (1929) 42 CLR 305

Kadsielski v Guca 1 Pty Ltd [2018] NSWCATAP 223

Lake Burrendong State Park Trust v Thompson [2011] NSWSC 1554

Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534

Luxottica Retail Australia Pty Limited v Grant [2009] NSWCA 378

Makisic v Keelty [2005] NSWSC 1124

Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622

Muhibbah Engineering (M) BHD v Trustee Company Limited [2009] NSWCA 205

Newcastle Wallsend Coal Co Pty Limited v Industrial Relations Commission (NSW) [2006] NSWCA 129

Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84

O’Born v Commissioner for Government Transport (1959) 77 WN (NSW) 81

Registrar of the Court of Appeal v Maniam (No 1) (1981) 25 NSWLR 459

Registrar of the Supreme Court, Equity Division v McPherson (1981) 1 NSWLR 688

Category:

Principal judgment

Parties:

Home Resources 789 Pty Limited (Applicant- Cross- Respondent)
Zheng Shang (Respondent- Cross- Applicant)

Representation:

Solicitors
Dixon Holmes (Applicant- Cross- Respondent)
Juris Cor Legal (Respondent- Cross- Applicant)

File Number(s):

PC 22/03464

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. On 25 January 2022 Home789 Resources Pty Limited (the Applicant) filed an application seeking the referral of Zheng Shang (the Respondent) and a number of other named persons to the Supreme Court to be dealt with for contempt (the referral application). The application was made pursuant to the provisions of s 73(5) of the Civil and Administrative Tribunal Act (CAT Act) and was based on alleged breaches of an order of the Tribunal.

2. Prior to its determination, the Applicant discontinued the referral application, which, by that time, had become only against the present Respondent.

3. The Applicant sought that the Respondent pay its costs of the referral application. The Respondent resisted the Applicant’s claim for the costs of the referral application and sought an order that the Applicant pay his costs of the application.

4. The Tribunal made directions for the filing of evidence and submissions in support of the competing costs applications. On 10 June 2022 the Applicant filed submissions in support of its claim. The Applicant relied upon two Affidavits of Ammaar Ali, sworn 11 March 2022 and 20 May 2022. On 26 July 2022 the Respondent filed submissions. In support of his claim, the Respondent relied upon an Affidavit sworn by him on 24 July 2022 and the Exhibit to that Affidavit.

5. Whether there should be a hearing

6. The first issue requiring determination is whether the competing applications should be determined “on the papers” and without a hearing. The Applicant submitted that the competing applications were “suitable to be determined on the papers” (48). The submissions of the Respondent did not engage with the issue

7. Section 50(1) of the CAT Act provides that a hearing is required for proceedings in the Tribunal unless the Tribunal makes an order under dispensing with a hearing (s 50(1)(c)). Section 50(2) of the CAT Act provides that the Tribunal may make an order dispensing with a hearing “if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal”. The extensive written submissions of the parties satisfy the Tribunal that the issues for determination can be adequately determined “on the papers” and in the absence of the parties.

8. The Tribunal is further satisfied that, in the present circumstances, dispensing with a hearing is consistent with the “guiding principle” articulated in s 36 of the CAT Act, and facilitates the “just, quick and cheap resolution of the real issues in the proceedings”.

9. Pursuant to s 50(3) of the CAT Act, the Tribunal is satisfied that the parties have been “afforded” the opportunity to make submissions about the proposed order which, to the extent that any party has, have been taken into account. In the circumstances, the Tribunal orders, pursuant to s 50(2) of the CAT Act that a hearing be dispensed with.

Background

10. On 6 July 2021, a summons for the production of documents was issued to the Respondent. The Applicant alleged that on the return date of the summons, 23 July 2021, the Respondent produced no documents, that on the adjourned return date of the summons, 30 August 2021, no documents were produced, and that the summons was then further adjourned to 31 September 2021. The Applicant alleged that no documents were subsequently produced on the summons on 31 September 2021, 7 October 2021, 21 October 2021, 26 October 2021, 18 November 2021, 17 December 2021 or 21 December 2021.

11. The return date of the referral application was 16 February 2022, on which date it was adjourned to 2 March 2022. On 3 March 2022 the Respondent’s solicitors acknowledged that he had notice of the referral application.

12. The Applicant alleged that the Respondent first produced documents on or about 13 April 2022, but that he did so “vastly inadequately”, notwithstanding which it discontinued the referral application.

13. The Respondent disputed that the summons came to his attention during 2021, for a variety of reasons. The Respondent “heavily disputed” that he had not produced documents in accordance with the summons when, he contends, it ultimately came to his notice.

14. In substance, the outcome of the present applications turns materially on what is alleged by each party to have occurred, or not occurred between July and December 2021 with respect to the summons to the Respondent to produce documents, matters about which the Tribunal is unable to make findings of fact.

Submissions of the parties

15. The Applicant submitted (40) that, due to the Respondent’s non-compliance with the summons, “additional costs were incurred in that additional summonses were issued [to] other parties identified through the documents” produced by the Respondent on 13 April 2022. Included in the costs claim by the Applicant (41) were the costs of filing the summonses, the payment of conduct money, costs with respect to attendances on the return of summonses to various third parties, all of which were submitted to be “a direct result of Shang’s failure to comply with the summons”. The Applicant further submitted (42) that costs were incurred as a “direct consequence of Shang’s repeated failures to comply with the summons” on the 2021 dates which have been recorded earlier in these reasons.

16. It was further submitted (43) that, after the filing of the referral application, there was no appearance by the Respondent on the original and adjourned return dates. The Applicant submitted, correctly in the Tribunal’s view, that its application was governed by the provisions of s 60 of the CAT Act which provides that, in the absence of “special circumstances”, costs cannot be awarded.

17. Section 60(1) of the CAT Act provides that each party to proceedings in the Tribunal pay the party’s own costs. Section 60(2) provides that 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”.

18. Section 60(3) of the CAT Act identifies a number of factors to which the Tribunal may have regard when determining whether special circumstances have been demonstrated.

19. The Applicant submitted (45) with respect to the provisions of s 60(3) that special circumstances were established in that the Respondent:

“(a)   conducted the proceedings in a way that unnecessarily disadvantaged the Applicant;

(b)   has been responsible for prolonging unreasonably the time taken to complete the proceedings;

(c)   has provided no credible explanation as to why he failed to comply with the Summons adequately;

(d)   there was no complex legal issues involved in the obligations to comply with the summons - it was a simple case of wilful, persistent and contemptuous attitude towards a summons issued by this Tribunal on the part of Mr Shang;

(e)   it was a simple case of wilful, persistent and contemptuous attitude towards a summons issued by this Tribunal on the part of Mr Shang;

(f)   it was a clear case of Mr Shang failing to comply with the duty imposed by s 36(3) which requires a party “to comply with the directions and orders of the Tribunal” in order to achieve the “just, quick and cheap resolution of the real issues in the proceedings”. Mr Shang’s conduct prolonged the proceedings.”

20. The Applicant ultimately submitted (46) that the Respondent has:

“failed to purge his contumacious, delinquent attitude and conduct towards a summons issued by the Tribunal to the very day of these submissions in that it has still not complied with the summons adequately by producing the balance of the documents and should be ordered to pay costs occasioned by his failure under s 60 in that he unnecessarily disadvantaged the Applicant, was responsible for substantially prolonging the proceedings, provided no satisfactory explanation, and failed to comply with the duty imposed on him under s 36(3).”

21. The Respondent submitted (20) that, on 23 March 2022 his solicitors informed the Applicant’s solicitors that “they had served the wrong address and email address” and requested the withdrawal of the contempt application.

22. The Respondent submitted (31) with respect to s 60 of the CAT Act that, after a series of attempts to serve the Respondent with the summons, which were unsuccessful by reason of service being directed to the wrong address or addresses:

“It was only at a later stage that the applicant then took reasonable steps including conducting an ASIC search, personal service of the documents to the said address of the ASIC search and sending the documents to an email address actually associated with Mr Shang. However instead of using this information to bring the summons to Mr Shang’s attention, they instead used this information to bring a contempt application to his attention. It would have saved both parties and Court’s resources if the Applicant were to have served the summons upon him again before bringing the contempt application.”

23. It was further submitted (32) that on 24 March 2022 the Applicant “failed to withdraw their application for contempt despite being provided with an explanation by Mr Shang’s solicitors on 23 March 2022 regarding service on the wrong email address and residential address”. The Respondent further submitted (33) that on 1 April 2022 “the Applicant failed to withdraw their application for contempt despite the [sic] Mr Shang having produced documents in compliance with the summons”.

24. The Respondent submitted, in reliance upon the decision in Attorney General v Wentworth [1988] 14 NSWLR 481 that the referral application was vexatious in the circumstances asserted by him. It was further submitted (38) that the Applicant had “conducted the proceedings in a way which caused delay, unfairness to Mr Shang and caused him to incur legal costs.” The Respondent submitted (39) that the Tribunal “should use its discretion to take into consideration Mr Shang’s role in these proceedings”, it being submitted that “Mr Shang’s diligent behaviour in compliance with the Tribunal is certainly a factor the Tribunal to take into consideration”.

25. It was further submitted (40) that the Respondent’s response to the contempt application and the summons were “swift once he had been notified” and that (41) the “behaviour exhibited in his emails is inconsistent with somebody who would wilfully committing [sic] contempt against the Tribunal”. The Respondent reiterated his assertion (44) that he had been “compliant with the summons at all material times”.

Special circumstances

26. Both parties accept that, to enliven the discretion to award costs, a party seeking costs must establish “special circumstances” pursuant to s 60(2) of the CAT Act.

27. Section 60(3) of the CAT Act identifies seven matters to which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs. The Tribunal may also have regard to any other matter which it considers relevant to that determination (s 60(3)(g)).

28. Ordinarily, costs applications are made after proceedings have been determined on the merits, and are informed by the findings made in the course of that determination, and the outcome of the proceedings. The referral application not having been determined after a hearing, the submissions which either party can successfully advance with respect to s 60(3) factors are necessarily limited.

29. Special circumstances are circumstances that are “out of the ordinary”, and do not have to be extraordinary or exceptional (Kadsielski v Guca 1 Pty Limited [2018] NSWCATAP 223). Each case turns on its own particular facts (Gizah Pty Limited v AXA Trustees Limited (No 2) [2001] NSWADT 164) and depends on the circumstances of the individual case (Brunsprop Pty Limited v Joanne Hay & Wes Davies [2015] NSWCATAP 152). The discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs (eMove Pty Limited v Naomi Dickinson [2015] NSWCATAP 94).

30. The rationale of awarding costs is to partially reimburse a successful party for costs incurred. A costs order is not intended to punish the unsuccessful party, but rather to compensate the successful party for costs incurred (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534).

The nature of a summons in the Tribunal

31. Section 48 of the CAT Act provides for the “issue of summons”. Section 48(3) of the CAT Act provides that a summons may require the person to whom it is addressed:

“(a)   to attend and give evidence, or

(b)   to attend and produce documents or things, or both.”

32. Rule 34(6) of the Civil and Administrative Tribunal Rules 2014 (the Rules) refers to a “person who is summoned to attend and produce a document or thing” to the Tribunal.

33. Rule 33(1) of the Uniform Procedure Rules 2005 (NSW) (UCPR) provides that the court may “by subpoena order the addressee” to do the things referred to in s 48 of the CAT Act. Whereas a subpoena issued pursuant to Rule 33.2 of the UCPR is an order to the addressee to do something, a summons issued pursuant to s 48 of the CAT Act requires the addressee to do something.

34. Rule 33.12(1) of the UCPR provides that the “failure to comply with a subpoena without lawful excuse is a contempt of court and may be dealt with accordingly”. Neither s 48 of the CAT Act, or Rule 34 of the Rules provides that the failure to comply with a summons is a contempt of the Tribunal.

35. Section 73(2) of the CAT Act provides that a person is “guilty of contempt of the Tribunal if the person does or omits to do anything that, if the Tribunal were a court of law having power to commit for contempt, would be contempt of the court unless the person establishes that there was a reasonable excuse for the act or omission”. Section 73(5) of the CAT Act empowers the Tribunal to refer a matter to the Supreme Court if it “is alleged, or appears to the Tribunal on its own view, that a person is guilty of contempt of the Tribunal”.

36. The submissions of both parties assume that the Tribunal has jurisdiction to entertain the referral application. Without expressing, or needing to express a concluded view, and acknowledging that the issue is less than straightforward, the provisions of s 73(2) of the CAT Act appear to render a referral application in reliance upon the failure to comply with a summons capable of being referred to the Supreme Court pursuant to s 73(5) of the CAT Act.

37. Notwithstanding the differences between a subpoena issued by a court, and a summons issued by the Tribunal, the authorities with respect to the consequences of failing to comply with a subpoena are considered to be instructive for the purposes of a referral application.

38. Prior to the advent of the UCPR, refusal to obey a subpoena has been held to be a contempt of court (James v Cowan [1929] 42 CLR 305). The destruction of a relevant document before a subpoena has been issued can amount to contempt of court (Registrar of the Supreme Court, Equity Division v McPherson [1981] 1 NSWLR 688). Non-compliance with a subpoena to testify can found a contempt which is categorised as a contempt other than in the face or hearing of the court (Registrar of Court of Appeal v Maniam (No 1) (1991) 25 NSWLR 459).

39. Before a witness can be dealt with for contempt for failing to produce a document on subpoena, there must be evidence both that the document exists, or did exist, and that it was in the possession of the witness (O’Born v Commission for Government Transport [1959] 77 WN (NSW) 81). The minimum necessary for a contempt conviction constituted by disobedience to a court order, is wilfulness in the failure to comply, it is not sufficient merely to evidence a failure to fully comply with the terms of a subpoena (Markisic v Keelty [2005] NSWSC 1124).

Costs of settled proceedings

40. As is not in doubt, the referral application has never been determined on its merits. The Tribunal is thus unable to make findings with respect to the disputed issues of fact identified above. The general principle applied by courts in relation to costs where proceedings are determined without a hearing on the merits, and where it cannot be said that one party has simply capitulated, is that there will be no order as to costs, with the intent that each party bear its own costs, unless it can be seen that one party has acted unreasonably in bringing or defending the proceedings (Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622).

41. In very rare cases it may be appropriate to make an order for costs without a contested hearing on the merits, if the Court can be almost certain that one party or the other would have “won” (Ferguson v Hyndman [2006] NSWSC 538; Newcastle Wallsend Coal Co Pty Limited v Industrial Relations Commission (NSW) [2006] NSWCA 129; Muhibbah Engineering (M) BHD v Trust Company Limited [2009] NSWCA 205), or the merits of the claim have in practical terms been determined in favour of the party seeking costs (Luxottica Retail Australia Pty Limited v Grant [2009] NSWCA 378).

42. In Australian Securities Commission v Aust-Home Investments Limited [1993] FCA 585; (1993) 44 FCR 194 Hill J observed, at [201] that:

“It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceedings should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial” and which would “particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue”

43. In Lake Burrendong State Park Trust v Thompson [2011] NSWSC 1554, at [69]-[82], Hallen AsJ (as Hallen J then was) extensively reviewed the authorities with respect to the costs of settled proceedings. His Honour concluded, at [83]:

“Thus, it seems to me, if it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled, or its further prosecution became futile, the proper exercise of the costs discretion will usually mean the Court will make no order as to costs of the proceedings.

44. An order for costs may be made in a case which has resolved without a hearing on the merits if it can be shown that a party has behaved unreasonably, or unreasonably pursued or defended litigation where that is found by reference to known or agreed circumstances, but, if the issue cannot be determined without reviewing large swathes of evidence and resolving on a tentative basis disputed questions of fact, the task should not be undertaken (Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84).

Consideration

45. The principles with respect to costs of settled proceedings emerging from the authorities are instructive for present purposes, particularly given the requirement of s 60(2) of the CAT Act that a party establish “special circumstances” in order to obtain an award of costs, and that the matters to which regard may be had pursuant to s 60(3) of the Act for the purpose of that determination are based on facts which are agreed or which have been found at a hearing.

46. The evidence before the Tribunal does not establish that either party simply capitulated. The evidence does not enable the Tribunal to conclude that either party would have “won” if the referral application had been heard and determined. Nor can the Tribunal find that the merits of either party’s claim has been determined in its or his favour in practical terms.

47. In the present circumstances, the Tribunal is unable to find on the balance of probabilities that the Applicant acted unreasonably in commencing the referral application, or that the Respondent acted unreasonably in defending it.

48. The legal principles governing the referral application were concisely reiterated in DVI v ZIT [2021] NSWCATEN 4, at [5]-[12]. It is sufficient for present purposes to record that the Tribunal is unable to make findings with respect to any of the matters of relevance in a referral application identified in DVI. In circumstances where the Applicant asserts that the Respondent has still not fully complied with the summons, and the Respondent asserts that he has, in the absence of a hearing, the Tribunal cannot make findings on the balance of probabilities with respect to either party’s allegations. Nor is it able to make any findings or draw any inferences as to the likelihood that the Applicant could have established the matters which it needed to in order to succeed with the referral application had it been heard and determined.

49. Essentially for the reasons recorded above, the Tribunal is unable to make findings supporting either party’s claim with respect to any of the matters articulated in s 60(3)(a) to (f) of the CAT Act. There is no other matter which the Tribunal considers relevant to the determination of the present claims.

50. In the circumstances recorded above, the Tribunal is unable to make findings with respect to the Applicant’s commencement and prosecution of the referral application, or the Respondent’s defence of it, which takes the proceedings “out of the ordinary”. Determinative in that respect is the inability of the Tribunal to make findings of fact with respect to the service of the summons on the Respondent, and the adequacy or otherwise of the Respondent’s production of documents in response to the summons when it was served on him.

Disposition

51. Neither party having demonstrated special circumstances, each party’s application will be dismissed.

Orders

1. That pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 the Tribunal dispenses with a hearing of the competing costs applications.

2. The application for costs of the Applicant is dismissed.

3. The application for costs of the Respondent is dismissed.

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

Decision last updated: 19 August 2022