Leishman v Chief Commissioner of State Revenue

[2019] NSWCATAD 126

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Leishman v Chief Commissioner of State Revenue [2019] NSWCATAD 126
Hearing dates:	On the papers
Date of orders:	25 June 2019
Decision date:	25 June 2019
Jurisdiction:	Administrative and Equal Opportunity Division
Before:	R L Hamilton SC, Senior Member
Decision:	The Applicant to pay the costs of, or incidental to, the proceedings in the Tribunal as agreed or assessed.
Catchwords:	COSTS - special circumstances - prolonging proceedings unreasonably - failure to comply with duty to cooperate with Tribunal to achieve the guiding principle - misconceived application-
Legislation Cited:	Administrative Decisions Review Act 1997(NSW) Civil and Administrative Tribunal Act 2013 (NSW)
Cases Cited:	Gaynor v Burns [2015] NSWCATAP 150 Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120
Category:	Costs
Parties:	Kathleen Leishman (Applicant) Chief Commissioner of State Revenue (Respondent)
Representation:	Counsel: D Woods (Respondent)   Solicitors: Gardener Ekes (Applicant) Crown Solicitor (Respondent)
File Number(s):	2017/00297212
Publication restriction:	Nil

REASONS FOR DECISION

1. Ms Leishman’s application challenged the basis upon which she was assessed to liability as a director of a company which had not paid its payroll tax debts. She was represented by a solicitor through the proceedings.

2. After commencing the proceedings Ms Leishman has on numerous occasions failed to comply with the Tribunal’s directions, failed to adequately explain this conduct and failed to reply to correspondence from the respondent.

3. Having given Ms Leishman various opportunities to rectify the position, I ultimately ordered the application to be dismissed for want of prosecution on 30 October 2018 pursuant to s 55(1)(d) Civil and Administrative Tribunal Act2013 (CAT Act) on the application of the Respondent. The Applicant did not appear.

4. The Respondent has sought an order for its costs in this matter, and has filed and served written submissions supported by an affidavit of Ms K McKee, a senior solicitor at the Crown Solicitor’s Office who had carriage of the matter. The Respondent consents to the matter being determined ‘on the papers’ without a hearing.

5. A number of attempts have been made to contact the applicant through her solicitor to seek submissions and evidence going to the costs issue, but these have been met with silence.

6. It is appropriate that this matter be determined without a hearing ‘on the papers’ (s 50 CAT Act).

BACKGROUND

7. Notwithstanding that the Applicant was legally represented from the commencement of the Tribunal proceeding, no substantive step was taken by the Applicant to pursue the review once proceedings were commenced in September 2017. For example:

1. The Applicant failed to attend the first directions on 14 November 2017.

2. The Tribunal first made orders on 20 February 2018 for the Applicant to file her evidence and submissions by 20 March 2018, and subsequent extensions were given, but no evidence or submissions were ever filed and served by the Applicant.

3. On 24 April 2018, the Applicant lodged a misconceived application to join her previous tax agents and ASIC as parties to the proceeding and for the review proceeding to be transferred to the Supreme Court ("Joinder & Transfer Application").

4. The Respondent invited the Applicant to withdraw her Joinder & Transfer Application, outlining, amongst other things, the Tribunal's lack of jurisdiction to make the orders sought. When the application was not withdrawn and the Applicant's solicitor failed to respond to the Respondent's solicitor's emails, the Respondent made an application for dismissal of the Joinder & Transfer Application and the proceeding generally. Both parties' applications were listed for hearing on 12 June 2018.

5. On 12 June 2018, the Applicant indicated that she would commence any Supreme Court proceeding relating to the validity of the Applicant's directorship of the company within 21 days of the orders and use all reasonable endeavours to have the proceeding determined expeditiously and within 12 months. Noting the Applicant's planned Supreme Court action, by consent the Tribunal made orders on 12 June 2018:

1. dismissing the Applicant's Joinder & Transfer Application; and

2. staying the Tribunal proceeding pending determination of the Applicant's foreshadowed Supreme Court proceeding or until further order of the Tribunal.

6. Ms McKee followed up by emails and her own investigations and found the Applicant never commenced the foreshadowed Supreme Court proceeding.

7. On 19 October 2018, given the Applicant's failure to commence Supreme Court proceedings and the lack of any response from the Applicant to the 3 emails sent by the Respondent's solicitor, the Respondent made an application to have the stayed Tribunal proceeding dismissed.

COSTS

8. The Chief Commissioner seeks an order that the Applicant pay the Respondent's costs of the proceedings.

9. The general rule is that each party pays their own costs unless there are special circumstances which warrant an award of costs: s 60(1), (2). CAT Act

10. Section 60(3) lists the following matters to which the Tribunal may have regard in determining whether there are special circumstances warranting an award of costs:

1. whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

2. whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

3. 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,

4. the nature and complexity of the proceedings,

5. whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

6. whether a party has refused or failed to comply with the duty imposed by section 36(3) of the CAT Act,

7. any other matter that the Tribunal considers relevant.

11. The general rule in s 60(1) that parties should bear their own costs is designed to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as is practicable.

12. Exercising the Tribunal's discretion has been described as a two-stage structured process consisting of:

1. a consideration of whether or not the tribunal is "satisfied" that there are "special circumstances" in relation to the question of costs; and

2. if so, whether those special circumstances warrant departing from the general rule and making an award of costs. (Gaynor v Burns [2015] NSWCATAP 150, at [18])

13. Special circumstances means circumstances that are out of the ordinary, but not necessarily extraordinary or exceptional: see e.g. Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].

14. Are there “special circumstances”? The Respondent submits that "special circumstances" on the question of costs fall within the factors listed in paras 60(2)(b), (e) and (f) of the CAT Act. These facts and circumstances are set out below.

60(2)(b) -prolonging unreasonably the time taken to complete the Tribunal proceeding

15. As can be seen from the events described above, there was an almost complete want of prosecution by the Applicant since the commencement of proceedings with no substantive steps taken by the Applicant to prepare the matter for hearing. The Applicant's failure to attend the first directions hearing and the numerous extensions of time sought by the Applicant subsequently to comply with the orders previously made, led to the same orders being repeatedly made (with the dates being changed) and no real progress.

60(3)(e)-Joinder & Transfer Application was misconceived and lacked substance

16. The Respondent's reliance on the factors listed in 60(3)(e) of the CAT Act is limited to the Applicant's Joinder & Transfer Application. As notified by the Respondent to the Applicant at the earliest opportunity, that application was misconceived because:

the transfer was sought pursuant to provisions in Schedule 4 of the CAT Act that apply only to the Consumer and Commercial Division of the Tribunal, rather than the Administrative and Equal Opportunity Division, therefore the Tribunal's jurisdiction to make the orders was a live issue;

1. the proposed transfer was said to be sought under s 96 of the TAA, notwithstanding s 96 having no apparent relevance to the situation; and

2. the application failed to address the requirements of s 97(2) of the TAA, which specifies the way in which a review proceeding commenced in the Tribunal may be determined by the Supreme Court.

60(3)(f) - disregard and breach of the duty under s 36(3) of the CAT Act

17. Section 36(3) of the CAT Act imposes a duty on both a party to a proceeding and his or her legal representative to co-operate with the Tribunal to give effect to the guiding principle of facilitating the just, quick and cheap resolution of the real issues in the proceedings and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal.

18. The Applicant's and her legal representatives' disregard for and failure to comply with their duty under s 36(3) of the CAT Act was demonstrated by:

1. Their continued delays and failure to comply with the procedural orders made by the Tribunal e.g., their failure to file any evidence and submissions and delay in responding to the Respondent's privilege claim pursuant to s 59 of the Administrative Decisions Review Act 1997 (NSW)

2. The Applicant failed to pro-actively approach the Respondent or the Tribunal with respect to the Applicant's timetable slippages so that the orders could be revised or the matter re-listed. It repeatedly fell to the Respondent to initiate such action.

3. No explanation for the breach of the orders or continuing delay was ever provided to the Tribunal,

4. The Respondent's solicitor's emails and telephone calls to the Applicant's solicitor repeatedly went unanswered.

19. I am not convinced that the ground in s 60(3)(e) CAT Act (the’ frivolous and vexatious’ ground) is made out. It needs more than just a misconceived application to rise to such a level. ‘Frivolous and vexatious’ add colour to the ‘misconceived’ concept.

20. However as to the other grounds, the Tribunal is satisfied that there are "special circumstances" in relation to the question of costs. It appears to me that the Applicant was using the Tribunal proceedings to ‘buy more time’, and was not treating the matter seriously.

21. The Respondent does not rely on the relative strength of the respective parties' cases to support its application for costs. This reflects the Respondent's acceptance that the Tribunal is not in a position to assess the merits of the substantive proceeding given that the proceeding was dismissed prior to the parties serving evidence and submissions and without a hearing of the merits of the case.

22. As to the second stage of the process in the exercise of discretion under s 60, the "special circumstances" of the Applicant's dilatory approach, repeated defaults, lack of professional courtesy in responding to communications and the heavy reliance on the Respondent's commitment to the guiding principle warrant departing from the general rule because such conduct by the Applicant has unreasonably increased the legal costs incurred by the Respondent associated with the proceeding.

23. In a proceeding that was ultimately dismissed because of the inaction by the Applicant in the 14 month duration of the proceeding, the Respondent and/or his legal representatives have:

1. attended 6 directions hearings, 2 of which counsel was also briefed to appear due to the scheduled applications to be heard on those occasions;

2. endeavoured to keep the matter moving by chasing up the Applicant when the Applicant had defaulted;

3. agreed to a reasonable number of extensions of times requested by the Applicant;

4. prepared and submitted to the Applicant forms of Consent Orders to facilitate the adjustment of timetables following the Applicant's defaults; and

5. mentioned the appearance of the Applicant's solicitor at the directions hearing on 20 February 2018.

24. For the above reasons, in this proceeding there are special circumstances which the Tribunal finds justifies an order being made that the Applicant pay the Respondent's costs of, or incidental to, the proceedings in the Tribunal in the amount as assessed or agreed.

ORDER

1. The Applicant to pay the costs of, or incidental to, the proceedings in the Tribunal as agreed or assessed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar

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: 25 June 2019