Locaputo v Director General, Department of Fair Trading (No 2)

[2003] NSWADT 108

CITATION:	Locaputo v Director General, Department of Fair Trading (No 2) [2003] NSWADT 108
DIVISION:	General Division
PARTIES:	APPLICANT Rubens Locaputo FIRST RESPONDENT Director General, Department of Fair Trading SECOND RESPONDENTS Daniel and Rubens Delfino
FILE NUMBER:	991037
HEARING DATES:	11/04/2003
SUBMISSIONS CLOSED:	04/11/2003
DATE OF DECISION:	05/19/2003
BEFORE:	Hennessy N - Magistrate (Deputy President)
APPLICATION:	Costs
MATTER FOR DECISION:	Costs
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 District Court Act 1973 Legal Profession Act 1987 Local Court (Civil Claims) Act 1970 Supreme Court Act 1970 Supreme Court of Judicature Act 1890 (UK)
CASES CITED:	Locaputo v Director General, Department of Fair Trading [2002] NSWADT 238 Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Limited (No 2) 1999 1 QD R 518 Dawkins v Lord Rokeby Jovanovic & anor v Woods & Anor [2001] TASSC 96 (15 August 2001) Najjar v Haines & Ors (1991) 25 NSWLR 224 Kondos & Anor v Citadin Pty Limited (RLD) [2003] NSWADTAP 7 Ultraglen Pty Ltd v Citadin Pty Ltd [2002] NSWADT 220 Aiden Shipping Ltd v Interbulk Ltd [1986] 1 AC 965 Knight and Anor v FP Special Assets Ltd and Ors (1992) 174 CLR 178 (HCA) Knight & Anor v FP Special Assets Limited & Ors (1992) 174 CLR 178 Citadin Pty Ltd v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd (No 2) [2001] NSWADTAP 31 Graham v Director General, Department of Community Services [2001] NSWADTAP 4 Tu v University of Sydney (No 2) [2002] NSWADTAP 25 Harding v UNSW [2002] NSWADTAP 36 (EOD)
REPRESENTATION:	APPLICANT Rubens Locaputo FIRST RESPONDENT Director General, Department of Fair Trading SECOND RESPONDENTS Daniel and Rubens Delfino
ORDERS:	Each application for costs is dismissed

1 These proceedings concern an application for costs by the applicant, Rubens Locaputo, against the second respondents Daniel and Rubens Delfino who were witnesses in the substantive proceedings. The second respondents also applied for costs in relation to this costs application. The first respondent, the Director General, Department of Fair Trading was the only respondent in the substantive proceedings. The Director General opposed the costs order sought by Mr Locaputo and did not seek any order for costs.

2 On 19 November 2002, the Tribunal handed down a decision in the substantive matter, Locaputo v Director General, Department of Fair Trading [2002] NSWADT 238. The application was for a review of a decision by the respondent to refuse the applicant’s application for a conveyancers licence. Daniel and Rubens Delfino gave evidence contrary to Mr Locaputo’s interests in those proceedings. The Tribunal decided to set aside the Director General’s decision and, in substitution for that decision, to grant a conveyancers licence to Mr Locaputo.

Costs application

3 The applicant sought an order that:

Daniel Delfino, solicitor . . . shall pay all costs of the applicant and the respondent to these proceedings of and incidental to this action, including the costs of this motion, except in so far as the applicant’s or the plaintiff’s costs are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, both the applicant and the respondent will be completely indemnified by Daniel Delfino for their costs.

Rubens Delfino, solicitor . . . shall pay all costs of the applicant and the respondent to these proceedings of and incidental to this action, including the costs of this motion, except in so far as the applicant’s or the plaintiff’s costs are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, both the applicant and the respondent will be completely indemnified by Rubens Delfino for their costs.

4 The application included an application for costs in relation to an interlocutory matter involving the return of a summons.

5 The second respondents sought a costs order against the applicant, on an indemnity basis, in relation to the costs application.

Background

6 Mr Daniel Delfino and Mr Rubens Delfino are brothers who were in legal practice together trading under the name of Delfino and Delfino. On 1 January 1999 Mr Locaputo and Mr Garcia, both accountants, jointly purchased Rubens Delfino's share of the business and formed a multi-disciplinary partnership comprising Daniel Delfino, Rubens Locaputo and Daniel Garcia. Daniel Delfino was the only partner with a practising certificate under the Legal Profession Act 1987. Rubens Delfino remained employed by the firm as a consultant on a voluntary basis for 6 months and then part-time until the partnership was dissolved on 8 June 2001.

7 Between 1 June 2000 and 8 January 2001 the relationships between Daniel Delfino and the other two partners began to deteriorate. Daniel Delfino and Mr Locaputo had been good friends but their relationship soured and by April 2001 the three partners had agreed to dissolve the partnership. At the date of the hearing, proceedings in relation to the dissolution of the partnership were on foot in the Supreme Court.

8 Daniel Delfino wrote letters to the Director General objecting to Mr Locaputo's application for a conveyancers licence. The issue in the substantive proceedings was whether Mr Locaputo had two years relevant practical training and conveyancing experience under the supervision of a licensed conveyancer or solicitor. There was no issue as to the fitness or propriety of Mr Locaputo to hold the licence.

9 With a few minor exceptions, the Tribunal found Mr Locaputo to be a credible witness. It also found that the evidence of Daniel Delfino and Rubens Delfino was not as reliable as that of Mr Locaputo. On a number of points the Tribunal made findings which were directly inconsistent with evidence given by Daniel and Rubens Delfino.

10 It was the applicant’s submission that costs were justified in this case, basically because Daniel and Rubens Delfino misrepresented the extent of the relevant experience the applicant had and lied as to their own conduct in relation to the conveyancing practices at Delfino and Delfino. The applicant submitted that Daniel and Rubens Delfino are the two parties at whose feet the blame for the entirety of these proceedings may be laid.

11 The Director General and the Delfinos disputed this submission, arguing that it had been the Director General’s decision to refuse Mr Locaputo’s application for a conveyancers licence. In addition, it was Mr Locaputo’s actions in applying for a review of that decision that brought the proceedings before the Tribunal.

Legislative provisions

12 Section 88 of the Administrative Decisions Tribunal Act 1997 (ADT Act) sets out the Tribunal’s powers in relation to costs.

(1) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that there are special circumstances warranting an award of costs.

(2) The Tribunal may:


(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis.

(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.

(4) In this section, "costs" includes:

(a) costs of or incidental to proceedings in the Tribunal, and
(b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application.

13 The questions which the Tribunal must ask itself are as follows:

a) Does the Tribunal have the power to order a witness to pay costs?
b) If so, are there special circumstances justifying an award of costs against the Delfinos?
c) If so, should costs be awarded on an indemnity basis?

14 Applicant’s submissions. The applicant submitted that the Tribunal has power to award costs against a witness because s 88 allows the Tribunal to “determine by whom and to what extent costs are to be paid.” Similar provisions exist in s 76(1)(b) of the Supreme Court Act 1970, s 34(1)(b) of the Local Court (Civil Claims) Act 1970 and s 148B(1)(b) of the District Court Act 1973.

15 The applicant cited examples of cases where a court had ordered costs against a non-party and sought to compare the facts of those cases to the present case. In particular, in Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Limited (No 2) 1999 1 QD R 518, the Supreme Court of Queensland ordered a witness, Mr Kenneth Pitts, to pay costs on an indemnity basis.

16 Delfinos’ submissions. Mr Williams, the legal representative for Daniel and Rubens Delfino, submitted that witnesses have a well-established immunity from suit. (Dawkins v Lord Rokeby (1973) LR 8 QB 255 at 264; Cabassi v Vila 1940 64 CLR 130; Jovanovic & anor v Woods & anor [2001] TASSC 96 (15 August 2001). While Mr Williams conceded that a costs application is not a cause of action from which a witness would automatically have immunity, he argued that the same public policy considerations which apply to protecting witnesses from being sued in relation to the giving of evidence, should equally protect them from any order for costs. (Najjar v Haines & Ors (1991) 25 NSWLR 224.)

17 Tribunal’s conclusion. In Kondos & Anor -v- Citadin Pty Limited (RLD) [2003] NSWADTAP 7, the Appeal Panel of this Tribunal decided that s 88(2)(b) of the ADT Act confers power to make orders for costs against non-parties including lay advocates. In that case the Retail Leases Division of the Tribunal ordered the professional representatives of the applicant in proceedings brought under the Retail Leases Act 1994 to pay the respondent's costs of the proceedings.(Ultraglen Pty Ltd v Citadin Pty Ltd [2002] NSWADT 220.) The Tribunal noted that the text of s 88(2)(b) is in the same terms as s 5 of the Supreme Court of Judicature Act 1890 (United Kingdom), which has been held to permit the making of costs orders against non-parties. The Appeal Panel, at [20] referred to the discussion in Aiden Shipping Ltd v Interbulk Ltd [1986] 1 AC 965 at 975 & ff (HL) per Lord Goff; approved Knight and Anor v FP Special Assets Ltd and Ors (1992) 174 CLR 178 (HCA), in dealing with similar provisions in the costs rules of the Queensland Supreme Court.

18 In Knight & Anor v FP Special Assets Limited & Ors (1992) 174 CLR 178, the High Court held that Order 91 rule 1 of the since repealed Rules of the Supreme Court of Queensland conferred jurisdiction to make an order for costs against the receivers of companies who were not themselves parties to those proceedings. At 192 Mason CJ and Deane J stated that “. . . the general principle is that an order for costs is only made against a party to the litigation.” However there are a “a variety of circumstances in which considerations of justice may . . . support an order for costs against a non-party.” At p.203 of Knight Dawson J said "... in general costs are not awarded against non-parties but that is because it is generally inappropriate to do so." He went on to say, "But I see nothing in the rule to prevent it being done in the exceptional case where it is appropriate to do so."

19 I am satisfied that the Tribunal has power to make a costs order against a non-party, including a witness, under s 88. The general immunity of a witness from being sued in relation to evidence that they have given in proceedings does not prevent an order for costs from being made against them in an appropriate case.

Are there special circumstances justifying an award of costs against the Delfinos?

20 In determining whether there are special circumstances justifying an award of costs, the Tribunal should be guided by decisions of superior courts. Although many courts and tribunals have power to order costs against a witness (depending on the terms of the legislation under which they operate) costs are rarely awarded, even in jurisdictions where costs follow the event. The test to be applied where costs follow the event, has been articulated recently by the Supreme Court of Queensland in Naomi Marble & Granite Pty Ltd v FAI General Insurance Company Limited and Ors Another 1999 1 QD R 518. Shepherdson J examined the relevant authorities including the High Court’s decision in Knight’s case and concluded that there is no limit on the court’s jurisdiction to exercise its discretion to order costs against a non-party but such discretion should only be exercised in the "interests of justice.”

21 At 544, Shepherdson J articulated the test to be applied:

I propose to apply the "interests of justice" test bearing in mind the circumstances of the case against each of the four non-parties against whom the defendants have sought indemnity costs orders. I also propose to proceed on the basis that if any costs order is to be made against any one of them I must be satisfied that the case is an exceptional one and such that the interests of justice justify departure from the prima facie general principle sufficient to warrant a costs order.

22 Shepherdson J, at 545, summarised the cases in which a non-party had been ordered to pay costs as follows:

· where a person has some management of the action e.g. a director of an insolvent company who causes the company improperly to prosecute or defend a proceeding;

·where a person has maintained or financed the action;

·where the unsuccessful party is a corporation (as is the case here) the director or directors who have the right to control the corporation;

·in the situation of a party to litigation who was an insolvent person or a man of straw, a person who has played an active part in the conduct of the litigation and who has an interest in the subject matter of the litigation;

·where the non-party is the effective litigant standing behind the actual party;

·where the non-party is funding or otherwise financially assisting the unsuccessful party to the litigation and stands to benefit if that party has been successful;

·where a non-party has supported the unsuccessful party and has done so acting in bad faith towards the other parties and towards the court such as by giving false testimony or forging documents or preventing relevant documents being discovered.

23 Shepherdson J found at 546, that a woman by the name of Anne Hunter was the managing partner for the plaintiff and as such had the right to control that company. His Honour concluded that:

On that basis alone she falls within a category of persons against whom, as a non-party, an order for costs may be made. . . . In addition as I found and as I have already indicated in these reasons she played a very active part in the conduct of the litigation being the major witness for the plaintiff and had an interest in the subject matter of the litigation . .

Furthermore, in supporting the unsuccessful litigation she did so in what I regard as complete bad faith towards the two defendants by giving false testimony. To succeed in its claims against each defendant the plaintiff depended entirely on her evidence. . .

She attempted to deceive the court and in my view, this is a clear-cut and exceptional case justifying departure from the prima facie general principle that costs orders are only made against a party to the litigation.

24 Shepherdson J also concluded at 554, that a witness, Kenneth Pitts, had partially financed the litigation, had a financial interest in the outcome of the case and had deliberately given false evidence to bolster the evidence of Ann Hunter, his fiancée and later his wife.

25 Mr Locaputo applied for a conveyancers licence. The respondent made a decision, no doubt based, in part, on the representations of the Delfinos, that the licence should not be given. Following internal review, Mr Locaputo applied to the Tribunal for a review of that decision. On the basis of all the evidence, the Tribunal set aside the respondent’s decision. In doing so, the Tribunal rejected some of the evidence of the Delfinos and made findings inconsistent with that evidence. The Tribunal made no finding that either Rubens or Daniel Delfino had deliberately given false evidence or otherwise acted in bad faith.

26 The Delfinos did not manage, conduct or finance the action. They were not the “effective litigants” standing behind the respondent. They were merely witnesses in a case brought by Mr Locaputo against a decision of the Director General. While that decision was influenced by the representations of the Delfinos, I am satisfied that the respondent made the decision independently on the basis of all the relevant evidence.

27 The applicant submitted that the Delfinos had an interest in the subject matter of the litigation because if the applicant obtained a conveyancers licence he would set up business in competition with their firm. As both the Delfinos and Mr Locaputo speak Spanish they would be in direct competition with one another for Spanish speaking clients.

28 It is a relatively common occurrence that a witness will have some interest in the outcome of the litigation. Even if the Delfinos had an interest in the subject matter of the litigation, that is not an exceptional situation which, in the interests of justice, would justify departure from the prima facie general principle that costs orders should only be made against parties.

29 For these reasons, the present case does not fall within the test enunciated by Shepherdson J in Naomi Marble, nor does it fall within any of the categories of case which has previously justified an order for costs against a witness. Given that the test of “special circumstances” is more onerous than that which is applicable in jurisdictions where costs generally follow the event, the application for costs is refused.

30 Since the circumstances of this case do not justify an award of costs against the Delfinos, there is no need to consider whether costs should be awarded on an indemnity basis.

Costs of this application

31 The final matter to consider is whether an order for costs should be made in relation to this application. The applicant applied for costs against the Delfinos in relation to the present application as well as in relation to the substantive proceedings. The applicant has been unsuccessful and there are no special circumstances justifying an award of costs in the applicant’s favour.

32 The Delfino’s applied for costs, on an indemnity basis, in relation to the applicant’s application for costs. The Delfinos submitted they have been forced to defend an application that they personally pay the costs of proceedings to which they are strangers. In their view, pursuant to s 88 of the ADT Act, this situation constitutes special circumstances.

33 In Kondos & Anor -v- Citadin Pty Limited [RLD] [2003] NSWADTAP 7 the Appeal Panel upheld a decision of the Tribunal awarding costs against a non-party. The Appeal Panel also ordered the appellants to pay the respondents' costs of the appeal.

34 In this case the applicant’s application for costs have been unsuccessful. A separate question arises as to whether there are “special circumstances” justifying an award costs in relation to the costs application.

35 The Tribunal and the Appeal Panel has now dealt in a number of decisions with the question of what might constitute special circumstances justifying a costs order. (See, for example, Citadin Pty Ltd -v-Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd (No 2) [2001] NSWADTAP 31; Graham -v- Director General, Department of Community Services [2001] NSWADTAP 4; Tu -v- University of Sydney (No 2) [2002] NSWADTAP 25; Harding -v- UNSW [2002] NSWADTAP 36 (EOD). In this case, although it is a rare event that an application is made for an award of costs against a non-party, the Delfinos did not point to any misconduct of the applicant in relation to the present application, any breach of procedural requirements or any other basis which may constitute “special circumstances” justifying an award of costs. It is true that the application has been dismissed but mere “success” is not sufficient to justify an award of costs. While there may be cases where an order for costs against an unsuccessful applicant for costs is justified, this is not one of them. In those circumstances I make no order as to costs in relation to this application.