McCarthy v NSW Racing Appeals Tribunal

Case •

[2014] NSWSC 798

•

18 June 2014

Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: McCarthy v NSW Racing Appeals Tribunal [2014] NSWSC 798
Hearing dates:22 May 2014
Decision date: 18 June 2014
Jurisdiction:Common Law
Before: Beech-Jones J
Decision:

(1) The decision of the Racing Appeals Tribunal dated 15 May 2013 refusing the Plaintiff's application for costs be set aside.

(2) The Racing Appeals Tribunal determine the Plaintiff's application for costs according to law.

(3) The Second Defendant pay the Plaintiff's costs of the proceedings.

Catchwords:

ADMINISTRATIVE LAW - Racing Appeals Tribunal - Supreme Court's supervisory jurisdiction - Supreme Court Act 1970 (NSW) s 69 - error of law on the face of the record - jurisdictional error - order made under Evidence Act 1995 (NSW) s 136 regarding submissions and material before Tribunal

ADMINISTRATIVE LAW - Racing Appeals Tribunal - successful overturning of adverse disciplinary finding - whether costs "follow the event" - application for costs by applicant rejected by Tribunal - just and "reasonable expectation" - Latoudis v Casey [1990] HCA 59; 170 CLR 534 - natural justice - right to oral hearing on costs - Wednesbury unreasonableness - reasonableness review.
Legislation Cited: - Costs in Criminal Cases Act 1967 (NSW), s 3(1)
- Evidence Act 1995 (NSW), s 136
- Greyhound and Harness Racing Administration Act 2004 (NSW)
- Greyhound and Harness Racing Administration (Appeals) Regulation 2004 (NSW), reg 27
- Harness Racing Act 2009 (NSW), s 9, s 10, s 17, s 20, s 22
- Harness Racing (Appeals) Regulations 1999 (NSW), reg 12
- Land and Environment Court Act 1979 (NSW), s 17, s 39, s 69
- Protection of the Environment Operations Act 1997 (NSW), Part 9.2, s 96, s 97, s 98, s 100, s 292
- Racing Appeals Tribunal Act 1983 (NSW) ss 15, 15A, 15B, 16, 17, 17A, 18
- Racing Appeals Tribunal Regulation 2004 (NSW), reg 14
- Racing Appeals Tribunal Regulation 2010 (NSW), regs 3, 9, 10
- Racing Legislation Amendment Act 2009 (NSW)
- Supreme Court Act 1970 (NSW), s 69
- Thoroughbred Racing Act 1996 (NSW)
- Uniform Civil Procedure Rules 2005 (NSW), r 36.16(3A)
Cases Cited: - Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
- Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321
- Calvin v Carr [1979] 1 NSWLR 1
- Chahal v Director of Public Prosecutions [2008] NSWCA 152; 185 A Crim R 580
- Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; 199 CLR 135
- Craig v South Australia [1995] HCA 58; 184 CLR 163
- House v R [1936] HCA 40; 55 CLR 499
- Kirk v Industrial Court (NSW) [2010] HCA 1; 239 CLR 531
- Latoudis v Casey [1990] HCA 59; 170 CLR 534
- Licensee Roy Roots and Harness Racing New South Wales (Racing Appeals Tribunal (NSW), Mr D.B. Armati, 18 July 2012, unrep)
- Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24
- Re Minister for Immigration and Ethnic Affairs, ex parte Lai Qin [1997] HCA 6; 186 CLR 622
- Minister for Immigration and Multicultural Affairs, Re; Ex parte Applicant S20/2002 [2003] HCA 30; 198 ALR 59
- Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; 209 CLR 597
- Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; 197 CLR 611
- Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; 207 ALR 12; 78 ALJR 992
- Ohn v Walton (1995) 36 NSWLR 77
- One.Tel Ltd v Commissioner of Taxation [2000] FCA 270; 101 FCR 548
- Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72
- Pedrana v Racing NSW [2014] NSWSC 462
- Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107
- Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council [2007] NSWCA 300; 71 NSWLR 230
Category:Principal judgment
Parties: Luke McCarthy (Plaintiff
NSW Racing Appeals Tribunal (First Defendant)
Harness Racing New South Wales (Second Defendant)
Representation: Counsel:
D.G. Dalton SC, V. Heath (Plaintiff)
A.T.S. Dawson (Second Defendant)
Solicitors:
G.J. Harris & Co (Plaintiff)
I.V. Knight, Crown Solicitor (First Defendant) (submitting appearance filed 8 July 2013)
McLachlan Thorpe Partners (Second Defendant)
File Number(s):2013/179609

Judgment

  1. The principal issue raised by these proceedings is what approach should be adopted by the Racing Appeals Tribunal in dealing with an application for costs by a participant in the harness racing industry who succeeds in overturning an adverse disciplinary finding.

  1. For the reasons that follow, I consider that such a person has a reasonable expectation that they will receive an award of costs which cannot be defeated in the absence of grounds connected with the conduct of the proceedings which make it unjust or unreasonable that the award be made. Generally such an expectation will not be defeated by merely finding that the respondent acted reasonably in its defence and conduct of the appeal.

Background

  1. At the relevant times the plaintiff, Luke McCarthy, was a licensed harness racing driver and licensed harness racing trainer. On 9 December 2012 a horse which he trained was subject to a post-race drug test. The results of that test led to an enquiry conducted by Stewards appointed under the Australian Harness Racing Rules (the "Rules") into whether Mr McCarthy had contravened Rule 190(2) thereof. The Stewards found the contravention established. Mr McCarthy was disqualified.

  1. Mr McCarthy appealed to the first defendant, the Racing Appeals Tribunal, (the "Tribunal"). The second defendant to these proceedings, Harness Racing New South Wales ("HRNSW"), being a body corporate constituted under the Harness Racing Act 2009 (NSW), was the respondent to the appeal. On the day that Mr McCarthy's appeal was listed for hearing, HRNSW indicated it no longer contested the appeal. The Tribunal recorded that "the appeal was upheld and the finding of guilt made by the [S]tewards set aside".

  1. Mr McCarthy then applied to the Tribunal for an order that HRNSW pay his costs pursuant to reg 19(1) of the Racing Appeals Tribunal Regulation 2010 (NSW) (the "Regulations"). His application was dealt with by way of written submissions provided to the Tribunal. On 15 May 2013 the Tribunal refused the application (the "costs decision"). It published detailed reasons explaining its refusal (the "costs judgment").

  1. Mr McCarthy now seeks to quash the costs decision. There is no express right of appeal to this Court or anywhere else from Tribunal decisions. Nevertheless, Mr McCarthy seeks to invoke the Supreme Court's supervisory jurisdiction, part of which at least is constitutionally guaranteed (see Kirk v Industrial Court (NSW) [2010] HCA 1; 239 CLR 531) ("Kirk"). In any event its existence is confirmed by s 69 of the Supreme Court Act 1970 (NSW).

  1. Mr McCarthy contends that the Tribunal's costs decision was affected either by a jurisdictional error or by an error of law on the face of the record. For the purposes of this latter contention, the "record" is usually confined to any documentation which initiates the application, the pleadings (if any), and the orders made (Craig v State of South Australia [1995] HCA 58; 184 CLR 163 at 182) ("Craig"). However, in this State the definition of a record has been expanded to include the reasons of the inferior court or tribunal (s 69(4)) of the Supreme Court Act; see Kirk at [89]). Insofar as jurisdictional error is alleged, this Court can take account of any relevant material placed before it (Craig at 176).

  1. When the hearing commenced the parties not only sought to tender the costs judgment, but all the submissions and material that was placed before the Tribunal. In respect of all the material other than the costs judgment, I made an order under s 136 of the Evidence Act 1995 (NSW) to the effect that it could only be used in relation to so much of Mr McCarthy's case that alleged jurisdictional error.

  1. The Tribunal filed an appearance submitting to the orders of the Court save as to costs.

Legislative regime

The Tribunal

  1. The Tribunal was established by the Racing Appeals Tribunal Act 1983 (NSW) (the "Tribunal Act"). The source of the Tribunal's authority to hear Mr McCarthy's appeal was s 15B of the Tribunal Act which provides:

"15B Appeals to Tribunal relating to harness racing
(1) Any person who is aggrieved by any of the following decisions may, in accordance with the regulations, appeal against the decision to the Tribunal:
(a) a decision of a harness racing club (within the meaning of the Harness Racing Act 2009),
(b) a decision of a steward of HRNSW.
(2) Any of the following persons or bodies that are aggrieved by a decision of HRNSW may, in accordance with the regulations, appeal against the decision to the Tribunal:
(a) any person,
(b) a harness racing club (within the meaning of the Harness Racing Act 2009)."

  1. A similar jurisdiction to s 15B in relation to greyhound racing is conferred by s 15A. Section 15 of the Tribunal Act confers various rights of appeal in respect of decisions made under the Thoroughbred Racing Act 1996 (NSW).

  1. Section 16(1) of the Tribunal Act confirms that the nature of the appeal is a hearing de novo, in that it is to "be by way of a new hearing and fresh evidence". Section 16(2) provides that the proceedings "are to be held as in open court before the Tribunal" Section 17A confers on the Tribunal, in respect of an appeal under s 15A or 15B, power to dismiss the appeal, confirm or vary the decision appealed from, or otherwise make such other order in relation to disposal of the appeal as the Tribunal thinks fit. Section 17A(2) provides that the decision of the Tribunal "is final and is taken to be a decision of the person or body whose decision is the subject of the appeal."

  1. Section 18 of the Tribunal Act confers a power to make regulations to "make provision for or with respect to the Tribunal under this Act", including powers with respect to the procedures to be followed for suspension of any decision, and "the payment of fees and costs in respect of appeals under [the] Act".

  1. As noted, such regulations have been made. Regulation 9 purports to qualify the types of matters that can be the subject of an appeal under s 15A or s 15B. It provides:

"9 Decisions from which an appeal lies to Tribunal
(1) In the case of an appeal made under section 15A or 15B of the Act, an appeal may be made to the Tribunal only in respect of a decision:
(a) to disqualify or warn off a person, or
(b) to cancel the registration of, or to refuse to register, a person, or
(c) to cancel the registration of, or to refuse to register:
(i) a greyhound (including registration of a greyhound as a sire and registration of a litter of greyhounds), or
(ii) a harness racing horse, or
(d) to fine a person an amount of $200 or more, or
(e) to disqualify a greyhound, if the disqualification is made in conjunction with the imposition of a penalty on the appellant or any other person, or
(f) to disqualify any horse from participating in harness racing, if the disqualification is made in conjunction with the imposition of a penalty on the appellant or any other person, or
(g) to suspend any licence, right or privilege granted under the rules, or
(h) to reduce in grade a driver for a period of 4 weeks or more, or
(i) to place an endorsement on the registration certificate of a greyhound for marring or failing to pursue the lure, that gives rise to a suspension of the greyhound for a period of more than 4 weeks.
(2) Expressions used in this clause have the meanings given to them in the rules."

  1. No issue arose in these proceedings concerning the validity of this regulation to the extent it purported to restrict the type of decisions that may be appealed under s 15A or s 15B. I discuss the nature of some of these decisions below (at [21]ff).

  1. Regulation 10 specifies a procedure for the filing of a notice of appeal for cases that fall within reg 9. Amongst other matters, it specifies a role for the "Secretary" which, in the context of harness racing, is either the Chief Executive of HRNSW or an officer of HRNSW or a State government official (reg 3(1)). One function of the Secretary is to receive a notice of appeal and forward it to the Tribunal and, in the case of an appeal concerning harness racing, to give a copy of any notice to any owner of a horse whose placing may be affected by the appeal and any "harness racing club concerned" (reg 10(2)(c)).

  1. The balance of the Regulations concern all forms of appeal to the Tribunal, i.e. those concerning harness racing, greyhound racing and thoroughbred racing. Regulation 16(1) provides that the Tribunal is "not bound by the rules of, or practice as to, evidence but may inform itself of any matter in such manner as it thinks fit". Regulation 16(2) enables the Tribunal to require, if it decides, that a witness be examined on oath or affirmation, or give evidence in the form of a statutory declaration. Regulation 17 provides that the Tribunal "may hear an appeal in the absence of a party to the appeal" and enables the Tribunal to "grant leave for each party to be represented by a lawyer or agent at the hearing". Regulation 18 provides that the Tribunal may, subject to the Act and the regulations, "direct the manner in which any appeal before it is to be conducted".

  1. Regulations 15 and 19 deal with costs. They respectively provide:

"15. Withdrawal of Appeal
An appeal duly lodged may not be withdrawn except with the leave of the Tribunal. In granting such leave, the Tribunal may impose such conditions as to the payment of costs or otherwise as it thinks fit."
"19 Costs
(1) On determining an appeal, the Tribunal may make such orders as it thinks fit as to the payment of costs (including the payment of costs in respect of the hearing by the Appeal Panel, Racing NSW, GRNSW, HRNSW, a racing association, a greyhound racing club or a harness racing club of the decision appealed against).
(2) On service on a party to an appeal of an order for the payment of costs, the amount of costs specified in the order:
(a) is payable by the party to the person specified in the order as the person to whom the costs are to be paid, and
(b) may be recovered as a debt in a court of competent jurisdiction."

  1. One notable omission in this scheme is the absence of a provision specifying who the parties to an appeal are, even though a number of the provisions including regs 17 and 19 refer to a "party to an appeal". Clearly costs must be payable by someone and these provisions appear to contemplate that it is not just an applicant for review. Were it otherwise, it would be drafted differently (see for example reg 12 of the Harness Racing (Appeals) Regulation 1999). Regulation 12(1) refers to an "appellant" which is presumably the aggrieved person who lodges a notice of appeal. Otherwise there is no express provision for the joinder of any person to the appeal although that may be authorised by reg 18. In this case HRNSW appeared at the hearing of Mr McCarthy's appeal and was treated by all as the respondent. There was no suggestion that it was not capable of being "the party" referred to in reg 19(2)(a).

  1. Beyond this, it is clear that the structure of the Tribunal Act and the Regulations contemplates the existence of a contradictor. Neither the Tribunal Act nor the Regulations provide the Tribunal with the machinery to conduct its own investigations and inquiries. In circumstances where the Tribunal's review is by way of a "new hearing and fresh evidence" this means that, in the ordinary course, the Tribunal will exercise an adjudicative and not an inquisitorial function when determining appeals.

Reviewable Decisions

  1. Section 15B identifies three categories of decision makers whose decisions can be appealed, namely HRNSW, harness racing clubs and Stewards. Their status and aspects of their functions need to be explained.

  1. Section 9 of the Harness Racing Act 2009 vests in HRNSW the function of, inter alia, controlling supervising and regulating harness racing in New South Wales. It is also conferred with the function of registering harness racing clubs, harness racing horses, owners, trainers and drivers, bookmakers and "other persons associated with harness racing" (s 9(1)(b)) (as to the latter phrase: see Pedrana v Racing NSW [2014] NSWSC 462 at [41]ff per Rothman J). In respect of harness racing clubs it also has the function of allocating to harness racing clubs "the dates on which they may conduct harness racing meetings" (s 9(2)(e)). The power to register harness racing clubs is conferred on HRNSW by s 17. The power to suspend or cancel their registration is conferred by s 20. HRNSW is also given an express power to supervise the activities of harness racing clubs (s 10(2)(b)).

  1. Harness racing clubs are defined by s 3(1) of the Harness Racing Act 2009 to be "any body or other association of persons, whether incorporated or unincorporated and whether registered or not, promoting, conducting or controlling, or formed for promoting, conducting or controlling, a harness racing meeting or harness racing meetings".

  1. Section 22(1) of the Harness Racing Act empowers HRNSW to make rules "for or with respect to the control and regulation of harness racing". Section 22(2) expands upon the topics that may be covered by those rules. Under these provisions HRNSW made the Rules. It did so by adopting a standard set of rules promulgated by Harness Racing Australia Inc. Apparently the "controlling body" in each participating jurisdiction has adopted the Rules. It appears that there are also certain supplementary rules for each jurisdiction known as "Local Rules".

  1. Rules 1 to 13 concern harness racing clubs. These rules include various restrictions on their operations which are unnecessary to describe. Rule 9(1) enables a harness racing club to "exclude from its racecourse, premises or other place under its control, a person under disqualification or a person currently warned off or excluded from a racecourse". The balance of the rule subjects the exercise of this power to supervision by HRNSW.

  1. Rule 14 of the Rules enables the "controlling body" (ie HRNSW), to appoint "Stewards". By Rule 15 the Stewards are conferred with a significant array of powers which include the direction and control of race meetings, but which also include the investigation and resolution of disciplinary complaints. Thus Rule 15 provides, inter alia:

"15. (1) Stewards are empowered -
(a) to direct and control at any meeting or race the activities of officials, owners, qualifying/requalifying supervisors, trainers, drivers, bookmakers, clerks, persons attending horses and anyone else appointed, employed or engaged in or about the meeting or race;
(b) to entertain and determine all matters under question or in dispute at or arising out of a meeting or race, or concerning the meaning or application of these rules, or concerning any aspect of the harness racing industry;
(c) at any meeting or race to appoint or remove any person from or to any office, position, responsibility or task;
(d) to exclude or direct the removal of a person from a racecourse;
(e) to suspend or disqualify any person from participating in or being employed or engaged in or about the harness racing industry;
(f) to furnish information about any person excluded, directed or warned of any racecourse to such persons and in such form as they consider appropriate;
(g) to stop, restart, rerun, postpone or abandon any race;
(h) to declare any race void;
...
(m) to impose fines;
(n) to impose any other penalties provided for in these rules;
...
(r) to suspend or disqualify any driver;
...
(ab) to make declarations and orders with respect to betting;
...
(ad) to order payment by a person of costs or expenses incurred by the Stewards in the performance of their duties;
..."

  1. In this case the appeal to the Tribunal was from a decision of a Steward (or Stewards) exercising the power conferred by Rule 15(c) to disqualify Mr McCarthy (see s 15B(1)(b) of the Tribunal Act, reg 9(1)(a)).

  1. However, this was not a free standing power. Part 11 of the Rules deals with inquiries and investigations by Stewards. Rule 181 provides:

"Conduct and scope
181. The Stewards may, and when directed by the Controlling Body shall, conduct inquiries or investigations in such manner as they think fit into any occurrence or matter at or arising out of or connected with a meeting, race or event, or into any aspect of the harness racing industry, or into anything concerning the administration or enforcement of these rules."

  1. The Rules include a number of prescribed norms, a breach of which is described as an "offence". In this case Mr McCarthy was alleged to have breached Rule 190(2). Rule 190 provides:

"Presentation free of prohibited substances
190. (1) A horse shall be presented for a race free of prohibited substances.
(2) If a horse is presented for a race otherwise than in accordance with sub rule (1) the trainer of the horse is guilty of an offence.
(3) If a person is left in charge of a horse and the horse is presented for a race otherwise than in accordance with sub rule (1), the trainer of the horse and the person left in charge is each guilty of an offence.
(4) An offence under sub rule (2) or sub rule (3) is committed regardless of the circumstances in which the prohibited substance came to be present in or on the horse.
(5) A horse is presented for a race during the period commencing at 8.00 a.m. on the day of the race for which the horse is nominated and ending at the time it is removed from the racecourse after the running of that race.
(6) Where a trainer intends to leave another person in charge of a horse in the trainer's absence, then prior to doing so, the trainer must notify the Chairman of Stewards, and the notification must be in the manner, within the time, and containing the information determined by the Controlling Body or the Chairman of Stewards.
(7) A person can only be left in charge of a horse by a trainer with the approval of the Chairman of Stewards.
(8) A trainer who fails to comply with sub rule (6) or sub rule (7) is guilty of an offence."

  1. Rule 191 made provision for the issue of evidentiary certificates in relation to the presence of prohibited substances in the blood of horses which, depending on the circumstances, were either prima facie or conclusive evidence of the substance's presence.

  1. Rule 256 dealt with the penalties that may be imposed in respect of an offence under the Rules. It provided:

"PENALTIES
256. (1) One or more of the penalties set out in sub rule (2) may be imposed on a person, club or body guilty of an offence under these rules.
(2) (a) A fine within the limits fixed by legislation or by the Controlling Body,
(b) conditional or unconditional suspension for a period;
(c) disqualification, either for a period or permanently;
(d) warning off, either for a period or permanently;
(e) exclusion from a racecourse, either for a period or permanently;
(f) a bar, either for a period or permanently, from training or driving a horse on a racecourse, track or training ground;
(g) conditional or unconditional suspension of registration for a period or cancellation of registration;
(h) conditional or unconditional suspension of a licence for a period or cancellation of a licence;
(i) a severe reprimand;
(j) a reprimand or caution.
(3) Should a rule of its own terms impose a penalty in respect of an offence created by that rule then, subject to any contrary intention expressed or otherwise apparent in that rule, that penalty is the only one which can be imposed in respect of that offence.
(4) Penalties, whether under this or any other rule, attach from the time they are imposed, except that the Controlling Body or the Stewards may postpone such attachment.
(5) (a) Penalties other than a period of disqualification or a warning off under this or any other rule may be suspended for a period not exceeding 12 months upon such terms and conditions as the Controlling Body or Stewards see fit;
(b) if the offender does not breach any term or condition imposed during the period of suspension, the penalty shall be waived;
(c) if the offender breaches any term or condition imposed during the period of suspension then, unless the Controlling Body or Stewards otherwise order, the suspended penalty thereupon comes into force and penalties may also be imposed in respect of any offence constituted by the breach.
(6) Although an offence is found proven a conviction need not necessarily be entered or a penalty imposed.
(7) Before an offence is found proven, the following conditions shall be satisfied:
(a) the offender shall be afforded reasonable opportunity to cross examine witnesses, make submissions, present evidence to the Controlling Body or the Stewards as the case may be;
(b) those submissions or evidence shall be taken into account;
(c) evidence relied upon in establishing the offence shall be identified;
(d) in a matter before the Stewards, those Stewards who finally determine that an offence has been committed shall be present during the whole of the proceedings."

  1. Rules 256(1) and 256(2) do not specify which body or person can impose the sanctions listed in Rule 256(2), although the balance of the rule contemplates that it is either the Stewards or HRNSW. The authority to impose them must be found elsewhere in the Rules. In the case of the Stewards, that authority is conferred by Rule 14, which I have already described.

  1. The Court was also referred to Local Rule 256A which enables the Stewards to make an order that a person who is subject to a penalty for a breach or offence of the Rules pay the costs of HRNSW in connection with the investigation or inquiry.

  1. HRNSW accepted that Stewards are bound by the rules of procedural fairness citing Calvin v Carr [1979] 1 NSWLR 1 at 6. Calvin v Carr concerned the position of the Stewards when they only derived their authority from rules of racing that did not have statutory force. As they now have such force, the position is that much stronger. The requirements of procedural fairness appear to be at least partly codified in Rule 256(7).

  1. HRNSW nevertheless submitted that a Stewards' inquiry or investigation is an inquisitorial as opposed to adversarial proceeding. Its characterisation of the nature of a Stewards' inquiry is correct in that the Rules contemplate the Stewards both undertaking the investigation and imposing any sanction. There is no provision in the Rules for any party to "prosecute" a disciplinary breach other than the Stewards themselves.

  1. HRNSW further contended that the procedures of a Stewards' inquiry explained why the right of appeal from their decisions provided for in s 15B and s 16 of the Tribunal Act should be a "quick, low cost and informal method of appeal". I will return to address this contention, but as I have already noted that there is nothing to suggest that the Tribunal was meant to operate in an inquisitorial manner. Thus, if the appeal from the decision to disqualify Mr McCarthy had been heard by the Tribunal, it would have exercised a quasi-judicial function adjudicating between the case presented by Mr McCarthy and the relevant contradictor. In determining the appeal the Tribunal would have had to consider whether Mr McCarthy committed an offence under Rule 190(2) and, if so, the appropriate sanction to impose under Rule 256.

The Costs Judgment

  1. Mr McCarthy's primary contention to the Tribunal was that reg 19 embodied the so-called "usual rule", namely that costs "follow the event" in the absence of some disentitling conduct. As he succeeded in the appeal, he submitted that he should obtain a costs order. The Tribunal rejected Mr McCarthy's submission. It concluded:

"41 ... the Tribunal will not assess this application for costs on the basis that costs will follow the event unless the Tribunal is able to find disentitling conduct on behalf of the applicant.
42 The Tribunal set out in Roots, as set out above, the principles it considers to be appropriate. Having considered the submissions made in this case, the Tribunal is of the opinion that various other matters such as types of misconduct referred to in Oshlack are appropriately covered by the principles enunciated in Roots."

  1. The reference to "Roots" was to an earlier decision of the Tribunal given on 18 July 2012 (Licensee Roy Roots and Harness Racing New South Wales: Racing Appeals Tribunal (NSW), Mr D.B. Armati, 18 July 2012, unrep). The reference in the above passage to the "principles" that had been "set out above" was to the following passage in the costs judgment:

"25 ... no costs should be awarded unless in special circumstances, so that an appellant should regard this Tribunal as his or her own Tribunal, to be approached if the appellant has suffered any of the penalties outlined ... However, special circumstances will exist if there is a frivolous or vexatious appeal, or a party causes unreasonable delay or expense. In such a case this Tribunal will not hesitate to award costs in favour of the Committee as against the appellant."
"34 The test to be applied requires consideration, at least but not exhaustively, of the following principles:
...
(v) Any order for costs is to be compensatory and not punitive
(vi) Costs do not follow the event.
(vii) The manner in which an appeal is run is a factor that can be considered.
(viii) In appropriate cases it may be necessary to look for exceptional circumstances but this will not always be the case.
(ix) In appropriate cases it will be necessary to consider whether an appeal was frivolous or vexatious.
(x) In appropriate cases it will be necessary to consider whether there has been unreasonable delay in the conduct of the appeal.
(xi) In appropriate cases it will be necessary to consider whether a party has caused the other party any unreasonable cost by the manner in which the appeal has been conducted.
..."

  1. Having identified the principles that it would apply, the Tribunal then recited the history of Mr McCarthy's successful appeal as follows:

"44. A brief history is that the appellant presented a horse to race and it was tested and found to have the prohibited substance boldenone. On the same night, another horse was tested and it was positive for the same substance (the Lew case). These were the first two positive returns for this substance. An inquiry was commenced. The appellant vigorously defended the matter and had experts supporting him before the stewards. There was a very different reading in the findings between the A sample and the B sample. There has been very limited research into boldenone and its metabolites in horses. From the outset, the appellant argued microbial contamination and was supported by his experts. Harness Racing NSW had its own experts who did not accept that proposition and made findings supporting the processes and outcomes. There were a number of interlocutory applications where the appellant sought access to laboratory material, DNA testing, and arguments were advanced for re-testing. These approaches were not accepted by Harness Racing NSW and the Tribunal made various findings rejecting those applications for dna [sic] testing and laboratory materials. After various aborted hearings and compliance and non-compliance with timetables fixed by the Tribunal, the matter was fixed for hearing. The second testing laboratory in Hong Kong, of its own volition, at the costs of Harness Racing NSW, re-tested the B sample and found it had changed by its level increasing. This was not immediately conveyed to the appellant. On notification to the appellant, various offers were exchanged. There had been a pre-arranged pre-hearing conference of the various experts organised. Settlement was not reached. The expert panel convened and came to a conclusion which qualified the original findings. As a result, the Board of Harness Racing NSW did not oppose the Tribunal upholding the appeal." (emphasis added)

  1. Some aspects of this needs clarification. I have already outlined the operation of Rule 190. Mr McCarthy's case was that the variations in the readings referred to in the emphasised portions of the above were only consistent with there being some flaw in the sampling process. Rule 191(7) provided that certificates of the kind referred to in that rule did not have "evidentiary value" or "establish an offence, where it is proved that the certification procedure or any act or omission forming part of or relevant to the process resulting in the issue of a certificate, was materially flawed".

  1. Consistent with the approach the Tribunal stated it would adopt, the Tribunal then summarised those parts of the submissions which addressed the reasonableness of HRNSW's conduct in resisting the appeal. However, the Tribunal also referred to passages from the judgment of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 ("Lai Qin"), which had been cited by HRNSW. I will return to address the relevance of Lai Qin.

  1. Under the heading "Discussion", the Tribunal identified the issues that it considered it had to address in the following terms:

"76 The key parts of Roots that apply to this matter are that a discretion must be exercised having regard to the facts and circumstances relevant to this individual case. It is necessary to consider whether the applicant should be compensated for the costs he has incurred. The Tribunal must assess the way in which the appeal was run by the respondent, whether there are exceptional circumstances, whether the respondent's position was frivolous, whether the respondent has occasioned unreasonable delay, whether the respondent has caused the other party any unreasonable costs by the manner in which it conducted the appeal, that in assessing all of these matters the Tribunal is dealing in an industrial sporting body on matters of integrity." (emphasis added)

  1. After identifying the matters it would address, the Tribunal made the following findings and expressed the following conclusion:

"83. The Tribunal does not accept the applicant's belief that the appeal would succeed, that it must succeed, that it was a watertight case and that opposition was futile. The Tribunal does not accept that the applicant's obvious success was apparent at any time. The fact that the appellant, his advisors and experts were of such belief does not make the respondent's conduct or opinions unreasonable, improper, exceptional, frivolous or vexatious and does not establish that the respondent occasioned unreasonable cost or delay.
Conclusion
84. Accordingly, in the exercise of a judicial discretion, and based upon the facts and circumstances identified above, the Tribunal does not find that the applicant had demonstrated a case for him to be compensated for his costs. There are no factors in which the way in which the appeal has been run by the respondent that require such a compensation order to be made. The Tribunal does not find exceptional circumstances. The Tribunal does not find that the respondent has been vexatious. The Tribunal does not find that the respondent has occasioned to the application unreasonable delay. The Tribunal does not find that the respondent has occasioned for the applicant unreasonable costs by the manner in which was conducted by it. The Tribunal does not find any other facts or principles which require that the applicant be compensated for his costs." (emphasis added)

Ground 1 - Failure to apply the "usual rule" that costs follow the event

  1. Mr McCarthy's first ground alleges that the Tribunal erred in law (on the face of the record) or otherwise exceeded its jurisdiction in finding that "the usual rule that costs should follow the event unless there is disentitling conduct ... does not apply" to the Tribunal. This ground replicates the submission he made to the Tribunal, namely that the terms of reg 19 were such that, as he succeeded and, in the absence of disentitling conduct on his part, a costs order should follow. During the course of argument Senior Counsel for Mr McCarthy, Mr Dalton SC, put forward a variation on this ground. He also contended that, even if it was not accepted that the Tribunal should have applied a "rule" to the effect stated, it should have at least regarded that as the guiding principle and not simply focused on whether there was some unreasonable aspect of HRNSW's conduct which warranted a costs order being made against it.

  1. Counsel for HRNSW, Mr Dawson, contended that the Tribunal's construction of reg 19 was correct, and that even if it was not, any such error was immaterial to the outcome. This latter contention was to the effect that, even if the Tribunal should have applied a rule, or guiding principle, to the effect that costs follow the event, there was no "event" as the appeal was resolved by consent. Mr Dawson submitted the Tribunal's findings were consistent with a proper application of the principles stated by McHugh J in Lai Qin.

  1. I will address the construction of reg 19 first before addressing Mr Dawson's submission concerning materiality.

  1. In Latoudis v Casey [1990] HCA 59; 170 CLR 534 ("Latoudis"), the High Court considered the proper construction of a provision conferring a wide discretion upon a Magistrate to make an order for costs in favour of a defendant to criminal proceedings who successfully defended a summary charge. The majority (Mason CJ, Toohey and McHugh JJ) held that the Magistrate had erred in refusing to award costs to the defendant because the informant had acted reasonably in bringing the charges (at 544 per Mason CJ, at 564 per Toohey J, and at 570 per McHugh J).

  1. In Latoudis, McHugh J stated (at 568):

"In civil proceedings, the relevant statute or rule often provides that costs follow the event unless the Court thinks that some other order should be made. But even where the discretion is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the successful party except for a reason connected with the case." (emphasis added)

  1. The phrase "reasonable expectation" in this passage is of significance. Later in the judgment McHugh J stated that, in circumstances where there is no express rule to the effect, neither a successful party in civil proceedings or criminal proceedings has a "right to an order for costs" (at 569). Instead his Honour stated they had a "reasonable expectation" to that effect which should not be defeated "on grounds unconnected with the charge or the conduct of the litigation" (at 569). Further, his Honour found that the fact that the unsuccessful informant acted reasonably in bringing the proceedings, did so in the public interest or might be deterred from bringing charges if costs were awarded, does not defeat the expectation (at 569 to 570).

  1. Senior Counsel for Mr McCarthy, Mr Dalton SC, placed significant reliance on the Court of Appeal's judgment in Ohn v Walton (1995) 36 NSWLR 77 ("Ohn"). In Ohn the Medical Tribunal declined to award costs in favour of a respondent doctor who had successfully resisted disciplinary proceedings brought. The relevant regulatory regime conferred upon that tribunal a power to order, inter alia, the complainant or the medical practitioner the subject of the complaint "to pay such costs to such person as the Tribunal may determine". The medical practitioner appealed to the Court of Appeal against the refusal to award him costs. The appeal was restricted to a question of law (at 85). All the members of the Court of Appeal held that the Medical Tribunal had erred by failing to recognise that its discretion to award costs should be exercised in a manner consistent with the principles identified by the majority in Latoudis (at 79 per Gleeson CJ, 81 per Powell JA, and 85 per Cole JA).

  1. In Ohn, Gleeson CJ identified the imputed purpose of legislation which confers an unconfined power to award costs (at 79):

"The point of Latoudis v Casey is that the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made.
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.
The majority [in Latoudis] also held that these principles are equally applicable to a case where a complainant or informant is acting under a public duty to lay a complaint or information." (emphasis added)

  1. This statement as to the presumed legislative purpose in the enactment of provisions conferring an unconfined discretion to award costs reconciles the outcome of Latoudis and Ohn, namely the prescription of a guideline requiring significant and perhaps presumptive weight to be attached to the fact that one party was successful, with the general proposition that ordinarily questions of the weight to be attached to a factor relevant to the exercise of a discretion are matters for the primary judge or decision maker (see House v R [1936] HCA 40; 55 CLR 499 at 504 to 505; Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 at 41 per Mason J).

  1. However, while a power conferred to award costs cannot be exercised "arbitrarily, capriciously or so as to frustrate the legislative intent", the relevant discretion is nevertheless "unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be definitely extraneous to any objects the legislature could have had in view" (Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [22]) ("Oshlack").

  1. In Oshlack, Gaudron and Gummow JJ warned against an "arterial hardening" of provisions conferring a power to award costs by elevating rules of practice to rules of law which had the effect of rendering irrelevant to the exercise of the relevant discretion considerations such as the motivation for an unsuccessful party bringing litigation, the potential benefit other than to themselves personally from the potential success and the significance of the issues sought to be raised as factors relevant to the exercise of discretion concerning costs (at [20] and [48] to [49]). Thus their Honours denied that there was any "absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the [Land and Environment Court] Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party" (at [40]). The factors identified by Gummow and Gaudron JJ were said to be relevant in the context of environmental litigation brought by a private person apparently for the public benefit. No case since has suggested that this aspect of Oshlack is inconsistent with the analysis of McHugh J in Latoudis noted in [49] above.

  1. One particular feature of this case is that the Tribunal was exercising a review function, which that was not the case with the Medical Tribunal in Ohn, nor the court the subject of the appeal in Latoudis. The exercise of an unconfined power to award costs in such a context was considered in Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council [2007] NSWCA 300; 71 NSWLR 230 ("Thaina Town"). In Thaina Town, Spigelman CJ (with whom Mason P and Beazley, Giles and Ipp JJA agreed) found that the Land and Environment Court had erred in law in adopting a "presumptive rule" in certain merits review proceedings of not awarding costs. The rule was found to be an "impermissible fetter" on the discretion conferred by s 69 of the Land and Environment Court Act 1979 (NSW) ("L&E Court Act") which conferred an unconfined discretion to award costs (at [68]).

  1. In Thaina Town the applicant for costs had been issued with a prevention notice under s 96 of the Protection of the Environment Operations Act 1997 (NSW) (the "POEO Act"). The applicant successfully appealed the issue of the notice to the Land and Environment Court. The proceedings were so called "Class 1" proceedings (see s 17 of the L&E Court Act) in respect of which the Court exercised a merits review function (s 39 of the L&E Court Act). In describing the inter-relationship between the nature of the review and the exercise of the power to award costs, Spigelman CJ stated as follows:

"73 In any event, and alternatively, identifying the relevant principle, as his Honour did, in terms of 'merits review proceedings' or 'Class 1 proceedings' is too broad. Not all 'Class 1 proceedings' are equivalent. An appeal with respect to a refusal of a development application is not capable of being equated to an appeal from a decision to issue a prevention notice. Another way of expressing this conclusion is that the fact that the proceedings involved a citizen resisting the imposition of a liability, to use the formulation of Sugerman J in Thorpes Ltd supra, was a relevant consideration which his Honour failed to take into account.
74 ...
75 I accept that the character of litigation is a relevant question in the exercise of the costs discretion. However, it is not appropriate to identify that character in such general terminology as 'merits review' or 'Class 1, 2 and 3' of the Court's jurisdiction. The very breadth of the matters encompassed by so general and wide ranging a concept leads almost inevitably to a fetter on the discretion because relevant differences in the kinds of matters so classified are not taken into account.
76 Relevantly for present purposes, in my opinion, there is a significant distinction between merits review of a decision which seeks a consent or a licence in the exercise of an administrative discretion on the one hand, and merits review of a decision to impose a liability on a person by requiring conduct to occur and expense incurred under the threat of criminal sanctions. The same approach is not appropriate in both kinds of cases.
77 Furthermore, as I have indicated above there is an important statutory difference between an appeal under Pt 9.2 of the Protection of the Environment Operations Act [("POEO Act")] and other appeals in Class 1. The primary decision-maker is said to be bound by the Court's decision, as distinct from the Court exercising the powers and performing the functions of the primary decision-maker.
78 The actual order made by the Commissioner was to revoke the Prevention Notice. This order is sufficient to prevent the enforcement provisions of the [POEO Act], ss97, 98 and 100, from having effect. It is not clear what work is done by s292(2) when it provides that the decision of the Court is 'final and binding' on the Council. Presumably, it would prevent the issue of a further notice in materially the same terms.
79 However, unlike many other Class 1 proceedings it cannot be said that the Court simply takes the place of the primary decision-maker in an appeal under Pt 9.2 of the [POEO Act]. In my opinion, the usual position on a merits review that an appeal tribunal stands in the shoes of the primary decision-maker is a significant element in the practice of such tribunals not to exercise such power, if any, to award costs as are conferred upon them. Administrative decision-makers do not award costs. Where a judicial or quasi-judicial function is expressly placed in the position of such a decision-maker then it is more appropriate that it adopt the same general approach. Part 9.2 of the [POEO Act] is different in this respect."

  1. In this passage Spigelman CJ identified two aspects of the statutory scheme of merits review of the decision in that case that distinguished it from other types of merit review. The first was that noted in [76], namely that the proceedings in that case did not involve the review of a decision granting or refusing a licence or permit, but instead was a review of a decision to impose a liability upon a person.

  1. The second was that the legislation under which the primary decision was made, namely s 292(2) of the POEO Act, did not have the effect that the Land and Environment Court stood "in the shoes" of the primary decision maker. Instead the legislation provided that the decision of that Court was "final and binding" on the appellant and the person or body whose decision was the subject of the appeal. However s 39(5) of the L&E Court Act provided that the decision of the Court was the "final decision of the person or body whose decision is the subject of the appeal and shall be given effect to accordingly". Earlier in his Honour's judgment, Spigelman CJ noted that (Thaina Town at [15]):

"There appears to me to be a tension between s292(2) [of the POEO Act] and s39(5) of the [L&E Court Act]. It is, at the least, unnecessary to provide both that the Court's decision is 'binding' on the primary decision-maker and that the Court's decision is 'deemed ... to be the final decision' of the primary decision-maker. By way of comparison, there is no such provision with respect to appeals relating to development applications under s97 and s98 of the [EPA Act], in which case the Court does stand in the shoes of the decision-maker."

  1. As previously noted, s 17A(2) of the Tribunal Act provides that the decision of the Tribunal "is final and is taken to be a decision of the person or body whose decision is the subject of the appeal". This provision appears to contain the same tension that concerned Spigelman CJ in Thaina Town in that it both substitutes the decisions of the Tribunal for that of the body appealed from, and also provides that it is "final" (and not just the final decision of the body appealed from). For my part, I confess to having difficulty understanding how these legislative nuances of a merits review scheme are relevant to the exercise of a reviewing court or tribunal's power to award costs. However, accepting their significance, the drafting of s 17A(2) is such that I regard this as a neutral factor.

  1. However the first matter noted above (at [57]) is of particular significance to Mr McCarthy's case. I have sketched the type of decisions from which the Tribunal exercises its appellate or review function at [21]ff above. The Tribunal's function in this case has strong similarities to the function exercised by the Medical Tribunal in Ohn. The Tribunal was exercising a quasi-judicial function of applying an established rule of conduct to the facts as found and, if appropriate, imposing a sanction as a consequence. Mr McCarthy's position fell within the description given by Spigelman CJ in Thaina Town of a citizen "resisting the imposition of a liability" (Thaina Town at [73]). It can be contrasted with an application for "merits review of a decision which seeks a consent or a licence" (Thaina Town at [76]).

  1. In the end result, none of the decisions since Ohn have undermined the continuing applicability of Gleeson CJ's statement as to the presumed purpose of the conferral of an unconfined power to award costs (see [51]). However, Oshlack confirmed that such a power does not establish a "rule" that costs follow the event unless there is disentitling conduct. Instead the power retains its discretionary nature and the factors affecting the exercise of the discretion are only limited by the "subject matter and the scope and purpose" of the legislation. The analysis of the legislative structure governing appeals in different types of proceedings within class 1 of the L&E Act undertaken by Spigelman CJ in Thaina Town is an example of how the "subject matter and the scope and purpose" of the legislation informs the approach to be undertaken to the exercise of the power to award costs.

  1. This analysis leads to the conclusion that, in the case of an appeal from a disqualification imposed by the Stewards as a consequence of finding of a breach of the Rules, the power conferred by reg 19 should be exercised on the basis 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" (Ohn at 79) (see [51]). In such cases a successful party does not have an entitlement or right to a costs order, but they do have a reasonable expectation that they will not be deprived of their costs without proper cause (Latoudis at 568 per McHugh J). Generally the reasonableness of the other party in bringing, defending or conducting the proceedings will not of itself suffice to defeat that expectation (Latoudis id; Ohn).

  1. In rejecting Mr McCarthy's submission that ordinarily costs should follow the event, the Tribunal referred to the inquisitorial nature of a Stewards' inquiry and speculated that their procedures "are probably unique in disciplinary bodies". It is not necessary to review the universe of disciplinary regimes to determine whether the Tribunal's suspicions were correct. These proceedings do not concern the costs of Stewards' inquiries but the costs of proceedings before the Tribunal. The Tribunal's role is primarily adjudicative. There is nothing particularly unique about its function. It undertakes a similar role to that undertaken by the Medical Tribunal in Ohn.

  1. Another concern expressed by the Tribunal in relation to the awarding of costs by reference to the outcome of an appeal was the potential effect of such an approach on unsuccessful appellants in circumstances where they were seeking to appeal against penalties that could affect the livelihood of participants in the harness racing industry including the "livelihood of people in many cases with very little means". The Tribunal expanded upon this concern stating:

"There is a further and telling factor, and that is the impact upon industry participants if the rule was to be applied against them. That is, the disincentive to appeal which would arise for many licensed persons if they faced the prospect that they would nearly always have to pay the costs of the regulator if their appeal was lost and the regulator was otherwise not disentitled by conduct to its costs. It could not be the intention of Parliament, in putting in place the present regime for this industry sporting body, that that could be a consequence without consideration of other factors such as those set out in Roots."

  1. This is an understandable concern, but the policy issue it raises are addressed by reg 19 and the statutory regime that it forms part of. In particular two points should be noted. First, the passage from the judgment of Gleeson CJ in Ohn set out above (at [50]) deals with the presumed legislative or executive intention (or understanding) in enacting a provision that confers a wide discretion to award costs. Second, the above passage from the Tribunal's reasons fails to distinguish between the type of decisions that can be reviewed by the Tribunal. As previously explained, in large part reg 9 confines the Tribunal to reviewing decisions of a disciplinary nature in which case Ohn is particularly apposite. However some of the decisions that can be reviewed are not of that character, such as decisions to refuse registration. In those cases the observations of Spigelman CJ in Thaina Town at [76] warrant the adoption of a different approach.

  1. I have set out above at [37] to [38] the critical findings of the Tribunal as to the approach it stated it would adopt. For the reasons stated, the Tribunal was correct to find at [42] of its reasons that it would not determine the costs application "on the basis that costs will follow the event unless the Tribunal is able to find disentitling conduct on behalf of the applicant" (see [37] above). None of the judgments in Ohn identified the appropriate principle in the form of a strict rule. In any event Oshlack confirms that there is no such rule.

  1. However the Tribunal erred in stating that the appropriate principles to be applied were those that it identified from its own decision in Roots set out above at [38]. Those principles and the manner of their application by the Tribunal in this case reveal that the Tribunal applied reg 19 by adopting a presumptive rule that each party would pay their own costs unless there was something in the conduct of the party against whom a costs order was sought, ie HRNSW, that warranted a departure from that approach.

  1. While proposition (v) stated by the Tribunal (see [38]) referred correctly to costs being "compensatory and not punitive", the balance of the principles and their manner of application reveal that the Tribunal failed to appreciate the significance of that statement. Instead of addressing whether Mr McCarthy should be compensated in consequence of his success on the appeal, the Tribunal instead applied principles (ix) to (xi) and exclusively focussed on whether some aspect of HRNSW's conduct of the appeal was unreasonable such that a costs order should be made against it (see [42] to [43] above). Consistent with the conclusion in [62], the correct position was that Mr McCarthy had a reasonable expectation that he would recover costs and that expectation was not properly defeated by only finding that the HRNSW had not acted unreasonably in its defence and conduct of the appeal.

  1. It is unnecessary to determine whether the Tribunal's misconstruction and misapplication of reg 19 was a jurisdictional error. At the very least there was an error of law on the face of the costs judgment.

  1. Accordingly, subject to considering Mr Dawson's submissions as to materiality, I would uphold ground 1 of the summons.

Materiality

  1. As noted, Mr Dawson submitted that any error on the part of the Tribunal in construing reg 19 was irrelevant. He contended that, as there was no determination of the appeal on the merits, any rule predicated on such a determination had no application. Instead he contended that the relevant principle(s) guiding the Tribunal's determination was the following passage from the judgment of McHugh J in Lai Qin (at 624 to 625):

"In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation.
...
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. ... But such cases are likely to be rare.
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 cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases."

  1. Mr Dawson also referred to the statement by Preston CJ of LEC in Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107 ("Ralph Lauren") (with whom Beazley P and Ward JA agreed) at [33]:

"If there is no unreasonableness in the conduct of the defendant then, notwithstanding that the discontinuing plaintiff might have achieved some practical success by settlement or extra curial means, the proper exercise of the costs discretion will usually be to make no order as to costs."

  1. As is already apparent, the Tribunal made extensive findings concerning the reasonableness of HRNSW's conduct in defending the appeal. Thus Mr Dawson submitted that, even if the Tribunal did not intend it to be so, its findings were in conformity with these principles and any error in the construction of reg 19 was immaterial.

  1. I do not accept this submission. Although it referred to them, clearly the Tribunal was not purporting to apply the principles stated in Lai Qin. Its findings concerning HRNSW's conduct were directed towards the test it posed for itself based on its own decision in Roots.

  1. Further, the submission erroneously asserts that there was no "event" which could found the exercise of a power to award costs which was governed or at least informed by that factor. In Lai Qin the party seeking costs had discontinued after the respondent Minister had advised her that he proposed to issue her visa by the exercise of a different power to that which was the subject of challenge in the proceedings (at 623). Similarly the quote from Ralph Lauren noted above refers to a "discontinuing plaintiff" seeking costs. Thus, in both cases the party seeking costs had discontinued.

  1. However, in this case the "plaintiff", Mr McCarthy, obtained orders representing success in the proceedings. In jurisdictions where costs usually follow the event, the guiding principle in such cases was stated by Burchett J in One.Tel Ltd v Commissioner of Taxation [2000] FCA 270; 101 FCR 548 at [6]:

"In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs." (emphasis added)

  1. Subsequently in One.Tel at [7] Burchett J applied this approach:

"By contrast with the decisions I have been discussing [which included Lai Qin], the present matter involves a clear winner. The applicants, by their proceeding, sought to challenge the validity of certain notices, and to have them set aside. The respondent, after initially defending those notices, encountered at least an evidentiary difficulty, and acknowledged that they were to be set aside. That means that the applicants have succeeded ..."

  1. These observations are also applicable to this case. To employ the words of Burchett J in One.Tel at [6], the orders made by the Tribunal reveal that Mr McCarthy was the "successful party".

  1. It follows that the findings of the Tribunal did not address the application of the principles that apply in costs jurisdictions where costs follow the event as contended by Mr Dawson. It further follows from that conclusion and the finding at [68] that I uphold ground 1 of the summons.

  1. I will grant relief setting aside the Tribunal's decision and ordering the Tribunal to reconsider Mr McCarthy's application for costs according to law. It is, however, necessary to address the remaining two grounds that were argued on behalf of Mr McCarthy.

Ground 2: Procedural Fairness

  1. Mr McCarthy's second ground was that the Tribunal denied him procedural fairness. In the written submissions lodged on his behalf it was contended that the Tribunal denied him a "contested hearing". This contention appears untenable in circumstances where his appeal was allowed. Otherwise the Tribunal afforded him a hearing on the question of costs, although the hearing was conducted in writing.

  1. In oral argument Mr Dalton SC refined this ground. He made it clear that this ground only arose in the alternative to ground one, in that it assumed that the Tribunal applied the correct test in treating the reasonableness of HRNSW's conduct in defending the appeal as determinative of whether it should pay Mr McCarthy's costs. On that hypothesis, Mr Dalton SC argued that the Tribunal was obliged to afford his client a limited oral hearing to test the assertion made by HRNSW in its submissions that it, and the experts retained by it, acted reasonably in resisting the appeal until the time of the joint conference referred to in the extract from the Tribunal's decision set out above at [39].

  1. I have already described the legislative regime governing the Tribunal above (at [10] to [36]). Nothing in those provisions confers any entitlement on a party such as Mr McCarthy to have a hearing in the form contended for by Mr Dalton SC. The passage from the judgment of McHugh J in Lai Qin that I have noted above warns against conducting a hearing of the proceedings that never ran in order to determine costs. His Honour's comments are of general application to all costs regimes. An acceptance of Mr Dalton SC's contention would have involved the Tribunal acting inconsistently with them.

  1. In any event, when requested to do so, Mr Dalton SC was unable to point to any request that was made by his client to the Tribunal to convene a hearing of the kind he submits his client was entitled to. Instead all that was stated on behalf of his client to the Tribunal was that Mr McCarthy's experts would be made available to the Tribunal for HRNSW to cross examine them if it so wished. No such request was forthcoming.

  1. In these circumstances there was no breach of procedural fairness on the part of the Tribunal. I reject ground 2.

Ground 3: Unreasonableness

  1. Mr McCarthy's third ground was that the Tribunal's decision was unreasonable. In oral argument Mr Dalton SC explained that this ground also arose as an alternative to the first ground. In particular he contended that, even if the Tribunal's approach to the exercise of the power conferred by reg 19 was correct, its conclusion to the effect that the HRNSW's resistance of the appeal until the date it conceded was not unreasonable was itself unreasonable.

  1. As formulated in the written submissions, this ground invited the Court in a general way to reconsider the submissions that were made on behalf of Mr McCarthy to the Tribunal and compare them with the Tribunal's assessment. Such an invitation should never be accepted by a Court undertaking judicial review. It amounts to a request to engage in a merits review. Critically it elides the distinction between any findings of fact that may have been made by a decision maker and the next step of considering that decision maker's exercise of the relevant power by reference to the facts as found (and those not found).

  1. During oral argument this ground was refined. The Court was taken to the following note of the conference of experts held just prior to when HRNSW conceded the appeal:

"1. The re-testing of both the A and B samples has demonstrated that boldenone and/or its metabolites has been generated ex vivo within the A and B urine samples (Wan 22.10.12 para 1(h)). The most likely explanation is enzymatic activity by microbial contamination.
2. It is implausible that such an enzyme associated with an unknown microorganism could have passed through the horses system into the urine (Trout 9.11.12 paras 5(a)-(b); Snow 9.11.12 para 5(b)).
3. The enzyme associated with an unknown microorganism has most likely been introduced into the sample through the collection process (Trout 9.11.12 - the second last para also numbered (5)). Testing the control solution might shed some light on the phenomenon using Dr Wan's experimental conditions.
4. The original readings of boldenone from both samples can in no way be indicative of the boldenone level in urine sample number N110701 at the time of collection after the race at Newcastle on 9.12.11.
5. The condition of both samples has been compromised by this potential microbiological contamination (Trout 9.11.12 last two paragraphs).
6. The particular combination of collection, transport and storage could have allowed the ex vivo production of boldenone in both samples.
7. The presence of very low levels of epiboldenone in sample N110701 cannot be taken as evidence of boldenone administration (Wan 22.10.12 para 8(a)).

  1. I will pass over the evidentiary status of this document for the present. Mr Dalton SC submitted that, based upon this document, the Tribunal had to conclude that HRNSW's defence of the appeal was always bound to be unsuccessful.

  1. After the hearing Mr Dalton SC sought leave to file a supplementary submission on the topic, as did Mr Dawson in reply. I record that I granted such leave. Mr Dalton SC's submission contended:

"3. It is submitted contrary to the findings of the Tribunal herein (particularly paras [78] - [83]), given the anomalies in the readings, the coincidence evidence and the opinions of the Plaintiff's experts, and notwithstanding the Defendant's experts, the evidence demonstrated by the application of circumstantial reasoning, that the only reasonable hypothesis open, and certainly on the balance of probabilities that there was a material flaw in the sampling process.
4. This was put beyond any reasonable doubt by virtue of the Experts Agreed Responses dated 12.11.112 (copy annexed) and in particular at para 3: 'The enzyme associated with an unknown microorganism has most likely been introduced into the sample through the collection process (Trout 9.11.12 - the second last paragraph also numbered (50).'
5. This further demonstrates the error at Judgment para [83]." (emphasis in original)

  1. Paragraph 83 of the costs judgment which is attacked by this submission is set out above at [43]. The first two sentences of that paragraph record the Tribunal not being persuaded of two factual contentions put on behalf of Mr McCarthy. Its approach to those two matters was crucial to it not being persuaded that HRNSW had acted unreasonably in its defence of the appeal.

  1. These refinements to ground 3 focus attention upon the scope of review that is sought to be undertaken. The written submissions in support of this ground referred the Court to a passage from the judgment of Basten JA in Chahal v Director of Public Prosecutions [2008] NSWCA 152; 185 A Crim R 580 "at [61]" but which I presume was meant to be the following passage (at [60]):

"It follows from the language of s 3(1) that the precondition does not depend upon the establishment of objective facts, but upon the establishment of an opinion of the relevant judicial officer. The formulation of such an opinion on the part of administrative bodies is not unreviewable, but may depend upon demonstration of a legally erroneous approach to the formation of the opinion, such as that the decision-maker could not reasonably have formed the opinion, has acted capriciously, arbitrarily, or without reference to the statutory criteria: see R v Connell; Ex parte The Hetton Bellbird Collieries Ltd [1944] HCA 42; 69 CLR 407 at 430-432 (Latham CJ); Buck v Bavone [1976] HCA 24; 135 CLR 110 at 118 (Gibbs J) and Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; 197 CLR 611 at [113]-[139] (Gummow J) [("Eshetu")]. No lesser test can apply to the formation of an opinion by a judge of a court of record, such as the District Court: District Court Act 1973 (NSW), s 8."

  1. The reference in this passage to "s 3(1)" was to s 3(1) of the Costs in Criminal Cases Act 1967 (NSW) which referred to the grant of a certificate specifying the opinion of the Court, Judge, Justice or Justices in respect of certain matters. Thus, in the above passage, Basten JA was not describing the ground of judicial review known as Wednesbury unreasonableness (Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 229 to 231 ). Wednesbury unreasonableness concerns the abuse of discretionary powers (Eshetu at [124] per Gummow J; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; 198 ALR 59 at [73] per McHugh and Gummow JJ) ("S20").

  1. Instead, in Chahal, Basten JA was describing an analogous ground of review which is available in circumstances where the power of a court or decision maker only arises in the event they form a particular opinion or reach a certain state of satisfaction. As the existence of a reasonably formed opinion or state of satisfaction is considered a "jurisdictional fact", it has been found that in such cases there is scope for reviewing the facts found or not found in forming that opinion on a wider basis than merely inquiring whether there was some evidence to support them (Eshetu at [138]ff). Instead it has been held that such an opinion or state of satisfaction can be reviewed, inter alia, where it is "based on findings or inferences of fact which were not supported by some probative material or logical grounds" (Eshetu at [145] per Gummow J; S20 at [34] and [37] per McHugh and Gummow JJ; Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; 207 ALR 12; 78 ALJR 992 at [38] per Gummow and Hayne JJ).

  1. However this form of review has no relevance to the exercise of the power to award costs conferred by reg 19. The exercise of that power is not predicated upon the Tribunal forming any particular opinion or reaching any state of satisfaction. Thus the only relevant form of complaint that can be made concerning its exercise is Wednesbury unreasonableness. A complaint of that kind does not enable the reviewing court to reconsider the facts found by the decision maker upon which the discretion was exercised.

  1. If this Court was not constrained to only considering whether there was a jurisdictional error or error of law on the face of the record but was instead simply considering whether the Tribunal erred in law, an attack on a finding of a non-jurisdictional fact could be mounted (and only be mounted) by demonstrating that there was no evidence to support it (Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321 at 355-356 per Mason CJ; Eshetu at [138] per Gummow J; Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; 199 CLR 135 at [59] per Gaudron J). However, this Court is so constrained. As none of the facts challenged under this ground has a jurisdictional quality, no challenge can be made to them by conducting an inquiry that involves travelling beyond the "record". Thus the attempt to deploy material beyond the costs judgment to attack the facts found by the Tribunal falls foul of the ruling noted in [8]. The challenge does not raise a complaint of jurisdictional error.

  1. Instead Mr McCarthy is restricted to challenging the discretion on a true Wednesbury basis. He must accept the facts as found by the Tribunal. On the basis of those facts, especially those noted in [83] and [84] of the costs judgment, the Tribunal's conclusion was certainly not unreasonable. That said, the exercise of the Tribunal's discretion miscarried for another reason, namely that identified with ground 1.

  1. I reject ground 3.

Relief

  1. It follows from the conclusion in relation to ground 1 that Mr McCarthy is entitled to succeed. In his summons he sought a declaration that the Tribunal's costs decision was "void", as well as relief in the nature of certiorari and mandamus. Arguably I should not make such a declaration without having further determined whether the Tribunal's error was jurisdictional and, in any event, it is doubtful whether "void" is the appropriate description (Minister for Immigration and Multi-cultural Affairs v Bhardwaj [2002] HCA 11; 209 CLR 597 at [46] per Gaudron and Gummow JJ and at [144] to [145] per Hayne J).

  1. However, there is no utility in considering these issues when it is clear that Mr McCarthy is entitled to the balance of the relief he seeks. I will also order HRNSW to pay the plaintiff's costs of these proceedings. If either party wishes to apply for a different order they should do so within the time provided for in Rule 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW).

  1. Accordingly the Court orders that:

(1)   The decision of the Racing Appeals Tribunal dated 15 May 2013 refusing the Plaintiff's application for costs be set aside.

(2)   The Racing Appeals Tribunal determine the Plaintiff's application for costs according to law.

(3)   The Second Defendant pay the Plaintiff's costs of the proceedings.

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Decision last updated: 18 June 2014

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4

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Statutory Material Cited

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Kirk v Industrial Court of New South Wales [2010] HCA 1
Craig v South Australia [1995] HCA 58
Dr Ross Gregory Pedrana v Racing NSW [2014] NSWSC 462