O'Sullivan v NSW Medical Board (No 2)

[2010] NSWADT 188

CITATION:	O’Sullivan v NSW Medical Board (No 2) [2010] NSWADT 188
DIVISION:	Equal Opportunity Division
PARTIES:	APPLICANT Brendan Thomas O’Sullivan RESPONDENT NSW Medical Board
FILE NUMBER:	091055
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	8 July 2010
DATE OF DECISION:	28 July 2010
BEFORE:	Chesterman M - Deputy President
CATCHWORDS:	Costs – allegation of unlawful discrimination –summary dismissal of complaint
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Anti-Discrimination Act 1977 Medical Practice Act 1992
CASES CITED:	AT v Commissioner of Police [2010] NSWCA 131 Building Professionals Board v Hans (GD) [2008] NSWADTAP 13 Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Dowsett v Fitness First Australia Pty Ltd [2008] NSWADT 226 Lee v Mavaddat [2005] WASC 68 O’Sullivan v NSW Medical Board [2010] NSWADT 75 Peng v Chief Commissioner of State Revenue [2009] NSWADT 295 Rucom Pty Ltd & Anor v Multiplex & Ors [2010] NSWADT 1 Salon Today Pty Ltd v M M I R Pty Ltd [2009] NSWADT 71 Tu v University of Sydney (No 2) [2002] NSWADT 22 Yates v Bola [2000] FCA 1895
REPRESENTATION:	APPLICANT M Lynch, barrister RESPONDENT J Gormly, barrister
ORDERS:	The Applicant is to pay the Respondent’s costs of and incidental to these proceedings on a party-party basis, as agreed or assessed.

REASONS FOR DECISION

Introduction

1 This decision relates to an application by the Respondent, the NSW Medical Board (‘the Medical Board’), for an order that the Applicant, Dr Brendan O’Sullivan, pay its costs of and incidental to these proceedings on an indemnity basis or, in the alternative, on a party-party basis.

2 Dr O’Sullivan, who is a medical practitioner, sought remedies under the Anti-Discrimination Act 1977 (‘the AD Act’) for harm caused to him by the allegedly unlawful conduct of one or more officers, servants or agents of the Medical Board. He claimed that the Medical Board was vicariously liable for this conduct.

3 On 18 November 2008, he lodged a complaint relating to these matters with the Anti-Discrimination Board (‘the ADB’). By a letter dated 10 June 2009, following investigation of the complaint by the ADB and an unsuccessful attempt to resolve it by conciliation, the President of the ADB (‘the President’) referred it to the Tribunal. The accompanying Report by the President included the ADB’s summary of the issues raised by the complaint and copies of its correspondence with Dr O’Sullivan (including his initial letter of complaint) and with the Medical Board.

The summary dismissal of Dr O’Sullivan’s complaint

4 Following the referral of Dr O’Sullivan’s complaint to the Tribunal, various case conferences took place, at which a number of directions were given. In addition, Dr O’Sullivan filed and served material of significant length. Relevant details of these matters are set out below.

5 The complaint focused on two events in 2008, involving both the Medical Board and the Health Care Complaints Commission (‘the HCCC’).

6 The first of these events was a decision by Ms Karen Mobbs, the Director of Proceedings within the HCCC, that two complaints by former patients against Dr O’Sullivan, which the Medical Board had previously remitted for determination to a Professional Conduct Committee of the Board, should instead be prosecuted in the Medical Tribunal. This decision was taken following consultation with the Medical Board.

7 The second event was a decision by the Medical Board, based initially on section 54 of the Medical Practice Act 1992 but subsequently claimed to have been authorised by section 78A, to require that Dr O’Sullivan, who previously had suffered from depression, should undergo a psychiatric assessment. The ground on which the Board relied in making this decision was a concern, prompted by certain behaviour of Dr O’Sullivan, that he might suffer from a disability that brought the safety of his patients into jeopardy. In a letter written to the Medical Board after this decision had been taken, the HCCC recommended that this course of action should be adopted.

8 As ultimately formulated on Dr O’Sullivan’s behalf, his claims were as follows: (a) that the Medical Board, through its involvement in these two decisions, ‘victimised’ him, within the meaning of section 50 of the AD Act, by way of retaliation for his having been involved during 2007 in the making of two complaints against the HCCC to the ADB; and (b) that the Board, in making the second decision, unlawfully discriminated against him on the ground of disability, within the meaning of sections 49B(1) and 49M(1) of this Act.

9 On 12 February 2010, the Medical Board applied for an order under section 102 of the AD Act striking out the whole of Dr O’Sullivan’s complaint.

10 Section 102 of the AD Act states that the Tribunal, at any stage in proceedings relating to a complaint, may dismiss the whole or any part of the complaint on a ground on which the President may decline the whole or any part of a complaint under section 92(1)(a)(i) or (ii) or (b). So far as relevant, the grounds set out in these provisions within section 92 are as follows:-

(a) the President is satisfied that:


(i) the complaint, or part of the complaint, is frivolous, vexatious, misconceived or lacking in substance, or

(ii) the conduct alleged, or part of the conduct alleged, if proven, would not disclose the contravention of a provision of this Act or the regulations, or…

(b) the President is satisfied that for any other reason no further action should be taken in respect of the complaint, or part of the complaint…

11 It is established by a long line of decisions of the Appeal Panel and the Equal Opportunity Division of this Tribunal that the power to dismiss a complaint summarily under section 102 should be exercised ‘with exceptional caution and only if the circumstances clearly warrant such action’ (see e.g. Johnson v Free Spirit Management Pty Ltd [2010] NSWADT 31; Sullivan v State of NSW (NSW Police Force) [2009] NSWADT 2 at [15] and the cases cited in that paragraph). It is established also that the need for caution is ‘even more apparent’ when, as in the present case, an application for dismissal has been made before the complainant’s evidence has been adduced at the substantive hearing (see e.g. Commissioner of Police, New South Wales Police Service v Orr (EOD) [2001] NSWADTAP 16 at [34]). In such a case, the Tribunal must assume that the complainant’s case can be established by evidence – i.e., his or her allegations must be taken ‘at their highest’ (see e.g. Razaghi v Director-General, NSW Department of Health & Anor [2001] NSWADT 4 at [10]).

12 The Medical Board’s application under section 102 was heard on 22 February 2010. As it required a decision as to whether Dr O’Sullivan’s complaint should be the subject of an order for summary dismissal, it involved the exercise of an ‘interlocutory function’ as defined in section 24A(1)(h) of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’). Pursuant to this provision, the Tribunal was constituted, and remains constituted, by myself sitting alone.

13 At the commencement of this hearing, Mr Lynch, counsel for the Medical Board, identified the grounds of the Board’s application as being that Dr O’Sullivan’s claims (a) were misconceived; (b) were lacking in substance; (c) did not disclose any possible contravention of the AD Act; and/or (d) were such that no further action should be taken in respect of the complaint. He put forward submissions in support of these grounds.

14 At this hearing, Mr Eaves, solicitor, appeared for Dr O’Sullivan and argued that the strict pre-requisites, which I have just outlined, for summary dismissal of a complaint under section 102 were not present in this case. His submissions related chiefly to Dr O’Sullivan’s claim of victimisation under section 50.

15 In a decision delivered on 22 March 2010 (O’Sullivan v NSW Medical Board [2010] NSWADT 75 – hereafter ‘the dismissal decision’), I upheld the Medical Board’s application and ordered that Dr O’Sullivan’s complaint be dismissed under section 102.

16 In that decision, I held that Dr O’Sullivan’s claims of victimisation were ‘lacking in substance’. This was due principally to what I found to be a clear insufficiency of evidence supporting crucial components of his case under that section. In the present context, I should refer to one particular aspect of my reasoning. At [64], I held that there was no ‘reasonable possibility’ that if the case went to trial the evidence adduced by Dr O’Sullivan, together with the answers given in cross-examination by the Medical Board’s witnesses, would establish the necessary causative link between the conduct of the Board of which he complained and the motivation for that conduct that he alleged, namely, retaliation for his having been involved during 2007 in the making of complaints against the HCCC to the ADB.

17 I held also that his claim of unlawful discrimination on the ground of disability was ‘misconceived’. The principal ground for this conclusion was that the Board’s decision to refer him for psychiatric examination, being authorised by provisions of the Medical Practice Act that were enacted to ensure the safety of patients of medical practitioners, fell within the scope of defences created by section 49M(2) and section 54 of the AD Act.

18 The detailed reasons supporting these two rulings are set out in the dismissal decision at [50 – 70] and [78 – 81] and need not be repeated here.

The present application for costs

19 In the dismissal decision, I made the following order on the matter of costs:-

There will be no order for costs in these proceedings unless a party files and serves an application for costs, with supporting submissions, within 28 days. In such event, the opposing party or parties must file and serve submissions in response within a further 28 days. The question of costs will then be determined ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.

20 On 15 April 2010, the Medical Board filed an application for the costs of the proceedings, with supporting submissions.

21 On 16 April 2010, Dr O’Sullivan filed a Notice of Appeal against the dismissal decision.

22 On 1 July 2010, at my request, the Registrar sent a letter to Dr O’Sullivan indicating that submissions by him on the matter of costs had not been filed and were long overdue. The letter advised him that the Tribunal’s Guideline on Costs (Practice Note 22, dated 30 April 2010) makes express provision in clause 10 for cases, such as the present, when an appeal has been filed against a Tribunal decision after an application has been made for costs relating to that decision. Clause 10 indicates that ‘normally’ the Tribunal should proceed to determine the application for costs ‘so that finality is achieved at that level’. The letter to Dr O’Sullivan communicated a ruling by me that this approach should be followed in the present case.

23 On 8 July 2010, Mr Gormly of counsel, who had replaced Mr Eaves as Dr O’Sullivan’s legal representative, filed submissions opposing the costs application.

General principles regarding costs

24 By virtue of section 110 of the AD Act, awards of costs in Tribunal proceedings under this Act are governed by section 88 of the ADT Act. So far as is relevant here, section 88 provides:-

(1) Each party to proceedings before the Tribunal is to bear the party’s own costs in the proceedings, except as provided by this section.

(1A) 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 it is fair to do so having regard to the following:

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:


(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or

(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or

(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or

(iv) causing an adjournment, or

(v) attempting to deceive another party or the Tribunal, or

(vi) vexatiously conducting the proceedings.

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d) the nature and complexity of the proceedings,

(e) any other matter that the Tribunal considers relevant.

(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 a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.

25 In a recent decision of the Court of Appeal, AT v Commissioner of Police [2010] NSWCA 131, Basten JA, delivering the judgment of the Court, referred at [33] to ‘the force of the general principle that each party should bear its own costs in the Tribunal, a principle applicable at both first instance and before the Appeal Panel’. He then said:-

Although an order varying the general rule may be made “only if” the relevant criterion is satisfied in a particular way, there is a relatively low hurdle for an applicant seeking an order. The criterion of “fairness” will take into account the compensatory purpose of an award of costs, which will generally favour the successful party. The circumstances in which fairness may be identified are indicated by the specific attributes listed in sub-s (1A), but subject to the generality of paragraph (e), read in its context. Other considerations will no doubt include the nature of the jurisdiction of the Tribunal which is invoked and the objects identified in s 3(b)-(g) of the [ADT Act].

26 The current version of section 88, in which the criterion of ‘fairness’ stated in subsection (1A) has replaced a rule that in the absence of ‘special circumstances’ no costs might be awarded, became operative on 1 January 2009. In Salon Today Pty Ltd v M M I R Pty Ltd [2009] NSWADT 71 at [72], the Tribunal stated:-

What the Parliament has done, in its 1 January 2009 amendments, is recognise that there is a need for this Tribunal to be more flexible and widen the scope of a litigant’s entitlement to costs. …[T]he result of this re-assessment by the Parliament is a different test, a test of fairness, having regard to a number of parameters/factors.

27 The foregoing dicta may be contrasted with the following observations made in a case (Dowsett v Fitness First Australia Pty Ltd [2008] NSWADT 226 at [15]) decided in the Equal Opportunity Division under the ‘old’ section 88:-

15 Costs orders are rarely made against unsuccessful applicants in anti-discrimination matters. The Appeal Panel observed in Tu v University of Sydney (No 2) [2002] NSWADT 22 at [42] that:

. . . the sanction of a full costs order against the complainant tends to be reserved for cases where an abuse of process is seen as having been involved.

The Medical Board’s submissions

28 In his written submissions on behalf of the Medical Board, Mr Lynch relied on three paragraphs within subsection (1A) of section 88 as the foundation for his argument that the criterion of ‘fairness’ in this subsection was satisfied.

29 He identified the ‘primary basis’ for a costs order against Dr O’Sullivan as the consideration stated in paragraph (c), namely, ‘the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law’. He argued that a case, such as the present, where a complaint under the AD Act was summarily dismissed under section 102 fell ‘self-evidently’ within this paragraph. Because Dr O’Sullivan’s claims were ‘so untenable’ that they ‘warranted being dismissed at the outset’, it was ‘only fair’, Mr Lynch submitted, that the Medical Board should be ‘compensated for having to defend such a misconceived claim’.

30 Secondly, Mr Lynch relied on paragraph (a). He argued that the manner in which Dr O’Sullivan and his legal representative had conducted these proceedings had ‘unnecessarily disadvantaged’ the Medical Board. The conduct on which this argument was based was described in an affidavit sworn on 12 February 2010 by Ms Marina Rizzo, a solicitor in the employ of the Crown Solicitor, and admitted at the hearing on 22 February. This conduct was as follows:-

1. Dr O’Sullivan requested, on or about 28 September 2009, that all correspondence in these proceedings should go through his solicitor, Mr Eaves. At a case conference on 28 October 2009, at which both parties were represented, he was directed to file and serve Points of Claim by 25 November 2009. He did not comply with this direction, nor did he act through his solicitor. Instead, on 30 November 2009, he himself sent by email to the Medical Board an unsealed document headed ‘Points of Claim’.

2. At the case conference on 28 October 2009, Dr O’Sullivan was also directed to file and serve witness statements by 25 November 2009. As at 12 February 2010, the date of Ms Rizzo’s affidavit, no such statements had been filed or served.

3. As was pointed out by Ms Rizzo in a letter to Mr Eaves dated 3 December 2009, the document headed ‘Points of Claim’ was ‘deficient’. It was, to quote from this letter, ‘a long narrative of evidence’ which did not ‘expose with any clarity’ the nature of Dr O’Sullivan’s claim of unlawful discrimination. It contained ‘numerous irrelevant averments’ which would be ‘embarrassing to plead to’ and it made allegations against individuals who were not servants or agents of the Medical Board and were not respondents to the proceedings. In this letter, Ms Rizzo also pointed out that no witness statements had been served as required by the direction on 28 October 2009. Neither Mr Eaves nor Dr O’Sullivan replied to this letter or put forward any excuse for failing to reply.

4. In a letter dated 17 December 2009 to Mr Eaves, Ms Rizzo stated that she had still not received sealed copies of Dr O’Sullivan’s Points of Claim or of any witness statements. Neither Mr Eaves nor Dr O’Sullivan replied to this letter or put forward any excuse for failing to reply.

5. At a case conference on 4 January 2010, a second direction was given to Dr O’Sullivan to file and serve Points of Claim. He did so on 5 February 2010, one day after the date specified in the direction.

31 Mr Lynch argued that the Medical Board was ‘unnecessarily disadvantaged by having to peruse and analyse the two sets of Points of Claim and draw correspondence in respect of the deficiencies in them’.

32 He also argued that Dr O’Sullivan, by prosecuting his complaint against the Medical Board, was ‘vexatiously conducting proceedings’ within the meaning of subparagraph (vi) of paragraph (a). He maintained that the proceedings had been instituted ‘without sufficient grounds’, that they ‘only served to cause unnecessary expense and annoyance’, that they were ‘an abuse of the Tribunal’s process’, that they ‘lacked bona fides’ and that there were ‘no serious issues of fact or law to be tried’.

33 The third paragraph within subsection 88(1A) on which Mr Lynch relied was paragraph (e), which requires the Tribunal to have regard to ‘any other matter that the Tribunal considers relevant’. He argued that where a claim was ‘so untenable as to justify summary dismissal’, the criterion of ‘fairness’ stated in the subsection required that the respondent’s cost be paid on an indemnity basis. Drawing attention to other Tribunal proceedings to which Dr O’Sullivan has been a party in recent years, he submitted that Dr O’Sullivan could not be regarded as ‘an uneducated or unrepresented litigant’. It was therefore open to the Tribunal to infer that Dr O’Sullivan intended to ‘vex’ the Medical Board by ‘drawing it into litigation which was hopeless but costly’, or ‘at the very least was reckless as to whether there was any merit in pursuing the complaint’.

34 In support of this part of his argument, Mr Lynch drew attention to paragraph (b) of section 3 of the ADT Act. This section sets out the objects of the Act. Paragraph (b) formulates one of these objects as ‘to ensure that the Tribunal is accessible, its proceedings are efficient and its decisions are fair’.

Dr O’Sullivan’s submissions

35 Mr Gormly commenced his submissions on behalf of Dr O’Sullivan by stating that if the Appeal Panel upheld the appeal that had been lodged against the dismissal decision, Dr O’Sullivan would apply for the costs of this decision and of the appeal.

36 In the ensuing paragraphs of his submissions, Mr Gormly did not address any of the contentions advanced by Mr Lynch. Instead, he argued that for a reason wholly unconnected with these contentions, it would be unfair to require Dr O’Sullivan to pay any of the Medical Board’s costs.

37 The reason put forward by Mr Gormly was that ‘deception’ practised by the Medical Board caused me to fall into error in concluding in the dismissal decision that Dr O’Sullivan’s complaint should be dismissed under section 102 of the AD Act.

38 For reasons explained below, it is not necessary for me to describe in detail the alleged conduct of the Medical Board that, according to Mr Gormly’s submissions, constituted ‘deception’. It is sufficient to say that this alleged conduct of the Board took the form of (a) failing to disclose information to Dr O’Sullivan, the ADB and the Tribunal when it was under an obligation to do so and (b) making deceptive and misleading representations about other information to Dr O’Sullivan, the ADB and the Tribunal.

39 Mr Gormly claimed that as a result of this conduct I was not apprised of important information relating to (a) the Medical Board’s decision to substitute section 78A of the Medical Practice Act 1992 for section 54 as the statutory basis for its direction that Dr O’Sullivan be psychiatrically examined (see [7] and [17] above) and (b) the Board’s knowledge during 2008 of the complaints made about the HCCC to the ADB during 2007, in which Dr O’Sullivan had been involved (see [8] and [16] above).

40 Mr Gormly claimed also that if the Board’s conduct connected with the first of these matters had been made known to me, I would have reached a different conclusion on a specific question addressed in the dismissal decision at [54] and [69], namely, whether the Board’s direction to Dr O’Sullivan to undergo a psychiatric examination inflicted a ‘detriment’ upon him within the meaning of section 50 of the AD Act. It is convenient for me to indicate here, however, that I did not in fact arrive at a decision on this question: see [69].

41 For these reasons, Mr Gormly submitted that ‘it would be unfair for the Tribunal to make a costs order unless the applicant is given a proper opportunity (with the cooperation of the respondent) to prove its claims to the Tribunal or alternatively to wait for the findings of the Appeal Panel’.

Discussion and conclusions

42 In discussing the parties’ submissions, it is useful for me to begin with those advanced by Mr Gormly.

43 In my opinion, the matters raised by Mr Gormly are not relevant to the questions to be determined in this decision. The Appeal Panel, when it hears Dr O’Sullivan’s appeal against the dismissal decision, is empowered, in its discretion, to grant leave for the appeal to extend to the merits and for fresh evidence, such as Mr Gormly now wishes to adduce, to be admitted: see section 113(2)(b) of the ADT Act and (by way of illustration) Building Professionals Board v Hans (GD) [2008] NSWADTAP 13. But my task, as confirmed in the Tribunal’s Guideline on Costs (see [22] above) is to reach a conclusion on the matter of costs of the proceedings at first instance that takes account only of (a) the evidence and submissions on which the dismissal decision was based, (b) my assessment, as set out in that decision, of this material in the light of the applicable law and (c) submissions addressing the relevant law regarding costs. This is not a stage of the proceedings at which a party may be permitted to rely on fresh evidence (whether tendered or not tendered) with a view to establishing that the dismissal decision was incorrect and that a decision on costs should therefore be deferred.

44 Mr Lynch’s submissions regarding costs, which on the matters that they addressed were unopposed, are to my mind persuasive, except on two matters that I shall shortly discuss. I endorse his arguments to the following effect: (i) that my dismissal of Dr O’Sullivan’s complaint under section 102 of the AD Act, on the grounds that his claim of victimisation was lacking in substance and his claim of unlawful discrimination was misconceived, necessarily implies that his case as a whole had ‘no tenable basis in fact or in law’; and (ii) that in conducting the case in the manner outlined above at [30], he ‘unnecessarily disadvantaged’ the Medical Board. For these reasons, the Medical Board’s claim that it would be ‘fair’ to make a costs order against Dr O’Sullivan derives significant support from paragraphs (c) and (a) respectively of section 88(1A) of the ADT Act.

45 I am not persuaded, however, by Mr Lynch’s contentions, outlined above at [32 – 34], that Dr O’Sullivan’s claims must be characterised as ‘vexatious’ and ‘an abuse of process’ and that for this reason an order for the payment of indemnity costs, not merely party-party costs, is warranted.

46 It may well be appropriate to describe Dr O’Sullivan’s conduct in this litigation as seriously misguided and indeed obsessive. But the evidence falls short, at least as I view it, of demonstrating that he has acted in bad faith or with vexatious intent or that a finding of ‘abuse of process’ is justified. Indeed, my conclusion that the case should not proceed to a hearing and that summary dismissal was warranted instead required careful consideration, particularly with regard to the claim of victimisation. At worst, I would describe Dr O’Sullivan’s conduct in these proceedings as ‘reckless’.

47 Mr Lynch did not cite any decisions of the Tribunal (or indeed of any court) as to when under the specific statutory regime on costs created by section 88 it is appropriate to award indemnity costs. Indeed, he did not cite any decisions at all on this species of costs order.

48 I have however obtained useful guidance from passages in two recent decisions of the Tribunal. They were both given under what may be called the ‘new’ version of section 88 (see [26] above).

49 The earlier of them, Peng v Chief Commissioner of State Revenue [2009] NSWADT 295, is a decision of the Revenue Division. At [102 – 108], the Tribunal said:-

102 In ordinary litigation, costs on an indemnity basis can be awarded where special circumstances exist. As such in the contention of the Chief Commissioner such cases warranting the making of a costs order provide a useful analogy to the present and in fact underlie in large part the examples given in section 88(1A). In the leading decision of Colgate Palmolive v Cusson (1993) 46 FCR 225 at 232-234 Sheppard J described the circumstances necessary for indemnity costs in the following terms:

"it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and to other parties; the fact that the proceedings were commenced or continued for some ulterior motive; or in wilful disregard of known facts or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;”

103 In Lee v Mavaddat [2005] WASC 68 at para 23 Roberts-Smith J emphasised the waste of unnecessary expense in defeating a false claim as circumstances warranting an indemnity costs order. His Honour stated:

“As I have found, this is a case in which the evidence of the defendant and his whole defence to the claim was a deliberate concoction. His conduct prolonged the trial. … The defendant propounded false documents to the Court in the course of this litigation. The defendant must, or ought to, have known at all material times that he had no chance of success in his defence of the claim or in his counterclaim - this is not simply a case of the defendant's evidence not being accepted. In the circumstances his defence of the case and prosecution of the counterclaim must be presumed to have been continued for some ulterior motive or in wilful disregard of the known facts and the established law. That motive must have been a desire to keep the plaintiff out of her funds and to retain for him the benefit of them for as long as possible. I am satisfied that by reason of his manner of conducting this litigation, the defendant has caused considerable unnecessary expense and cost to the plaintiff beyond that which could reasonably be expected to be incurred in litigation of genuine issues. The justice of the case requires an order for indemnity costs.”

104 In Yates v Bola [2000] FCA 1895 at [73] and [74] the Full Federal Court considered an appeal from a decision of Branson J to award costs on an indemnity basis in connection with evidence that was false. Her Honour stated:

The evidence called at trial showed both the plea and Mr Yates' affidavit evidence in this regard to be false, and that Mr Yates either knew or ought to have known that it was false. … The fact that the applicant persisted with the proceeding without apparent regard to significant deficiencies in the evidence available to be called to establish its case is sufficient, in my view, to enliven the discretion of the Court to make orders for costs on a basis other than a party and party basis.


105 The Full Court upheld the decision below and specifically referred to the finding that the false evidence was given negligently. Rather it was a finding that “the evidence was deliberately false or, at least, recklessly false” and accordingly “there can be no doubt that her Honour was correct in regarding that matter as relevant to the exercise of her discretion” to award indemnity costs.

106 In the circumstances of this case, as from 3 September 2007 when the application for review in proceedings 076108 was filed, which application attached the letter of 31 August 2007, the case for the Applicants has proceeded on the basis of falsehood.

107 The Chief Commissioner contends that the award of costs on an indemnity basis is warranted under sec 88(1A)(a)(v) on account of the attempt, from the day of filing application 076108, to deceive the Chief Commissioner as a party to the proceedings, or alternatively, within sec 88(1A)(a)(vi) the proceedings have been conducted “vexatiously”, that is, amongst other, “proceedings instituted or pursued without reasonable ground”: (and see Kyriacou (supra) at [42] to [45]) or further alternatively, within sec 88(1A)(c), the Applicants have made a claim that has no tenable basis in fact or law. Except that I have not made a finding as to the allegation of vexatious conduct the Chief Commissioner has made out his case in this regard. Mr Jones advised the Tribunal that he knows of no case where an award of costs on an indemnity basis has been made. As set out previously the regime in respect of costs awards in this Tribunal has been limited but in respect of this Tribunal the statutory regime has been altered to a significant extent.

108 In all the circumstances, the Tribunal agrees that the claim of the Chief Commissioner for costs on an indemnity basis ascertained as from the commencement of proceedings 3 September 2007 has been made out. As will have been noted the conduct of the Applicants has been particularly bad. The Applicants contend that the allegations made against them are such that they must be established within the Briginshaw standard and the Tribunal finds that if that contention is correct, that standard has been satisfied.

50 The second of these decisions, Rucom Pty Ltd & Anor v Multiplex & Ors [2010] NSWADT 1, was given in the Retail Leases Division. At [59 – 61], the Tribunal said:-

59 The Second and Third Respondents have applied for an award of costs on an indemnity basis. The Tribunal clearly has power to make such an award: see s.88(2)(a); Barsoum v. Glebe Administration Board (No. 2) [2002] NSWADT 174; and Peng v. Chief Commissioner of State Revenue [2009] NSWADT 295 at [104-116]. It is clearly discretionary and, as such, must be exercised judicially. There is no need for me to review the law in detail: suffice it to say that in order to support an award of indemnity costs the Tribunal needs to be satisfied that there is “a sufficient or unusual feature”, or some “relevant delinquency” bearing a relevant relation to the conduct of the case – see for example Colgate Palmolive Co v. Cussons Pty Ltd (1993) 46 FCR 225 at 233-234; Oshlack v. Richmond River Council [1998] 193 CLR 72; White ACT (in liq) v. G B White [2004] NSWSC 303 at [11]; and Liverpool City Council v. Estephen [2009] NSWCA 161 at [95]… One can detect, I think, in all these decisions the general thrust of the Court of Appeal in Cripps v. G & M Dawson Pty Ltd [2006] NSWCA 81 at [52-60].

60 It is not a sufficient base for an award of indemnity costs that a party is successful in the litigation: a good recent example of the application of that principle is to be found in the decision of Forster J in Auto Panel Beaters & Radiators Pty Ltd (in liq) v. Barclays Services Pty Ltd (No 2) [2009] NSWSC 1308.

61 Although it is true that the categories of conduct, “sufficient or unusual feature” or “relevant delinquency” are not closed (see Colgate Palmolive at [257]) it is plain that indemnity costs orders are most regularly awarded where litigation is commenced with no reasonable prospects of success. There are a number of cases where such awards have been made where the cases could be generally regarded as “hopeless”, or with no chance of success, or categorised as being “without substance”, “groundless”, “fanciful or hopeless”, no reasonable prospects of success or so weak as to be futile. Reference can be made to the recent decision of Hoeben J in Ludon Investments No 7 Pty Ltd v. Barton [2009] NSWSC 1179 at [45-46]. Although it is true that a weak case will not ground an indemnity costs award, where the matter raised has been decided previously then that would generally result in an indemnity order – see Bayne v. Blake (No 3) (2009) CLR 366.

51 I have noted the Divisions in which these two decisions were given because it is well recognised in the Tribunal that the application of section 88, in both its earlier and its ‘new’ form, differs as between different Divisions. In the Retail Leases Division, in particular, it is acknowledged that due to the ‘commerciality’ of the cases decided in it, there should be a greater readiness to award costs than in other Divisions. The contrast between the position in these Divisions and the approach adopted in the Equal Opportunity Division may be sufficiently illustrated by referring to the passage quoted above (at [27]) from Dowsett v Fitness First Australia Pty Ltd [2008] NSWADT 226 at [15].

52 Undoubtedly, a decision that a complaint under the AD Act must be dismissed on the ground that it is ‘misconceived’ or is ‘lacking in substance’ necessarily implies that it was ‘hopeless’ or virtually so. This follows from the general principles, summarised above at [11], governing applications under section 102. But I am mindful of the possibility that if I were now to award indemnity costs, my decision might be taken to imply that in any case in which summary dismissal has been ordered under section 102, the respondent should receive costs assessed on that basis. This was not, as far as I am aware, the practice in this Division under the ‘old’ version of section 88 and my own research shows that this approach has not been adopted in any case so far decided under the new version.

53 Accordingly, although the dicta just quoted from Rucom Pty Ltd & Anor v Multiplex (a case in the Retail Leases Division) might suggest that in any case where the applicant’s case is found to be ‘very weak’ or ‘hopeless’ an order of indemnity costs should be made, I do not think that any such principle should be applicable in the Equal Opportunity Division. Something in the nature of ‘delinquency’, as illustrated in Lee v Mavaddat [2005] WASC 68 (see [49] above), or some other ‘sufficient or unusual feature’ should be present. The conduct of Dr O’Sullivan and Mr Eaves that I found to have ‘unnecessarily disadvantaged’ the Medical Board (see [30] above) does not, in my view, fall within either of these categories.

54 For the foregoing reasons, I have decided after careful consideration that it is ‘fair’, within the meaning of section 88(1A) of the ADT Act, to order that Dr O’Sullivan pay the Medical Board’s costs of and incidental to these proceedings, and that these costs should be paid on a party-party basis, not (as sought by the Board) on an indemnity basis.