Prasad v Chief Commissioner of State Revenue (No 2)

[2011] NSWADT 55

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	Prasad v Chief Commissioner of State Revenue (No 2) [2011] NSWADT 55
Hearing dates:	On the papers
Decision date:	18 March 2011
Before:	S Frost, Judicial Member
Decision:	The Tribunal declines to award costs
Catchwords:	COSTS
Legislation Cited:	Administrative Decisions Tribunal Act 1997
Cases Cited:	Prasad v Chief Commissioner of State Revenue [2010] NSWADT 219; GA v University of Sydney (No. 2) [2010] NSWADTAP 53; Briginshaw v Briginshaw (1938) 60 CLR 336
Category:	Costs
Parties:	Ravi Prasad (First Applicant) Archana Prasad (Second Applicant) Chief Commissioner of State Revenue (Respondent)
Representation:	Coleman Greig (Applicants) Crown Solicitors Office (Respondent)
File Number(s):	096070

REASONS FOR DECISION

1. The Applicants were unsuccessful in their application to the Tribunal for review of land tax assessments in relation to a property they own in Epping: see Prasad v Chief Commissioner of State Revenue [2010] NSWADT 219 (the Decision).

1. In written submissions filed with the Tribunal prior to the hearing, the Commissioner had foreshadowed his intention to apply for costs, pursuant to s 88(1A) of the Administrative Decisions Tribunal Act 1997 (the ADT Act). The application was duly made, and both parties have now made written submissions on that question.

The legislation

1. Section 88 of the ADT Act provides as follows:

88Costs

(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.

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

(4) In this section, costs includes:

(a)costs of or incidental to proceedings in the Tribunal, and

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

Summary of the parties' submissions

1. The Commissioner submits that this is a case where the general rule in s 88(1) that each party should bear its own costs has been displaced. He submits that it would be "fair" to award costs in his favour, having regard to the factors in s 88(1A), but particularly those in (a)(i), (a)(iii), (a)(iv), (a)(v), (b) and (c).

1. The Applicants, on the other hand, submit that there are no grounds under paragraph (a) or (b) to warrant a costs order in favour of the Commissioner. In relation to paragraph (c), it is submitted that the Applicants' appeal to the Tribunal was "motivated out of a genuinely held belief that the Epping property constituted the principal place of residence in that they retained and exercised in that property a right to reside ...".

1. It is also submitted on their behalf that "to award costs against the Applicants would add to the couple's financial stress in circumstances where the Applicants only sought to exercise their right of appeal and to present their case".

The substantive issue between the parties

1. The substantive issue between the parties in relation to the disputed land tax assessments was the question of entitlement to the "principal place of residence" (PPR) exemption for the Epping property: or, in the language of the Land Tax Management Act 1956 (LTM Act), whether the property was "used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose ...".

1. I concluded that the PPR exemption was not available. Central to that conclusion was oral evidence given by Mr Prasad to the effect that:

from March 2003 until almost the end of that year, he did not live in the Epping property (Decision, at [12]);

for most of 2005 he had stayed in the Epping property "only on some days" (Decision, at [17]);

from November 2005 to January 2007 he spent the "great majority" of nights in a rental property with his family, and only a "handful" of nights at Epping (Decision, at [18]);

during the 2007 calendar year he spent the "great majority" of nights in a rental property with the rest of his family (Decision, at [19]).

1. The Commissioner submits that the findings that I made on the basis of Mr Prasad's evidence demonstrate that the Applicants' case was manifestly weak, and even untenable, and that this is a factor that should weigh against them in the context of s 88(1A)(c) of the ADT Act.

1. The Commissioner submits further that Mr Prasad had not acknowledged those factual circumstances prior to the hearing, but had instead provided "detailed and nuanced" assertions creating the impression that Mr Prasad was living in the Epping property when in fact he was not. He submits that the Commissioner had been "unnecessarily disadvantaged" by the Applicants' attempt to deceive him, and that this should weigh against the Applicants in the context of s 88(1A)(a)(v) of the ADT Act.

Consideration

1. The general rule in s 88(1) is that each party is to bear its own costs in the Tribunal. That general rule may not be departed from unless the Tribunal is satisfied that it is "fair" to do so, having regard to the various matters set out in s 88(1A).

1. In the context of s 88, the word "fair" means just, equitable, or "not unduly favourable or adverse to either side" (Oxford Online English Dictionary, def. 10.b).

1. In GA v University of Sydney (No. 2) [2010] NSWADTAP 53, an Appeal Panel of this Tribunal noted at [17]-[19]:

[17]It is very unusual for awards of costs to be made in the review jurisdiction of the Tribunal, especially at first instance. ...

[18]The Tribunal, both at first instance and when dealing with appeals, has recognised that the review jurisdiction provides a means for people to have reconsidered by an independent tribunal external to the administrative agencies of government the correctness and fairness of a decision ... The objectives of the ADT Act, s 3, include ones designed to promote the achievement of justice in individual cases and wider systemic objectives such as:(f) to foster an atmosphere in which administrative review is viewed positively as a means of enhancing the delivery of services and programs,

(g) to promote and effect compliance by administrators with legislation enacted by Parliament for the benefit of the citizens of New South Wales.

[19]In line with these considerations, the Tribunal in dealing with review applications at the Divisional level rarely is called on to deal with costs applications from respondent agencies. The Tribunal has tended only to grant such an application where the review applicant has engaged in conduct that has exacerbated or prolonged unnecessarily the disposal of the matter ...

1. I have carefully considered the matters in s 88(1A). I am not satisfied, having regard to those matters, that it would be fair in this case to make a costs award in favour of the Commissioner. I will explain my reasons for coming to this view.

1. It is clear that the Applicants' case was very much weaker than the Commissioner's. It is equally clear to me that there were two basic shortcomings in the Applicants' case.

1. The first shortcoming stemmed from Mr Prasad's failure to understand that to attract the PPR exemption he needed to establish that his circumstances satisfied the three broad elements of the PPR exemption - occupation, use and residence. He had, at best, a limited understanding of each of those elements.

1. As to the first element, that of occupation, his understanding was described in a letter dated 23 November 2009 to the Crown Solicitor's Office, where he said:

Back in 2002, the advice from my accountant was that the property remains primary place of residence as long as part of the property is occupied by a family member ...

1. He explained his understanding of the second element, that of use, with his very first statement to the Tribunal (p.6, transcript):

My case [is] dependent on whether I had use of my personal property at North Epping or not, and the [Commissioner is] saying that I never used that property ...

1. But it became clear quite early in the hearing that he did not understand the significance of the third element, that of residence, when in answer to questions put to him by Mr Gerard for the Commissioner, he said this (p. 27, transcript):

Q. Is it not the case though that your case is that you were living in the property with [the tenant] during the time of his tenancy? A. That's not my case, no.

Q. It is not your case that you were living in the property with [the tenant]? A. In 2003 I did not live with [the tenant]. But I had a - I had a room there which I accessed during that 2003. That's my case.

1. The second shortcoming in the Applicants' case stemmed from Mr Prasad's belief that the Commissioner or the Tribunal had some over-arching discretion to waive, or at least reduce, the land tax liability even if the PPR exemption were not strictly available. For example, in the letter dated 23 November 2009 to the Crown Solicitor's Office, Mr Prasad said (emphasis added):

In summary, the issue relates to a family that had been under considerable financial and emotional pressures due to the young son's disability ... and its search for a suitable institution (private or public) to educate him.

...The OSR reviewer has asserted in her report that I have not been able to provide all required and complete documentary evidence. In hindsight, her assertion may appear to be correct but it ignores the human side of the issue. ...

1. Mr Prasad's closing submissions at the hearing included the following (pp. 87-88, transcript):

... there should be some leniency here because there's special circumstances.

...

[the property] remains our principal place of residence because that's our property and we own it and we eventually are going back to it.

...

We, as a family, are under a lot of stress.

1. The Commissioner has submitted, and somewhat forcefully, that in various statements that he made prior to the hearing, Mr Prasad attempted to deceive the Commissioner and that costs should be awarded to the Commissioner because of the resulting "unnecessary disadvantage" to him.

1. To conclude that Mr Prasad's behaviour was so grave as to warrant a finding that he had attempted to deceive the Commissioner, I would need to be comfortably satisfied that that was the case: Briginshaw v Briginshaw (1938) 60 CLR 336. I am not so satisfied. Each of the statements of which the Commissioner complains is explicable, in my view, by reference to the first shortcoming in the Applicants' case - the lack of understanding of the requirements of the legislation. The Commissioner's view that the statements were "nuanced", and the implication that they hinted at living arrangements that might have supported the exemption, are both predicated on a level of insight into the requirements of the legislation that Mr Prasad simply did not have. Once that is acknowledged, the argument for attempted deception falls away.

1. There are additional factors which the Commissioner urges me to take into account and which he says weigh against the Applicants: failure to attend various directions hearings; failure without reasonable excuse to comply with the Tribunal's directions; prolonging unreasonably the time taken to complete the proceedings. While as a general rule the Tribunal should be reluctant to ignore instances of dilatory conduct by parties, these factors weigh, at most, only very marginally against the Applicants.

1. The reason for the general rule in s 88(1) of the ADT Act is that, as a general proposition, citizens seeking independent review of a decision made by a State Government agency should be entitled to pursue that avenue in the Tribunal without exposing themselves to the danger of having to pay the agency's costs of defending its decision. As it was put (although in relation to different legislative provisions) by the Victorian Court of Appeal in Transport Accident Commission v O'Reilly [1998] VSCA 106 at [18]:

... a person making a claim ... and reasonably and in good faith pressing it, albeit unsuccessfully, ... should not on that account necessarily be out of pocket.

1. It also needs to be acknowledged that an agency such as the Chief Commissioner of State Revenue is in a position of obvious advantage in relation to the citizens of the State, particularly self-represented ones. He has more resources and better knowledge of the law that he administers. That is a matter properly to be taken into account, in an appropriate case, under s 88(1A)(e) of the ADT Act.

1. Ultimately, after weighing the factors in s 88(1A) of the ADT Act, I am not satisfied that it is fair to award costs to the Commissioner. In the circumstances there is insufficient reason to displace the general rule in s 88(1).

Decision

1. The Tribunal declines to award costs.

I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.

Registrar

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Decision last updated: 18 March 2011