SMAJIC and BOSNIAN ISLAMIC SOCIETY PERTH (WA) INC.
[2020] WASAT 36
•31 MARCH 2020
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: ASSOCIATIONS INCORPORATION ACT 2015 (WA)
CITATION: SMAJIC and BOSNIAN ISLAMIC SOCIETY PERTH (WA) INC. [2020] WASAT 36
MEMBER: MS C BARTON, MEMBER
HEARD: 28 AND 29 JANUARY 2020
DELIVERED : 31 MARCH 2020
PUBLISHED : 3 APRIL 2020
FILE NO/S: CC 1265 of 2019
BETWEEN: SAJIT SMAJIC
Applicant
AND
BOSNIAN ISLAMIC SOCIETY PERTH (WA) INC.
Respondent
Catchwords:
Incorporated association - Application under s 182 of the Associations Incorporation Act 2015 (WA) - Jurisdiction of the Tribunal - Whether model rules apply - Attempt to resolve dispute - Grievance procedure
Legislation:
Associations Incorporation Act 2015 (WA), s 22, s 22(3), s 22(3)(a), s 22(7), s 26(1), s 28, s 28(2), s 28(2)(b)(i), s 182, s 182(1), s 186, s 198, item 18 Sch 1 Div 1
Associations Incorporation Regulations 2016 (WA), reg 4, Sch 2
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Applicant | : | In Person |
| Respondent | : | Mr L van Aardt |
Solicitors:
| Applicant | : | N/A |
| Respondent | : | LVA Legal |
Case(s) referred to in decision(s):
Green and Port Hedland Pony Club Inc. [2019] WASAT 16
Kavanagh and Pine Valley Pistol Club Incorporated [2020] WASAT 11
Kelmscott Senior Football Club (Inc) and Western Australian Amateur Football League (Inc) [2018] WASAT 6
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
These are the reasons of the Tribunal that represent the content of the oral decision delivered to the parties on 31 March 2020. Minor editorial amendments have been made for the purposes of publication.
At an executive committee meeting of the Bosnian Islamic Society Perth (WA) Inc. (Society) on 7 October 2018, Mr Sajit Smajic (applicant) was removed from office as President of the Society following a vote of no confidence. The applicant's removal from office was confirmed at an Annual General Meeting held by the Society on 11 November 2018 (AGM). The Society subsequently suspended the applicant's membership on 9 April 2019 for a period of two years.
The applicant applied to the Tribunal on 15 August 2019 to have a dispute between himself and the Society determined by the Tribunal.
The application is made under s 182(1) of the Associations Incorporation Act 2015 (WA) (Act), which allows an incorporated association, or one of its members, to apply to the Tribunal when a dispute cannot be resolved 'under the procedure provided for as required by Schedule 1 Division 1 item 18' of the Act. The dispute in question must be under or relating to the rules of the incorporated association.
The parties do not contest that:
1)The Society was incorporated before the Act commenced on 1 July 2016;
2)The Society is an 'existing incorporated association' for the purposes of s 186 of the Act and, therefore, is taken to be an association incorporated under the Act;
3)The current rules of the Society are the rules set out in the document entitled, 'Constitution and Rules of the Bosnian Islamic Society Perth (WA) Incorporated' (Constitution) which were approved and adopted at a special general meeting of the Society on 25 March 2016; and
4)As a suspended member of the Society, the applicant is entitled to apply to the Tribunal under s 182(1) of the Act because the applicant contends that the Society has not complied with the rules of its Constitution relating to the suspension of his membership.
The preliminary issue to be determined
The issue for the Tribunal to resolve is whether or not it has jurisdiction under s 182(1) of the Act to determine the dispute.
The relevant question for determination by the Tribunal was articulated as follows in orders made by the Tribunal on 4 October 2019:
Does the Tribunal have jurisdiction under s 182(1) of the Associations Incorporation Act 2015 to determine the dispute considering, in particular, the questions of, firstly, which dispute resolution procedure applies to the dispute under the rules of the respondent and, secondly, was that procedure followed before the application was made to the Tribunal?
The parties agreed at the hearing that the applicant's removal from office under the Society's Constitution and subsequent membership suspension constitutes the 'dispute' for the purposes of determining the preliminary issue.
Conduct of the proceedings
The parties were required by orders made by the Tribunal on 4 October 2019 to file with the Tribunal, and give to each other, written submissions in relation to the determination of the preliminary issue and all documents and decided cases on which they wished to rely.
In determining the preliminary issue, the Tribunal has relied on the written submissions and legal authorities provided by the parties, the oral submissions at the hearing and the documents filed by the parties. The Tribunal also relies on the evidence of witnesses called by the parties and additional documents tendered at the hearing.
The witnesses gave evidence about the executive committee meeting of 7 October 2018 leading to the vote of no confidence in the applicant. There was also evidence given by the witnesses of the conduct and outcomes of the AGM, including the resolution by members to ratify the decision of the committee in relation to the applicant's removal from office.
In addition, the witnesses gave evidence about a mediation held between the applicant and members of the executive committee on 29 October 2018 and the formation, conduct and outcomes of that mediation.
After the parties addressed the point of whether the Tribunal had power to determine the dispute under s 182(1) of the Act, the Tribunal reserved its decision.
The statutory framework relating to rules of an association
Section 22 of the Act sets out the general requirements for the content of the rules of an incorporated association.
Section 22(3)(a) of the Act provides that the rules of an incorporated association must address each of the matters set out in items 1-19 of Sch 1, Div 1 to the Act which includes, relevantly, a procedure for dealing with any dispute under or relating to the rules between members or between members and the incorporated association (item 18).
Section 22(7) of the Act provides that s 22 of the Act applies to an association which was already incorporated prior to the commencement of the Act. However, s 198 of the Act allows a period of three years after the commencement of the Act for those incorporated associations to alter their rules to comply with the requirements of s 22 of the Act. If the rules are not altered within the three year period, the model rules apply to the extent that the rules of the incorporated association do not address a matter referred to in Sch 1, Div 1 to the Act: s 28(2)(b)(i) of the Act.
Under s 26(1) of the Act and reg 4 of the Associations Incorporation Regulations 2016 (WA) (Regulations), the rules set out in Sch 2 to the Regulations are prescribed as model rules (Model Rules).
The applicant's contentions
The applicant's contentions may be summarised as follows:
1)The Tribunal has jurisdiction to determine the dispute between the applicant and the Society because the dispute could not be resolved using the procedure provided for by item 18, Sch 1, Div 1 to the Act.
2)Item 18 of Sch 1, Div 1 to the Act provides that an association's rules must contain a procedure for dealing with any dispute under or relating to the rules between members or between members and the incorporated association.
3)Section 22(3) of the Act requires the association's rules to cover the items in Sch 1, Div 1 to the Act. Section 28(2) of the Act provides that if the rules do not address those matters then the Model Rules will apply to the extent that the rules do not address the Sch 1, Div 1 matters.
4)The Constitution sets out a means to resolve the dispute in rule 24.
5)The applicant has attempted to resolve the dispute in relation to his removal from office in compliance with the procedure of rule 24. Rule 24 is relied upon because there was a disagreement between officers of the executive committee (the applicant and the Society's employed Imam) that led to the applicant's removal from office.
6)There are three published decisions addressing the jurisdictional point related to s 182 of the Act. In all three of those decisions, it was determined that the Tribunal did not have jurisdiction. All of those decisions can be distinguished as the rules did not provide a mechanism for resolving a dispute and s 28 of the Act was not relied upon.
7)The leading case is Kelmscott Senior Football Club (Inc) and Western Australian Amateur Football League (Inc) [2018] WASAT 6 (Kelmscott Football Club). The Tribunal concluded that it did not have power to determine the dispute because there was no dispute resolution procedure incorporated into the Western Australian Amateur Football League's rules as required by Sch 1, Div 1, item 18 to the Act. In this matter, the Society has a Constitution that sets out the dispute resolution procedure and to the extent that it doesn't the dispute resolution procedure is that set out in Sch 2 to the Regulations.
8)The Tribunal has jurisdiction to hear this matter because:
a)the Constitution does have a dispute resolution procedure in rule 24 and it is that procedure that gives the Tribunal jurisdiction;
b)to the extent that the rules contained in the Constitution are inadequate or totally missing, then the dispute resolution procedure set out in Sch 2, Div 3 to the Regulations (the Model Rules) applies;
c)the question is whether the procedure has been followed as a pre-requisite to lodging the application with the Tribunal; and
d)the applicant contends that the procedure has been followed.
The Society's contentions
The Society's contentions may be summarised as follows:
1)Rule 24 of the Constitution does not apply to disputes 'between members and the incorporated association'. Rule 24 only refers to a 'disagreement between officers of the executive committee or between members of the Society'.
2)The present dispute is not one between 'officers of the executive committee' nor is it one 'between members of the Society'.
3)The reference in rule 24 to 'officers of the executive committee' is not a reference to the 'incorporated association' as required by item 18 of Sch 1, Div 1 to the Act. In Green and Port Hedland Pony Club Inc. [2019] WASAT 16 at [17] (Pony Club), the Tribunal observed that 'while the Management Committee is the body through which the day-to-day decisions and the management of the club occurs, it is not the same as the association'. In any event, on its proper construction, rule 24 relates to disputes between the members of the executive committee itself.
4)For the jurisdiction of the Tribunal to be enlivened under s 182 of the Act, there must be a dispute resolution procedure in place as required by item 18 of Sch 1, Div 1 to the Act: Pony Club at [20]. Because of the defective wording in rule 24 of the Constitution, it is the Society's contention that the Constitution does not comply with item 18 of Sch 1, Div 2 to the Act.
5)It was submitted in Pony Club at [9], that the dispute resolution procedure need not be capable of dealing with all disputes, 'so long as there is a dispute resolution procedure capable of dealing with the particular dispute sought to be the subject of the determination by the Tribunal'.
6)As rule 24 does not apply to disputes between members and the association, there is no procedure under the Constitution that is capable of dealing with the dispute the subject of the application. Accordingly, if the Constitution is defective, s 28(2) of the Act provides that the dispute resolution procedure in the Model Rules apply to the extent that there is a lacking provision in the Constitution.
7)The procedure undertaken in relation to the dispute in question was, broadly, as follows:
a)On 22 October 2018, following the applicant's removal from office, the Society arranged a mediation to be held on 29 October 2018;
b)The mediation was held in a meeting room at the Parmelia Hilton in Perth and was conducted in the presence of three Imams;
c)The Head Imam in Australia attended the mediation at the applicant's request;
d)The mediation lasted for six hours commencing at 6.00 pm and ending at approximately midnight; and
e)The applicant subsequently made submissions at the AGM. The members, in general meeting, ratified the decision of the committee concerning the applicant's removal from office.
8)The dispute resolution process in the Model Rules was not followed. The parties did not attempt to resolve the dispute as required by item 19 of Sch 2, Div 3 of Pt 4 to the Regulations. The Society did not respond to the letter from the applicant's solicitor of 22 October 2019.
9)There was no written notice given to the Society's secretary for the purposes of item 20 of Sch 2, Div 3 of Pt 4 to the Regulations, that is, there was no notice given to the secretary of the parties to the dispute or the matters that were the subject of the dispute. There was also no meeting convened by the secretary to consider and determine the dispute for the purposes of items 20(2) and (3) of Sch 2, Div 3 of Pt 4 to the Regulations.
10)Because the dispute resolution process in the Model Rules was not followed before the applicant made his application to the Tribunal, the Tribunal does not have jurisdiction under s 182(1) of the Act to determine the dispute.
The Tribunal's consideration
In Kelmscott Football Club at [32], the Tribunal determined that before an application can be made to the Tribunal under s 182(1) of the Act, on the facts, there must be a failure to resolve the dispute despite following the dispute resolution procedure in the rules of the incorporated association (which satisfies item 18 of Sch 1, Div 1 to the Act).
Item 18 of Sch 1, Div 1 to the Act provides:
A procedure for dealing with any dispute under or relating to the rules -
(a)between members; or
(b)between members and the incorporated association.
If the rules of an incorporated association do not contain a dispute resolution procedure which satisfies the requirements of item 18 of Sch 1, Div 1 to the Act, then under s 28(2)(b)(i) of the Act the dispute resolution procedure in the Model Rules is deemed to apply to its rules.
Senior Member Aitken identified the situations in which the Model Rules will apply in Kavanagh and Pine Valley Pistol Club Incorporated [2020] WASAT 11 (Kavanagh) at [46]. The Tribunal observes that the fourth situation identified in Kavanagh is relevant to the current proceeding, namely:
[I]f an incorporated association, which was already an incorporated association under the Repealed Act when the AI Act commenced on 1 July 2016, had rules which did not address all of the matters referred to in Sch 1, Div 1 of the AI Act and the incorporated association did not alter its rules within the three year transition period provided in s 198 of the AI Act to ensure that it addressed all of those matters, then after 1 July 2019 under s 201(2)(a) of the AI Act, the Model Rules are deemed to apply to its rules to the extent that its rules do not address those matters.
Do the Model Rules apply?
It is common ground between the parties that the dispute in question is between a member of the association (the applicant) and the association itself (the Society).
Rule 24 of the Constitution provides:
In the event of disagreement between officers of the executive committee or between members of the Society, which is unable to be resolved using the avenues of recourse within these rules, the disagreement shall be subject to a mediation process. The mediation process involves the setting up of a dispute resolution committee, of which the Imam of the Society shall be a member and whose role will be to arbitrate towards a solution by addressing the details of the disagreement.
The Tribunal finds that the dispute resolution procedure in rule 24 of the Constitution does not provide a mechanism for dealing with disputes between a member and the incorporated association. Rule 24 refers specifically to a disagreement between the officers of the executive committee or between members of the Society. Accordingly, the Tribunal finds that the dispute resolution process in the Constitution does not satisfy the requirements of item 18 of Sch 1, Div 1 to the Act and, therefore, under s 28(2)(b)(i) of the Act, the dispute resolution process of the Model Rules apply to the dispute in question.
In closing submissions, the applicant conceded that in light of the information presented to the Tribunal, the Model Rules do apply to the dispute between him and the Society.
Was the process for dispute resolution in the Model Rules followed?
The Model Rules are set out in Sch 2 to the Regulations. Part 4, Div 3 of Sch 2 to the Regulations deals with the Model Rules for the resolution of disputes. In summary, the dispute resolution procedure set out in the Model Rules is as follows:
•The parties to a dispute must attempt to resolve the dispute between themselves within 14 days after the dispute has come to the attention of each party (r 19);
•If the parties are unable to resolve the dispute, then a formal grievance procedure may be commenced by any party to the dispute by giving written notice to the secretary of the incorporated association (r 20(1));
•A meeting of the management committee must be convened within 28 days after the secretary has been given notice (r 20(2));
•The parties must be given written notice of that meeting and they are entitled to attend the meeting and make submissions to the committee about the dispute (r 20(3) and (4)); and
•If the dispute is between one or more members and the association, then a party to the dispute can elect that it not be determined by the committee and that a mediator be appointed (r 20(5), in which case r 22 r 25 in Pt 4, Div 4 of Sch 2 to the Regulations apply).
On 22 October 2018, the applicant's lawyer sent a letter to the Society setting out the reasons why the purported removal of his client from office was invalid. The Society did not respond to letter. The question that arises is whether the letter was an attempt by the applicant to resolve the dispute for the purposes of r 19 of the Model Rules. Relevantly, the letter states:
It is now open to Mr Smajic to appeal his purported removal to the next annual Society meeting which I understand to be scheduled in the next several weeks, in terms of Constitution clause 11(f). Mr Smajic intends to do so and asks that the Committee adds the following item to the Agenda of the upcoming Society Annual General Meeting:
Purported Removal on 7 October 2018 of Mr Sajit Smajic from office of President of the Bosnian Islamic Society Perth WA Incorporated
The notice for the AGM dated 20 October 2018, which pre-dates the letter from the applicant's lawyer, had the following matter listed as agenda item 6: 'Committee explanation regarding the no confidence vote for the President'. The acting secretary of the Society, who was present at the AGM, stated in evidence that at the start of the meeting the members were advised that the applicant would appeal his case concerning the vote of no confidence.
The Tribunal finds that the letter from the applicant's solicitor to the Society dated 22 October 2018 does not attempt to resolve the dispute but rather advises the Society that the applicant intends to appeal his removal from office at the AGM. Even if the Tribunal's finding is incorrect on this point, the Tribunal nevertheless finds that the applicant did not initiate the grievance procedure by giving written notice to the secretary of the Society as required by r 20(1) of the Model Rules. The acting secretary of the Society at the time the dispute arose stated in evidence that he did not receive written notice from the applicant about the parties to the dispute or the matters that were the subject of the dispute.
Accordingly, on the basis of the evidence before it, the Tribunal finds that the process for dispute resolution set out in the Model Rules was not followed by the parties to the dispute. The applicant stated at the hearing that he believed that he had followed the dispute resolution procedure outlined in the Model Rules but acknowledged that not all the requirements of the Model Rules were followed.
Because the Tribunal has found that the grievance procedure in the Model Rules was not initiated, it is unnecessary for the Tribunal to determine whether a party to the dispute elected to rely on the mediation process set out in r 22 to r 25 of the Model Rules or whether a mediation was undertaken in accordance with that process.
Conclusion
In accordance with these reasons and the preliminary issue so framed, the Tribunal concludes that the dispute resolution process in the Model Rules applies to the dispute between the parties. However, the Tribunal finds that the dispute resolution process in the Model Rules was not followed and, therefore, the Tribunal does not have jurisdiction under s 182(1) of the Act to determine the dispute. Even if the applicant wished the Tribunal to determine the dispute, it would be unable to do so.
Orders
The Tribunal makes the following orders:
1.The application is dismissed on the basis that the Tribunal does not have jurisdiction to determine the dispute under s 182(1) of the Associations Incorporation Act 2015 (WA).
2.If the respondent wishes to maintain its application for costs then it may on or before 15 April 2020 file with the Tribunal and serve on the applicant written submissions in relation to costs.
3.If the respondent makes a costs application as referred to in order 2, then the applicant is to file with the Tribunal and serve on the respondent responsive submissions in relation to costs on or before 30 April 2020.
4.Subject to any further order, any application for costs will be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
3 APRIL 2020
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: ASSOCIATIONS INCORPORATION ACT 2015 (WA)
CITATION: SMAJIC and BOSNIAN ISLAMIC SOCIETY PERTH (WA) INC. [2020] WASAT 36 (S)
MEMBER: MS C BARTON, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 22 JUNE 2020
FILE NO/S: CC 1265 of 2019
BETWEEN: SAJIT SMAJIC
Applicant
AND
BOSNIAN ISLAMIC SOCIETY PERTH (WA) INC.
Respondent
Catchwords:
Practice and procedure - Incorporated association - Costs - Settlement offer
Legislation:
Associations Incorporation Act 2015 (WA), s 182(1), s 182(3)
Associations Incorporation Regulations 2016 (WA), Sch 2
State Administrative Tribunal Act 2004 (WA), s 9, s 15, s 46(3), s 47, s 48, Div 5, s 87
State Administrative Tribunal Rules 2004 (WA), r 40, r 41, r 41(2), r 42, r 42(1)(c)
Result:
Application successful in part
Category: B
Representation:
Counsel:
| Applicant | : | Ms F Bucolo |
| Respondent | : | Mr L van Aardt |
Solicitors:
| Applicant | : | Rowick & Bucolo Lawyers |
| Respondent | : | LVA Legal |
Case(s) referred to in decision(s):
Lombardi Investments (WA) Pty Ltd and City of Cockburn [2009] WASAT 65
Medical Board of Western Australia and Kyi [2009] WASAT 22
Panegyres v Medical Board of Australia [2020] WASCA 58
Perth Central Holdings Pty Ltd and Doric Constructions Pty Ltd [No 2] [2008] WASAT 302
Pharmire Pty Ltd v The Pharmacy Registration Board of Western Australia [2018] WASAT 88
Rae and Prima Homes Nominees Pty Ltd [2020] WASAT 24
Smajic and Bosnian Islamic Society Perth (WA) Inc. [2020] WASAT 36
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
On 15 August 2019, Mr Sajit Smajic (applicant), commenced proceedings in the Tribunal under s 182(1) of the Associations Incorporation Act 2015 (WA) (enabling Act). The applicant sought to have a dispute between himself and the Bosnian Islamic Society Perth (WA) Inc. (Society) determined by the Tribunal.
A preliminary issue concerning the Tribunal's jurisdiction to determine the dispute between the applicant and the Society was heard on 28 and 29 January 2020. In Smajic and Bosnian Islamic Society Perth (WA) Inc. [2020] WASAT 36, delivered on 31 March 2020, the Tribunal found that it did not have jurisdiction under s 182(1) of the enabling Act to determine the dispute and dismissed the application.
On 15 April 2020, the Society filed with the Tribunal an application for costs against the applicant pursuant to orders made by the Tribunal on 31 March 2020.
In reaching its decision, the Tribunal has considered the written submissions and Annexures A, B and C filed by the Society on 15 April 2020 and the applicant's responsive submissions filed on 30 April 2020.
The issue for determination
The issue for the Tribunal to determine is whether or not the Society is entitled to a costs order against the applicant in respect of proceeding CC1265 of 2019 and the hearing of the preliminary issue on 28 and 29 January 2020.
The statutory framework
The parties to a proceeding before the Tribunal must bear their own costs unless otherwise specified in the State Administrative Tribunal Act 2004 (WA) (SAT Act), the enabling Act, or an order of the Tribunal under s 87 of the SAT Act.
Section 87 of the SAT Act provides:
Costs of parties and others
(1)Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal.
(2)Unless otherwise specified in the enabling Act, the Tribunal may make an order for the payment by a party of all or any of the costs of another party or of a person required to produce a document or other material on the application of the party under s 35.
(3)The power of the Tribunal to make an order for the payment by a party of the costs of another party includes the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought.
(4)Without limiting anything else that may be considered in making an order for the payment by a party of the costs of another party where the matter that is the subject of the proceeding comes within the Tribunal’s review jurisdiction, the Tribunal is to have regard to
(a)whether the party (in bringing or conducting the proceeding before the decision-maker in which the decision under review was made) genuinely attempted to enable and assist the decision-maker to make a decision on its merits;
(b)whether the party (being the decision-maker) genuinely attempted to make a decision on its merits.
(5)The rules may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of an order for the payment by a party of the costs of another party.
(6)The Tribunal may order that the representative of a party, rather than the party, in the representative’s own capacity compensate that or any other party for costs incurred because the representative acted in, or delayed, the proceeding in a way that resulted in unnecessary costs.
Section 87(5) provides that the State Administrative Rules 2004 (WA) (Rules) may deal with the effect of certain offers to settle, and responses, if any, to the offer, on the making of a costs order by the Tribunal.
Rule 42 of the Rules relevantly applies to a proceeding in the Tribunal's original jurisdiction. It provides:
Order for costs if settlement offer is rejected
(1)This rule applies if
(a)a party to a proceeding (other than a proceeding in the Tribunal’s review jurisdiction) gives another party to the proceeding an offer in writing to settle the proceeding; and
(b)the other party does not accept the offer within the time the offer is open; and
(c)the offer complies with rules 40 and 41; and
(d)in the opinion of the Tribunal, the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer.
(2)If this rule applies, the Tribunal is to, in determining the costs that may be awarded, take into account that the party did not accept an offer more favourable than the Tribunal’s order.
(3)In determining whether its orders are or are not more favourable to a party than an offer, the Tribunal
(a)must take into account any costs it would have ordered on the date the offer was made; and
(b)must disregard any costs it ordered in respect of any period after the date the offer was received.
Rules 40 and 41 which are referred to in r 42(1)(c) of the Rules provide as follows:
40.Settlement offers
(1)An offer to settle a proceeding that is before the Tribunal may be made
(a)with prejudice, meaning that any party may refer to the offer, or to any terms of the offer, at any time during the proceeding; or
(b)without prejudice, meaning that the Tribunal is not able to be told of the making of the offer until after it has made its decision in respect of the matters in dispute in the proceeding (other than in relation to the making of orders in respect of costs).
(2)If an offer does not specify whether it is made with or without prejudice, it is to be treated as if it had been made without prejudice.
(3)A party may make more than one offer.
(4)If an offer provides for the payment of money, the offer must specify the amount of money to be paid and when and how that money is to be paid.
41.Acceptance of settlement offers
(1)An offer may be open for acceptance for any period. However, an offer must be open for acceptance until the commencement of the hearing or until the expiry of a specified period after the offer is made, whichever is the shorter period.
(2)The minimum period that can be specified is 14 days.
(3)An offer cannot be withdrawn while it is open for acceptance without the permission of the Tribunal.
(4)In deciding whether to give permission, the Tribunal may examine the offer, even if it was made without prejudice.
(5)If the offer was made without prejudice, a member of the Tribunal who examines it for the purposes of subrule (4) must take no further part in the proceeding after determining whether or not to give permission.
(6)A party can only accept an offer by giving the party who made it a signed notice of acceptance.
(7)A party may accept an offer even though the party has made a counter offer.
The Society's contentions
The Society's position in support of its costs application may be summarised as follows:
(1)The application was untenable, lacking in foundation and vexatious. The orders sought by the applicant under s 182(3) of the enabling Act were not readily within the power of the Tribunal to make.
(2)In Pharmire Pty Ltd and The Pharmacy Registration Board of Western Australia [2018] WASAT 88 at [6], the Tribunal referred to the principles that apply to the resolution of a costs dispute as expressed by the WA Court of Appeal in Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 (Questdale). One of those principles is that:
Unmeritorious claims or claims made or pursued involving misconduct or which are vexatious or grossly exaggerated or presented in a way that is unduly burdensome may justify an exercise of the discretion conferred by s 87(2) of the SAT Act.
(3)The applicant failed or refused to understand the jurisdictional question under s 182(1) of the enabling Act, specifically:
(a)the applicant refused or failed to obtain legal advice regarding whether the Tribunal had jurisdiction (as referred to in orders made by the Tribunal on 12 September 2019);
(b)the applicant's written submissions dated 16 October 2019 only addressed the jurisdictional question in the final paragraph;
(c)the Society's solicitor conferred with the applicant following a directions hearing on 1 November 2019 and openly invited him to discontinue his application to avoid unnecessarily increasing costs;
(d)the applicant's witness summaries dated 14 November 2019 did not give sufficient information as to the evidence to be given by each witness; and
(e)the applicant did not limit the witness evidence to the preliminary issue.
(4)The actions and inactions of the applicant were unduly burdensome towards the Society and unnecessarily prolonged the proceedings. The Society incurred unnecessary time and costs in:
(a)having to attend a further directions hearing on 1 November 2019;
(b)preparing a timeline of the dispute and issues document; and
(c)conferring with the applicant to correct the applicant's misunderstandings to try to elicit focussed and more helpful information.
(5)The applicant's conduct was at all times vexatious and a breach of process. The applicant appeared to be opposed to a particular employee of the Society which was wholly irrelevant to the preliminary issue.
(6)The applicant's conduct has impaired the Tribunal's statutory objectives to achieve the resolution of disputes fairly and according to the substantial merits of the case, with as little formality and technicality as possible so as to minimise the costs to the parties: Questdale at [54].
(7)The conduct of the applicant unfairly caused the Society to suffer increased legal costs as well as reputational damage by virtue of the proceedings.
(8)The applicant refused an offer by the Society on 14 November 2019 to withdraw his application. By doing so, the applicant acted unreasonably. The applicant caused the Society to unnecessarily incur costs in continuing with the application when he should have realised that the application had no real prospects of success in relation to the jurisdictional issue.
(9)On 28 January 2020, the applicant again refused an offer by the Society to withdraw his application in circumstances where no reasonable person could have held a belief that the applicant would be successful on the jurisdictional issue. The applicant offered no evidence that the Model Rules set out in Sch 2 to the Associations Incorporation Regulations 2016 (WA) had been complied with and consistently appeared to confuse the purpose of the hearing with a trial in relation to his removal from the committee and his suspension as a member of the Society.
The applicant's contentions
The applicant's position may be summarised as follows:
(1)The Tribunal is a 'no cost' jurisdiction so as not to discourage individuals from pursuing actions because of inability to meet the costs of legal representation.
(2)Parties bear their own costs in a proceeding of the Tribunal unless otherwise specified in the SAT Act, the enabling Act, or an order of the Tribunal under s 87(1) of the SAT Act. The enabling Act does not provide for costs orders.
(3)The relevant principles that apply to the resolution of a costs dispute are summarised in Questdale.
(4)The onus is on the Society to establish that it is fair and reasonable that the Tribunal's discretion under s 87(1) be exercised in its favour. The Society has failed to discharge its onus for the following reasons:
(a)the proceeding was not drawn out and there were no onerous obligations imposed on the Society as was the case for the medical practitioner in Medical Board of Western Australia and Kyi [2009] WASAT 22 (Kyi) where the Tribunal made no order as to costs against the Medical Board of Western Australia; and
(b)it was reasonable for the applicant to have commenced the proceeding.
(5)The mere fact that the applicant was unsuccessful is not sufficient to warrant a costs order against him.
(6)It would set an unfortunate precedent if the Tribunal's discretion was exercised to order costs against the applicant. The fear of a costs order would deter members of small not-for-profit associations from achieving the resolution of questions, complaints or disputes.
(7)The preliminary issue related to a jurisdictional point and was not a hearing of the substantive dispute. The applicant was entitled to bring the application and the issue of jurisdiction was arguable.
(8)In Lombardi Investments (WA) Pty Ltd and City of Cockburn [2009] WASAT 65 at [65], the Tribunal stated that it is unreasonable to award costs unless there is an exceptional reason to do so.
(9)The amount claimed in costs is excessively disproportionate to the subject matter of the proceeding taking into account that:
(a)the Society is a not-for-profit religious body;
(b)the applicant is of limited means; and
(c)the remedy sought by the applicant was to be given a fair hearing through the Society's dispute resolution procedure and to be reinstated in order to carry out the benevolent objectives of the Society.
(10)An offer that the applicant withdraw its application on the basis that the Society would not seek costs against the applicant is not a bona fide offer. A settlement offer was never made that would entitle the Society to a costs order under r 42 of the Rules.
The Tribunal's consideration
The fact that a party is unsuccessful, or fails on a contention advanced during the course of the hearing, does not automatically support the making of a costs order unfavourable to that party. The presumptive position is that each party will bear their own costs in proceedings before the Tribunal: s 87(1) of the SAT Act.
Although the Tribunal is a 'no cost' jurisdiction, the Tribunal has power under s 87(2) of the SAT Act to order the payment of costs unless otherwise specified in the enabling Act. The enabling Act does not contain any provision in respect of the making of costs orders and, therefore, the costs provisions in Div 5 of the SAT Act apply.
The WA Court of Appeal has observed that s 87(2) of the SAT Act is to be construed in the context that the legal rationale for an order for costs is to compensate the party in whose favour it is made and not to punish the party the subject of the order: Questdale at [51]. This rationale is evident in s 87(3) of the SAT Act which provides that the power of the Tribunal to make an order for the payment of costs includes 'the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought'.
It is relevant to the exercise of the Tribunal's discretion under s 87(2) of the SAT Act whether, and to what extent, the Society can establish that the applicant's conduct has impaired the attainment of the Tribunal's objectives under s 9 of the SAT Act: Questdale at [54].
In Kyi at [73], the Tribunal referred to the following general principle regarding costs:
If a party has conducted itself in such a way as to unnecessarily prolong the hearing, has acted unreasonably or inappropriately in its conduct of the proceedings, has been capricious, or the proceedings in some other way constitute an abuse of process, then this may give rise to an exercise of the discretion to award costs. This encompasses a situation where proceedings should not have been maintained against a party because it is clearly untenable and no reasonable person would have believed they could be successful.
It follows that conduct of a kind referred to in s 46(3), s 47 and s 48 of the SAT Act (which includes failure on the part of an applicant to prosecute a matter, frivolous proceedings and vexatious conduct) is relevant to the exercise of the Tribunal's discretion under s 87(2) of the SAT Act: Questdale at [64]. The question for the Tribunal is whether it is fair and reasonable in the circumstances of the case that a party should be reimbursed for the costs it has incurred. The onus of proof is on the party seeking an order in its favour: Questdale at [51].
The applicant's conduct
The applicant is legally represented in respect of the Society's costs application but was self-represented at the final hearing on the preliminary issue. It is relevant to the exercise of the Tribunal's discretion under s 87(2) that the applicant was not legally represented at the final hearing.
The Society contends that the proceeding was protracted because the applicant failed or refused to understand the nature of the jurisdictional issue. The applicant contends that he was entitled to bring the application and that the jurisdictional issue was arguable.
During the course of the hearing, both the Tribunal and counsel for the Society reminded the applicant on a number of occasions that he need only address the Tribunal in respect of the preliminary issue. However, the applicant repeatedly led evidence from his witnesses that was not relevant to the preliminary issue. The applicant was intent on examining his witnesses and cross-examining the Society's witnesses on matters relating to the substantive dispute not before the Tribunal. The Tribunal finds that the length of the hearing would have been substantially shorter had the applicant limited his evidence and submissions to the preliminary issue. Accordingly, the Tribunal finds that the applicant's intransigence at the hearing was unreasonable and unfairly increased the Society's legal costs.
The offers of settlement
The Society contends that the applicant refused an offer of settlement on 14 November 2019 to withdraw his application on the basis that the Society would not pursue costs against him. A similar offer by the Society was refused by the applicant during the course of the hearing on 28 January 2020.
Rule 42 provides for the making of a costs order if a settlement offer is rejected by a party to a proceeding other than a proceeding in the Tribunal's review jurisdiction. The dispute between the parties falls within the Tribunal's original jurisdiction for the purposes of s 15 of the SAT Act because it does not involve the review of an administrative or government decision. Therefore, the Tribunal finds that r 42 of the Rules applies.
The applicant contends that the Society's two offers do not entitle the Society to a costs order under r 42 because an offer to withdraw an application on the basis that no costs order would be sought is not a bona fide offer. The Tribunal does not accept this contention. It is open to a party under r 42 to make an offer not to pursue costs on the basis that an application is withdrawn.
Nevertheless, the Tribunal finds that the settlement offer made by the Society on 14 November 2019 does not satisfy the requirements of r 42. Although the offer by the Society was in writing and ultimately rejected, the applicant was only given five days in which to accept the offer and not the legislated minimum of 14 days provided for in r 41(2) of the Rules. Further, the offer made by the Society on 28 January 2019 was not in writing as required by r 42 and, therefore the Tribunal finds that it was not an offer of settlement for the purposes of r 42.
Exercise of discretion in this case
The nature of the dispute is relevant to the Tribunal's exercise of discretion under s 87(2) of the SAT Act. In this proceeding, a dispute arose between the Society, a not-for-profit association, and the applicant, a member of the Society, in respect of his removal from office and subsequent suspension as a member. The Tribunal finds that the applicant was entitled to bring the application under s 182(1) of the enabling Act to have a dispute determined by the Tribunal. The Tribunal further finds that the attendances by representative(s) for the Society at directions hearings (including the further directions hearing on 1 November 2020 at which programming orders were made for hearing) were necessary for the proper conduct of the proceeding.
The applicant contends that members of incorporated associations should not be deterred from resolving a dispute before the Tribunal because of the possibility of a costs order against them. The Tribunal accepts the applicant's contention in general but, in respect of this proceeding, the Tribunal could not determine the dispute between the Society and the applicant unless it had the jurisdiction to do so. The purpose of the hearing on 28 and 29 January 2020 was for the parties to provide the Tribunal with evidence and submissions in respect of that discrete issue.
At the hearing, the applicant repeatedly ignored requests by both the Tribunal and counsel for the Society to limit his evidence and submissions to the preliminary issue. The Tribunal accepts the Society's contention that the conduct of the applicant at the hearing caused the length of the hearing to be unnecessarily protracted, which increased costs to the Society. Accordingly, the Tribunal finds that the applicant's conduct at the hearing interfered with the Tribunal achieving its statutory objectives in s 9 of the SAT Act to act speedily and with as little technicality as is practicable, and to minimise costs to parties.
An order for costs should be approached in a broad and relatively robust fashion: Perth Central Holdings Pty Ltd and Doric Constructions Pty Ltd [No 2] [2008] WASAT 302 at [67]. The Tribunal must be satisfied that the costs claimed are reasonable and not excessive in nature: Rae and Prima Homes Nominees Pty Ltd [2020] WASAT 24 at [69].
In Panegyres v Medical Board of Australia [2020] WASCA 58, Vaughan JA provided the following guidance on the minimum amount of information required by the Tribunal to ensure it is in a position to evaluate and assess a claim as to cost:
At the least this requires that the Tribunal be appropriately informed as to the work done and time taken as is claimed for and the rates which are said to apply to that work. The detail required in this respect is a matter for the Tribunal. It may take the form of an affidavit attaching the tax invoices as charged. Alternatively, the Tribunal may consider it appropriate to require a short form bill of costs.
For the purposes of its costs application, the Society provided the Tribunal with itemised tables setting out the legal work completed between 12 September 2019 and 15 April 2020, and the quantum of legal costs incurred for that work at the relevant hourly rate (excluding GST) charged by the Society's solicitors. To defend the application, the itemised table shows that the Society incurred total legal fees of $10,815 (excluding GST). This figure includes $1,750 (excluding GST) for legal representation at the hearing on 28 January 2020, $1,575 (excluding GST) for the second day of the hearing on 29 January 2020, and $700 (excluding GST) for the preparation of the costs application.
The Society has included in its application for costs a breakdown of legal fees relating to the period after it made the offer of settlement to the applicant between 14 November 2019 and 15 April 2020. The cost of the legal work undertaken during this period totals $7,200.10 (excluding GST). For the reasons already given, however, the Tribunal finds that the settlement offer made on 14 November 2019 cannot be relied on by the Society in support of its costs application.
The presumptive position is that parties to a dispute before the Tribunal will bear their own costs. However, the Tribunal is able to order a party to pay all or any of the costs of another party under s 87(2) of the SAT Act. The Tribunal finds that due to the delay caused by the applicant's conduct at the hearing, the applicant should pay to the Society the amount of $1,575 (excluding GST) for the legal costs it incurred for the second day of the hearing, and the amount of $700 (excluding GST) for the preparation of the costs application. The Tribunal finds that these costs are reasonable and not excessive having regard to the nature of the dispute. When GST is applied to these figures, the total sum is $2,502.50. Accordingly, the Tribunal will order the applicant to pay to the Society the amount of $2,502.50 (including GST) by 31 July 2020.
Orders
The Tribunal orders:
1.Pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA), the applicant must by 31 July 2020 pay to the respondent the amount of $2,502.50 (including GST).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
22 JUNE 2020
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