Valastar Pty Ltd v Chief Commissioner of State Revenue
[2010] NSWADTAP 84
•23 December 2010
Appeal Panel - Internal
CITATION: Valastar Pty Ltd v Chief Commissioner of State Revenue [2010] NSWADTAP 84 PARTIES: APPELLANT
RESPONDENT
Valastar Pty Ltd
Chief Commissioner of State RevenueFILE NUMBER: 109018 HEARING DATES: 21 July 2010 SUBMISSIONS CLOSED: 30 July 2010
DATE OF DECISION:
23 December 2010BEFORE: Callaghan P, SC, Deputy President; Frost S - Judicial Member; Bennett C - Non-Judicial Member CATCHWORDS: Land Tax – trust – company trustee – costs of appeal DECISION UNDER APPEAL: Valastar Pty Ltd v Chief Commissioner of State Revenue [2010] NSWADT 46 FILE NUMBER UNDER APPEAL: 109018 LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Land Tax Management Act 1956CASES CITED: AT v Commissioner of Police [2010] NSWCA 131
Attorney General v Wentworth (1988) 14 NSWLR 481
B & L Linings Pty Ltd v CCSR (No.5) (RLD) [2010] NSWADTAP 21
Chief Commissioner of State Revenue v Kelly [2010] NSWADTAP 79
Council of the Law Society of NSW v Dimitriou (No.2) [2010] NSWADT 37
CPT Custodian Pty Ltd v CSR (2005) 224 CLR 98
Department of Human Services v RA (No.2) [2010] NSWADTAP 37
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Jonamill Pty Ltd v Alramon Pty Ltd (No.2) (RLD) [2010] NSWADTAP 3
Kennon v Spry (2008) 238 CLR 366REPRESENTATION: APPELLANT
RESPONDENT
A.M. Ishkharian (Solicitor), W.G. Hodgekiss (Agent)
I. Mescher (Counsel)ORDERS: 1 Appeal dismissed
2 Affirmation of the decision under review confirmed
3 Appellant to pay the Respondent’s costs of the appeal on a party and party basis, as agreed or assessed.
REASONS FOR DECISION
1 This appeal is against a decision (“the subject decision”) of the Tribunal constituted by a Judicial Member in proceedings 096078 (“the subject proceedings”) of 15 February 2010 affirming on review a decision by the Respondent disallowing an objection by the Appellant (“Valastar”) against an amended Land Tax assessment dated 24 July 2008 in respect of a residential property at Strathfield (“the property”), for the 1999-2005 inclusive Land Tax years. The Notice of Appeal alleges that the Tribunal erred in law:
A. By failing to hold that the Hearing could not proceed until a Hearing of the Appeal from Mr Verick had been determined.
B. By failing to hold that the amended assessment was incompetent because it was issued at a point of time after the applicant disposed of the property.
D. By failing to hold in respect of the 2003 year that the concessional trust contention should operate by virtue of Section 10AA(2).C. By failing to consider at paragraph 16 the effect of Spry’s Case in the High Court.
2 The following chronology will provide a relevant background:
1988 Mr William Hodgekiss and Mrs Sandra Hodgekiss who had previously rented the property purchased it as their family home.
6 January 1994 Mr Hodgekiss entered into a Part X arrangement with his creditors under the Bankruptcy legislation.
15 January 1996 Valastar was incorporated.
25 January 1996 A Deed was executed constituting the Sandra Hodgekiss Family Trust with the settlor being Mr Arthur Wood, the father of Mrs Sandra Hodgekiss, Valastar being the trustee and the beneficiaries being Mrs Sandra Hodgekiss and any of her children.
9 February 1996 Valastar acquired the property and the then first mortgagee was paid out.
28 October 1999 Mrs Sandra Hodgekiss and Mr Dean Van Dyke, her son by a previous marriage, who was born in 1971, became directors of Valastar replacing Mr Bernie Houghton and Mr Robert Gehring, who had been the original directors.
15 June 2000 Mrs Sandra Hodgekiss became the sole director of Valastar.
15 April 2001 A Deed of Variation of the Sandra Hodgekiss Family Trust was executed whereby the children of Mrs Sandra Hodgekiss were deemed to be Ms Alexandra Hodgekiss (who was born in 1985) and Mr Dean Van Dyke.
23 September 2003 Five Notices of Assessment were issued from 1999 to 2003 Land Tax years to Valastar totalling approximately $54,000.00.
22 January 2004 Notice of Assessment issued for 2004 Land Tax year for $12,221.00.
10 February 2004 Valastar lodged objections to assessments for 2000 to 2003 Land Tax years on the basis of land value.
17 February 2004 Valastar lodged an objection to the assessment for the 2004 Land Tax year on the basis of land value.
18 February 2004 Valastar lodged an objection to the assessment for the 1999 Land Tax year on the basis of land value.
11 March 2004 Valastar lodged objections to the six assessments for the 1999 to 2004 Land Tax years on the basis of land value of the property, with the Valuer-General.
14 April 2004 Instalment arrangement entered into in respect of outstanding Land Tax.
28 July 2004 Instalment arrangement entered into in respect of outstanding Land Tax.
11 October 2004 Valastar’s objections disallowed by Valuer-General.
19 January 2005 Notice of Assessment issued for 2005 Land Tax year for $10,600.00.
February 2005 Valastar objected to the assessment for the 2005 Land Tax year on the basis of land value.
18 March 2005 Instalment arrangement entered into in respect of outstanding Land Tax.
30 August 2005 Instalment arrangement revocation notice sent to Valastar.
31 August 2005 Further instalment arrangement entered into in respect of outstanding Land Tax.
26 October 2005 Instalment arrangement revocation notice sent to Valastar.
21 December 2005 Mrs Sandra Hodgekiss became registered proprietor of the property pursuant to an order of the Family Court, she and Mr William Hodgekiss having been divorced.
5 February 2006 Notice of Assessment issued for 2006 Land Tax year for “Nil” together with assessment summary for previous years.
29 January 2008 Valastar objected to assessments for 2000-2004 Land Tax years on the basis that Valastar was the trustee of a concessional trust with an infant beneficiary.
12 February 2008 Objection disallowed.
2 June 2008 Respondent demanded payment of approximately $74,986.90 in outstanding Land Tax.
23 June 2008 Valastar objected to assessment for 1999 Land Tax year.
22 July 2008 Respondent determined objections to the 2002 to 2004 Land Tax years by wholly disallowing them.
24 July 2008 Land Tax Notice of Assessment issued for 1999 to 2005 Land Tax years totalling $122, 432.25 based upon the trust being a special trust with no tax thresholds imposed.
29 August 2008 Valastar objected to above assessment.
2 September 2008 Application made to the ADT for review – proceedings 086057.
16 February 2009 Proceedings 086057 adjourned pending determination by Respondent of objection dated 29 August 2008.
2 March 2009 Respondent determined objection dated 29 August 2008 by wholly disallowing it.
3 July 2009 Further application for review filed in ADT – proceedings 096078.19 June 2009 Proceedings 086057 withdrawn and dismissed.
3 The first question of law alleged in the present appeal is that the Tribunal erred in law:
“By failing to hold that the Hearing could not proceed until a Hearing of the Appeal from Mr Verick had been determined.”
This requires a closer consideration of what happened in relation to proceedings 086057.
4 Proceedings 086057 sought to challenge the disallowance by the Respondent on 22 July 2008 of the objections by variation to the assessment of 2 June 2008 for $74,986.90 on the stated ground that:
“The assessment is not in accordance with law and in particular failed to appropriately consider the position of the company as trustee of a concessional trust.”
5 After proceedings 086057 were instituted, an amended Assessment was issued for Land Tax on the property on 24 July 2008.
6 An affidavit dated 18 June 2009 by Mr N.G. Cassim, Solicitor, on behalf of Valastar was filed in proceedings 086057 seeking the following orders in that application:
“1. That the Application for Review filed by the Applicant be dismissed with no order for costs and without admissions and without prejudice to any other proceeding.
2. That Valastar be granted leave to file out of time an Application for Review of the disallowance of its objection to the Amended Assessment before 18 July 2009.”
7 On 19 June 2009, Mr C.A. Sweeney QC appeared on behalf of Valastar at a directions hearing. He submitted to the Tribunal that the dispute now being about the merits of the disallowance and the objection to the amended Assessment (of 24 July 2008), the Tribunal had no jurisdiction to consider that and a new Application would have to be filed. Mr I. Mescher of Counsel on behalf of the Respondent submitted that the Tribunal did in fact have jurisdiction but did not oppose the applications by Valastar. Transcript of that hearing concludes as follows:
“VERICK: Well, if the parties agree that the application be amended to reflect the new decision then I get jurisdiction.
SWEENEY: Well, I don’t know.
VERICK: Well, we’re not going to argue that point---
SWEENEY: No, we’re not.
VERICK: --because I’m going to dismiss it and I’ll leave the rest to you to do what you wish to do in due course.”
Clearly enough, the Tribunal dismissed the application. Nevertheless, the bench record of proceedings contains a tick in a box beside a line reading “Application dismissed/decision affirmed” and there is no deletion of the second of those potential orders. Consistently with the situation then debated before the Tribunal, proceedings 096078, now under appeal, were instituted by Valastar on 3 July 2009 and then the Respondent has raised no objection concerning the late filing of that Application.
8 The Tribunal Registry had issued a notice to the parties in proceedings 086057 on 19 June 2009, inaccurately stating that the decision made by the Tribunal on 19 June 2009 was that the decision under review had been affirmed. On 15 September 2009 Valastar lodged a Notice of Appeal 099052 against the decision in proceedings 086057 on the stated basis that there had been a failure to provide reasons for the decision.
9 At a directions hearing on 20 January 2010 in appeal 099052 a direction was made, it seems, in the following terms:
“Direct the Appellant write to Judge O’Connor (with the consent of the Respondent) to seek amendments of decision of Mr Verick’s orders under the slip rule so as to note that the Order reflects dismissal, upon which amendment, the appeal will be withdrawn, such that it be sent on or before 27 January 2010 and copies sent to the Respondent.”
Apparently no such letter as directed was sent by Valastar. On 29 January 2010 the President authorised action by the Registry, which was taken that day, to issue a replacement Notice of Decision correctly recording the decision on 19 June 2009 as “Application Dismissed”. That Notice of Decision was issued under cover of a letter from the Registrar, evidently sent to both solicitors:
“Please find enclosed amended Notice of Decision in accordance with directions given by Needham DP in appeal file no. 099052 on 20 January 2010 and by consent of President Judge O’Connor on 29 January 2010.”
10 That communication from the Registrar seems to have crossed in the mail or delivery with a letter of the same date from Mr Cassim to the Registry advising that the opinion of Mr Sweeney was that “any review should be by way of rehearing and not properly the subject of a Consent Order”. Mr Cassim wrote again to the Registry on 15 March 2010:
“We cannot agree to the peremptory dismissal of this application and respectfully suggest that an alternative hearing date be allocated suitable to our Counsel, Mr Sweeney QC.”
On 19 March 2010 appeal proceedings 099052 were the subject of another directions hearing. Mr Cassim, Solicitor, appeared for Valastar and the appeal was dismissed.
11 At the hearing in the subject proceedings 096078 on 1 February 2010, Mr Hodgekiss appeared by leave as agent of Valastar. In the subject decision at [5]-[7] the Judicial Member dealt with the history of proceedings 086057 and of appeal proceedings 099052. At [8] he dealt with the situations now referred to in the first ground of appeal as follows:
“…Mr Hodgekiss…raised an objection to the effect at the commencement of this hearing that until a hearing of the appeal had taken place this hearing before the Tribunal should not proceed. He did not explain why this was so or otherwise furnish reasons for his objection. As to what purpose a hearing in respect of the appeal would in these circumstances serve is altogether unclear and the Tribunal is of the view that this issue (if issue it is) is of no relevance whatsoever.”
At [28] the Judicial Member added some relevant comments by way of conclusion including:
“At the risk of labouring the point the Verick decision as to the dismissal of the application was made at the express request of the Applicant. The fact that the dismissal led to a decision which had the effect that the decision under review was mistakenly affirmed was clearly erroneous and easily corrected. No appeal was necessary or desirable and there is certainly no need whatever for a hearing of the appeal. The contention that an appeal was needed because reasons for the Verick decision had not been furnished and where the Applicant had been referred to the transcript was regrettable. …”
12 In this appeal the written submissions filed on behalf of Valastar do not develop any contentions seeking to sustain this ground of appeal. The Respondent’s written submissions contain the following:
“(The Notice of Decision of 19 June 2009) was an innocent error made by the Registrar. At no stage did Judicial Member Verick affirm the decision of the Respondent. Rather, the Notice of Decision should have read ‘Application Dismissed’. Some time after 19 June 2009, presumably by reason of the Notice of Decision stating ‘Decision Affirmed’, the Appellant applied for reasons in writing under Section 89(3) of the Administrative Decisions Tribunal Act 1997 of this decision. On or about 16 August 2009, the Registry informed the Appellant that the oral reasons previously delivered by Judicial Member Verick on 19 June 2009 comply with Section 89(5) of the ADT Act and that no further reasons for the decision are required. A copy of the transcript of 19 June 2009 was attached.”
13 As we have said, it is clear that the Tribunal dismissed proceedings 086057 on 19 June 2009. The reference by the Registry then to affirmation of the decision under review, was a formal or clerical inaccuracy which did not affect the substance of what had transpired. Appeal proceedings 099052 were inappropriate and in any event were ultimately dismissed with Valastar’s Solicitor in attendance, on 19 March 2010. If our views in this regard be wrong in some respect, and an inaccurate order was made, the situation was in any event appropriately retrieved with the authority of the President on 29 January 2010, consistently with s87 of the ADT Act.
14 In respect of the first ground of appeal no error at all has been established, let alone an error involving a question of law.
15 The second ground of appeal asserts that the Tribunal erred in law “by failing to hold that the amended assessment was incompetent because it was issued at a point of time after the Applicant disposed of the property”. In the subject decision the situation evidently covered by this ground of appeal was referred to at [10] as follows:
“Mr Hodgekiss contended that the amended assessment … against the Applicant in respect of the relevant years, was incompetent because it was issued in point of time after the Applicant had disposed of the property; the chronology quoted earlier in these reasons indicates that the property was transferred by the Applicant to Mrs Sandra Hodgekiss on 21 December 2005 and thus after the taxing point for the 2005 year. In respect of that contention no authority whatever in support was cited and it is clearly without any merit whatever. An assessment for land tax in respect of the relevant years was competent against the Applicant who was the owner of the property during the relevant years; it seems clear moreover that there was no other owner of the property during the relevant years and so that there was no other person against whom the assessment in question could have been issued.”
16 As the Respondent submits, even though the date of issue of the amended assessment was after the date of disposal of the property by Valastar, the assessment did not seek to tax Valastar in respect of any years that were not the subject of ownership of the property by Valastar, and indeed, by reason of its disposal of the property Valastar received a “Nil” Land Tax assessment for 2006 Land Tax year. For each Land Tax year, the tax is charged on land as owned at midnight on the 31st day of December immediately preceding the year for which the Land Tax is levied (s8 of Land Tax Management Act 1956 – “LTMA”).
17 The second ground of appeal has not been made out.
18 The third ground of appeal alleges that the Tribunal erred in law by failing to consider at paragraph 16 the effect of Spry’s case in the High Court. The case referred to is Kennon v Spry (2008) 238 CLR 366. Paragraph [16] of the subject decision is as follows:
“A consideration of the trust deed as a whole, and including in this context the deed of variation, has the effect that it is clear that the trust is a discretionary trust; the Tribunal refers in this context to in Dyneset Pty Limited v Commissioner of State Revenue [2008] NSWADT 245; CPT Custodian Pty Limited v Commissioner of State Revenue (Victoria) (2005) 224 CLR 98; and GTN Developments Pty Limited v Chief Commissioner of State Revenue [2007] NSWADT 168.”
19 The point made in [16] of the subject decision, particularly in light of the CPT Custodian decision in the High Court, the definition of “discretionary trust” in s3(1) of the LTMA and the provisions of the trust deed set out in [15] of the subject decision, seems unexceptional. Clearly enough, at all relevant times Valastar was the “owner” in accordance with the definition of that term in s3(1) of the LTMA. The issue in Spry’s case was whether interests in certain trust assets constituted property of the parties to a marriage for the purposes of s79 of the Family Law Act 1975. It has not been explicitly submitted to us on behalf of Valastar how Spry’s case could have been of assistance in the subject proceedings and we are unable to deduce any present relevance of that case to this appeal. It appears that no reference was made in Valastar’s written submissions in the subject proceedings to Spry’s case but there was a reference to it made in those proceedings during argument by Mr Hodgekiss when he appears to have conceded that this involved an academic argument as to whether or not the relevant beneficiaries had a proprietary right and was not relevant:
“MESCHER: Quite so, and CPT really reaffirms that proposition. So I don’t know if your decision---
HODGEKISS: Might I say, Mr Block, that that’s not without question now after the High Court in Kennon v Spry, and I’ll give you the reference to Kennon v Spry, this has produced howls of indignation from Mr Spry, who was a leading tax ---
BLOCK: I know, I know all about Mr Spry – Dr Spry actually. This is purely academic, there was no doubt in my mind that at least for the purposes of this Act your ex-wife, Alexandra and your stepson were beneficiaries.
HODGEKISS: No, that’s quite true.
BLOCK: I mean academic argument as to whether or not they had a proprietary right is not relevant.
HODGEKISS: That’s right, we’ve diverted into that by Mr Mescher completeness in giving you those references, that’s all.
BLOCK: Let’s go on with Dyneset.”
20 In these circumstances, we do not see that any error of law was committed by the Tribunal in not giving in the subject decision itself explicit consideration to Spry’s case.
21 The fourth ground of appeal is that the Tribunal erred in law by failing to hold in respect of the 2003 year that the concessional trust contention should operate by virtue of s10AA(2). The concept of concessional trust was introduced into the LTMA with effect in and from the 2003 Land Tax year. The definition of concessional trust is contained in s3B of the LTMA which relevantly provides:
“(1) For the purposes of this Act, a trust is a “concessional trust” if:
(a) the trust property includes land, and
(b) each person who is a beneficiary of the trust is:
(i) a person under the age of 18 years, or
(ii) a person in respect of whom a guardianship order is in force under the Guardianship Act 1987, or
(iii) a person in the target group within the meaning of the Disability Services Act 1993.
(2) For the purposes of this section, a person is a ‘beneficiary’ of a trust if the person is a person, or a member of a class of persons:
(a) in whose favour, by the terms of the trust, capital or income the subject of the trust may be applied:(b) entitled or permitted, under the terms of the trust, to use and occupy land that is the subject of the trust.”
(i) in the event of the exercise of a power or discretion in favour of the person, or
(ii) in the event that a discretion conferred under the trust is not exercised, or
22 S10(1)(r) provided then exemption from Land Tax in respect of land “that is used and occupied as the principal place of residence of the owner of the land”. S10AA(1) and (2) provided as follows:
“(1) Land is not exempt from taxation under section 10(1)(r) if:
(a) the land is owned by a company, unless the land is owned by a trustee company acting in its representative capacity or a company acting in its capacity as trustee of a concessional trust, or
(b) the owner of the land, or each of the joint owners, who use and occupy the land as a principal place of residence is an owner only by reason of being a trustee, or
(c) the land is owned by a person who is a trustee acting in the person’s capacity as trustee of a special trust.
Note. The expression trustee company (as referred to in subsection (1)(a)) is defined in section 3(1).
(2) For the purposes of section 10(1)(r), land that is owned by a company acting in its capacity as trustee of a concessional trust is taken to be used and occupied as the principal place of residence of the owner of the land only if the person, or one of the persons, who so uses and occupies the land is a person who is a beneficiary of the trust.”
23 The factual point involved in this issue is that Ms Alexandra Hodgekiss did not turn 18 until April 2003 and evidently was a resident in the property.
24 At [17] to [21] the subject decision explains that the trust was not a concessional trust as only one of the persons who was a beneficiary of the trust was under the age of 18 years and that it was not a situation where “each person who is a beneficiary of the trust was under the age of 18 years”. That explanation seems to us to be correct in point of law and we do not perceive any new argument to have been directed to us in this appeal suggesting otherwise.
25 The subject decision deals with s10AA(1) and s10AA(2) in [24]:
“(c) Section 10AA(1)(a) provided that land would not enjoy the PPR (principal place of residence) exemption where it was owned by a company unless that company was acting as trustee of a concessional trust; section 10AA(1)(b) made it clear that there could not be an exemption in respect of land owned by a special trust.
(d) Section 10AA(2) provided that land owned by a company in its capacity as trustee of a concessional trust would enjoy the exemption only where any beneficiary (occupied) the land as his or her PPR. The effect of this provision is that the exemption applies where any beneficiary occupies, but does not alter the fact that the trust is not a concessional trust unless each and every beneficiary is under 18. It is important to note that in this subsection AA(2) the word ‘any’ is used and in contrast to the use of the word ‘each’ in the definition.”
Subject to one aspect, those sub-paragraphs in our opinion substantially involve a proper construction and application to the relevant facts of the provisions. That one aspect is that in the last sentence quoted, it is suggested that the word “any” is used in s10AA(2); that is not correct and the relevant reference is to “the person, or one of the persons”. Nevertheless the contrast to use the word “each” in the definition of “concessional trust”, remains, and that inaccuracy in language does not affect the dominant conclusion, properly made there, that the exception to s10AA(1)(a) did not apply as the subject trust was not in any event a concessional trust.
26 The subject decision also deals at [22] to [26] with the concept of “special trust” and, correctly in our view, concludes that the subject trust was at all relevant times a special trust for the purposes of the LTMA. We see no reason to develop our consideration of this point as it is not one that is raised in the appeal.
27 In our assessment, the fourth ground of appeal has not been made out.
28 It follows, therefore, that the appeal should be dismissed and that the affirmation in the subject decision of the decision under review be confirmed.
29 The Respondent has applied for costs of the appeal in this event. The Respondent submits the appeal is vexatious and Valastar’s submissions have no tenable basis in law. The Respondent points particularly to s88(1A)(a)(vi), s88(1A)(b) and s88(1A)(c) of the ADT Act. S88 relevantly provides as follows:
“(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:
…
(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,
…
(e) any other matter that the Tribunal considers relevant.”
30 No order for costs was made in the subject decision and we gather no such order was sought in the subject proceedings. We do not see that there has been any unreasonable prolongation of these appeal proceedings and that s88(1A)(b) is presently relevant. It seems to us that the ultimately relevant questions are whether Valastar has vexatiously conducted the proceedings (s88(1A)(a)(vi)) and/or has made a claim that has no tenable basis in fact or law as referred to in s88(1A)(c).
31 In the subject decision the Tribunal at [29] expressed the view that such contentions as were pressed in the subject proceedings had no merit. Nevertheless, questions as to whether the proceedings were vexatiously conducted by Valastar and involved claims that had no tenable basis in fact or law require further consideration.
32 In the context of an issue whether a person should be found to be a vexatious litigant within s84(1) of the Supreme Court Act 1970, Attorney General v Wentworth (1988) 14 NSWLR 481 at 487-491 provides in our opinion instruction which also has some relevance for present purposes. In that case, Roden J held that no order should be made against the litigant involved under that provision but expressed his conclusions as to the relevant law at p 491 as follows:
“It seems then that litigation may properly be regarded as vexatious for present purposes on either objective or subjective grounds. I believe that the test may be expressed in the following terms:
1. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought.
2. They are vexatious if they are brought for collateral purposes, and not for the purpose of having the court adjudicate on the issues to which they give rise.
3. They are also properly to be regarded as vexatious if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless.
4. In order to fall within the terms of s 84:
(a) proceedings in categories 1 and 2 must also be instituted without reasonable ground (proceedings in category 3 necessarily satisfy that requirement);
(b) the proceedings must have been ‘habitually and persistently’ instituted by the litigant.”
Paragraphs 1, 2 and 3 in that passage require consideration but clearly enough no case within paragraph 1 or paragraph 2 is involved here. Consideration of the epithets in paragraph 3 prompts contemplation of the General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 line of authority. In the General Steel case Barwick CJ said at 129, in the context of a summary dismissal application dealing with similar concepts:
“The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense’.
At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or ‘so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument’; ‘so to speak apparent at a glance’.”
The General Steel case has been considered recently in this Tribunal in Chief Commissioner of State Revenue v Kelly [2010] NSWADTAP 79 at [14]-[15]. Nevertheless, it has to be remembered that the assessment by us of the strength and tenability of the appeal grounds prosecuted in the appeal is made after the hearing of the appeal and not on an interlocutory basis, as in a summary dismissal application.
33 There has also to be remembered the overlying provision at the commencement of s88(1A) that the basic position in s88(1) that each party is to bear the party’s own costs in the proceedings is to be altered “only if (the Tribunal) is satisfied that it is fair to do so having regard to (the matters set out in paragraphs (a) to (e))”. We bear in mind, too, the consideration and application of s88 by this Tribunal in various cases, especially Jonamill Pty Ltd v Alramon Pty Ltd (No.2) (RLD) [2010] NSWADTAP3 at [24] to [33] and [41] to [48], B & L Linings Pty Ltd v CCSR (No.5) (RLD) [2010] NSWADTAP 21 at [115] and following paragraphs, Council of the Law Society of NSW v Dimitriou (No.2) [2010] NSWADT 37 at [11], and Department of Human Services v RA (No.2) [2010] NSWADTAP 37 at [5], [10] and [11]; as well as the consideration and application of the section by the Court of Appeal in AT v Commissioner of Police [2010] NSWCA 131 at [18] to [35]. In particular we note [33] in AT v Commissioner of Police:
“33 That approach does not diminish 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. 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 Tribunal Act.”
We also note in particular [41]-[44] in the Jonamill decision:
“41 As we view the matter, an important question of principle on which our decision on this application depends is the degree of weight that we should attribute to the two decisions in VCAT on which Mr Sneddon placed reliance.
42 For two reasons, we believe that we should not treat these decisions as controlling the interpretation of section 88(1A)(c), for the purposes of these proceedings, to such an extent that this subparagraph should only be considered applicable if Jonamill’s case in the appeal could properly be characterised as ‘unarguable, unreasonable or untenable’.
43 The first reason is that to apply the subparagraph in this way is to ignore that part of its wording that refers to ‘the relative strengths of the claims made by each of the parties’. The subparagraph refers to ‘a claim that has no tenable basis in fact or law’ only by way of exemplifying cases in which there is a very great disparity between these ‘relative strengths’.
44 Secondly, to take this approach would involve ignoring the authorities (cited above at [26-30]) establishing that under section 88 in its previous form costs were more readily awarded when either (a) the case arose in the Retail Leases Division or (b) costs were being sought against an unsuccessful appellant. The present proceedings fall into both these categories.”
As to [44] in Jonamill, while the present case did not arise in the Retail Leases Division, it does involve costs being sought against an unsuccessful appellant.
34 We take into account as a factor in Valastar’s favour in relation to the costs issue that while he did not appear in the subject proceedings or on the appeal, Queen’s Counsel was evidently consulted by Valastar on the matter.
35 In supplementary written submissions it is put on Valastar’s behalf that no order for costs should be made against Valastar as, it is contended, “the main distortion in the litigation arose from a mistake in the order regarding the original assessment”. We have dealt with that situation above in relation to the first ground of appeal. This contention on Valastar’s behalf is contrary to our conclusions, which we have explained above, and accordingly we reject it.
36 Our conclusions on consideration of the matters as to costs canvassed above are that we are satisfied that the appeal was not vexatiously conducted by Valastar but that the appeal had a sufficiently untenable basis in law and in fact (as we have explained in dealing above with each ground of appeal) to require in fairness that Valastar should pay the Respondent’s costs of the appeal.
ORDERS
1. Appeal dismissed.
2. Affirmation of the decision under review confirmed.
3. Appellant to pay the Respondent’s costs of the appeal on a party and party basis, as agreed or assessed.
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