CITATION: Hutchings Electrical Pty Limited & Anor -v- Director General, Department of Fair Trading (No 2) [2002] NSWADT 255 DIVISION: General Division FIRST APPLICANT Hutchings Electrical Pty Limited PARTIES: SECOND APPLICANT Steven Owen Hutchings RESPONDENT Director General, Department of Fair Trading FILE NUMBER: 023198 HEARING DATES: 08/10/2002 SUBMISSIONS CLOSED: 11/15/2002 DATE OF DECISION: 12/06/2002 BEFORE: Montgomery S - Judicial Member APPLICATION: Costs MATTER FOR DECISION: Costs Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Fair Trading Act 1987 Legal Profession Act 1987 Victorian Civil and Administrative Tribunal Act 1998 Bar Ristretto Pty Ltd v. Ansett Australia Limited [2002] NSWADT 124 Prasad & Anor v. Fairfield City Council (RLD) [2002] NSWADTAP 2 revised 26/02/2002 Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd (RLD) [2001] NSW ADTAP 31 Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd (RLD) [2001] NSW ADTAP 31 CASES CITED: Mangoplah Pastoral Company P/L v Great Southern Energy (No 2) [2002] NSWADT 4 Charteris -v- General Manager, Leichhardt Municipal Council (No. 2) (GD) [2001] NSWADTAP 39 Windsurfing International Inc v Petit (1987) AIPC 90-441 Latoudis v Casey [1990] 170 CLR 534 Ohn v Walton (1995) 36 NSWLR 77 APPLICANTS REPRESENTATION: G Jackson, solicitor RESPONDENT F Campora, solicitor ORDERS: 1. The Respondent is to pay the Applicant's costs in relation to these proceedings; 2. In the absence of agreement between the parties these costs are to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987. THE APPLICATION 1 This matter relates to an application for review of a decision of the Director General, Department of Fair Trading ("the Respondent"), to suspend for 60 days licences held by Hutchings Electrical Pty Limited and Mr Steven Owen Hutchings ("the Applicants"). The substantive matter was heard on 25 September 2002. 2 In determining the substantive matter I made the following orders: "1. The decision of the Director General dated 30 August 2002 to suspend the contractor's licence of Hutchings Electrical Pty Limited is set aside 2. The decision of the Director General dated 30 August 2002 to suspend the qualified supervisor's certificate of Mr Steven Owen Hutchings is set aside." 3 Following those orders, the Applicants sought an order for costs. The matter was listed to deal with the issue on 8 October 2002 and a timetable was set for the filing of written submissions. Each of the parties filed submissions and submissions in reply were filed by the Applicants. RELEVANT LEGISLATION 4 The Tribunal's power to award costs in relation to proceedings before is governed by section 88 of the Administrative Decisions Tribunal Act 1987 ("the ADT Act"). Section 88 of the ADT Act provides: "88 Costs (1) 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 there are special circumstances warranting an award of costs. (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 the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 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." APPLICANTS' SUBMISSIONS 5 Written submissions prepared by Mr Davie of Counsel were filed on behalf of the Applicants. Mr Davie also prepared submissions in reply to those filed on behalf of the Respondent. Mr Davie's submissions raised several issues which he argued should ground the Applicants' claim for costs. 6 These proceedings were triggered by the decision of the Respondent to exercise his suspension power granted pursuant to section 64A of the Fair Trading Act 1987. Mr Davie argued that in normal circumstances, the Respondent will assess whether there is rational and persuasive evidence for the formation of a belief that the criteria specified in section 64A are satisfied and use the power as a safeguard where other measures available to the Department will not protect consumers from significant loss or damage. 7 Mr Davie submitted that in this particular case, with the exception of a single defect, there appears to have been no rational or persuasive evidence to warrant the formation of a belief that any of the conduct alleged constituted grounds for suspension or cancellation of the licence under the relevant legislation. Further, there appears to have been no rational or persuasive evidence to warrant the formation of a belief that the licensee would continue to engage in the alleged conduct and there was simply no evidence, rational, persuasive or otherwise to support the proposition that there was a danger that a person or persons may suffer significant harm or significant loss or damage as a result of the conduct alleged unless action was taken urgently, and accordingly the Respondent's case was necessarily doomed to failure. 8 Mr Davie submitted that the fact that the dispute was triggered by a decision to suspend in such circumstance would constitute those circumstances as special. 9 It is submitted that if the action taken by the Respondent has arisen as the result of complaints based generally on contractual disputes then section 64A of the Fair Trading Act is not the correct avenue to address those disputes. Other more appropriate avenues are available and it is submitted that the fact that an inappropriate avenue had been taken should be considered a special circumstance. 10 Mr Davie also submitted that the manner in which the Respondent's case was presented should constitute special circumstances. The Applicants were forced to incur substantial costs in order to respond to a mass of allegations, many of which were unclear, and a significant number of which were subsequently abandoned. Moreover the key evidence put forward by the Respondent to identify major defects was that of a Mr Johnson. It became clear in the course of limited cross examination that the evidence was not his own. This too should, it is submitted, constitute a special circumstance. 11 Mr Davie concedes that an order for costs should not be a sanction to punish agencies for poor administration. Nevertheless, he submitted that in this case there has been a failure to take into account the provisions permitting the exercise of the power reviewed. The Respondent had failed to observe the statutory procedures pertinent to the application to the Tribunal. 12 Mr Davie requested that the Tribunal assess the Applicants' costs. He argued that in this case an assessment by the Tribunal would be appropriate because the proceedings were held urgently, and the Tribunal has a detailed appreciation of the circumstances of the application. To have the costs assessed by the Court would merely cause additional delay and burden the Applicants still further. RESPONDENT'S SUBMISSIONS 13 The Respondent opposed the Applicants' application that he be ordered to pay costs of the proceedings. Ms Campora prepared and filed written submissions on behalf of the Respondent. She argued that costs can only be awarded if there are 'special circumstances' warranting the award of costs. The usual rule in the Tribunal is that parties bear their own costs of proceedings. 14 Ms Campora observed that there is no guidance within the ADT Act as to what 'special circumstances' are. She submitted that an appropriate guidance may be found by reference to section 109(3) of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCATA"). She also referred to a number of decisions of this Tribunal in which the VCATA had been considered: Bar Ristretto Pty Ltd v. Ansett Australia Limited [2002] NSWADT 124; Prasad & Anor v. Fairfield City Council (RLD) [2002] NSWADTAP 2 revised 26/02/2002; and Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd (RLD) [2001] NSW ADTAP 31. 15 The relevant elements of section 109(3) of the VCATA provide: "(3) The Tribunal may make [a costs order] .... only if satisfied that it is fair to do so, having regard to - (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; (ii) failing to comply with this Act, the regulations, the rules or an enabling enactment; (iii) asking for an adjournment as a result of (i) or (ii); (iv) causing an adjournment; (v) attempting to deceive another party or the Tribunal; (vi) vexatiously conducting the proceeding; (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding; (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 proceeding; (e) any other matter the Tribunal considers relevant." 16 Ms Campora submitted that, using the factors listed in section 109(3) of the VCATA as a guide, it is not appropriate for costs to be awarded to the Applicants. 17 Ms Campora observed that there is no suggestion or finding by the Tribunal that the Director-General did not engage in an assessment of the evidence prior to forming a belief that the criteria specified in section 64A had been satisfied. She argued that the decision by the Director-General to use a power available to him as opposed to another power does not give rise to a special circumstance that warrants the granting of costs. 18 The Respondent denies that the decision to suspend the authorities of the Applicants in the circumstances of this matter was aberrant and unusual, or that it was based on an absolute lack of evidence. That the Tribunal did not ultimately agree with the Director-General's view of the material before him does not create a special circumstance. 19 In relation to the Applicants' suggestion that the manner in which the Respondent's case was presented constitutes special circumstances Ms Campora observed that the majority, if not all, of the material filed by the Applicants in response to the Respondent's material involved the Defect Notices and the defective, and incomplete work noted therein. The allegations that the Applicants suggest were abandoned did not form any part of the basis for the suspension of the authorities. 20 In relation to the Applicants' submissions regarding the evidence of Mr. Johnson, Ms Campora argued that his evidence was in fact his own. Whilst he may not have inspected the sites the subject of the complaints, he perused the Notice of Electrical Work forms and Defect Notices and came to his own conclusions as to whether a defect was major or minor from the descriptions of the defective work noted by the inspector who did inspect the site. She submitted that the Applicants' belief as to the appropriateness of a witness does not bring the matter within 'special circumstances'. 21 Ms Campora further submitted that whilst the Respondent was not successful in these proceedings, this alone is not a special circumstance. She referred to decisions of this Tribunal in Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd (RLD) [2001] NSW ADTAP 31 and Mangoplah Pastoral Company P/L v Great Southern Energy (No 2) [2002] NSWADT 4 as authorities for that proposition. She argued that as the other issues raised by the Applicants as amounting to special circumstances cannot be considered as such, it is appropriate in the circumstances of this matter that the usual rule apply, namely that each party bear its own costs. FINDINGS 22 The Tribunal is a creature of statute and has no inherent power to make an order for costs; its power to award costs is derived from its enabling statute. It must find its power in the express language of the statute. The basic rule as to costs in the Tribunal is that each party bears their own costs. This rule may be departed from if the Tribunal is satisfied that there are 'special circumstances' justifying departure from the rule: section 88 of the ADT Act. 23 The Tribunal has been guarded in making decisions to impose costs where an aggrieved person is challenging an adverse government agency decision. The Tribunal has generally resisted submissions that adverse costs orders be made as a sanction to reprove allegedly unreasonable conduct by a government agency which has led to a citizen having no option but to apply to the Tribunal for relief, and in so doing incurring professional costs. See for example Charteris -v- General Manager, Leichhardt Municipal Council (No. 2) (GD) [2001] NSWADTAP 39. Government agencies do not usually press costs applications where an Applicant is unsuccessful and in my view this is an appropriate stance. 24 However, the position is more complicated where, as in this matter, an Applicant may have been put to considerable expense in challenging the action taken by a Government agency and it appears that the action taken by the Government agency should never have been taken. 25 The legislature has given a clear indication that the Tribunal is not to apply the usual approach of an unfettered discretion to award costs in judicial proceedings, i.e. that costs follow the event. The "event" refers to the practical result of the claim: Windsurfing International Inc v Petit (1987) AIPC 90-441 per Waddell J. Something more than success is needed to warrant an order, whether the successful party is a citizen challenging an administrative decision or an administrative agency resisting such a challenge. 26 In this matter the Applicants have substantially succeeded. It therefore is necessary to determine whether the usually rule that each party pay their own costs should be displaced. I note the Respondents submissions in relation to the lack of guidance in the ADT Act as to what is to be considered as 'special circumstances' and the Tribunal's reference to the VCATA in various decisions. In my view the approach proposed by the Respondent is reasonable in the circumstances of this matter. 27 In my decision in the substantive matter, I concluded at paragraphs 42 - 45: "With a single exception, I am not satisfied that the conduct alleged against each licensee falls within ground (a) of section 64A(2) of the FTA. The only exception is the single defect in which the reporting Energy Australia inspector disconnected the power supply. In my opinion, the evidence before the Tribunal does not lead to the conclusion reached by the Director-General in relation to any other item. I do not accept that the alleged defects constitute grounds for suspension or cancellation of the licence on the standard outlined by the Tribunal's President in Rizen Smash Repairs . I have considered the arguments presented by the Applicants regarding the interpretation of the applicable Wiring Rules that the Applicants have disputed. With respect to the items, referred to above, which have been classified as major defects, it is my view that it is reasonably arguable that they are not in fact defects at all. I therefore have difficulty in concluding that ground (a) of section 64A(2) of the FTA has been satisfied. Even if there are grounds for suspension or cancellation of the licence, I do not accept that it is likely that the licensee will continue to engage in that conduct. On the evidence before me I think it is highly unlikely that in the future the Applicants will engage in conduct that constitutes grounds for suspension or cancellation of the licence. It follows that I am not satisfied that the requirements of ground (b) of section 64A(2) of the FTA are satisfied. Even if I am wrong and the requirements of section 64A(2) (a) and (b) have been made out, I am not satisfied that there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently. There is simply no evidence to support that proposition. In my opinion, the Applicants' conduct has been such that they cooperated fully and have rectified the defects even where they have been disputed. I have no reason to doubt that the Applicants are serious in their intention to comply with the applicable regulations in the future." 28 I further observed at paragraph 46: "In my opinion, the action taken by the Director-General has arisen as the result of numerous complaints but those complaints are generally based in contractual disputes. Section 64A of the FTA is not the correct avenue to address those issues. Section 64A of the FTA is a mechanism to address urgent issues which require swift action where no other avenue is reasonably available. In my view, the legislature did not intend that contractual disputes of this kind would be address by this machinery. Other more appropriate avenues are available to the Director-General to address those issues." 29 I agree with the Applicants in that I consider that these findings are sufficient to allow the circumstances of this matter to be considered as special circumstances. In my view the circumstances of this matter would satisfy the provisions of either section 109(3)(d) or 109(3)(e) of the VCATA. These are complex proceedings in which the Applicants have been put to expense that they should not have incurred because in my view the proceedings should never have been commenced. I am therefore satisfied that there are special circumstances warranting an award of costs as required by section 88(1) of the ADT Act. 30 I note that section 88 of the ADT Act clearly states that in awarding costs the Tribunal may determine by whom and to what extent costs are to be paid. The language used is in very broad terms. 31 There is authority for the principle that if a Tribunal has the discretion to award costs, it should follow the practice in other courts when it decides to do so. 32 In Latoudis v Casey [1990] 170 CLR 534 the High Court ruled on the relevant considerations to be taken into account in exercising a discretion to order costs. The facts of that case were quite dissimilar to the application presently under consideration. However, the Court (in considering whether a successful defendant in summary criminal proceedings should ordinarily be awarded costs) made the following comment that I believe to be relevant to my consideration of this issue. McHugh J at p.566,7 stated: "An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v Noumenon Pty. Ltd . (1988) 47 SASR 182. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings." 33 The issue was more recently considered by the New South Wales Court of Appeal in Ohn v Walton (1995) 36 NSWLR 77, where Gleeson CJ, stated (at 79): "The point of Latoudis v Casey is that the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made. When legislation confers a power to order costs it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose. Two things follow: 1. The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or the conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement. 2. The test of whether an order for costs should be made against an unsuccessful plaintiff or complainant is not whether he or she has done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated." 34 In my view, it is just and reasonable in the circumstances of this matter that the Applicants should be reimbursed for costs incurred. 35 I note the Applicants' submission that the Tribunal should assess the extent of those costs. I also appreciate the Applicants' concern with respect to the delay which would flow from a Court assessment. Notwithstanding that argument, I do not accept that the suggested course is appropriate. The material filed in support of that application suggests that some of the expenses claimed may not have been incurred in relation to the prosecution of this case but rather were in relation to general investigations undertaken by the Department of Fair Trading. The method of establishing whether or not the claim is reasonable is to have the account assessed. The method of assessment available is referral to a Costs Assessor pursuant to Part 11 of the Legal Profession Act 1987. 36 In my view the appropriate order is for the Respondent to pay the Applicant's costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987. ORDERS 37 The Respondent is to pay the Applicant's costs in relation to these proceedings. In the absence of agreement between the parties these costs are to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.