Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Esplanade Wollongong Pty Limited ATF Esplanade Wollongong Trust v Commissioner of State Revenue [2015] NSWCATAD 228 Hearing dates: 03 August 2015 Decision date: 05 November 2015 Jurisdiction: Administrative and Equal Opportunity Division Before: R Deutsch, Senior Member Decision: 1) The matter is remitted to the Respondent to make a comprehensive decision regarding all the relevant issues including a decision in respect of the application of sections 32A and 32B of the Duties Act (NSW) 1997. 2) No order as to costs Catchwords: Costs, conduct which is reprehensible, indemnity costs Legislation Cited: Section 60 NSW Civil and Administrative Tribunal Act 2013 (NSW) Act Section 88 Administrative Decisions Tribunal Act (1997) (NSW) Sections 32A and 32B Duties Act (NSW) Cases Cited: Duffy v Du Rin (2014) 87NSWLR 495 Habib v State of New South Wales (NSW Police Force (2014) NSWCATAP 70 Category: Costs Parties: Esplanade Wollongong Pty Limited ATF Esplanade Wollongong Trust (Applicant) Commissioner of State Revenue (Respondent) Representation: Counsel: K Young (Applicant) S Balafoutis (Respondent) Solicitor: Dormer Stanhope (Applicant) Crown Solicitors Officer (Respondent) File Number(s): 136077 reasons for decision 1. The hearing in this matter was set down for four days commencing on 3 August 2015. 2. The case concerns the transfer of a property situated at 72-76 Cliff Road Wollongong ("the Property"). Decision regarding the optimum way to proceed 1. On the morning of the first day of the hearing the Tribunal became aware that the Respondent determined on 14 July 2015 to change the basis of the assessment and increase the Applicant's liability. It seems to be agreed that it was only on that date that the Respondent first sought to increase the rate of duty under the assessment by an amount between $150,000 and $255,000 depending on which value of the property in question is finally accepted. 2. This changed basis of assessment arose because the Respondent now takes the view that s 32A of the Duties Act applies such that a higher rate of premium duty is payable. A formal reassessment had already been undertaken by the Respondent on 19 February 2013, the outcome of which was to assess the duty at the lower rate being the normal duty applicable under s 32 of the Act. 3. The brief history of this matter which is necessary to document for current purposes is that the transfer of the Property to Esplanade took place on 22 October 2010 and the Respondent commenced a formal investigation into that transfer on 11 July 2012. 4. The Applicant was requested to provide various documents including trust deeds, deeds of appointment and most critically a formal valuation. The Applicant complied with that request. The valuation appears to have disclosed a valuation in excess of $3,000,000. 5. A further notice was issued by the Respondent on 20 November 2012 seeking further information regarding the property and its financing. 6. Confronted with this situation on the first day of a four day hearing I had available the following possible options: Option 1: Adjourn the whole matter to a future date to allow the parties time to make further submissions; Option 2: Resubmit the whole matter to the Respondent to make a fresh decision on the whole matter; Option 3: Proceed on all but the s32A issue and set a separate hearing date to resolve the s32A matter; Option 4: Hear the whole case and decide as the Tribunal on all the matters including the application of s 32A based on the current state of the evidence. 1. In assessing these options, I was mindful at all times that up until a little over 2 weeks before the date of the hearing, the Applicant had no idea that the Respondent was contemplating the application of s32A with the resultant increase in the liability that that would entail. In my view, this is quite a fundamental change since although, as the Respondent asserts, it changes only the rate of duty, there are some fundamental issues which the Applicant needs time to address in relation to s32A and its application. 2. Two weeks in my view is inadequate to allow the Applicant to properly prepare for such an argument. The Respondent points out that the Applicant had agreed to that timetable and while that is no doubt true, that would have been on the basis that no new arguments of a fundamental nature would have come out of the Respondent's response. Certainly, there would not have been any expectation that the premium rate of duty would suddenly have been applied. 3. Option 4 was therefore particularly undesirable as the Applicant had not had adequate time to consider its position and the response to what clearly was a fairly significant development in the case that was being put against it. Further, it is not entirely clear to me that the Tribunal would have the power to make a decision based on s32A without the Respondent having taken any further steps. 4. Option 3 would have resolved the matter but it remains unclear to me as to whether the matters that would be heard outside of the s32A issue would be impacted to some extent by the issues that would be canvassed and resolved in relation to s32A issue. In that sense it seemed that trying to resolve the matter in this 2 step process, had the potential to give rise to more problems than it could resolve. 5. Option 1 would achieve nothing that could not be achieved more cleanly and with more certainty than the adoption of Option 2. The time frame could be much the same depending on the speed with which the parties respond and both parties would know exactly what the case being put against them involved and would thus allow them to respond to every aspect of the other side's arguments. 6. Accordingly, I choose to adopt Option 2 and remitted the matter to the Respondent to make a comprehensive decision on all aspects of the case including the application of sections 32A and 32B of the Duties Act. Decision on Costs 1. At the conclusion of the proceedings the Applicant made an application for costs. As a result I asked for formal written submissions from both parties as to the costs issue and the requested written submissions were provided on a timely basis by both parties. 2. Before considering all the relevant factors it is necessary for me to decide whether costs should be awarded pursuant to s 88(1A) of the Administrative Decisions Tribunal Act (NSW) (the ADT Act) or s 60(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). 3. The issue arises largely because of the transitional provisions of the NCAT Act, particularly clause 7, which broadly has the effect that the provisions of the ADT Act continue to apply in respect of these proceedings. However, clause 7 is not a provision that provides exclusivity in respect of the provisions of the ADT Act. 4. The matter has not been definitely considered previously but it has been commented upon on one occasion. 5. The issue seems to have been largely ignored in Duffy v Du Rin (2014) 87NSWLR 495 where the Court of Appeal applied s 88 of the ADT Act but did not consider the possibility that s 60(2) of the NCAT Act may also apply. 6. However, in Habib v State of New South Wales (NSW Police Force (2014) NSWCATAP 70 without conclusively deciding the matter, the Appeal Panel of the NCAT proceeded largely on the basis that the powers under the ADT Act provide additional and alternative powers to the Tribunal. Certainly, they did not take the view that only the ADT Act can apply where proceedings were commenced before the establishment of NCAT. 7. In my opinion therefore, the better view is that in proceedings that commenced before the establishment of the NCAT, this Tribunal now sitting as NCAT, can choose to apply the NCAT Act or the ADT Act. 8. In the current circumstances where the proceedings were commenced less than a month before the establishment of NCAT with the consequence that almost all the costs have been incurred while the NCAT Act was in force, the NCAT Act should apply. 9. Accordingly, the relevant legislation is s 60 of the NCAT Act which relevantly provides as follows: 1. Each party to proceedings in the Tribunal is to pay the party's own costs. 2. The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. 3. In determining whether there are special circumstances warranting an award of costs, the tribunal may have regard to the following: 1. whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, 2. whether a party has been responsible for prolonging reasonably the time taken to complete the proceedings, 3. 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, 4. the nature and complexity of the proceedings, 5. whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance' 6. whether a party has refused or fail to comply with the duty imposed by section 36(3) (which requires the parties to seek the just, cheap and quick resolution of the real issues in the proceedings), 7. any other matter that the Tribunal considers relevant. 1. Thus, the situation is clearly that the starting point is that each party is to pay their own costs and the only variation to that arrangement is if the Tribunal is satisfied that there are special circumstances warranting an award of costs based on any of the matters referred to in sub-section (3) above. 2. The Applicant suggests that the Chief Commissioner's conduct was reprehensible and consequently warrants a cost order. 3. The procedural history of this matter is extensive and requires some further elaboration in this context, as it has a significant bearing on the question of the appropriateness or otherwise of the Chief Commissioner's conduct in relation to this matter. 4. As already mentioned, this case originally commenced in the Administrative Decisions Tribunal in December 2013 with very little transpiring between then and April 2014. 5. In April 2014, the proceedings which had been commenced in the ADT were stayed until November 2014 as a result of an application made by the Applicant. This was necessary according to the Applicant because the transfer had to be read in its rectified form and any liability to duty would arise from and be ascertained pursuant to that rectified form. It was thus necessary for the rectification issue to be heard by the Supreme Court before any determination of the liability to duty in respect of the transfer could be made by the Tribunal. 6. On 8 April 2014, the Applicant commenced proceedings in the Supreme Court of New South Wales against the Chief Commissioner, the Registrar-General of New South Wales and the National Australia Bank. The application to the Supreme Court was essentially seeking rectification of a transfer which had taken place in 2010. 7. On 29 August 2014, the Applicant withdrew its application to the Supreme Court and it was not until late March 2015 that the Applicant finally served its evidence and submissions in full in respect of the ADT proceedings. The submissions raised a number of new arguments based around sections 27 and 294 of the Duties Act and an argument that the subject properties value was diminished by an equitable interest. 8. The Chief Commissioner was directed to file his evidence and submissions by 5 June 2015 but this was delayed until mid- July 2015 partly at least as a result of the Applicant's failure to respond to a number of summons for documents issued at the behest of the Chief Commissioner which documents were required by the Chief Commissioner's expert valuer. 9. On 30 and 31 July 2015, the Applicant served a number of submissions and affidavits. 10. In these circumstances the Applicant asserts that the Chief Commissioners conduct has been reprehensible in failing to inform the Applicant earlier of the s32A argument. 11. I find this argument of the Applicant somewhat surprising and somewhat disingenuous having regard to the delays which occurred in many respects as a direct result of the Applicant's conduct. 12. The position appears to be one in which as a result of the conduct of both parties a key issue in the form of the possible application of s 32A of the Duties Act has arisen somewhat belatedly so much so that it became difficult to see how that matter could be satisfactorily heard at the scheduled time. 13. In my view, there is no basis for sheeting the blame for these circumstances onto the Chief Commissioner alone. 14. In any event, the Applicant knew at the very latest on 14 July 2015 that the Chief Commissioner was making a submission for the higher rate to apply. In other words, the Applicant had 2 weeks to seek an adjournment before the commencement of the four day hearing but chose not to do so. 15. The Applicant also asserted, but without any specifics, that the Chief Commissioner had failed to act as a model litigant. 16. It is however unclear as to exactly which aspects of the Chief Commissioner's conduct is being questioned with this suggestion. 17. The Chief Commissioner was duty bound to raise the argument as to the application of the higher rate once he realised it was available. The fact that this issue was so late in the process was the result of the tardiness of both parties in relation to the required document filings and in my view it cannot be legitimately argued that the Chief Commissioner had thereby failed to comply with his obligations as a model litigant. 18. No other matters arise which would fall into the category of special circumstances and accordingly I propose to make no costs order and I will allow the usual rule to apply in that the parties are to each pay their own costs. 19. Similarly, in relation to the narrower suggestion that indemnity costs from 14 July 2015 onwards should apply, for the reasons outlined above there was nothing in the Chief Commissioner's conduct that would justify a departure from the usual position that no costs order should be made. DECISION (1) The matter is remitted to the Respondent to make a comprehensive decision regarding all the relevant issues including a decision in respect of the application of sections 32A and 32B of the Duties Act (NSW) 1997. (2) No order is made as to costs. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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. Decision last updated: 05 November 2015