Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Chief Commissioner of State Revenue v Fitzpatrick Investments Pty Limited [2016] NSWCATAP 91 Hearing dates: 4 November 2015, 24 March 2016 Date of orders: 20 April 2016 Decision date: 20 April 2016 Jurisdiction: Appeal Panel Before: Dr J Renwick SC, Senior Member R Deutsch, Senior Member Decision: Appeal dismissed Catchwords: CIVIL AND ADMINISTRATIVE TRIBUNAL – Appeal Panel – Land Tax appeal withdrawn just prior to hearing – no order as to costs – appeal – did former costs provision apply – no legal error in applying current costs provision – no other error of law – appeal dismissed Legislation Cited: Administrative Decisions Tribunal Act 1997 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Interpretation Act 1987 (NSW) Land Tax Management Act 1956 (NSW) Cases Cited: Blue Oil Energy Pty Ltd v Tan [2014] NSWCA 81 Brian Lewis Groth v Secretary, Department of Social Security [1995] FCA 1708 Commissioner of Taxation v McGrouther [2015] FCAFC 34 Cripps v G & M Dawson [2006] NSWCA 81 Duffy v Da Rin [2014] NSWCA 270 Esplanade Wollongong Pty Ltd ATF Esplanade Wollongong Trust v Commissioner of State Revenue [2015] NSWCATAD 228 Commissioner of Taxation v Consolidated Media Holdings Limited [2012] HCA 55 Federal Commissioner of Taxation v Raptis [1989] FCA 381 Habib v State of New South Wales (NSW) Police Force [2014] NSWCATAP 70 Haritos v Commissioner of Taxation [2015] FCAFC 92 Holpitt Pty Ltd v Varimu Pty Ltd [1991] FCA 269 Leda Manorstead v Chief Commissioner of State Revenue [2010] NSWSC 867 Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 408 Minister for Immigration v Eden [2016] FCAFC 28 Minister for Immigration and Citizenship v Li [2013] HCA 18 Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6 Sakkara Investment Holdings Pty Ltd as trustee for Sakkara Landings Trust v The Residents Committee of The Landings Retirement Village [2016] NSWCATAP 52 Texts Cited: None Category: Principal judgment Parties: Chief Commissioner of State Revenue (Appellant) Fitzpatrick Investments Pty Limited (Respondent) Representation: I Mescher (Appellant) B Sullivan SC with F St John (Respondent) Ms Kerr, Crown Solicitor's Office (Appellant) Mr Clark, Clark McNamara Lawyers (Respondent) File Number(s): AP 15/39036 Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Administrative and Equal Opportunity Division Citation: [2015] NSWCATAD 103 Date of Decision: 19 May 2015 Before: A Verick, Senior Member File Number(s): 136006 REASONS FOR Decision Introduction 1. The essential questions for us are whether the Tribunal below: 1. erred in law in considering the Appellant's costs application under s 60 of Civil and Administrative Tribunal Act 2013 (NSW) (the Act), rather than under s 88 of the Administrative Decisions Tribunal Act 1997 (the former Act); and if not, did it err 2. in deciding not to make any order for costs. 1. For the reasons which follow, we answer each question 'no', and dismiss the appeal. Background and Grounds 1A, 1B and 1C 1. The appellant, the Chief Commissioner of State Revenue, issued land tax assessments to the respondent, Fitzpatrick Investments Pty Limited, for the land tax years 2010, 2011 and 2012 in respect of approximately 98 hectares of land in New South Wales. A challenge to those assessments by the respondent was brought on the basis the land was exempt from land tax under s 10AA of the Land Tax Management Act 1956. The challenge was brought by application in the predecessor to this Tribunal, namely the Administrative Decisions Tribunal, on 10 January 2013. This Tribunal came into existence on 1 January 2014. Because the proceedings were "unheard proceedings" on that date, they were taken to have been commenced in the present Tribunal: see clauses 6(1) and 7(1) of Schedule 1 to the Act, provisions to which we shall return. 2. The matter was listed for two weeks of hearing, commencing 1 December 2014, following 16 directions hearings. The application was withdrawn the Friday preceding the hearing. The appellant sought his costs. After a hearing before the Tribunal below, the Senior Member hearing the matter decided to make no order as to costs, but in doing so gave detailed, indeed comprehensive, reasons of approximately 60 paragraphs. The appellant filed a Notice of Appeal. 3. When the appeal first came on for hearing, we asked whether the Tribunal below was wrong to apply s 60 of the Act in view of clauses 6 and 7, particularly 7(3)(b) of Schedule 1 to that Act: 6 "unheard proceedings" means pending proceedings that had not been heard before the establishment day [ie 1 January 2014] by … existing tribunal in which the proceedings were instituted or commenced. 7 (1) Unheard proceedings in an existing tribunal are taken, on and from the establishment day, to have been duly commenced in NCAT and may be heard and determined instead by NCAT. … (3) For the purposes of subclauses (1) …: (a) NCAT has and may exercise all the functions that the relevant existing tribunal had immediately before its abolition, and (b) the provisions of any Act, statutory rule or other law that would have applied to or in respect of the proceedings had this Act and the relevant amending Acts not been enacted continue to apply. 1. The parties filed further submissions on this point and the appellant amended his Notice of Appeal to include the following grounds: Section 88 ADT Act 1A Senior Member Verick erred in law in applying the provisions of section 60 Civil and Administrative Tribunal Act 2013 (NSW) ("the Act") rather than section 88 Administrative Decisions Tribunal Act 1997 (NSW) ("the old Act"). 1B In the alternative to 1A above, Senior Member Verick erred in law in: (a) not considering that s 88 of the old Act applies as an alternative to s 60 of the Act; and (b) not deciding that, on the facts of this case, s 88 of the old Act should apply, in preference to s 60 of the Act, in deciding that a costs order should be made in favour of the Appellant. 1C In the alternative to 1A & 1B above, Senior Member Verick erred in law in not finding that s 88 of the old Act applies to the costs application in addition to s 60 of the Act. 1. There are differences between the former s 88 and the current s 60 such as those noted in bold: 60 Costs (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: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, 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 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (5) In this section: "costs" includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal. (emphasis added) 1. Section 88 at the relevant time stated: 88 Costs (1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section. (1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as: (i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or (ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or (iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or (iv) causing an adjournment, or (v) attempting to deceive another party or the Tribunal, or (vi) vexatiously conducting the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) any other matter that the Tribunal considers relevant. (2) The Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs. (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Tribunal, and (b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application. (emphasis added) 1. Thus, there are differences in the precise question to be asked, as well as some of the permissible relevant considerations. 2. It is important to note that in the written submissions seeking costs below, dated 10 February 2015, those acting for the appellant wrote that their client "seeks an order under s60 [of the Act]". Then, in the respondent's outline of submissions in response, the following was stated: There is an argument that since these proceedings were begun before the NCAT Act commenced, the test for the award of costs is the previous rule under s88(1)(a) of the ADT Act, which was continued for proceedings commenced before the NCAT Act by s7 of the transitional provisions in Schedule 1 of the NCAT Act. 1. The appellant did not demur from that submission. In the result, from beginning to end, its application for costs below was solely based on the provisions of s60 of the Act, despite being aware of the contrary argument. 2. The first three grounds of appeal require this Tribunal to decide whether, in relation to 'unheard proceedings' under clause 7(3)(b) of Schedule 1, s60 of the Act was: 1. A permissible head of power to award costs along with s88; 2. The only permissible head of power to award costs; or 3. A wholly impermissible head of power to award costs. 1. This is a question which has been touched on, but not previously decided, by earlier decisions of this Tribunal and the courts. 2. Fundamentally, the appellant submits that Clause 7(3)(b) does not simply permit, but requires, s88 to be utilised to award costs for unheard proceedings, and precludes s60 of the Act being so utilised. In argument, the appellant agreed that such a consequence is not expressly stated in clause 7(3)(b) (or otherwise), but rather, it is an implication which must be drawn. The appellant also acknowledges that such a submission is inconsistent with what was decided by Senior Member Deutsch in Esplanade Wollongong Pty Ltd ATF Esplanade Wollongong Trust v Commissioner of State Revenue [2015] NSWCATAD 228, at [15]-[22]: [15] 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. [16] 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). [17] 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. [18] The matter has not been definitely considered previously but it has been commented upon on one occasion. [19] The issue seems to have been largely ignored in Duffy v Da Rin (2014) 87 NSWLR 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. [20] 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. [21] 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. [22] 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. 1. The reference to Habib is to a decision of the Appeal Panel, which included the President, where it was stated at [62]-[67]: [62] Deputy President Hennessy and Senior Member Scahill both proceeded on the basis that the applicable provision was s 55 of the Act and not s 73(5)(g) and (h) of the Administrative Decisions Tribunal Act 1997 (the ADT Act). As has been noted above, these proceedings became, after 1 January 2014, "unheard proceedings" within the meaning of cll 6 and 7 of Schedule 1 to the Act. In these circumstances, cl 7(3)(b) applied so that "the provisions of an Act, statutory rule or other law that would have applied to or in respect of the proceedings had this Act [namely the Civil and Administrative Tribunal Act 2013] and the relevant amending Acts not been enacted continue to apply." [63] Accordingly, the Tribunal below could have proceeded under the ADT Act. Further, it might be argued that the ADT Act continued to apply to the exclusion of the Act in the present proceedings. [64] As it happens, the terms of s 55 of the Act and s 73(5)(g) and (h) of the ADT Act are in almost identical terms and there is no difference in substance between them. When the matter was raised with the parties, both parties were prepared to proceed on the basis that whether the Tribunal below on 19 February and 25 March 2014 applied the relevant provisions of the Act or the ADT Act did not have any implication for this appeal. [65] Further, it was submitted by the respondent that the transitional provisions in cl 7(3) should be construed as providing additional or alternative powers to the Tribunal in "unheard proceedings" so that the Tribunal below was permitted to apply s 55 of the Act or s 73(5)(g) and (h) of the ADT Act. Reliance upon s 55 of Act was not precluded as there was no clear exclusion of its application in cl 7(3) of Schedule 1 to the Act. [66] A similar issue arises in relation to whether costs at first instance were to be determined under s 60 of the Act or s 88 of the ADT Act. Whilst the terms of s 60 are similar to those of s 88 there are certain differences. In the circumstances, any differences are probably not of substance in the present case. [67] As the appellant did not raise these issues as grounds of appeal or seek to argue that the appeal should be allowed on this basis, the Appeal Panel believes that the better way to proceed is to accept, for the purposes of determining these proceedings, that cl 7(3)(b) provides additional and alternative powers to the Tribunal when dealing with "unheard proceedings" and does not exclude the application of the Act to those proceedings. It should be noted, however, that this issue was not the subject of full argument and the Appeal Panel should not be taken to have decided this issue on a definitive basis. 1. Finally, in the cited reference of Duffy, Basten JA, who gave the leading decision, said the following at [59]-[61]: [59] Section 329 of the Local Government Act authorised the Tribunal to make an award of costs under s 88 of the Tribunal Act (since repealed), in respect of proceedings under that provision on an application that a person be dismissed from civic office: s 329(6). Section 88 of the Tribunal Act, as in force when the proceedings were commenced, provided that each party before the Tribunal was to bear his or her own costs unless the Tribunal ordered otherwise: s 88(1). The Tribunal was empowered to make such an order if satisfied "that it is fair to do so", having regard to a number of specified criteria: s 88(1A). It appears that the application for costs was made on 23 December 2013: Da Rin v Duffy (No 2) at [3]. Further submissions were made after the establishment date for NCAT, being 1 January 2014. At that point, the proceedings were either "part heard proceedings" or "pending proceedings" as defined in Sch 1, cl 6(1) of the NCAT Act. On either classification, the costs provisions in the Tribunal Act continued to apply. By a judgment, not delivered until 10 June 2014, an order was made by NCAT, constituted as the Tribunal had been for the purpose of the proceedings, pursuant to the relevant transitional provisions: NCAT Act, Sch 1, cl 7 [60] Because the decision of the Tribunal in favour of the respondent is to be set aside, the order for costs in his favour must also be set aside. Accordingly, it is not necessary to consider whether the costs order would have been set aside even if the order of dismissal from civic office had been upheld. It is, however, necessary to note, because it may have resulted in some extra costs being incurred by the appellant, that the appellant faced a formidable procedural difficulty in seeking to appeal from the costs order independently of the substantive order. [61] In accordance with the transitional provisions, the costs order was made by NCAT. Although the matter was not fully argued, it would seem that any right of appeal from the judgment of NCAT was to be found within the NCAT Act. An appeal is available, with leave of this Court, on a question of law against any decision made by NCAT: s 83(1). However, the fact that the right to appeal is granted to a party to "an external or internal appeal" or a party "on whom a civil penalty has been imposed" suggests that appeals are limited to such proceedings before NCAT: s 83(1) and (2). It would appear that none of these jurisdictions was being exercised by NCAT in the present case: NCAT Act, ss 31, 32 and 77. More broadly, the consequences of repeal of s 330 of the Local Government Act may need to be revisited by the Parliament. 1. Neither Habib nor Duffy definitively decide the question. The former decision states that expressly. As to the latter, while Basten JA stated in relation to "part-heard proceedings" or "pending proceedings" as defined in clause 6(1) of Schedule 1 of the Act, that on either classification, the costs provisions in the former Act continue to apply, we do not read his Honour to be considering or ruling upon whether s60 could also apply. It is thus a matter for us to decide this question definitively, as far as the Tribunal is concerned. 2. We conclude, following Esplanade and the cases there cited that "this Tribunal now sitting as NCAT, can choose to apply the NCAT Act or the ADT Act." Our reasoning is as follows: 1. The relevant statutory text, considered in context, is both the starting and the end point of the task of statutory construction; see eg. Commissioner of Taxation v Consolidated Media Holdings Limited (2012) 250 CLR 503 at [39]; Interpretation Act 1987, s 33. 2. Clause 7(3)(b), in context, operates as follows. All of the words in that clause before the words "continue to apply", simply identify the subject matter, that is to say, here, the costs provision that would have applied, "but for" s 60 being enacted. 3. Clause 7(3)(b) simply says that that such former provisions "continue to apply". 4. That general provision preserves existing powers and not just in relation to costs. Because of the wide range of matters to which clause 7(3)(b) may from time to time apply, clause 7 makes no attempt to exclude or alter the operation of similar powers conferred by the Act, but, rather, it proceeds on the basis that there may be overlapping powers, whereby the former powers do not exclude the current powers. 5. There is no legitimate method of statutory construction which entitles us to draw an implication that retaining powers held by the former Tribunal (not limited, but including as to costs orders) should impliedly remove the powers which this Tribunal has expressly conferred on it, relevantly, by s60. No policy reasons discerned from the scope, purpose and operation of the Act, or from any secondary materials, were provided as to why such an implication should be drawn and we are not prepared to do so. 1. The appellant's submissions dealt with the eventuality that we would so find, and submitted that, then, "the Appeal Panel must decide on what basis it is to apply either s88 or s60". Submissions were made that as most of the proceedings were conducted in the former Tribunal, and as most costs were incurred in the former Tribunal, "therefore" s88 was the preferable provision. We do not consider that we need to decide which provision should have applied, unless we were to find that there was an error of law, and that we were to proceed to exercise the costs power afresh under s81 of the Act, bearing in mind s80(3) of the Act. Rather, as the amended grounds of appeal assume, the appellant must first establish that there was an error of law by the Tribunal below. 2. Given our conclusion that the Tribunal below could lawfully apply either provision, ground 1A, namely that there was an error of law in applying s60 rather than s88, must fail. 3. Ground 1C, to the effect that the Tribunal below should somehow have applied the provisions cumulatively, must also fail. There are some differences between ss88 and 60. In particular, the former permitted costs to be awarded when it was "fair to do so", but the current provision requires "special circumstances" to be established. They are evidently not identical tests. There is no warrant in Clause 7(3)(b), nor any other reason, to apply the tests cumulatively, not least because the appellant elected to rely on s60 alone, even when the respondent pointed out that s 88 was an available source of power. 4. That leads to the final preliminary ground, 1B, that the Tribunal below erred in law in not considering that s88 applied as an alternative to s60 and not deciding that s 88 should apply. The respondent makes three submissions in relation to this. First, that there has been a waiver by the appellant, second, that there cannot be an error of law in not addressing a provision not relied upon, and third, that it is unfair to change on appeal the way the case was argued below. We consider there is merit in the first two objections and we need not therefore consider the third. 5. In Haritos v Commissioner of Taxation (2015) 322 ALR 254, a Full Court of the Federal Court said at [62]: … In certain circumstances, a new question of law may be raised on appeal to a Full Court. The exercise of the Court's discretion will be affected not only by Coulton v Holcombe [1986] HCA 33; 162 CLR 1 considerations, but also by considerations specific to the limited nature of the appeal from the Tribunal on a question of law, for example the consideration referred to by Gummow J in Federal Commissioner of Taxation v Raptis [1989] FCA 557; 89 ATC 4994 that there is difficulty in finding an "error of law" in the failure in the Tribunal to make a finding first urged in this Court. 1. What Gummow J said in the cited passage in Raptis referred to was as follows: This is not how the case was put before the Tribunal. There must be some difficulty in such circumstances in finding an "error of law" in the failure in the Tribunal to make a finding first urged in this Court. 1. We respectfully agree, and would decline to find an error of law in those circumstances. 2. Next, it is submitted that there has been a waiver of rights, similar to what occurred in Commissioner of Taxation v McGrouther [2015] FCAFC 34, which involved application of the maxim that, in English, provides that any person can waive a statutory provision which exists entirely for his, her, or its own benefit. 3. In McGrouther, the plurality, Pagone and Davies JJ, with whom Allsop CJ relevantly agreed at [5], concluded at [22]-[25] that, where a tax payer waived his rights to serve a particular notice on the Commissioner of Taxation, the tax payer could not later proceed as if his abandonment of rights under the notice had not occurred. Their Honours at [23], concluded that: Rights conferred by a statutory provision are capable of waiver, unless the provision is one that is enacted for the benefit of the public, or where the observance of the provision is a condition precedent to the exercise of a statutory power. 1. Although it does not say so in terms, s60 certainly assumes that an application for costs will be made by one of the parties in the Tribunal. The right to seek costs does not go to the Tribunal's jurisdiction, and the provision is enacted for the private benefit of the relevant parties. Thus the right to make a costs claim under s60 is capable of waiver, and that is what occurred here. That is a second basis for dismissing this ground of appeal. 2. For those reasons, we reject grounds 1A, B and C of the amended grounds of appeal, finding that there is no error of law in the decision of the Tribunal to rely on s60 of the Act, as the appellant always contended below. 3. It is not necessary in those circumstances to consider the respondent's submission that we apply what was said by the Court of Appeal in Blue Oil Energy Pty Ltd v Tan [2014] NSWCA 81 at [29], namely: As the respondents note, this point was also not taken before the primary judge. A party is bound by the manner in which the case was conducted at first instance: Coulton v Holcombe [1986] HCA 33; 162 CLR 1; University of Wollongong v Metwally [1984] HCA 74; 158 CLR 447. This principle is subject to recognised exceptions, for example, where the new point involves the construction of a document, or a point of law, or where the facts have been found by the primary judge. But the exception does not apply as of right. It is a matter for the Court to determine whether it is in the interests of the justice and expedient that the new point be raised and determined: Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 645-6. Grounds 1-7 1. We therefore turn to the remaining grounds of appeal, and to whether any error of law is there established. We note that all of the grounds assert an error of law, to the extent that leave to appeal was in passing during the hearing sought on (undefined) questions of fact, we see no reason to grant leave. Costs decisions are matters of practice and procedure, rarely raise matters of general principle and do not raise such issues here in relation to grounds 1-11. 2. It was asserted during the hearing that the following errors of law appear in relation to the following four grounds: 1. Appeal paragraphs [1]-[2] s60(3)(a-b) - having regard to irrelevant considerations; 2. [3]-[6] s60(3)(d) - having regard to irrelevant considerations; 3. [7]-[8] s60(3)(f) - manifest unreasonableness; and 4. [9]-[11] s60(3)(g) - failing to have regard to mandatory relevant considerations. The Tribunal's Reasoning 1. It is convenient to now turn to the reasoning by the Tribunal below. 2. The Tribunal first noted that the subject land had, for some 50 years prior to the three challenged land tax years in question, been exempted from land tax on the basis that the respondent had conducted primary production activities on the land. However, there was then, in the relevant three years, primary production carried on by third parties, which the appellant characterised as either not being for the maintenance of cattle for the purposes of selling them, or that neither the applicant and the agistee were engaged in the necessary, significant, commercial primary production business for the purposes of profit. 3. The Tribunal correctly noted that determining the relevant questions for establishing a primary production exemption from land tax is a question of fact, depending upon a detailed consideration of all the circumstances of the case: see Leda Manorstead v Chief Commissioner of State Revenue (2010) 79 NSWLR 724, and that determining whether there is a "significant and substantial commercial purpose or character" requires consideration of the "size, depth, bulk, weight, seriousness, importance, quality, intensity and prominence" in determining the commercial nature of the relevant primary production activity: Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 408. In short, such cases can be factually complex, and this one was. 4. Indeed, one of the notable features of the appellant's costs argument below was some tension between an acknowledgement that the matter was complex such that 52 folders of material were produced, and $483,000 in pre-hearing costs and disbursements was incurred; and, conversely, a submission that the respondent's case was always without merit. 5. We note that in Sakkara Investment Holdings Pty Ltd as trustee for Sakkara Landings Trust v The Residents Committee of The Landings Retirement Village [2016] NSWCATAP 52 an Appeal Panel which included the President stated at [226]: … The general position under s 60 is that each party is to bear its own costs, s60(1). Notwithstanding this, the Tribunal (including the Appeal Panel) may award costs but only if it is satisfied that there are special circumstances warranting such an award, s60(2). In this context "special circumstances" should be taken to refer to circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional, see Cripps v G & M Mawson [2006] NSWCA 84 at [60] dealing with a very similar provision in s88(1) of the Administrative Decisions Tribunal Act 1997 (NSW) (as the Administrative Decisions Review Act 1997 (NSW) was previously entitled). A non-exhaustive list of circumstances that can amount to special circumstances for the purposes of subs (2) is found in s60(3). 1. It is appropriate here to note and adopt what was put by the respondent, namely, that it is of fundamental significance to the appeal as a whole, that the following findings of fact by the Tribunal below are unchallenged by the appellant: [48] … this matter follows what are the normal procedures of the jurisdiction, until the afternoon of Friday 28 November 2014. [49] … the conduct highlighted by the Chief Commissioner has not been out of the ordinary … there is in any case, no evidence that the conduct was "grossly unreasonable" in the circumstances highlighted by the Chief Commissioner. [57] … until the withdrawal of the application, this matter had followed normal and reasonable procedural stages involving a primary production exemption claim against its special facts. Grounds of Appeal 1- 2 1. The Tribunal considered the appellant's claim under s60(3)(a) and (b) that the way the respondent conducted the proceedings unnecessarily disadvantaged the appellant, and unreasonably prolonged the time taken. The submissions of the parties were then set out in a detailed manner which neither party suggested was incorrect. Notably, although there was a large number of directions hearings, and some delay in complying with certain directions, either the delay did not disadvantage the appellant significantly, or the appellant consented to extensions of time, or on one occasion, the appellant sought and obtained his costs. One reason for delay in compliance with procedural directions was that the evidence to be relied on by the respondent necessarily involved evidence from the agistee, who was a third party. Finally, on no occasion was there any attempt to have the application summarily dismissed. 2. The Tribunal concluded at [47]-[49]: [47] In this matter, the Applicant was dealing with third parties to prepare the Applicant's case as the land was being used for agistment by them and not the Applicant. I accept the explanation provided that, as a result, there were delays and changes to the position that the Applicant took. I also accept the various explanations given by the Applicant's counsel as set out in paragraph 25 above. Whilst 16 directions hearings might seem too many, it is not unusual for proceedings to result in a number of directions hearings prior to the actual hearing of the principal matter. This depends, as was the case in this matter, on the nature of evidence and complexity of the facts. [48] On some occasions the timetable was adjusted by consent and on other occasions the timetable was adjusted with the approval of the Tribunal. Against the factual background, it would seem to me that this matter followed what are the normal procedures of the jurisdiction until the afternoon of Friday 28 November 2014. I should add, that with the exception of one occasion, the Chief Commissioner did not seek costs at the hearing of all other directions hearings. [49] Accordingly, in my view, the conduct highlighted by the Chief Commissioner has not been out of the ordinary. There is no evidence before the Tribunal that would suggest that the Applicant had followed a deliberate course of action designed to disadvantage the Chief Commissioner and prolong unreasonably time taken to complete the proceedings. I also think there is in any case no evidence that the conduct was "grossly unreasonable" in the circumstances highlighted by the Chief Commissioner. 1. Grounds of Appeal 1-2 state: 1. Senior Member Verick erred in law in finding that, for the purposes of having regard to s60(3)(a) & (b) Civil and Administrative Tribunal Act 2013 (NSW) ("the Act") in determining whether there exist special circumstances warranting the award of costs, it is necessary for a party to have followed a deliberate course of conduct designed to disadvantage another party which was grossly unreasonable and prolong unreasonably the time to complete the proceedings by reason of such conduct (paragraph [49]). 2. Senior Member Verick should have found that, for the purposes of s60(3)(a) & (b) of the Act, the relevant conduct engaged in by a party need not be deliberate, intentional or grossly unreasonably so long as it unnecessarily disadvantaged another party (s60(3)(a)) or prolonged unreasonable the time taken to complete the proceedings. 1. This ground fails as Tribunal did not, on our reading of the reasons, substitute any such gloss. It must be recalled that, earlier in its reasons the Tribunal, having considered relevant cases, including Cripps v G & M Dawson [2006] NSWCA 81 at [55]-[60]; Brian Lewis Groth v Secretary, Department of Social Security [1995] FCA 1708; Holpitt Pty Ltd v Varimu Pty Ltd [1991] FCA 269, concluded at [20]: In order to invoke s60 and award costs in a matter, it is accordingly necessary to be satisfied that there are circumstances relating to the conduct of the proceedings that are clearly out of the ordinary. The circumstances "do not have to be extraordinary or exceptional". In determining that there are special circumstances, grossly unreasonable conduct or a finding of "serious unfairness" are not prerequisites to such a determination, they are nonetheless highly relevant considerations. 1. The last sentence at [20] explains the relevance of the notions of "grossly unreasonable conduct" or "serious unfairness" in applying s60 and in reaching the conclusions set out at [49], but it does not substitute them as preconditions for the award of costs and it does not thereby apply a wholly irrelevant consideration. These grounds fail. Grounds 3-6 1. These state: 3. Senior Member Verick erred in law in finding that, for the purposes of having regard to section 60(3)(d) of the Act in determining whether there exist special circumstances warranting the award of costs, proceedings are not factually complex if the Appellant has: (a) engaged in activity to defend the assessments "that would have been in the first place issued with some definite basis"; (b) incurred significant costs in defending the assessments; (c) made a submission under section 60(3)(c) of the Act that the Respondent has made a claim that has no tenable basis in fact or in law (paragraph [56]) 4. Senior Member Verick erred in law in finding that, on the one hand, the proceedings were not, in substance, factually complex (paragraph [56]) and, on the other hand, finding that the reason for the large number of directions hearings was the complexity of the facts (paragraph [47]). 5. Senior Member Verick should have found that, for the purposes of section 60(3)(d) of the Act, because: (a) the Appellant has engaged in detailed activity to defend the assessments; and (b) a party has incurred significant legal costs then the proceedings are factually complex. 6. Senior Member Verick should have found that, for the purposes of section 60(3)(d) of the Act, it is irrelevant that a party has or has not made a submission under section 60(3)(c) of the Act – i.e. that another party has made a claim that has no tenable basis in fact or in law. 1. These grounds raise no error of law. 2. In relation to the suggestion that there was never any tenable basis in fact and law in the respondent's case, the Tribunal correctly applied what was said by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6, namely, that in the absence of a hearing on the merits of a case, "a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order." His Honour, having then noted that reading the Tribunal's decision and the affidavit filed in support of the application for relief, he considered that the prosecutrix had an arguable case, but not strong prospects of success, and that if he had to make a prediction about the result of the application it would probably have failed, then said, "however, as I have said, it is not the function of the court on a costs application – in most cases at all events – to make a prediction as to the outcome of hypothetical case." 3. The Tribunal below correctly described that approach as the "general rule" and concluded that this was not such a case where it could be seen from the beginning that the challenge was untenable. Rather, in the absence of a final hearing, it was not possible to predict the likely result. We agree. 4. Secondly, it was noted that there was never an application to have the proceedings summarily dismissed by the appellant, and thirdly, at [52]-[53] it was said that: [52] On the contrary, the Chief Commissioner embarked on what can only be described as a very extravagant pursuit to defend his assessment, even though the onus was, under s 100(3) of the Taxation Administration Act 1996, on the Applicant to establish that it was entitled to the exemption. The Chief Commissioner's preparation of his case included, as highlighted by Mr Hamilton SC for the Applicant, engaging solicitors, counsel, a number of experts, 37 requests seeking production of documents, various inspections of the subject land and concluding with a case file which comprised 52 arch folders. And in the process incurring, as claimed by the Chief Commissioner, almost half a million dollars. [53] Against that background, it is difficult to understand the submission now made by the Chief Commissioner that the Applicant did not have a tenable claim and that the proceedings were lacking in substance. 1. Those are all findings of fact. They involve no errors of law. 2. As to the suggestion that the respondent had incurred significant legal costs because the proceedings were factually complex, the Tribunal correctly noted that because of the complexity in establishing such cases, the matter was bound to be somewhat complex, but nevertheless, concluded at [56]: … The legal principles involved in determining the principal issues are well settled and, ultimately, the onus was on the Applicant and not on the Chief Commissioner to establish the necessary facts to support its claim for exemption. It is, in my opinion, quite out of the ordinary for the Chief Commissioner to engage in such detailed activity to defend assessments that would have been in the first place issued with some definite basis. The assessments were not tentative assessments. (emphasis added) 1. There was no challenge to the findings in the italicised words. 2. Contrary to the assertions in these grounds of appeal, the Tribunal faithfully applied the correct legal tests, the real complaint by the appellant is with its factual conclusions which exhibit no legal error, and in particular did not involve a failure to have regard to mandatory relevant considerations. Ground 7-8 – manifest unreasonableness 1. These grounds stated: 7. Senior Member Verick erred in law in finding that, for the purposes of having regard to section 60(3)(f) of the Act in determining whether there exist special circumstances warranting the award of costs, it is necessary for a party to engage in deliberate or grossly unreasonable conduct to frustrate or prevent the just, quick and cheap resolution of the real issues in the proceedings, before, in substance, a party would be found to have breached s 36(3) of the Act (paragraph [57]). 8. Senior Member Verick should have found that, for the purposes of section 60(3)(f) of the Act, the relevant conduct engaged in by a party need not be deliberate or grossly unreasonable so long as it is conduct which has the effect of preventing the just, quick and cheap resolution of the real issues in the proceedings. 1. In relation to the reliance on s60(3)(f), there is the statement in the last sentence of [57], which is not challenged, and which was a strong basis for failing to find that head made out, namely: Until the withdrawal of the application, this matter had followed normal and reasonable procedural stages involving a primary production exemption claim against its special facts. 1. As we noted above, where directions were not complied with there was good reason for that non-compliance and extensions were unopposed except on one occasion where costs were successfully sought. 2. Any assertion of manifest unreasonableness must take into account what was said by the High Court in Minister for Immigration and Citizenship v Li [2013] HCA 18, as helpfully summarised recently by a Full Court of the Federal Court in Minister for Immigration v Eden [2016] FCAFC 28 at [54]-[65], in particular: [58] First, the concept of legal unreasonableness concerns the lawful exercise of power. Legal reasonableness, or an absence of legal unreasonableness, is an essential element in the lawfulness of decision-making: Li at 350[26] and 351[29] (French CJ), 362[63] (Hayne, Kiefel and Bell JJ) and 370[88] (Gageler J); [59] Second, the Court's task in determining whether a decision is vitiated for legal unreasonableness is strictly supervisory (Li at 363[66]). It does not involve the Court reviewing the merits of the decision under the guise of an evaluation of the decision's reasonableness, or the Court substituting its own view as to how the decision should be exercised for that of the decision maker: Li at 363[66] (Hayne, Kiefel and Bell JJ); [60] Third, there are two contexts in which the concept of legal unreasonableness may be employed. The first involves a conclusion after the identification of a recognised species of jurisdictional error in the decision making process, such as failing to have regard to a mandatory consideration, or having regard to an irrelevant consideration. The second involves an "outcome focused" conclusion without any specific jurisdictional error being identified: Li at 350[27]-351[28] (French CJ), [72] (Hayne, Kiefel and Bell JJ); [62] Fourth, in assessing whether a particular outcome is unreasonable, it is necessary to bear in mind that within the boundaries of power there is an area of "decisional freedom" within which a decision-maker has a genuinely free discretion: Li at 351[29] (French CJ), 363[66] (Hayne, Kiefel and Bell JJ). Within that area, reasonable minds might differ as to the correct decision or outcome, but any decision or outcome within that area is within the bounds of legal reasonableness: Li at 363[66] (Hayne, Kiefel and Bell JJ) [63] Fifth, in order to identify or define the width and boundaries of this area of decisional freedom and the bounds of legal reasonableness, it is necessary to construe the relevant statute: Li at 349[24] (French CJ), 363[67]-364[67] (Hayne, Kiefel and Bell JJ). … [64] Sixth, where reasons for the decision are available, the reasons are likely to provide the focus for the evaluation of whether the decision is legally unreasonable: Singh at 446[45]-447[47]. Where the reasons provide an evident and intelligible justification for the decision, it is unlikely that the decision could be considered to be legally unreasonable: Minister for Immigration and Border Protection v Singh [2014] FCAFC 1 at [47]. 1. Applying this test, a decision as to costs is a classic area of broad decisional freedom, here there are evident and intelligible reasons for the conclusions and it is not for us to substitute our own views (although in fact we would have come to the same decision for the same reasons). This ground must therefore be dismissed. Grounds 9-11 1. These grounds of appeal state: 9. Senior Member Verick erred in law for the purposes of having regard to an other relevant matters in section 60(3)(g) of the Act in determining whether there exist special circumstances warranting the award of costs: (a) in failing to take into account the lateness of the Respondent's withdrawal of the proceedings at first instance – i.e. on the last business day before the commencement of a 2 week hearing (b) in finding that to award costs merely on the late withdrawal of the matter would create a precedent to encourage matters to be finalised by a full hearing rather than resolution by way of a settlement or a withdrawal of an application (paragraph [59]) 10. Senior Member Verick should have found that, for the purposes of section 60(3)(g) of the Act, it was relevant to take into account not just the fact of withdrawal of the proceedings but the time of the withdrawal and the reasons for the withdrawal. 11. Senior Member Verick should have found that, for the purposes of section 60(3)(g) of the Act, no "precedent" would be created to litigate matters to a full hearing if an award of costs was made in circumstances where an Applicant withdraws the proceedings the day before the commencement of a long hearing – such a finding would discourage late withdrawals and encourage early withdrawals. 1. It is difficult to logically accept that there has been a failing to have regard to mandatory relevant considerations where the provision in question permits regard to be had to "any other matter that the Tribunal considers relevant". 2. In relation to s60(3)(g), it was noted that withdrawal or settlement of applications was not a matter specifically mentioned, and that in fact, considering the "just, quick and cheap" aim of the Tribunal, the saving of considerable costs by avoiding a final hearing were reasons not to penalise the tax payer. There is no legal error in these conclusions. The grounds attack factual matters. 3. In conclusion, while we have dealt in great detail with all grounds asserted, we consider in substance that the Tribunal below was clearly right for the reasons given, but that in any event there are no legal errors in its decision. 4. The appeal must be dismissed. ****** 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: 20 April 2016