Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Kelly v Szatow [2018] NSWCATOD 64 Hearing dates: On the papers Date of orders: 04 May 2018 Decision date: 04 May 2018 Jurisdiction: Occupational Division Before: S Montgomery, Senior Member Decision: 1. The Applicant is to pay each of the Respondents' costs of and incidental to the proceedings from 16 January 2018 as agreed or assessed. Catchwords: COSTS – Whether special circumstances warrant an award of costs – Where applicant's application was frivolous or vexatious or otherwise misconceived or lacking in substance – Where applicant was self-represented and had genuine concerns Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Local Government Act 1993 (NSW) Cases Cited: Attorney General v Wentworth (1988) 14 NSWLR 481 CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 GHI v ABC trading as DEF [2018] NSWCATAD 8 Mendonca v Tonna [2017] NSWCATAP 176 Office of Local Government v Councillor Martin Ticehurst of Lithgow City Council [2016] NSWCATOD 122 Category: Costs Parties: Peter Kelly (Applicant) Cheryl Szatow; Martin Smith; Donna Greenfield; Jeff Pettett (Respondents) Representation: P Kelly (Applicant in person) Solicitors: G Skehan (Respondents) File Number(s): 2017/00343156; 2017/00343149 REASONS FOR DECISION Introduction 1. Mr Peter Kelly brought applications against Ms Cheryl Szatow, Mr Martin Smith, Ms Donna Greenfield and Mr Jeff Pettett ("the Respondents") seeking orders under the Local Government Act 1993 (NSW) ("the LG Act") for the Respondents to be disqualified from holding civic office in Ku-ring-gai and banned from holding civic office. 2. In support of his applications he asserted that: 1. Cr Smith's declaration (prior to the election) may be false - depending on the relationship he has with his father's property development business. He has since engaged in a smear campaign aimed at denigrating the Applicant to his fellow councillors and the general public. 2. Cr Szatow's declaration (prior to the election) may be false as she is married to a property developer, plus she has also engaged in a smear campaign aimed at denigrating the Applicant to fellow councillors and the general public. 3. Cr Greenfield and Cr Pettett have supported Cr Szatow in the smear campaign. 1. The Respondents separately sought the dismissal of the applications on the basis that: 1. Mr Kelly did not have standing to bring the applications; 2. the Tribunal does not have jurisdiction to hear Mr Kelly's applications; 3. Mr Kelly's applications had no tenable basis at law; and 4. Mr Kelly's applications were frivolous, vexatious and without substance. 1. I dealt with the dismissal applications on 21 February 2018. I determined that the Tribunal did not have jurisdiction and I dismissed each of the applications. In a related matter I was satisfied that the Tribunal did have jurisdiction and set a timetable for the progress of that matter. 2. The Respondents to the present matters have each sought an order for costs in relation to the proceedings. It was agreed that the applications for costs would be determined on the basis of written material without the need for a hearing. The parties have filed written submissions in relation to the issue. 3. While there are two separate applications, it is convenient to deal with them together because of the overlap of relevant circumstances. Applicable legislation 1. The purpose of an award of costs is to compensate the party in whose favour costs are awarded for the expense incurred in respect of the litigation. The Tribunal has the power to award costs pursuant to section 60 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the NCAT Act") if it is satisfied that there are special circumstances warranting an award for costs. The Tribunal may make such order as it thinks appropriate, so long as the discretion to award costs is exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. Each situation must be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs. 2. When determining whether special circumstances exist, the Tribunal is to take into consideration the factors present in section 60(3) of the NCAT Act. Section 60 provides: 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 the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 ) 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. 1. Section 60 of the NCAT Act has been considered in numerous decisions of the Tribunal. Senior Member Scahill discussed relevant caselaw in her recent decision in GHI v ABC trading as DEF [2018] NSWCATAD 8. At paragraphs [18] to [24] of the decision she stated: Relevant case law 18. Ms ABC referred to the findings of Santow JA in Cripps v G & M Dawson [2006] NSWCA 81 in relation to the words "special circumstances". "for this purpose, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional. While a finding of serious unfairness is not prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration." 19. Ms ABC also referred to CEU v University of Technology Sydney [2017] NSW CA 280 at 4: "to establish special circumstances, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional." 20. Ms ABC then referred to the following factors set out under section 60(3) of CATA as establishing special circumstances. Sub section 60 (3)(c) "no tenable basis in fact" 21. Mr GHI had not provided any facts or facts from which an inference could be reasonably drawn to support his claim. There had always been an innocent explanation for the refusal of service. He had failed to establish any grounds under the first limb of section 24 of the ADA. He had failed to provide facts from which a reasonable inference could be drawn when an innocent explanation was available on the facts. See Dutt v Central Coast Area Health Service [2002] NSWADT 133 at 70. Subsection 60 (3)(d) – "the nature of the proceedings" 22. Ms ABC submitted that the proceedings by Mr GHI were based upon a misconceived notion of rejection. The original notice to Mr GHI was clear and unambiguous on its face that the reason for the refusal of service was his behaviour, not any other matters. Mr GHI had abused the facility and services provided to him from the Anti-Discrimination Board. It appears in his evidence at page 38 that even by 10 July 2017, the ADB were on notice that Mr GHI's complaint was not founded in a sex discrimination case and the ADB reminded Mr GHI to "focus on the how I allege the Respondent has discriminated me on the basis of sex." Mr GHI's own evidence on pages 55 to 65 shows his obsession with Ms ABC and his obsession with his "move away from engineering to performing" see page 60 and "I need to learn more about camera poses – it will also help my acting career, when sprung by paparazzi"- see page 63. This type of behaviour is confirmed in Ms ABC's evidence at page 23 where Mr GHI made comments to Ms ABC requesting he perform on the morning show with Ms ABC and that she play his vocal rendition of Maniac. Subsection 60(3)(e) – the complaint is lacking in substance 23. A complaint is said to be lacking in substance when it can be demonstrated there exists no factual basis for the allegation or that the complaint is not reasonably arguable see Langley v Niland and Anor (1981) 2 NSWLR104 at 107 and Chalker v Murrays Australia Pty Ltd [2016] NSWCATAD 282 at 22. Mr GHI had not been able to demonstrate a factual basis for his complaint. Subsection 60 (3)(g) any other matter that the Tribunal may consider relevant. 24. On 24 October 2017 at 10:37 PM, Ms ABC received an email advising her that Mr GHI was no longer pursuing the matter. Ms ABC had been distressed and confused by this. Ms ABC had incurred costs in her defence. These costs could have reasonably been avoided if Mr GHI had filed his notice of discontinuance in a timely manner. The Respondents' Submissions 1. Separate submissions were filed in each of the matters. Cheryl Szatow 1. As noted above, I dismissed the application in regard to Ms Szatow. Ms Szatow has sought an order that Mr Kelly pay her costs in relation to responding to the application. 2. Ms Szatow contends that "special circumstances" exist which warrant an order for costs. She submits that those circumstances are: 1. the Tribunal's lack of jurisdiction and Mr Kelly's lack of standing; 2. the untenable nature of the application; 3. the vexatious nature of the application; and 4. Mr Kelly's abuse of process by instigating concurrent proceedings. 1. She submits that while the Tribunal has determined that it does not have jurisdiction to hear Mr Kelly's application, that determination is no bar to the Tribunal's power to award costs. 2. Ms Szatow noted that in his application Mr Kelly relied on section 440 of the Local Government Act 1993 ("the LG Act") as the source of the Tribunal's jurisdiction. 3. Section 440 of the LG Act provides: 440 CODES OF CONDUCT (1) The regulations may prescribe a model code of conduct (the "model code" ) applicable to councillors, members of staff of councils and delegates of councils. (2) Without limiting what may be included in the model code, the model code may: (a) relate to any conduct (whether by way of act or omission) of a councillor, member of staff or delegate in carrying out his or her functions that is likely to bring the council or holders of civic office into disrepute, and (b) in particular, contain provisions for or with respect to conduct specified in Schedule 6A. (3) A council must adopt a code of conduct (the "adopted code" ) that incorporates the provisions of the model code. The adopted code may include provisions that supplement the model code. (4) A council's adopted code has no effect to the extent that it is inconsistent with the model code as in force for the time being. (5) Councillors, members of staff and delegates of a council must comply with the applicable provisions of: (a) the council's adopted code, except to the extent of any inconsistency with the model code as in force for the time being, and (b) the model code as in force for the time being, to the extent that: (i) the council has not adopted a code of conduct, or (ii) the adopted code is inconsistent with the model code, or (iii) the model code contains provisions or requirements not included in the adopted code. (6) A provision of a council's adopted code is not inconsistent with the model code merely because the provision makes a requirement of the model code more onerous for persons required to observe the requirement. (7) A council must, within 12 months after each ordinary election, review its adopted code and make such adjustments as it considers appropriate and as are consistent with this section. (8) Nothing in this section or such a code gives rise to, or can be taken into account in, any civil cause of action, but nothing in this section affects rights or liabilities arising apart from this section. (9) This section applies to an administrator of a council (other than an administrator appointed by the Minister for Primary Industries under section 66) in the same way as it applies to a councillor. 1. Ms Szatow noted in particular that section 440(8) of the LG Act further clarifies that: "Nothing in this section or such a code gives rise to, or can be taken into account in, any civil cause of action." 1. Section 440AA of the LG Act expressly provides that the appropriate process for dealing with such complaints is via the Procedures for the Administration of the Model Code of Conduct for Local Council's in NSW. Section 440AA provides: 440AA ADMINISTRATION OF CODE OF CONDUCT (1) The regulations may prescribe a procedure (the "model procedure") for administering the model code referred to in section 440. (2) The model procedure is to set out the procedures for dealing with alleged contraventions of the model code. (3) A council must adopt a procedure (the "adopted procedure") that incorporates the provisions of the model procedure. The adopted procedure may include provisions that supplement the model procedure. (4) A council's adopted procedure has no effect to the extent that it is inconsistent with the model procedure as in force for the time being. (5) Councillors, members of staff and delegates of a council must comply with the applicable provisions of: (a) the council's adopted procedure, except to the extent of any inconsistency with the model procedure as in force for the time being, and (b) the model procedure as in force for the time being, to the extent that: (i) the council has not adopted the model procedure, or (ii) the adopted procedure is inconsistent with the model procedure, or (iii) the model procedure contains provisions or requirements not included in the adopted procedure. (6) This section applies to an administrator of a council (other than an administrator appointed by the Minister for Primary Industries under section 66) in the same way as it applies to a councillor. 1. Ms Szatow submits that there is no mechanism in the LG Act by which Mr Kelly can bring a claim to NCAT regarding a Code of Conduct complaint. For NCAT to consider such a claim, a Code of Conduct complaint must be made in accordance with section 440AA of the LG Act. On determination of the Code of Conduct complaint, the Departmental Chief Executive then has the option to take a number of steps, including the option to take no action or to prepare a report and refer the report to NCAT for consideration. See Office of Local Government v Councillor Martin Ticehurst of Lithgow City Council [2016] NSWCATOD 122 at paragraphs [12] – [13]. 2. Ms Szatow noted that Mr Kelly conceded that he had already ventilated the substance of his NCAT application via the Council's internal Code of Conduct complaints resolution process but he concurrently brought an application to the Tribunal because he anticipated a long delay in the complaints resolution process. She submits that this approach is not only vexatious, but also an abuse of process. 3. Ms Szatow raised the issue of jurisdiction and Mr Kelly's lack of standing prior to the first directions hearing in the proceeding in January 2018. Mr Kelly nevertheless pursued his application. He did not provide any argument to contradict Ms Szatow's submissions regarding jurisdiction. 4. She further submits that Mr Kelly's claim that she engaged in a campaign of denigration by sending an email to a number of Councillors and members of the public is lacking in substance and that in any event the Tribunal does not have the power to deal with a claim for reputational damage. She contends that the proceedings are without legal basis and vexatious. 5. She relies on the views expressed by Principal Member Titterton in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at paragraph [11] citing views expressed by Roden J in Attorney General v Wentworth (1988) 14 NSWLR 481 at 491 "proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought; brought for collateral purposes and not for the purpose of having the court adjudicate on the issues to which they give rise, or if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless. That decision has been followed in many cases: see for instance Attorney General v Bhattarcharya [2003] NSWSC 1150 and Attorney General v Betts [2004] NSWSC 901. 1. At the hearing on the issue of jurisdiction, Mr Kelly conceded that the matter may not have been within the Tribunal's jurisdiction. Ms Szatow submits that these proceeding and Mr Kelly's formal complaint under section 440AA of the LG Act were competing processes involving the same conduct. Instigating concurrent formal proceedings is unreasonable, oppressive and has placed an unnecessary costs burden on her. 2. Ms Szatow submits that Mr Kelly has unnecessarily involved her in a claim which lacked substance and was not legally maintainable but which she was obliged and entitled to defend. 3. She submits that Mr Kelly's conduct in bringing proceedings in circumstances where NCAT has no jurisdiction and where the substance of the proceedings are concurrently being investigated via a competing process is unfair, oppressive and constitutes 'special circumstances, entitling her to an award for costs. She submits that the Tribunal should exercise its discretion to award costs as Mr Kelly's application is untenable. 4. Ms Szatow seeks costs on an indemnity basis. 5. At a minimum, she submits that she should be entitled to costs from 16 January 2018, being the date of her primary submissions. Martin Smith, Donna Greenfield and Jeff Pettett 1. The circumstances of the matter concerning Mr Smith, Ms Greenfield and Mr Pettett are similar to those concerning Ms Szatow, as are the arguments regarding the application for costs. As was the case with Ms Szatow, these Respondents contend that: 1. the Tribunal's lack of jurisdiction and Mr Kelly's lack of standing; 2. the legally untenable nature of the application; 3. the vexatious nature of the application; and 4. Mr Kelly's abuse of process by instigating the proceedings, 1. constitute special circumstances under section 60(3) of the NCAT Act, justifying an award for costs. 2. The Respondents submit that regardless of way in which Mr Kelly purports to have framed his enquiries to the Electoral Commission of NSW, his actions led to a significant investigation by the Commission in relation to the matters that were the subject of Mr Kelly's enquiries and which are also the subject of his NCAT application. 3. The solicitors for the Respondents provided detailed arguments in support of the application for costs. Those submissions reflect those presented on behalf of Ms Szatow referred to above and argue that the Tribunal should exercise its discretion in awarding costs, not to punish Mr Kelly but in an attempt to remedy the unnecessary burden and cost incurred as a result of the proceedings. 4. The Respondents seek costs incidental to Mr Kelly's application to the Tribunal on an indemnity basis. It is submitted that at a minimum, they should be entitled to costs from 16 January 2018, being the date of their primary submissions. 5. The solicitors for the Respondents in the two matters have billed costs as a single unit as the matters are related. They propose an order that the Applicant pay each of the Respondent's costs of the hearing to be calculated by splitting relevant amounts invoiced under that single matter equally between the proceedings. The amount would then be split equally between each of the Respondents. Mr Kelly's Submissions 1. Mr Kelly noted that section 60(1) of the NCAT Act states that each party pays their own costs, with limited exceptions. He further noted that the Respondents have attempted to characterize these matters as those where an order for costs should be made. 2. Mr Kelly referred to his good standing and responsible positions. Those matters are not in issue in these proceedings. 3. He denies that he commenced the applications in the Tribunal lightly or vexatiously. He identified the actions that he took in Council in regard to his concerns. He commenced the applications in the Tribunal out of frustration regarding the lack of progress in those other actions. 4. He submitted that different applications have been filed in different jurisdictions because the nature of the transgressions was not appropriate for all jurisdictions. Discussion 1. I agree that the dismissal of the substantive proceedings does not provide a bar to the Tribunal's power to award costs. 2. As has been noted above, the Tribunal must consider the conduct of the proceedings and form an opinion in regard to whether there is reason to depart from the position that each party pays their own costs and whether there are special circumstances warranting an award of costs. 3. If the Tribunal is satisfied that there are special circumstances warranting an award of costs in favour of the Respondents, it will then become necessary to decide whether the award should be for indemnity costs rather than party/party costs. 4. I accept Mr Kelly's contention that he only commenced the proceedings in the Tribunal in the light of his view that there was a lack of progress in relation to matters that he had raised under the LG Act. 5. It is understandable that a self-represented litigant who is not legally qualified might commence proceedings in the Tribunal with the knowledge that the Tribunal does have some jurisdiction in regard to local council matters. In those circumstances I do not regard Mr Kelly's conduct in bringing the applications as vexatious. 6. However, I agree with the Respondents that once Mr Kelly commenced the proceedings in the Tribunal they were entitled and required to defend those matters. In doing so, they have been subjected to the burden of conducting the proceedings and they incurred cost in doing so. 7. It is apparent that from the time the Respondents provided Mr Kelly with their submissions in regard to jurisdiction he was on notice of the Respondents' contentions that the Tribunal lacked jurisdiction in regard to these applications. 8. There is no suggestion that Mr Kelly attempted to reach agreement with the Respondents in regard to resolving the proceedings prior to the hearing. 9. It is common ground that I accepted the Respondents' arguments regarding jurisdiction. In my view this was an inevitable outcome. I agree with the Respondents that the applications lacked merit. I also agree that it was an abuse of process to continue the proceedings once Mr Kelly had been given the Respondents' arguments regarding jurisdiction. 10. I agree that the Respondents should be entitled to costs from 16 January 2018. In my view, Mr Kelly should have been aware of the ultimate outcome of the proceedings from that date. He should have withdrawn the applications to avoid incurring further costs. 11. In Mendonca v Tonna [2017] NSWCATAP 176 the Appeal panel noted at paragraph [59] – [60]: 59 Indemnity costs are only awarded in limited circumstances. The discretion to do so must be the subject of careful reasoning (Degmam Pty Ltd (In Liq) v Wright (No 2) [1983] 2 NSWLR 354) and caution should be exercised in making such an award: Leichhardt Municipal Council v Green [2004] NSWCA 341; Ng v Chong [2005] NSWSC 385 at [13]. 60 Other than in relation to the unreasonable refusal of a genuine offer of settlement, one circumstance in which indemnity costs may be awarded is when a case is commenced or continued where there is no chance of success (Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12 at [4]), such as where the claim is "without substance", "groundless", "fanciful or hopeless" or so weak as to be futile, such as where a limitation period is obviously at an end: Hillebrand v Penrith Council [2000] NSWSC 1058. However, mere weakness of a case will not be sufficient to warrant an exercise of the discretion to award indemnity costs: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534. 1. While I accept that these matters contains some of the elements which might warrant an award of costs on an indemnity basis, I do not consider that the totality of the matters are such that an award of costs on an indemnity basis is warranted. 2. I note the submissions on behalf of the Respondents that an order for costs should be made in such a way to provide for its division between the Respondents. The enforceability of such an order is open to question. The more prudent approach is to make an order in favour of each Respondent. Order 1. The Applicant is to pay each of the Respondents' costs of and incidental to the proceedings from 16 January 2018 as agreed or assessed on a party/party. ********** 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 Amendments 01 June 2018 - Amendment in order remove word "proportion of" 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: 01 June 2018