No Costs in ACAT? The Proper Operation of Sections 48 and 49 of the ACT Civil and Administrative Tribunal and Other Issues

In CIC –v- ACT Planning and Land Authority [2013] ACTSC 96 (CIC –v- ACTPLA), which was an appeal from the ACT Civil and Administrative Tribunal (ACAT), Penfold J considered, amongst other things, the proper operation of sections 48 and 49 of the ACAT Act.

The relevant facts were:

1. CIC Australia Ltd (CIC) made a development application to the ACT Planning and Land Authority (ACTPLA), which was approved;
2. Mainore Pty Ltd (Mainore) sought to have the application reviewed;
3. Mainore later joined CIC as a party to the proceedings;
4. On the day of the hearing, CIC advised that it had given notice to ACTPLA that it surrendered its review application;
5. Mainore foreshadowed discontinuing its proceedings, but declined to do so until the ACAT had dealt with its costs application against CIC;
6. CIC requested that ACAT exercise its powers under section 32 of the ACAT Act, for being frivolous and vexatious, as the application had become futile;
7. ACAT formally dismissed the application for review under section 56(d) of the ACAT Act (without providing reasons), and ordered CIC pay Mainore’s costs;
8. CIC then commenced this appeal.

A preliminary issue in the appeal was what powers the Supreme Court had in respect of appeals from ACAT.

In essence, considering the effect of the enactment of the Court Procedure Rules 2006 (ACT) (CPR) in 2006, (which provided wider powers than the previous Supreme Court powers on appeal on a question of law from the Administrative Appeals Tribunal)¹, and the enactment of the ACAT Act in 2008, Penfold J came to the conclusion that her task on appeal was to:²

1. Examine and answer questions of law relevant to the ACAT decision on appeal;
2. Having regard to those questions of law, to do any of the following:

• Confirming, varying or setting aside the ACAT decision;
• Remitting the case to ACAT to be heard and decided again, with or without hearing of further evidence;
• To exercise any of the powers of the ACAT, including the power to receive further evidence; and
• To make any other appropriate order.

In determining this, Penfold J considered that the Supreme Court’s jurisdiction over appeals from ACAT is not enlarged by the CPR to questions other than law.

Penfold J noted, in the course of her judgment, that section 48 of the ACAT Act sets out the costs power of ACAT.

Penfold J noted that section 48(1) of the ACAT Act provides that each party must bear their own costs unless the ACAT Act or the tribunal otherwise orders. The Court also noted that section 48(2) of the ACAT Act thereafter commences with the word “[h]owever”, and prescribes that if certain circumstances occur, the tribunal may order particular costs orders.³

Her Honour stated that section 48 of the ACAT Act, therefore, has four main elements:

1. The default position is that the parties bear their own costs;
2. The default position may be varied by the provisions of the ACAT Act;
3. The default position may be varied by an order of the ACAT;
4. That in four specified circumstances, ACAT may make particular costs orders.

Penfold J noted that the section is not coherent, having been “cobbled together”, particularly with respect to the combined effect of sections 48(1) and (2).  Her Honour noted that the use of the word “However” at the beginning of section 48(2) was problematic.

On the wording of section 48 of the ACAT Act, Penfold J noted that there could be three possible interpretations of the section, namely, that section 48 confers:

1. a broad discretionary power, with examples as to how that power may be used;
2. a broad discretionary power that, in the circumstances of section 48(2), may only be exercised as set out in section 48(2); or
3. a narrow costs power, enlivened only in the circumstances set out in section 48(2).

Penfold J considered the following sources in interpreting the scope of the costs power:

• Section 48(2)(a) of the ACAT Act, which permits ACAT to order a respondent to pay the filing fee to a successful applicant. Due to its nature, it would be an odd provision to limit a general discretion whenever the filing fee is applicable. This supports an interpretation of a broad costs power with examples or a narrow power only;

• Section 49 of the ACAT Act, which confines the operation of the discretionary power conferred by section 48(2)(c) of the ACAT Act to costs for a contravention of orders, but only if it is in the interests of justice to do so. This supports a narrow interpretation, as a qualification relating to the interests of justice would normally apply to a general discretion. Therefore, it supports a narrow construction of the costs power;

• The note to section 32 of the ACAT Act provides that a costs order may be made under section 32 of the ACAT Act if it is made in any of the circumstances referred to in section 42(d) of the ACAT Act, suggestive of being the only circumstances that the costs power can be used, therefore suggesting a narrow cost power;

• Section 6 of the ACAT Act, in relation to the purposes of the ACAT Act. Penfold J found nothing in the section clearly established the matter one way or the other;

• Dal Pont’s Law of Costs reference book, cited in case law,³ which did not provide a conclusion on the issue;

• Predecessors of section 48 of the ACAT Act, but Penfold J considered that the predecessors were made in a different context and therefore did not apply;

• The Explanatory Statement ACT Civil and Administrative Tribunal Bill 2008, which points to no other explanation other than it being a narrow costs power;

• The Justice and Community Safety Legislation Amendment Bill 2010, which provides a clear legislative assumption that section 48 of the ACAT Act only provides very limited exceptions to the general rule that parties are to bear their own costs;

• The general rule of  tribunals in Victoria, Queensland and South Australia that parties bear their own costs, and all of which set out a non-exhaustive list of matters to which the tribunal is to have regard in determining costs issues. In all three of these jurisdictions, it is clear that there is a broad discretionary costs power with specific limitations. However, Penfold J considered that the wording in the ACAT Act is more constrained than the equivalents in the other jurisdictions, including being constrained by the additional qualifier “[h]owever” before listing the specified circumstances and orders that may be made under section 48(2) of the ACAT Act. Accordingly, Penfold J found that a comparative approach favoured a narrow interpretation of the costs power of ACAT.

Considering all of the above, Penfold J concluded that section 48 of the ACAT Act only confers a narrow costs power on ACAT.

This means that ACAT only has the power to make the cost orders specified in section 48(2) of the ACAT Act and only in the circumstances specified in that provision.

Penfold J then considered the operation of sections 32 and 56 of the ACAT Act (and in the course of so doing, section 31 of the ACAT Act).

Section 31 provides that, if the tribunal considers it appropriate, it may take all reasonably practicable steps to resolve matters before the application is heard.

Section 32 confers the power on the tribunal to dismiss or strike-out an application.

Section 56 confers power on the tribunal to take other actions, including to make other orders the tribunal considers necessary or convenient, and to amend or set aside a tribunal order.

CIC ran the argument that Mainore’s application had become futile, and was therefore frivolous. Accordingly, section 32 of the ACAT Act mandatorily applied to the application (rather than section 56 of the ACAT Act, which is the section that ACAT relied on in its decision). Essentially, the submission was that section 32 of the ACAT Act constrained the application of section 56.

Penfold J held that section 32 of the ACAT Act did not necessarily apply in all circumstances. Her Honour noted that:

1. the section commenced with the words “if the tribunal considers”, which provides a discretion to the tribunal;
2. there is nothing in the words of the ACAT Act that would require such an interpretation (that is, to constrain the operation of section 56); and
3. that there is no basis in policy or common sense to assume no decision to dismiss an application can be made until ACAT has considered whether it has the power to dismiss an application on the frivolous or vexatious ground first.

Penfold J acknowledged that there are cases where proceedings persisted with after they had become futile were held to be frivolous or vexatious; however, did not consider that all futile applications were necessarily frivolous or vexatious.

Given the negative consequences of a finding that an application is frivolous or vexatious (namely, costs consequences), Penfold J considered that clear legislative direction or authoritative judicial pronouncement would be required for such a finding (which did not occur in this case).

After granting leave to appeal on the operation of the ACAT Act⁴, Penfold J made the following findings on the questions of law raised in this case:

Question 1 — Does ACAT have power to make costs orders under s 48 of the ACAT Act apart from the power to make costs orders of the kinds specified in s 48(2) in the circumstances specified in s 48(2)?

Answer — No. ACAT’s only powers to make costs orders are found in s 48(2) of the ACAT Act and any other applicable legislative provisions.

Question 2 — Does ACAT have power to dismiss an application under s 56(d) of the ACAT Act if the application could be dismissed under s 32 of that Act?

Answer — Yes.

Question 3 — Does s 48(2)(d) of the ACAT Act apply not only to applications dismissed under s 32 of that Act but also to applications that could have been dismissed under s 32?

Answer — No.

Question 4 — Are all applications that have become futile therefore frivolous or vexatious for the purposes of s 32 of the ACAT Act?

Answer — No.

Accordingly, the following orders were made:

1. leave granted to appeal on four specified questions of law;
2. the questions of law are answered as set out above;
3. the appeal is upheld;
4. the order of ACAT that the appellant pay the respondent’s costs of the proceeding in ACAT is set aside;
5. the respondent is to pay the appellant’s costs of this appeal; and
6. the parties will be heard about any other orders required.

Notwithstanding the introduction of the CPR and ACAT Act, the Supreme Court of the ACT only has power to address appeals from the ACAT on questions of law. Penfold J has provided a regime whereby such questions may be addressed.

In relation to costs, the default position on costs in ACAT is that each party bears its own costs.

Despite its potential appearance of granting a broad discretionary power, section 48 of the ACAT Act confers limited rights to vary the default position, being those set out in sections 48(2) and any other applicable legislative provisions.

Applicants to ACAT should therefore be mindful of the limited circumstances in which costs can be recovered.