Creak v Roads & Maritime Services; McKinley v Roads & Maritime Services

HIS HONOUR: By Amended Summonses, dated 4 June 2020, the plaintiffs seek the following orders:

In the Amended Summonses the plaintiffs set out their “Appeal Grounds” as follows:

By an Amended Response to the Amended Summons, the first defendant set out grounds for opposing the relief sought as follows:

On 11 May 2018, the first defendant issued the plaintiffs with a “Notice to Show Cause”. That notice was based on an audit of the plaintiffs’ premises pursuant to the Authorised Inspection Scheme (AIS) on 8 February 2018. The notice alleged that the plaintiffs had violated the AIS Business Rules. The notice identified the rules and the conduct alleged to have violated them. The notice called upon the plaintiffs to “show cause” why their authority to operate as an authorised examiner should not be suspended or cancelled. The “Notice to Show Cause” document is set out as follows:

The plaintiffs responded to the notice.

On 16 August 2018, the first defendant issued the plaintiffs with a “Notice of Cancellation” of their AIS Examiner’s Authority pursuant to clause 72 of the Road Transport (Vehicle Registration) Regulation 2017 (NSW) (the Regulation).

By application dated 6 September 2018, the plaintiff appealed the first defendant’s decision to the Local Court of New South Wales pursuant to s 267 of the Road Transport Act 2013 (NSW) (Road Transport Act). This had the effect of staying the cancellation.

The appeal was commenced by application notice pursuant to s 45 of the Local Court Act 2007 (NSW) (Local Court Act).

The matter came before the Downing Centre Local Court and her Honour Baptie LCM heard the appeal on 5 March 2019, 10 May and 19 July 2019. On 6 September 2019, her Honour determined that all but one of the 10 alleged breaches had been established on the evidence presented. On 23 September 2019, her Honour received affidavit evidence and heard submissions on behalf of the plaintiffs and the first defendant.

The proceedings were adjourned to 1 November 2019. It is uncontroversial that the order of the Local Court in relation to the appeal was that the Local Court suspended Mr Creak’s AIS Examiner’s Authority for a period of 12 months and that of Mr McKinley for one month.

On 20 December 2019, the matter came before her Honour who, having received written submissions from the parties, determined that the plaintiffs should pay the first defendant’s costs. A copy of her Honour’s judgment on costs is attached to these reasons.

The power to suspend or cancel an AIS Examiner’s Authority is found in cl 72 of the Regulation. Under s 267 of the Road Transport Act a person may appeal to the Local Court against an “appealable decision” by filing a notice of appeal in the Local Court.

An “appealable decision” is defined in s 266(1)(l) of the Road Transport Act to include:

Pursuant to cl 127(a) of the Road Transport (General) Regulation 2013 (NSW), a decision of the Authority under the Regulation to cancel an examiner’s authority is described as a decision of the kind identified in s 267(1)(l) of the Road Transport Act.

Section 268 of the Road Transport Act prescribes how the Local Court is to determine these “appealable decisions”. It prescribes powers to set aside the decision, vary the decision, or dismiss the appeal, as well as to make any other order that the Court determines to be just in the circumstances.

An “appealable decision” is dealt with by the Local Court in its “Special Jurisdiction”, which is found under Pt 4 of the Local Court Act.

Pursuant to s 45 of the Local Court Act, “appealable proceedings” may be commenced by issuing and filing an application notice in accordance with Pt 4, Div 2 of that Act. “Appealable Proceedings” are defined in s 43 as proceedings to which Pt 4 of the Local Court Act applies.

The magistrate’s power to award costs pursuant to s 69 of the Local Court Act was discretionary. Section 69 is relevantly similar to s 98(1) of the Civil Procedure Act 2005 (NSW). It was accepted by the parties that as a general rule, the successful party is entitled to his or her costs.

By their Amended Summonses, the plaintiffs seek to appeal from her Honour’s order that they pay the first defendant’s costs and a review of her Honour’s Costs decision, pursuant to the Court’s supervisory jurisdiction under s 69 of the Supreme Court Act 1970 (NSW). Accordingly, the relief sought and the grounds stated in the plaintiffs’ Amended Summonses are both an appeal in respect of the Costs decision and an application for review.

It was common ground between the parties that the Amended Summonses raises the following issues for resolution by the Supreme Court:

It was also common ground between the parties that an appeal to the Supreme Court may only be made pursuant to s 70 of the Local Court Act in circumstances where the plaintiff in fact only appeals against the order for costs. Section 270 of the Road Transport Act with its privative clause is not applicable. Section 70(1) of the Local Court Act provides:

There was no issue that her Honour’s power to award costs was a power available to her pursuant to s 69 of the Local Court Act which provides:

This analysis was endorsed by Adamson J in Alpha Precision Pty Ltd v Comptroller-General of Customs [2018] NSWSC 841 where her Honour said:

The principles relevant to an award of costs were recently summarised by the Court of Appeal (Bell P, Gleeson and Payne JJA) in Sydney Local Health District v Macquarie International Health Clinic Pty Ltd (No 2) [2020] NSWCA 316 at [12] where their Honours said:

The plaintiffs submitted that at an early point in the proceedings (5 March 2019) they sought not only that the Cancellation Decision be set aside but that in the alternative, the Cancellation Decision be varied so as to impose a less severe penalty. The plaintiffs noted that that was the position which they maintained throughout the proceedings. The plaintiffs also noted that the first defendant opposed the grant of that alternative relief. The plaintiffs further noted that the Local Court ultimately made the order sought by them, i.e. that the Cancellation Decision be varied so as to impose a lesser penalty.

The plaintiffs submitted that as a result they had succeeded in obtaining the order sought by them, i.e. a variation with a lesser penalty. The plaintiffs submitted that had they not sought a variation in this way, the penalty imposed on them would not have been varied. The plaintiffs submitted that on that issue they were the successful party for the purpose of the costs proceedings.

The plaintiffs submitted that they had been successful in rebutting the Brake Testing Allegation and that this fact should have been taken into account by her Honour.

In the alternative, the plaintiffs submitted that jurisdictional error had been established by them in that the Local Court had misunderstood what was the ‘event’. The plaintiffs submitted that this error was apparent on the face of the court record in that it was clear that the Local Court was labouring under a misconception as to the function it was called upon to perform in making an award of costs under s 69 of the Local Court Act.

The plaintiffs submitted that s 69 of the Local Court Act mirrored the Supreme Court’s general power as to costs set out in s 98(1) of the Civil Procedure Act, i.e. costs are in the discretion of the Court and the Court has full power to determine by whom, to whom and to what extent, costs are to be paid. The plaintiffs submitted that it was well established that costs follow the event so that a successful party has a “reasonable expectation” of being awarded costs. On that issue, the plaintiffs relied upon the statement of principle by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, where his Honour said at [67]:

The plaintiffs noted that the exception to that statement of principle arose when a successful party has been guilty of some sort of misconduct in relation to the conduct of the litigation.

The plaintiffs submitted that when those principles were applied to the facts of this case, it was clear that the first defendant was not the successful party and should not have been awarded costs on that basis. The plaintiffs submitted that that conclusion constituted an error of law on the face of the record.

The plaintiffs submitted that had they not commenced the proceedings, their Examiner’s authority would have been cancelled permanently. Instead their Examiner’s authority was suspended for respectively 12 months and one month. The plaintiffs submitted that the variation of the Cancellation Decision constituted an order made in their favour and established that the plaintiffs had obtained a successful outcome from the litigation.

The plaintiffs submitted that in focusing on her findings regarding individual breaches of the inspection rules, her Honour asked herself the wrong question, i.e. rather than evaluating which party was ultimately successful, her Honour assessed the extent to which each of the relevant breaches of the AIS Business Rules had been made out. The plaintiffs submitted that the court’s focus on the individual breaches led it into error in the context of the Costs decision.

The plaintiffs submitted that this was not a case where the court recognised that they were the successful party, but nevertheless, decided to award costs against them because their conduct of the litigation unnecessarily protracted it. The plaintiffs submitted that the court below simply failed to correctly identify the successful party. They submitted that the imposition of a significant costs order on them being the parties who successfully obtained a variation of the first defendant’s Cancellation Decision, had the potential to operate as a significance disincentive to parties seeking to exercise their appeal rights under the Local Court Act, thereby undermining the legislature’s creation of that appeal avenue.

In reply, the plaintiffs submitted that apart from the Brake Testing Allegation, the show cause notice alleged that ten of the AIS Business Rules had been breached. The plaintiffs submitted that in eight cases the fact of the breach was accepted and submissions were made regarding the seriousness of the relevant breach and the circumstances surrounding it. In relation to two further AIS Business Rules subject to challenge, the plaintiffs submitted that a breach of the rules had not in fact been made out. These submissions were directed to the breach of AIS Business Rules said to have arisen from Mr Creak’s inspection of a Ford F250 vehicle.

The first defendant noted that the plaintiffs sought to both appeal from the decision of her Honour and a review of her Honour’s decision. The first defendant submitted that for the appeal to succeed, it was necessary for the plaintiffs to demonstrate that her Honour’s discretion miscarried or that the order of her Honour was plainly unjust or unreasonable. The first defendant submitted that the plaintiffs had failed to establish those matters.

The first defendant submitted that it was its success in establishing the breach of AIS Business Rules in particular ways which was of importance in the context of a legislative regime which was protective rather than punitive.

The first defendant agreed that it was of fundamental importance for her Honour to determine who in fact was the successful party in the proceedings. The first defendant submitted that it was clear from her Honour’s Costs decision that her conclusion that the first defendant was successful was correct and was based on a principled approach to the facts.

The first defendant submitted that her Honour’s decision that it was the successful party in the proceedings was based on the following considerations set out in the costs judgment:

The first defendant submitted that it was erroneous to refer to the AIS Business Rules as involving penalties. It submitted that the correct characterisation of the legislation was that it was protective, having as its purpose the regulation of inspection activities to ensure the safety of the motoring public, and that compliance with relevant Business Rules was brought about by the imposition of sanctions.

The first defendant submitted that the proceedings before her Honour were in the nature of disciplinary proceedings in that they were protective of the public.

The first defendant submitted that the awarding of costs against the plaintiffs, even though they had successfully exercised their appeal rights, would not operate as a disincentive for other parties to rely upon the appeal provisions of the Local Court. This was because the legislative framework was directed at the regulation of inspection services which were designed to promote the safety of the motoring public.

The first defendant submitted that the rationale behind the approach contended for by the plaintiffs would have the inevitable effect that in all appeals, pursuant to s 267 of the Road Transport Act, there would be a prima facie entitlement to costs under s 69 of the Local Court Act where any order other than the dismissal of an appeal was made pursuant to s 268 of the Road Transport Act. The first defendant submitted that this would extend to decisions relating to the suspension of driving licences by police or the fining of persons exceeding the speed limit by 30-45 kmph.

The first defendant submitted that at no time did her Honour apply a test other than determining which party in her opinion was the successful party in the proceedings. Where the parties were at issue was not as to the nature of the question to be asked but as to how that question should be answered. The first defendant noted that in any event, the answer to that question was one of fact or mixed fact and law.

As a preliminary issue I am of the opinion that there is no basis in this matter for the supervisory jurisdiction of the Supreme Court to be invoked pursuant to s 69 of the Supreme Court Act. The matters in contest as to costs could be and had been fully ventilated in the hearing of the appeal pursuant to the Crimes (Appeal and Review) Act.

In Kirk v Industrial Court of NSW (2010) 239 CLR 531; [2010] HCA 1 the majority of the High Court (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) noted at [71] that:

The High Court has been disinclined to authoritatively define error, however, some assistance on what may constitute such error is provided by Professor Mark Aronson (M Aronson, B Dyer, M Groves, Judicial Review of Administrative Action (4th ed, 2009) who catalogued eight categories of jurisdictional error which include:

Some further assistance is provided in Area Concrete Pumping Pty Ltd v Inspector Barry Childs (WorkCover) (2012) 223 IR 86; [2012] NSWCA 208 where Basten JA said:

I have concluded that the plaintiffs have not established any failure by her Honour to correctly formulate the issue to be determined in the context of the statutory provision in respect of which a determination was required.

The matters arising in these proceedings do not give rise to questions of jurisdiction, nor do they provide scope for supervision by this Court under s 69 of the Local Court Act. The question of who should pay costs, particularly in this case, is fact specific and essentially turns on factual findings by her Honour. Accordingly, I reject the submission that anything done by the learned Magistrate involved jurisdictional error or error on the face of the court record. In this case the court record would comprise documents initiating proceedings, pleadings, the formal court order and the reasons for the Costs decision. I do not understand the court record to include the submissions of the parties.

In relation to the appeal to this Court pursuant to the Crimes (Appeal and Review) Act, it should be noted that no appeal has been brought in relation to any of the factual findings made by her Honour. The only matter challenged is the order for costs and whether correct principles were applied by her Honour in reaching her conclusion as to costs. It follows that it was not open to the plaintiffs to challenge, in the course of submissions, the factual findings upon which her Honour’s award of costs was based.

Given the findings of fact upon which her Honour’s conclusion as to costs were based, I do not see any question of law arising so that the plaintiffs would have an appeal as of right to this Court. Accordingly, I have concluded that given the issues of fact found by her Honour in her judgment on costs, this is a matter involving questions of mixed fact and law in relation to which leave has to be granted before they can be considered.

Her Honour identified, as a crucial question to be decided, who was the successful party. Her Honour also found that all of the breaches established against the plaintiffs were the subject of disputed evidence during the proceedings. This included challenges to the records of interview of each plaintiff. There seems little doubt from her Honour’s summary of evidence in her Costs judgment that the factual issues were hotly contested. The result is that even if no evidence was led in respect of a particular issue, it was still necessary for her Honour to be satisfied to the Brigenshaw standard (Brigenshaw v Brigenshaw (1938) 60 CLR 336; [1938] HCA 34) that the elements of that breach had been made out.

A fundamental issue in the appeal was the proposition put forward by the plaintiffs that because the cancellation of their inspection rights had been varied to a suspension, they had in fact improved their position and had achieved success in the proceedings and that this should be reflected in a costs order in their favour. That was certainly the position adopted by the plaintiffs in the appeal and to some extent not fully challenged by the first defendant. The resolution of that issue favourably to them was a fundamental part of the plaintiffs’ appeal.

I find that submission difficult to understand. This is so given the clear statement by her Honour to the effect that the variation of the sanction to a suspension rather than a cancellation of inspection rights would still involve a finding and a result which were adverse to the position adopted by the plaintiffs. The observations to which I refer are as follows:

The effect of her Honour’s Costs decision is that having considered the whole of the circumstances and the whole of the evidence, her Honour was satisfied on the balance of probabilities that the first defendant was the successful party so as to entitle it to the costs of the proceedings. Implicitly, her Honour found that the first defendant acted appropriately in the proceedings, both in relation to commencing them and proceeding with them. Apart from the first defendant’s failure to include the purported tampering with brakes in the Show Cause Notice, she was not otherwise critical of how the first defendant conducted the proceedings. That could not be said of her comments in relation to the plaintiffs. Those findings are plain from her Honour’s reasons.

I have concluded that her Honour’s reasons in her Costs decision were comprehensive and did not omit reference to any relevant matter. They were sufficient to expose her Honour’s reasoning and recorded her findings which were made on the basis of evidence adduced at the hearing.

For the reasons already set out, none of the issues raised in the “supervisory” part of the claim is couched in terms of a legal question. The inclusion of the words “in law” and “jurisdictional error” do not for that reason give rise to questions of law.

What is raised in this application are questions of mixed fact and law in respect of which leave is required (s 53(1)(b) Criminal (Appeal and Review) Act). I am not persuaded that leave should be granted on any of those grounds. As indicated, it was in my view open to her Honour to find that the first defendant was successful in the proceedings which it brought against the plaintiffs. Given her factual findings, I have concluded that it was open to her Honour in the exercise of her discretion under s 69 of the Local Court Act to award costs to the first defendant. The principles relating to appellate review of discretionary decisions are well known. Before a court will on appeal interfere with a discretionary decision such as an order for costs, the applicant must demonstrate that the discretion miscarried or the order was plainly unjust or unreasonable. For the reasons given above, I consider that it was open to her Honour to approach the issue of costs in the way in which she did and no error of the necessary kind has been identified.

Since the plaintiffs have failed in their application, I can see no basis for not awarding the costs of this proceeding against them. There was no suggestion by the parties that costs ought not follow the event.

For the reasons given above, I make the following orders: