Choundary v Capital Airport Group (No.2)
[2006] FMCA 1122
•10 August 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHOUNDARY v CAPITAL AIRPORT GROUP (No.2) | [2006] FMCA 1122 |
| COSTS – HUMAN RIGHTS – Application for costs on an indemnity basis – claim that the contempt application was misconceived and without merit – claim that the contempt application contained procedural irregularities – offer of compromise – Federal Court’s cost scale – costs awarded on a party and party basis – taxation at 85 per cent of rate under Federal Court Rules. |
| Federal Magistrates Act 1999, ss.3, 79 Federal Court Rules, O 62 Federal Magistrates Court Rules 2001, Div 21.2 |
| Choundary v Capital Airport Group [2006] FMCA 530 JL Holdings Pty Ltd v State of Queensland [1998] FCA 1032 Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) & Ors (1996) 72 FCR 151 Trade Practices Commission v Nicholas Enterprises (1979) 421 FLR 213 Wilczak v Alpine Refrigeration & Anor (No.3) [2006] FMCA 554 |
| Applicant: | KORINA CHOUNDARY |
| Respondent: | CAPITAL AIRPORT GROUP |
| File Number: | CZ 24 of 2003 |
| Judgment of: | Mowbray FM |
| Hearing date: | Decided on written submissions |
| Date of Last Submission: | 22 May 2006 |
| Delivered at: | Canberra |
| Delivered on: | 10 August 2006 |
REPRESENTATION
| Counsel for the Applicant: | Ms R Francois, Dr C Ward |
| Solicitors for the Applicant: | Nicholas Dibbs Solicitors |
| Counsel for the Respondent: | Mr A Robertson SC, Ms K Eastman |
| Solicitors for the Respondent: | Mallesons Stephen Jaques |
ORDERS
The applicant pay the respondent’s costs as agreed or taxed under Order 62 of the Federal Court Rules and calculated at 85 per cent of the costs payable under those Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CZ 24 of 2003
| KORINA CHOUNDARY |
Applicant
And
| CAPITAL AIRPORT GROUP |
Respondent
REASONS FOR JUDGMENT
On 19 April 2006 I dismissed a contempt application brought against the respondent (Choundary v Capital Airport Group [2006] FMCA 530). The applicant had failed to make out a prima facie case on each of the three charges pressed and did not pursue the fourth charge. I set a timetable for written submissions on costs.
The respondent seeks an order that the applicant pay costs on an indemnity basis. In the alternative it submits that the Court should refer the costs for taxation under Order 62 of the Federal Court Rules.
The applicant submits that the circumstances of the contempt application are not appropriate for the award of indemnity costs. She also asserts that “it is premature at this stage, without having heard the evidence and decided the discrimination proceedings, to decide the costs of the contempt application”.
Relevant principles
Section 79 of the Federal Magistrates Act 1999 empowers the Court to award costs in non-family law proceedings:
Costs
(1)This section does not apply to family law or child support proceedings.
(2)The Federal Magistrates Court or a Federal Magistrate has jurisdiction to award costs in all proceedings before the Federal Magistrates Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3)Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Magistrates Court or Federal Magistrate.
This discretion is “absolute and unfettered” but must be exercised judicially (Trade Practices Commission v Nicholas Enterprises (1979) 421 FLR 213 at 219). It includes making an order for costs to be paid on an indemnity basis (Wilczak v Alpine Refrigeration & Anor (No.3) [2006] FMCA 554).
Black CJ considered the issue of indemnity costs in Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) and Ors (1996) 72 FCR 151 at 152-153:
The circumstances under which indemnity costs will be ordered have been discussed in many cases in this Court and it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case costs will follow the event and the Court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity. Nevertheless the court has an absolute and unfettered jurisdiction in awarding costs, although that discretion must be exercised judicially. So, indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the Court exercising its discretion in that way. See John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 at 203 per Hill J, referring to the judgment of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. But as Hill J pointed out in John S Hayes (at 203):
“…care must be taken not to circumscribe the discretion by reference to closed categories. It is not a necessary condition of the power to award costs that a collateral purpose be shown. The categories warranting the exercise of the discretion are not closed: Colgate-Palmolive at 233; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991) per French J at p 8; Regata Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court, 5 March 1993) per Davies J at p 6. In each case it will be necessary to look at the particular facts and circumstances to see whether an exercise of discretion to order costs on an indemnity basis is warranted.”
Submissions
The respondent submits that the applicant’s contempt claims were misconceived and without merit. Properly advised, the applicant should have known that she had no chance of success in establishing a prima facie case on the contempt application. The respondent alleges that the applicant failed:
·to state the charges in accordance with the rules
·to file an affidavit setting out the facts relied upon
·to lead appropriate evidence to establish the contempt.
The respondent asserts that the claim was misconceived and without merit having regard, not only to procedural irregularities, but also to the substance of the claims. The respondent refers to my reasons for dismissing the charges in support of this contention and notes that the applicant’s submissions appear to be seeking to contest my factual findings.
The respondent says that a further ground which may justify an indemnity costs order relates to an offer of compromise. On 17 November 2005 the respondent invited the applicant to settle the proceedings on the basis that the applicant consent to the application being dismissed and the applicant contributing $2,500 to the respondent’s legal expenses. The applicant did not accept this offer.
The applicant contested whether there were procedural irregularities. If there were, they could not be said to render the application patently hopeless or to otherwise justify an order for indemnity costs. Furthermore, it is arguable that there was evidence before the Court to establish a prima facie case although minds could reasonably differ on this question. The evidence was not patently hopeless in terms of justifying the orders sought.
The applicant points out that the offer of compromise was faxed to her on 17 November 2005 and open for less than 24 hours. It was made only one clear working day before the hearing. It did not explain why it considered the applicant’s prospects of success to be “very poor”. It sought capitulation by the applicant with a payment of $2,500 towards the respondent’s costs.
The applicant argues it would be premature to make a decision on costs without having determined the discrimination proceedings. Evidence may be given in those proceedings which would affect the justice of any costs order.
The applicant also opposes use of the Federal Court costs scale. She says that there is no proper basis for departing from this Court’s own scale.
Conclusions
I agree with the applicant that the mere fact that she was unsuccessful is not sufficient for a special costs order. The starting point is that costs follow the event on a party and party basis. There must be some special or unusual feature in the case for indemnity costs.
The categories of cases where indemnity costs might be awarded are not closed. But the test suggested by the applicant – the case must have been patently hopeless – is set too high. In Wilcox the Full Court considered whether the application “was misconceived and without merit”.
At [50] of my reasons for dismissing the contempt application I said:
I agree with Mr Robertson that in proceedings as serious as those for contempt the specific charges must be distinctly and clearly stated. The elements of the offences should be articulated and the alleged facts set out in some detail. There were significant failings on this score and in the general handling of this matter.
I do not resile from this statement. Nevertheless, apart from charge 2 which was not pursued and which had a similar factual base to charge 1, on balance I do not agree that the contempt application was sufficiently misconceived and without merit to justify an indemnity costs order. The case raised some complex issues of fact and law, especially in relation to charge 1. It is not one with “some special or unusual feature” which warrants an order for indemnity costs on this ground.
The second ground put forward for an indemnity costs order is the unsuccessful offer of compromise. Such an offer is not conclusive of whether an indemnity costs order should be made, but is just one factor to be taken into account (JL Holdings Pty Ltd v State of Queensland [1998] FCA 1032).
I do not think it was unreasonable in the circumstances for the applicant to have failed to respond to the offer of 17 November 2005, essentially for the reasons that she put forward. In particular, no reasonable time was provided to her to consider the offer prior to the commencement of the hearings. Furthermore, what it proposed was really a capitulation not a compromise.
In the circumstances the normal rule for costs on a party and party basis should apply. I see no good reason for deferring the decision further until judgment in the discrimination matter is given.
Division 21.2 of the Federal Magistrates Court Rules allows me to set a method by which costs should be calculated and to refer the costs for taxation under Order 62 of the Federal Court Rules. I consider that this is the appropriate course in this case. Having regard to the objects set out in section 3 of the Act – see also rule 1.03 – these costs should be calculated at 85 per cent of the scales applied on taxation in the Federal
Court. These costs should include any reserved costs.
I certify that the preceding twenty-one paragraphs are a true copy of the reasons for judgment of Mowbray FM
Associate: Natasha Werner
Date: 10 August 2006
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