Commissioner of the Australian Federal Police v Heng Jie Zhang and Ying Shen [No 2]
[2016] VSCA 191
•8 August 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0083
| COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE | Appellant |
| v | |
| HENG JIE ZHANG and YING SHEN [No 2] | First Respondent Second Respondent |
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| JUDGES: | TATE, PRIEST and BEACH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | On the papers |
| DATE OF JUDGMENT: | 8 August 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 191 |
| JUDGMENT APPEALED FROM: | [2015] VSC 390 (T Forrest J) |
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COSTS – Appeal allowed in relation to the sequence in which applications for exclusion from orders restraining property and applications for forfeiture of that property should be heard and determined under the Proceeds of Crime Act 2002 (Cth) – Whether successful appellant should be awarded costs of the application for leave to appeal and the appeal where the litigation was a ‘test case’.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr A R Moses SC with Ms R Burton | Australian Federal Police |
| For the Respondents | Mr O P Holdenson QC with Mr C G Juebner | Tony Hargreaves & Partners |
TATE JA
PRIEST JA
BEACH JA:
On 22 July 2016 the Court granted leave to appeal and allowed an appeal brought by the Commissioner of the Australian Federal Police (‘the Commissioner’) about the sequence in which applications for exclusion from orders restraining property and applications for forfeiture of that property should be heard and determined under the Proceeds of Crime Act 2002 (Cth) (‘the Act’).[1] The application for leave to appeal and the appeal were heard together.[2] The Court ordered that various applications brought by the respondents, Heng Jie Zhang and his wife Ying Shen, for exclusion under s 31 and under s 74 of the Act, and applications by the Commissioner for forfeiture orders in respect of the relevant property (two residential properties and a motor vehicle), be remitted to the Trial Division of the Supreme Court to be reheard and determined according to law.
[1]Commissioner of the Australian Federal Police v Zhang [2016] VSCA 171.
[2]Hereafter jointly referred to as ‘the appeal’.
The Commissioner has sought an order for the respondents to pay his costs, including reserved costs, of the appeal on the general ground that he was successful and that costs follow the event. In relation to the costs of the hearing at first instance held over four sitting days (3 to 6 August 2015), the Commissioner has identified three categories of costs incurred, namely:
(a) Costs of the application before the judge as to the order in which evidence was to be heard, including the Commissioner’s costs of preparation in response to this application and the costs of the hearing and determination of that application on 3 and 4 August 2015;
(b) Costs of the remainder of the hearing before the judge below on 4, 5, 6 and 7 August 2015 which was ‘conducted entirely consequentially upon his Honour’s erroneous ruling in Commissioner of the Australian Federal Police v Zhang (Ruling No 1)’;[3] and
(c) Costs of the substantive applications originally listed before the judge below.
[3](2015) 298 FLR 128 (‘Ruling No 1’).
While the Commissioner submits that the costs of the substantive hearing of the original applications should be costs in the re-hearing, he seeks his costs of the first two categories above, to be paid on the standard basis.
The respondents resist those orders. They submit there should be no order as to costs. They put forward two reasons: first, the litigation involved a threshold question of construction of the provisions of the Act with implications far beyond the present litigation and therefore the litigation should be regarded as a ‘test’ case; and further or alternatively, the respondents cannot apply for an indemnity certificate under s 4(1) of the Appeal Costs Act 1998,[4] thereby placing an additional burden on them.
[4]Solomons v District Court of New South Wales (2002) 211 CLR 119. See also DPP (Cth) v Hunter (2003) 7 VR 119.
The respondents point out that the position taken by the Commissioner both in this Court and below openly acknowledged that the matter was a test case which dealt with a threshold controversy. That can be seen from the remarks of counsel for the Commissioner before the judge below. During an adjournment application made to the judge on 27 July 2015, when the amount of time that might be taken to deal with the various applications was discussed, counsel for the Commissioner said:
… this is a test enough case, if I can put it that way to say that the decision [about the order in which the applications are heard] has implications for how these matters are run generally and it is theoretically possible that one side or another may even have instructions to go elsewhere with whatever that decision is.
Then following the delivery of Ruling No 1 on 4 August 2015, counsel for the Commissioner described the litigation as ‘something of a test case’ when applying for a stay to consider the implications of the ruling and whether an appeal should be instituted. Counsel later noted that ‘it’s important that the law is settled in this regard.’
The respondents also point to two of the bases relied upon by the Commissioner for the grant of leave, namely:
The Decision [below] raises legal questions of national significance concerning the construction and operation of the Act.
…
The Decision amounts to a departure from the manner in which such applications under the Act currently due for hearing nationwide have been typically prepared for hearing, in that the extant exclusion applications before the Court were not adjudicated prior to or with the forfeiture application.
Consistently with these considerations, the Commissioner in his written case submitted that the appeal raised an important issue of construction of the Act and the judge’s decision below raised legal questions of national significance. At the hearing of the appeal, senior counsel for the Commissioner reiterated that this was a test case that would have an impact on other pending proceedings brought under the Act throughout Australia. In light of that, he contended that the decision of the judge below that, he argued, ‘so gravely misinterprets the provisions of the Act and mis-applies authority’ should not be permitted to stand.
The respondents say that the resolution of this threshold issue has conferred a benefit on the Commissioner ‘far beyond this proceeding’, given the other pending proceedings filed prior to 1 March 2016.[5] In their submission, this case is analogous to that dealt with in Director of Public Prosecutions v Nguyen[6] in which the Court of Appeal made no order as to costs, either on the appeal or below, on the basis that while the Director’s appeal concerning automatic forfeiture under the Confiscation Act 1997 had succeeded, the litigation amounted to a test case conducted in the public interest.
[5]The commencement date of s 315A(2) which provides that an application for exclusion from a restraining order must be determined prior to the hearing of an application for a forfeiture order.
[6](2009) 23 VR 66.
The respondents further submit that if the Court is of the view that it is inappropriate to make no order as to costs with respect to the costs of the hearing before the primary judge, the costs of that hearing should be reserved and left to the judge below on the remittal, on the basis that the remitter judge will be best placed to evaluate costs having regard to issues raised at trial, including admissibility of evidence. They submit that, although the Commissioner was ordered to pay the respondents’ costs below (which has now been overturned), the Commissioner is not ‘out of pocket’ because those costs were not assessed or paid by reason of the appeal.
The Commissioner submits that there is no appropriate basis for the Court to exercise its discretion to depart from the ordinary rule that costs follow the event. Given the nature and objects of the Act, the present proceedings were not unusual in raising issues of public importance. He rejects the assertion that this case should be seen as a test case; the issue about the sequence in which the applications should be dealt with arose from the respondents’ erroneous submissions which led the judge below into error. There are many examples of appellate judgments that establish important principles where the costs orders have not departed from the usual order as to costs.
The Commissioner relies upon Director of Public Prosecutions v Ali [No 2][7] where the Court held that the case ought not be described as a ‘test case’. In considering that no order was made as to costs in Director of Public Prosecutions v Nguyen, Maxwell P observed that:
In Nguyen, the DPP had appealed from an order of a judge of the Trial Division dismissing an application for judicial review of a decision of the County Court. The critical issue was whether the date of conviction was the date on which an accused was arraigned and the allocutus was administered, or the date upon which his or her plea was heard and unequivocally accepted. The court concluded that significant questions of general application were raised by the proceeding — both at law and for the purposes of the Confiscation Act — and that the respondents could rightly be characterised as having been parties to a proceeding which the DPP had conducted in the public interest. Accordingly, the court made no order as to costs, either of the proceeding in the Trial Division or of the appeal.
The present case does not fall into that exceptional category. Almost every case under the Confiscation Act requires interpretation of a provision of the Act. That cannot be sufficient for this purpose. The point at issue must be capable of being viewed as of wide general importance before it can be regarded as a test case.[8]
[7](2009) 25 VR 656.
[8]Ibid 660–1 [18]–[19] (citations omitted).
Kyrou JA said (with the concurrence of Weinberg JA on this issue):[9]
In my view, this case stands in a different position from Nguyen. It cannot be described as a test case. While this court’s decision in the substantive judgment on this proceeding clarifies the position in relation to an important provision of the Confiscation Act, it cannot be said that the question was either of the significance or general application that would be expected of a proceeding in the nature of a test case. Nor was the proceeding conducted by any party in the public interest or on the basis that it was a test case.[10]
[9]Ibid 663 [33].
[10]Ibid 664–5 [44] (citations omitted).
As a matter of policy, the Commissioner urges the Court not to establish a category of ‘test’ cases which would form the basis for not ordering costs in the usual way, save in truly exceptional cases. There is a risk, it is submitted, that such a category of cases would unintentionally encourage litigants to adopt a ‘nothing to lose’ approach by claiming an element of public importance to deflect the usual costs order if they fail. Moreover, the Commissioner submits, in the present case, the stance taken by the respondents is opportunistic, given that they contested that leave to appeal should be granted on the basis that the matter did not give rise to sufficient public interest. If, as the respondents now assert, the matter is of such public importance, that position should have been raised at the time of the hearing of the application for leave to appeal.
Finally, the Commissioner points out that there is no material before the Court to suggest that there is any financial or other reason why the respondents should be indemnified for their costs regardless of the outcome. This submission appears to be misconceived as the respondents do not seek to have the Commissioner pay their costs; rather, they seek that there be no order as to costs.
In relation to the costs of the hearing before the judge below of both the application about the proper sequence of the applications, and the actual hearing of the applications following Ruling No 1, the Commissioner submits that since that ruling has now been set aside, the costs of the first two categories identified earlier[11] should be paid in the usual manner on a standard basis because they were incurred as a consequence of the ruling.
[11]See [2]–[3] above.
In our opinion, this was clearly a test case and it is appropriate that there be no order as to costs of the appeal.[12] Although the Commissioner was successful, we consider that this is an instance where costs should not follow the event because, by contrast with Director of Public Prosecutions v Ali, the Commissioner has obtained a judgment of wide general importance, indeed of national significance, in his favour and the respondents should not be obliged to bear the burden of his costs in obtaining that benefit. We accept that the Commissioner conducted the appeal in the public interest as a test case and it is of no consequence that the respondents did not accede to that characterisation in resisting the grant of leave. In our view it was a truly exceptional case which resulted in a mandated sequence for the hearing of the relevant applications in all future proceedings to which s 315A of the Act applied in its unamended form. Indeed, the fact that legislation was introduced to amend s 315A to reflect an approach which has now been independently affirmed by this Court reveals the national significance of the proceeding.
[12]That is, the costs of both the application for leave to appeal and the appeal.
As we consider we should accede to the respondents’ request on this reason alone, there is no need to consider the second reason proffered by the respondents for there being no order as to costs of the appeal.
We are also of the view that all of the costs of the hearing below should be a matter for the remitter judge. The remitter judge will be in a properly informed position to consider how much of the earlier proceeding remains relevant to the remitted proceeding. If very little of the earlier proceeding remains relevant, a suitable costs order can be framed. He or she will also be aware of the ultimate disposition of the remitted proceeding which will have a significant impact on the terms of any final orders as to costs.
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