Commissioner of the Australian Federal Police v Tradieh (No 2)

[2023] NSWSC 1399

Supreme Court

New South Wales

Medium Neutral Citation:

Commissioner of the Australian Federal Police v Tradieh (No 2) [2023] NSWSC 1399

Hearing dates:

16 November 2023

Date of orders:

16 November 2023

Decision date:

16 November 2023

Jurisdiction:

Common Law

Before:

Weinstein J

Decision:

The defendant is to pay the plaintiff’s costs of the Notice of Motion dated 28 February 2023 on the ordinary basis.

Catchwords:

COSTS — where Commissioner successfully defended action arising out of Proceeds of Crime Act 2002 (Cth) — indemnity costs sought — Calderbank letters – ordinary costs order made

Legislation Cited:

Civil Procedure Act 2005

Legal Services Directions 2017 (Cth)

Proceeds of Crime Act 2002 (Cth)

Uniform Civil Procedure Rules 2005

Cases Cited:

Calderbank v Calderbank [1975] 3 All ER 333

Commissioner of the Australian Federal Police v Opal Storm Pty Ltd [2018] VSCA 301

Commissioner of the Australian Federal Police v Tradieh [2023] NSWSC 1259

Category:

Costs

Parties:

Commissioner of the Australian Federal Police (Plaintiff)
Ammar Tradieh (Defendant)

Representation:

Counsel:
M Short (Plaintiff)
B Walker (Defendant)

Solicitors:
Australian Federal Police (Plaintiff)

File Number(s):

2022/161182

Publication restriction:

Nil

JUDGMENT EX TEMPORE REVISED

1. On 26 October 2023, I dismissed the defendant's Notice of Motion seeking orders pursuant to ss 29 and 31 of the Proceeds of Crime Act 2002 (Cth) (‘the Act’) that certain property be excluded from a restraining order made by Davies J on 3 June 2022: see Commissioner of the Australian Federal Police v Tradieh [2023] NSWSC 1259. The Commissioner now seeks his costs of the motion on an indemnity basis or, alternatively, on the ordinary basis.

2. Before me is the following evidence:-

1. An affidavit of Caitlin Julia Muddle affirmed on 16 November 2023 annexing certain correspondence between the parties’ legal representatives, including two offers by the plaintiff said to be made in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333 (‘Calderbank’); and

2. Correspondence from the defendant's legal representative to the Commissioner dated 19 December 2022 containing an offer also said to be made in accordance with the principles set out in Calderbank (Exhibit 1).

3. In written submissions, Mr Short, who appeared on behalf of the Commissioner, advanced two reasons why I ought to make an order for costs on an indemnity basis. First, he submitted that the defendant's motion had no reasonable prospects of success. Second, he submitted that the defendant unreasonably rejected offers in two Calderbank letters of 22 August 2023 and 12 September 2023, which he said, if accepted, would have put the defendant in a better position than he was following the delivery of my judgment on 26 October 2023.

4. Mr Walker, who appeared on behalf of Mr Tradieh, conceded that the starting point in proceeds of crime matters is that costs should follow the event. However, he submitted that given the "harsh and blunt" consequences of the provisions of the Act, the defendant was left with little choice but to seek exclusion of his real and personal property in an effort to preserve his equity, particularly his equity in the real property.

5. Mr Walker further submitted that the Commissioner was in breach of his obligations pursuant to cl 2(e)(i) of Appendix B of the Legal Services Directions 2017 (Cth) (‘the Directions’) by putting the defendant to proof with respect to the location of a tobacco crop on the defendant's property, which he submitted was within the Commissioner's knowledge. I observe that note 5 to Appendix B cl 2 of the Directions provides that:-

Note 5:   The obligation does not prevent the Commonwealth from enforcing costs orders or seeking to recover its costs.

6. Further, Mr Walker submitted that a combination of factors, including the harshness of the effects of the Act on the defendant, would cause me to exercise my discretion and make no order as to costs of the motion.

7. The proceedings are civil in nature: Commissioner of the Australian Federal Police v Opal Storm Pty Ltd [2018] VSCA 301 at [72] (‘Opal Storm’). It follows that the provisions of the Civil Procedure Act 2005 (‘CPA’) and the Uniform Civil Procedure Rules 2005 (‘UCPR’) apply. Section 98 of the CPA relevantly provides:-

98   Courts powers as to costs

(1)   Subject to rules of court and to this or any other Act—

(a)   costs are in the discretion of the court, and

(b)   the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c)   the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

…

8. Thus, costs are in the discretion of the Court.

9. I observe that the general rule is that costs follow the event and that typically costs will be awarded on the ordinary basis: rr 42.1, 42.2 UCPR. An award of indemnity costs is a special entitlement: see LexisNexis, Ritchie’s Uniform Civil Procedure NSW, vol 1 (at Service 140) [r 42.5], and the examples cited therein.

10. Dealing first with Mr Short's submission that the defendant had no reasonable prospects of success, in my view this is a submission made with the considerable benefit of hindsight. I observe that no motion for summary dismissal of the motion was ever contemplated. Although I found for the plaintiff on what was called the “threshold issue”, in my view, evidence might have been adduced leading to a different result. I therefore reject this submission.

11. As to the reasonableness or otherwise of the Calderbank letters sent by the Commissioner, I observe that the law with respect to Calderbank letters is well-settled. A party seeking an order for indemnity costs, based on Calderbank principles, must demonstrate:-

1. that the offer involves a relevant compromise;

2. that the rejection of the compromise was unreasonable; and

3. that the offer foreshadowed an application for a specific costs order based on the Calderbank letter. An order as to indemnity costs based on a Calderbank letter is still within the discretion of the Court; cf. Offers of Compromise at r 42.14 UCPR.

12. I am not prepared to exercise my discretion to order indemnity costs based on the plaintiff’s and defendant’s Calderbank letters for the following reasons.

13. First, the parties were engaged in uncertain and continuing negotiations up to the date of the hearing. Both were attempting to compromise the proceedings.

14. Second, there was no evidence before me as to the amount of money in the defendant’s bank account at about the date of hearing. In any event, the amount that he might have kept was not so great as to amount to a real compromise offer by the plaintiff in the circumstances.

15. Third, the offer not to proceed with a pecuniary penalty order in my view was not a real compromise in circumstances where, at the hearing, the Commissioner told the Court that he might not press for one based on the evidence in the substantive hearing. So much was properly conceded by counsel for the Commissioner when the substantive matter was heard before me.

16. As I have said, taking all matters into account, I decline to exercise my discretion by making an order for indemnity costs based on the several Calderbank letters.

17. As to Mr Walker's submission that there be no order as to costs, I reject his submission that there was a breach of the Directions by the plaintiff. It was at all times up to the defendant to prove on which part of his property the tobacco plant was located, which was well within his (rather than the plaintiff’s) knowledge. Furthermore, even if the defendant had proved that the location was situate in one distinct parcel of the land, it was by no means certain that that portion of the land would have been excluded. The Directions do not and cannot displace the onus of proof set out in s 317 of the Act. No Notice to Admit was served by the defendant (although I note there was a Notice to Admit tendered by the plaintiff) and there was no evidence led in-chief or in cross-examination by Mr Walker about the location of the tobacco crop. No doubt there were legitimate forensic decisions for doing so.

18. Whilst I acknowledge that the provisions of the Act may operate harshly against the defendant, in my opinion, that does not affect the starting point in the exercise of the judicial discretion as to costs: see Opal Storm at [72].

19. In all the circumstances of this case, in my opinion the Commissioner should have his costs of the application on the ordinary basis.

20. I make the following orders:-

1. The defendant is to pay the plaintiff’s costs of the Notice of Motion dated 28 February 2023 on the ordinary basis.

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Decision last updated: 17 November 2023