Commonwealth of Australia v Lyon - [2004] FCAFC 92

FEDERAL COURT OF AUSTRALIA
Commonwealth of Australia v Lyon [2004] FCAFC 92
COSTS – successful appeal on issue of jurisdiction – appellants seeking to discontinue primary proceedings – discontinuance not consented to by respondents – whether all issues of costs at first instance should be determined by the primary judge – whether usual rule should govern costs of the appeal
Commonwealth of Australia v Lyon (2004) 203 ALR 553 referred to
Commonwealth of Australia v Lyon (2003) 202 ALR 362 referred to
Commonwealth of Australia v Lyon [2003] FCA 1215 referred to
Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 cited
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 cited
Yates Property Corporation Pty Ltd v Boland (2000) 179 ALR 664 cited
COMMONWEALTH OF AUSTRALIA & ANOR v PAUL LYON & ORS
N 1706 of 2003
BRANSON, MADGWICK AND HELY JJ
29 APRIL 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1706 of 2003

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

COMMONWEALTH OF AUSTRALIA
FIRST APPELLANT

COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
SECOND APPELLANT

AND:
PAUL LYON
FIRST RESPONDENT

FRANK PATRICK BARBARO
SECOND RESPONDENT

ARTHUR JOSEPH LOVEDAY
THIRD RESPONDENT

JOSEPH ALEXANDER CASSAR
FOURTH RESPONDENT

FRANK VELARDI
FIFTH RESPONDENT

PETER PANGALLO
SIXTH RESPONDENT

ROBERT IBRAHIM
SEVENTH RESPONDENT

AUSTRALIAN BROADCASTING CORPORATION
EIGHTH RESPONDENT

SEVEN NETWORK PTY LTD
NINTH RESPONDENT

NINE NETWORK PTY LTD
TENTH RESPONDENT

JOHN FAIRFAX PUBLICATIONS PTY LTD
ELEVENTH RESPONDENT

NEWS LIMITED

TWELFTH RESPONDENT

JUDGES:

BRANSON, MADGWICK AND HELY JJ

DATE OF ORDER:

29 APRIL 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.All undetermined issues as to the costs of this matter at first instance be determined by the primary judge.
2.There be no order as to the costs of the notice of motion dated 26 November 2003.
3.The second, fourth and eighth to twelfth respondents pay the appellants’ costs of the appeal.
4.The second, fourth and eighth to twelfth respondents each have liberty to apply –
(a)for the making of an order or orders as to their respective liabilities to contribute to the appellants’ costs of the appeal; and
(b)under the Federal Proceedings (Costs) Act 1981 (Cth) for the grant of a costs certificate in respect of the appeal.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1706 of 2003

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

COMMONWEALTH OF AUSTRALIA
FIRST APPELLANT

COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE
SECOND APPELLANT

AND

PAUL LYON
FIRST RESPONDENT

FRANK PATRICK BARBARO
SECOND RESPONDENT

ARTHUR JOSEPH LOVEDAY
THIRD RESPONDENT

JOSEPH ALEXANDER CASSAR
FOURTH RESPONDENT

FRANK VELARDI
FIFTH RESPONDENT

PETER PANGALLO
SIXTH RESPONDENT

ROBERT IBRAHIM
SEVENTH RESPONDENT

AUSTRALIAN BROADCASTING CORPORATION
EIGHTH RESPONDENT

SEVEN NETWORK PTY LTD
NINTH RESPONDENT

NINE NETWORK PTY LTD
TENTH RESPONDENT

JOHN FAIRFAX PUBLICATIONS PTY LTD
ELEVENTH RESPONDENT

NEWS LIMITED
TWELFTH RESPONDENT

JUDGES:

BRANSON, MADGWICK AND HELY JJ

DATE:

29 APRIL 2004

PLACE:

SYDNEY

REASONS FOR JUDGMENT
THE COURT
Introduction

These reasons for judgment are concerned solely with issues concerning costs. In Commonwealth of Australia v Lyon [2003] FCAFC 284, 203 ALR 553 this Full Court allowed an appeal against the judgment of a judge of this Court in Commonwealth of Australia v Lyon [2003] FCA 1155; 202 ALR 362. At the request of the parties we did not at that time make orders for costs. In our reasons for judgment we indicated that should the parties be unable to agree on the appropriate order or orders as to costs, the question of the appropriate order or orders to be made would be determined on written submissions. The parties were unable to agree on the appropriate order or orders as to costs to be made by this Full Court. We have now had the benefit of the parties’ respective written submissions.
Background
The application by which this proceeding was initiated sought declaratory relief. At the time that the application was filed the now appellants (‘the appellants’) feared that a magistrate might be about to lift an interim suppression order concerning material that the appellants contended attracted public interest immunity from disclosure. The primary judge in his reasons for judgment at [8] summarised the history of the proceeding before him in the following way:
‘The ex parte application made by the Commonwealth interests in these proceedings came before me as duty judge on the evening of 18 September 2003. The ex parte application was again before the Court the following morning when the orders were made. The application was then made returnable on Tuesday 23 September 2003. Later in the morning of 19 September 2003, the matter was listed for Monday 22 September 2003 on the application of the fourth respondent. Even later that day counsel representing the eighth to twelfth respondents appeared to argue, unsuccessfully, that the application should be dealt with that day. On Monday 22 September 2003 the application was listed for hearing on Monday 29 September 2003. The hearing did not proceed that day, and was fixed for hearing on 10 and 13 October 2003. On 10 October 2003 the parties commenced to address the question of whether the Court had jurisdiction to hear and determine the application. Submissions on that issue continued on the morning of Monday 13 October 2003. Though the parties commenced to address the question of whether, assuming jurisdiction existed, the orders sought by the Commonwealth interests should be made, it was ultimately accepted by all parties that the appropriate course was for me to determine the issue of jurisdiction before proceeding further. I then reserved to do so.’
On 22 October 2003, the primary judge ordered that the application be dismissed for want of jurisdiction (‘the primary decision’).
The appellants then applied for certain orders intended to protect the confidentiality of the material which they contended attracted public interest immunity pending the hearing of their appeal from the primary decision. Like the primary judge we will describe this application by the appellants as an application for a stay. Submissions on the stay were heard on 27, 28 and 29 October, for approximately an hour on each day. Upon the respondents who appeared before his Honour giving certain undertakings, the primary judge dismissed the application for a stay and made certain ancillary orders on 30 October 2003: Commonwealth of Australia v Lyon [2003] FCA 1215. The appellants were ordered to pay the respondents’ costs. The appellants did not appeal these orders.
The appellants appealed the primary decision. On 12 December 2003 we allowed the appeal, and remitted the matter to the primary judge for hearing and determination.
By letter dated 3 March 2004, the appellants notified the primary judge that:
‘Subject to the resolution of the question of costs before the Full Federal Court and at first instance, as presently advised, they would propose to discontinue these proceedings. From the applicants’ perspective, there is no further purpose to be served by pursuing the substantive claim…’
The written submissions indicate that the respondents, or some of them, will oppose the discontinuance of the proceeding. The basis of the foreshadowed opposition is not disclosed by the written submissions. The earlier decision of this Court that the Federal Court has jurisdiction to hear and determine the application was, as our reasons for judgment at [29] make clear, dependent upon the fact, as was then clearly the case, that the appellants were not seeking the answer to an abstract or hypothetical question. However, it is not necessary for this Court in these reasons for judgment to give further consideration to any issue concerning the proposed discontinuance of the primary proceeding. The question of whether the appellants are entitled to discontinue the primary proceeding, and if so on what if any terms, is one to be determined by the primary judge.
Costs of the Proceeding at First Instance
In the circumstances that have happened there may now be no hearing on the merits of the principal application made to the Court by the appellants. It appears that by reason of orders made in the magistrates court the risk of public disclosure of the material for which the appellants claimed public interest immunity has dissipated.
There is a relatively well developed body of jurisprudence as to the way in which a court will exercise its discretionary power to award costs where there is no continuing justification for a hearing on the merits (see, for example, Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; 44 FCR 194; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625; Yates Property Corporation Pty Ltd v Boland [2000] FCA 1106; 179 ALR 664). As a relevant consideration in such circumstances may be the reasonableness of the conduct of the respective parties in initiating and defending the proceeding, we conclude that all undetermined issues as to the costs of the proceeding at first instance should be determined by the learned primary judge who is in a better position than this Court is to assess the reasonableness of the parties’ conduct.
The Commonwealth’s Notice of Motion dated 26 November 2003
Pursuant to a notice of motion dated 26 November 2003, the appellants moved this Full Court for certain orders calculated to protect their position pending the hearing and determination of this appeal from the primary decision. Consent orders of a limited nature were ultimately made on the notice of motion. The consent orders did not include an order concerning the costs of the motion. Those costs would have been, as it seems to us, largely subsumed in the costs of the appeal. That may explain why no order as to costs was included in the consent orders. Nonetheless, to ensure that the position concerning the costs of the notice of motion is clear, we record our conclusion that no order concerning the costs of the notice of motion dated 26 November 2003 should now be made.
The Appeal
The issue of the Court’s jurisdiction to hear and determine the application in this matter was apparently raised by the learned primary judge. In the unusual circumstances that provided the background to the application it was an entirely appropriate issue for his Honour to raise. The respondents who took an active part in the hearing at first instance responded by contending that the Court did not have jurisdiction to hear and determine the application. The learned primary judge so held. Before this Full Court the second, fourth and eighth to twelfth respondents sought to support the decision of the primary judge.
The second respondent has submitted that his costs of the appeal should be met, as we read his submissions, either by the appellants or by the eighth to twelfth respondents (‘the media interests’). We see no reason for the appellants, who were successful on their appeal, to pay the second respondent’s costs of the appeal. So far as the media interests are concerned, the second respondent has characterised them as the ‘real and active Respondents’. There would, in our view, have been some basis for this characterisation had the second respondent chosen to allow the appeal to be argued between the appellants and the media interests. The appellants and the media interests were respectively represented by senior counsel each of whom has great experience in public law. However, the second respondent, like the fourth respondent, chose to take an active part in the appeal and instructed counsel to represent him before the Full Court and to present argument to the Full Court in support of the decision the subject of the appeal. In the circumstances, in our view, the second, fourth and eighth to twelfth respondents should all be treated in the same way so far as the costs of the appeal are concerned.
In our view, the question of the appropriate order as to the costs of the appeal involves different issues from those that the learned primary judge will need to consider when determining the appropriate order or orders to be made concerning the costs of this matter at first instance. As is mentioned above, the learned primary judge was urged by those respondents who appeared before his Honour to rule that the Court lacked jurisdiction to entertain the application made to the Court by the appellants. His Honour so ruled. The appellants are not, in our view, open to criticism because they appealed against the judgment of the primary judge. On the appeal, the second, fourth and eighth to twelfth respondents all actively supported the decision of the primary judge. In our view, in these circumstances the ordinary rule should prevail; that is that the second, fourth and eighth to twelfth respondents should be ordered to pay the appellants’ costs of the appeal.
The respondents have indicated that they prefer, at least in the first instance, to deal themselves with issues of contribution between them. We agree that they should be given the opportunity to do so. The respondents will be granted liberty to apply to this Full Court should they, or any of them, later seek the making of an order or orders as to their respective liabilities to contribute to the appellants’ costs of the appeal.
The second, fourth and eighth to twelfth respondents will also be granted liberty, which should be exercised by application to Branson J, to apply under the Federal Proceedings (Costs) Act 1981 (Cth) for the grant of a costs certificate in respect of the appeal (see Practice Note 6).

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of this Honourable Court.
Associate:
Dated: 29 April 2004

Counsel for the Appellants: RRS Tracey QC with JG Renwick

Solicitor for the Appellants: Australian Government Solicitor

Advocate for the 2^nd Respondent: MPP King

Solicitor for the 2^nd Respondent: Kings Lawyers

Counsel for the 4^th Respondent: A Howen with S Milanovic

Solicitor for the 4^th Respondent: Bilias & Associates

Counsel for the 8^th to 12^th Respondents: T Robertson with S Pritchard

Solicitor for the 8^th to 12^th Respondents: Gilbert + Tobin

Date of Hearing: 27 November 2003

Date of Judgment: 29 April 2004

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1706 of 2003

JUDGES:	BRANSON, MADGWICK AND HELY JJ
DATE OF ORDER:	29 APRIL 2004
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1706 of 2003

JUDGES:	BRANSON, MADGWICK AND HELY JJ
DATE:	29 APRIL 2004
PLACE:	SYDNEY

Counsel for the Appellants:	RRS Tracey QC with JG Renwick
Solicitor for the Appellants:	Australian Government Solicitor
Advocate for the 2^nd Respondent:	MPP King
Solicitor for the 2^nd Respondent:	Kings Lawyers
Counsel for the 4^th Respondent:	A Howen with S Milanovic
Solicitor for the 4^th Respondent:	Bilias & Associates
Counsel for the 8^th to 12^th Respondents:	T Robertson with S Pritchard
Solicitor for the 8^th to 12^th Respondents:	Gilbert + Tobin
Date of Hearing:	27 November 2003
Date of Judgment:	29 April 2004