Culley v Australian Securities and Investments Commission (No 2)

[2010] FCAFC 70

FEDERAL COURT OF AUSTRALIA

Culley v Australian Securities and Investments Commission (No 2) [2010] FCAFC 70

Citation:		Culley v Australian Securities and Investments Commission (No 2) [2010] FCAFC 70
Appeal from:		Culley v Australian Securities and Investments Commissioner [2008] FCA 1208
Parties:		BRIAN MALCOLM CULLEY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
File number(s):		VID 924 of 2009
Judges:		RYAN, MANSFIELD AND MCKERRACHER JJ
Date of judgment:		17 June 2010
Written Submissions filed:	2 June 2010
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	No Catchwords
Number of paragraphs:	12
Counsel for the Appellant:	Mr J F Styring with Mr S J  Krischock appeared pro bono
Solicitor for the Appellant:	Bevan-Rhys James (pro bono)
Solicitor for the Respondent:	Australian Securities and Investments Commission

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 924 of 2009

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	BRIAN MALCOLM CULLEY Appellant
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Respondent
JUDGES:	RYAN, MANSFIELD AND MCKERRACHER JJ
DATE OF ORDER:	17 JUNE 2010
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.There be no order as to the costs of the appeal herein.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 924 of 2009

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BRIAN MALCOLM CULLEY
Appellant

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Respondent

JUDGES:	RYAN, MANSFIELD AND MCKERRACHER JJ
DATE:	17 JUNE 2010
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE COURT:

1. On 19 May 2010, this Court dismissed the appellant’s appeal and published its reasons for that order:  Culley v Australian Securities and Investments Commission [2010] FCAFC 43. The first question in the substantive appeal was whether the learned primary Judge had erred in failing to make various declarations sought by the appellant and in declining to grant certain consequential relief. The second question was whether the power conferred on the Australian Securities and Investment Commission (“ASIC”) by s 206F of the Corporations Act 2001 (Cth) (“the Corporations Act”) is subject to an implied requirement that it be exercised within a reasonable time which, on the proper construction of the Corporations Act, is not to be measured by reference to the express seven year time limit stipulated in the prefatory words of s 206F(1)(a).

2. Ultimately, each of the appellant’s contentions was rejected. In respect of the first issue, the Court held that the primary Judge had unexceptionably exercised the discretionary powers reposed in him by s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”).  As to the second issue, it was held that ASIC was not required to act any more promptly within the express seven year limit provided.  At [51] of the substantive reasons for judgment we indicated the primary reason for dismissing the appeal and explained that, had that reason not been available, we would still have dismissed the appeal because of our view that the learned primary Judge’s discretion had not miscarried.  We there observed:

   For the reasons we have endeavoured to explain, if “an implied requirement that it be exercised within a reasonable time” is synonymous with a “condition precedent for the exercise” of the power conferred by s 206F, we would uphold ASIC’s contention, answer question 5 “no” and dismiss the appeal accordingly. If we be wrong in our understanding of question 5, we consider that the learned primary Judge correctly perceived that, however s 206F be interpreted and applied, the declaratory and consequential relief sought by Mr Culley is not “appropriate” in the sense used in s 44(4) of the AAT Act.  On either view, therefore, the appeal must be dismissed.

3. On 19 May 2010 we ordered that the parties file and serve, within 14 days, written submissions as to costs of the appeal.  It is to the question of costs that these reasons are directed.

   The parties’ submissions on costs

4. The appellant submits that, though he was ultimately unsuccessful on his appeal – in the sense that he was held not to be entitled to any of the relief which he sought – there should nevertheless be no order as to the costs of the appeal.  In their written submissions, Mr Styring of Counsel, who appeared with Mr Krischock for the appellant, referred, first, to Perrett v Commissioner for Superannuation (1991) 29 FCR 581, where, at 594, a Full Court of this Court (Wilcox, Burchett and Ryan JJ) said:

   The Tribunal has no power to make orders for costs in relation to cases of this nature and it seems to us to be undesirable that persons who unsuccessfully challenge a decision of the Tribunal should automatically be visited with a costs order in this Court. The court should consider the matter of costs, bearing in mind the result of the appeal but also taking into account the reasonableness of the applicant in bringing that appeal and the general importance of the clarification of the law for such an authority as the respondent.

   Counsel referred, next, to Shelton v Repatriation Commission (1999) 85 FCR 587 where, another Full Court of this Court (Burchett, RD Nicholson and Finkelstein JJ) said, at 590, that;

   Often, in administrative law, such an application as this was clarifies the law in a wider interest than that of the applicant. Indeed, it is as essential to good administration as it is important in the interests of individual justice that administrative decisions should be open to accessible review. Persons affected by administrative decisions should not be overmuch deterred by the threat of costs orders in such cases, and the very wide discretion given to the Court by the Federal Court of Australia Act 1976 (Cth) should not be automatically exercised adversely to the losing party.

5. Consistently with what had been said in those authorities, Counsel for the appellant submitted that:

   ·It had been reasonable to institute the appeal;

   ·The arguments advanced by the appellant in support of the appeal were reasonably open;  and

   ·One result of the appeal was a public benefit, for the “appeal has enabled the significance of delay upon the exercise of the s 206F power to be clarified. This will benefit the respondent as well as company officers and their advisors”.

6. ASIC, on the other hand, was content to assert that, as it had succeeded on the appeal, it should have its costs.  Its written outline expressed the argument as follows:

   It is submitted that Mr Culley should be ordered to pay the costs of [ASIC] in respect of the appeal.  There is nothing in the circumstances surrounding the appeal justifying any departure from the general rule that the costs of the appeal follow the event: see generally Ruddock v Vardarlis (No 2) (2001) 115 FCR 229, Black CJ and French J at 234-235. ASIC’s costs of the appeal include the costs associated with ASIC’s notice of contention dated 4 February 2010.

   In this regard, Mr Culley failed in relation to the ‘questions’ raised by his notice of appeal and ASIC’s contentions concerning the proper construction of s 206F of the Corporations Act 2001 (Cth) were upheld: see at [13] and [51]. This is not a case in which it can be said that ASIC succeeded on some issues, but failed on others. Rather, ASIC was successful in all aspects of the appeal.

   Consideration

7. We do not accept that there is “nothing in the circumstances surrounding the appeal” which would justify departure from the normal rule, i.e. that costs follow the event.  In the passage of Vardarlis (No 2) immediately following that to which we were referred by ASIC, it should be remembered that Black CJ and French J went on to say;

   [12]     The award of costs to a successful party is principally by way of perceived restorative justice. The general rule assumes that where an applicant succeeds it will have incurred costs because the respondent's conduct made it necessary for the applicant to bring the proceedings. If the applicant fails, the respondent will have incurred costs defending an action which ought not to have been brought against it. The order made in such cases is compensatory:

   “If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings:  Cilli v Abbott (1981) 53 FLR 108 at 111.”

   Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 543; see to similar effect McHugh J at 567.

8. As we noted at [13]-[14] of the substantive reasons, had the appeal been argued solely on the grounds raised by Mr Culley’s notice of appeal, we would have regarded it as appropriate to dismiss it for the appellant’s failure to identify, in his Honour’s exercise of discretion, any error of the type identified in House v The King (1936) 55 CLR 499. Our analysis proceeded as it did, however, because of what had been raised in ASIC’s notice of contention, which is set out at [12] of the substantive reasons.

9. The notice of contention put in issue, as we have mentioned, whether there was an alternative basis on which Tracey J could have made the orders he did, namely that there was no implied requirement for ASIC to act more quickly than within the express seven year period stipulated in s 206F. That was not a submission which had been advanced before the primary Judge. However, it was the contention which received most attention in oral argument on the hearing of the appeal and, not unnaturally, was the main focus of the analysis undertaken in the preparation of the reasons for judgment. As appears from [20]-[50] of those reasons, the analysis canvassed general principles of statutory construction rather than the application of provisions of the Corporations Act to the particular circumstances of Mr Culley.

10. In our view, it was reasonable for the appellant to have taken the position he did on the appeal, notwithstanding that, ultimately, the contention in ASIC’s notice was upheld. We regarded the submissions advanced on his behalf as sufficiently arguable to require detailed analysis and a reconciliation of the various authorities to which we were referred on each side. It is not without significance that s 206F had not previously been the subject of authoritative judicial exposition.

11. In the reasons for judgment published on 19 May 2010 the Court resolved an arguable, although minor, ambiguity in respect of the time within which ASIC is required by s 206F to act. In that sense the appeal has clarified the operation of the law, and has served, as suggested in Shelton, supra, “a wider interest than that of the [appellant]”.

12. Section 43 of the Federal Court of Australia Act 1976 (Cth) confers on this Court a very broad discretion in respect of costs in proceedings before it (see, for example, DSE (Holdings) Pty Limited v InterTAN Inc [2004] FCA 1251, per Allsop J, at [14]). In the light of the way in which the appeal was conducted and the considerations outlined above, we regard this as a case, like those cited in the appellant’s written submissions, in which a broader purpose has been served by the ventilation of the issues which were at the forefront of the contentions on each side. We therefore regard it as an appropriate exercise of our discretion to make no order as to the costs of the appeal.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Ryan, Mansfield and McKerracher.

Associate:

Dated:        17 June 2010