David Doyle v Hall Chadwick
[2011] NSWSC 895
•18 August 2011
Supreme Court
New South Wales
Medium Neutral Citation: David Doyle v Hall Chadwick [2011] NSWSC 895 Hearing dates: 25 and 26 July 2011 Decision date: 18 August 2011 Jurisdiction: Common Law Before: Harrison AsJ Decision: (1) Paragraphs [5] to [7] of the amended summons filed 13 July 2011 are dismissed.
(2) The first defendant is to pay the plaintiff's costs up to and including the 14 April 2011 on a party/party basis, including his costs incurred on 25 February 2011.
(3) The plaintiff is to pay the first defendant's costs after 14 April 2011, including the hearing in relation to paragraphs [5] to [7] of the amended summons on a party/party basis.
(4) The second and third defendants are to pay their own costs of these proceedings.
(5) Dr Doyle is to pay the Attorney General's costs from 14 April 2011 to date. These costs are assessed at $5000.
Catchwords: PROCEDURE - civil - application to have District Court judgment entered in relation to a costs assessment set aside - consideration of indemnity costs- whether a costs order should be made against costs review panel and Attorney General. Legislation Cited: Civil Procedure Act 2005
Legal Profession Act 2004
Uniform Civil Procedure Rules 2005Cases Cited: Advancex Management Consultancy Pty Ltd v Martin Conway Beech [2003] NSWSC 638
Cat Media Pty Ltd v Allianz Australian Insurance Ltd [2006] NSWSC 790
Cufurovic v Coshott [2009] NSWSC 372
Darkyung Local Aboriginal Land Council v Darkyung Pty Ltd (in Liq) [2010] NSWCA 351
Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172
Kumar v Mitchell (1990) 32 FCR 190, (1991) 26 ALD 421
Leichhardt Municipal Council v Green [2004] NSWCA 341
Magistrates' Court of Victoria at Heidelberg v Robinson [2000] VSCA 198
Minister for Immigration & Multicultural & Indigenous Affairs v Naos of 2002 [2003] FCAFC 142
Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6, (1997) 186 CLR 622
New South Wales Crime Commission v Fleming (1991) 24 NSWLR 116
Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2; 211 CLR 476
Sahab Holding Pty Ltd v Registrar-General and Castle Constructions Pty Ltd [2009] NSWSC 1143
SBAU v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 70 ALD 72
Sydney City Council v Geftlick [2006] NSWCA 280Category: Principal judgment Parties: David Doyle - Plaintiff
Hall Chadwick - First Defendant
Robbert Fox - Second Defendant
Ian Dwyer - Third Defendant
Attorney General for the State of New South Wales - Fourth DefendantRepresentation: D Doyle - Plaintiff
M Castle - First Defendant
C Mantziaris - Second, Third & Fourth Defendants
The Builders' Lawyer Pty Ltd - Plaintiff
HWL Ebsworth Lawyers - First Defendant
IV Knight, Crown Solicitor - Second, Third & Fourth Defendants
File Number(s): 2010/237932
Judgment
HER HONOUR: The plaintiff is Dr David Doyle ("Dr Doyle"). The first defendant is Hall Chadwick. The second defendant is Robbert Fox. The third defendant is Ian Dwyer. The second and third defendants constituted the costs review panel ('review panel"). The fourth defendant is the Attorney General for the State of New South Wales ("the Attorney General").
On 11 July 2011, consent judgment was filed in this Court. It relevantly reads:
"1. That the determinations of the Second and Third Defendants dated 27 September 2010 in Costs Review Process Numbered 2009/00005648, consisting of the Certificate entitled "Certificate of Determination of Costs By Cost Review Panel" dated 27 September 2010 and the Certificate entitled "Certificate of Determination of Costs Review" dated 27 September 2010, be quashed and set aside.
2. That all matters as to the reliefs sought by the Plaintiff in paragraphs 5, 6 and 7 of the Amended Summons dated 12 May 2011 be heard immediately on the hearing dates allocated, being the 25 th July 2011, and if required, the 26 th July 2011."
By amended summons filed 13 July 2011, Dr Doyle at this hearing, now seeks:
"5. An order that the judgment for $66,786.15 of the District Court of New South Wales in proceedings numbered 2009/337285 entered on 21 September 2009 against the Plaintiff be set aside;
6. An order that the judgment of $1,155.00 of the District Court of New South Wales in proceedings numbered 2009/337234 entered on 21 September 2009 against the Plaintiff be set aside.
7. An order that the First Defendant repays the amount of $75,987.99, plus interest to the plaintiff within 7 days of the date thereof."
Aside from the issues raised in paragraphs [5] to [7] of the amended summons, the other issue to be determined at this hearing is who should pay the costs of the proceedings. I shall deal with paragraphs [5] to [7] of the amended summons and then the issue of who should pay the costs of the proceedings.
Background
Hall Chadwick was awarded costs against Dr Doyle in Supreme Court proceedings 13740/2006 and Court of Appeal proceedings 40567/2006 (another matter). Those proceedings arose out of a dispute over legal fees between Dr Doyle and Hall Chadwick.
On 20 July 2005, Dr Doyle made an application for costs assessment with respect to part of the costs said to owe under a costs agreement. On 4 July 2006, a determination was made. Dr Doyle filed the determination and sought judgment on it in the District Court. On 27 July 2006, judgment was entered.
On 1 August 2006, Hall Chadwick filed a summons appealing the determination of the costs assessor and on that basis, a stay of the judgment was ordered on 15 August 2006. Hall Chadwick was successful in the appeal. Dr Doyle appealed to the Court of Appeal and was unsuccessful. Subsequently, Dr Doyle sought special leave to appeal to the High Court. It was refused.
The costs the subject of the application and review which give rise to the present summons are the costs incurred by Hall Chadwick in the Supreme Court and Court of Appeal proceedings, for which the courts had made orders that Dr Doyle pay Hall Chadwick's costs.
Hall Chadwick retained J R Knowles Pty Ltd (and subsequently Knowles Lawyers Pty Ltd) to act on its behalf in respect of both the Supreme Court and Court of Appeal proceedings. In January 2008, the practice of Knowles Lawyers was effectively succeeded by Ebsworth & Ebsworth Lawyers (now HWL Ebsworth Lawyers).
History of these proceedings
On 27 July 2009, the costs assessor Mr Stern, issued a certificate of determination of costs that assessed a fair and reasonable sum to be paid by Dr David Doyle to Hall Chadwick was the sum of $66,786.15. The costs assessor issued a further certificate of costs that Dr Doyle was to pay the sum of $1,155 (the certificates).
On 2 October 2009, Dr Doyle filed an application for review of the costs assessor's decision.
On 16 July 2010, Dr Doyle filed a summons in these proceedings while the costs review procedure was extant and before a final determination had been made by the review panel, Dr Doyle alleged that the review panel denied him natural justice and acted outside their jurisdiction.
On 17 August 2010, the review panel filed a submitting appearance in these proceedings.
On 21 September 2010, the certificates from the costs assessor's decision were registered as judgments in the District Court. Judgments were entered that Dr Doyle pay Hall Chadwick the sum of $66,786 (in proceedings 337285/09) and $1,155 (in proceeding 337234/09) - see Ex D1/2.
On 27 September 2010, the review panel affirmed the certificate of determination of the costs assessor. On 22 November 2010, the certificates were sent to the parties by the Manager, Costs Assessment.
On 25 February 2011, in these proceedings, the review panel sought to withdraw its submitting appearance on the basis that it wanted to actively participate to seek to have the notice to produce issued by Dr Doyle to them set aside on the basis of judicial immunity. That notice to produce sought production of the working notes of the review panel. This Court granted leave to the review panel to withdraw their submitting appearances.
On 23 March 2011, the review panel sought to withdraw their active appearance and once again to submit to the orders of the Court save as to costs. At the same time, the Attorney General for the State of New South Wales sought to intervene to provide a proper contradictor. (I shall refer to the events between 23 March 2011 and 29 July 2011 in more detail under the heading "Costs of these proceedings" later in this judgment.)
Importantly, on 17 May 2011, the Attorney General communicated to the parties that (a) the review panel had failed to consider two boxes of documents that were before the costs assessor Mr Stern; (b) that as a consequence, the second and third defendants had breached s 375 of the Legal Profession Act 2004 (' LPA '); and (c) that this would have the legal consequence that the review panels determination was invalid.
It would seem to me that this Court would need to agree that the decision of the review panel ought to be quashed. As it appears that there was breach of s 375 of the LPA as the review panel did not conduct the assessment on the evidence that was before the costs assessor. In any event, on 11 July 2011, a consent order/judgment were filed in this Court (referred to at the outset of the judgment).
On 13 July 2011, Dr Doyle filed an amended summons that joined the Attorney General as fourth defendant.
(i) Should orders be made to set aside the District Court judgments? - Paragraphs [5] to [7] of the amended summons
Dr Doyle furnished written submissions dated 24 February 2011, 8 July 2011 and 25 July 2011. His earlier submissions were done at a time before the consent judgment had been entered. Dr Doyle stated, at this hearing, that these earlier submissions were to be used so as to give an understanding as to the current submissions. The Attorney General and appeal panel did not participate in the arguments concerning paragraphs [5] to [7] of the amended summons.
The main argument, so far as paragraphs [5] to [7] of the amended summons are concerned, centred upon the operation of s 377 of the LPA . It reads:
"377 Effect of review on costs assessor's determination
(1) If the Manager, Costs Assessment refers a determination of a costs assessor to a panel for review under this Subdivision, the operation of that determination is suspended.
(2) The panel may end such a suspension:
(a) if it affirms the determination of the costs assessor, or
(b) in such other circumstances as it considers appropriate.
Both parties referred to Frumar v The Owners of Strata Plan 36957 [2010] NSWSC 172. Counsel for Hall Chadwick also referred to Advanced Management Consultancy Pty Ltd v Martin Conway Beech [2003] NSWSC 638.
Submissions on paragraphs [5] to [7] of the amended summons
On 23 October 2009, the Manager, Costs Assessment referred the determination of a costs assessor to the panel (the second and third defendants) for review. Dr Doyle submitted that the operation of the judgment became suspended on that date. Dr Doyle submitted that there was mandatory suspension of the operation of the determinations of Mr Stern, and that the suspension of the operation of the judgment, can only be ended by the Review Panel in accordance with s 377(2) of the LPA . According to Dr Doyle, the Review Panel purported to exercise such a statutory power in their determinations by stating, in their certificate dated 27 September 2011, " The Panel ends the suspension of the determination of the costs assessor (section 377 of the Act )."
Dr Doyle submitted that once a decision is quashed for jurisdictional error, as with the Review Panel's certificates and determinations in this case, such a certificate/determination is regarded, in law, as no decision at all: see Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2; 211 CLR 476 at [76] and Cufurovic v Coshott [2009] NSWSC 372 at [26] per Hislop J .
The result, according to Dr Doyle is, that once the Review Panel's determinations are quashed and set aside, the parties' positions are returned to the time the Manager, Costs Assessment has referred the determination of Mr Stern to the Review Panel for review. That referral, or the plaintiff's application for review, has not been quashed or set aside.
Dr Doyle submitted that the mandatory suspension of the operation of Mr Stern's determinations and that of the operation of the judgments has never been ended and has always been in force at all material times. Therefore, according to Dr Doyle, as there is no underlying foundation for the judgments in the District Court. Those judgments should be set aside.
When a party seeks a review of a costs assessor's determination, it does so by applying to the Manager, Costs Assessment, for a review (s 373). The Manager is required to refer an application duly made to a review panel (s 374(1)(c)).
Counsel for Hall Chadwick submitted that when the function of the review panel has ended, so too had the operation of s 377 and that the Court has power to make an order in relation to the suspension.
When exercising the power of review under s 375 of the LPA , the review panel has power to do only one of two things, firstly, affirm the costs assessor's determination (s 375(1)(a)), or secondly, set aside the determination and substitute such determination as should have been made by the costs assessor (s 375(1)(b)).
In Frumar v The Owners of Strata Plan 36957 , the brief facts are as follows. On 4 April 2006, the appeal was dismissed but the appellant appealed to the Court of Appeal. On 7 October 2006 the appeal to the Court of Appeal was allowed: [2006] NSWCA 278; 67 NSWLR 321. The orders of myself, and the determination of the panel were set aside, and the panel was ordered to redetermine the application.
On 15 March 2007, Mr Frumar filed a notice of motion in the District Court seeking inter alia a permanent stay of the "judgment". On 27 April 2007, the Judicial Registrar made an order staying the judgment permanently pursuant to s 135 of the Civil Procedure Act. The Judicial Registrar added the following to the order in the court's records: "Note proceedings are now finalised."
In Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 , Giles JA stated at [8] to [10]:
"[8] First, as Handley AJA has explained, under s 208KF(2) of the Legal Profession Act 1987 (since repealed, see now s 368(5) of the Legal Profession Act 2004) on the filing of the review panel's certificate it was taken to be a judgment of the District Court. In truth, there was no District Court judgment. So-called judgments under s 208J(3) of the 1987 Act, which is relevantly replicated in s 208KF(2), have been considered in Doyle v Hall Chadwick [2007] NSWCA 159 at [47]-[54] and cases there mentioned, with recognition of their distinct nature, and while reference to them as judgments is convenient (and I will hereafter refer to the District Court judgment as such) they take their force from the statute and are not judgments of the court.
[9] Secondly and consequentially, if the Supreme Court proceedings brought a redetermination of the amount of the costs by a costs assessor or a review panel, or a determination by the court itself, there would not be a variation of the District Court judgment. At least in the case of redetermination, there would be a fresh certificate which upon registration would be taken to be a judgment - there would be an entirely different judgment. In the case of a determination by the court, being "such determination in relation to the application as, in [the court's] opinion, should have been made by the costs assessor" (s 208L(2)(a)), it is not clear whether and how the result would be a fresh certificate, but if the result instead would be a judgment by the court for a particular amount again there would not be a variation of the District Court judgment.
[10] Whether a redetermination or a determination by the court would bring a substituted District Court judgment involves regard to the same considerations. Perhaps a judgment upon registration of a certificate for a different amount or the court's judgment for a different amount could be regarded as a substituted judgment; but it would not of itself expunge the existing District Court judgment, and to that extent would not be a substituted judgment."
And Handley AJA stated at [42] to [46] and [62]:
"[42] The validity of that part of the rule which authorises the entry of judgment must be doubtful in view of s 208KF(2)(b) of the Legal Profession Act 1987 (and its successor s 368(5) of the 2004 Act) dealing with the effect of filing "with no further action", and s 133(2)(b) of the Civil Procedure Act which only provides for entry of the certificate in accordance with the rules. Accepting, for present purposes, that the rule is valid, it is nevertheless clear that the entry of judgment on a filed certificate is a ministerial act. It makes the certificate enforceable as a judgment but otherwise does not alter its legal effect.
[43] The certificate of a panel is a cost assessor's certificate as defined in the Dictionary of the UCPR.
[44] The decision of this court on 17 October 2006 [2006] NSWCA 278; 67 NSWLR 321, which set aside the certificate of the panel, deprived the "judgment" 15 November 2005 of its only legal foundation. The District Court was bound, on a proper application, to set the "judgment" aside. UCPR Pt 36.16(2)(a), (3), and (4) confer the necessary power for this purpose, but in any event the District Court has implied power to correct its records: Doyle v Hall Chadwick [2007] NSWCA 159 at [49]-[52].
[45] The Judicial Registrar ordered a permanent stay of the judgment and did not set it aside. Mr Cox for the respondent said that a substantial sum would become due and payable to his client when the costs payable under the order of Coorey DCJ were quantified, but that stage has not yet been reached. In the meantime the debt for costs owed by the appellant is unascertained, contingent, and unenforceable.
[46] A new certificate will not confer retrospective validity, in whole or in part, on the old certificate or the earlier "judgment". A new certificate and any "judgment" based on it will be completely independent and the debt will only become due and payable on entry of that certificate.
...
[62] It seems to me therefore that the permanent stay of the "judgment" of 15 November 2005 deprived it of all legal effect or operation. It ceased to be the source of any legal right or duty, there was no judgment debt and nothing was owing under it. The "judgment" had become a scrap of paper."
In Advanced Management Consultancy , Master Macready (as he then was) considered whether a notice of demand should be set aside. As an application to a review panel had been filed but the Costs Manager had not appointed a review panel. His Honour at [10] to [11] and [13] considered the operation of s 208KE of the LPA 1987 (now s 377 of the LPA 2004).
"[10] If there is a review then two sections of the act come into play that affect the certificate and a judgment obtained pursuant to it. They are s208 KE and s208 KF the relevant parts of which are as follows:-
208KE Effect of review on costs assessor's determination
(1) If the Manager, Costs Assessment refers a determination of a costs assessor to a panel for review under this Subdivision, the operation of that determination is suspended.
(2) The panel may end such a suspension:
(a) if it affirms the determination of the costs assessor, or
(b) in such other circumstances as it considers appropriate.
208KF Certificate as to determination of panel
(1) On making a determination in relation to an application for review of a costs assessment under this Subdivision, a panel is to issue to each party concerned a certificate that sets out the determination.
(2) If the panel sets aside the determination of the costs assessor, the following provisions apply:
(a) if the amount of costs has already been paid, the amount (if any) by which the amount paid exceeds the amount specified in the determination of the panel may be recovered in a court of competent jurisdiction,
(b) if the amount of costs has not been paid, the certificate is, on filing of the certificate in the office or registry of a court having competent jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs,
(c) if the costs assessor issued a certificate in relation to his or her determination under s208J:
(i) the certificate ceases to have effect, and
(ii) any judgment that is taken to have been effected in relation to that certificate also ceases to have effect, and
(iii) any enforcement action taken in respect of that judgment is to be reversed.
[11] It is the referral of the determination of the Costs Assessor to a panel for review that brings into effect the suspension. Until there is that referral there is no suspension.
...
[13] ... It can be seen that s208 KE refers to a suspension of the determination. It does not refer to a suspension of the judgment that was entered pursuant to it. The provisions of s208 KF subpara (2)(c) would also seem to support the construction that it is only the determination that is suspended. The subsection specifically considers and allows for the fact that the judgment has continued in effect with enforcement of the judgement taking place prior to the Costs Assessor's certificate ceasing to have effect as a result of the determination of the review panel."
In Advanced Management Consultancy , Master Macready decided that as the appeal panel had not been appointed, s 208KE had not come into play. The statutory demand had run its course without there being any suspension of the determination. Therefore, the statutory presumption of insolvency had arisen and the statutory demand was not set aside.
There are four different relevant concepts involved in these proceedings. They are, "a determination of a costs assessor", "a determination of a review panel", "a suspension" and "a judgment".
On 27 September 2010, the review panel made a decision affirming the costs assessor decision. On 11 July 2011, the determinations of the review panel were quashed and set aside (one is in relation to the costs assessor's decision and the other is the payment of its costs). Once the decision of the review panel is quashed and set aside there is no decision of the review panel affirming the determination of the costs assessor. There was no valid order made by the review panel to end the suspension referred to in s 377. While the referral by the Costs Manager to the review panel remains in existence, the operation of the costs assessor's decision remains suspended.
Section 377 refers to the suspension of the costs assessor's determination. It does not refer to a suspension of a judgment that was entered pursuant to s 368(5). While I acknowledge that those judgments in the District Court take their force from the statute and are not judgments of the Court, while the suspension of the determinations of the costs assessor remains in place, so too do the District Court judgments.
If Dr Doyle wishes to proceed with a review he may seek to have it allocated to a different review panel. Alternatively, Dr Doyle may chose not to proceed with the review. If he does not proceed with the review the suspension would be lifted and the District Court judgments would be enforceable. It the party requesting the review withdraws his or her application, after it has been referred to a review panel, the review panel can choose to end the suspension. Currently there is no basis to set the District Court judgments aside. I decline to make order 5 and 6 of the amended summons.
Restitution
On 17 December 2010, Dr Doyle paid the sums outstanding in relation to the District Court judgments.
Dr Doyle referred to Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd (in Liq) [2010] NSWCA 351 at [76] and Frumar . The difference between Frumar and the situation here is that in Frumar there was a permanent stay of the judgment. Here there is a suspension still in existence in relation to the costs assessor's determination. It would only be if the costs assessor's decision was to be set aside that the judgments would also need to be set aside as their foundation would no longer exist and they would become, in the words of Handley JA, "scrap[s] of paper".
It would be in the event that the costs assessor's decision is set aside that Dr Doyle may be entitled to restitution from Hall Chadwick. As there are no grounds to make an order for restitution, I decline to make order (7) in the amended summons.
Costs of the proceedings
So far as costs of the proceedings are concerned, there are two relevant periods. The first from the filing of the summons up to 14 April 2011 when the Attorney General notified Dr Doyle and Hall Chadwick that the review panel had not viewed the relevant files; and second, from the continuation of proceedings beyond that date.
Paragraphs [5] to [7] were discrete issues between Dr Doyle and Hall Chadwick. As Dr Doyle was unsuccessful on those issues he should pay Hall Chadwick's costs in relation to them.
Dr Doyle seeks that the second, third and fourth defendants pay his costs of these proceedings. Hall Chadwick seeks the costs thrown away by the review panel's failure to conduct the assessment properly to be paid by the review panel. The review panel submitted that the Court should make no order as to costs for, or against, it. The Attorney General submitted that the Court should make no order as to costs between Hall Chadwick and the Attorney General; and that Dr Doyle should pay the Attorney General's costs incurred from 15 April 2011, on an indemnity basis.
Before I deal with the parties' submissions on costs, it is necessary to briefly refer to the costs assessor's decision in order to ascertain how it came about that the review panel conducted the costs review but overlooked two boxes of material that had been before the costs assessor. I shall then give a brief history as to what occurred from that date up to the date of the hearing.
Turning to the costs assessor's reasons dated 27 July 2009, the relevant references he made to the material that he had before him when he conducted the assessment are set out at [4.1], [4.9] and [5] in his written reasons. They read:
"4.1 I have been provided with copies of invoices directed to the Costs Applicant in these matters. I have also had access to the files and have sighted the Knowles costs agreement of 13 May 2008. ...
4.9 I had the benefit of the complete file and I did scan or peruse the file as I considered it necessary to see whether or not there was evidence that the work claimed to have been done was, in fact, done."
5. I had the benefit of submissions from each of the parties, including objections and responses and other correspondence.
I also had the benefit of access to the file as I have already said."
It is clear that the cost assessor had before him Hall Chadwick's complete file and their invoices. He also had before him submissions made by each party and some correspondence. However, I accept that in his reasons, there was no specific mention that the solicitors' complete file was voluminous and occupied two boxes. Had there been such a reference, it should have altered the review panel that it did not have Hall Chadwick's file.
On 2 October 2009, Dr Doyle filed his application for review of the costs assessor's decision.
On 23 October 2009, this Court issued a notice of assignment of assessors as panellists to Dr Doyle and Hall Chadwick. It read:
"I refer to the review application filed on 2 October 2009 in this matter.
The costs assessors who constitute the review panel are Robbert Fox and Ian Francis Dwyer.
A notice has been sent to The Costs Assessor to produce the file and documents used for the assessment. When the file is received, the matter will be referred to the review panel.
Generally, the review is to be conducted on the material that was submitted to the costs assessor. The members of the panel do not require any submissions from the parties for a review application. Should the panel require any further information or document(s), the members will contact you.
The operation of a costs assessor's determination is suspended once The Manager, Costs Assessment has referred a application for review to the panel. This includes the liability to pay an invoice for the original assessor's fees if those fees are also the subject of the review application. The panel may end that suspension if it affirms the original assessor's determination or in any other appropriate circumstances."
On 1 December 2009, Sonya Kroon, of Hall Chadwick, internally emailed Amanda Bryant as follows:
"Can you please ring the Court and get an updated on the review please. I'd like to at least write to Blair to tell him that we have done this, even if we can't get any information." (Ex D1/1)
On 2 December 2009, Amanda Bryant replied and advised that the review panel had access to the original costs assessor's file from 11 November 2009, that it usually took a month or two for a determination to be made and that the registry thought it was unlikely that they would have a result until the following year. (Ex D1/1).
On 11 November 2009, this Court issued a notice to collect file to Mr Fox and Mr Dwyer requesting that arrangements be made for the collection of the file within 14 days of the date of the notice. On 16 November 2009, Wendy Hughes collected the file.
In the review panel's reasons dated 27 September 2010, it made reference to documents it had before it by stating:
"The Panel has examined the material placed before Stern, and on the basis of that is satisfied that the determination is correct both as to the employment of Counsel in the first place, and further as regards to the disbursements by way of Senior and Junior Counsel's fees. ...
...
The Panel has perused Stern's worksheets, and is satisfied that he diligently applied himself to every item and every objection, doggedly, page by page.
Be that as it may, a review of the worksheets, when compared with items actually identified in Stern's reasons, indicates that he had identified the items of costs in dispute, indicated how he adjusted them, and (in a global sense) quantified the adjustments made as set out in Stern's Item 6(iii).
...
As regards item 10, bearing in mind that the Panel's task is one of review, it is satisfied that Stern has not erred "in allowing items claimed for which there is no or incomplete evidence of the work having been carried out". We take that objection to be a demand for the full perusal or scanning of every sheet and note in the instruction file, and again observe that the process is of assessment, not taxation. We note that Stern had available to him the full text of the initial Judgment of Rothman J, the Court of Appeal, the actual Orders made, the correspondence annexing a draft of the Bill, copies of the tax invoices issued by HWL Ebsworth to Hall Chadwick and copies of Counsel's fee notes and other disbursement invoices.
...
As the first aspect of this ground indicates, the Costs Assessor has not sighted any document purporting to be a Costs Agreement in relation to the work done between 5 July 2005 and 20 July 2006, (although the Costs Assessor did sight copies of the invoices directed to the Review Respondent). The panel is of the view that in this regard Stern has erred."
The review panel wrongly stated that it had examined the material placed before the costs assessor because in fact it only made specific reference to Stern's worksheets and to the documents Stern had before him. It commented that it took objection to the demand for full perusal or scanning of every sheet and instruction file. On one reading, it was merely making a comment on what should be the proper approach to an assessment as opposed to a taxation of costs. The review panel made no specific reference to Hall Chadwick's file.
On 27 September 2010, Ian Dwyer wrote to Mr Stern advising:
"Robbert Fox and I have finally completed a review of your Determination of 27 July 2009. We affirmed your decision.
...
I return your file of papers."
Once again, there is no reference to Hall Chadwick's file.
On 9 February 2011, Dr Doyle served a notice to produce pursuant to Uniform Civil Procedure Rule 21.10 upon the review panel (the first notice). On 24 February 2011, the review panel served a Notice of Motion to set this notice aside, on the basis that the documents requested were subject to public interest immunity (the first motion). The review panel changed its appearance from a submitting one to an active one in order to argue judicial immunity.
On 25 February 2011, at the hearing of the matter, leave pursuant to UCPR 6.11(2) was granted to the review panel to file the first motion. This was the sole active step in the proceedings taken by the review panel, pending the joinder of the Attorney General as the fourth defendant. R A Hulme J ordered that the review panel pay Hall Chadwick's costs of 25 February 2011 in the sum of $5,000 and that costs in relation to Dr Doyle were to be costs in the cause.
On 29 February 2011, Dr Doyle became aware of deficiencies in his first notice, and proposed in 'without prejudice' correspondence, that (a) he be permitted to substitute the first notice with a second notice to produce (drafted in different terms and issued under UCPR 34.1); (b) that the review panel withdraw their motion to set aside the first notice; and (c) that the plaintiff consent to the filing of another motion to set aside the second notice to produce.
On 4 March 2011, the review panel responded, indicating that they were 'favourably disposed towards the broad proposal' put by Dr Doyle, but that they were ascertaining the position of the Attorney General. The review panel stated that it would be 'more appropriate' for the Attorney General to appear as the contradictor on any motion to set aside any notice to produce.
In a parallel stream of 'open' correspondence, Dr Doyle requested clarification of the status of the review panel in the litigation. The review panel responded that their active role in the proceedings was limited to the hearing of their motion; and that they maintained their submitting appearance in all other respects.
On 11 March 2011, the Crown Solicitor, representing both the review panel and the Attorney General, reiterated the position put on 4 March 2011 by the review panel, and stated that the Attorney General had instructed him to seek the joinder of the Attorney General.
The Crown Solicitor proposed consent orders that would allow the first notice and the first motion setting aside to be substituted by a second Notice to Produce and a second Motion setting aside. An express term of these consent orders was an order under UCPR 6.11(2) to permit the review panel to return to its submitting appearance. On 11 March 2011, Dr Doyle consented to the UCPR 6.11(2) and the joinder orders.
On 23 March 2011, the Court made consent orders affecting the joinder of the Attorney General, the substitution of the notices to produce and the motions to set aside, and the order pursuant to UCPR 6.11(2).
On 23 March 2011, at the directions hearing, Dr Doyle requested the Crown Solicitor to ask the review panel whether they had viewed the files of the first defendant's solicitors considered by the first costs assessor (the relevant files ) when they had conducted the review. Dr Doyle suggested, correctly, (i) that if the review panel had not viewed these files, their review would be affected by jurisdictional error; and (ii) that if jurisdictional error were found, both the second notice and the second Motion would become unnecessary. Ultimately, this is actually what occurred.
On 25 March 2011, Dr Doyle filed his second notice to produce on the review panel (second notice). The Attorney General filed his notice of motion to set aside the second notice.
On 29 March 2011, the Crown Solicitor communicated to Dr Doyle that the review panel had not viewed the relevant files; and sought, on behalf of the Attorney General, Dr Doyle's response in relation to the filing of the second motion. The plaintiff responded on 30 March 2011, seeking clarification as to the identity of the relevant files, but maintaining that the second notice was still necessary, and requesting that the review panel file affidavits.
On 14 April 2011, the Attorney General notified both Dr Doyle and Hall Chadwick that the review panel had not viewed the relevant files; that a breach of LPA s 375 had occurred; and that the determinations of the review panel were invalid. The Attorney General then invited the other parties to abandon the proceedings on the basis that each party pay its own costs. He put both parties on notice that he would apply for indemnity costs on a Calderbank basis if either party continued the litigation notwithstanding the concession regarding the invalidity of the determinations.
On 29 April 2011, Dr Doyle maintained his position, indicating that he would seek a hearing date. On 3 May 2011, notwithstanding the Attorney General's reiteration of his position, Dr Doyle proposed orders for a timetable for the hearing of the matter.
Hall Chadwick made the proper concession that "to continue with the proceedings in the circumstances would mislead the Court" and agreed with the Attorney General's suggestion that the proceedings be abandoned. Hall Chadwick nevertheless requested the Attorney General to file a notice of motion to have the proceedings struck out, and sought costs from both the Attorney General and the review panel.
On 12 May 2011, Dr Doyle issued a notice to admit facts to the solicitor acting for Hall Chadwick. It required Hall Chadwick to admit the following facts:
"1. That neither you nor your legal representative, HWL Ebsworth lawyers, has regained possession nor control of the solicitor files given to Mr Terence Stern in Costs Assessment Process 2009/00005648 under cover of a letter from Ms Sonya Kroon to Mr Terence Stern dated 15 June 2009."
On 26 May 2011, the first defendant in its notice disputing facts stated:
"The first defendant disputes the facts set out in the Notice to Admit Facts dated 12 May 2011.
The first defendant says:
1. The first defendant received a letter from Terence L Stern (Mr Stern) dated 27 July 2009 accompanied by two boxes of material which was said to be those boxes provided to Mr Stern "to assist in completion of [his] assessment";
2. The first defendant did not retain a copy of the files delivered to Mr Stern on 15 June 2009;
..."
From the first notice disputing facts it is clear that the two boxes containing Hall Chadwick's file had been returned to them by the costs assessor at the conclusion of the costs assessment.
The Attorney General declined to file such a notice of motion, further explaining his position on 17 May 2011. He stated that if Dr Doyle continued to press the second notice, the Attorney General would argue that the Notice be set aside due to the futility of the proceedings.
Dr Doyle pursued the hearing of his second notice to produce which took a half day at court on Friday 20 May 2011. The Court made a timetable for the hearing of the second motion The first indication of any change in position by Dr Doyle was in a 'without prejudice' letter of 23 June 2011, after the Attorney General had been put to the task of filing written submissions on the second motion and the amended summons (21 June 2011). It was not until 15 July 2011, that the plaintiff indicated that, " we would not press the order that the Attorney General serves submissions on the Summons. "
On 19 July 2011, Dr Doyle withdrew his notice to produce addressed to the review panel.
Submissions on costs
The starting point is s 98(4)(c) of the Civil Procedure Act 2005. It relevantly reads:
"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.
...
(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to:
(a) costs up to, or from, a specified stage of the proceedings, or
(b a specified proportion of the assessed costs, or
(c) a specified gross sum instead of assessed costs, or
(d) such proportion of the assessed costs as does not exceed a specified amount.
..."
And UCPR 42.1 and 41.2 read:
"42.1 General Rule that costs follow the event
Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.
42.2 General rule as to assessment of costs
Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis."
Section 391 of the LPA reads:
"391 Protection from liability
A matter or thing done or omitted to be done by the Chief Justice of New South Wales, the Manager, Costs Assessment or a costs assessor (including a costs assessor acting as a member of a panel constituted under this Division) does not, if the matter or thing was done or omitted to be done in good faith for the purpose of the administration of this Part, subject the Chief Justice of New South Wales, the Manager, Costs Assessment or any costs assessor personally to any action, liability, claim or demand."
Section 391 of the LPA provides the review panel with protection from liability relating to any act or omission in the course of the performance of their functions under the Act. The statutory protection extends to any action, liability, claim or demand. The review panel argues that s 391 is broad enough to cover a costs order. I do not agree. As the cases referred to in this later judgment show, costs can be awarded against Magistrates and statutory decision makers despite them having statutory protection from liability.
Both Dr Doyle and Hall Chadwick seek that the review panel pay the costs of the proceedings. Dr Doyle submitted that the review panel was in dereliction of its statutory duty and its conduct fell into the category of serious misconduct. Dr Doyle made some unsubstantiated submissions about the behaviour of the Attorney General that I will not repeat here. Dr Doyle seeks the review panel and Attorney General should pay his costs on an indemnity basis. Hall Chadwick submitted that the review panel failed to conduct the assessment properly and it referred to Kumar v Mitchell (1990) 32 FCR 190, (1991) 26 ALD 421 and Minister for Immigration v Naos of 2002 [2003] FCAFC 142. Hall Chadwick submitted that it is possible, though rare, for a costs order to be made against a submitting party.
Submitting appearance - the usual position
Where proceedings are taken to challenge some decision of an inferior court and that court, instead of appearing only as a submitting party, chooses to participate in the proceedings by attempting to support its own decision and its opposition is unsuccessful, so that the decision is overturned, the inferior court's participation in the proceedings by way of attempting to support its own decision may lead to an award of costs against it. Recently, in Sahab Holding Pty Ltd v Registrar-General and Castle Constructions Pty Ltd [2009] NSWSC 1143, Slattery J discussed the cost consequences when a party acted inconsistently with its submitting appearance. Slattery J explained:
"72 ... Costs will usually not be ordered against a party, usually an inferior court or tribunal subject to judicial review, where the party files a submitting appearance under UCPR r 6.11 and thereby submits itself to any order of the reviewing court: El Deeb v Magistrates Court of South Australia (1999) 72 SASR 596, at 598 per Doyle CJ, Bleby J and Martin J concurring. This is the usual rule except in a clear case of serious misconduct or where the decision reviewed was perverse in the sense of revealing obstinacy in error: Willesee v Willessee (1974) 2 NSWLR 275 and Cummins v Mackenzie (1979) 2 NSWLR 803 at 810-812. Analogous principles apply to administrative decision makers such as local government authorities: Develtor Property Group P/L v Newcastle City Council [2001] NSWLEC 47, at [42].
...
82 In any event there are no real costs advantages for the Registrar-General in maintaining a submitting appearance. Even a submitting party may be ordered to pay costs if the submitting party does take an active role in the proceedings beyond procedural matters : see for example R (Davies) v Birmingham Deputy Coroner [2004] 1 WLR 2739 and De Haas v Williams (2004) 132 LGRA 195. There is therefore no real disadvantage to the Registrar-General in ordering the filing of a UCPR r 6.9 appearance."
The Attorney General submitted that the review panel maintained a strict submitting appearance from their filing on 17 August 2010 to this hearing. The only exception to this position was within the period formally punctuated by the grant of leave to become active parties in respect of the first motion and the grant of leave to resubmit to the Court's order after the joinder of the Attorney General.
The review panel submitted that the sole active step taken by it was to file the first motion to preserve the position until the joinder of an appropriate contradictor and in the circumstances a costs order against the review panel is inappropriate. The review panel submitted that it did not delay in filing a submitting appearance and notifying the parties of such an appearance, nor did it delay in returning to a submitting appearance once a proper contradictor had been found; secondly that this is not a case where the submitting party adopted an adversarial role in the proceedings, making submissions at large on the issue in the case.
I agree that the review panel only took an active role when they moved to have the notice to produce set aside. That action was appropriate. But the critical issue is what costs consequences should follow when the review panel overlooked material that they should have had before it when it undertook the costs review.
Dr Doyle referred to Magistrates' Court of Victoria at Heidelberg v Robinson [2000] VSCA 198 as authority for the proposition that the review panel of the Attorney General should pay his costs. Hall Chadwick referred to Minister for Immigration & Multicultural & Indigenous Affairs v Naos of 2002 [2003] FCAFC 142 and Kumar v Mitchell (1990) 32 FCR 190, (1991) 26 ALD 421
Magistrates' Court of Victoria at Heidelberg v Robinson
In Robinson , the brief but most unusual facts are that on 7 September 1998, Mr Robinson appeared before a Magistrate at Heidelberg and pleaded guilty to 12 charges of intentionally damaging property. Compensation orders were sought for the sum of $9,470. It was his first offence. Mr Robinson, through his solicitor, asked for 12 months to pay the compensation, as his wages were less than $200 per week.
During proceedings, while the duty solicitor's plea on behalf of Mr Robinson had not concluded, the magistrate intervened to say that he wanted the respondent to pay $9,470 in damages. He repeated this demand a number of times, accompanying the demand on at least three occasions with the threat that the defendant would go to gaol for two months if he did not pay that sum within two months. When the duty solicitor's request for 12 months to pay was rejected out of hand, and a request was made for six months, the Magistrate replied, "Stop wasting my time. He either gets a loan or gets his mother to get one or he goes in for two months. No question about it."
On 5 November 1998, when the case resumed, a new solicitor, Mr Metcalfe, represented Mr Robinson. The Magistrate was informed that the respondent had paid part of the compensation demanded to the factories who were uninsured, but that he earned less than $200 per week and his mother was on a part-pension and had to support two other children. During this hearing, on four occasions the Magistrate repeated his assertion that the respondent was to pay the money or go to gaol. When Mr Metcalfe submitted that the magistrate's demand was unreasonable and asked him to disqualify himself, the magistrate twice threatened to deal with Mr Metcalfe for contempt.
On 10 February 1999, Gillard J in separate proceedings determined that the Magistrate should be prohibited from hearing the charges against Robinson and they should be heard by another Magistrate. On 11 March 1999, Gillard J made an order that the Magistrates' Court should pay the plaintiff's costs. The Magistrates' Court sought and was granted leave to appeal the order for costs.
In Robinson , Brooking JA (with whom Charles and Buchanan JJA agreed) traced the history of when costs orders can be made against judicial officers, which while interesting, is not necessary to reproduce here. His Honour stated at [6] , [7], [8], [10] and [12]:
"[6] In the last 150 years the question when such an award will be made has received a good deal of attention in New South Wales, beginning with Re Starr in 1859. There is in that State a considerable body of authority - decisions of single judges, the Full Court and the Court of Appeal - attempting to explain in what circumstances an inferior court should be mulcted in costs. While expressions recur and while one decision does not purport to depart from another, there is a degree of diversity of expression to be found. Sometimes the Court makes it clear that the categories given by it are not exhaustive.
[7] "Perverse" is a word often found in the cases in New South Wales. The word is used to suggest something more than error, or manifest error, and conveys some such notion as obstinacy or persistence in error: Cummins v Mackenzie. So in the early case of R v Smith Stephen J said of the magistrate, "I take it for granted that with this section before him couched in terms as plain as words could be, he refused to follow it." In Ex parte Vincent the Full Court of New South Wales, faced with what it regarded as "an extraordinary and astounding blunder", was not prepared to say that the magistrate had behaved perversely. The idea seems to be that a magistrate is not to be ordered to pay costs for acting on an erroneous view of the law, even though it is very plain that that view was wrong, unless the magistrate has really chosen to ignore the law. ...
...
[8] The word "misconduct" often appears in the decisions in New South Wales. Sometimes it is used in a narrow sense, as by Hutley JA in Sankey v Whitlam ("where the magistrate is guilty of serious misconduct, corruption, gross ignorance or has been perverse"). In this formulation, corruption, gross ignorance and perversity are not regarded as varieties of "serious misconduct", unless the comma which appears after that expression is intended to make that which follows epexegetical. But in the case cited by Hutley JA, Ex parte Blume; Re Osborn, the Full Court, as it seems to me, used the words "a clear case of serious misconduct" at 339 in a generic sense, as covering all kinds of behaviour which justified an award of costs against the magistrate. The immediately following references to perversity, corruption and gross ignorance are, I think, made by way of mentioning varieties of misconduct. "A clear case of serious misconduct", mentioned at 339, is "misconduct of such a nature as to justify an award of costs against him" (340). The view that "misconduct" was used in an all-embracing sense is supported by what was said at 340-341:
"The appeal against this part of the order [the part dealing with costs] was because of the imputation of serious misconduct which such an order necessarily involves."
...
[9] I see no distinction between the English test (a flagrant instance of improper conduct) and that propounded in New South Wales (a clear case of serious misconduct).
[10] ... In my view, the notion of serious misconduct or serious impropriety may be said to underlie the award of costs against inferior courts provided that it is understood that there may be misconduct or impropriety notwithstanding the absence of any knowing departure from elementary principles. By this I mean that the person or persons constituting the court may be said to be guilty of serious misconduct or serious impropriety if they failed to observe some fundamental principle of justice notwithstanding that they were ignorant of that principle. Some principles are so fundamental that it may be regarded as misconduct or impropriety in the necessary sense for an inferior court not to observe them notwithstanding that the court is unaware of them. There is, I think, here to be drawn a distinction between rules of substantive law and the fundamental rules of natural justice. The superior court may be prepared to regard even "an astounding blunder" in a matter of substantive law as not exhibiting "gross ignorance" in a necessary sense and, in the absence of "perversity", may decline to make an order for costs against the inferior court, although a stage might be reached at which the rule of substantive law that had, albeit through ignorance, not been applied was so fundamental as to require the case to be viewed as one of misconduct or impropriety and so as making an award of costs appropriate. But when one is concerned, not with some "ordinary" rule of substantive law, but with the fundamental principles concerning procedural fairness or natural justice, the inferior court may be held not to be excused by its own ignorance. In considering the suggestion of "gross ignorance", and what is to be excused, one cannot overlook the fact that the lay and honorary justice has given way to the legally qualified professional magistrate. But in saying this I do not wish to suggest that a mere blunder should attract an award of costs: the approach should still be benign, or reasonably so, where a bona fide mistake has been made."
His Honour, in Robinson , concluded:
[12] ... More specifically, I have no doubt that it was a flagrant instance of disregard for the elementary principles which every court ought to obey (using the English formulation) or a flagrant violation of a principle of natural justice, using the formulation originating in New South Wales. ... The magistrate behaved like a bully and, worst of all, threatened the solicitor with instant committal for contempt of court if he persisted in his application. What Martin J once called the immensity of the power to commit makes the abuse of that power in the present case deplorable. It cannot be said to be mitigated by any stress that the magistrate was under or any justifiable irritation. The magistrate was continuing to behave as he had behaved up till then, although now his behaviour became worse. He refused to hear a party, and moreover in a criminal proceeding, and did so by using his contempt power as an instrument of oppression."
The appeal was dismissed. As Robinson shows, so far as costs against the justices are concerned, it has been the practice not to grant costs against justices or tribunals merely because they have made a mistake in law. Costs are only to be awarded if there has been serious misconduct or serious impropriety or a flagrant violation of a principle of natural justice.
Bad faith - Naos
In Minister for immigration & Multicultural & Indigenous Affairs v Naos , the Full Federal Court referred to an analysis by Mansfield J in SBAU v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 70 ALD 72, of the principles applicable to a determination whether a decision constitutes a bona fide attempt to exercise a statutory power of review at [18] and [19]:
"[18] An analysis by Mansfield J in SBAU of the principles applicable to a determination whether a decision constitutes a bona fide attempt to exercise a statutory power of review was subsequently approved by a Full Court (Tamberlin, Mansfield and Jacobson JJ) in SBBS v Minister for Immigration and Multicultural and Indigenous Affairs (2002) 194 ALR 749. They summarized (at 756) the propositions which emerge from Mansfield J's analysis as follows:
'43 First, an allegation of bad faith is a serious matter involving personal fault on the part of the decision-maker. Second, the allegation is not to be lightly made and must be clearly alleged and proved. Third, there are many ways in which bad faith can occur and it is not possible to give a comprehensive definition. Fourth, the presence or absence of honesty will often be crucial: see SBAU at [27] citing SBAP v Refugee Review Tribunal [2002] FCA 590 at [49] per Heerey J and NAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 805 at [25] per Hely J
44. The fifth proposition is that the circumstances in which the Court will find an administrative decision-maker had not acted in good faith are rare and extreme. This is especially so where all that the applicant relies upon is the written reasons for the decision under review; SBAU at [28] citing SAAG v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 547 at [35] per Mansfield J and SCAA v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 668 at [38] per von Doussa J.
45 Sixth, mere error or irrationality does not of itself demonstrate lack of good faith; SBAU at [29]. Bad faith is not to be found simply because of poor decision-making. It is a large step to jump from a decision involving errors of fact and law to a finding that the decision-maker did not undertake its task in a way which involves personal criticism; see NAAG of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 713 at [24] per Allsop J quoted with approval in NAAV at [107] by Beaumont J.
46 Seventh, errors of fact or law and illogicality will not demonstrate bad faith in the absence of other circumstances which show capriciousness; SBAU at [31].
47 Eighth, the Court must make a decision as to whether or not bad faith is shown by inference from what the Tribunal has done or failed to do and from the extent to which the reasons disclose how the Tribunal approached its task; SBAU at [32].
48 Ninth, it is not necessary to demonstrate that the decision-maker knew the decision was wrong. It is sufficient to demonstrate recklessness in the exercise of the power; SCAZ v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 1377 ('SCAZ').'
[19] That summary by the Full Court in SBBS was considered in Minister for Immigration and Multicultural and Indigenous Affairs v SBAN [2002] FCAFC 431, where Heerey and Kiefel JJ said:
'7 ... We adopt what their Honours said at [43]-[47], but with this qualification to the ninth proposition at [48].
8 As with other areas of law where wrongful intent is in issue, reckless indifference may be the equivalent of intent. But this is not to say that the test is objective. The inquiry is directed to the actual state of mind of the decision-maker. There is no such thing as deemed or constructive bad faith. It is the ultimate decision - in the case of the RRT, affirming the rejection of a protection visa application - which must be shown to have been taken in bad faith. Illogical factual findings or procedural blunders along the way will usually not be sufficient to base a finding of bad faith. Such defects can be equally explicable as the result of obtuseness, overwork, forgetfulness, irritability or other human failings not inconsistent with an honest attempt to discharge the decision-maker's duty.
9 Questions of professional ethics arise. An allegation of bad faith, like an allegation of fraud, should not be advanced by an advocate unless there are proper grounds for doing so: SCAS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 397 at [19], cf Federal Court Rules O11 r1B.
10 Bad faith may manifest itself in the form of actual bias. Actual bias in this context is a state of mind so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or argument may be presented. It is something more than a tendency of mind or predisposition: Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507 at [71] - [72]. Apprehended bias, resting as it does on what may be observed objectively, as distinct from the actual state of mind of the decision-maker, is quite different. While it has been suggested that actual bias may occur subconsciously, that would not establish bad faith in the relevant sense for the purposes of s474(1): NAAV v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 228 at [4], [113]-[115], [638] and [648].
11 In the particular context of reviews of decisions of the RRT it should be kept in mind that the Tribunal only embarks on a hearing when it is not satisfied on the papers that a protection visa should be granted: s425(2)(a). Therefore the very fact that there is a hearing necessarily involves at least some lack of satisfaction on the part of the RRT. It is in the nature of things that this may vary in degree and could amount in some cases to suspicion, or even strong suspicion. The fact that the RRT holds such a state of mind, or that it becomes apparent in the course of the hearing, does not of itself suggest actual bias in the relevant sense.'"
Naos establishes that bad faith involves personal fault on the part of a decision maker.
Kumar
Kumar involved deprivation of liberty of Kumar by the erroneous order of a Magistrate obtained at the request of a public authority (the Immigration department). Faced with statutory silence as to the allocation of costs, two innocent parties, and the applicant's deprivation of liberty.
In Kumar Spender J stated:
"... However, the question in the Federal Court proceedings was the propriety of the course adopted by the learned stipendiary magistrate and in particular his view expressed in the letter of 17 June 1991 that "may", in s 92(4), ought be construed as "shall", and that if the prescribed authority believes that there are reasonable grounds to suspect that a person is an illegal entrant, then the prescribed authority is obliged to authorise the detention of that person in custody.
...
Where there are two innocent parties the matter is not free from difficulty, but I think that in all the circumstances the proper order to make as to costs is that the second respondent pay the applicant's costs, to be taxed if not agreed. This order implies no fault or blame on the part of the representatives of the second respondent, but where there are competing considerations between a citizen seeking redress for an error affecting the liberty of that person, proceedings being necessary to vindicate that person's rights, and an organ of government which initiated proceedings affected by error, the fact that that organ of the government has not been a party in the error does not mean that that party should be relieved of the obligation to pay costs.
As between the parties, clearly the applicant is without fault and is entitled to a remedy and considerations of justice dictate that the second respondent [the Minister for Immigration] should pay the costs of the applicant."
In Kumar , both parties were innocent and it was the Magistrate who made an error, so costs were awarded against the Minister for Immigration.
The review panel and the Attorney General referred to Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6, (1997) 186 CLR 622 and Smith v Airservices Australia [2005] FCA 997; [2005] ALR 464 as to what are the costs implications when the proceedings become futile.
In Smith v Airservices Australia (2005) 222 ALR 464, Stone J at [46], [47], [48], [49] and [51] stated:
"[46] In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-5 ; 143 ALR 1 at 3 ; [1997] HCA 6 (Ex parte Lai Qin), McHugh J commented on the difficulties of allocating costs where there has been no hearing on the merits:
"... Ordinarily, the power [to order costs] is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties ... In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation ...
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried ... But such cases are likely to be rare. [Emphasis added and footnotes omitted]
[47] In this case there has been no hearing on the merits. Moreover, there is nothing to suggest that this is one of those rare cases to which McHugh J referred in Ex parte Lai Qin where I can have any confidence that either party was "almost certain to have succeeded if the matter had been fully tried" despite the respondent's attempt to, in some way, characterise itself as the successful party. ...
Futility
[48] Often an application for leave to discontinue proceedings is made because the applicant believes that further prosecution of the proceedings has become futile. This may be because the applicant believes he or she will be unable to substantiate the claim, or because the parties have settled their dispute or because a change in extrinsic circumstances means that the proceedings are no longer a necessary or appropriate means to the desired end. The reason for the futility is a relevant consideration in determining whether costs are to be awarded.
[49] In Ex parte Lai Qin extrinsic circumstances rendered the proceedings futile. An applicant who had been refused a protection visa by the Refugee Review Tribunal sought an order nisi for writs of prohibition, certiorari and mandamus directed to the Minister for Immigration and Ethnic Affairs and the Refugee Review Tribunal. Before her application was heard the minister granted her a protection visa in exercise of his discretion under s 417 of the Migration Act 958 (Cth). In granting the prosecutrix leave to discontinue the proceeding, McHugh J held that there should be no order as to costs and commented (at CLR 625; ALR 3-4):
'If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings ...'
There was a similar situation in Tasmanian Conservation Trust Inc v Minister for Environment and Heritage [2004] FCA 883 where the proceedings became futile as a result of a ministerial decision that removed one of the principal bases on which the action was founded. Jacobson J held that in all the circumstances both parties had acted reasonably and therefore there should be no order as to costs: see also, Lean v Tumut River Orchard Management Ltd [2004] FCA 1670 per RD Nicholson J at [35]; Gribbles Pathology at 287.
[50] As McHugh J indicated, the position is generally the same where the proceedings have become futile because the parties, having generally acted reasonably in commencing and pursuing the litigation, have settled their dispute by mutual agreement: Taylor v Australian Postal Corp [2004] FCA 1265. Alternately the respondent may have given the applicant the substantive benefit or relief it was seeking to obtain through the proceedings. For instance, in Sullivan v Secretary, Department of Defence [2005] FCA 786 the applicant sought leave to discontinue the proceedings after the respondent gave undertakings that negated the need for a hearing of the application. I held that the parties had acted reasonably throughout and that there should be no order as to costs: see also Harvey Norman.
[51] The respondent submitted, correctly in my view, that futility is not a matter of objective or subjective belief but a matter of fact; either the proceedings were futile or they were not. It follows that, in the absence of extrinsic circumstances such as are described in [47] and [48] above, where there has been no hearing on the merits of the case it is not possible to say with certainty that the proceedings have become futile even where discontinuation is an acknowledgment of likely defeat. Nevertheless the applicant's belief as to futility and the reasonableness of that belief is a relevant factor in the exercise of the court's discretion as to costs."
As was stated in Ex parte Lai Qin a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. However, the court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. But such cases are likely to be rare.
The Attorney General outlined his position on 14 April 2011 in a Calderbank letter. He reiterated his position on 17 May 2011. The Attorney General claims his costs on an indemnity basis from 14 April 2011 from Dr Doyle. The Attorney General submitted that he is entitled to his costs because Dr Doyle unnecessarily protracted the proceedings in circumstances where he has succeeded on a point that he has not argued, where he obtained the relief already offered to him by Hall Chadwick and the Attorney General . The Attorney General made further submissions concerning Dr Doyle's resort to the prerogative style relief sought in this court rather than to the appeal provisions under the LPA . It was in my view appropriate to seek declaratory relief in this court rather than an appeal under the LPA in the District Court.
The review panel submitted that there was no evidence of serious misconduct by it. According to the review panel, there was no perverse obstinacy in error and once it was alerted to the possibility of error in its decision through the failure to consider the relevant file, it responded swiftly and candidly. The review panel further submitted that unless this case falls within the facts of cases such as Kumar , compensation for the loss suffered could only be claimed in an action for damages and this cause of action was not pleaded by either Dr Doyle or Hall Chadwick. I disagree. Costs can be awarded against the review panel without the necessity of a claim for damages.
The review panel submitted that there is no evidence of bad faith on behalf of the panellists and all that occurred was that the subject matter of the proceeding fell away, due to the discovery of an invalidity not known to any of the defendants prior to the inquiry and the proceedings then became futile.
While the review panel made an error, it is my view that its conduct does not fall into the category of serious misconduct nor can it be said that it demonstrated a flagrant disregard of elementary principles of justice. Nor is it my view that the review panel acted in bad faith.
Hall Chadwick submitted that the review panel is charged with the statutory duty of carrying out the review "on the evidence that was received by the costs assessor". Hall Chadwick says that it is part of the review panel's primary duty to ensure that they carry out the review within the limits of their jurisdiction; and that they must ensure that they have the evidence which was received by the costs assessor before embarking upon the process. Hall Chadwick submitted that for the review panel to fail to do this is a very substantial dereliction of its duty.
Hall Chadwick submitted that it was not in a position to know that the internal workings of the review panel or the costs assessment section or to know, for example, whether the materials provided to the costs assessor had been copied. Hall Chadwick says that it was in fact diligent in following up the progress of the review and contacted the Court in December 2009 seeking an update with respect to the status of the review. Upon contacting the court registry, solicitors for it were informed that the review panel had access to the original costs assessor's file from 11 November 2009 and that the review panel would usually take a month or two to make a determination. I disagree with Hall Chadwick's submissions.
On 27 July 2009, the costs assessor returned the two boxes that contained Hall Chadwick's file to its office under cover of a letter. So far as Hall Chadwick's submission about the costs assessor scanning the whole file, it would be most unlikely that a costs assessor would photocopy or scan two boxes worth of material at his own cost. Particularly when he had access to the original file. On about 23 October 2009, Hall Chadwick was aware that the review was to take place and that the review was to "be conducted on the material that was submitted to the costs assessor." The contents of that letter should have alerted Hall Chadwick that it would be necessary to produce its file, namely two boxes of material that was currently in its possession to the review panel in order for the review to be carried out. It seems that the solicitor acting for Hall Chadwick did not turn his/her mind to this matter. Hall Chadwick at this hearing before this court has sought to disavow itself of any blame. This is not a case, such as Kumar , where Hall Chadwick can be said to be an innocent party. It is my view that Hall Chadwick should pay Dr Doyle's costs up until 14 April 2011 on a party/party basis.
Dr Doyle submitted that if a costs order is made in his favour then the costs order made by RA Hulme J needs to be determined. On 25 February 2011, RA Hulme J ordered that Dr Doyle costs be costs in the cause. As Dr Doyle was successful in his claim up to 14 April 2011, the Hall Chadwick should pay his costs of that day.
After 14 April 2011, Dr Doyle has continued to pursue this litigation when there was already consent between the parties that the decision of the review panel was to be quashed and set aside. He elected to pursue paragraph [5] to [7] of the amended summons, the second notice to produce and continued to seek costs from the Attorney General and the review panel. In oral submissions Dr Doyle stated that the reason he elected to act in this way was because he could not be confident that consent orders would be adhered to until such a time as they were entered by this court. On 11 July 2011, this court entered the consent orders. In my view, when Hall Chadwick, the Attorney General and the review panel agreed that the decision should be set aside that should have been the end of these proceedings so far as the review panel and the Attorney General were concerned as proceedings against them had become futile.
The Attorney General and the review panel seek their costs on an indemnity basis from 14 April 2011 from Dr Doyle. When the review panel was merely submitting to the orders of the court they are not entitled to costs. I accept that the intervention of the Attorney General brought to light the error of the review panel and facilitated the setting aside of the review panel's decision. The review panel was actively involved in the proceedings when they wished to be heard in relation to the setting aside of the notices to produce addressed to them on the basis of judicial immunity. It is my view that as the review panel made an error that necessitated the bringing of these proceedings they should not be entitled to any costs for the short time they were actively involved. The review panel should pay its own costs of the proceedings.
The Attorney General submitted that if it was successful on costs it should be awarded on an indemnity basis from 14 April 2011 as the proceedings became futile after that date.
Indemnity Costs
The general rule is that costs are payable on a party/party basis. A court should only depart from the general rule and award indemnity costs where the conduct of the party against whom the order is sought is plainly unreasonable: see Sydney City Council v Geftlick [2006] NSWCA 280 at [90] per Tobias JA, Mason P and Hodgson JA agreeing. Indemnity costs orders should be reserved for the most unreasonable action by unsuccessful plaintiff: see Leichhardt Municipal Council v Green [2004] NSWCA 341 per Santow JA (at [57]).
In Cat Media Pty Ltd v Allianz Australian Insurance Ltd [2006] NSWSC 790, Bergin J (as she then was) confirmed the relevant principles in relation to Calderbank offers by reference to Leichhardt Municipal Council stating that the costs consequences attendant under the general law upon an offer of compromise made in a Calderbank letter are in the court's discretion, to be exercised having regard to all of the relevant circumstances of the case. Firstly, there is not a prima facie presumption in favour of an award for indemnity costs if the Calderbank offer is not accepted and is not bettered; secondly, a Calderbank offer that has no real element of compromise in it, which is designed merely to trigger costs sanctions, will not be treated as a genuine offer of compromise; thirdly, there is no rule that an optimistic offer is not a genuine offer. Whether or not it was reasonable to reject an offer is a question that may figure in the discretionary balance, but it is not a question which affects the genuineness of the offer; and fourthly, an applicant for an order for indemnity costs consequent upon an unaccepted Calderbank offer must show that the rejection of the offer was unreasonable.
The Crown solicitors letters dated 14 April 2011 and 3 May 2011 are not expressed to be Calderbank letters nor do they stipulate that they would be relied upon in court in relation to costs.
On 25 July 2011, (the morning of the hearing of this matter) the Crown Solicitor served the affidavit as to costs on Dr Doyle with an accompanying letter that concluded:
"the sum claimed represents a significant compromise on what could be claimed. The sum is claimed without prejudice to my clients' quantification costs on assessment should the Court order costs to be paid as agreed or assessed. If assessment occurs, this affidavit shall be tendered in a submission, based on Calderbank v Calderbank [1976] Fam 93, that the plaintiff pay the costs of the assessment."
The amount of costs sought is $12,850 for both Counsel's and solicitor's costs. The only amounts claimed for solicitor's costs were for attendances at court on 6 May 2011, 20 May 2011, 25 July 2011 and 26 July 2011, a total of $2,883.
The Attorney General also submitted that he should be awarded a lump sum in accordance with Part 98(4)(c) of the Civil Procedure Act and referred to New South Wales Crime Commission v Fleming (1991) 24 NSWLR 116 at 125 where Gleeson CJ stated:
"I do not agree with the suggestion that judges, as compared with taxing officers, lack the qualification to determine what might constitute reasons legal expenses. The judges of whom we are speaking are the very people who ultimately determine appeals from taxing officers in relation to disputes as to taxation."
It is my view that once all parties agreed that the review panel's decision was to be set aside, the proceedings against the Attorney General became futile. At that stage the Attorney General offered to Dr Doyle that the consent orders be made and an offer that each party pay its own costs to that date. Nevertheless, Dr Doyle proceeded with his notices to produce addressed to the review panel, a matter where the Attorney General needed to continue to act as a true contradictor. This continuation of the proceedings caused the Attorney General to incur further costs unnecessarily.
Hence, it is my view that Dr Doyle should pay the Attorney General's costs on and from 14 April 2011 to date. It is my view that these costs are payable on a party/party basis. An order for indemnity costs is not warranted.
Due to this fact that the proceedings arise from the costs assessment process and to avoid another round of costs assessment, I will assess these costs pursuant to s 98(4)(c) of the Civil Procedure Act 2005. Only half of those costs are attributable to the Attorney General's involvement and half are attributable to the Crown Solicitor and barrister acting for the review panel. While there has already been a reduction in the fees claimed by the solicitor, Counsel's fees are calculated on an indemnity basis. I assess the Attorney Generals costs from 14 April 2011 to date at $5000.
The Court orders:
(1) Paragraphs [5] to [7] of the amended summons filed 13 July 2011 are dismissed.
(2) The first defendant is to pay the plaintiff's costs up to and including the 14 April 2011 on a party/party basis, including his costs incurred on 25 February 2011.
(3) The plaintiff is to pay the first defendant's costs after 14 April 2011, including the hearing in relation to paragraphs [5] to [7] of the amended summons on a party/party basis.
(4) The second and third defendants are to pay their own costs of these proceedings.
(5) Dr Doyle is to pay the Attorney General's costs from 14 April 2011 to date. These costs are assessed at $5000.
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Decision last updated: 22 August 2011
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