FSJ18 v Minister for Immigration, Citizenship and Multicultural Affairs
[2024] FCA 433
•30 April 2024
FEDERAL COURT OF AUSTRALIA
FSJ18 v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 433
Appeal from: FJS18 v Minister for Immigration, Citizenship and Multicultural Affairs (No 2) [2022] FedCFamC2G 1007 File number(s): NSD 1147 of 2022 Judgment of: BURLEY J Date of judgment: 30 April 2024 Catchwords: COSTS – appeal from orders awarding costs fixed by reference to the scale in Division 1 of Part 2 of Schedule 2 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) – whether “good reason” required to depart from scale amount – where primary judge relied on incomplete version of costs affidavit – principles applicable to discretion to award costs – discretion re-exercised. Legislation: Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 214, 214(2), 214(3)
Federal Circuit Court of Australia Act 1999 (Cth) s 79
Migration Act 1958 (Cth) ss 5(1), 476
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 1.04, 1.06(1), 1.06(4)(a), 1.07, 20.02(2)(b), 22.02(2)(c), 22.02, 22.02(1), 22.02(2)(a), 22.02(2)(b), 22.02(2)(c), 22.03, 22.08, 22.09, 22.10, 29.10, 29.11, 29.12, 29.13, 29.13(1), 29.13(3), Part 22, Division 22.3, Part 29, Division 29.4, Schedule 2
Federal Court Rules 2011 (Cth) Part 40, Division 40.2, Schedule 1, Schedule 3
Cases cited: AHE18 v Minister for Immigration, Citizenship and Multicultural Affairs (No 2) [2023] FedCFamC2G 257
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403
CIQ17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (No 2) [2020] FCCA 3467
Colgate Palmolive v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225
FJS18 v Minister for Immigration, Citizenship and Multicultural Affairs [2022] FedCFamC2G 875
FJS18 v Minister for Immigration, Citizenship and Multicultural Affairs (No 2) [2022] FedCFamC2G 1007
Frank Jasper Pty Ltd v Glew [No 3] [2012] WASC 24
Gehlert v Minister for Immigration, Citizenship & Multicultural Affairs [2023] FedCFamC2G 563
House v The King [1936] HCA 40; (1936) 55 CLR 499
Kirwin v The Pilbara Infrastructure Pty Ltd [2012] WASC 99
Oshlack v Richmond River Council (1998) 193 CLR 72
SZUVZ v Minister for Immigration and Border Protection [2015] FCCA 2346
Division: General Division Registry: New South Wales National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 62 Date of last submission/s: 16 February 2024 Date of hearing: 14 February 2024 Counsel for the Appellant: Mr S Lloyd SC with Mr B Mostafa Solicitor for the Appellant: Varess Counsel for the Respondents: Ms R Francois Solicitor for the Respondents: Australian Government Solicitor ORDERS
NSD 1147 of 2022 BETWEEN: FSJ18
Appellant
AND: MINISTER FOR IMMIGRATION, CITIZENSHIP AND MULTICULTURAL AFFAIRS
First Respondent
IMMIGRATION ASSESSMENT AUTHORITY
Second Respondent
ORDER MADE BY:
BURLEY J
DATE OF ORDER:
30 APRIL 2024
THE COURT ORDERS THAT:
1.The appeal be allowed.
2.The costs order made by the Federal Circuit and Family Court on 1 December 2022 be set aside.
3.The First Respondent pay the Appellant’s costs of the proceeding in the Federal Circuit and Family Court as agreed or taxed in accordance with Part 40 of the Federal Court Rules 2011 (Cth).
4.The First Respondent pay the Appellant’s costs of the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
1 INTRODUCTION
[1]
2 THE DECISION OF THE PRIMARY JUDGE
[9]
3 THE RELEVANT LEGISLATION
[11]
4 THE SUBMISSIONS
[22]
5 CONSIDERATION
[26]
5.1 The correct approach
[26]
5.2 Re-exercise of the discretion
[51]
6 DISPOSITION
[62]
BURLEY J:
1. INTRODUCTION
This judgment concerns the question of whether or not the discretion to award costs in the Federal Circuit and Family Court of Australia (Division 2) (FCFC) in respect of a migration decision is constrained by a requirement that a departure from scale costs be preconditioned on the existence of a “good reason” for doing so. For the reasons set out below, I consider that it is not.
The primary judge delivered substantive reasons for judgment in favour of the appellant on 11 October 2022 where he ordered that the decision of the Immigration Assessment Authority be quashed and the matter be remitted for rehearing; FJS18 v Minister for Immigration, Citizenship and Multicultural Affairs [2022] FedCFamC2G 875 (judgment). Subsequently, the primary judge sought written submissions and, on the basis of the papers, gave a costs judgment where he ordered that the first respondent, the Minister for Immigration, Citizenship and Multicultural Affairs, pay the appellant’s costs of and incidental to the application fixed in the amount of $7,853, being scale costs fixed by reference to Division 1 of Part 2 of Schedule 2 to the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (FCFC Rules); FJS18 v Minister for Immigration, Citizenship and Multicultural Affairs (No 2) [2022] FedCFamC2G 1007.
The appellant, however, had contended that the Schedule 2 scale costs should not apply but that a larger amount in costs should be awarded. He had relied upon an affidavit of his solicitor, Farid Varess dated 28 November 2022 (costs affidavit) which had been filed electronically shortly after the judgment was delivered. As a result of administrative oversight on the part of a solicitor under the supervision of Mr Varess, only every second page of his affidavit was filed. This was not picked up by the primary judge, and the costs judgment was delivered on the basis of the partial affidavit.
The appellant seeks leave to appeal (if required) from the costs judgment and foreshadows as the grounds of appeal that the primary judge:
(1)erred in proceeding on the manifestly incorrect basis that, when the appellant filed his 24 November 2021 amended application in the Court below, he abandoned the grounds of relief sought in his initial application filed on 9 October 2018;
(2)erred by acting unreasonably or denying the appellant procedural fairness, by proceeding on the basis of the filed version of the costs affidavit in circumstances where it was obvious that the filed version of the costs affidavit was inadvertently missing every second page when acting reasonably, the primary judge should have sought a complete version from the appellant’s representatives; and
(3)misconstrued or misapplied r 22.09 of the FCFC Rules on the costs question and thereby acted on a wrong principle.
The appellant seeks an order that the costs order of the primary judge be set aside and in its place the Minister be ordered to pay the appellant’s costs as agreed or taxed under Part 40 of the Federal Court Rules 2001 (Cth) (FCR).
The Minister accepts that ground (2) is established on the basis that the primary judge proceeded to the costs judgment on the basis of a manifestly incomplete copy of the costs affidavit and accordingly accepts that, in the circumstances, leave to appeal would be granted and the appeal allowed on that ground, the primary judge having made an error of the type in House v The King [1936] HCA 40; (1936) 55 CLR 499, being a breach of the rules of natural justice. He also accepts that it is appropriate for this Court to consider the correctness of the exercise by the primary judge of the discretion to award costs. However, he submits that this Court should determine the question of principle as to whether the primary judge was correct as to the basis upon which costs should be awarded in considering ground (3) and then remit the matter to the primary judge for application of that question on the basis of the facts in the present case.
The concession of the Minister concerning ground (2) is sufficient basis to found the grant of leave to appeal and accordingly it is unnecessary for present purposes to address the disputed question of whether leave is required. I will grant leave to appeal and allow ground (2) of the appeal. For the reasons set out below, I also consider that ground (3) has been established. I consider that it is in the interests of justice to proceed to re-exercise the discretion as to costs, which I have done below. I have concluded that the Minister must pay the appellant’s costs of the proceedings before the primary judge as taxed or agreed.
At the hearing, I granted leave for the appellant to rely on a complete version of the costs affidavit.
2. THE DECISION OF THE PRIMARY JUDGE
In relation to the question of principle raised by ground (3), it is sufficient to set out the concluding paragraphs of the costs judgment:
[12]It is trite that the awarding of costs is in the discretion of the Court. Scale costs are a good reflexion of what quantum of costs ought properly to be ordered consequent upon the handing down of judgment in a proceeding. What one Judge might have found warranted the handing down of a particular costs order in a particular matter, and the reasons for their having done so, is irrelevant to this Court’s consideration of what is a fair and just costs order in this matter.
[13]There was only one occasion on which the matter was heard as a final hearing. The Grounds of Review ultimately considered by the Court in the Amended Application were neither novel nor exceptional. The matter was not factually complicated.
[14]The Court finds that there is no good reason for costs to be assessed as submitted on behalf of the applicant.
[15]It is ordered that the first respondent pay the applicant’s costs of and incidental to the Application for Review fixed in the amount of $7,853.00.
The conclusion in [15] is reflected in the Order made. I infer that the award in the amount of $7,853.00 is an application by the primary judge of the scale costs set out in Part 2 of Schedule 2 to the FCFC Rules.
3. THE RELEVANT LEGISLATION
Section 214 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFC Act) relevantly provides:
…
(2)The Federal Circuit and Family Court of Australia (Division 2) or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3)Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit and Family Court of Australia (Division 2) or Judge.
Part 22 of the FCFC Rules is within Chapter 1 of the FCFC Rules and applies to all general federal law proceedings: r 1.06(4)(a). The Chapter includes in r 1.04 reference to the overarching purpose of the FCFC Rules as being “to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible”.
Rule 1.06(1) provides that it is intended that the practice and procedure of the Court in general federal proceedings be governed by the Rules. The term “general federal law proceedings” is defined to mean a proceeding in the FCFC other than a family law or child support proceeding. It includes a migration proceeding.
By rule 1.07, the Court is empowered, in the interests of justice, to dispense with compliance, or full compliance, with any of the FCFC Rules.
Part 22 is entitled “Costs”. Rule 22.02 provides:
Order for costs
(1)An application for an order for costs may be made:
(a)at any stage in a proceeding; or
(b)within 28 days after a final decree or order is made; or
(c)within any further time allowed by the Court.
(2) In making an order for costs in a proceeding, the Court may:
(a)set the amount of the costs; or
(b)set the method by which the costs are to be calculated; or
(c)refer the costs for taxation under Part 40 of the Federal Court Rules; or
(c)set a time for payment of the costs, which may be before the proceeding is concluded.
Rule 22.03 provides:
Determination of maximum costs
(1)The Court may specify the maximum costs that may be recovered on a party and party basis:
(a)by order at the first court date; and
(b)on its own initiative or on the application of a party.
(2)However, an amount specified must not include an amount that a party is ordered to pay because the party:
(a)has failed to comply with, or has sought an extension of time for complying with, an order or any of these Rules; or
(b)has sought leave to amend a document; or
(c)has otherwise caused another party to incur costs that were not necessary for the economic and efficient progress of the proceeding or hearing of the proceeding.
(3)The Court may vary the maximum costs specified if, in the Court's opinion, there are special reasons and it is in the interests of justice to do so.
Division 22.3 is entitled “Costs and disbursements” and includes rr 22.08 – 22.10, which provide as follows:
22.08Application of Division 22.3
(1)This Division applies to costs payable, or to be taxed, under an Act, these Rules or an order of the Court, in a proceeding.
(2)Unless otherwise provided, these Rules do not regulate the fees to be charged by lawyers as between lawyer and client in relation to proceedings in the Court.
Note:In relation to a dispute between a lawyer and a client about the fees charged by the lawyer, see the State or Territory legislation governing the legal profession in the State or Territory where the lawyer practises.
22.09 Costs and disbursements
Unless the Court otherwise orders, a party entitled to costs in a general federal law proceeding (other than a proceeding to which the Bankruptcy Act 1966 applies) is entitled to:
(a)costs in accordance with Schedule 2; and
(b)disbursements properly incurred.
Note 1:For costs in a proceeding to which the Bankruptcy Act 1966 applies, see Part 13 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021.
Note 2:For costs in a migration proceeding, see rule 29.13 and Part 2 of Schedule 2 to these Rules.
22.10Taxation of costs
(1)In taxing a statement of costs, a taxing officer must apply the scale of costs set out in Schedule 3 to the Federal Court Rules.
(2)In this rule:
taxing officer means a Registrar.
Part 29 of the FCFC Rules is entitled “Proceedings under the Migration Act 1958”. It applies to a proceeding for a remedy to be granted in the exercise of the Court’s jurisdiction under s 476 of the Migration Act 1958 (Cth) in relation to a migration decision (as defined in s 5(1) of the Migration Act), which includes the decision the subject of the judgment.
Division 29.4 of Part 29 is entitled “General” and makes provision for the stay of proceedings (r 29.10), directions and orders (r 29.11), the issue of writs (r 29.12) and costs (r 29.13).
Rule 29.13 relevantly provides:
(1)The Court may, in relation to a proceeding that is concluded, order an unsuccessful party to the proceeding to pay the costs of a successful party in accordance with Division 1 of Part 2 of Schedule 2;
…
(3)This rule does not limit a party’s right to apply, under Part 22, for an order as to costs of the application.
Division 1 of Part 2 of Schedule 2, which is referred to in r 29.13(1), applies to migration proceedings (Part 1 applies to general federal law proceedings other than migration proceedings). In a table, it refers to costs for a migration proceeding concluded at a final hearing as being in the amount of $8,371.30, inclusive of GST. As at the date of the costs judgment the amount was $7,853.00, being the amount of costs ordered by the primary judge.
4. THE SUBMISSIONS
The appellant submits that in migration proceedings, like any other, the costs discretion must be exercised judicially and the justification for the general principle that costs follow the event is that the primary purpose of an award of costs is to indemnify the successful party. He submits that the provisions in the FCFC Act and FCFC Rules provide several options for the form of costs orders in FCFC migration proceedings but says little to confine the discretion of the court to select between those options. He submits that the wording of r 29.13(1) (“may”) shows that the rule cannot be regarded as a default rule, much less that the court requires a “good reason” before an order other than in the scale amount may be made, especially where, as in the present case, a party exercises its right under Part 22 to apply for a costs order as envisaged in r 29.13(3).
The appellant submits that whilst some decisions of the FCFC have suggested that “good reason” or the existence of “additional steps or complicating factors” will be required for the FCFC to depart from the scale amount, some authorities suggest that the scale amount ought to be applied where a proceedings is of “average complexity” or is “a standard unit equivalent migration proceeding”. None of these tests find their origins in the FCFC Act or Rules. Rather, the key principles are as stated in CIQ17 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (No 2) [2020] FCCA 3467 (Judge Manousaridis) at [24] – [25] which provide no skewing of an order in favour of costs assessed at the scale rate, but by the exercise of the discretion under s 79 of the Federal Circuit Court of Australia Act 1999 (Cth) (the equivalent of s 214 of the FCFC Act) to make an award of costs in accordance with the indemnity principle (at [26]), which would require such assessment to be made as to the amount that would represent a fair indemnity for the costs the successful party incurred. It was accordingly not correct for the primary judge to require (at [14]) that there be a “good reason” for departing from the scale amount. He submits that error having been established, this Court should re-exercise the discretion as to costs.
The Minister submits that the usual purpose of having a “scale” for costs is to ensure that costs remain within reasonable bounds, those scale costs being a potential disincentive to litigants in expending unnecessary resources and lawyers charging large fees that may become payable by the opposing party, citing Kirwin v The Pilbara Infrastructure Pty Ltd [2012] WASC 99 (Hall J). He submits that the parliamentary intention of including the scale is for disputes to be resolved cheaply, quickly and simply, and the public availability of scale costs enables parties to litigation to be aware that the relevant costs scale is likely to determine their maximum recoverable costs should they succeed and if the parties wish to incur significantly more costs in litigation that are not recoverable, then that is a matter for them, citing Gehlert v Minister for Immigration, Citizenship & Multicultural Affairs [2023] FedCFamC2G 563 at [26] (Judge Lucev). The Minister notes that the recoverable scale amount is reviewed from time to time to ensure that it retains currency, observing that the Explanatory Statement to the 2022 amendment stated that the updated scale costs was “in line with the recommendations of the Joint Costs Advisory Committee” and attaching the terms of reference of that committee, which is composed of judicial officers whose functions are to review and recommend variations in the quantum of costs and provide annual recommendations to the Courts. The Minister submits that the reasoning in CIQ17 should not be adopted and that the fact that the Act and the FCFC Rules provide for a discretion as to the awarding of costs is not a proper basis to ignore the scale costs for litigants “who wish to use more expensive solicitors or barristers”. He submits that the scale is intended to put a break on “rampant capitalism”. Whilst he accepts that the Court should try to provide a fair indemnity for the successful party, that must be understood to occur in the context of the party litigating in a Court with a known scale of costs and that in appropriate more complex, difficult, time-consuming cases or for other “good reasons” the scale may be held not to be appropriate. To interpret the FCFC Act and Rules as operating in relation to costs without regard to the scale is to benefit the commercial interests of appellant’s legal representatives which is an approach inconsistent with the processes of the Joint Costs Advisory Committee and the role of the Court below as an inferior court.
The Minister submits that, whether or not error has been found in the application of principle concerning costs, this Court should not proceed to determine the question, but rather remit the question to the primary judge. This, he submits, is more efficient having regard to the primary judge’s familiarity with the case, preferable to the outcome sought by the appellant which is that the proceeding be referred to a third decision maker in the form of a taxing registrar and more appropriate having regard to the fact that it was the administrative error of the solicitors for the appellant that occasioned the success of ground (2).
5. CONSIDERATION
5.1 The correct approach
The present appeal involves a challenge to the exercise of the discretion of the primary judge. To make good the challenge, the appellant must establish that it falls within the principles set out in House v The King at 505. Given that the Minister has properly conceded error in relation to ground (2), that is sufficient to warrant a re-exercise of discretion.
Section 214(2) of the FCFC Act provides the jurisdiction for the FCFC to award costs. Section 214(3) provides that the award of costs is in the discretion of the FCFC.
In exercising the discretion conferred in s 214(3), the Court must consider whether there is a party in whose favour an award should be made and then the appropriate mechanism by which the quantum of that award should be calculated. The familiar orders made are that a party is ordered to pay “costs of the action”, “costs of, and incidental to, the proceedings”, “costs in the cause” or costs of a particular event in the hearing: Dal Pont GE, Law of Costs (LexisNexis, 5th ed, 2021) at 1.14 – 1.27.
It is inappropriate to read a provision such as s 214(3) by making conditions or imposing limitations which are not to be found in the words used; Oshlack v Richmond River Council (1998) 193 CLR 72 at [21] (Gaudron and Gummow JJ).
Section 214(3), like the section under consideration in Oshlack, contains no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. As the Court there observed, the power is to be exercised judicially, not arbitrarily or capriciously or so as to frustrate the legislative intent. The discretion may be seen to be unconfined, except insofar as the subject matter and the scope and purpose of the legislation may enable an appellate court to conclude that an exercise of the discretion is “definitely extraneous to any objects the legislature could have had in view”; Oschlack at [22].
The submissions advanced by the Minister in the present case bear some similarity to the proposition rejected by Gaudron and Gummow JJ in Oshlack where their Honours said at [37]:
Implicit in the submissions for the Council is the proposition that, so strongly determinative of a discretion conferred in broad terms by a provision such as s 69 of the Court Act are the considerations (i) that the court must determine the matter from the perspective of the successful party, (ii) that the successful party ordinarily should be compensated by the unsuccessful party for the expense of the litigation, and (iii) that the successful party will be deprived of costs only by disentitling conduct, that they are to be displaced only by specific legislative provision. …
Their Honours held that modern provisions conferring discretion as to costs have “escaped arterial hardening” where provision was made for a broad discretion to confer costs; at [38].
In an often-repeated passage, McHugh J observed at [67] (citations omitted):
The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
In a similar vein, Kirby J, who with Gaudron and Gummow JJ formed the majority in Oshlack, noted at [134(3)] that appellate courts should avoid the imposition of rigid requirements which would narrow the discretion afforded by the statutory power; whilst guidance may be afforded by referring in general terms to the considerations which the decision-maker may take into account, such considerations are not intended to confine the decision-maker to a rigidly mechanical approach, which would amount to an abdication of the discretion afforded to the decision-maker. His Honour went on to observe at [134(4)] (citations omitted):
It is because the general purpose of an order for costs in favour of a successful party is to provide compensation in the form of a partial indemnity for the costs incurred that the ordinary principle… is that legal costs will usually be ordered in favour of the successful party… But the compensatory principle cannot be treated as an absolute rule. Otherwise, the discretion conferred in unqualified terms would indeed be shackled and confined. To permit this would be incompatible with statutory language expressed in such terms. Therefore, although there are "rules" or ordinary principles which will guide the donee of power in the exercise of the discretion, they cannot extinguish the element of discretion. They must not be allowed to harden into rigid or inflexible requirements.
Of course, it is not the case that the “indemnity” equates to the notion of “indemnity costs”. Rather, as courts have come to recognise, the principle is that a party that is successful be permitted to recover so much of its costs as are reasonably incurred. This is often determined upon the award of “party-party costs” which are assessed by an independent assessor on taxation: Dal Pont at 16.14 – 16.17; see also Schedule 1 of the Federal Court Rules 2011 (Cth), which defines “costs as between party and party” as “only the costs that have been fairly and reasonably incurred by the party in the proceedings”. The just resolution of disputes does not necessarily require that a successful party recover all of the party’s costs and disbursements, or that a party be able to maximise the recovery thereof; awards of costs (even on an indemnity basis) do not always fully compensate a party: Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403 at 410 – 411, 414 – 415 (Mason CJ, Brennan, Deane, Dawson and McHugh JJ); Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [98] – [100] (Gummow, Hayne, Crennan, Kiefel and Bell JJ); Colgate Palmolive v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225 at 226 (Sheppard J); see also Dal Pont at 7.7, 15.4 – 15.6.
Once the Court decides that an order for costs should be made in favour of a particular party, the next question is the appropriate amount to award. The scheme set out in the FCFC Act and Rules provides several options for the award of costs by the court in migration cases, all of which must be understood to be subject to the principles set out above, which arise from the conferral of the general discretion to award costs in s 214(3).
Those options may be summarised as follows.
First, the Court may elect to do no more than indicate (in an unspecified manner) that a party is entitled to costs.
In that case, under rule 22.09 of the FCFC Rules, the default position is that the party is entitled to costs in accordance with Schedule 2, Part 1 of which concerns general federal law proceedings other than migration proceedings and Part 2 of which concerns migration proceedings. Rule 22.09 provides that, in addition to costs in accordance with these schedules, the party is entitled to “disbursements properly incurred”. Part 1 of Schedule 2 makes allowance, in assessing costs for general law proceedings other than migration proceedings, for both an amount for costs and separately for daily hearing fees. In respect of disbursements, a specific amount is allowed for photocopying per page, agents’ fees and travelling costs, and “court fees and other fees and payments to the extent that they have been reasonably incurred”. Part 2 provides for the payment of a single amount in respect of an event, for example, where a proceeding has concluded at a final hearing, with no reference to fees or disbursements.
Secondly, if an application is made in accordance with rule 22.02(1), the Court may set the amount of the costs by reference to r 22.02(2)(a).
Thirdly, if an application is made in accordance with rule 22.02(1), the Court may set the method by which the costs are to be calculated; r 22.02(2)(b). As noted in CIQ17 at [12], this may be a determination that costs are to be paid on a “party-party”, “solicitor-client” or “indemnity” basis, but may provide for another basis.
Fourthly, if an application is made in accordance with rule 22.02(1), the Court may refer the costs for taxation under Part 40 of the FCR; r 22.02(2)(c). Part 40 of the FCR is entitled “Costs” and within Division 40.2 makes provision for the taxation of costs. Schedule 3 to the FCR, to which reference is made in FCFC Rules 22.10, makes provision for costs allowable for work done and services performed by lawyers. It provides that counsel’s fees may be allowed according to the circumstances of the case and are to be claimed as a disbursement (cl 16). It provides that all court fees and other fees and payments may be allowed in the amounts actually incurred (cl 18). Taxation is a method by which the fair and reasonable costs of a party are determined, depending on the particular basis of the award, for instance, whether it is “party/party costs” or “indemnity costs”: see the definitions of “costs as between party and party” and “costs on an indemnity basis” in the Dictionary in Schedule 1 to the FCR.
Fifthly, the Court may order that an unsuccessful party is to pay the costs of a successful party in accordance with Division 1 of Part 2 of Schedule 2; r 29.13(1). This is a more specific mechanism than the first option identified above and requires the Court to specify the party to pay costs in accordance with the Schedule.
It is within this scheme that the dispute between the parties emerges. The Minister contends that the scale costs identified in r 29.13(1) are set to “put a break on rampant capitalism” and set a reasonable rate for legal fees that will avoid exorbitant charging in migration proceedings. He submits that the scale sets that rate and that it is to be assumed that this provides a benchmark for judges to award costs, deviation from which should only occur in cases where there is “good reason” to do so. For the following reasons I am unable to accept that submission.
The scheme of the FCFC Rules must be understood in the context of the discretion conferred pursuant to s 214(3) of the FCFC Act. The reasoning of the High Court in Oshlack to which I have referred above demonstrates that the broad jurisdiction to award costs empowers the Court to make orders that fairly indemnify the successful party. I respectfully agree with the analysis set out by Judge Manousaridis in CIQ17 at [25] – [26] in which he observes that none of the FCFC Rules is expressed in mandatory terms. It is within the discretion of the Court to determine which of the mechanisms for assessment of costs it will exercise in any given case. The rules in effect lay out a palette of choices for the Court and it will depend on the particular circumstances of the case which is the choice most apposite. As Judge Manousaridis said at [26]:
If there is any overriding principle in relation to the assessment of costs, it is that costs should be set to provide the successful party a fair indemnity for the costs he or she has incurred in having had to litigate.
In a migration proceeding, if an application is made under r 22.02, then the Court must exercise its discretion to determine whether one of the other options in r 22.02(2) is more appropriate than the application of the Schedule 2 scale costs pursuant to r 29.13(1); see r 29.13(3).
I find no basis in the language of the FCFC Rules to conclude that in so doing there is any bias or weighting to be accorded in favour of scale costs such that there must be a “good reason”, “exceptional circumstances” or a case of “unusual complexity” before one of the other options is selected. In this regard, whilst some decisions in the FCFC appear to have considered that such a threshold requirement exists (see, for instance, the detailed survey of cases in Gehlert at [33] – [51]), in my respectful view to take such an approach is inconsistent with the principles set out above.
The Minister emphasises statements made by the Supreme Court of Western Australia to the effect that the existence of scale costs is intended to ensure that costs remain within reasonable bounds, citing Kirwin at [20] and Frank Jasper Pty Ltd v Glew [No 3] [2012] WASC 24 at [33]. The difficulty with this submission is that the legislative scheme in that State involves the application of a mandatory rule, stating that costs “shall not exceed” the amounts set out in the scale; Kirwin at [10], [11]. By contrast, no such mandatory language is to be found in r 29.13 of the FCFC Rules.
I do not consider that either the Explanatory Statement or the Terms of Reference for the Joint Costs Advisory Committee provide support for the Minister’s position. The Explanatory Statement simply indicates that the amendments update the scale of costs in Schedule 2 in line with the recommendations of the Joint Costs Advisory Committee. The committee has been established to advise justices and judges of the Federal Courts annually on variations in the quantum of costs for legal practitioners which may be fixed in the rules for which judges of each court are responsible. The committee is to inform itself by reference to previous decisions of the committee, written submissions from interested parties, the reasonable expenses incurred by solicitors in the conduct of their practices and any other relevant factors. A formula is set out that is used as an indicative mechanism to be adjusted according to available data (including Australian Bureau of Statistics data), taking into account wages, overheads and partners’ salaries and profits adjusted by CPI and wages increases calculated by the ABS.
The workings of the committee and the figures in Schedule 2 are undoubtedly carefully calculated. However, r 29.13(1) provides one of several discretionary options to the Court to assess costs on the basis of the scale identified in Part 2 of Schedule 2. There is no statement to be discerned from either the FCFC Rules or the secondary material to which I was referred to indicate that the application of the scale may be considered to represent an assessment of costs of a migration case of “average complexity” (SZUVZ v Minister for Immigration and Border Protection [2015] FCCA 2346 at [4]) or a “standard unit equivalent migration proceeding which concludes at a final hearing” (AHE18 v Minister for Immigration, Citizenship and Multicultural Affairs (No 2) [2023] FedCFamC2G 257 at [4]). As noted in CIQ17 at [27], it is doubtful that one could assess what would constitute a case of average complexity.
In the present case, the appellant applied to the primary judge for an order that costs in his favour be “as agreed between the parties, or taxed under Part 40 of the Federal Court Rules 2001 (Cth)”. This was an application under FCFC Rule 20.02(2)(b) or (c). It was supported by the costs affidavit. In refusing that application, the primary judge wrongly failed to consider whether the award of such costs would indemnify the appellant in the sense of permitting him to recover his costs as reasonably incurred. Instead he considered that there was “no good reason” to depart from scale costs, scale costs being “a good reflexion of what quantum of costs ought properly to be”. This was an error of principle.
5.2 Re-exercise of the discretion
The appellant submits that this Court should re-exercise the discretion in relation to costs. The Minister opposes that course and submits that the application should be remitted to the primary judge for redetermination. In my view, it is more efficient to consider the appellant’s application under FCFC Rule 20.02(2)(c).
In the costs affidavit, Mr Varess provides an itemised record of the solicitor-client costs incurred by the appellant totalling $4,038.98 while he was represented by a prior firm, which includes:
(a)a $665 court filing fee; and
(b)$983 in barrister’s fees.
Mr Varess also provides an itemised record of solicitor-client costs incurred since he commenced to represent the appellant in December 2018 which amounts to $28,910.96, including:
(a)an $835 court setting down fee; and
(b)$12,100 in barrister’s fees.
For each disbursement, he includes documentary evidence in support in the form of the court fee invoice or barristers fee invoices.
Mr Varess gives evidence that he has been practising as a solicitor in the field of immigration law since 2003, has since 2010 been accredited by the Law Society of New South Wales as a specialist in immigration law and has had carriage of over 506 judicial review matters. He has had experience in the process of taxation of costs under Part 40 of the FCR. He gives evidence to the effect that in matters in which he has been engaged where taxation has taken place, on average his bills of costs have been discounted to 78% of the total solicitor-client costs. Applying that percentage, on the basis of the itemised costs (and disbursements) in the present case, which total $32,949.94, he would expect that a Certificate of Taxation would be issued in the amount of $25,700.95. Mr Varess was not cross-examined.
The primary judge made several misplaced criticisms of the evidence at [7] – [9] because of his mistaken belief that he had the whole of the affidavit, when only every second page had been provided to the Court. He also correctly noted that nowhere in the affidavit did Mr Varess affirm that the charge out rate for any listed item was reasonable having regard to the nature of the work said to have been performed and nowhere was the Court supplied with material from a costs assessor.
Of further note is that the primary judge referred to an amendment made to the application for review more than three years after the original application was filed, which included the ground upheld by the Court. The primary judge inferred that for that period, the attention of the lawyers representing the appellant was directed towards obtaining relief which was ultimately abandoned in favour of the successful ground (at [6]). That observation was demonstrated on appeal to be incorrect.
I have otherwise set out relevant aspects of the reasoning of the primary judge at [9] – [10] above.
As I have noted, the correct approach to the question of costs is for the Court to consider whether it has been put into the position to assess what amount would represent a fair indemnity for the costs that the successful party has incurred. The appellant contends that it should be an amount as agreed or taxed. The Minister contends that it should be the scale amount of $7,852. It is open to the Court, notwithstanding the positions advanced by the parties, to select another amount or method of calculation.
In the present case, there is no dispute that the matter proceeded to hearing, counsel was retained and oral and written submissions were advanced on behalf of the appellant before the primary judge. The uncontested evidence of Mr Varess supports the submission that the scale fees are not likely to represent a fair indemnity. Indeed, even were a discount on actual costs upon taxation of 70% applied, the amount assessed by the primary judge would be an underestimate of a fair indemnity. The primary judge identified no other factors that would bear on the assessment of costs in the proceedings.
Whilst the assessment of costs by the Court is necessarily a broad-brush affair, the evidence indicates that an amount of costs fixed at $7,852 is unlikely to represent a fair indemnity for the appellant. It is not necessary for the Court to form a view as to an amount that would, although it can, where appropriate, choose to do so. There are matters that would no doubt have a bearing on the final amount to be awarded, however, in my view the correct course in the present case is to accede to the application of the appellant and order that the costs be taxed, if not agreed. It may be that the outcome of that process is a figure similar to the amount awarded by the primary judge, but the evidence available suggests that this is highly unlikely.
6. DISPOSITION
For the reasons set out above, the appeal must be allowed, the costs order of the primary judge discharged and in lieu thereof the Minister be ordered to pay the costs of the proceeding in the Federal Circuit and Family Court as agreed or taxed in accordance with Part 40 of the FCR. The Minister must also pay the costs of the appeal.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Burley. Associate:
Dated: 30 April 2024
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