Jensen v D.F.C.S. - [2006] FMCA 637

FEDERAL MAGISTRATES COURT OF AUSTRALIA

JENSEN v D.F.C.S.

[2006] FMCA 637

PRACTICE & PROCEDURE – COSTS – Discontinuance of an appeal from Administrative Appeals Tribunal.

Federal Magistrates Court Rules 2001, rr.13.01, 13.02, 21.02
Federal Court Rules, O.22 r.26

Re The Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6
Mineralogy Pty Ltd v National Native Title Tribunal & Ors [1998] FCA 1700

Applicant:

DAVID CRAIG JENSEN

Respondent:

SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES

File number:

SYG2637 of 2005

Judgment of:

Barnes FM

Hearing date:

12 April 2006

Delivered at:

Sydney

Delivered on:

12 April 2006

REPRESENTATION

Applicant:

In person

Solicitors for the Respondent:

Australian Government Solicitor

ORDERS

That the applicant pay the costs of the respondent fixed in the amount of $1800.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG2637 of 2005

DAVID CRAIG JENSEN

Applicant

And

THE SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

This is an application for costs by the respondent to an appeal from a decision of the Administrative Appeals Tribunal (the AAT) which was commenced by the applicant in the Federal Court of Australia by way of a notice of appeal filed on 19 August 2005, transferred to this Court and discontinued by the applicant on 19 January 2006.
The applicant’s appeal was on the grounds that the AAT had failed to proceed according to law in exercising its jurisdiction in refusing to grant his request of 20 June 2005 to vacate a scheduled hearing date on 24 June 2005, that it failed to proceed according to natural justice in that the hearing of 24 June 2005 proceeded in the absence of the applicant and/or the applicant's representative, and that it failed to proceed with proper consideration of all the facts and circumstances. An order was sought remitting the matter to the Tribunal for rehearing.
On 16 September 2005 Sackville J of the Federal Court ordered that the proceedings be transferred to this Court. The matter first came before this court on 25 October 2005. There was no appearance for the respondent on that day. However directions had already been made by Sackville J to facilitate preparation of an index to the appeal book. The matter was adjourned. The parties attended conferences with a registrar on 31 October 2005 and 8 November 2005 to settle the index to the appeal book.
The matter came back before this Court on 6 December 2005. There was no appearance for the applicant on that occasion. However, as discussed below, the proceedings were adjourned for mention on

7 February 2006. On 19 January 2006 a notice of discontinuance was filed by the applicant in which it was stated “In circumstances of Mr Luckman’s ill-health, and without his help, I’m unable to continue with proceedings. Request Application for Discontinuance be granted without award of costs against me”. The matter came back before the Court on 17 February 2006 as the respondent sought costs. Orders were made for the filing of relevant material.
Rule 13.01(1) of the Federal Magistrates Court Rules 2001 provides that a party may discontinue an application by filing a notice of discontinuance, which by Rule 13.01(2), may be filed at least 14 days before the date fixed for the final hearing of the application, or with the leave of the Court or a Registrar, at a later time. In this instance a date had not been fixed for the final hearing of the application. It was open to the applicant to file a notice of discontinuance without the leave of the Court.
The Federal Magistrates Court Rules 2001 do not provide that a party who discontinues without the need for leave of the Court should pay the costs of the other party (cf Federal Court Rules, Order 22, but note the operation of Order 62 Rule 26 in relation to the discretion of the Court.) Instead Rule 13.02 provides that if a party discontinues an application, or part of an application, another party in the proceeding may apply for costs. This is what has occurred. The respondent seeks costs on a party/party basis in the sum of $1,800.
First, in relation to the principles to be applied, as the Rules do not provide automatically that the party discontinuing should pay the costs of the other party, the question of costs is a matter for the discretion of the Court. However I bear in mind that the usual principle in proceedings of this nature, this being a Court in which there are cost consequences (unlike the Administrative Appeals Tribunal) is that if a party discontinues in circumstances where leave is not required then in the ordinary case such party would be liable to pay the other party's costs, at least up to and including the time of the discontinuance.
I have had regard to the general principles relevant to the exercise of the Court's discretion, including principles applied in the context of applications for leave to discontinue where the question of costs is a matter for the Court to consider at large (see in particular Re The Minister for Immigration & Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6, and Mineralogy Pty Ltd v National Native Title Tribunal & Ors [1998] FCA 1700). I bear in mind, however, that much of the discussion of costs in that context arises in a situation where a party has discontinued or failed to continue proceedings because that party has achieved the result sought by some other means. That is clearly not the case in this instance. In his appeal the applicant sought review of the AAT decision and that the matter be remitted to the AAT. He has not achieved this result. Rather, by his discontinuance he has indicated that he does not seek to pursue the appeal from the decision of the AAT.
I consider it is relevant to have regard to all of the circumstances, including the conduct of the parties generally as well as to whether they have acted reasonably in commencing and defending the proceedings and their conduct in continuing the proceedings, the circumstances which occasioned the appellant not to proceed with the appeal, whether there are any issues of public importance or public interest and the circumstances of the parties in relation to the payment of costs.
The respondent, as the applicant for costs, relies on an affidavit of Dale Jennifer Watson, the solicitor with carriage of the matter for the respondent, sworn and filed on 16 February 2006 which sets out the manner in which the costs sought have been calculated. No issue was taken by the applicant with the manner in which such costs were calculated, except that the applicant submitted that the bulk of preparation by the respondent was completed before the court proceeding and contended that any attempt to claim costs for work done in “lower jurisdictions” was invalid.
It was confirmed for the respondent and I accept, that the application for costs in this instance does not include any attempt to claim costs for work done in “lower jurisdictions” (in particular for work done in relation to the proceedings in the AAT). I note in that respect that I am advised from the bar table that the Australian Government Solicitor (the solicitor for the respondent in these proceedings) did not act for the respondent in the proceedings in the AAT.
The respondent also relies on an affidavit of Ms Watson sworn and filed on 7 April 2006 giving an account of conversations between herself and a Mr Luckman. In order to understand this, it is necessary to refer to the documents filed by Mr Jensen in relation to the costs application. These consist of an affidavit sworn and filed by Mr Jensen on 31 March 2006 and an affidavit of James Richard Luckman also sworn and filed on 31 March 2006. Mr Jensen describes advice he received from Mr Luckman about Mr Luckman’s discussions with Ms Watson and himself about the costs of the proceedings. He describes Mr Luckman as his “representative”. Mr Luckman states that since 1999 he has been the applicant’s representative “pro bono” on Centrelink matters. He does not purport to be a legal practitioner and in fact describes himself as a pensioner, but quite clearly has had a part in the carriage of these proceedings on behalf of Mr Jensen, although Mr Jensen has appeared before me. Mr Luckman has participated in conversations with the legal representative of the respondent in relation to the progression of this matter and attended and participated in the conferences to settle the index to the appeal book. No issue has been taken in relation to the appropriateness of this, despite the fact that Mr Luckman is not a legal practitioner.
The respondent contends that, consistent with the usual principle, it is appropriate that the applicant should meet the costs of the respondent. The applicant asks that no order as to costs be made. Each party provided an account of conversations between Mr Luckman (for the applicant) and Ms Watson (for the respondent). Mr Luckman’s affidavit contains an account of his recollection of conversations that he had, in particular with Ms Watson. Ms Watson's affidavit takes issue with aspects of his recollection of the detail of some of those conversations. Mr Luckman was required for cross-examination. Mr Jensen was not. Nor was Ms Watson. In his cross-examination Mr Luckman conceded that there were aspects of the evidence of Ms Watson about the conversations that she said had occurred between them in relation to costs that he could not recollect. He did not deny that the conversations had taken place as she recalled, rather stated that that was not his recollection and that he was not sure that there had been time, in particular on one occasion outside Court, for a conversation of the length referred to by Ms Watson to have occurred.
Mr Luckman told the Court in cross-examination that he did not have any familiarity with the concept of a notice of discontinuance until he approached the Registry in January 2006 in relation to bringing these proceedings to an end. However he did not dispute that the solicitor for the respondent had raised with him, at an early time, and in particular following the directions hearing before Sackville J on 16 September 2005, what his Honour had said about the case, which according to Ms Watson's affidavit, reflected an issue raised by his Honour as to difficulties facing the applicant in light of a need to establish a lack of procedural fairness in circumstances where a hearing date had been set by the AAT and the hearing had not, according to the material before the Court, been attended by the applicant.
It is not disputed that, as set out in the affidavit of Ms Watson, following the directions hearing on 16 September 2005 there was a conversation between herself and Mr Luckman. Mr Jensen was present. Although Mr Jensen heard the conversation, he stated that he could not make out any words other than “costs”. I accept that. Ms Watson stated that she had been instructed to raise with the applicant the possibility that costs would be awarded against him if he was unsuccessful, so that he was aware of this. She stated that she indicated to Mr Luckman and Mr Jensen that they had heard what the judge said about the case and that Mr Jensen needed to be aware that should these proceedings continue he was likely to have costs awarded against him and asked if they were aware that costs could be awarded against him. In all the circumstances, where accounts differ I prefer Ms Watson’s account of the conversations between herself and Mr Luckman.
I accept that Ms Watson indicated that if Mr Jensen pulled out early she may be able to get instructions not to pursue costs, but told Mr Luckman that this would not be likely if the matter kept going because extra work would be required and that Mr Luckman indicated that they understood this and would be proceeding.
The parties agree that there was some discussion of a potential figure in relation to costs. Mr Luckman indicates that the potential figure discussed on 16 September 2005 was the sum of $3000. I accept that that is the case and that at that time the applicant was aware of a potential liability should the matter proceed
The parties participated in settling of the index to the appeal book, which is clearly not an indication from the applicant of any intention, at that stage, not to proceed. That occurred in October and November 2005. Whether or not Mr Luckman recollects that there was some discussion about the need to get a date to settle the appeal index, it is clear that he and Mr Jensen were aware of the need to do so. Orders had been made to that effect by Sackville J, the parties being given leave to approach the Registry for settling of an index to an appeal book. Two appointments were required for the settling of the index to the appeal book. I accept Mr Luckman's evidence that he did not understand precisely what was required in this respect and that he had not produced material in accordance with the requirements of the Registry on the first occasion. Nonetheless, that is not a matter for which the respondent is responsible. A solicitor other than Ms Watson attended the appointments in relation to settling of the index to the appeal book for the respondent.
Contrary to Mr Luckman’s recollection, Ms Watson did not appear before this Court on 25 October 2005. She denies that she told Mr Luckman on that date that if Mr Jensen withdrew his application her client was prepared to waive costs. I accept her evidence in this respect.
The matter was next listed for mention before me at 9:30am on 6 December 2005. I accept that shortly before that time, in a telephone conversation between Mr Luckman and Ms Watson, Mr Luckman indicated that he was ill and would have to withdraw and that he and Mr Jensen did not want to take the case any further. There was no appearance by the applicant on 6 December 2005. The matter was adjourned until 7 February 2006. Mr Luckman does not recall use of the expression “notice of discontinuance”, but I accept that as well as indicating that they did not want to take the case further, there was some discussion of the manner in which that might occur. It is consistent with that that Ms Watson indicated there would be a need for the applicant to file a notice of discontinuance (even if Mr Luckman does not recall or did not understand the precise nature of the words used in relation to such a procedure).
In his affidavit Mr Luckman suggested very generally that his understanding was that as at 6 December 2005 he had “a message conveyed to him” that in the circumstances costs would not be pursued. However, on the evidence before me, including the affidavit evidence of Ms Watson and the cross-examination of Mr Luckman, I am not persuaded that there was an indication from the solicitor for the respondent that in the circumstances costs would not be pursued or that that this was simply to be confirmed by the client as a matter of formality as Mr Luckman suggested. I do accept that Mr Luckman indicated that they wanted to see if it was possible to withdraw with no order as to costs and that Ms Watson indicated that she would see if she could get instructions. Ultimately, the matter was, as I have indicated, discontinued in January 2006.
Thus, it is clear that the solicitor for the respondent raised the issue of a potential costs liability with the applicant at an early stage in the proceedings (after the first directions hearing before the Federal Court) and made it clear to the applicant, albeit through Mr Luckman, who it is not disputed was his ‘representative’ in such discussions, that there may be a liability for costs if the matter was not resolved in his favour or discontinued at an early stage. Despite this at that point the applicant as he was entitled to do, chose to proceed at least through the initial directions hearing in this Court and the preparation of the index to the appeal book. The first clear indication from the applicant of an intention not to proceed was, on either account, not until 6 December 2005. This indication was provided immediately before a scheduled appearance in Court. This necessitated an appearance, at least for the respondent, so that the Court could be advised of the situation.
The respondent has set out in detail the costs that have been incurred. They are costs on a party/party basis that relate to the conduct of these proceedings. They do not relate to the conduct of the proceedings in the AAT. There is otherwise no issue taken with the manner in which the costs are calculated. I note that, as indicated by the solicitor for the respondent, the manner in which the costs have been calculated results in an amount that is somewhat less than would be the case were the scale in Schedule 1 of the Federal Magistrates Court Rules 2001 applied. The Court has the power under the Federal Magistrates Court Rules 2001 to order costs in a fixed amount (Rule 21.02(2)(a)).
I have had regard not only to the discussions between the parties but also to the other matters that are raised by the applicant in opposition to the costs order, particularly in his written submissions. First, it is suggested that the application for costs is punitive. I reject that submission in the circumstances of this case. Rather the respondent seeks costs as an application of the general principle in contested litigation that the unsuccessful applicant should meet the costs of the respondent. The respondent does not seek, nor would it be appropriate to seek, costs on an indemnity basis, but rather on a party/party basis. I have indicated that there is no intention to seek, and nor would the Court order, costs in relation to the AAT proceedings.
The applicant indicated that the discontinuance was undertaken in the belief that costs would not be sought. Whether or not this was so, this was not the clear impression conveyed by the evidence of the conversations between the parties prior to the discontinuance.
The suggestion that the bulk of preparation by the respondent was completed prior to the present proceedings is not consistent with the affidavit of Ms Watson in relation to the work carried out. The fact that the appeal relates to AAT proceedings, and hence that documents and information in relation to proceedings in that Tribunal are relevant, does not mean that the work undertaken for the respondent was not relevant to these proceedings.
The applicant refers to his impecuniosity, his lack of assets, and dependence on Centrelink benefits. I accept that he is dependent on Centrelink benefits and have had regard to his submissions about impecuniosity, albeit that he states this to the Court by way of submission rather than by way of affidavit evidence. Nonetheless, an applicant's impecuniosity is not a reason for not awarding costs, although it may be a matter taken into account by the respondent in determining when and how to seek to recover costs. It is clear that if the costs are to be met by the applicant he will have to meet such costs from his own funds. I take that into account as part of all the circumstances.
As to the applicant's contention that in pursuit of justice he was denied benefits by the Secretary of the Department of Family and Community Services for more than two years, that is a matter which goes to the merits, in some ways, of his proceedings in the Administrative Appeals Tribunal. I bear in mind the necessary caution in relation to making any prediction as to the applicant's likelihood of success in these proceedings had they continued, particularly on the limited material before me. However I do note, as Sackville J did according to the evidence of the respondent, that the applicant would have faced some difficulty simply on the basis of the grounds as set out in the notice of appeal.

The applicant also requested that a substantially reduced amount be ordered. However, as I have indicated, the amount is considerably less than the amount that the respondent might seek pursuant to the Federal Magistrates Court scale. The amount sought is appropriate in light of all the circumstances and the nature of this case. Rather than for the Court to engage, in proceedings of this nature, in a detailed consideration of the precise financial situation of the applicant, any repayment schedule should be a matter for the parties to resolve. The respondent is the Secretary of the Department of Family and Community Services and hence should be aware of the circumstances and the nature of the situation of an applicant such as the present who is dependent on social security benefits and who clearly is not in a position to meet a costs order of the amount of $1,800 in one sum, or indeed on anything other than a very gradual basis over a very extended period of time.
Nonetheless, these circumstances are not such as to warrant a departure from the normal rule that the unsuccessful applicant should meet the costs of the respondent, particularly in circumstances where there is a no costs jurisdiction for an applicant to resolve disputes of the nature that this applicant initially had with the Secretary of the Department Family and Community Services and Centrelink through the mechanism of the Social Securities Appeals Tribunal and the Administrative Appeals Tribunal. Having then sought to commence proceedings in a jurisdiction where, as is apparent from Mr Luckman's affidavit, it was understood that there would be costs implications, and having sought to proceed with a number of steps thereafter, which caused further costs to be incurred for the respondent despite the fact that both Mr Jensen and Mr Luckman were made aware of the possibility of a liability for costs if unsuccessful, I consider that it is appropriate that the applicant should meet the costs of the respondent as sought.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date: 5 May 2006